COURT OF APPEAL FOR ONTARIO

CITATION: National Money Mart Company v. 24 Gold Group Ltd.,
    2018 ONCA 812

DATE: 20181010

DOCKET: C64588

Hoy A.C.J.O., Brown and Trotter JJ.A.

BETWEEN

National
    Money Mart Company, carrying on business under

the firm name and style of Money Mart

Plaintiff (Respondent)

and

24 Gold Group Ltd. and Kamel W.L. Hanna

Defendants (Appellants)

John Adair and Sean Husband, for the appellants

Marvin J. Huberman, for the respondent

Heard: May 18, 2018

On appeal from the order of Justice James F. Diamond of
    the Superior Court of Justice, dated October 27, 2017, with reasons reported at
    2017 ONSC 6373, [2017] G.S.T.C. 81.

Brown J.A.:

I.

OVERVIEW

[1]

The central issue on this appeal concerns the entitlement of the
    respondent, National Money Mart Company (Money Mart), to bring an action
    against the appellant, 24 Gold Group Ltd. (24 Gold), for unpaid Goods and
    Services Tax/Harmonized Sales Tax (HST) pursuant to s. 224 of the
Excise
    Tax Act
, R.S.C. 1985, c. E-15 (
ETA
).

[2]

Over a two-year period, 24 Gold purchased from Money Mart approximately
    $12.16 million in unrefined gold. 24 Gold did not pay, and Money Mart did not
    collect or remit, HST on those transactions. Several years later, Canada
    Revenue Agency (CRA) issued reassessments to Money Mart requiring the payment
    of $1,573,903.94 in HST. CRA used part of Money Marts corporate tax payments
    to satisfy the HST due.

[3]

Money Mart thereupon demanded that 24 Gold reimburse it for the HST. 24
    Gold refused. Money Mart commenced this action against 24 Gold and its
    principal, Kamel W.L. Hanna, seeking payment of the HST.

[4]

Money Mart moved for summary judgment. 24 Gold resisted the motion,
    arguing that the action was time-barred. The motion judge granted summary
    judgment against 24 Gold for $1,573,903.94.

[5]

24 Gold appeals. For the reasons set out below, I would dismiss 24
    Golds appeal.

II.

FACTS

[6]

The material facts are not in dispute.

[7]

Between July 1, 2010 and June 30, 2012, Money Mart sold unrefined gold
    to 24 Gold pursuant to an oral agreement of purchase and sale. Money Mart
    charged and 24 Gold paid approximately $12.16 million for the goods supplied.
    Money Mart did not deliver invoices at the time of the various sales.

[8]

The sale of the unrefined gold was a taxable supply within the meaning
    of the
ETA
.

[9]

Sections 165(1) and (2) of the
ETA
require every recipient of a
    taxable supply made in Canada to pay tax in respect of the supply calculated at
    the rate of 5% on the value of the consideration of the supply and, in
    participating provinces, additional tax representing the provincial component
    of HST at the prescribed rate. HST is 13% for a taxable supply in Ontario (the
    federal rate of 5%, plus the Ontario provincial sales tax rate of 8%):
ETA,
Schedule VIII. The tax is payable by the recipient on the earlier of the
    day the consideration for the supply is paid or the day the consideration for
    the supply becomes due:
ETA,
s. 168(1).

[10]

24
    Gold did not pay the tax at the time of the transactions. The record does not
    explain why it did not.

[11]

Nor
    did Money Mart pay the HST.

[12]

In
    2015, the CRA audited Money Marts HST returns for the period from July 1, 2010
    to June 30, 2012. By June 2015 the CRA had issued HST reassessments to Money
    Mart on its sale of unrefined gold to 24 Gold requiring the payment of
    $1,573,903.94 in HST.

[13]

That
    tax obligation was satisfied by the CRA applying part of Money Marts 2016
    corporate tax payments against the reassessed amounts.

[14]

On
    May 31, 2015 Money Mart issued two invoices to 24 Gold requiring payment of the
    $1,573,903.94 in HST. Each invoice identified the consideration for the gold
    sales, as well as the HST payable on the transactions. Each invoice noted that
    the (GST/HST) at 13% was not charged in error and [t]he GST/HST is being
    billed to [24 Gold] as a result of Minister issuing an audit assessment to
    National Money Mart for the failure to charge and remit GST/HST on the
    consideration for the taxable supplies of jewellery.

[15]

Some
    discussions ensued in July 2015 and October 2016 between Money Mart and 24 Gold
    regarding a means by which 24 Gold could pay Money Mart the tax. The
    discussions broke down over the issue of 24 Golds ability to claim an input
    tax credit against such tax.

[16]

Money
    Mart commenced this action in December 2016. In May 2017, it moved for summary
    judgment in the amount of the HST collected by the CRA.

[17]

The
    motion judge granted summary judgment in favour of Money Mart.

[18]

24
    Gold advances a single ground of appeal, which involves the interpretation of
ETA
,
    ss. 223(1) and 224. Section 224 specifies several conditions a supplier must
    meet in order to bring an action against a recipient to recover HST paid by the
    supplier. One condition, set out in s. 223(1), requires the supplier to provide
    the recipient with written disclosure of the tax payable. 24 Gold submits the
    motion judge erred by failing to find that s. 223(1) requires such disclosure
    to be given at the time of the supply transaction. Since Money Mart gave notice
    by the two May 2015 invoices issued well after the transactions, 24 Gold
    contends Money Mart failed to satisfy the pre-condition to suit in s. 223(1).
    As a result, 24 Gold contends the order granting summary judgment must be set
    aside.

[19]

Money
    Mart argues that it is not open to 24 Gold to raise that issue on appeal
    because it was not made before the motion judge.

[20]

Accordingly,
    the appeal raises two main issues. First, is 24 Gold raising a new issue? If it
    is, should this court entertain it? Second, if this court considers the new
    issue, did Money Mart fail to comply with
ETA
, ss. 223(1) and 224,
    thereby barring its action? Before addressing those issues, I shall describe
    the role of ss. 223 and 224 of the
ETA
in the overall statutory scheme
    for the payment, collection, and remittance of HST.

III.

THE STATUTORY SCHEME

[21]

The
ETA
defines a taxable supply as one that is made in the course of a
    commercial activity. A supplier is the person making the supply; the
    recipient includes a person who is liable under an agreement to pay
    consideration for the supply: s. 123(1).

[22]

As
    mentioned, ss. 165(1)-(2) and 168(1) of the
ETA
require every
    recipient of a taxable supply to pay HST in respect of the supply on the
    earlier of when the consideration is paid or becomes due.

[23]

The
    person who makes a taxable supply must collect, as agent for the Crown, the HST
    payable by the recipient in respect of the supply:
ETA,
s. 221(1).
    Section 225 contains the rules for calculating the amount of net tax a person
    must pay during a particular reporting period.

[24]

Section
    224 authorizes a supplier to sue a recipient for tax the supplier remitted but
    did or could not collect from the recipient, if it meets certain conditions.
    The section states:

224. Where a supplier has made a taxable supply to a recipient,
    is required under this Part to collect tax from the recipient in respect of the
    supply,
has complied with subsection 223(1)
    in respect of the supply
and has accounted for or remitted the tax
    payable by the recipient in respect of the supply to the Receiver General but
    has not collected the tax from the recipient, the supplier may bring an action
    in a court of competent jurisdiction to recover the tax from the recipient as
    though it were a debt due by the recipient to the supplier. [Emphasis added.]

[25]

Compliance
    with s. 223(1) is one of the conditions a supplier must satisfy before starting
    a collection action against a recipient pursuant to s. 224. Section 223
    concerns the disclosure of tax by a registrant supplier to the recipient.
    Section 223(1) states:

223 (1) If a registrant makes a taxable supply, other than a
    zero-rated supply, the registrant shall indicate to the recipient, either in
    prescribed manner or in the invoice or receipt issued to, or in an agreement in
    writing entered into with, the recipient in respect of the supply,

(a) the consideration paid or payable
    by the recipient for the supply and the tax payable in respect of the supply in
    a manner that clearly indicates the amount of the tax; or

(b) that the amount paid or payable
    by the recipient for the supply includes the tax payable in respect of the
    supply.

[26]

Money
    Mart did not invoice 24 Gold at the time of each sale. Only after the CRA audited
    Money Marts HST returns did Money Mart send the two May 31, 2015 invoices to
    24 Gold. Each of those invoices indicated the consideration paid by 24 Gold for
    the supply and the tax payable in respect of the supply.

[27]

24
    Gold contends that s. 223(1) requires a supplier to give the notice disclosing
    the tax payable at the time of the supply transaction. If the supplier does
    not, it cannot sue the recipient for the tax pursuant to s. 224.

IV.

FIRST ISSUE: IS 24 GOLD RAISING A NEW ISSUE ON THIS APPEAL? IF IT IS,
    SHOULD THIS COURT ENTERTAIN IT?

(a)

Is 24 Gold raising a new issue on this appeal?

[28]

Money
    Mart submits the sole ground of appeal 24 Gold advances in its new factum is an
    issue that it did not raise below. 24 Gold disagrees. It takes the position
    that the issue was in play below, although it acknowledges that in fairness to
    His Honour, the issue was not well briefed or argued below.

[29]

I
    do not accept 24 Golds submission. A review of its statement of defence, its factum
    before the motion judge, the reasons of the motion judge, its notice of appeal,
    and its first appeal factum reveals that it now seeks to raise a new issue.

