COURT OF APPEAL FOR ONTARIO

CITATION: The Dominion of Canada General Insurance Company v.
    Unifund Assurance Company, 2018 ONCA 303

DATE: 20180327

DOCKET: C63263

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

BETWEEN

The Dominion of Canada General Insurance Company

Applicant (Respondent)

and

Unifund Assurance Company

Respondent (Appellant)

DArcy McGoey, for the appellant

Eric K. Grossman, for the respondent

Heard: September 5, 2017

On appeal from the order of
    Justice Mario D. Faieta of the Superior Court of Justice, dated June 30, 2016,
    with reasons reported at 2016 ONSC 4337, 132 O.R. (3d) 588, allowing an appeal
    from the preliminary decision of Arbitrator Shari L. Novick, dated October 20,
    2015.

van Rensburg J.A.:

A.

OVERVIEW

[1]

This appeal arises in the context
    of a dispute between insurers with respect to the payment of statutory accident
    benefits (SABS), and the determination by the arbitrator of a preliminary
    issue. In this case, the SABS claimant was not notified of the priority dispute
    between the insurers until after arbitration proceedings had been commenced. The
    issue is whether the late notice to the claimant precluded the appellant from
    contesting its liability to pay SABS and from proceeding with the arbitration.

[2]

The arbitrator determined the
    issue in favour of the appellant. This decision was reversed on appeal to the
    Superior Court of Justice. The appeal judge applied a correctness standard of
    review and substituted his own interpretation of the applicable regulation for
    that of the arbitrator.

[3]

For the reasons that follow, I
    would allow the appeal and restore the decision of the arbitrator. As I will
    explain, the appeal judge ought to have applied a reasonableness standard of
    review to the arbitrators decision. Typically, the decisions of SABS
    arbitrators respecting priority disputes are subject to review for
    reasonableness on appeal, even where the principal issue, as here, is a
    question of law. The arbitrator was a specialized decision-maker engaged in
    interpreting her home statute and regulation in the context of the
    determination of a preliminary issue in a priority dispute under the SABS
    regime. The arbitrators interpretation of the requirements of the regulation
    was reasonable, as was her determination that the appellants notice to the
    claimant only after the arbitration proceedings were underway did not bar the
    appellant from pursuing its priority dispute with the respondent.

B.

FACTS

[4]

The parties proceeded with the
    preliminary issue on the basis of an Agreed Statement of Fact.

[5]

Jing Hua Fan, the SABS claimant,
    owns an automobile repair shop. On November 1, 2011 he was injured in an
    accident that occurred while he was test driving a customers vehicle.

[6]

The Dominion of Canada General
    Insurance Company (Dominion)
insured
    the repair shop under a garage policy of insurance. Mr. Fan was also a named
    insured under a motor vehicle liability policy issued by
Unifund Assurance Company (Unifund),
covering his personal vehicle.

[7]

On January 4, 2012 Dominion
    received Mr. Fans application for SABS and began paying him benefits. On
    January 24, 2012 Dominion delivered a notice to Unifund, asserting that Unifund
    was in higher priority to pay Mr. Fans claim under s. 268(2) of the
Insurance Act,
R.S.O. 1990, c. I.8 (the Act). The notice was in the form of a Notice
    to Applicant of Dispute Between Insurers (DBI Notice). At the time, Dominion
    did not send a copy of the DBI Notice to the claimant or otherwise notify him
    of the priority dispute between the insurers.

[8]

Dominion served Unifund with a Notice
    of Commencement of Arbitration on November 5, 2012, initiating arbitration
    proceedings to determine the insurer responsible for paying the claimants SABS.

[9]

After two pre-hearing conference
    calls with the arbitrator, Dominion notified Mr. Fan of the dispute
    between the insurers by letter dated June 23, 2014 that enclosed the DBI Notice.
    The notice informed Mr. Fan of his right to object to the transfer of his
    claim and, if he objected, of his right to participate in any proceeding that
    might take place to determine which insurer was responsible to pay SABS. Mr.
    Fan did not respond to the notice. He attended an examination under oath in
    July 2014. He continued to receive benefits from Dominion. He did not resolve
    his SABS claim with Dominion, and the claim remained open during these
    proceedings.

