COURT OF APPEAL FOR ONTARIO

CITATION: Sagos v. Canada (Attorney
    General), 2020 ONCA 360

DATE: 20200608

DOCKET: C67723

Strathy C.J.O., Lauwers and van
    Rensburg JJ.A.

BETWEEN

Peter
    Sagos

Plaintiff (Appellant)

and

Attorney General of Canada and
    Ottawa Police Services Board

Defendants (Respondents)

Peter Sagos, in person

Kevin Palframan, for the respondent
    Attorney General of Canada

Mary Simms, for the respondent Ottawa
    Police Services Board

Heard by videoconference and released orally:
    June 4, 2020

On appeal from the judgment of Justice Robyn
    M. Ryan Bell of the Superior Court of Justice, dated October 2, 2019.

REASONS FOR DECISION

[1]

Mr. Sagos appeals the dismissal on summary
    judgment of his claims against the Attorney General of Canada and Ottawa Police
    Services Board (OPSB) alleging negligent investigation, harassment and other
    wrongs by the RCMP and OPSB.

[2]

Based on the evidence filed on the motion, the
    motion judge found there was no genuine issue requiring a trial in relation to
    either defendant and granted summary judgment dismissing the action with costs.

[3]

Mr. Sagos has provided us with no basis in
    evidence or law on which to interfere with the comprehensive and thorough
    reasons of the motion judge. The motion judge was entitled to weigh the
    evidence, evaluate credibility and draw reasonable inferences from the
    evidence. She did exactly that. The exercise of her fact-finding powers is
    entitled to deference.

[4]

We give no effect to the submissions Mr. Sagos
    sought to raise concerning the actions or inactions of his counsel.

[5]

The appeal is therefore dismissed, with costs to
    each respondent in the amount of $2,500, inclusive of taxes and disbursements.

G.R.
    Strathy C.J.O.

P.
    Lauwers J.A.

K.
    van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Samuels v. Mai, 2020 ONCA 408

DATE: 20200624

DOCKET: C67621

Strathy C.J.O., Lauwers and van
    Rensburg JJ.A.

BETWEEN

Donovan
    Samuels

Plaintiff/Appellant

and

Jen Ling
    Mai
,
Hao Cheung Mark
,
Mark Holdings Inc.
and CPM Realty Corporation

Defendants/
Respondents

David Silver, for the appellant

Pulat Yunusov, for the respondents

Heard: in writing

On appeal from the order of Justice Shaun
    OBrien of the Superior Court of Justice, dated September 23, 2019.

REASONS FOR DECISION

[1]

The appellant appeals an order dismissing his
    action. The order was made on the appellants motion to vary a litigation
    timetable and for summary judgment against the respondents. On that motion, the
    respondents sought an order dismissing the motion to vary the timeline and
    dismissing the appellants action for delay.

[2]

For the reasons that follow, we allow the appeal
    and remit the matter to the Superior Court.

Procedural History

[3]

The action is based on an Agreement of Purchase
    and Sale dated September 6, 2011, for a 12-unit apartment building in Toronto
    for the sum of $1.28 million. The agreement called for a $50,000 deposit and
    was conditional on the buyer, the appellant, obtaining financing. The appellant
    was allegedly unable to do so and purported to terminate the agreement.

[4]

On December 6, 2011, the appellant commenced this
    action for recovery of his $50,000 deposit under the Simplified Procedure: see r.
    76 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194. He claimed
    an additional $50,000 for loss of opportunity to invest the deposit.

[5]

On January 11, 2012, the respondents delivered a
    statement of defence and counterclaim, claiming damages of $100,000 for breach
    of contract. Nine months later, on October 26, 2012, the appellant delivered a
    reply and defence to counterclaim.

[6]

At that point, the action stalled. There is
    little evidence of why that happened, although there is a suggestion that the
    appellants then counsel had a serious illness.

[7]

Whatever the reason, there is no evidence of any
    step having been taken by any party to move the action forward for over four
    years. There were some inconclusive communications between the lawyers
    concerning settlement and other issues, but nothing of significance occurred.

[8]

In March 2016, the appellant retained new
    counsel, but there was no progress in the action for almost a year. In January
    2017, the respondents retained new counsel.

[9]

The appellants counsel requested a status
    hearing to prevent an administrative dismissal. At that hearing, on February
    27, 2017, the Master directed the Registrar not to dismiss the action for delay
    and set a litigation timetable, which called for discoveries and motions to be
    completed and the action to be set down for trial by June 1, 2018. That order
    was not opposed by the respondents.

[10]

In spite of being handed a lifeline by the Master, the appellant
    took no steps to move the action forward.

[11]

On January 26, 2018, the respondents served a motion to dismiss the
    action for delay or, in the alternative, for summary judgment dismissing the appellants
    claim and granting the respondents judgment on their counterclaim.

[12]

Between January and August 2018, the parties delivered affidavits of
    documents and exchanged communications concerning settlement, but once again,
    the appellant did little to move the action forward.

[13]

On March 19, 2018, counsel for the appellant stated an intention to
    bring a cross-motion for summary judgment on the same timeline as the
    respondents motion for dismissal for delay or summary judgment.

[14]

On March 20, 2018, a motion schedule was set in Civil Practice
    Court, leading to a return date for the respondents motion on September 11, 2018.

[15]

On August 10, 2018, having filed no materials on their scheduled
    motion to dismiss the action for delay or for summary judgment, the
    respondents counsel proposed to withdraw their motion to focus on the next
    stage of this action.

[16]

On September 6, 2018, counsel for the respondents advised the court
    in an email that the motion would be proceeding on September 11, 2018, but
    only on costs and the respondents would be seeking a deadline to set this
    action down for trial.

[17]

On September 10, 2018, counsel for the respondents advised the
    appellants counsel, [m]y offer on costs [of the withdrawn motion] will remain
    open until the hearing tomorrow but regardless of your acceptance I will seek a
    new deadline to set this matter down for trial.

[18]

On September 11, 2018, the motion did not go ahead because the matter
    had not been listed. On this day, counsel agreed that the appellants motion
    for summary judgment would be scheduled and a timetable would be set at Civil
    Practice Court. The costs of the respondents withdrawn motion would be
    reserved to the motion judge.

[19]

In the five months thereafter, there were inconclusive settlement
    discussions, but nothing substantive occurred.

[20]

On February 27, 2019, the appellants counsel appeared in Civil
    Practice Court to schedule a motion to vary the timetable set by the Master and
    for summary judgment. The motion, which resulted in the order at issue, was
    scheduled for July 24, 2019.

[21]

Both parties delivered materials on the July 24, 2019 motion. The
    respondents materials addressed both the merits of the claim and counterclaim
    and responded to the appellants request for variance of the timetable. The
    appellant and one of his affiants were cross-examined.

[22]

On September 23, 2019, the motion judge dismissed the appellants
    action for delay and provided written reasons for decision. She did not address
    the respondents counterclaim.

[23]

On October 21, 2019, after the dismissal of the action, the
    respondents served a notice of election to proceed with their counterclaim.

The Motion Judges Reasons

[24]

The motion judge noted the appellants failure to take any steps to
    move the action forward for several years after the exchange of pleadings. Even
    after the retainer of new counsel in March 2016, the appellant took no action
    until bringing a motion to avoid dismissal for delay in January 2017. As a
    result of that motion, the Master set a timetable order. Yet again, the
    appellant took no steps to advance the action, which prompted the respondents
    motion, served in January 2018, to dismiss the action for delay or
    alternatively for summary judgment.