[30]

In
    its statement of defence, 24 Gold pleaded two main defences: (i) Money Marts
    claim was barred by a two-year limitation period that 24 Gold contended was
    created by
ETA,
s. 225 (the Section 225 Defence); and (ii) the claim
    also was barred by the two-year limitation period in s. 4 of the
Limitations
    Act
, 2002, S.O. 2002, c. 24, Sched. B (the Limitations Act Defence). Although
    in para. 5 of its statement of defence 24 Gold pleaded that before May 2015
    Money Mart had not provided it with any invoices containing the information
    required by
ETA,
s. 223(1), it did not go on to plead that Money
    Marts non-compliance with s. 223(1) barred it from bringing the action.

[31]

In
    its factum on the summary judgment motion, 24 Gold addressed three legal
    issues: (i) its Section 225 Defence; (ii) the Limitations Act Defence; and
    (iii) an unjust enrichment argument. Its factum did not submit that Money Marts
    action was barred because the supplier had not issued invoices disclosing the
    tax at the time of the transactions.

[32]

The
    motion judge rejected 24 Golds submissions that Money Marts claim was barred
    on the basis of the Section 225 and Limitations Act Defences: at paras. 13, 14
    and 23. The motion judge did not deal with 24 Golds unjust enrichment argument.

[33]

In
    its notice of appeal, 24 Gold states that the motion judge misunderstood its
    Section 225 Defence and erred in rejecting its Limitations Act Defence. Those
    two grounds of appeal formed the subject-matter of its first appeal factum.

[34]

At
    some point after filing its first factum, 24 Gold changed counsel. On April 17,
    2018, it obtained a consent order permitting it to file a new factum and book
    of authorities to replace the factum and book of authorities previously filed
    by the Appellants former counsel.

[35]

In
    its new factum, 24 Gold advances the single ground of appeal described earlier:
    Did the motion judge err in his interpretation of s. 224 and the incorporated
    provisions of s. 223(1) by holding that a supplier can retroactively satisfy
    the obligation to comply with s. 223(1)? As well, the new factum confirms that
    the Limitations Act Defence is not an issue on the appeal. Nor does the new
    factum deal with the Section 225 Defence or the unjust enrichment argument
    advanced below.

[36]

This
    brief procedural history shows that before changing counsel, 24 Gold contended
    that Money Marts s. 224 action was out of time. Now, it takes the position
    that Money Mart started the action without complying with a necessary
    pre-condition specified by s. 224  compliance with s. 223(1). 24 Gold clearly
    is raising a new issue on appeal.

(b)

Should this court consider 24 Golds new issue?

[37]

The
    general principle regarding entertaining new issues on appeal was articulated
    by Weiler J.A. in
Kaiman v. Graham
, 2009 ONCA 77, 245 O.A.C.
    130, at para. 18:

The general rule is that appellate courts will not entertain entirely
    new issues on appeal. The rationale for the rule is that it is unfair to
    spring a new argument upon a party at the hearing of an appeal in circumstances
    in which evidence might have been led at trial if it had been known that the
    matter would be an issue on appeal The burden is on the appellant to persuade
    the appellate court that all the facts necessary to address the point are
    before the court as fully as if the issue had been raised at trial This
    burden may be more easily discharged where the issue sought to be raised
    involves a question of pure law In the end, however, the decision of whether
    to grant leave to allow a new argument is a discretionary decision to be guided
    by the balancing of the interests of justice as they affect all parties
    [citations omitted.]

[38]

Several
    factors favour entertaining the new issue raised by 24 Gold: it involves a pure
    question of law, specifically the interpretation of
ETA
, ss. 223(1)
    and 224; Money Mart was permitted to file a supplementary factum and book of
    authorities, which enabled it to submit materials and commentary about the
    history, interpretation and application of those sections; and the facts
    concerning the supply transactions are not in dispute.

[39]

However,
    Money Mart argues it would be prejudiced if the court entertained 24 Golds new
    issue. Doing so would allow 24 Gold to withdraw an admission that Money Mart
    submits it made in its first appeal factum where, at para. 5(a), 24 Gold stated
    that Money Mart complied with Section 223 of the Excise Tax Act only on May
    31, 2015 when it invoiced [24 Gold] as the recipient for the consideration paid
    and the amount payable for HST.

[40]

To
    the extent that the statement in the first factum constitutes an admission, I
    regard it as an admission of law. The statement assumes that s. 223 does not
    require a supplier to issue an invoice containing the information stipulated in
    the section at the time of a supply transaction. That involves a question of
    law concerning the interpretation of s. 223. A party can withdraw an admission
    of law:
Re Baty
, [1959] O.R. 13 (C.A.), at p. 16; Sidney N. Lederman, Alan
    W. Bryant & Michelle K. Fuerst,
Sopinka, Lederman & Bryant: The Law
    of Evidence in Canada,
5th ed. (Toronto: LexisNexis, 2018), at p. 1388,
    §19.2.

[41]

In
    those circumstances, entertaining 24 Golds new issue will cause no prejudice to
    Money Mart that cannot be compensated for by costs.

V.

SECOND ISSUE: DO SECTIONS 223(1) AND 224 OF THE
ETA
REQUIRE THE
    DISCLOSURE OF THE TAX AT THE TIME OF A SUPPLY TRANSACTION?

(a)

The issue stated

[42]

In
    support of its submission that s. 223(1), properly interpreted, requires the
    invoice or receipt in respect of the supply to be issued to the recipient at
    the time of the supply, 24 Gold advances a long list of arguments:

(i)

the case law is divided on the issue;

(ii)

the use in s. 223(1) of the article the in the phrase the invoice or
    receipt, in contrast to the use of an when referring to an agreement in
    writing, signals, as a matter of logic, that for an invoice to comply with s.
    223(1) it must be issued at the time of the transaction;

(iii)

as a matter of common commercial practice, invoices are issued
    contemporaneously with a transaction, so s. 223(1) should be interpreted in
    that manner;

(iv)

it would be more commercially reasonable to fix the supplier with the
    cost of HST where the parties erroneously believed that HST was not payable on
    a transaction because the supplier likely deals frequently in the type of
    supply and need only determine its taxable status once;

(v)

notice provided after the transaction does not fulfill the purpose of s.
    223(1), which is to give the purchaser an opportunity to consider the
    transactions true cost, namely whether or not the price includes the tax;

(vi)

to interpret s. 223(1) as allowing after-the-fact invoices would create
    a moral hazard by permitting vendors to avoid complying with s. 223(1), thereby
    changing the price for the transaction initially represented by the supplier;

(vii)

such an interpretation also would deny natural justice to recipients
    because they have no ability to participate in assessment proceedings brought
    against the supplier; and

(viii)

uncertainty exists as to whether an input tax credit would be available
    to all recipients in a situation where a supplier issues an after-the-fact
    invoice, so the potential for a recipient to claim an input tax credit does not
    support interpreting s. 223(1) to permit non-contemporaneous invoices.

[43]

I
    propose to deal together with arguments (i) through (v). As I will explain, the
    case law no longer remains divided on the interpretation of s. 223(1), and the
    case law, together with CRA policy and professional commentary, address the
    first five arguments. I shall then consider arguments (vi) through (viii).

(b)

The case law, CRA policy and professional commentary

The case law

[44]

I
    do not accept 24 Golds starting premise that the case law interpreting s.
    223(1) remains divided. While conflicting lower court decisions emerged
    immediately following the introduction of the GST in 1991, a clear
    interpretation of ss. 223(1) and 224 has emerged that recognizes a supplier can
    invoice HST after the fact, subject to any contractual restrictions on doing
    so.

[45]

The
    introduction of the GST in 1991 spawned a number of cases that considered the
    ability of a supplier to recover GST from a recipient on a contract that was
    signed before, but performed or closed after, the GST came into force. Some of
    those cases considered whether giving notice of the tax payable after the initial
    supply contract satisfied s. 223(1).

[46]

One
    of the earliest reported decisions was
390781 Alberta Ltd. v. Mensaghi
,
    [1992] G.S.T.C. 10 (Alta. Prov. Ct.). There, the court reached two conclusions.
    First, the court held that since it was not a term of the contract entered into
    before the GST regime came into force that that the purchaser would pay GST
    over and above the stated purchase price, rectification of the contract to make
    the purchaser responsible for the tax was not available. The court then went on
    to state that
ETA,
s. 223(1) requires a supplier to notify the
    recipient of the tax payable before entering into a transaction. However, that
    statement was made in respect of a contract entered into before the GST regime
    came into effect that was silent as to GST.
Mensaghi
did not involve
    an invoice or other form of notice issued following the supply transaction,
    which is the situation in the present case.

[47]

Many
    of the subsequent cases referred to by the parties that dismissed a suppliers
    action under s. 224 turned not on the timing of the notice given by a supplier,
    but on whether the form of the notice document provided by the supplier met the
    requirements of s. 223(1): see,
Pellizzari v. 529095 Ontario Ltd.
, [1995]
    G.S.T.C. 51 (Ont. Sm. Cl. Ct.), at p. 51-3;
Deep Six Developments Inc. v.
    Kassam
, [1998] G.S.T.C. 36 (B.C.S.C.), at para. 22. Others turned on
    whether the agreement at the time of the supply transaction clearly allocated
    responsibility for GST between the parties:
Dworak v. Kimpton
, [1996]
    G.S.T.C. 97 (B.C.S.C.). In yet another, the supplier had not issued an invoice
    or receipt after the transaction:
Villa Nova Developments v. Hunter
, [1998]
    G.S.T.C. 74 (N.L. Prov. Ct.), at p. 74-2.