[10]

At the commencement of the
    arbitration hearing, Unifund made a preliminary objection to the jurisdiction
    of the arbitrator. The objection was based on Dominions failure to notify the
    claimant of the dispute between the insurers within 90 days of its receipt of the
    application for SABS. Unifund argued that such notice was a statutory
    precondition to Dominions claim that Unifund pay the claimants SABS.

C.

REGULATORY PROVISIONS

[11]

The determination of the payor of
    SABS in priority disputes is resolved in accordance with the rules set out in
    s. 268(2) of the Act
.
Section 275(4) of the Act requires insurers to
    refer any unresolved priority dispute to arbitration under the
Arbitration Act,
    1991
, S.O. 1991, c. 17.

[12]

Disputes Between Insurers
, O. Reg. 283/95, governs the procedures to be
    followed by insurers in a SABS priority dispute. The relevant sections of the
    regulation are as follows:

2.1(6) The first insurer that receives a completed
    application for benefits from the applicant shall commence paying the benefits
    in accordance with the provisions of the Schedule pending the resolution of any
    dispute as to which insurer is required to pay the benefits.

3.(1) No insurer may dispute its obligation to pay
    benefits under section 268 of the Act unless it gives written notice within 90
    days of receipt of a completed application for benefits to every insurer who it
    claims is required to pay under that section.

(2) An insurer may give notice after the 90-day
    period if,

(a) 90 days was not a sufficient period of time to
    make a determination that another insurer or insurers is liable under section
    268 of the Act; and

(b) the insurer made the reasonable investigations
    necessary to determine if another insurer was liable within the 90-day period.

(3) The issue of whether an insurer who has not given
    notice within 90 days has complied with subsection (2) shall be resolved in an
    arbitration under section 7.

4.
(1) An insurer that gives notice under section 3 shall
    also give notice to the insured person using a form approved by the
    Superintendent. [the approved form is in the form of the DBI Notice].

5.(1) An insured person who receives a notice under
    section 4 shall advise the insurer paying benefits in writing within 14 days
    whether he or she objects to the transfer of the claim to the insurers referred
    to in the notice.

(2) If the insured person does not advise the insurer
    within 14 days that he or she objects to the transfer of the claim, the insured
    person is not entitled to object to any subsequent agreement or decision to
    transfer the claim to the insurers referred to in the notice.

(3) Subject to subsection 7(5), an insured person who
    has given notice of an objection is entitled to participate as a party in any
    subsequent proceeding to settle the dispute and no agreement between insurers
    as to which insurer should pay the claim is binding unless the insured person
    consents to the agreement or 14 days have passed since the insured person was
    notified in writing of an agreement and the insured person has not initiated an
    arbitration under the
Arbitration Act, 1991
.

6. (1) The insured person shall provide the insurers
    with all relevant information needed to determine who is required to pay
    benefits under section 268 of the Act.

(2) Upon request by the first insurer that receives a
    completed application for benefits, the insured person shall submit to one
    examination under oath for the purpose of determining who is required to pay
    benefits under section 268 of the Act.

(4) The scope of the examination under oath is
    limited to matters that are relevant to determining who is required to pay
    benefits under section 268 of the Act.

7.

(1) If the insurers cannot agree as to who
    is required to pay benefits, the dispute shall be resolved through an
    arbitration under the
Arbitration Act, 1991
initiated by the insurer
    paying benefits under section 2 or 2.1 or any other insurer against whom the
    obligation to pay benefits is claimed.

(2) If an insured person was entitled to receive a
    notice under section 4, has given a notice of objection under section 5 and
    disagrees with an agreement among insurers that an insurer other than the
    insurer selected by the insured person should pay the benefits, the dispute
    shall be resolved through an arbitration under the
Arbitration Act,
    1991
initiated by the insured person.

(3) The arbitration may
    be initiated by an insurer or by the insured person no later than one year
    after the day the insurer paying benefits first gives notice under section 3.

D.

