In reinstating an arbitrator’s original award and overturning a Superior Court of Justice order for a 50-50 fault-split, the Court of Appeal of Ontario has reaffirmed the Fault Determination Rules chart used in insurance matters should override any application of the ordinary rules of tort law.
In
State Farm Mutual Automobile Insurance Company v. Aviva Canada Inc., the Court of Appeal overturned a Superior Court of Justice order that had found two drivers equally responsible for a 2009 car-motorcycle accident in Richmond Hill, Ont. that involved no physical collision between the two vehicles. Through its interpretation of Rule 5(1) of the Fault Determination Rules, the Appeal Court placed the full fault back on the driver of the car, Eric Basciano. He was attempting to make a left-hand turn off of northbound Yonge Street when he turned into the path of Ali Shalforoushzadeh on his southbound motorcycle. Shalforoushzadeh was successful in attempting to avoid a collision, but he ended up skidding through the intersection and suffered an injury.
In a decision written by Appeal Court Justice Eileen Gillese, with justices Gloria Epstein and Lois Roberts agreeing, the court ruled that because Rule 5(1) states “if an accident is not described in any of these [FDR] rules, the degree of fault of the insured shall be determined in accordance with the ordinary rules of law” and that when approached as a matter of statutory interpretation “it becomes clear that the word ‘tort’ should not be read into rule 5(1).”
Eric Grossman, partner at Zarek Taylor Grossman Hanrahan LLP, says the ruling reaffirms that it is the chart that governs the determination of fault “as opposed to the application of the ordinary rules of tort law.”
“The loss-transfer regulation makes clear that a chart known as the Fault Determination Rules is to govern the attribution of fault in these loss-transfer cases,” he says. “The Court of Appeal has further affirmed that deference is owed to the decision-maker at first instance on issues of credibility.”
During the near-collision, Shalforoushzadeh was southbound on his motorcycle in heavy traffic when Basciano, who was northbound, attempted to make a left-hand turn. Basciano was waved through the intersection by another driver who was stopped in the southbound passing lanes. Basciano did not see Shalforoushzadeh approaching the intersection when he turned into the motorcycle’s path.
Shalforoushzadeh swerved and lost control of the bike. Injured, he applied for benefits to State Farm, which in turn paid those and sought indemnification from Basciano’s provider, Aviva, through arbitration.
The arbitrator determined Basciano was 100 per cent at fault based on an analysis of loss-transfer provisions, which place 100-per-cent fault on the part of a left-turning vehicle. Aviva successfully appealed the finding to the Superior Court, which ordered a 50-per-cent split of responsibility between the parties based on a finding that Shalforoushzadeh was not there to have been seen by Basciano due to the heavy traffic blocking views and that Shalforoushzadeh failed to be alert as he approached the intersection. The Superior Court also ruled that the arbitrator had erred in law in disregarding cars that were stopped to the motorcycle driver’s left as he approached the intersection and failed to attribute contributory negligence.
On appeal, Justice Gillese, however, agreed with State Farm’s assertion that the Superior Court erred in finding Shalforoushzadeh failed to be alert and supported the arbitrator, who had the advantage of seeing and hearing testimony first-hand. The Appeal Court also held the arbitrator properly interpreted Rule 5(1) of the FDR in that it must be informed by Rule 3, because Rule 3 requires the degree of fault to be determined without reference to the circumstances in which the incident occurs.
“The meaning to be given to the ‘ordinary rules of law’ in rule 5(1) of the FDRs is a matter of statutory interpretation. I make this seemingly obvious point because the decisions relied on by Aviva have not approached the matter in that fashion. Instead, those decisions are based on the assumption that the words “the ordinary rules of law” in rule 5(1) mean ‘the ordinary rules of tort law,’” Justice Gillese wrote.
“I pause to note that it would have been a simple matter for the legislature to have included the word ‘tort’ in the quoted words in rule 5(1), had that been its intention. In any event, when the meaning of the quoted words is approached as a matter of statutory interpretation, it becomes clear that the word ‘tort’ should not be read into rule 5(1).”
Grossman says the decision is a reminder to lawyers that it is much harder to overturn findings of fact made at first instance and that deference is owed on appeal of such findings.
“More importantly, it is a reminder that the ordinary rules of law can only be applied in the context of the Fault Determination Rules only in limited circumstances, and that there will most certainly be cases where factually, the application of the FDRs will depart from the ordinary application of liability in a tort context,” Grossman says.
Associate lawyer Shannon Gaudet of Lerners LLP says it’s a case that should change how insurers deal with loss transfer going forward. “It might be an indication by the court to insurers that we shouldn’t be focused on tort analysis.”