[25]

While the respondents ultimately did not proceed with their motion,
    which was scheduled for September 11, 2018, the appellant took no steps to
    schedule his own motion until February 2019. In the meantime, the parties had
    one phone call and the [appellant] sent one letter in an attempt to settle the
    matter.

[26]

The motion judge found that the eight years delay since the
    commencement of the action was inordinate. The appellant had failed to
    provide a satisfactory explanation for the delay, either before or after the
    Masters timetable order. While courts are prepared to make some allowance for
    delay due to settlement discussions, this was not a satisfactory explanation in
    the circumstances.

[27]

In considering the motion to vary the timetable, the motion judge
    made reference to the test in
Reid v. Dow Corning Corp.
(2001), 11
    C.P.C. (5th) 80 (Ont. S.C.), revd on other grounds (2002), 48 C.P.C. (5th) 93.
    (Ont. Div. Ct.), which was referred to by this court in
Prescott v. Barbon
,
    2018 ONCA 504, 141 O.R. (3d) 616. The motion judge laid out the four
Reid
factors, namely: (1) the explanation for the litigation delay; (2) inadvertence
    in missing the deadline; (3) efforts to move promptly to set aside the
    dismissal; and (4) absence of prejudice to the defendant.

[28]

The motion judge also cited to
Jadid v. Toronto Transit
    Commission
, 2016 ONSC 1176, affd 2016 ONCA 936, dealing with the
    application of the
Reid
factors in a situation where a party comes to
    the court seeking a second lifeline.

[29]

Finally, the motion judge properly noted two points. First, it is
    not necessary to satisfy each part of the
Reid
test. A contextual
    approach requires the weighing of all relevant factors to determine what is
    just in the circumstances:
Marché DAlimentation Denis Thériault Ltée v.
    Giant Tiger Stores Limited
, 2007 ONCA 695, 87 O.R. (3d) 660, at para. 20.
    Second, she was required to balance two principles, namely: (a) that actions
    should be determined on their merits if possible; and (b) that the timely and
    efficient resolution of disputes requires that rules be respected and enforced:
1196158 Ontario Inc. v. 6274013 Canada Limited
, 2012 ONCA 544, 112
    O.R. (3d) 67, at para. 18.

[30]

Considering the
Reid
factors, and applying them with
    heightened scrutiny due to the appellants complete disregard of the timelines
    established by the Master, the motion judge found that the plaintiff:

1.

had not provided a satisfactory explanation for the
    delay;

2.

did not demonstrate that he failed to prosecute
    the action due to inadvertence;

3.

did not move promptly to bring a motion to vary
    the timetable; and

4.

had not proven that the defendants would not
    suffer prejudice.

[31]

The motion judge added that if she were wrong in dismissing the
    action for delay, she would not have decided the summary judgment motion because
    the parties had disclosed the terms of settlement offers in their motion
    materials. She would have referred the matter to another judge.

Submissions on
    Appeal

(1)

Appellant

[32]

The appellant submits that the motion judge erred in dismissing the
    action because she failed to consider whether the order was just under the
    circumstances. She ought to have considered the overall context and history of
    the litigation and should not have dismissed an action that was ripe for
    summary determination on the merits. The order was punitive rather than
    efficient, citing to
Cariocas Import & Export Inc. v. Canadian
    Pacific Railway Limited
, 2015 ONCA 592, 128 O.R. (3d) 143, at para. 54.

(2)

Respondents

[33]

The respondents submit that the appellant was responsible for
    unreasonable delay and failed to proceed with his motion in a timely way,
    particularly after the respondents withdrew their motion on September 11, 2018,
    in the expectation that the plaintiff would move promptly with his. The
    respondents also submit that the nature of their counterclaim is different from
    the claim advanced by the plaintiff. Specifically, the plaintiff sought return
    of the deposit and damages for loss of investment opportunity; whereas, the
    respondents sought damages for failure to close the real estate transaction. The
    respondents submit that this court should not consider the notice of election
    to proceed with the counterclaim, as it amounts to fresh evidence and would
    require a re-weighing of the
Reid
factors.

Discussion

[34]

The motion judges decision is entitled to deference in the absence
    of an error in legal principle or a palpable and overriding error of fact.

[35]

While the motion judge identified the need for a contextual
    analysis, she failed to consider a critical contextual factor: the dismissal of
    the appellants claim left the respondents counterclaim alive. In fact, the
    respondents have evidenced an intention to proceed with their counterclaim.

[36]

We do not accept the respondents submission that the counterclaim
    is somehow different from the claim. It is a mirror image of the claim. If the
    appellants claim had been successful, he would have established that he was
    entitled to refuse to complete the transaction and the respondents
    counterclaim would have failed. Success on the counterclaim, on the other hand,
    would necessarily mean the failure of the claim.

[37]

In
Cardon Developments Ltd. et al. v. Butterfield
, 1999
    BCCA 642, 131 B.C.A.C. 197, at para. 5, Southin J.A. set aside an order
    dismissing a claim for delay because a counterclaim that arose out of the same
    events remained. Since the claim and counterclaim were inextricably wound up
    one with the other and the defendants were planning on proceeding on the
    counterclaim, the interests of justice would not be properly served if the
    claim was not also permitted to proceed.

[38]

As in
Cardon
, it was not in the interests of justice to dismiss
    the appellants claim while permitting the respondents to litigate the very
    same issues in their counterclaim. The order did not promote the timely and
    efficient resolution of the proceeding. While the claim and counterclaim were
    well past their best before dates, neither party had displayed any diligence
    in moving the proceedings forward and there was no evidence of prejudice. When
    the litigation was finally ready for determination, the motion judge erred in failing
    to consider the fact that dismissing the claim would leave the counterclaim
    outstanding, exposing the appellant to liability in relation to the very same
    issue he was litigating.

[39]

We do not think it was necessary for the motion judge to recuse
    herself from hearing the summary judgment motion, had she permitted the
    variation of the timetable. The parties waived privilege over the settlement
    discussions by referring to them in their materials. It does not appear that
    she was asked to recuse herself. Having received the evidence and heard the
    submissions, it would not have been efficient to refer the matter to another
    judge to decide the summary judgment motion.

[40]

We cannot leave this matter without observing that this proceeding could
    have been resolved by a one-day trial. Liability turned on the credibility of
    the appellant and on one or two documents. Proof of the respondents damages,
    if any, should have been uncomplicated. Sometimes a trial is the just, most
    expeditious, and least expensive determination of a civil proceeding on its
    merits, as required by r. 1.04(1).

Disposition

[41]

For these reasons, the appeal is allowed, the dismissal of the
    action and the costs award are set aside, and the matter is remitted to the
    Superior Court for determination. There were no submissions as to costs. In the
    particular circumstances of this case, the costs of this appeal are fixed at $5,000,
    inclusive of disbursements and all applicable taxes, in the cause.

G.R.
    Strathy C.J.O.

P.
    Lauwers J.A.

K.
    van Rensburg J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Taylor v. 864773 Ontario Inc.,
    2020 ONCA 345

DATE: 20200603

DOCKET: C67381

Rouleau, van Rensburg and
    Roberts J.J.A.

BETWEEN

Donald Taylor, Eleanor Hepburn,
    Mary Lou Taylor-Hawley and
Janet Taylor Walker

Applicants
    (Respondents/
Appellants by way of cross-appeal)

and

864773 Ontario Inc.

Respondent
    (Appellant/
Respondent by way of cross-appeal)

Frank
    Sperduti and Graham Splawski, for the appellant/respondent by way of
    cross-appeal 864773 Ontario Inc.