THE ARBITRATORS DECISION

[13]

The parties agreed to the
    arbitration of their priority dispute by Arbitrator Shari L. Novick. In her
    decision dated October 20, 2015 she determined Unifunds preliminary objection
    that Dominion was out of time to pursue the dispute. She concluded that
    Dominion was not precluded from pursuing its priority dispute even though it
    did not send the required notice to the claimant until after the arbitration
    proceeding had been commenced.

[14]

The arbitrator accepted that s. 4
    of the regulation imposes a mandatory obligation on the first insurer who receives
    a completed application to provide notice to the insured person of its
    intention to dispute its obligation to pay benefits.

[15]

The arbitrator determined,
    however, that the requirement that the insurer shall also give notice to the
    insured person does not require such notice to be given within 90 days of
    receipt of the SABS application. She noted that the purpose of the section was for
    claimants to be notified of an ongoing priority dispute between insurers, and to
    be provided with the opportunity to participate in it. Nevertheless, the rights
    provided to claimants to participate in the process are entirely procedural. No
    determination of priority between insurers will affect a claimants entitlement
    to accident benefits, nor would the claimants position on the dispute affect
    its determination, which depends on the provisions of s. 268(2) of the Act.

[16]

More than two years after notice
    was provided to Unifund under s. 3 of the regulation, Dominion gave notice to
    Mr. Fan that it was disputing its obligation to pay benefits. This was approximately
    six months after the first arbitration pre-hearing teleconference was held. Mr.
    Fan received notice while the claim was still open, and as such he had the
    opportunity to participate in the process. The arbitrator acknowledged that
    insurers should ideally provide notice to claimants at the same time as notice
    is given to the other insurer. Even so, Dominions very late notice to Mr. Fan satisfied
    the requirement in s. 4 of the regulation to also give notice of the dispute
    to the claimant. It provided him with the opportunity to participate in the
    process.

[17]

The arbitrator refused to read
    in a 90 day time limit for notice to a claimant that was not spelled out
    explicitly in s. 4. There was a
sensible
    rationale for the 90 day time limit set out in s. 3(1) (subject to an extension
    under s. 3(2)) for giving notice to the second insurer, as various steps and
    investigations must be undertaken by that insurer in order to determine whether
    another insurer may be in priority. There was no such rationale for applying a
    90 day time limit to the requirement to provide notice to a claimant under s. 4
    of the regulation.

[18]

The arbitrator also rejected
    Unifunds alternative argument that the latest point at which notice could be provided
    to a claimant was one year after the notice was given to the other insurer
    under s. 3. According to Unifund, the failure to give notice to the claimant
    within that period would cause the claimant to lose the right to initiate an
    arbitration, which under s. 7(3) of the regulation must be commenced within one
    year of the s. 3 notice.

[19]

The arbitrator accepted that the
    drafters of the regulation intended to provide a right to an insured to
    initiate an arbitration in a priority dispute between insurers (something the
    arbitrator described as extremely rare  if not unprecedented). The right to
    initiate arbitration is referred to in both ss. 5(3) and 7(3) of the regulation.
    The arbitrator noted the inconsistency between the s. 5(3) requirement that an
    insured who objects to a proposed transfer of a claim initiate arbitration
    within 14 days, and the provision in s. 7(3) that an insured may initiate
    arbitration no later than one year after the day the first insurer gives its
    notice to the other insurer under s. 3. She observed that insurers might agree
    to transfer a claim years after the s. 3 notice was given. It would not make
    sense for a claimant to be precluded from maintaining an objection if the
    insurers reached an agreement more than one year after the s. 3 notice was
    provided. She concluded that the language in s. 7(3) would not prohibit a
    claimant who was otherwise validly exercising the right to object to an
    agreement under s. 5(3) from initiating arbitration. The arbitrator rejected Unifunds
    argument based on s. 7(3) that a 90 day deadline for giving notice was
    necessary to protect the claimants participation rights.

E.

APPEAL DECISION

[20]

The arbitrators decision was
    appealed to a judge of the Superior Court. Faieta J. allowed the appeal, after
    applying a correctness standard of review. He concluded that Dominions failure
    to give notice of the priority dispute to Mr. Fan within the same time period
    as notice was required to be given to Unifund was fatal to Dominions priority dispute.

