The claimant was injured in a motor vehicle accident while the passenger of a motorcycle. The claimant was married, but she and her husband had separated years prior. In fact, the claimant had been in a committed relationship with the operator of the subject motorcycle for the previous 5 years.

The claimant was a named insured on a policy of insurance with Dominion and her husband was a named insured of a Wawanesa policy. The operator of the motorcycle was a named insured of a policy with Intact. The claimant applied to Intact for statutory accident benefits. Intact commenced a priority dispute against Dominion and Dominion put Wawanesa on notice. On May 24, 2019, a hearing was held before Arbitrator Samworth who found that the claimant and her boyfriend were “spouses” for the purposes of the Insurance Act and, as a result, Intact was obliged to pay the claimant’s accident benefits.

Intact appealed the arbitrator’s decision to the Superior Court. Writing for the Court, Justice Lemay engaged in a detailed analysis of the applicable standard of review and recognized a recent, radical shift in judicial review of administrative decision making.

The Court had previously applied a reasonableness standard when considering a private arbitration arbitrator’s interpretation of the word “spouse.” This followed the decision of Intact Insurance Company v. Allstate Insurance Company 2016 ONCA 609 where Ontario’s highest court had carved out two kinds of cases where the presumption of reasonableness was rebutted: where the decision maker at issue and the courts share jurisdiction over the same legal question or where the question is “exceptional,” such as constitutional questions or one of jurisdiction.

However, Justice Lemay was of the view that the Supreme Court of Canada’s recent decision of Canada (Minister of Citizenship and Immigration) v. Vavilov 2019 SCC 65 had changed the analytical framework and set out a new approach to judicial review where the standard applied must reflect the legislature’s intent. In the past, the presumption of reasonableness review was premised on notions of relative expertise of a tribunal and the Supreme Court recognized that where a legislature has not explicitly prescribed that a court is to have a role in reviewing the decisions of that decision maker, there should be a minimum of judicial interference. However, since judicial review is protected by s. 96 of the Constitution Act, administrative decision making cannot be shielded from curial scrutiny entirely. Moreover, a blanket presumption of reasonableness disregards the legislature’s choice to have a more involved role for the courts in a statutory appeal context. The Supreme Court listed two ways in which a legislature can indicate that a standard other than reasonableness will apply. Either the statute may explicitly prescribe a different standard or the legislature may provide for a statutory appeal mechanism.

Justice Lemay reasoned that any appeal of an arbitration flows from section 45 of the Arbitration Act which prescribes that unless the arbitration agreement deals with appeals, a party may only appeal an award to the court on a question of law, with leave.

In the present case, the arbitration agreement permitted any party to appeal a point of fact, law or mixed fact and law, without leave. Hence, the court was bound to apply the appellate standards to a review of the arbitrator’s decision.

Justice Lemay clarified that the appellate standard of review on a question of law is correctness, while, for purely factual errors, the reviewing court must find a “palpable and overriding” error. However, for questions of mixed fact and law, the court must consider whether there is an extricable error of law. If there is an extricable error of law, or a pure error of law in the application of the law to findings of fact, the standard is correctness. If, on the other hand, the error is part of the findings of fact, then a “palpable and overriding” error is necessary for the decision to be reversed.

Justice Lemay determined that the definition of “spouse” is an extricable question of law. Namely, the question in the present case is whether at law the definition of spouse under the Insurance Act is broad enough to capture relationships between unmarried people who maintained separate residences. In the end, Justice Lemay determined that the arbitrator’s decision was both incorrect and unreasonable and allowed Intact’s appeal.

More importantly, with this decision, the Superior Court of Ontario has taken a vital first step in actualizing the goal which the Supreme Court of Canada expressed in Vavilov “…remedying the conceptual and practical difficulties that have made this area of the law challenging for litigants and courts alike.”

Hooman Zadegan is the author of this blog and member of the Loss Transfer and Priority practice group at the firm. If you have a question about this decision or a similar file, please reach out to Hooman at 416-777-5235.