The Motor Vehicle Accident Claims Fund of Ontario does not have the right to compel an insurance company to participate in an arbitration to resolve a dispute over which of two insurers is required to pay funds under a policy of automobile insurance

04. November 2004 0

Allstate Insurance Co. of Canada v. Motor Vehicle Accident Claims Fund, [2005] O.J. No. 4688, Ontario Superior Court of Justice

Ms. Mattinas was killed in a two-vehicle automobile accident. She was a passenger in a vehicle which was not insured. The other vehicle was insured by the Manitoba Public Insurance Corporation (“MPIC”). Ms. Mattinas resided with her mother who had a policy of automobile insurance issued by Allstate Insurance Company of Canada (“Allstate”). Ms. Mattinas’ mother applied to the Motor Vehicle Accident Claims Fund (“MVACF”) for the death and funeral benefits mandated by the Statutory Accident Benefits Schedule under s. 268 of the Insurance Act, R.S.O. 1990, c.1. The MVACF paid Ms. Mattinas’ mother benefits totalling $20,000. There was protracted correspondence between the MVACF, Allstate and MPIC as to which Insurer should compensate MVACF for the benefits paid to Ms. Mattinas’ family from the fund. If Ms. Mattinas was ‘dependent’ upon her mother’s household, Allstate would have to repay the benefits. If Ms. Mattinas was not ‘dependent’ on her mother’s household MPIC would be required to indemnify the MVACF for the $20,000. Eventually, the MVACF attempted to invoke Regulation 283 under the Insurance Act of Ontario, by serving a Notice of Commencement of Arbitration pursuant to the Arbitration Act, S.O. 1991, c. 17, on Allstate and MPIC. Section 7 of Regulation 283 entitles an Insurer, if two or more Insurers cannot agree as to who is required to pay benefits, to have the dispute resolved through an arbitration pursuant to the Arbitration Act.

Allstate, MPIC and MVACF attended at the arbitration. The parties agreed that each party had the right to appeal from decisions of the arbitration on a question of law or a question of mixed law and fact. The Arbitrator determined that MVACF had the ability to set down the arbitration based on paragraph 19 of Ontario (Minister of Finance) v. ING Halifax [2003] O.J. No. 6036 in which Kennedy J. noted that while the MVACF is not obliged to arbitrate, it may “avail itself of the dispute resolution process” under the Regulation. The Arbitrator determined that Ms. Mattinas was dependent on her mother’s household and that Allstate was obligated to repay the funds to MVACF. Allstate appealed the decision of the Arbitrator on the basis that MVACF did not have the ability to independently set down an arbitration.

At the appeal, Ferguson J. noted that the jurisdictional issue was not whether the MVACF and the other Insurers may arbitrate if they agree to do so, but whether the Regulation enables MVACF to compel Allstate to arbitrate the dispute. Ferguson J. determined that the Ontario Court of Appeal in Kalinkine v. Ontario (Superintendent of Financial Services), [2004] O.J. No. 5138 clearly stated that the MVACF was not an Insurer for purposes of Regulation 238, that the provision only apply to Insurers, and that the MVACF was not an Insurer for this purpose. Therefore, the MVACF had no authority to initiate arbitration in this case because it was not an Insurer with respect to Regulation 238.

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