[21]

The appeal judge interpreted the
    regulation as requiring notice to be given to the insured within the same time
    period that was required for notice to the other insurer under s. 3. First, he
    interpreted the word also in s. 4 to require that notice be given in a like
    manner to the notice provided under s. 3. According to the appeal judge, also
    would be meaningless and unnecessary if it did not reference and incorporate
    into s. 4 the only matter addressed in the giving of notice under s. 3
    that was not otherwise specifically addressed in s. 4 (namely, the 90 day time
    limit).

[22]

Second, the appeal judge noted
    that the claimants right to initiate an arbitration must occur within one year
    of the s. 3 notice under s. 7(3). He concluded that this right would be lost if
    the claimant were unaware of the dispute until after the one year time limit had
    passed.

[23]

Finally, the appeal judge rejected
    the claim that the arbitrator could have granted relief from forfeiture under
    s. 98 of the

Courts of Justice Act
, R.S.O. 1990, c. 43
or
s. 129 of the

Insurance
    Act.
He held that there was
nothing in either the

Insurance Act

or the regulation
    that provides for relief from forfeiture in respect of a failure to comply with
    the time limits for the delivery of notice and the initiation of arbitration
    under the regulation.

F.

ISSUES

[24]

Dominion appeals to this court
    with leave. The first issue is whether the appeal judge applied the correct
    standard of review on the appeal of the arbitrators decision. I will explain
    why the applicable standard of review is reasonableness. The second issue is,
    then, whether the arbitrators decision was reasonable. In my view, the
    decision was reasonable and ought not to have been overturned by the appeal
    judge. I will address each issue in turn.

G.

ANALYSIS

(1)

Standard of Review

[25]

The standard of review on the
    appeal to this court of the appeal courts determination of the standard of
    review is correctness:
Dr. Q. v.
    College of Physicians and Surgeons of British
Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226, at para.
    43. Accordingly, no deference is owed to the appeal judges selection of the
    standard of review.

[26]

Nor is this court bound by the
    parties own agreement as to the standard of review. The parties arbitration
    agreement provided for appeals on questions of law on a correctness standard of
    review and appeals on questions of mixed fact and law on a reasonableness
    standard of review. The fact that the parties agreed in the past, or agree at
    the hearing of an appeal, to a standard of review to be applied by a court, is
    not determinative. The applicable standard of review is a question of law to be
    decided by the reviewing court:
Monsanto
    Canada Inc. v. Ontario (Superintendent of Financial Services)
, 2004 SCC 54, [2004] 3 S.C.R. 152, at para. 6;
Intact Insurance Company v. Allstate Insurance Company
    of Canada
, 2016 ONCA 609, 131 O.R.
    (3d) 625, at para. 22.

[27]

The point of departure in
    determining the proper standard of review from the arbitrators decision is the
    statement of this court that the presumptive standard of review for decisions
    of arbitrators determining SABS priority disputes, including where a question
    of law is engaged, is reasonableness:
Intact
, at para. 53.

[28]

The issue in
Intact
was
    whether the SABS claimants, a mother and her two children, were principally
    dependent for financial support on the mothers new partner at the time of the
    accident. Intact argued that the arbitrator committed an extricable legal error
    by importing a permanence requirement into the question of dependence.

[29]

In determining the standard of
    review, LaForme J.A. noted that, while the issue in that case could be
    characterized as one of mixed fact and law and therefore subject to review for
    reasonableness, the same standard of reasonableness would apply assuming the
    issue was an extricable legal question. He observed that there is a
    presumption that the reasonableness standard applies where the decision-maker is
    interpreting its home statute or statutes closely connected to its function. He
    also observed that SABS priority disputes are adjudicated by arbitrators with
    relevant expertise. Finally, he noted that the regulation has put in place a
    distinct regime that efficiently resolves priority disputes between insurers
    while ensuring that beneficiaries receive their benefits promptly, and that the
    arbitrator in this case was a specialized decision-maker:
Intact
, at
    paras. 29-30, 47. LaForme J.A. stated at para. 53 of
Intact
that:

In the unlikely scenario that the
    issue before the insurance arbitrator is an exceptional question [of law]
    (one of jurisdiction, a constitutional question, or a general question of law
    that is both of central importance to the legal system as a whole and outside
    the adjudicators specialized area of expertise), a correctness standard of
    review may be applicable.

