In the Matter of the Insurance Act, R

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IN THE MATTER OF THE INSURANCE ACT, R.S.O. 1990

c. I.8, s. 275 AS AMENDED

AND IN THE MATTER OF THE ARBITRATION ACT, S.O. 1991,

c. 17, AS AMENDED

AND IN THE MATTER OF AN ARBITRATION

B E T W E E N :

WEST WAWANOSH MUTUAL INSURANCE COMPANY

Applicant

and

FEDERATION INSURANCE COMPANY, LLOYD’S OF LONDON

INSURANCE COMPANY and ALLSTATE INSURANCE COMPANY

Respondents

A W A R D

COUNSEL

Ms. Catherine R. Bruni, Counsel for the

Applicant

Ms. Ruth Henneberry, Counsel for

Federation Insurance Company

Edward J. Chadderton, Esq., Counsel

for Lloyd’s of London Insurance Company

Stuart S. Aird, Esq., Counsel for

Allstate Insurance Company

This Arbitration arises out of a motor vehicle accident which occurred on June 6, 2001 on Highway 169 between the Town of Bala and the Town of Gravehurst.

Chris Wiegand had parked his vehicle on the west side of the road in order to check a connection between his pick-up and trailer.

Dan Voisin had been proceeding southbound on Highway 169. Ahead of him and to his right, was the Wiegand vehicle parked on the west side of Highway 169. There was an intersecting road to the north of where the Wiegand vehicle was stopped.

Malcolm McPherson was proceeding in a westerly direction on the side road to the left of Mr. Voisin. Mr. McPherson pulled out ahead of Mr. Voisin. Mr. Voisin cut to his right to avoid hitting the McPherson vehicle and collided with the stopped trailer of Mr. Voisin. He did not realize that Chris Wiegand was between the trailer and the pick-up truck which had been pulling the trailer.

The Agreed Statement of Facts, sets out that Mr. Wiegand sued Mr. Voisin and Mr. McPherson in tort. Mr. Wiegand also sued his insurance broker, Mike Johnston & Johnston & Associates Insurance Brokers Ltd. since there was an issue as to the coverage on the Wiegand vehicle at the time of the accident.

Mr. Wiegand also sued West Wawanosh for a Declaration as to coverage and for outstanding accident benefits claims.

Mr. Wiegand suffered significant injuries.

The preliminary issue to be determined in this Arbitration is whether or not West Wawanosh provided a policy of insurance to Christopher Wiegand, which policy contained Statutory Accident Benefits coverage at the time of the subject accident of June 6, 2001.

EVIDENCE OF MICHAEL JOHNSTON

Counsel for West Wawanosh Mutual Insurance Company, hereinafter referred to as “West Wawanosh” called Michael Johnston as the only witness to give evidence on behalf of West Wawanosh in this Arbitration.

Michael Johnston stated that he had been an insurance broker since 1971. Starting in 1989 he was employed by Johnston & Assoc. Insurance Brokers Ltd. He was still employed there in 2000 and 2001.

Mr. Johnston stated that the brokerage wrote home, auto, boat and business insurance. There were five brokers at the brokerage.

Mr. Johnston stated that he received a call from Chris Wiegand, who called to obtain a quote for insurance on a vehicle and his business. This was a “cold” call as he had not spoken with Mr. Wiegand previously. Mr. Johnston took the first call. He was told by Mr. Wiegand that his business was hauling garbage from cottages.

Mr. Wiegand was inquiring as to liability and Accident Benefits coverage on various vehicles. He did not seek physical damage coverage for the vehicles. There were five vehicles in all. Mr. Johnston could not recall if he gave quotes in respect of all five vehicles.

At Tab 22 of the Joint Document Brief, marked as Exhibit 1, Mr. Johnston had his notes as to his initial call from Chris Wiegand.

Mr. Johnston obtained some background information as to the nature of the business. He noted that there were a couple of barges and boats. The business had been ongoing for two years and had three employees. There was a discussion about cargo insurance. He noted that this was a seasonal business operating from May to November.

He noted that there had been no business insurance on the business since 1999.

Mr. Johnston did not give a quote during the initial call. He said that the practice was to call back with quotes.