Cameron
    Fiske and William S.M. Cord, for the respondents/appellants by way of
    cross-appeal Donald Taylor, Eleanor Hepburn, Mary Lou Taylor-Hawley and Janet
    Taylor Walker

Heard:
    in writing

On appeal
    from the judgments of Justice Michael R. Gibson of the Superior Court of
    Justice dated July 25, 2019.

REASONS FOR DECISION

A.

Overview

[1]

Pursuant to an option agreement, the appellant had
    a right of first refusal in respect of land owned by the respondents. A dispute
    arose as to whether the appellant had validly exercised its option. The application
    judge declared that the appellants purported exercise of the option was
    invalid because its offer was not for a like amount to a third party offer for
    the purpose of the agreement.

[2]

On appeal, the appellant argues that the
    application judge erred in concluding that its offer was not sufficiently
    like the third-party offer. The respondents cross-appeal, seeking to vary the
    language in the judgments to facilitate the sale to the third party.

[3]

For the following reasons, we dismiss the appeal
    and allow the cross-appeal.

B.

Background

[4]

The subject property is a piece of undeveloped
    farmland in Burlington. The appellant, a neighbouring land owner, has a right
    of first refusal in respect of the sale of the property pursuant to an option
    agreement entered into by the parties legal predecessors. The appellant can
    exercise its option under the agreement by indicating its willingness to
    purchase the property upon the same terms and conditions and for a like
    amount as a third-party offer.

[5]

There have been many unsuccessful attempts to
    sell the land. The respondents now seek to sell the land to a third party
    pursuant to a conditional agreement of purchase and sale with a purchase price
    of $15.3 million. The conditions in the agreement include the purchasers
    satisfaction with the environmental condition and development suitability of
    the property. The respondents notified the appellant of this offer pursuant to
    the terms of the option agreement. The appellant then purported to exercise the
    option by making an offer to buy the property for $10,000,000, with no
    conditions.

[6]

The respondents brought the underlying
    application seeking a declaration that this was an invalid exercise of the
    option and that the option be discharged from title. The appellant brought a
    counter-application, seeking a declaration that it had validly exercised the
    option. Its position was that considering the factual matrix of the property
    and the option, and notably the impediments to development of the property, the
    proposed $10,000,000 purchase price offered without conditions is a like
    amount.

[7]

The application judge allowed the respondents
    application in part and dismissed the appellants counter-application. He
    declared that the option had not been validly exercised because $10,000,000 is
    not a like amount to the $15.3 million offer. The application judge further declared
    that the option to purchase will be extinguished should the transaction be
    completed and at that point the respondents could move for an order directing the
    removal of certain instruments related to the option agreement from title.

C.

Analysis

(1)

The Application Judge Did Not Err in Concluding
    that the Exercise of the Option is Invalid

[8]

The appellant alleges that the application judge
    disregarded two key pieces of evidence. First, the appellant explains that the
    development costs it alleges will have to be incurred to develop the property
    for residential purposes are such that its offer of $10,000,000 without
    conditions is a like amount to the $15.3 million offer received by the
    respondents. The appellant argues that the application judge disregarded this
    evidence solely on the basis that no expert opinion was led in support, despite
    the fact that the evidence filed by the appellant came from its corporate
    vice-president who had first-hand knowledge of the matter. Second, the
    appellant argues that the application judge did not consider the fact that
    numerous prior agreements of purchase and sale had failed to close because of
    the significant development costs that would have to be incurred by prospective
    purchasers.

[9]

We see no reason to interfere with the application
    judges conclusion. He considered all of the relevant evidence and his
    conclusion that the appellant's offer was not in a like amount is well
    supported in the record.

[10]

The third-party agreement of purchase and sale
    in the amount of $15.3 million received by the respondents, states that the
    property is being bought as is without representations or warranties. Nothing
    in the record indicates the purchasers proposed use of the property. Even
    accepting the existence of extraordinary costs associated with developing the
    property, as advanced by the appellant in its supporting affidavit, adjustments
    to the purchase price to account for these costs may not be demanded. It is
    simply speculation as to whether the third-party purchaser will seek to
    renegotiate the price and, if such a renegotiation is attempted, whether it
    will result in a new or modified agreement of purchase and sale or the
    agreement simply falling through. In our view, none of these possibilities
    change the nature of the existing offer.

[11]

Further, we do not accept the appellants
    argument that the application judge did not consider the propertys history of
    failed attempts at sale. These prior offers are referenced in his reasons. The
    fact that prior offers have fallen through as a result of higher than expected
    development costs does not establish the requisite similarity between the purchase
    prices at issue.

[12]

As for the appellants argument that the
    application judge erred by concluding there was insufficient evidence that the
    unconditional offer is worth the difference in price, we disagree. The
    application judge was not required to accept the partisan opinion of similarity
    tendered by the appellants own officer, an opinion premised on the appellants
    proposed use of the property. He properly concluded that absent expert evidence
    confirming the appellants proposed adjustments are necessary and appropriate
    when comparing the two offers, it would not accord with sound commercial
    principles and good business sense, or indeed common sense to make adjustments
    of that magnitude.

[13]

In these circumstances, we see no error in the application
    judges conclusion that the proposed purchase price of $10,000,000 is not a like
    amount to the $15.3 million purchase price being considered by the respondents.
    It may well be that, if the appellant was the party seeking to purchase the
    property, it would demand a reduction in the purchase price equal to the amount
    of the costs it alleges need to be incurred to develop the property for
    residential purposes. The fact remains, however, that the $15.3 million price
    has not been renegotiated and, at this point, nothing in the record indicates
    that it will be.

(2)

The Cross-appeal is Allowed on Consent

[14]

The appellant agrees that, if its appeal is
    dismissed, the respondents cross-appeal regarding the form of the judgments should
    be allowed. As a result, we allow the cross-appeal, set aside paragraph two of
    both judgments and replace them with the following:

THIS COURT DECLARES that the rights of 864773
    Ontario Inc. to purchase the Property (as hereinafter described) pursuant to
    the Option to Purchase dated the 14
th
day of June, 1973, registered against those
    lands and premises known municipally as 1309 Appleby Line, in the City of
    Burlington, Ontario and registered as Instrument No. 364344 as against PIN
    07183-0185 (LT), (the Property), which rights were assigned by Instruments
    Nos. 642060 registered June 3, 1986, 680569 registered November 19, 1987 and
    684283 registered January 15, 1988, are extinguished in their entirety on the
    completion of the purchase of the Property pursuant to an Agreement of Purchase
    and Sale between Taylor, Donald; Hepburn, Eleanor, Walker, Janet Taylor; and
    Taylor-Hawley, Mary Lou as Sellers and John Vitulli Jr. in trust (and without
    personal liability) as Buyer, dated the 17th day of December, 2018, (the
    Agreement of Purchase and Sale) by John Vitulli Jr. in trust (and without
    personal liability) or his Permitted Assignee, as defined in Schedule A,
    paragraph 10 of the Agreement of Purchase and Sale.

THIS COURT ORDERS that immediately following
    the registration of a Transfer/Deed of Land from Donald Taylor, Eleanor
    Hepburn, Janet Taylor Walker and Mary Lou Taylor-Hawley to John Vitulli Jr. in
    trust (and without personal liability) or his Permitted Assignee, showing
    consideration of $15,300,000.00, the Land Registrar for the Regional
    Municipality of Halton (No. 20) (hereinafter referred to as the Land
    Registrar) is hereby directed to delete, discharge or otherwise rule off the
    title abstract for PIN 07183-0185 (LT) Instruments Nos. 364344, registered June
    14, 1973, 642060, registered June 3, 1986, 680569, registered November 19, 1987
    and 684283, registered January 15, 1988, forthwith upon this Order, being
    submitted for registration.