[30]

Unifund contends that the proper
    standard of review of the arbitrators decision on what was essentially a
    question of interpretation of a regulation is correctness. Unifund seeks to distinguish
Intact
on the basis that the case involved an arbitrators
    decision on dependency, which was a question of mixed fact and law that
    depended on the factual matrix. Unifund also asserts that the decision of the
    Supreme Court of Canada in
Teal Cedar
    Products Ltd. v. British Columbia
,
    2017 SCC 32, [2017] 1 S.C.R. 688, which was released after
Intact
, supports
    its argument for a correctness standard of review for all questions of law.

[31]

Both of these arguments were
    considered and rejected in this courts recent decision in
Belairdirect
    Insurance v. Dominion of Canada General Insurance Co. (Travelers)
, 2018 ONCA 101, 64 C.C.L.I. (5th) 74 (
Belairdirect
). In that case, Roberts J.A. rejected the
    characterization of
Intact
as a fact-driven dependency case, at para. 36. She
    noted, at para. 38, that [t]
he decision
    in
Intact
focussed on the nature of the decision-maker and, next, on
    the question of whether the decision in issue required the application of the
    specialized expertise of the decision-maker. She referred to this courts
    conclusion, at para. 53 of
Intact
,

that even a question of
    law regarding SABS will generally involve a reasonableness standard of review
    because it requires the application of the specialized insurance arbitrators
    expertise for determination:
Belairdirect
,

at para. 44.

[32]

Unifund refers to the statement in
Teal Cedar Products
,
at para.
    47, that a question of statutory interpretation is normally characterized as a
    legal question. This is not however determinative of the standard of review. In
    the
Belairdirect
case, at para. 37,
Roberts J.A., referring to
Teal Cedar Products
, stated
:

[W]hile the nature of the question
    (whether legal, factual, or mixed) is dispositive of the standard of review
    applicable to appeals from civil litigation judgments by courts, it is not
    dispositive in the context of commercial arbitral awards by specialized
    arbitrators: [T]he mere presence of a legal question does not, on its own,
    preclude the application of a reasonableness review in a commercial arbitration
    context.

[33]

I agree that there is nothing in
    the
Teal Cedar Products
case that would overtake the reasoning in
Intact
and
    the presumptive standard of review of reasonableness for a decision that
    engages a question of law by a SABS arbitrator.

[34]

Indeed, the
Belairdirect
case applied the reasonableness standard of review of
Intact
to a
    question that could be characterized as one of statutory interpretation by a
    SABS arbitrator in a priority dispute: whether a person who was listed as an
    excluded driver was an insured person under s. 3 of the SABS regulation.
    Roberts J.A. concluded that [t]here was no reason to displace the deference
    owed to the arbitrator, who was applying his home statute and his specialized
    expertise to the policy language
:
Belairdirect
,
    at para. 58.

[35]

The two recent decisions of this court,
Intact
and
Belairdirect
,

accordingly provide for a presumptive reasonableness
    standard of review for a question of law determined by an arbitrator within the
    SABS regime. This is subject to an exceptional question of law that may
    require a correctness standard. This brings us to Unifunds final argument - that
    the question here, which requires an interpretation of the requirements in the
    regulation for notice to a claimant, is a general question of law because the
    90 day period operates as a type of limitation period that would exclude the
    priority dispute if it is not met.

[36]

I disagree. Although there was a
    question of statutory interpretation at the heart of the arbitrators decision
    on the preliminary issue, the question before her involved the interpretation
    of her home statute (the priority regulation) in the context of the overall
    SABS regime. The question also involved the specific facts of the case, including
    when notice was given to Mr. Fan and his failure to object to the transfer of
    the claim. No general question of law was engaged here.