Mr. Johnston was unable to identify the exact date of the initial phone call.

Mr. Johnston stated there were no discussions about putting the insurance on the vehicles and taking the insurance off at various times of year.

Mr. Johnston stated that he telephoned back to Mr. Wiegand with quotes. He could not recall all the discussions that took place during that telephone call. He stated that he was instructed to proceed to put the coverages on.

Mr. Johnston stated that two vehicles were insured. He obtained the serial numbers of a Ford and a Dodge. He was told that both vehicles were owned by Chris Wiegand.

As part of the process, Mr. Johnston filled out an Application for Automobile Insurance. That Application was at Tab 2 of the Joint Document Brief. Mr. Johnston identified his handwriting on the document. He also signed the document. He said that it was filled out on May 2, 2000. At that point, he did not have particulars as to prior insurance on the two vehicles. It was agreed that Mr. Wiegand would get that and forward it to Mr. Johnston. The Application in the name of Chris Wiegand was an Owner’s Form which described vehicles owned by Chris Wiegand. Two drivers were noted on the Application as Chris Wiegand and his father, Jim. They were both noted since they lived together, as it was necessary to list all drivers of the described automobiles in the household or business.

Chris Wiegand was asked about traffic tickets and he stated that he had had two speeding tickets.

There was to be no coverage for damage or loss to the two vehicles.

The estimated premium was $1,917.00 yearly. There was to be a deposit of two months premium, $319.50. Monthly payments were estimated at $159.75.

Mr. Johnston said that he went over everything with Mr. Wiegand. He had no recollection of reviewing ownership of the two vehicles. He stated that Mr. Wiegand signed the Application and gave him the down payment cheque and completed the authorization re monthly payments to be withdrawn from a bank account.

Mr. Wiegand provided a cheque of Island Haul A Way covering the deposit of $319.50.

Mr. Johnston stated that he gave Chris Wiegand a copy of the Application for Insurance and a temporary liability slip to be kept in the vehicle. The temporary slip covered one month between May 2, 2000 and June 2, 2000.

Mr. Johnston had no recall as to any discussions with Chris Wiegand as to removing the vehicles from the road on a seasonal basis.

Mr. Johnston then sent the Application to West Wawanosh. It was noted that he was still seeking information as to prior insurance.

Mr. Johnston ultimately received information from Mr. Wiegand that he had previously been insured with Allstate. He ultimately learned that there had been three speeding convictions instead of two convictions. That resulted in a higher premium.

West Wawanosh sent a statement of account to Chris Wiegand dated May 11, 2000. The total premium was noted on the account and the monthly payments were noted to be $191.76 for June 1, 2000 and monthly payments of $191.79 thereafter. The letter was addressed to Christopher Wiegand at P.O. Box 1288, Gravenhurst, Ontario, P1P 1V4.

A Certificate of Automobile Insurance with the total premium noted and the applicable coverages for the two vehicles was prepared by West Wawanosh, and a copy was sent to Chris Wiegand. Mr. Johnston said that he reviewed it and ensured the vehicle numbers were right. A copy of the Certificate and the account was contained in the files of Johnston & Assoc.

Mr. Johnston said that he never heard from Chris Wiegand once the account and Certificate were sent out.

Mr. Johnston said that when Chris Wiegand called to advise him about prior coverage through Allstate, Mr. Johnston could not recall discussions as to the vehicles being taken off the road at some point.

Mr. Johnston said that he had another discussion with Mr. Wiegand in September of 2000 when a pontoon boat was added to the coverage. Mr. Johnston could not recall discussions then with Mr. Wiegand as to use of his various vehicles.

Mr. Johnston said that his next contact with Mr. Wiegand about the auto policy was in November, 2000. Mr. Wiegand called to advise he wished the road coverage taken off both vehicles as they were parked for the season. Mr. Johnston stated, in his evidence, that this was not discussed with him before.

Mr. Johnston advised Mr. Wiegand that when the coverage was taken off, the policy would be over. He advised Mr. Wiegand that if he purchased minimum fire and theft insurance, the policy would be kept in force and there would not be a need for a new Application when the coverage was “back on”.