[48]

Then
    came the 1996 decision of the New Brunswick Court of Appeal in
OCCO
    Developments Ltd. v. McCauley
, [1996] G.S.T.C. 16 (N.B.C.A.), to date the
    only appellate decision that has considered whether written notice of the tax
    payable given after a supply transaction complies with
ETA,
s. 223(1).

[49]

The
    facts in
OCCO Developments
were typical of a pre/post-GST transition
    case. The recipient signed an agreement to purchase a condominium unit in 1989
    before the GST was enacted. Title did not pass until May 1992, when the GST was
    in force.

[50]

Before
    closing, the vendor asked the purchaser to pay an amount for GST. The purchaser
    did so. Two years later, in 1994, the vendor received a notice of assessment
    stating a further amount of GST was payable. In June 1994, the vendor wrote the
    purchaser asking for payment of the further amount. The purchaser refused. Nor
    did the vendor remit the amount to Revenue Canada, which obtained judgment
    against the vendor for the amount of GST due.

[51]

The
    vendor sued the purchaser pursuant to
ETA
, s. 224 to recover the
    additional amount of GST. The trial judge dismissed the action. Although the
    trial judge held that the vendors post-closing letter to the purchaser
    claiming further GST satisfied s. 223(1), she concluded that the vendor had not
    complied with the further condition in s. 224 that it had accounted for or
    remitted the tax payable by the recipient.

[52]

The
    New Brunswick Court of Appeal allowed the appeal. It dealt with two issues.
    First, the purchaser argued that the trial judge had erred in holding the
    vendor had complied with s. 223(1). The purchaser advanced an argument similar
    to that advanced by 24 Gold in this case: It is [the purchasers] position
    that the amount of GST claimed must be incorporated in the original
    invoice, receipt or agreement, and it cannot be changed subsequently: at
    p. 16-4. In rejecting that submission, Bastarache J.A., writing for the
    majority, stated at p. 16-4:

I do not agree with the very restrictive interpretation given
    to the Act in the above mentioned cases. The Act must be considered as a whole
    and interpreted in a purposive manner in order to give effect to the intention
    of Parliament. It imposes the tax on the recipient of the service, not on its
    supplier. It would therefore be an unreasonable interpretation of s.223(1) to
    limit the sending of a notice of the amount of GST due to documents issued at
    the time the supply was received. My view on this issue is reinforced by the
    fact that the formulation of the obligations in s.223(1) does not reveal any
    intention of Parliament to impose such a restriction. As noted by Alan Shragie
    in "Application of the G.S.T. to Damages and Related Matters",
    Canadian Tax Journal 38 (6) (November-December 1990) 1468 at 1492, it is also
    significant that s.223(1) applies to "registrants" and that this
    categorization cannot extend to persons acting before the coming into effect of
    the GST

[53]

In
    his dissent, Rice J.A. did not quarrel with that conclusion.

[54]

The
    majority and minority parted company over the second issue: the meaning of the
    words accounted for the tax in
ETA,
s. 224. Recall that before
    starting its action, OCCO Developments had not paid the additional GST
    assessed, unlike Money Mart in the present case. Accordingly, there is no need
    to consider the majoritys specific analysis of the words accounted for.

[55]

However,
    other comments made by Bastarache J.A. in the course of dealing with that issue
    assist in understanding the place of ss. 223(1) and 224 in the scheme of the
ETA
.
    At p. 16-5 he wrote, in part:

Section 224 is designed to permit a supplier to obtain payment
    of the amounts of GST it has remitted or is required to remit to Revenue Canada
    as an agent (see: s.221(1)). It seems obvious that where the
Act
provides for assessments by Revenue Canada, it must be deemed to authorize the
    agents of Revenue Canada to collect the moneys they are required to remit as a
    result of the assessments. It would require clear terms to the contrary in
    s.224 to find that Occo is in fact made liable for the payment of the
    additional GST claimed by Revenue Canada because it is precluded from
    collecting the amount in question from the recipient of the supply. This would
    be contrary to s.165(1) and to the purpose of the Act

The effect of the assessment has been a revision of the amount
    owed, not an obligation on Occo to act as though a new supply had been made. I
    would agree with Shragie where he states, at p.1494 of his article, that a
    supplier is able to correct a disclosure deficiency contained in his initial
    document by issuing an invoice or receipt that meets the requirements of s.223.
    This was done in the present case. Nothing in s.224 prevents a supplier from
    claiming additional GST owed following an assessment. The supplier, Occo, has
    made a supply and accounted for the GST. It's determination of the amount owed
    was inaccurate and judged to be too low by Revenue Canada. The result is that
    Dr. McCauley has only paid part of the amount to be remitted by Occo. Section
    224 provides that a supplier can recover the amount of the tax payable, which
    is the total amount claimed by Revenue Canada, and not necessarily the amount
    estimated by the supplier in his first invoice. I therefore find that the
    requirements of s.224 have been met in the present instance and that Occo can
    recover the amount of GST outstanding.

[56]

Counsel
    referred to four cases decided not long after
OCCO Developments
.  The
    first,
Deep Six Developments
, did not refer to
OCCO Developments.
The
    court held, at para. 22, that Revenue Canada correspondence forwarded to the
    purchaser subsequent to the transaction did not meet the requirements of s.
    223(1) because it did not clearly disclose both the amount paid and the tax
    thereon. In contrast, in
Lens Construction Midland Ltd. v. Georgian Bay
    Native Friendship Centre Inc.
, [1998] G.S.T.C. 37 (Ont. Gen. Div.), the
    court held that a suppliers letter demanding payment of GST to a purchaser
    over a year after the transaction had closed satisfied the notice requirements
    of s. 223(1): at p. 37-3.

[57]

OCCO
    Developments
was followed in
Carman v. Jackson
, 1998 ABPC 143, [1999]
    G.S.T.C. 24, where the court found that the delivery of a post-closing revised
    statement of adjustments showing the GST payable satisfied the requirements of
    s. 223(1): at para. 14.

[58]

Then,
    in
Leong v. Princess Investments Ltd.
, [1999] G.S.T.C. 86 (B.C.S.C.),
    the British Columbia Supreme Court applied the reasoning in
OCCO
    Developments
to hold that a notice delivered after the supply transaction
    could satisfy s. 223(1). At para. 27, Dorgan J. wrote:

The authorities appear to favour the view that ss. 223(1)
    exists to enable a purchaser to determine how much tax has been or is payable
    to Revenue Canada.  Consequently, the notice provisions should be construed
    liberally. The provisions in ss. 223(1) contain no reference to notice
    "within a reasonable time". The cases do not turn on how much time
    has passed between the transaction in question and the notification, though
    they are influenced where GST is contemplated by the contract. Notice in the
    form of an invoice, which is defined very broadly, may be provided after the
    fact. The letter of Leong's lawyer dated May 2, 1996 constitutes notice and may
    be considered an invoice in these circumstances.

[59]

Since
    the late 1990s, there have been few reported cases on whether a notice of the
    tax payable given following a supply transaction complies with s. 223(1).
    Counsel did refer to the 2017 decision of the Ontario Superior of Justice in
King
    Road Paving and Landscaping Inc. v. Plati
, 2017 ONSC 557, [2017] G.S.T.C.
    82. The court held that where a contract for goods and services is silent in
    respect of HST, there is an inference that the price does not include HST. In
    the course of its analysis, the court stated, at para. 78:

The case law supports the position that where,
    through oversight or other error, the supplier omits or incorrectly states the
    HST on the contract the recipient of the goods or services remains responsible
    for the full amount of the tax. To conclude otherwise would make the tax
    collector personally liable for the payment of the tax with no right of
    recourse against the tax payor. In this regard I adopt the analysis of Dorgan
    J. in
Leong v. Princess Investments ltd
. and the
    several cases cited therein. [Citations omitted.]

[60]

The
    case law now appears settled, with the prevailing view that expressed by the
    New Brunswick Court of Appeal in
OCCO Developments
 namely, an
    invoice or receipt issued after the supply transaction can meet the
    requirements of
ETA,
s. 223(1).

CRA Policy

[61]

That
    interpretation of s. 223(1) was adopted by the CRA as its policy in 1994,
    before the decision in
OCCO Developments
, and remains its policy today.
    CRA Policy Statement P-116,
Collection of GST, by a Supplier, Where the
    Invoice is Silent on the Tax Payable
, was issued in 1994 and updated in
    1999. The Policy Statement states:

Where there are no contractual or common law restrictions to
    prevent the issuance of amended or additional invoices, the Department will
    continue to accept that the disclosure requirements may be met after the fact.
    This position was adopted since subsection 223(1) of the Act is silent on the
    issue of timing and because many purchasers are agreeable to the extra charge.

[62]

In
    regards to any contractual restrictions, 24 Gold has not taken the position
    that the oral agreements with Money Mart included the tax as part of the
    transaction price. Money Mart raised the issue of the terms of the oral
    agreements in its Statement of Claim by pleading that it was an implied term of
    the agreements that 24 Gold would pay the HST. 24 Gold denied those allegations
    as part of its general blanket denial, but it did not plead specifically that
    it was a term of the contract that HST was included in the transaction prices.
    Its pleaded affirmative defences were much narrower: (i) Money Mart had not
    proved it paid the HST; (ii) the Section 225 Defence; and (iii) the Limitations
    Act Defence. Nor did Mr. Hanna suggest in his affidavit that 24 Gold understood
    the transaction prices included HST.