THIS COURT ORDERS that a law statement of a
    lawyer for Donald Taylor, Eleanor Hepburn, Janet Taylor Walker and Mary Lou
    Taylor-Hawley that the Transfer of the Property has been made to either John
    Vitulli Jr. in trust or a Permitted Assignee, as defined in Schedule A,
    paragraph 10 of the Agreement of Purchase and Sale, shall be full and
    sufficient evidence of same having occurred and the Land Registrar shall accept
    such law statement as good and sufficient evidence of same, and is directed and
    shall on the registration of such Transfer of the Property with such law
    statement, delete, discharge or otherwise rule off the instruments referred to
    in paragraph 2 of this Order.

D.

Disposition

[15]

The appeal is dismissed, the cross-appeal is
    allowed and the judgment is varied as described above.

[16]

If the parties cannot agree on costs of this
    appeal and cross-appeal, they may make brief submissions in writing
    electronically to coa.e-file@ontario.ca, not to exceed five pages in length as
    follows: the respondent within ten days of the release of this decision, and
    the appellant within five days thereafter.

Paul
    Rouleau J.A.

K.
    van Rensburg J.A.

L.B.
    Roberts J.A.


COURT OF APPEAL FOR ONTARIO

CITATION:
Travelers
    Insurance Company of Canada v. CAA Insurance Company, 2020 ONCA 382

DATE: 20200615

DOCKET: C66783

Lauwers, Paciocco and Fairburn JJ.A.

IN
    THE MATTER OF the
Insurance Act
, R.S.O. 1990, c. I.8, s. 268 (2)

and
    Ontario Regulations 34/10 and 283/96 thereunder;

AND
    IN THE MATTER OF the
Arbitration Act
, 1991, S.O. 1991, c.17;

AND IN
    THE MATTER OF an Arbitration:

BETWEEN

Travelers
    Insurance Company of Canada

Appellant

and

CAA
    Insurance Company

Respondent

Daniel
    Strigberger and Julianne Brimfield, for the appellant

Jamie R.
    Pollack and Stacey A. Morrow, for the respondent

Heard: November 26,
    2019

On appeal from the judgment of Justice Andra Pollak of the Superior
    Court of Justice, dated September 13, 2018, with reasons reported at 2018 ONSC
    3911.

Lauwers J.A.:

I.

Overview

[1]

The claimant, Patricia Soloway, was catastrophically
    injured in an accident in Nunavut, where she was temporarily employed as a
    nurse supervisor. She was driving a Nunavut-plated vehicle owned by the Government
    of Nunavut and covered by a Nunavut motor vehicle insurance policy issued by Travelers
    Insurance Company of Canada to the Government of Nunavut. Under that policy the
    claimant was entitled to Nunavut statutory accident benefits.

[2]

The claimant was ordinarily resident in Ontario.
    She owned a car plated in Ontario and insured by CAA Insurance Company under
    the terms of the Ontario Standard Automobile Policy (OAP), which included coverage
    for prescribed statutory accident benefits.
Ontario statutory
    accident benefits
are more generous than those of Nunavut.

[3]

Under the terms of her Ontario insurance policy,
    the claimant was contractually entitled to claim Ontario statutory accident
    benefits from CAA. The OAP covers an insured wherever he or she drives in North
    America. Section 1.2 of the prescribed policy form provides:

This policy covers you and other insured
    persons for incidents occurring in Canada, the United States of America and any
    other jurisdiction designated in the Statutory Accident Benefits Schedule, and
    on a vessel travelling between ports of those countries. All of the dollar
    limits described in this policy are in Canadian funds.

The CAA coverage followed the
    claimant to Nunavut. This was the basis on which the claimant was entitled to
    seek statutory accident benefits under the CAA policy, even though the accident
    that led to her injuries occurred in Nunavut and did not involve her
    Ontario-insured car. CAA has been paying those benefits.

[4]

CAA pursued Travelers for reimbursement for some
    or all of the benefits CAA paid to the claimant under Ontarios legislated
    motor vehicle insurance regime as a form of a statutory cause of action:
Unifund Assurance Company of Canada v. Insurance Corporation of
    British Columbia
, 2003 SCC 40, [2003] 2 S.C.R. 63,
    at para. 10,
per
Binnie J.

[5]

CAA succeeded in its claim against Travelers in
    an arbitration under s. 268 of the Ontario
Insurance Act
[1]
.
The arbitrator
    required Travelers to reimburse CAA for the benefits CAA had paid to the
    claimant and to assume responsibility for paying the benefits to her in the
    future. The appeal judge upheld the arbitrators decision, accepting the
    arbitrators analysis. Travelers appeals to this court.

[6]

Nothing in this decision affects the claimants
    entitlement to Ontario statutory accident benefits. The only question is which
    insurer must pay them.

II.

The Issue

[7]

The issue in this appeal is whether CAA is
    entitled under the Ontario
Insurance
    Act
to recover from
Travelers some or all of the statutory
    accident benefits that CAA has paid to the claimant and to compel Travelers to
    pay these benefits to her in the future.

[8]

As I will explain, this issue turns on whether,
    in respect of the Nunavut policy and the accident in Nunavut, Travelers is to
    be considered an Ontario insurer for the purpose of the priority provisions
    of the Ontario
Insurance Act
. I conclude that Travelers is not an
    Ontario insurer for that purpose and is not obliged to indemnify CAA or to assume
    CAAs obligations to the claimant.

III.

The Positions of the
    Parties

[9]

Travelers is prepared to pay what it is obliged
    to pay as statutory accident benefits under the Nunavut policy (for which it
    received premiums at the Nunavut level), but not the higher Ontario statutory
    accident benefits. Travelers argues that the statutory scheme does not oblige
    it to pay the Ontario benefits and that the arbitrator erred in so finding.

[10]

CAA argues that, having
    elected to take the benefits of its presence in the lucrative Ontario insurance
    market, Travelers must also take the burdens, one of which is the possibility
    that it would have to assume financial responsibility under the priority
    provisions of the Ontario
Insurance Act
, as CAA submits the arbitrator correctly found.

IV.

The Arbitrators
    Decision

[11]

The operative decision in this dispute is that of the arbitrator,
    who concluded that
s. 268 of
the
Ontario
Insurance Act
supplied CAA with a
    statutory basis for its claim against Travelers. The arbitrator relied on two
    connections between Travelers and Ontario to do so. First, he found that
    Travelers is an Ontario insurer because it: is licensed to undertake
    automobile insurance in Ontario as outlined in section 224(1) of the
Insurance Act
: at p. 8. Second, he
    found that Travelers is bound by the Power of Attorney and Undertaking (PAU),
    which Travelers signed in 1964
.
He said:

I am satisfied that as a signatory to the PAU, Travelers is
    considered to be an Ontario insurer for the purposes of this dispute between
    insurers and is therefore subject to the provisions of the
Insurance Act
, the Statutory Accident
    Benefits Schedule and its Regulations: at p. 14.

[12]

The
    arbitrator then added a determination of considerably broader application:
I find that a signatory to the PAU essentially becomes an insurer
    in the province or Territory where the claim is brought and with that exposure
    to the liability limits, accident benefit limits, as well as the loss transfer and
    priority obligations, if any, of that jurisdiction: at p. 16. The result is
    that: the priority provisions of the
Ontario
Insurance Act
apply to Travelers: at p. 16.