It was the evidence of Mr. Johnston that he had discussions with Mr. Wiegand that Mr. Wiegand would have to advise him when he was back and wished the coverage back on. He stated that all that was up to Mr. Wiegand. Mr. Johnston did not take notes as to when the coverage would be put back on. He said to do that would cause a problem. It was not his practice to ever take a date for the reinstatement of coverage.

It was the evidence of Mr. Johnston that Chris Wiegand did not tell him when he would be back in business and need the coverage back on.

It was the evidence of Mr. Johnston that he would have told Mr. Wiegand that Wiegand needed to call his office and request that the coverage be put back on.

He did discuss the premiums with Mr. Wiegand. Because of the down payment, enough might have been paid such that additional payments would not be necessary.

Mr. Johnston said that he understood that the coverage would be suspended because Wiegand’s business was done for the season. He understood that the vehicles were used only for business purposes.

These instructions as to removing coverage were taken over the phone. He did not require notice in writing requesting such coverage changes.

Mr. Johnston stated that he advised West Wawanosh in writing to delete all coverage other than specified perils for the two trucks. His form letter to West Wawanosh was at Tab 12 of the Joint Document Brief.

The notice to West Wawanosh was dated November 22, 2000. It was the evidence of Mr. Johnston that Chris Wiegand called him that day or perhaps the day prior.

It was the evidence of Mr. Johnston that the business of Chris Wiegand did not operate in the winter. Notwithstanding that, there was no change in the business coverage as that had to run for twelve months.

On the document at Tab 12 i.e. the notice to West Wawanosh re the change in coverage, Mr. Johnston noted “Chris to advise when back on road”. It was the evidence of Mr. Johnston that he made that entry on the same day. It was the earlier evidence of Mr. Johnston that he assumed in every case that the insured person would call when coverage was to be put back on. One then wondered why such a note was put on the last mentioned document.

A new Certificate of Automobile Insurance was prepared showing the effective dates of coverage as November 22, 2000 to May 2, 2001. That document showed the change in coverage. A copy of that certificate was sent to Chris Wiegand addressed to him at P.O. Box 1288, Gravenhurst, Ontario, P1P 1V4.

A new Statement of Account was also sent to Chris Wiegand showing a reduction in the total premium and an overpayment. That document was dated November 27, 2000.

By letter dated November 29, 2000, a cheque covering a refund of $199.05 was also sent to Christopher Wiegand at the same address.

Mr. Johnston said that he received no additional contact from Chris Wiegand in November, 2000.

By statement of account dated March 9, 2001, reference was made to an annual premium of only $40.00 plus taxes and service charge resulting in monthly payments of $3.57 on April 1, 2001 and $3.53 per month starting May 1, 2001. A copy of that statement of account was sent to Christopher Wiegand at the same address.

A new Certificate of Automobile Insurance was also sent to Christopher Wiegand noting the restricted coverage on the two vehicles. That certificate covered the policy period between May 2, 2001 and May 2, 2002.

It was the evidence of Mr. Johnston that he reviewed the new Certificate of Automobile Insurance and the statement of account before the documents were sent out.

Accordingly, based on the evidence of Michael Johnston, in May, 2000, Christopher Wiegand would have received a Certificate of Automobile Insurance, two pink liability slips and a statement of account showing the monthly premiums.

Once liability coverage and Accident Benefits coverage was to be taken off the two vehicles, after a request that that be done by Chris Wiegand in November, 2000, Chris Wiegand was a sent a new Certificate of Automobile Insurance, a statement of account, a refund cheque and new liability slips in November, 2000.

It was the evidence of Michael Johnston that in June, 2001 he received a telephone call from Chris Wiegand. Chris was in hospital and was injured. Mr. Johnston got the Wiegand file and stated that there was a problem. He stated that he told Chris Wiegand that he had not called him to tell him to put coverage back on the two vehicles. Mr. Johnston stated that the response of Chris Wiegand was that he was upset and crying. Mr. Johnston stated that Chris Wiegand said that he realized that he had not called and that he had forgotten to do so. Chris Wiegand asked Mr. Johnston about coverage for his injuries. Mr. Johnston told him that he would have coverage as he was an innocent party and coverage would be available under the policy on the vehicle that struck him. Mr. Johnston also told Chris Wiegand to check his father’s policy for possible coverage.