Law Times

Law Times • November 12, 2018 Page 11 www.lawtimesnews.com Case on policy non-renewal headed for SCC BY SHANNON KARI For Law Times A dispute over the finan- cial consequences for an automobile insurer that provides ineffec- tive notice of non-renewal of a policy may be headed to the Su- preme Court of Canada. The Ontario Court of Ap- peal issued a split decision last month in Ontario (Finance) v. Elite Insurance Company, a case where it was asked to de- termine the priority of payment of statutory accident benefits to a claimant struck by an unin- sured vehicle. All three judges agreed that the non-renewal notice issued by Elite did not comply with the requirements of the provincial Insurance Act. However, two of the judges concluded that based on a "con- textual reading" of the statute and the facts in the case, the policy was not in effect at the time of the accident. Section 236(5) of the act says that "a contract of insurance is in force until there is compli- ance" with the other subsections, which includes requirements to do with non-renewal of a policy. This section, however, "is not exhaustive as to what happens to a policy, irrespective of what else might have transpired between the insurer and insured, in any situation where there has been a defective notice of non-renewal. "There is no question that an insurance policy may come to an end, other than by an in- surer's notice of non-renewal," wrote Justice Katherine van Rensburg, with Justice David Paciocco concurring. The majority of the panel overturned the decision of Su- perior Court Justice Peter Ca- vanagh and concluded that the province's Motor Vehicle Acci- dent Claims Fund was respon- sible for paying out benefits and not Elite. Eric Grossman, who repre- sented the insurance company at the Court of Appeal, says that, if the context behind any non-renewal dispute is ignored, it could result in an unfair obli- gation for insurers. "The provision, if taken liter- ally, does give rise to a perpetual policy. The notion that you pay a premium for a finite period goes by the boards," says Grossman, a partner at Zarek Taylor Gross- man Hanrahan LLP in Toronto. The province, says Gross- man, has indicated that it will seek leave to the Supreme Court to appeal the decision. Marie Sydney, an outside law- yer who acted for the Ministry of Finance in the proceeding, did not respond to requests for comment. The case before the Court of Appeal stemmed from a De- cember 2011 accident, where Arpad Vadasz was struck in a parking lot. The driver f led the scene in his vehicle. More than a year before the incident, there were commu- nications between Vadasz and Elite, which indicated that he had failed to register for its Autograph program and that it was cancel- ling his policy. He then obtained a policy from another insurer, which he cancelled a short time later. The province paid out acci- dent benefits, but it argued that Elite's policy had remained in effect because its cancellation did not comply with the re- quirements of the relevant sec- tions of the Insurance Act. An arbitrator, selected by both parties, agreed that the no- tice of non-renewal was invalid. But he disagreed that this would cause the policy to continue indefinitely, because the facts showed a "mutual intention" to terminate the agreement. Cavanagh, in his ruling is- sued in July 2017, overturned the arbitrator and found that he failed to give effect to "the clear words of section 236 (5)," in his decision. "In my view, the words of s. 236(5) of the Insurance Act, when read in the context of pro- visions addressing termination or non-renewal of contracts of insurance, and when given their grammatical and ordinary sense harmoniously with the scheme of the Insurance Act, mean what they say: that a contract of insurance is in force until there is compliance with ss. 236 (1), (2) and (3). Subsection 236(5), in my view, clearly displaces the com- mon law principles applicable to renewals of lapsed contracts," wrote Cavanagh. The ruling of justices van Rensburg and Paciocco con- cluded that decisions of the arbi- trator on the non-renewal issue and that the policy was not in force at the time of the accident were reasonable and should be given deference. "The decision does not ignore the relevant statutory provisions. Rather, it takes them into ac- count together with the factual circumstances of the case, and arrives at what I consider to be a reasonable result," they said. "The issue here turns on the scope and meaning to be given to s. 236(5) of the Insurance Act, which provides that '[a] contract of insurance is in force until there is compliance with subsections (1), (2) and (3),' and FOCUS Eric Grossman says if the context behind any non-renewal dispute is ignored, it could result in an unfair obligation for insurers. See Dissent, page 13 The decision does not ignore the relevant statutory provisions. Justice Katherine van Rensburg What do your clients need? The means to move on. Guaranteed. ™ Baxter Structures customizes personal injury settlements into tax-free annuities that can help your clients be secure for life. » Pre- and post- settlement consultation and support » Caring professionalism for over 30 years » No fee to you or your clients Need more information? Contact us at 1 800 387 1686 or baxterstructures.com Kyla A. Baxter, CSSC PRESIDENT, BAXTER STRUCTURES READERS ' CHOICE 2018-19 STRUCTURED SETTLEMENTS Untitled-5 1 2018-11-06 3:05 PM

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