Many insurers are frustrated by the amount of time it takes to get an “accident” determination settled under the dispute resolution process. But, a new ruling by the Ontario Superior Court of Justice is offering a cautionary note to insurers thinking they can circumvent the practice.
In Ayr Farmers Mutual Insurance Company v. Wright, 2015 ONSC 6219, Justice Sweeny was requested to consider the validity of a pre-emptive Application filed under Rule 14 for determining an “accident” simply based on a three-line description. The Insurer, Ayr Farmers, did not participate in FSCO mediation and unilaterally sought an adjudication of the issue outside the dispute resolution process.
To justify its approach, the insurer argued that there have been plenty of cases in the past where the courts had reached a decision based on the Application by the insurer. Justice Sweeny accepted this fact (and acknowledged that such an Application would be recognized under appropriate circumstances) but said that, in this instance, Ayr Farmers was acting unilaterally.
For his part, Wright argued that the jurisdiction for the determination of an accident resides within the dispute resolution process. He also said that the Application filed by the insurer did not contain agreed facts, and so, there were many factual issues in dispute as well.
The court agreed with Wright on all counts and confirmed that, for all such determinations, the dispute resolution process given in the Insurance Act was applicable.
It is important to note that Sweeney’s ruling does not prohibit the use of a Rule 14 application fully. This process has been used plenty of times in the past to benefit both the insurer and the insurer when either (or both) party is seeking an expedited determination, a fact acknowledged by Justice Sweeny himself. But, without the consent of both parties and documents stating agreed facts and sufficient evidence, the court is not likely to entertain an application which tries to circumvent the dispute resolution process because of the reasons touched on in the case.
Unless the circumstances are appropriate, insurers are advised to stick to the dispute resolution process and not look for ways to get round it.