Professional commentary

[63]

The
    majority in
OCCO Developments
relied on the views expressed by Alan
    Shragie in an article published just prior to the coming into force of the GST,
    Application of the Goods and Services Tax to Damages and Related Matters
    (1990) 38:6 Can. Tax J. 1468. In that article, Mr. Shragie took the position that
ETA
, s. 223(1) permits a registrant to correct a disclosure deficiency
    for purposes of s. 224 by issuing an invoice or receipt that meets the
    disclosure requirements subsequent to the issuance of a deficient initial
    agreement. He offered several reasons for his view: (i) once the consideration
    for the supply becomes due, the recipient is liable for GST whether or not the
    initial contractual document met the s. 223(1) disclosure requirements; (ii) as
    a general rule, all supplies made by a registrant are taxable under the GST
    legislation unless, by way of exception, a supply is designated as exempt;
    (iii) in the case of an oral agreement, there is clearly nothing in section
    223(1) to prevent the supplier from subsequently issuing an invoice or receipt
    that reflects the  consideration payable as well as the  percent tax payable
    in respect of the supply; and (iv) if the supplier is not able to correct a
    disclosure deficiency for purposes of bringing an action, the recipient may
    obtain a windfall: at pp. 1493-1494.

[64]

A
    similar view is expressed by David M. Sherman in
Canada GST Service,
loose-leaf
    (Toronto: Thomson Carswell, 1990) at p. 224-105: Since the purpose of
    subsection 223(1) is merely to ensure that the recipient knows whether GST is
    extra or included, the authors view, consistent with that of the CRA, is
    that the GST can be invoiced after the supply is made.

(c)

Analysis

[65]

Section 223(1) is silent on when a registrant must give disclosure
    of the tax payable to a recipient. The overwhelming weight of the
    jurisprudence, the CRAs Policy Statement P-116, and the professional
    commentary have interpreted that statutory silence to mean that a registrant
    supplier can comply with the s. 223(1) disclosure obligations by delivering an
    invoice or receipt containing the prescribed information after the supply
    transaction.

[66]

I find that interpretation persuasive. I adopt it, accepting the
    reasoning of Bastarche J.A. in
OCCO Developments
, set out at paras. 52 and 55 above, together with that of Mr.
    Shragie and Mr. Sherman. They interpret
ETA
, s.
    223(1) in a manner firmly grounded within the larger purpose, structure and
    workings of Part IX of the
ETA
concerning the
    Goods and Services Tax. Their reasoning answers arguments (i), (ii), (iv) and
    (v) advanced by 24 Gold. While 24 Gold makes additional submissions based on
    commercial practice, those submissions ignore the clear language of the
ETA
that fixes the recipient of a taxable supply with the obligation to
    pay HST in respect of the transaction.

[67]

24 Golds submission that the article the
    preceding the words invoice or receipt in s. 223(1) mandates delivery of the
    tax disclosure notice at the time of the supply transaction strains the
    interpretative implications of a modest article. The article the relied on by
    24 Gold sits in a temporally silent statutory provision which, in turn, is part
    of a tax scheme that charges the recipient with the obligation to pay the tax.
    Accordingly, I do not find the appellants argument persuasive.

(d)

The remaining arguments of 24 Gold

[68]

As
    to 24 Golds remaining arguments  nos. (vi) to (viii) described in para. 42
    above  I would give them no effect.

[69]

First,
    I am not persuaded that interpreting s. 223(1) to allow after-the-transaction
    invoices would create a moral hazard by permitting vendors to avoid complying with
    s. 223(1), thereby changing the price for the transaction initially represented
    by the supplier.

[70]

The parties to a supply transaction can contract
    to have a quoted price be tax-included or tax-extra. If the contract is silent,
    the contract normally is interpreted as treating GST/HST as an extra:
Governors
    Hill Developments Ltd. v. Robert
, [1993] G.S.T.C. 35 (Ont.
    Gen. Div.), at p. 35-2, affirmed in relevant part, [1996] G.S.T.C. 43 (Ont. C.A.);
Lauber c. Reid
, 2016 QCCA 1587, [2016]
    G.S.T.C. 122, at para. 13;
Eco-Zone Engineering Ltd. v. Grand
    Falls-Windsor (Town)
, 2000 NFCA 21, [2000] G.S.T.C. 106, at
    para. 34; David Sherman, ed.,
Practitioners Goods and Services Tax
    Annotated,
37th ed
.
(Toronto: Thomson Reuters, 2018), at p. 486. In response to a collection action
    brought pursuant to s. 224, a recipient can attempt to prove that it was a term
    of the contract that the price included HST. However, 24 Gold did not assert
    such a defence.

[71]

Nor
    am I persuaded that interpreting s. 223(1) as allowing subsequent invoices
    would deny natural justice to recipients because they have no ability to
    participate in assessment proceedings brought against the supplier. It is open
    to recipients to negotiate express terms in their contracts with suppliers that
    allocate the ultimate responsibility for the payment of tax, including
    reassessed tax, as between the parties.

[72]

Finally,
    whether or not any uncertainty exists about the ability of all recipients who
    receive from a supplier a post-transaction notice of tax payable to claim an
    input tax credit has no bearing on the interpretation of s. 223(1). The
    obligation of a recipient to pay HST does not depend upon whether it can claim an
    input tax credit. Section 165(1) imposes an unqualified obligation on a
    recipient to pay HST. While the calculation under
ETA
, s. 225 of the
    net tax payable by a person for a particular reporting period takes into
    account available input tax credits, it does not diminish a recipients
    obligation under s. 165(1) to pay the HST on a taxable supply.

VI.

SUMMARY AND DISPOSITION

[73]

For
    the reasons set out above, I conclude that the two May 31, 2015 invoices issued
    by Money Mart to 24 Gold complied with
ETA
, s. 223(1). Money Mart
    therefore satisfied the conditions in s. 224 to bring this action.

[74]

The
    motion judge rejected the Section 225 and Limitations Act Defences asserted by
    24 Gold. In its second factum, 24 Gold did not challenge those findings. There
    is no dispute that 24 Gold was the recipient of unrefined gold under the series
    of transactions between July 1, 2010 and June 30, 2012. There is also no
    dispute that the HST payable on those transactions was $1,573,903.94, which the
    CRA has collected from Money Mart. In those circumstances, Money Mart is
    entitled to summary judgment against 24 Gold for $1,573,903.94.

[75]

Accordingly,
    I would dismiss the appeal.

[76]

In
    accordance with the agreement of the parties regarding the costs of the appeal,
    I would award Money Mart costs of $20,000, inclusive of disbursements and all
    applicable taxes.

Released: AH Oct 10 2018

David Brown J.A.
I agree. Alexandra Hoy A.C.J.O.
I agree. G.T. Trotter J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Ontario (Finance) v. Elite Insurance Company, 2018
    ONCA 809

DATE: 20181009

DOCKET: C64563

van Rensburg, Pardu and Paciocco JJ.A.

In
    the Matter of the Insurance Act, R.S.O. 1990, c. I.8, as amended, and Ontario
    Regulation 282/95 under the
Insurance Act
, and the
Motor Vehicle
    Accident Claims Act
, R.S.O. 1990, c. M.41;

And
    in the Matter of the
Arbitration Act
, S.O. 1991, c. 17;

And
    in the Matter of an Arbitration:

BETWEEN

Her
    Majesty the Queen in Right of Ontario,

as represented by

the Minister of Finance

Applicant (Respondent)

and

AXA
Insurance
    (Canada) and
Elite Insurance Company

Respondents (
Appellant
)

Eric K. Grossman and Meredith A. Harper, for the
    appellant

Marie Sydney, for the respondent

Heard: April 26, 2018

On appeal from the judgment of Justice Peter J. Cavanagh
    of the Superior Court of Justice, dated July 12, 2017, with reasons reported at
    2017 ONSC 3414, allowing an appeal and dismissing a cross-appeal from a
    decision of Arbitrator Scott Demsen, dated May 12, 2016.

van Rensburg J.A.:

A.

OVERVIEW

[1]

This appeal, which is before the court with leave, arises from an
    insurance priority dispute respecting the payment of statutory accident
    benefits to a claimant who was struck by an uninsured vehicle. The dispute is
    between the appellant, Elite Insurance Company (Elite or the appellant),
    the respondent, Her Majesty the Queen in Right of Ontario as represented by the
    Minister of Finance, who funds the Motor Vehicle Accident Claims Fund (the
    Fund or the respondent), and a third insurer, AXA Insurance (Canada)
    (AXA).

[2]

The priority dispute involving Elite was determined as a preliminary
    issue in the arbitration. At issue was whether a policy issued by Elite and
    insuring the claimant remained in force at the time of the accident after Elite
    purported to give notice of non-renewal. The arbitrator concluded that the
    notice of non-renewal was premature, but that in the circumstances of the case,
    s. 236(5) of the
Insurance Act
, R.S.O. 1990, c. I.8 did not extend
    coverage under the policy. As such, the Elite policy was not in force at the
    time of the accident. On appeal to the Superior Court, the appeal judge
    disagreed, concluding that s. 236(5) extends the existing contract until such
    time as a compliant notice of non-renewal is given, with the effect that the
    claimant remained insured under the Elite policy when the accident occurred.

