IN THE MATTER OF THE INSURANCE ACT, R.S.O. 1990, c. 18, section 275AND IN THE MATTER OF THE ARBITRATION ACT, S.O. 1991, c. 17;AND IN THE MATTER of an Arbitration between:LIBERTY MUTUAL INSURANCE COMPANYApplicant- and -ZURICH INSURANCE COMPANY OF CANADARespondentDECISIONCOUNSEL:Sean Tindale for the ApplicantEric D. Zeldin for the RespondentISSUES:
DECISION:
HEARING:The arbitration was held in the city of Toronto, in the province of Ontario, on July 20, 2006. No witnesses were called and the hearing proceeded on the basis of documentation filed at the hearing. FACTS AND ANALYSIS:This loss transfer matter arises out of a motor vehicle accident which occurred at approximately 11:30 p.m. on August 22, 1997. On that date Lisa Parry was westbound on Canborough Road in the township of West Lincoln when she came into collision with two motor scooters driven by Jay and Drew McIntosh, who were stopped on the north shoulder of Canborough Road. At the time of the accident both Jay and Drew McIntosh had valid motor vehicle liability policies with Liberty Mutual Insurance Company ("Liberty"). As a result of the accident Liberty paid accident benefits to and on behalf both McIntosh's. Liberty subsequently took the position that the accident was caused by the actions of Ms. Parry, who had a valid motor vehicle liability policy with Zurich Insurance Company ("Zurich") at the time of the accident. Pursuant to Section 275 of the Insurance Act, Liberty is claiming loss transfer for the accident benefits payments made to and on behalf of Jay and Drew McIntosh. Section 275 states: Indemnification in certain cases-the insurer responsible under subsection 268(2) for payment of statutory accident benefits to such classes of persons as may be named in the regulation is entitled, subject to such terms, conditions, provisions, exclusions and limits as may be prescribed, to indemnification in relation to such benefits paid from the insurers of such classes of automobiles as may be named in the regulations involved in the incident from which the responsibility to pay statutory accident benefits arose. At an earlier hearing I determined that none of the fault determination rules set out in Ontario Regulation 668 applied and therefore pursuant to Section 5 of that regulation, the ordinary rules of law were to apply to determine the degree of fault. The purpose of this hearing was to determine the fault in accordance with Section 5. As stated above, Liberty takes the position that the accident was caused by the actions of Ms. Parry, who, they suggest, was travelling too fast for the conditions or overreacted or misread the conditions resulting in her driving into the scooters, which all parties agree were stopped on the north shoulder of the road. No one has suggested that Jay or Drew McIntosh were responsible for the accident. Zurich submits that the accident was caused or contributed to by the actions of two other motor scooter drivers, Brian Stuart and Sasha Ohme, who Zurich says, had moved from the north shoulder of the road and turned around and were in fact travelling westbound in the eastbound lanes of Canborough Road at the time of the accident, thereby causing Ms. Parry to slam on her brakes and skid into the scooters stopped on the north shoulder. In order to determine the question of fault it is necessary to briefly review the evidence presented at the hearing. While no witnesses were called, numerous examination for discovery transcripts were filed as well as statements from various persons. Ms. Parry indicated that she was westbound on Canborough Road at approximately 11:30 p.m. The road was wet although it was not raining at the time of the accident. She was well acquainted with the road. She was on her way home to meet up with her boyfriend. Her boyfriend had left her place earlier in the evening but had forgotten his keys. She was in the process of delivering his keys back to him when she noticed that he had turned around and was headed back to her place. The layout of Canborough Road is significant in this matter. As one approaches the accident scene westbound as Ms. Parry did, the road curves to the left and the road dips and then rises shortly after the point of impact. There is a single lane westbound and eastbound in the area leading up to the accident. Ms. Parry gave different estimates as to her speed in the time leading up to the accident. In her statement to the police she indicated she was travelling at about 80 kilometres per hour, if that fast. In her statement to an insurance adjuster she stated that she was, "going about 60 to 70 kilometres per hour". At examinations for discovery she testified that she was travelling at, "maybe 60". The speed limit at this location is 80 kilometres per hour. She stated that as she came around the curve, which curves to the left, she noticed two motorcycles coming toward her in her lane. She applied her brakes and swerved into the eastbound lane. The two scooters then went into the eastbound lane. She tried to get back into the westbound lane but her car was sliding and she then struck the two scooters stopped on the north shoulder of the road. At her examination for discovery Ms. Parry testified as follows: Q: So you moved from your lane to the other lane? A: Right, I was startled when I saw themÉ. Q: And was it an emergency move on your part, or did you consider this would simply