[37]

While Unifund seeks to
    characterize the 90 day period as a type of limitation period in default of
    which an arbitration cannot be commenced, it is a time limit that exists within
    a statutory scheme. Its interpretation only affects those who have rights and
    obligations under that scheme. This is not a general question of law that
    transcends the specific regime, or that is both of central importance to the
    legal system as a whole and outside the adjudicators specialized area of
    expertise:
Intact
,

at para. 53. To the contrary, the interpretation issue
    engages a reading of s. 4 in the context of other sections of the regulation,
    and has regard to the objectives of the notice requirement in the context of
    the SABS regime. There is every reason to accord deference to the reasonable
    interpretation of the priority regulation by an arbitrator who has specialized
    knowledge and expertise working within that regime. It is a question of law
    arising specifically in the context of that scheme.

[38]

Accordingly, I conclude that the
    standard of review of the arbitrators decision in this case is reasonableness.
    The appeal judge erred in applying a correctness standard and in
substituting his own interpretation of the regulation
    for that of the arbitrator. He ought to have determined whether the
    arbitrators decision was reasonable, that is, whether
it fell within a range of possible, acceptable
    outcomes which are defensible in respect of the facts and law:
Dunsmuir v.
    New Brunswick
, 2008 SCC 9, [2008] 1 S.C.R. 190, at para. 47
;
Belairdirect
, at para. 56.

(2)

Was the Arbitrators Decision
    Reasonable?

[39]

The arbitrator rejected Unifunds
    preliminary motion to dismiss the priority dispute on the basis of late notice
    of the dispute to the claimant, Mr. Fan. The arbitrator concluded that, while
    Dominion was required to give notice of the priority dispute with Unifund to
    the claimant, there was no prescribed time limit for notice. The notice that
    was given, albeit very late, satisfied the requirement. It permitted the
    participation by Mr. Fan in the proceedings to the extent contemplated by the
    regulation.

[40]

I have set out above a summary of
    the arbitrators analysis. In arriving at her conclusion, the arbitrator considered
    the specific sections of the regulation, the context of the regulation as a
    whole, the interests protected by the SABS regime, as well as the specific
    interests of the insurers and claimant involved in the dispute.

[41]

Unifund asserts that the
    arbitrators interpretation of s. 4 was unreasonable because it does not give
    effect to the two policy objectives behind the regulation. Those objectives are
    the advancement of the consumer protection ends of the SABS legislation, and to
    provide certainty in the determination of priority disputes between insurers.

[42]

I do not agree that the
    arbitrators decision ignores the policy objectives of the regulation. First,
    the most important right of the claimant, not to be prejudiced or delayed in
    the receipt of benefits by the priority dispute between insurers, is
    specifically protected by s. 2. That section requires the first insurer to
    continue paying benefits to the insured pending resolution of the priority
    dispute. The timing of notice to the claimant does not affect this important
    right.

[43]

As for the insureds participation
    rights, they are limited to a right to object to the transfer of the claim, to
    be party to proceedings respecting any transfer, and to approve or object to
    any settlement of the dispute. The resolution of the dispute depends on s.
    268(2) of the Act, and not on any objection or position taken by the claimant.

[44]

The arbitrator reasonably
    characterized the claimants rights as procedural. It was reasonable for the
    arbitrator to conclude that a 90 day time limit was not essential to protect the
    claimants rights to object and participate, which could be protected in other
    ways. In this case for example, the claimants rights were protected by ensuring
    that he received notice and had the opportunity to object before the arbitration
    hearing to determine the priorities dispute was underway.

[45]

As for the policy objective of
    ensuring certainty for insurers in the dispute resolution regime, Unifund
    points to Sharpe J.A.s observation in
Kingsway General Insurance Company
    v. West Wawanosh Insurance Company
(2002), 58 O.R. (3d) 251, at para. 10, that,
    clarity and certainty of application are of primary concern. Insurers need to
    make appropriate decisions with respect to conducting investigations,
    establishing reserves and maintaining records.