[13]

The arbitrator then applied s. 268(5.2) of the Ontario
Insurance Act
and stipulated that Travelers was the priority insurer with
    responsibility for paying and adjusting statutory accident benefits to and on
    behalf of the claimant, on the basis that she was the occupant of the vehicle
    Travelers insured at the time of the accident. The arbitrator required
    Travelers to indemnify CAA for the benefits it has paid to or on behalf of the
    claimant together with interest, and to assume the financial burden of future
    payments.

V.

Analysis

[14]

Because this is a statutory appeal that raises
    questions of law, including questions of statutory interpretation, the standard
    of correctness applies:
Canada (Minister of Citizenship and Immigration) v.
    Vavilov
, 2019 SCC 65, at paras. 37, 53. In any event, the arbitrator made
    several serious legal errors that I would consider constitutional,
    jurisdictional, and exceptional, in respect of which deference is not due:
Intact
    Insurance Company v. Allstate Insurance Company of Canada
, 2016 ONCA 609,
    131 O.R. (3d) 625, at para. 53, leave to appeal refused, [2016] S.C.C.A. No.
    392. The standard of correctness has always applied to questions of law:
Progressive
    Homes Ltd. v. Lombard General Insurance Co. of Canada
, 2010 SCC 33, [2010]
    2 S.C.R. 245, at para. 23;
Ledcor Construction Ltd. v. Northbridge
    Indemnity Insurance Co.,
2016 SCC 37, [2016] 2 S.C.R. 23, at para. 46;
MacDonald v. Chicago Title Insurance Co. of Canada
, 2015 ONCA 842, 127
    O.R. (3d) 663, leave to appeal refused, [2016] S.C.C.A. No. 39.

[15]

I now consider whether the arbitrator correctly
    applied
Unifund
to determine that Travelers was an Ontario insurer for
    the purposes of s. 268 and the role of the PAU in reaching that conclusion. In
    my view, the arbitrator erred in his application of the
Unifund
decision.
    His approach to the significance of the PAU would effectively turn
Unifund
on its head.

[16]

The governing principle in
Unifund
is
    that Ontarios insurance laws do not have extraterritorial effect, as Binnie J.
    explained, at paras. 50-51:

It is well established that a province has no
    legislative competence to legislate extraterritorially. If the Ontario Act
    purported to regulate civil rights in British Columbia arising out of an
    accident in that province, this would be an impermissible extraterritorial
    application of provincial legislation.

This territorial restriction is fundamental to
    our system of federalism in which each province is obliged to respect the
    sovereignty of the other provinces within their respective legislative spheres,
    and expects the same respect in return. It flows from the opening words of s.
    92 of the
Constitution Act, 1867
, which limit the territorial reach of provincial legislation:
In each Province
the Legislature may exclusively make Laws in relation to the
    enumerated heads of power. [Emphasis in original; Internal citations omitted.]

[17]

In
Unifund
, the Brennans were insured under an Ontario policy issued by Unifund. While driving a rental car in British Columbia, they were struck by a tractor-trailer insured by the Insurance Corporation of British Columbia ("ICBC") under a British Columbia insurance policy. The Brennans sued in British Columbia and were awarded damages of about $2.5 million. Unifund had paid the Brennans statutory accident benefits under the Ontario policy from the time the Brennans claimed benefits from Unifund until the trial judge's decision, several years later. In the British Columbia action, ICBC, under British Columbia legislation, had deducted the amount of the statutory accident benefits from the trial award payable to the Brennans. Unifund sought reimbursement from ICBC of the benefits it had paid to the Brennans.

[18]

The Supreme Court found that Unifund could not use the provisions of the Ontario
Insurance Act
to recover the statutory accident benefits it had paid. In my view, the result in this case is the same.

[19]

As noted, the arbitrator in this case relied on
    two factors to tie Travelers into the Ontario statutory regime for determining
    priorities. The first was that Travelers had signed the PAU; the second is
    Travelers status as an Ontario insurer. I address each factor in turn.

[20]

The arbitrators reliance on the fact that
    Travelers had signed the PAU is contrary to Binnie J.s reasoning about the role
    of the PAU. He stated in
Unifund
, at para. 100:

The PAU is about enforcement of insurance
policies
, not
    about helping insurance companies, which have been paid a premium for the
    no-fault coverage, to seek to recover in their home jurisdictions their losses
    from other insurance companies located in a different jurisdiction when the
    accident took place in that other jurisdiction, and where the claims arising
    out of the accident were litigated there. [Emphasis in original.]

[21]

The PAU is a complex document containing many
    provisions designed to protect insureds, which Binnie J. discussed at length.
    He quoted and agreed with Professor Vaughan Blacks observation: The
    reciprocal system, of which the PAU is a key part, thus has what might loosely
    be described as a pro-compensation, consumer-protection function:
Unifund
,
    at para. 100, citing V. Black, Interprovincial Inter-Insurer Interactions:
Unifund
    v. ICBC
 (2002), 36 Can. Bus. L.J. 436, at p. 444. The PAUs purpose is to
    protect insureds, not insurers. It therefore offers no assistance to CAA in
    this dispute.

[22]

Accordingly, the arbitrator was not correct in
    his bald assertion that a signatory to the PAU essentially becomes an insurer
    in the province or Territory where the claim is brought and with that exposure
    to the liability limits, accident benefit limits, as well as the loss transfer
    and priority obligations, if any, of that jurisdiction: at p. 16. The use and
    application of the PAU in favour of insureds is context specific. If, for
    example, the claimant had driven the Nunavut vehicle into Ontario and had the
    accident here, Travelers would have had to provide her with statutory accident
    benefits at the Ontario level under the Nunavut policy. That is how the PAU is
    designed to work. But there is no basis for the arbitrators assertion that the
    PAU operates to extend loss transfer and priority obligations between or
    among insurers otherwise liable to compensate an insured under the Ontario
Insurance
    Act
s provisions.

[23]

The second factor the arbitrator relied on to
    tie Travelers into the Ontario priorities regime was Travelers status as an
    Ontario insurer: at p. 16. He rooted his decision in a single statement
    Binnie J. made in the last sentence of para. 12 of
Unifund
:

Section 275(4) of the Ontario Act provides
    that disputes about indemnification are to be resolved by arbitration, pursuant
    to the Ontario
Arbitration Act, 1991
, S.O. 1991, c. 17.
There
    is no doubt that if the appellant were an Ontario insurer, it would be required
    to arbitrate Unifund's claim.
[Emphasis added.]

[24]

Binnie J. did not explain what he meant by the
    term Ontario insurer. This is not a term of art or a technical legal term. The
    arbitrator assumed that Travelers was an Ontario insurer on the evidence
    presented by CAA  that it was licensed to undertake automobile insurance in
    Ontario, as required by s. 224(1) of the Ontario
Insurance Act
, and had
    offices in Ontario.

[25]

In my view, the correct approach is not quite so simple. Like
    Travelers, many of Canadas car insurers are licensed to write car insurance
    here and elsewhere in Canada. Mere licensing, or the presence of an office, does
    not convert these insurers into Ontario insurers for all purposes, nor does it
    make the Ontario
Insurance
    Act
the governing legislation for all of the automobile insurance policies they underwrite.
    Treating mere Ontario licensing as the sole reason to constitute an insurer as
    an Ontario insurer would give Ontario insurance legislation extraterritorial
    effect, which would be contrary to the essential holding in
Unifund
.