get around the vehicles? A: I believe I need to get out of their way. Q: Was it an emergency situation? A: I believe soÉ. Q: Can you tell us how long it was that you remained in theÉeastbound lane? A: 10 seconds. Immediately as I changed lanes, the other motorcycles changed lanes as well. I believe we both thought the same thing at the same timeÉ. Q: So, 10 seconds is quite a long period of time. A: I don't know. Something like this happens like that (witness snaps fingers) I cannot guesstimateÉ. Q: Here is my problem then, maybe you can help me. If your intent was to avoid a collision, it seems to me that you would want to get out of their wayÉyou are pointing your vehicle out of their way, why would you slow the process my braking harder? A: I'm not a professional driver. I did what my instincts did. I did not have time to stop and think, "Should I do this or should I do that or should I go this way. I did just what my body did when I was confronted." The scooter drivers all gave a different version of events leading up to the accident. Their evidence, while varying slightly by individual person, was that they stopped on the north shoulder of the road to determine where they were, as they had become lost. They eventually determined that they should turn around. Brian Stuart and Sasha Ohme turned their scooters and travelled onto the south shoulder of the road and waited for the other scooters to join them eastbound. Before the other scooters could do so, the Parry vehicle came around the curve and struck the McIntosh scooters. While the estimates varied, the scooter drivers estimated that they had been stopped from 45 seconds to more then 2 minutes before the accident occurred. The only truly independent witness to the accident was Mr. Joel Muir, who had met up with the scooter drivers earlier in the evening and was following them to the event that they were all planning to attend. All the scooter drivers had a vested interest in their testimony, in light off the litigation arising from the accident. Mr. Muir gave a total of four statements - two of them to the police, one to another adjuster on November 3, 1997 and a final statement to yet another adjuster on November 6, 1997. Mr. Muir had stopped on the north shoulder, ahead of the scooters as they attempted to determine where they were. Initially he told the police: I saw two of them turn around from the right shoulder to face east, I was going to turn too, but saw the light of the car coming from behind me west, so I stopped. The two motorcycles turning east were in the westbound laneÉthen I heard screeching tires and a crash. In his second statement to the police Mr. Muir stated: Some of the scooters turned around and started going back in the same direction that we had come. I was looking through my centre rear view mirror. I remember them going away, but could not tell you which lane they were inÉ.I turned my car wheels to the left and did a shoulder check. I saw two headlights come over the hill behind me. I straightened my wheel and heard skidding of tires on wet pavement.ÉI stopped, put on my four ways and got out of the carÉ.a lady was standing there yelling " what were you guys doing in the road". What were you doing the middle of the road? Or something to that affect. On November 3, 1997 Mr. Muir told an insurance adjuster: To cross the road they were travelling in a southerly direction. I saw the scooters in my rear view mirror, I believe, possibly one of the side mirrors. I was going to start to make my "u" turn when I looked over my shoulder. In doing so I saw a vehicle coming over the hill travelling westbound on Canborough Road. At this point this vehicleÉ.was entirely in its own lane with its headlights on. The scooters had crossed the road, the two of them, had their headlights on. I turned forward facing west and was waiting for this vehicle to pass so I could make my "u" turn immediately I heard the tires screeching so I looked in my rear view mirror and saw the vehicle impact at least one scooterÉ.Where the accident occurred Canborough Road has a slight dip. The accident occurred at the bottom of the dip and the female driver of the car would not have been able to see the scooters until she was at the top of this hill. On November 6, 1997 he gave a statement where he stated: I saw some of them take off and head back east, but I don't remember how many. I was getting ready to do my "u" turn, I shoulder checked to the left saw, headlights approaching in my rear, so I sat and waited for this car to passÉÉ.I hadn't seen where the scooters went or if they were on the south shoulder. I lost complete sight of themÉ.after these guys took off, I thought about making a "u" turn. I started to turn my vehicle a bit then decided to look over my left shoulder. It was at this time I saw the car headlights approaching. I do not recall how much time elapsed from when I saw the scooters take off until I saw the cars headlights approaching. Liberty, in its submissions, took the position that in my decision at the previous hearing I had already determined where the scooters were at the time of the accident and the issue is therefore already decided. In that decision I stated: This accident occurred at approximately 10:50 p.m. on August 22, 1997. The five motor scooters had pulled completely off to the north shoulder of the road and had checked a map for