[46]

Strict compliance with the time
    limit for notice between insurers is mandated by the provision in s. 3 that, where
    notice to the other insurer(s) is not given in time, the first insurer is
    precluded from disputing its obligation to pay benefits. If there is a dispute
    about whether an extended time limit was required, that issue will be the
    subject of arbitration: s. 3(3). In this case, the rights of the second
    insurer, Unifund, in the priority dispute resolution process were protected by
    its having received timely notice of the SABS claim from the first insurer -
    giving it time to properly evaluate Mr. Fans claim.

[47]

Unifund seeks to read into s. 4 not
    only the time limit for notice between insurers, but also the consequence for
    the failure to give timely notice  the prohibition of the dispute. Section 4
    contains no such time limit or consequence. Whether a claimant is given notice
    of a priority dispute within 90 days of submitting an application for SABS will
    have no impact on the rights of the second insurer. While notice to the second
    insurer serves the important function of permitting it to evaluate the SABS
    claim, notice to the insured serves no function at all in the determination of
    the priority dispute or rights between the insurers. Unifunds preliminary objection
    based on the lateness of the s. 4 notice is not based on any prejudice to its
    own position in the priority dispute arising out of late notice to the claimant.
    Indeed, this interpretation would provide Unifund with a windfall, if, under s.
    268(2), it was the proper insurer to respond to Mr. Fans SABS claim.

[48]

The overriding objective of the
    regulation is to provide a procedure to determine priority disputes. That objective
    would not be furthered, and may well be undermined, by importing a requirement
    that has nothing to do with the determination of the dispute or the rights of
    the parties.

[49]

Unifund also contends that the
    arbitrators decision fails to give effect to the express wording of s. 7(3),
    which requires an arbitration to be commenced by a claimant within one year of
    the s. 3 notice. Unifunds argument, which was accepted by the appeal judge, is
    that the claimants participation rights would be meaningless if the claimant
    was unaware of the dispute until after the one year time limit on initiating
    arbitration of the dispute had passed.

[50]

The arbitrator dealt with this submission
    in some detail. She noted the inconsistency between s. 5(3), which imposes a 14
    day time limit to the insured for commencing an arbitration, after the
    agreement between insurers, and s. 7(3). Giving the claimant notice within 90
    days would not solve the apparent problem of the one year delay expiring after
    the s. 3 notice, but before a settlement was reached. If that were the case, the
    insured could be prevented from commencing an arbitration if he or she objected
    to the settlement. The arbitrator reasonably concluded that the language of s. 7(3)
    would not prohibit a claimant, who was otherwise validly exercising his or her
    right to object to an agreement in accordance with s. 5(3), from initiating
    arbitration.

[51]

The prescribed DBI Notice form appears
    to anticipate that notice will be given to the claimant at or around the same
    time as it is given to the other insured. There is no practical reason why
    notice could not be given at the same time. The question however is whether the
    failure to give such notice in a timely way should preclude the priority claim altogether,
    or whether it should be up to the arbitrator to determine the consequences of
    late notice. The arbitrator in this case concluded that, while there is no time
    limit for notice to be given to a claimant, it will be up to the arbitrator to
    determine whether the notice required by s. 4 has been given too late to permit
    the claimant to exercise the participation rights afforded by the regulation.
    This is a reasonable approach as the arbitrator is well-positioned to safeguard
    those rights and to address any prejudice.

[52]

Here, the insured did receive
    notice before the arbitration hearing commenced, and did not object to the
    transfer of the claim. He was therefore not entitled to further participation
    in the insurers priority dispute. There was no prejudice. The arbitrator
    reasonably concluded that, while the notice was late, the lateness was not an
    impediment to the insurers arbitration of the dispute.

[53]

For all of these reasons, the
    arbitrators decision was reasonable, and ought not to have been overturned on
    appeal.

H.

DISPOSITION

[54]

I would therefore allow the appeal
    and restore the decision of the arbitrator on the preliminary issue in the
    arbitration of the parties priority dispute. I would award costs to the
    appellant in the agreed amount of $10,000, inclusive of applicable taxes and
    disbursements.

K. van Rensburg J.A.

I agree G.R. Strathy
    C.J.O.

I agree G.T. Trotter
    J.A.

Released: March 27, 2018