[3]

For the reasons that follow I would allow the appeal. I see no reason to
    interfere with the reasonable conclusion that the notice of non-renewal was
    premature. As for the question of whether the policy remained in force after
    Elites ineffective notice of non-renewal, while I do not agree with all
    aspects of the arbitrators reasoning, his conclusion that the Elite policy was
    not in force at the time of the accident, supported by his interpretation of s.
    236(5) and its application to the facts of this case, was in my view reasonable
    and ought not to have been overturned by the appeal judge.

B.

FACTS

[4]

The material facts are not in dispute and were largely contained in an
    agreed statement of facts.

[5]

Elite issued Arpad Vadasz (the claimant) an automobile insurance
    policy for a six-month term, from September 20, 2009 to March 20, 2010. The
    policy was renewed for a second six-month term ending September 20, 2010.

[6]

The Elite policy was an Autograph policy, which required
    policy-holders to install a device in their car to record driving behaviour. By
    installing the device, the claimant was entitled to a discount on his policy
    premium. Depending on the information concerning his driving behaviour recorded
    by the device, the claimant could be eligible for further discounts. Although
    he knew he was required to register online to receive the Autograph device, the
    claimant never registered and never received or installed the device.

[7]

During the term of the policy, the claimant communicated with Elite on
    multiple occasions, and asked about the Autograph device. He was told that he
    had not yet registered for the device and that he must do so. He was also told
    that Elite would cancel his policy in September 2010 if he did not register for
    the device.

[8]

Elite sent the claimant a letter (the purported non-renewal notice) by
    registered mail, which he received on August 18, 2010. The letter stated that, effective
    September 20, 2010 at 12:01 a.m., [Elite would be] unable to provide automobile
    insurance on the claimants vehicle. The letter indicated that the reason was Rule
    56 of the Declination Rules that Elites parent company, Aviva Insurance
    Company of Canada, had filed with the Superintendent of Financial Services, as
    required by s. 238 of the
Insurance Act
. Rule 56 was set out in the
    letter:

56. The named insured/applicant has not registered, via the
    Internet, to receive the Autograph data-transmitting device, within 2 previous
    terms (12 months).

[9]

On September 21, 2010, the claimant contacted Elite once again to state
    that he had not received the Autograph device. He was told that he had not
    registered online for the device and that his policy had been cancelled
    effective September 20, 2010. He was directed to the broker that had placed the
    Elite policy, to obtain alternative insurance.

[10]

The
    claimant did not pursue any further coverage with Elite after September 20,
    2010. On or about September 23, 2010, he obtained an automobile insurance
    policy from AXA for the same car that had been insured under the Elite policy.
    He cancelled the AXA policy a short time thereafter.

[11]

In
    July 2011, Elite discontinued the Autograph policy program, with the
    Superintendents approval.

[12]

On
    December 29, 2011, while trying to save a parking spot for a friend, the
    claimant was struck by an uninsured vehicle that left the scene.

[13]

The
    claimant applied for, and received, statutory accident benefits from the Fund.
    The Fund gave notice of a priority dispute to Elite and AXA (as the insurer of
    his friends vehicle). The Fund asserted that Elite was higher in priority
    because Elite had issued a motor vehicle insurance policy to the claimant in
    2009. AXA agreed. Although Elite had purportedly refused to renew the policy in
    September 2010, the Fund claimed that its notice of non-renewal to the claimant
    was invalid because it did not comply with ss. 236 and 238 of the
Insurance
    Act
and that, pursuant to s. 236(5) of the
Insurance Act
, the
    Elite policy had not been terminated and remained in force in December 2011
    when the accident occurred.

[14]

The
    matter was referred to arbitration. The parties agreed that the preliminary
    issue to be resolved was whether the Elite policy was in force at the time of
    the December 29, 2011 accident. AXA participated in the arbitration but not the
    subsequent appeals to the Superior Court and to this court.

C.

RELEVANT STATUTORY PROVISIONS

[15]

The
    relevant provisions of the
Insurance Act
are as follows:

236. (1) If an insurer does not intend to renew a contract
    or if an insurer proposes to renew a contract on varied terms, the insurer
    shall,

(a) give the named insured not less
    than thirty days notice in writing of the insurers intention or proposal; or

(b) give the broker, if any,
    through whom the contract was placed forty-five days notice in writing of the
    insurers intention or proposal.

(2) Subject to subsection (4), a broker to whom an insurer has
    given notice under clause (1)(b) shall give the named insured under the
    contract not less than thirty days notice in writing of the insurers intention
    or proposal.

(3) Notices given under subsections (1) and (2) shall set out
    the reasons for the insurers intention or proposal.

(4) Where, before a broker is required to have given notice to
    a named insured under subsection (2), the broker places with another insurer a
    replacement contract containing substantially similar terms as the expiring
    contract, the broker is exempted from giving notice under subsection (2).

(5) A contract of insurance is in force until there is
    compliance with subsections (1), (2) and (3).

(6) This section does not apply to prescribed types of
    contracts in prescribed circumstances.

238. (1) An insurer shall not decline to issue, terminate
    or refuse to renew a contract or refuse to provide or continue a coverage or
    endorsement, except on a ground filed with the Superintendent under this
    section.

[16]

In
    accordance with s. 238(1), Elites parent company filed Declination Rules with
    the Superintendent. The relevant portions are as follows:

If a client does not qualify for the Autograph program, for a
    reason described below, insurance coverage will be offered through another
    member of the Aviva group of companies, subject to that members eligibility
    requirements, and also provided that the requesting broker carries a valid
    contract with another member of the Aviva group of companies.

The Insurer will decline to issue, terminate, or refuse to
    renew a contract where:

54. The Insurer, for any reason, suspends the Autograph
    program, following approval from the Financial Services Commission of Ontario.

55. A policy term is other than 6 months in duration.

56. The named insured/applicant has not registered, via the
    Internet, to receive the Autograph data-transmitting device, within 2 previous
    terms (12 months).

D.

ARBITRATORS DECISION

[17]

The
    priority dispute was referred to a single arbitrator selected by the parties, under
    the
Arbitration Act, 1991
, S.O. 1991, c. 17. In considering the
    preliminary issue, the arbitrator was required to determine first, whether the
    notice of non-renewal was valid; and second, if it was invalid, whether the
    Elite policy remained in force at the time of the accident.

[18]

On
    the first issue, the arbitrator concluded that the August 12, 2010 notice of
    non-renewal was invalid because it was premature. He accepted the Funds
    argument that Rule 56, read in its grammatical and ordinary sense, required the
    non-renewal notice to be sent after 12 months  that is, after the second term
    of the policy had ended without the insured having registered to receive the
    Autograph device. The second term was not complete until September 20, 2010.
    The grounds for non-renewal did not exist at the time the notice was sent and
    the notice of non-renewal was therefore not compliant with ss. 236 and 238 of the
Insurance Act
.

[19]

On
    the second issue, the arbitrator considered s. 236(5) in the light of the
    parties conduct and common law principles.

[20]

He
    accepted the Funds argument that, in the absence of an effective non-renewal
    notice, s. 236(5)

applied to automatically renew the policy.
[1]
However, he did not accept that, unless a proper s. 236 non-renewal notice was
    given, the policy would renew indefinitely on each anniversary date of the
    policy term no matter what occurred after the initial automatic renewal: at p.
    24. Rather, referring to the Supreme Courts decision in
Patterson v.
    Gallant
, [1994] 3 S.C.R. 1080, he concluded that each renewal represents a
    new contract with its own offer and acceptance and that, in the absence of
    agreement between the parties, the policy would renew for at most one more
    term: at p. 37.

[21]

The
    arbitrator stated that the common law principles of contract law apply to
    insurance contracts unless specifically excluded by legislation. He therefore
    considered whether, notwithstanding the ineffective notice of non-renewal,
    there was a mutual intention to continue the policy. The arbitrator said that
    events which occurred after the September 20, 2010 disputed renewal date are
    relevant to the issue of whether the Elite policy was still in force as of the
    December 29, 2011 accident date: at p. 26. The arbitrator found that, although
    the notice was invalid for s. 236 purposes, there was no doubt the claimant
    received the notice and understood Elite did not intend to insure him under its
    policy beyond September 20, 2010. The claimant decided to end his insurance
    relationship with Elite and to pursue insurance coverage with a different
    insurer. The arbitrator concluded that there was a mutual intention to
    terminate the relationship: at pp. 35-36.

[22]

The
    arbitrator stated that, alternatively, the claimant effectively repudiated his
    contract with Elite when he failed to make any effort to comply with the
    essential conditions of the contract and when he secured replacement coverage.
    According to the arbitrator, the policy ended no later than March 20, 2011. At
    p. 36 he said:

In any event, in my opinion,
    putting the automatic renewal argument at its strongest, the s. 236 (5)
    consequence of Elites invalid non-renewal notice is that the claimants policy
    automatically renewed on September 20, 2010 because at that point it was only
    the insurer Elite who had expressed the intention to end the contractual
    relationship. It was not until a few days after September 20, 2010 that there
    was a mutual intention to end the contractual relationship.

[23]

The
    arbitrator concluded that s. 236(5) does not have the effect of making the automobile
    insurance contract continue indefinitely where the parties are not
ad idem
,
    or where they have mutually indicated an intention to end any contractual
    relationship which existed: at pp. 36-37.