directions. Two of the scooters had already turned around and gone to the south shoulder and were waiting for the other 3 scooters to turn around. I disagree with Liberty's position in this regard. The initial hearing dealt with the issue of whether the scooters have been parked or stopped on the north shoulder prior to the accident. The position of the scooters on the south side of the road was not a material issue at that hearing. It is only in this hearing that it became material. Accordingly I am of the view that the issue as to the whereabouts of the Ohme and Stuart scooters is still open and before me. Liberty also took the position that Ms. Parry was responsible for the accident because she did not respond appropriately when faced with the situation. Liberty points to the time that Ms. Parry testified that she took to respond to the situation and the fact that she had braked so hard as to go into a slide. If Ms. Parry was indeed faced with an emergency, not of her on making, I do not fault her for her actions. When faced with an emergency one does not demand perfection, only a reasonable response in all circumstances. What would appear to have happened here, after considering all the evidence, is that Ms. Parry came around the curve and into the dip and saw the westbound scooter lights. In the circumstances she mistakenly assumed that they were travelling eastbound in the westbound lanes and tried to avoid them. I find that the two scooters were stopped on the south shoulder of Canborough Road for a short period of time prior to the accident. Those scooters were not responsible for the accident. Accordingly, Liberty is entitled to loss transfer from Zurich. In the event that the parties cannot agree on the amount of the related issues, I may be spoken to. Liberty raised the issue, in the event that Ms. Perry and the scooter drivers on the south shoulder were both found at fault for the accident, whether Section 1 of the Negligence Act would apply and questioned whether this would be a case of joint and several liability, in which case Liberty would recover 100% from Zurich even if Zurich were only, say 50% at fault. In light of my finding that Zurich insured was 100% at fault for the accident, the issue is academic, however, as the parties argued the point at some length I will address it briefly. Section 1 of the Negligence Act states: Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly and severally liable to a person suffering loss or damage for such fault or negligence, but as between himself, in the absence of any contract expressed or implied, each is liable to make contribution and indemnify each other in the degree in which they are responsible, found to be at fault or negligent. It is Liberty's position, as I understand it, that to begin with, I should only find fault as between the two insured involved in the loss transfer dispute and not make any finding of fault with regard to any other person who might have been involved in the accident. To use our case as an example, if I had found the car (a party to the loss transfer) 75% at fault, the scooters on the north side (a party to the loss transfer) 0% at fault, and the scooter on the south shoulder (not a party to the loss transfer) 25% at fault, then the insurer of the car would have to pay 100% of the loss transfer as one should only consider fault between the two loss transfer litigants. Liberty also takes the position that Section 1 of the Negligence Act would apply and therefore could recover 100% from the insurer of the car, even though that insurer was only 75% at fault. I do not agree with Liberty's position in this regard. There is nothing in Section 275 of the Insurance Act, the enabling legislation for loss transfer, which supports such an interpretation. In Section 275(2) states that: "Indemnification under sub section 1 should be made according to the respected degree of fault of each insurer's insured as determined under the fault determination rules. Liberty suggests that it would not be appropriate to find fault on a non-party, as it would occur if fault is to be contributed beyond the parties to the loss transfer arbitration. I do not agree. The non-party will not have to pay anything as a result of such a finding, indeed, it is of no consequence to the non-party. If the legislature had intended for a party to the loss transfer arbitration to pay more then their degree of fault in the accident, which is what Liberty's position would allow, it would have been clearly stated a legislation, it did not. With regard to the application of Section 1 of the Negligence Act, it is to be noted that Section 1 implies or deals with indemnity rather then a fault. Loss transfer generally deals with fault. Section 275(2) specifically deals with indemnity and as such there is no need to refer to Section 1 of the Negligence Act. In light of the above, Liberty is entitled to loss transfer from Zurich on a 100% basis, subject to agreement on the amount. In the event that the parties are unable to agree with regard to the issue of cost, I may be spoken to. COSTS:The parties have agreed that costs are to be borne by the unsuccessful party. I may be spoken to if the parties are unable to come to an agreement on the quantum of costs payable. Dated this day of September, 2006 in the City of Toronto, Province of Ontario. __________________________ |