[26]

In
    this case, Travelers issued
a Nunavut motor
    vehicle policy
insuring
a Nunavut-plated vehicle owned
    by the Government of Nunavut. The accident occurred in Nunavut. Under that
    policy, which is governed by Nunavut insurance law, the claimant was entitled
    to Nunavut statutory accident benefits.

[27]

There are several reasons to conclude that the
    Ontario
Insurance Act
has no application to the Nunavut policy on the
    facts of this case.

[28]

The first is in the interpretation of the
    legislation. Ontario requires automobiles driven in the province to have valid insurance.
    Ontario-registered cars are usually covered by the prescribed OAP. Those who
    drive a vehicle into Ontario from elsewhere must also have adequate insurance.
    These concepts are captured by the language of the
Ontario
Insurance Act
,
    in particular Part VI, which deals with automobile insurance. Section 224(1)
    provides:

224(1) In this Part,

automobile includes,

(a) a motor vehicle required under
    any Act to be insured under a motor vehicle liability policy

contract means a contract of
    automobile insurance that,

(b) is undertaken by an insurer that
    is licensed to undertake automobile insurance in Ontario, or

(c) is
    evidenced by a policy issued in another province or territory of Canada, the
    United States of America or a jurisdiction designated in the
Statutory Accident
    Benefits Schedule
by an insurer that has filed an undertaking under section
    226.1.

[29]

In
Benson v. Belair Insurance Company Inc.
, 2019 ONCA 840,
148 O.R. (3d) 589, Feldman J.A. said, at para. 41, that the
    phrase required under any Act in s. 224(1) refers only to an Ontario statute:

I say Ontario statutes because s. 241(1)
    refers to any Act, and s. 87 of the
Legislation Act, 2006
, S.O.
    2006, c. 21, Sched. F. states that the words Act and statute, when
    used in an Act or regulation means an Act of the Legislature of Ontario.

[30]

Section 224(1) must be read together with ss.
    226 and 226.1 of the Ontario
Insurance Act
. Section 226 addresses the
    application of Part VI and provides:

226(2)
This Part does not apply to a contract providing insurance in
    respect of an automobile not required to be registered under the
Highway Traffic Act

unless it is insured under a contract
    evidenced by a form of policy approved under this Part. [Emphasis added.]

[31]

Section 226.1 supplies additional context for
    out-of-province insurers. It provides:

226.1  An insurer that
    issues motor vehicle liability policies in another province or territory of
    Canada, the United States of America or a jurisdiction designated in the
Statutory Accident Benefits Schedule
may file an undertaking with the Chief Executive Officer, in the
    form provided by the Chief Executive Officer, providing that the insurers
    motor vehicle liability policies will provide at least the coverage described
    in sections 251, 265 and 268
when the insured automobiles are operated in
    Ontario
. [Emphasis added.]

[32]

These provisions, properly interpreted, include policies
    that are issued in Ontario and policies that are issued in another province
    when vehicles from those jurisdictions are operated in Ontario. They make it
    plain that Part VI of the Ontario
Insurance Act
did not apply to the
    Nunavut vehicle operated by the claimant in Nunavut at the time of the accident
    because the vehicle was not then required to be insured in Ontario.

[33]

How did Ontario statutory accident benefits for the
    Nunavut accident come to be arbitrated under s. 268 of the Ontario
Insurance
    Act
? The purpose of s. 268 is to permit two or more insurers who might
    have responsibility for paying Ontario statutory accident benefits to determine
    responsibility on a set of prescribed priority rules. If the insurers cannot
    agree, then the issue is arbitrated under the
Disputes Between Insurers
regulation.

[34]

Although s. 268 appears to require the insured
    to select a certain insurer from which to claim benefits, that is not how the
    scheme works in practice. The historic refusal of insurers to pay benefits
    before their liability had been established through litigation led to the
    enactment in 1995 of the
Dispute

Between

Insurers
regulation:
Ontario (Finance) v. Echelon General Insurance Company
,
    2019 ONCA 629, 147 O.R. (3d) 1, at para. 12;
Allstate Insurance Company of
    Canada v. Motor Vehicle Accident Claims Fund
, 2007 ONCA 61, 84 O.R. (3d)
    401, at para. 24. The regulation allows the claimant to select the insurer
    that will pay statutory accident benefits and the selected insurer must pay.
    The paying insurer may then initiate an arbitration under the regulation to
    sort out priorities where another insurer is involved. At that point the
    claimant is no longer involved or affected by the outcome; the claimant will
    receive the benefits regardless of how responsibility is allocated between the
    insurers. That is how this case got before the arbitrator.

[35]

But the priority rules stipulated by s. 268 only
    apply if both insurers are subject to those rules. Section 268(1) provides that
    it applies to: Every contract evidenced by a motor vehicle liability policy. To
    understand what this means, one must turn to the definition of contract in s.
    224(1). That section refers to Ontario policies (s. 224(1)(a)), and to policies
    issued extra-provincially by insurers who file an undertaking in Ontario (s.
    224(1)(b)). The extent to which extra-provincial policies are caught by s.
    224(1)(b) is generally limited by s. 226.1 to situations where the vehicle that
    is registered and insured extra-provincially is actually operated in Ontario.
[2]

[36]

Section 226(2) limits the application of the Ontario
Insurance Act
in providing that Part VI
does
    not apply
to a contract providing insurance in respect of an
automobile not required to be registered under the
Highway Traffic Act
 (emphasis added). The Nunavut
Insurance Act
,
R.S.N.W.T. (NU) 1988, c. I-4
contains
    similar provisions: ss. 1(1), 2(2), 2(3), 39, 40, 124(1), 124(3). An insurance
    policy cannot both be governed by Ontario and Nunavut law at the same time. As
    this court clarified in
Benson
, it is a legal misapprehension that
    the
lex loci delicti
[principle] should be applied to a contract and
    statutory interpretation issue involving an Ontario contract and Ontario
    legislation where that legislation specifically directs that Ontario law is to
    apply: at para. 52. By parity of reasoning the same is true with respect to a
    Nunavut insurance policy where the Nunavut legislation clearly states that
    Nunavut law governs the contract.

[37]

I
    note that this conclusion accords with this courts analysis in
Young v. Ontario (Minister of Finance)
(2003), 68 O.R. (3d) 321
    (C.A.). In
Young
, this court concluded
    that a policy of insurance issued in New Mexico was not a policy of insurance
    within the meaning of s. 268. The plaintiff
was catastrophically injured when
    her pick-up truck flipped over in New Mexico, where she resided. She returned
    home to Ontario and sought statutory accident benefits from
t
he Motor Vehicle Accident Claims Fund
, which
    is
the payor of last resort of no-fault accident
    benefits to persons injured in Ontario where there is otherwise no access to
    coverage under a motor vehicle liability policy: at para. 2. This court
    refused relief. As MacPherson J.A. explained, at paras. 31-32:

The respondent's vehicle did not need to be
    registered in Ontario. Nor did the respondent's insurance policy need to comply
    with the mandatory coverage provisions of the Compulsory Automobile Insurance
    Act. The respondent's insurance policy could not be deemed by s. 268(1) of the
    Insurance Act to provide for the statutory accident benefits set out in the
    Schedule. This is because the respondent's vehicle was not being operated in
    Ontario. Moreover, the respondent did not sustain injuries in a motor vehicle
    accident in Ontario. It follows that Part VI of the Insurance

Act, including s. 268, has no
    application to the respondent or her vehicle.