[24]

At
    p. 40 of his decision, the arbitrator held that, in the alternative, the Elite
    policy was not in force on December 29, 2011 because Elite had terminated the
    entire Autograph policy program months before:

In light of this, it seems to me
    that it would stretch the application of subsection 236 (5) beyond the breaking
    point to accede to HMQs argument that the claimants Autograph Policy is in
    effect indefinitely, until Elite properly terminates it, or delivers a valid
    notice of non-renewal. This would create the legal fiction of an ongoing
    Autograph Policy contract in circumstances where, by the middle of 2011 with
    the approval of the Superintendent of Insurance, the insurer could not offer,
    and the insured could not obtain, automobile insurance coverage under the
    Autograph Policy program.

E.

APPEAL DECISION

[25]

The
    Fund appealed the arbitrators decision that, notwithstanding an invalid notice
    of non-renewal, the Elite policy was not in force at the date of the accident. Elite
    cross-appealed the arbitrators conclusion that the notice of non-renewal was
    invalid.

[26]

On
    appeal it was agreed that the standard of review of the arbitrators decision
    was reasonableness.

[27]

The
    appeal judge dismissed Elites cross-appeal. Essentially, he upheld as
    reasonable the arbitrators conclusion, based on an interpretation of s. 236
    and Rule 56, that the non-renewal notice was invalid. He agreed with the
    arbitrator that a valid notice could not be given before the expiry of two six-month
    terms of the contract, given the wording of Rule 56.

[28]

The
    appeal judge allowed the Funds appeal, overturning the decision of the
    arbitrator. He concluded that the Elite policy remained in force at the date of
    the accident.

[29]

The
    appeal judge referred to the decision of Matheson J. in
Echelon General
    Insurance Company v. Ontario (Minister of Finance)
, 2016 ONSC 5019, 133
    O.R. (3d) 233 (an appeal from an arbitrators decision that a policy was no
    longer in effect notwithstanding an ineffective notice of cancellation because
    it had lapsed at the end of its six-month term). In that case, Matheson J.
    concluded that the policy had not lapsed because s. 236(5), which provided that
    a contract of insurance was in force until there was compliance with
    subsections (1), (2) and (3), oust[ed] the common law of contract under which
    an insurance policy may otherwise expire on its own terms: at para. 28.

[30]

The
    appeal judge applied this reasoning to the case before him. While he agreed
    with Elite that, under the common law, the failure to give a valid notice of
    non-renewal would require offer and acceptance and a mutual intention by the
    parties for a renewal of the contract, the effect of s. 236(5) was to displace
    the common law principles that would otherwise apply: at para. 31.

[31]

He
    rejected Elites argument that giving the words of s. 236(5) a literal
    interpretation would alter the common law with respect to insurance policies
    by turning insurance contracts into continuous contracts. Rather, the appeal
    judge concluded that s. 236(5) addresses the consequence of an insurer failing
    to comply with the statutory requirement to give a valid notice of non-renewal,
    but does not preclude an insurer or insured from taking permissible steps to
    terminate an insurance contract in accordance with other statutory provisions:
    at para. 33. And he agreed with the appeal judge in
Echelon
that to
    give the words in s. 236(5) their grammatical and ordinary meaning would not
    necessarily cause a contract of insurance to continue in perpetuity because the
    policy continues only until the insurance company discharges the statutory
    notice obligations and the insurance company bears the risk if it makes a
    mistake in the notice process: at para. 34.

[32]

The appeal judge ended his analysis on this issue by concluding that the
    arbitrators determination that there was an automatic renewal of the policy
    under s. 236(5) that was valid at most for a further six months, was not only
    in error, but outside a range of possible, acceptable outcomes because it fail[ed]
    to give effect to the clear words of s. 236(5) when read in their entire
    context and in their grammatical and ordinary sense harmoniously with the
    scheme of the
Insurance Act
and its objects: at para. 41.

[33]

The
    appeal judge therefore declared that Elites policy was in force at the time of
    the December 29, 2011 accident and that, as between Elite and the Fund, Elite
    is the priority insurer responsible for payment of the claimants statutory
    accident benefits.

F.

STANDARD OF REVIEW

[34]

The
    parties agree that the applicable standard of review in the appeal from the
    arbitrators decision was reasonableness. This was the determination of a
    priority dispute between insurers under the statutory accident benefits regime,
    by an arbitrator with special expertise who was selected by the parties: see
Intact
    Insurance Company v. Allstate Insurance Company of Canada
, 2016 ONCA 609, 131
    O.R. (3d) 625, leave to appeal refused, [2016] S.C.C.A. No. 392, at para. 53.

[35]

The
    Fund argued that on this appeal, the courts task is to determine whether the
    appeal judge applied the right standard, and that, once it is satisfied that he
    applied a reasonableness standard, and not a disguised correctness
    standard, this court ought not to interfere with his decision. This is not the
    appropriate standard of review. In a second appeal of the appeal of an
    arbitration of a statutory accident benefits priority dispute, this court is
    required to consider whether the appeal judge chose the correct standard of
    review of the arbitrators decision,
and applied it
    properly
:
Intact
, at para. 33. This requires an examination of
    the reasonableness of the original decision. The issue is therefore whether the
    arbitrators conclusions that (a) Elites notice of non-renewal was
    ineffective; and (b) that the policy had nevertheless terminated, were
    reasonable.

G.

arguments on appeal

[36]

The
    appellant asserts that:

(1)

it was unreasonable for the arbitrator (and the appeal judge) to
    conclude that the notice of non-renewal was premature. Essentially, Elite
    argues that Rule 56 does not explicitly state that the notice must be sent
    after the end of two policy terms. Elite also submits that the purpose of Rule 56
    is to give the insured two terms of grace, rather than two terms and 30 days;

(2)

the arbitrators decision that the policy had been terminated, and his
    interpretation of s. 236(5) in the context of the common law and the factual
    circumstances of the case, were reasonable. Elite contends that the appeal
    judge substituted his own decision for that of the arbitrator rather than
    conducting a reasonableness assessment and that he failed to consider the
    factual circumstances that brought the policy to an end; and

(3)

the arbitrators alternative reason for concluding that coverage had
    ended (because the Autograph policy ceased to exist) was reasonable and was not
    addressed by the appeal judge.

[37]

The
    respondent contends that the arbitrators conclusion that the notice of
    non-renewal was premature was a reasonable interpretation of the requirements
    of s. 236 in the context of Ontarios mandatory automotive insurance scheme.

[38]

The
    respondent also argues that the arbitrators conclusions that the common law
    applied to bring the contract to an end or that s. 236(5) operated to renew the
    contract for only one further six-month term were unreasonable because (i) he
    failed to apply the clear wording of s. 236(5); (ii) he failed to consider the
    statutory context; (iii) he applied irrelevant case law and failed to follow
    relevant authorities; and, (iv) he applied the common law which was displaced
    by the statutory regime. Applying s. 236(5), the only reasonable conclusion was
    that the operation of the common law was ousted and the Elite policy remained
    in force at the date of the accident.

H.

Analysis

[39]

The
    Supreme Court directs that, in reviewing a decision for reasonableness, the
    court must recognize that certain questions may give rise to a number of
    possible, reasonable conclusions. A court conducting a review for
    reasonableness must inquire into the qualities that make a decision reasonable,
    including both the process of articulating the reasons and the outcomes. In
Dunsmuir
    v. New Brunswick
, 2008 SCC 9, [2008] 1 S.C.R. 190, at para. 47, the
    Supreme Court of Canada stated:

[R]easonableness is concerned
    mostly with the existence of justification, transparency and intelligibility
    within the decision-making process [and] also with whether the decision falls
    within a range of possible, acceptable outcomes which are defensible in respect
    of the facts and law.

[40]

An
    error in the arbitrators analysis would not necessarily lead to an
    unreasonable decision. A reasonableness review is not an examination of the
    weakest link of a chain of analysis in isolation from the reasons as a whole:
Petro-Canada
    v. British Columbia (Workers Compensation Board)
, 2009 BCCA 396, 276
    B.C.A.C. 135, at para. 56. Nor is it a line-by-line treasure hunt for error:
Communications,
    Energy and Paperworkers Union of Canada, Local 30 v. Irving Pulp & Paper,
    Ltd.
, 2013 SCC 34, [2013] 2 S.C.R. 458, at para. 54. Indeed, a global
    analysis of the arbitrators decision can lead to the conclusion that the
    result falls within acceptable, defensible outcomes, and that the reasons
    despite their flaws  fulfill the criteria for justification, transparency, and
    intelligibility: see
Syndicat des métallos section locale 7065 c.
    Entreprises de construction de Québec ltée
, 2015 QCCA 1690, D.T.E.
    2015T-771, at para. 69.

[41]

In
    my view, both aspects of the arbitrators decision  that the notice of
    non-renewal was premature, and that the policy, notwithstanding s. 236(5) of
    the
Insurance Act
, had come to an end  were reasonable and
    justifiable interpretations of the relevant statutory provisions and their
    application to the particular facts of this case.

(1)

The conclusion that Elites notice of non-renewal was premature was
    reasonable

[42]

The
    arbitrator concluded that Elite did not comply with the requirements of ss. 236
    and 238 of the
Insurance Act
in notifying the claimant that it did not
    intend to renew the Autograph policy. He accepted the argument of the Fund that
    the reason given in its notice did not constitute a valid ground for
    non-renewal filed with the Superintendent at the time the notice was given
    because the facts required to validate the ground were not yet in existence.

