Canada: Continental Casualty Company V Chubb Insurance Company Of Canada, 2022 ONCA 188

Earlier this year, in Continental Casualty Company v Chubb Insurance Company of Canada, the Court of Appeal for Ontario ("ONCA") determined a priority dispute between two insurers concerning liability for statutory accident benefits (SABS) coverage, where one policy provided basic mandatory SABS coverage and another policy provided both basic and mandatory and optional enhanced SABS coverage.

Key Takeaways

The Court of Appeal for Ontario ultimately determined that an optional benefits insurer cannot require a priority insurer to indemnify them for basic mandatory SABS coverage provided to the claimant and must administer both mandatory and optional benefits coverage. In other words, SABS payment obligations cannot be bifurcated between insurers and s. 268 of the Insurance Act can be ousted by Ontario Policy Change Form 47 ("OPCF 47").

The decision is also a signal to company owners, who have access to and control over their company vehicles but do not actually use any of those vehicles, that they will not meet the "regular use" requirements and cannot be considered a "deemed named insured" for the purposes of SABS coverage.

Background

In this case, the claimant was an owner, President, and CEO of a forestry products company who suffered catastrophic injuries when hit by a motor vehicle while jogging near his cottage. He had basic mandatory SABS coverage under his personal automobile insurance policy via Chubb Insurance Company of Canada. In addition, his company purchased optional enhanced SABS overage under a fleet policy via Continental Casualty Company for the company's vehicles.¹

After the accident, Continental denied a) that its policy provided optional enhanced SABS coverage and b) that the claimant had coverage under its policy. As such, he claimed basic mandatory SABS from his personal automobile insurance, Chubb.

Chubb then initiated a priority dispute, claiming that Continental was the insurer liable to pay SABS.²

Of note, s. 268 of the Insurance Act includes priority of payment rules. Specifically, if a SABS claimant is a named insured on more than one policy, the claimant can elect to choose from which insurer to claim SABS.³

A "named insured" generally refers to the person who is actually named in a contract of insurance, while an insured is a person who, whether by statute or by contract, has some or all of the rights of the named insured. According to the SABS Schedule, a person will be deemed to be the named insured under an automobile insurance policy at the time of an accident where the insured automobile is "being made available for the individual's regular use by a corporation."⁴

In April 2018, an arbitrator found that the claimant was the named insured under the Chubb policy and a "deemed named insured" under the Continental policy because he met the "regular use" requirement. The rationale was that the claimant had regular access to the company vehicles, even if he had never driven them.

In sum, then, the arbitrator determined the claimant was entitled to elect which insurer to claim SABS coverage from and, therefore, entitled to pursue optional benefit coverage and basic mandatory SABS from Continental.⁵

Continental appealed to the Ontario Superior Court of Justice ("ONSC").

Justice Stinson determined the arbitrator's conclusion that the claimant met the "regular use" requirements under the SABS Schedule as a "deemed named insured" was unreasonable. Despite being the owner and having access and control over the vehicles, he never actually used any such vehicles.⁶

Therefore, the claimant could not elect to claim benefits from the Continental policy, and Chubb was determined to be the priority insurer pursuant to s. 268 of the Insurance Act. The arbitrator's order was set aside, and Justice Stinson declared that in light of OPCF 47, which allows an insured to claim both mandatory accident benefits and optional accident benefits under any policy which offers optional enhanced benefits and prevents the insurer providing the optional enhanced benefits from denying benefits on the basis that s. 268 of the Insurance Act provides another insurer is liable to pay the mandatory accident benefits amount, Continental must pay both basic mandatory SABS and optional SABS to the claimant. They were also responsible for the cost of all optional benefits provided.

Regardless of this, however, Justice Stinson ruled Continental was entitled to reimbursement from Chubb for the cost of the basic mandatory SABS benefits paid to the claimant by Continental and all expenses associated with administering those benefits.⁷

Finding at the Court of Appeal for Ontario

Chubb then appealed to the Court of Appeal for Ontario, raising two issues:

1. Whether the ONSC erred in finding the claimant did not meet the regular use requirement and was not a deemed insured under the Continental Policy; and
2. Whether the ONSC erred in finding that Chubb was obliged to indemnify Continental for the basic mandatory SABS payments Continental was obliged to pay the claimant under OPCF 47.

On the first issue, Justice Simmons, writing for a unanimous panel that included Justice MacPherson and Justice Nordheimer, agreed with Justice Stinson's finding that the claimant did not meet the "regular use" requirement pursuant to the SABS Schedule.

Notably, in the view of the Court of Appeal for Ontario, the issue was not whether a company vehicle was made available to the claimant at the time of the accident, but "whether a company vehicle was being made available for his regular use at the time of the accident."⁸ The Court of Appeal for Ontario could not fathom how availability for regular use of the company vehicles could be imputed in the absence of any use up to the point of the accident.⁹

On the second issue, the Court of Appeal for Ontario disagreed with Justice Stinson's finding, noting that OPCF 47 is clear in requiring the optional SABS insurer to pay both the basic mandatory and optional enhanced SABS benefits.

The Court of Appeal for Ontario concluded that liability for SABS cannot be bifurcated pursuant to s. 268(2) of the Insurance Act, and that OPCF 47 can oust any s. 268 Insurance Act priority rules.

As a result, the appeal was allowed in part, and Justice Stinson's order requiring that Chubb reimburse Continental for the cost of basic mandatory SABS and related benefits was set aside.¹⁰

Footnotes

1. Continental Casualty Company v Chubb Insurance Company of Canada, 2022 ONCA 188 at paras 1-4.

2. Ibid at para 5.

3. Ibid at para 6.

4. Ibid at para 7.

5. Ibid at para 12.

6. Ibid, at para 14.

7. Ibid at para 17.

8. Ibid at para 59.

9. Ibid at para 61.

10. Ibid at para 110.