Court of Appeal rules Ontario insurance policy applies to B.C. accident

Lex loci delicti – law of the place where the event occurred – does not apply to the interpretation of an Ontario contract or statute governing entitlement to insurance, a recent Ontario Court of Appeal decision confirms.

In Benson v. Belair Insurance Company Inc., 2019 ONCA 840, an insurance company argued an Ontario insurance policy did not apply to a B.C. ATV accident. The result means that “from a practical standpoint” a person buying insurance in one province, doesn’t need to worry about not being covered if they drive their car over a provincial border, says Ian Furlong, a Toronto personal-injury lawyer from Thomson Rogers, who represented the injured man, Austin Benson.

Benson was an Ontario resident, living in B.C., who received a severe brain injury after falling off an ATV on a public trail. He applied for accident benefits in Ontario and his insurer, Belair Insurance Company, denied coverage. Belair argued that since the accident occurred in B.C. – where the law does not require ATVs to be insured as motor vehicles, meaning ATVs are not motor vehicles – then what happened to Benson was not a motor-vehicle accident covered under his insurance policy.

Mediation failed, and Benson then lost both at arbitration at the Financial Services Commission of Ontario and in his appeal to the Director’s Delegate — and again in his application for judicial review at the Divisional Court. He appealed the failed application for judicial review to the Court of Appeal and won.

“By the time Ian and I got to the court of appeal, it was already the fourth kick at the can, so to speak, but we were convinced that we were right and everyone else was wrong in terms of the law,” says Robert Ben, partner at Thomson Rogers who also acted for Benson.

“To put it really, simply, every auto policy in Ontario says that it's a contract made in Ontario and Ontario law applies to the contract and the contract covers you for accidents happening anywhere in Canada or the United States,” Ben says.

Ben says it is not lex loci delicti – “the law of the place where the wrong occurred” that applied but lex fori, “the law of the place of the contract.”

“What we got to do is we got to read the contract,” says Furlong. “And we have to examine what the intention of the parties were at the time the contract was entered into. And in this case, the intentions of the parties – the insurer and the insured – was to have their disputes resolved based on Ontario law.”

Initially, the arbitrator took the insurer’s position that the principle of lex loci delicti – “that an act committed in one part of this country will be given the same legal effect throughout the country” – meant that Ontario law “has no relevance” to an accident in B.C., said the decision. The Director’s Delegate upheld the arbitrator’s decision and pointed to statutory interpretation, finding that Ontario’s Insurance Act defines an “automobile” as that which is “required under any act” to be insured. The Director’s Delegate reasoned that if “any act” applied to B.C. law, then because ATV’s don’t need to be insured there, the ATV in question didn’t fall under the definition of an automobile.

On judicial review, the Divisional Court found that as this was a matter of statutory interpretation, the standard review of reasonableness applied, and since the decision was on the spectrum of “possible defensible outcomes,” deference was owed. The court added that, according to Adams v. Pineland Amusements Ltd., 2007 ONCA 844, the “proper question” was whether the vehicle needed insurance “at the time and in the circumstances of the accident,” states the decision. The Divisional Court said B.C. law not requiring ATVs be insured represented the time and the circumstances. Benson had no reasonable expectation of coverage, the court added, because ATVs are not included in his insurance policy, and Ontario’s Off-Road Vehicles Act — which mandates no uninsured use of ATVs — only applies to ATVs in Ontario.

At the Court of Appeal, Justice Kathryn Feldman agreed the reasonableness standard of review applied but narrowed the spectrum finding there could only be a “single reasonable interpretation.” Feldman said the definition of automobile was clear and unambiguous and the arbitrator and Director’s Delegate “proceeded on a legal misapprehension” that lex loci delicti would apply to an Ontario contract and Ontario legislation when the legislation directs that Ontario law applies.

Furlong says confirming that insurance coverage applies out-of-province is positive for both plaintiffs and insurance companies.

“From an insurance company standpoint, could you imagine trying to assess risk, where what you owe somebody or what you need to pay is completely dependent on what side of a provincial border, or whether he's south of the border in the States? They need certainty, too,” he says.