Insurer can dispute conviction of driving without insurance in accident benefits priority dispute

Federated Insurance Company of Canada is allowed to bring forth arguments – in an Ontario auto accident benefits priority dispute with Intact Insurance Company – that a motorist convicted of driving without insurance was nevertheless insured by Intact, now that the Supreme Court of Canada has denied Intact leave to appeal.

Court records indicate that in early 2010, Patrick Cadieux had his vehicle insured by Intact. But his premium payment for February, 2010 was returned due to non-sufficient funds, Justice James Diamond of the Ontario Superior Court of Justice noted in a decision in 2016.

“Intact was able to successfully recollect” the February 2010 premium but Cadieux’s payment for March, 2010 “was also returned N.S.F. and Intact’s computer system then generated a registered cancellation letter,” Justice Diamond added.

Intact cancelled Cadieux’s policy April 20, 2010. Five days later, Cadieux was involved in a collision with a truck. Cadieux’s son was in Cadieux’s vehicle. The accident benefits claim for Cadieux’s son is currently being paid by Intact. Federated insured the other vehicle involved in the accident.

Cadieux was convicted in November, 2010 of driving without insurance.

In 2015, an arbitrator ruled that Federated is allowed to argue that Intact did not properly cancel Cadieux’s policy. That ruling was quashed the following year by Justice Diamond but restored in 2017 by the Court of Appeal for Ontario. Intact filed for leave to appeal to the Supreme Court of Canada, which announced Aug. 24 it is dismissing Intact’s leave application.

“Federated argued that the presumption that proof of a conviction is proof that the crime was committed in a subsequent civil proceeding is a rebuttable presumption, and that the facts of this case fell within one of the exceptions to the abuse of process doctrine, namely where fairness dictates that the original result should not be binding in the new context, (i.e. the father’s criminal conviction should not be dispositive in the arbitration of his uninsured status),” Justice Diamond wrote.

Related: Ontario auto accident benefits priority dispute, involving driver convicted of having no insurance, could reach Supreme Court of Canada

In 2015, the arbitrator “ruled that the abuse of process doctrine did not apply in the arbitration before him, and thus Federated was permitted to lead evidence and argue that the father was an insured person as of the date of the accident,” added Justice Diamond, who had ruled in favour of Intact, finding that Federated was precluded by the doctrines of estoppel and abuse of process.

In overruling Justice Diamond’s decision and restoring the arbitrator’s decision, the Court of Appeal for Ontario found that a 2003 Supreme Court of Canada ruling – Toronto (City) v. C.U.P.E. Local 79 – was distinguishable from the circumstances of the priority dispute between Intact and Federated and Cadieux’s conviction of driving with no insurance.

In its ruling in C.U.P.E., the Supreme Court of Canada upheld an Ontario Divisional Court decision that had overturned a labour arbitrator’s decision in favour of Local 79 of the Canadian Union of Public Employees.

The City of Toronto had fired an employee who was convicted of sexual assault. The worker’s union, C.U.P.E., grieved the dismissal. The labour arbitrator made a finding of fact that the city worker was credible and the complainant in the sexual assault case was not, despite the fact that the city worker was convicted in criminal court. So the labour arbitrator ruled that the city worker was dismissed without just cause. But that ruling was overturned by Justice John O’Driscoll of Divisional Court, who ruled that “valid orders/judgments and are binding upon all those who were parties to the court proceeding.” Both the Court of Appeal for Ontario and the Supreme Court of Canada agreed.

But in the priority dispute between Intact and Federated, “while there is certainly a public interest in protecting the passenger’s right to Statutory Accident Benefits under the Insurance Act, there is little, if any, public interest in the determination of which of the two insurers involved in the proceeding should pay those benefits,” Justice David Doherty of the Court of Appeal for Ontario wrote.