The only way in which the respondent could
    qualify for Ontario statutory accident benefits for an accident in New Mexico
    would have been if she were an insured person in respect of a particular motor
    vehicle liability policy issued in Ontario. In other words, her recourse for
    the payment of Ontario statutory benefits would have been contractual in
    nature. The respondent did not have such a policy, nor was she an insured
    person on any other Ontario policy.

[38]

Accordingly, the arbitrator erred in applying s.
    268 of the Ontario
Insurance Act
to Travelers and to the Nunavut
    policy on the facts of this case.

[39]

The second reason for questioning the application
    of s. 268 of the Ontario
Insurance Act
is that the Ontario legislation
    provides no basis on these facts for managing the inconsistencies in the
    intersection of the statutory insurance schemes of different political entities
    in Canada, nor could it do so constitutionally under
Unifund
. The
    anomalies emerge quickly. In their text,
Insurance Law in Canada
, 4th
    ed (Toronto: LexisNexis Canada, 2018), Craig Brown and Andrew Mercer make the
    following observations in s. 14.5(c)(i) on medical and rehabilitation benefits:

In most jurisdictions (
all except Ontario
), where the alternative source of compensation is another
    automobile no-fault policy,

the
    automobile insurer of the owner of the vehicle involved in the accident pays
    the no-fault benefits. If there are two or more vehicles involved, the
    insurance on each car covers the occupants of that car. If there are two cars
    involved in a collision with a pedestrian, the claim is paid by the insurer of
    the car that created the force which caused the impact.
[Emphasis added.]

[40]

The authors explain their statement that:
the automobile insurer of the owner of the vehicle involved in the
    accident pays the no-fault benefits
 in an instructive
    footnote:

This is made clear in most of the Insurance
    Acts; see Alberta, s. 591(1); New Brunswick, s. 260(1); Nova Scotia, s. 143(1);
    Northwest Territories, s. 161(1). The matter appears to be dealt with in
    Newfoundland (s. 34(3)) and the Yukon (s. 159(3)) by a provision (which also
    appears in addition to those cited above in other Insurance Acts except P.E.I.
    and Nova Scotia) which provides:

(3) The insurance mentioned in paragraph
    (a) of subsection (1) is first loss insurance, and any other automobile
    insurance of the same type available to the injured person or in respect of a
    deceased person is excess insurance only. Although the meaning of this
    provision is not entirely clear, the confusion has been resolved in practice by
    a rule in the Insurance Bureau of Canada Inter-Company Claims Agreement. The
    insurer of the vehicle involved in the accident pays.

In contrast, in Ontario, a claimant's first
    recourse is to his/her own insurer. See Ontario
Insurance
    Act
, s. 268(2). [Internal citations omitted.]

[41]

T
he Nunavut
Insurance Act
has a similar provision
    to the usual provisions outside Ontario and stipulates what happens when more
    than one policy applies:

157(1) Every contract evidenced by a
    motor vehicle liability policy shall provide the benefits set out in subsection
    1 of the Schedule subject to the limits, terms and conditions set out in the
    Schedule.

157(4)

The insurance mentioned in subsection (1) is a first loss insurance,
    and any other automobile insurance of the same type available to the injured
    person or in respect of a deceased person is excess insurance only.

161(1) Where a person entitled to
    benefits provided by insurance under sections 157 and 158, or either of them,

(a) is
    an
occupant

of a motor vehicle involved in an accident,
the
    insurer of the owner of the motor vehicle
is, in the first instance,
liable
    for payment
of the benefits provided by the insurance. [Emphasis added.]

[42]

If
    the claimant had made a claim in Nunavut against her employers policy with
    Travelers, the Nunavut legislation would have designated the Nunavut policy as
    the primary policy. It is not clear how or whether the claimants entitlement
    to coverage under CAAs Ontario insurance policy would have figured in, since
    Nunavut legislation can have no extraterritorial application under
Unifund
. There is no evidence before the court on the
    impact of the Insurance Bureau of Canada
Inter-Company Claims
    Agreement, which

Brown and Mercer mention, on the
    way that insurers privately address the primary and excess coverage issues that
    this legislation and the legislation of other provinces might create.

[43]

Next,
    assuming that s. 268 of the Ontario
Insurance Act
governs in these circumstances, did
    the arbitrator apply the section properly? That question turns on
which of two subsections is applicable, ss. 268(5.1) or (5.2). They
    provide:

(5.1)  Subject to
    subsection (5.2), if there is more than one insurer against which a person may
    claim benefits under subsection (5), the person, in his or her discretion, may
    decide the insurer from which he or she will claim the benefits.

(5.2)  If
    there is more than one insurer against which a person may claim benefits under
    subsection (5) and the person was, at the time of the incident, an occupant of
    an automobile in respect of which the person is the named insured or the spouse
    or a dependant of the named insured, the person shall claim statutory accident
    benefits against the insurer of the automobile in which the person was an
    occupant.

[44]

The arbitrator quoted these subsections and referred
    to s. 3(7)(f) of the
Statutory Accidents Benefits Schedule
, O. Reg.
    34/10, which provides:

An individual who is living and
    ordinarily present in Ontario is deemed to be the named insured under the
    policy insuring an automobile at the time of an accident if, at the time of the
    accident,

(i) the insured automobile is
    being made available for the individuals regular use by a corporation,
    unincorporated association, partnership, sole proprietorship or other entity.

[45]

The arbitrator took this view, at p. 17:

If it were demonstrated that the claimant had
    regular use of the vehicle she was operating at the time of the accident, she
    would be considered a deemed named insured. Being a named insured on a policy
    with CAA and a deemed named insurer under the Travelers policy, the tie
    breaking mechanism of s. 268(5.2) would apply and the insurer of the vehicle in
    which she was an occupant, Travelers, would stand in priority if regular use
    cannot be demonstrated then CAA would stand in priority by reason of s.
    268(2)(i).

[46]

The arbitrator found that: the claimant had regular
    use at the time of the accident and was a deemed named insured under the
    Travelers policy and also a named insured under her policy with CAA: at p.
    19.  He applied s. 268(5.2) and found Travelers to be the priority insurer. I
    note that Travelers did not appeal the arbitrators determination that the
    claimant is deemed to be a named insured under the Nunavut policy analyzed
    under Ontario law. However, I see this as a legal question that must be
    resolved in order to correctly determine the appeal.

[47]

The difficulty with this analysis is that the
    arbitrator assumed that Ontario law was applicable in determining both the
    claimants status under the Nunavut policy and her entitlement to statutory
    accident benefits, without regard to the Nunavut legislation or to the Nunavut
    policy limits. Under the Nunavut policy, the claimant was not a named insured
    and the Nunavut legislation does not include the concept of a deemed named
    insured. If Nunavut legislation had been considered and applied in determining
    the claimants status under the Nunavut policy, the claimant would not be a
    named insured within the meaning of s. 268(5.2). Instead, s. 268(5.1) of
    the Ontario
Insurance Act
would apply. The claimant, in her
    discretion, claimed benefits from CAA, and that choice would govern.

[48]

Further, under Nunavut law, the claimant was
    only entitled to Nunavut statutory accident benefits. As noted, if the claimant
    had been driving the Nunavut vehicle in Ontario at the time of the accident,
    the PAU would have obliged Travelers to pay statutory accident benefits at the
    Ontario rate and not the Nunavut rate, but that is not what happened here. There
    is no legal basis on which the arbitrator could force Travelers to pay more
    than the Nunavut limits under its Nunavut policy. Ontarios
Insurance Act
cannot have extraterritorial application to compel Travelers to accept the
    burden of Ontario statutory benefits in this case, and the terms of the PAU do
    not alter that.