[43]

In
    arriving at his decision, the arbitrator interpreted the wording of Rule 56 in
    its grammatical and ordinary sense. He concluded that the rule requires
    specific timing for such notice, which cannot be validly given before the
    expiry of two six-month terms of the policy. He rejected Elites argument that
    the purpose of the non-renewal notice provision in s. 236 was satisfied in this
    case because the claimant was aware he was no longer insured and took steps to
    replace his insurance coverage. The arbitrator concluded that lack of prejudice
    did not validate the premature non-renewal notice. He also concluded that to
    the extent that the wording of Rule 56 was open to competing interpretations,
    any ambiguity must be resolved in favour of expanding rather than restricting
    coverage.

[44]

While
    there is merit to the argument that Rule 56 admits of an alternative
    interpretation, the question is not whether one interpretation is better or
    more persuasive than the other. The scheme of the statutory accident benefits priority
    dispute mechanism under O. Reg. 283/95, anticipates that an arbitrator selected
    by the parties will determine any dispute between insurers. In this case, the
    arbitrator considered what transpired in the context of the mandatory
    requirements in s. 236 for how an insurer is to give notice of non-renewal.
    Although the claimant had actual notice of the intention not to renew, s.
    236(5) provides that coverage continues until subsections (1), (2) and (3) are
    complied with. The arbitrators interpretation of the requirements of s. 236 is
    consistent with the plain wording of the rule, and to the extent there is any
    ambiguity, favours coverage to the claimant.

[45]

Elite
    did not persuade the appeal judge or this court that the arbitrators decision
    on this issue was unreasonable. Accordingly, there is no basis to interfere
    with the arbitrators conclusion that the non-renewal notice given by Elite was
    premature. The decision on this issue was based on a reasonable interpretation
    of the relevant statutory provisions and the declination rule as applied to the
    facts of the case.

(2)

The conclusion that the Elite policy was not in force notwithstanding
    the invalid notice of non-renewal was reasonable

[46]

The
    appeal judge, at para. 42, asserted that the arbitrator failed to properly
    engage in an interpretive process in respect of s. 236(5) of the
Insurance
    Act
 and that he made findings that were not only in error, but outside
    of a range of possible, acceptable, outcomes because his conclusion fails to
    give effect to the clear words of section 236(5).

[47]

I
    disagree. Although I do not agree with all aspects of the arbitrators
    analysis, the decision does not ignore the relevant statutory provisions.
    Rather, it takes them into account together with the factual circumstances of
    the case, and arrives at what I consider to be a reasonable result.

[48]

The
    issue here turns on the scope and meaning to be given to s. 236(5) of the
Insurance
    Act
, which provides that [a] contract of insurance is in force until
    there is compliance with subsections (1), (2) and (3),
and
its application to the facts of this case.

[49]

The
    arbitrator concluded that s. 236(5) was not exhaustive and determinative of the
    issue before him. He expressed this in terms of the common law continuing to
    apply, unless specifically excluded, and that s. 236(5) did not prevent the
    termination of the Elite policy because of the parties mutual intention to
    bring the contract to an end. The appeal judge, by contrast, considered the
    issue as one of statutory interpretation: section 236(5) prescribed
    consequences for a defective non-renewal notice. Following the literal wording
    of the section, until there is compliance with the non-renewal notice
    requirements, the policy remains in force.

[50]

Before
    turning to why I say the arbitrators approach and conclusion were reasonable, I
    will identify two points on which I agree with the appeal judge that the
    arbitrators analysis departed from the clear wording of s. 236(5) and was
    therefore unreasonable.

[51]

First,
    the arbitrator concluded that the effect of s. 236(5) was that the policy
    renewed at most for one further term (rejecting the Funds argument at that
    stage that the policy would renew indefinitely in the event of non-compliance
    with ss. 236(1), (2) or (3)). It appears that both parties at the arbitration
    stage characterized the effect of s. 236(5) as renewing the policy (an argument
    Elite continued to make to this court). Section 236(5), however, says nothing
    about renewal; it simply provides for the continuation of the policy in force
    until a notice of non-renewal that meets the statutory requirements is given. I
    agree with the Funds current position that s. 236(5) does not create any new
    contract through some form of renewal. The arbitrators conclusion that s.
    236(5) would extend coverage under the policy for no longer than an additional one
    six-month term contradicts the plain wording of the section, which contemplates
    that coverage continues until proper notice is given.

[52]

Second,
    it was unreasonable for the arbitrator, in arriving at his conclusion that the
    policy renewed for only one term, to rely on
Patterson v. Gallant
as
    authority that each renewal of an insurance policy creates a new contract, and
    that any further renewal would therefore require a meeting of the minds on
    terms and offer and acceptance. As the appeal judge pointed out, there was no
    equivalent to s. 236 in the applicable insurance legislation in
Patterson
and
    the Court expressly recognized, at para. 28, that the provisions of the
Insurance
    Act
can override the common law of contract. I agree with the appeal
    judge that the only reasonable interpretation of s. 236(5) is that it overrides
    the common law
with respect to lapsed policies
.

[53]

The
    appeal judge focussed on these parts of the analysis when he stated, at para.
    41, that the arbitrators conclusion that there was an automatic renewal of
    the contract of insurance under s. 236(5) that was valid at most for a further
    six months was not only in error but also unreasonable. As I will explain, the
    fact that these aspects of the arbitrators reasoning are unreasonable, as they
    directly contradict s. 236(5), does not inevitably lead to the conclusion that
    his decision was unreasonable, as the errors were not essential to the result:
    see e.g.
Syndicat des métallos
, at para. 69.

[54]

The
    question at the heart of the dispute was the proper scope for the application
    of s. 236(5), and whether, despite this provision, the parties could bring to
    an end the automobile insurance policy through their conduct after an invalid
    notice of non-renewal was given. In essence, the arbitrator decided this
    question in the affirmative, while the appeal judge treated s. 236(5) as
    determinative for all purposes of what would occur with respect to the policy,
    once a defective notice of non-renewal had been given.

[55]

While
    the only reasonable interpretation of s. 236(5) may well be that the Elite policy
    did not lapse at the conclusion of its six-month term, it is not unreasonable
    to give s. 236(5) a contextual reading, and to conclude that s. 236(5) is
not

exhaustive as to what happens to a policy,
    irrespective of what else might have transpired between the insurer and
    insured, in any situation where there has been a defective notice of
    non-renewal.

[56]

There
    is no question that an insurance policy may come to an end, other than by an
    insurers notice of non-renewal. While insurers are subject to detailed
    statutory requirements for the unilateral termination of a policy, the
    termination may occur at the initiative of the insured, without formality.
Statutory
    Conditions  Automobile Insurance
, O. Reg. 777/93, s. 11(2) provides that
    a policy may be terminated by the insured at any time on request, and there
    are no specific requirements for the content or form of the request. As the
    appeal judge noted, s. 236(5) does not operate to preclude an insurer or an
    insured from taking permissible steps to terminate an insurance contract in
    accordance with other statutory provisions.: at para. 33.

[57]

Section
    236 only deals with non-renewal or policy variations by an insurer. It
    prescribes the timing and content of notice required to be given. Until these
    requirements are met the contract of insurance remains in force, in accordance
    with s. 236(5).

[58]

As I have already observed, s. 236(5) does not renew a
    policy: it simply extends its coverage  potentially indefinitely  until the
    insurer complies with the notice provisions for non-renewal. As Matheson J.
    noted in
Echelon
and the appeal judge observed here, the plain
    language of s. 236(5) ousts the operation of the common law
with respect to the lapsing of policies
.

[59]

Section
    236(5) may well oust the common law that a policy will lapse when it is not
    renewed, but it does not preclude the consideration of other circumstances that
    may have arisen and brought the policy to an end. In my view, this is a
    reasonable interpretation that does not undermine the policy behind s. 236(5)
    to ensure continuous coverage.

[60]

The
    circumstances that were relevant in this case are the following. The evidence
    is clear that the claimant knew what the insurer was requiring him to do in
    order to continue coverage under the Autograph policy. After he received notice
    (albeit prematurely), he acted to protect his interests. By September 23, 2010,
    he had obtained a replacement policy from AXA. As the arbitrator noted, the
    parties shared a mutual intention that the Elite policy would not continue to
    cover the claimant. Even if this intention was precipitated by the assumption
    that Elites notice of non-renewal was valid and that the Autograph policy had therefore
    ended, the parties acted so as to terminate their relationship and conducted
    themselves in reliance on the termination. The claimant obtained replacement
    coverage, and was no longer charged a premium for the Elite policy.

