The recent decision of Justice Charney in Kingsway General Insurance Company v Dominion of Canada General Insurance Company, 2017 ONSC 498 sheds light on the circumstances in which section 5 and section 9(3) of the Fault Determination Rules, RRO 1990, Reg 668 (“FDR”) apply to determinations of fault for loss transfer purposes.
The Kingsway v Dominion decision arose from an accident that was a multi-vehicle “chain reaction” collision, in which commercial heavy vehicle C drove into the rear of the still moving vehicle B, which as a result drove into the rear of the still moving vehicle A, which then struck the stopped vehicle Z. All four vehicles involved in the accident were travelling in the same direction, in the same lane, and that the chain reaction collision was set off by vehicle C. The driver of vehicle A subsequently applied to Dominion for statutory accident benefits. Dominion paid the benefits but then sought loss transfer against Kingsway as the insurer of vehicle C. Kingsway denied the claim on the basis that Section 9(3)of the FDR applied and that loss transfer was therefore unavailable, as vehicle C did not directly strike vehicle A. Dominion took the position that Section 9(3) did not apply because vehicle Z was stationary at the time of the accident. Instead Rule 5 applied to render vehicle C entirely at fault and therefore subject to loss transfer.
The Arbitrator accepted Dominion’s argument, and found that Section 9(3) did not apply due to the fact that vehicle Z was a fourth and stationary vehicle. In her opinion, the accident produced a fact scenario that was not contemplated by Section 9(3) or the other provisions of the Fault Determination Rules. She held that she was therefore directed by Rule 5 of the Fault Determination Rules to determine the degree of fault “in accordance with the ordinary rules of law”. Vehicle C was therefore 100 percent responsible for the collision as it set off the chain reaction, and Dominion was successful in its claim for loss transfer.
On appeal Justice Charney reversed the arbitrator’s decision, and found that the accident fell within the circumstances described by section 9(3). In reaching this decision he emphasized that the purpose of the Rules was to apportion liability via an “expedient and summary method”, and that fault was to be determined strictly even if the result was somewhat arbitrary. This purpose as well as the principles of statutory interpretation did not favour a limited application of section 9(3), and would not be well-served by excluding the accident at hand simply because of an additional stationary vehicle was present at the tail end of the chain reaction.
In reaching his decision that Dominion was unsuccessful in its claim for loss transfer as against Kingsway, Justice Charney followed the decision of the Ontario Court of Appeal in State Farm Mutual Automobile Insurance Company v. Old Republic Insurance Company of Canada, 2015 ONCA 699. State Farm v. Old Republic concerned the type of factual situation found in section 9(4), where a commercial heavy vehicle hit a stationary vehicle, which then hit another stationary vehicle, all of which were in the same lane and travelling in the same direction. The Court held that while the commercial heavy vehicle was 100% at fault according to the Rules, the last vehicle to be hit in the chain reaction could not recover against it, or “leapfrog” over the intervening vehicle, based on the terms of Section 9(4). In reaching this conclusion, the Court in State Farm v. Old Republic confirmed that section 9(4) and 9(3) were parallel provisions, to be read consistently with one another. Therefore, the prohibition against leapfrogging applied to both.
Overall, this decision indicates that truly distinguishing factual circumstances are required before section 5 of the Fault Determination Rules will allow for an apportionment of fault in accordance with tort rules. Otherwise, even in the face of an arbitrary and seemingly unfair result, the Fault Determination Rules will be applied strictly to ensure that these disputes are resolved efficiently.