[49]

Both
    the arbitrator and the appeal judge erroneously treated Travelers as an Ontario
    insurer in this case and the Nunavut policy as an Ontario policy. The
    arbitrator and the appeal judge mistakenly looked to the PAU as preventing
    Travelers from taking the position that it was not required to pay Ontario statutory
    accident benefits under the Nunavut policy. As noted, this is contrary to
Unifund

because it would
    constitute an extraterritorial application of Ontario law. Nor is it justified
    under the PAU, which does not have the effect of converting a Nunavut insurance
    contract into an Ontario insurance contract and does not, by its terms, require
    Travelers to pay Ontario statutory accident benefits in this case:
Potts v. Gluckstein
(1992), 8 O.R. (3d) 556 (C.A.), at
    para. 12, leave to appeal refused, [1992] S.C.C.A. No. 42, citing
Corbett v. Co-operative Fire & Casualty Co.
(1984),
    34 Alta. L.R. (2d) 158 (Q.B.), at para. 31,
per
Shannon
    J., citing
MacDonald v. Proctor
(1977), 19
    O.R. (2d) 745 (C.A.), affd [1979] 2 S.C.R. 153.

[50]

CAA submits that this court should apply the
    reasoning in
Primmum Insurance Co. v. Allstate Insurance Co.
, 2010
    ONSC 986, 100 O.R. (3d) 788, affd 2010 ONCA 756,
107 O.R. (3d) 159
, leave to appeal refused, [2011] S.C.C.A.
    No. 13, a case that specifically addresses the application of s. 275 of
    the Ontario
Insurance Act
.

[51]

In
Primmum
, an Ontario resident was
    insured under an Ontario policy issued by Primmum. He was riding his motorcycle
    in North Carolina when he was struck and injured by a pick-up truck insured by
    Allstate under a policy issued in North Carolina. As of 2010, Allstate was
    licensed to provide insurance in Ontario and had an office in Markham, Ontario.
    Allstate argued that s. 275 of the Ontario
Insurance Act
 the loss
    transfer provision  only applied where the accident occur[ed] in Ontario or
    both policies were issued in Ontario and that the section d[id] not apply
    where one of the policies was issued outside of Ontario to cover a vehicle
    licensed and registered outside Ontario, even though it has signed a PAU: at
    para. 22.

[52]

The
Primmum
application judge stated,
    at paras. 20, 28:

If both of the insurers are registered in and
    carry on business in Ontario, they may claim loss transfer, even if the
    accident occurred in a non-loss-transfer jurisdiction such as Vermont:
Royal & Sun Alliance Insurance Co. v. Wawanesa Mutual Insurance
    Co
. (2006), 84 O.R. (3d) 449, [2006] O.J. No. 5131,
    2006 CanLII 42663 (S.C.J.), per Newbould J., who followed Binnie J. in
Unifund
.

In the
Insurance
    Act
, Allstate is an insurer under s. 1 and it
    issues contracts because it is licensed to sell insurance in Ontario under s.
    224(1)(a). The premiums it charges for the insurance or the limits of coverage
    in North Carolina are of no concern to Ontario.

[53]

He therefore determined Allstate was a licensed
    Ontario insurer under the Ontario
Insurance Act
because Allstate met
    the definition of insurer and was licensed to undertake and sell automobile
    insurance in Ontario: at paras. 17, 20. He concluded that Allstate could have
    avoided liability by either deregister[ing] as an Ontario insurance company or
    incorporat[ing] a subsidiary to sell insurance in North Carolina: at para. 29.

[54]

This court
    upheld the
Primmum
decision. In a brief endorsement, this
    court simply quoted Binnie J.s sentence in
Unifund
and held that Allstate is an Ontario
    insurer, accordingly it must arbitrate Primmums claim: at para. 7. In doing
    so, it appears that the court rejected Allstates argument in its written
    submissions that Binnie J.s statement was
obiter
.

[55]

I conclude that
Primmum
is of no
    assistance in this case. It does not touch the earlier determination that the
    arbitrator in this case erred in his interpretation of s. 268 of the Ontario
Insurance

Act
, which was not at issue in that case.
Primmum
dealt only
    with the application of s. 275 of the Ontario
Insurance Act
, the
    underlying purpose of which is distinct from the purpose underlying the
    priority rules in s. 268.
[3]

[56]

Moreover, neither the
Primmum
application judge nor this court explored what Binnie J. meant by Ontario
    insurer, which, as noted earlier, is not a defined term. That exploration
    remains open to the court and has been undertaken in this case.

[57]

For these reasons, I conclude that
Primmum
is not applicable to the factual scenario presented in this appeal.
[4]

Conclusions

[58]

In
    my view, the arbitrator erred in law in finding that Travelers was an Ontario
    insurer required to arbitrate priorities with CAA under s. 268 of the Ontario
Insurance Act
, for the reasons set out above. Further,
    if the arbitrator had been correct in that finding, he misapplied the section by
    failing to give effect to Nunavut law regarding the claimants status and the
    limits on her entitlement to Nunavut benefits under Nunavut legislation. The
    arbitrator should have found that s. 268(5.1) applied so that the
    claimants decision to seek statutory accident benefits from CAA was final and
    binding on CAA.

VI.

Disposition

[59]

I would allow the appeal, set aside both the
    order of the appeal judge and the award of the arbitrator, and issue a
    declaration that Travelers is not liable under s. 268 of the Ontario
Insurance
    Act
to reimburse CAA for the benefits CAA has paid to the claimant or to
    assume responsibility for paying the benefits to her in the future.

[60]

I would award the costs of the appeal to
    Travelers in the agreed amount of $10,000 all-inclusive, reverse the costs
    awards made by the arbitrator and the appeal judge against Travelers, and
    require CAA to pay the same amounts to Travelers.

Released: P.L. June 15, 2020

P.
    Lauwers J.A.

I
    agree. David M. Paciocco J.A.

I
    agree. Fairburn J.A.

[1]

Insurance Act
,

R.S.O. 1990, c. I.8. The arbitration
    took place
under s. 7 of
Disputes Between Insurers
, O. Reg.
    283/95 before Arbitrator Kenneth J. Bialkowski:
CAA Insurance Co. and
    Travelers Insurance Co., Re
(2017), 66 C.C.L.I. (5th) 149.

[2]
I note that
Part VI of the Ontario
Insurance Act
also
    applies to a foreign insured when they are injured in any vehicle driven in
    Ontario through the operation of the PAU:
Healy v. Interboro Mutual
    Indemnity Insurance Company
(1999), 44 O.R. (3d) 404 (C.A.).

[3]

See the discussion by John S. MacNeil in The Enigmatic
    Exception to the Bar Against Subrogation: S. 275 of the Insurance Act
    (2008), 34 Adv. Q. 172 at pp. 175-178.
Section 275 was
    introduced as a limited exception to the prohibition against recovering
    no-fault benefits through subrogation. As Mr.
MacNeil points out, s
. 275 was not intended to re-order the priority rules for payment of
    benefits. Instead, it introduced a statutory indemnity to give effect to a
    fault-based balancing of any inequity introduced by the expanded no-fault
    regime. It does not transfer responsibility for payment of accident benefits
    but permits a partial statutory indemnity in certain cases.

[4]

Travelers did not argue that
Primmum
was wrongly
    decided or
that the
per incuriam
exception should be
    applied. The
Primmum
application judge did not address
Young v.
    Ontario (Minister of Finance)
in
concluding that Allstate was an Ontario insurer within Binnie J.'s meaning in
Unifund
.
I leave the question of whether
Primmum
was correctly decided for
    another day.