[61]

The
    appeal judge did not consider whether the parties conduct after the
    ineffective notice of non-renewal may have terminated the Elite policy. He
    treated s. 236(5) as determinative for all purposes of what would occur with
    respect to the policy, once a defective notice of non-renewal had been given.
    In so doing, he relied heavily on
Echelon.
Yet, there is nothing in
    Matheson J.s reasoning or conclusion in that case that is inconsistent with finding
    here that the Elite policy was effectively terminated by what followed the
    invalid notice of non-renewal. In
Echelon
,

the insurer had
    attempted unsuccessfully to terminate the policy but argued that the policy had
    nevertheless lapsed at the end of its term. This argument (based on
Patterson
)
    was precluded by s. 236(5), which operates to oust the common law to prevent a
    non-renewed policy from lapsing.
Echelon
did not, however, deal with
    other circumstances that might have brought the policy to an end, and as such
    was not a complete answer to the question faced by the appeal judge in this
    case.
[2]

[62]

Here,
    accepting that the effect of s. 236(5) is that coverage would continue under a
    policy after an ineffective notice of non-renewal was given, the arbitrators conclusion
    that the policy was brought to an end by the mutual agreement of the parties,
    and was therefore no longer in effect, is not unreasonable.

[63]

First,
    as I have explained, this conclusion is legally defensible and not inconsistent
    with the statutory regime. While it is correct to say that the statutory
    provisions reflect the legislative intent in favour of coverage, that policy is
    not undermined by this analysis on the facts of this case. The fact that the
    claimant obtained a new policy from AXA confirmed his intention to terminate
    the Elite policy, and ensured (at least until the AXA policy was terminated)
    that he had replacement coverage.

[64]

Second,
    this conclusion is consistent with the modern approach to statutory
    interpretation, including the presumption against absurd results. A literal
    interpretation of s. 236(5), applying it to
all
cases where ss. 236(1), (2) or (3) are not complied with, without consideration
    of the factual context, would lead to absurd results. It would keep a policy
    alive indefinitely even where an insured subsequently receives a valid notice
    of cancellation (authorized by other provisions within the insurance
    legislative scheme) or the insured has chosen to terminate and replace the
    policy.

[65]

The
    appeal judge was willing to accept the potentially indefinite continuation of
    insurance coverage when a defective notice is given on the basis that the risk
    of non-compliance with notice provisions should rest with the insurer who has
    the means to avoid the risk. The underlying concern here is that the insurer
    will accept the consequences of its own mistake by providing ongoing coverage,
    where the result would otherwise be an interruption in coverage.

[66]

In
    the present circumstances, the defective notice was followed by conduct that
    led the claimant to obtain a new policy. Because of the operation of s. 236(5)
    there was no interruption in coverage until the claimant cancelled that policy.
    The parties would never have intended that, once the Elite policy was replaced,
    Elite would continue to cover the claimant  with the corresponding obligation
    to pay premiums: see
Insurance Act
,

s. 134. This
    interpretation would not interfere with the detailed regime respecting insurers
    rights to terminate or to refuse to renew auto insurance policies, designed to
    avoid any gap in coverage in a compulsory insurance scheme.

[67]

For
    these reasons, I would uphold as reasonable the arbitrators decision that the
    Elite policy was no longer in force on December 29, 2011, when the accident
    occurred, and that as such, Elite was not required to provide the claimant with
    statutory accident benefits.

(3)

Elites Alternative Argument

[68]

Finally,
    Elite argued that the arbitrator reasonably concluded that its policy was no
    longer in force because the entire Autograph policy program had been terminated
    months before the collision. The Fund responds that this argument fails to
    recognize that a deeming provision, such as s. 236(5), creates a legal effect (here,
    of continuing coverage) irrespective of future factual developments.

[69]

The
    appeal judge did not address this argument. In view of my conclusions
    respecting the reasonableness of the arbitrators decision that the Elite
    policy had been effectively terminated for other reasons, it is unnecessary to
    address this issue in the disposition of this appeal.

I.

DISPOSITION

[70]

For
    these reasons, I would allow the appeal and restore the decision of the
    arbitrator on the preliminary issue in the arbitration of the statutory
    accident benefits priority dispute. I would award costs to the appellant of
    this appeal in the sum of $15,000, inclusive of disbursements and HST.

K.
    van Rensburg J.A.

I
    agree. David M. Paciocco J.A.

Pardu J.A. (Dissenting):

[71]

Neither
    the insurer nor the insured complied with the statutory requirements for non-renewal
    or termination of an insurance policy. Nonetheless, the arbitrator concluded
    that because of the conduct and subjective assumptions of the parties, the
    insurance contract was at an end. I agree with the decision of the reviewing
    judge that this decision was unreasonable. The decision of the arbitrator was
    unreasonable because he failed to give effect to the statutory language, failed
    to consider legislative purposes, and adopted an interpretation that has no
    logical connection to the statutory language.

[72]

Section
    236(1) of the
Insurance Act
, R.S.O. 1990, c. I.8 provides that if an
    insurer does not intend to
renew
a contract the insurer shall give the
    named insured not less than 30 days notice of its intention. The insurer must
    set out the reason for the non-renewal in the notice (s. 236(3)).

[73]

Section
    236(5) provides that [a] contract of insurance
is in force
until there
    is compliance (emphasis added) with the notice requirements.

[74]

O.
    Reg. 777/93 mandates Statutory Conditions that apply to all contracts of
    automobile insurance. It specifies in great detail the steps an insurer must
    take to terminate a contract, and in s. 11(2) also provides that an insured may
    terminate a contract at any time
on request
.

[75]

I
    agree with the observations of the reviewing judge that s. 236(5) of the
Insurance
    Act
,

when read in the context of
    provisions addressing termination or non-renewal of contracts of insurance, and
    when given [its] grammatical and ordinary sense harmoniously with the scheme of
    the
Insurance Act
, mean[s] what [it] say[s]: that a contract of
    insurance is in force until there is compliance with ss. 236(1), (2) and (3).
    Subsection 236(5), in my view, clearly displaces the common law principles
    applicable to renewals of lapsed contracts. I agree with the statements made by
    the appeal judge in Echelon that this interpretation is consistent with the
    scheme and purpose of the
Insurance Act
and related legislation, and
    is also consistent with the objectives of a compulsory insurance regime:
    Echelon, at paras. 17-27.

[76]

One
    of the purposes of the compulsory automobile insurance regime established by
    the
Insurance Act
and related legislation is to protect third parties.
    The existence of a policy of insurance has consequences that extend far beyond
    the interests of the contracting parties. A pedestrian who, for example, is hit
    by an insured driver may have recourse to that drivers policy of insurance.
    Certainty as to whether that policy is in existence is an important step in
    resolving claims for injuries resulting from accidents and may have significant
    consequences where, for example, the limits under the insurance policy are higher
    than the statutory minimum.

[77]

As
    pointed out by Matheson J. in
Echelon General Insurance Company v. HMQ
,
    2016 ONSC 5019, 133 O.R. (3d) 233, at paras. 25 and 26,

This interpretation is consistent with scheme and purpose of
    the
Insurance Act
and related legislation. Section 236 was introduced
    in 1990 as part of a group of reforms to Ontarios compulsory automobile
    insurance regime:
Insurance Statute Law Amendment Act
, S.O. 1990, c.
    2, s. 47. As put in
Matheson v. Lewis
, 2014 ONCA 542, 121 O.R. (3d)
    641, at para. 36, the compulsory automobile insurance regime is clearly
    intended to protect innocent victims of automobile accidents from having no
    means of seeking damages from persons who might have caused those damages
    without having the protection of automobile insurance. The
Compulsory
    Automobile Insurance Act
, R.S.O.  1990, c. C.25, s. 2(1) prohibits an
    owner of a motor vehicle from operating it on a highway unless the motor
    vehicle is insured under a contract of automobile insurance.

The additional notice obligations
    introduced as part of the 1990 reforms are consistent with the objectives of a
    compulsory insurance regime. The s. 236 notice provisions facilitate continuity
    of insurance by requiring that insurance companies take additional steps to draw
    to a policyholders attention that their policy is about to lapse, and by
    providing that the insurance remain in force until the notice obligation has
    been fulfilled.

[78]

Interpreting
    s. 236(5) as requiring that a contract of insurance remain in force until there
    is compliance with the notice requirements is consistent with the objective of
    providing some certainty as to when a policy is in force. It is also consistent
    with that objective to make the insurer responsible for compliance with the
    statutory conditions for non-renewal or its termination of a policy, as an
    insurer has control over the steps required to initiate and complete that
    process.

[79]

However,
    this important legislative purpose was not considered by the arbitrator. An
    adjudicator must assess the extent to which an interpretation supports
    legislative objectives. Failure to do so may be a factor leading to a
    conclusion that the decision was unreasonable.

[80]

The
    ordinary meaning of a statutory provision is also important. As noted in
Teal
    Cedar Products Ltd. v. British Columbia
, 2017 SCC 32, [2017] 1 S.C.R. 688,
    the modern principle of statutory interpretation requires that due importance
    be given to the ordinary meaning of a statute:

[111] The modern principle of statutory interpretation is
    well-established:

Today there is only one principle
    or approach, namely, the words of an Act are to be read in their entire context
    and in their grammatical and ordinary sense harmoniously with the scheme of the
    Act, the object of the Act, and the intention of Parliament.

(E. A. Driedger, Construction of Statutes (2nd ed. 1983), at p.
    87)

[112] This principle requires that
    statutes be read to give the words their most obvious ordinary meaning which
    accords with the context and purpose of the enactment in which they occur:
CanadianOxy
    Chemicals Ltd. v. Canada (Attorney General)
, [1999] 1 S.C.R. 743, at para.
    14;
Rizzo & Rizzo Shoes Ltd. (Re)
, [1998] 1 S.C.R. 27, at paras.
    21-22. The plain and ordinary meaning of a statutory provision is the natural
    meaning which appears when the provision is simply read through.

[81]

Use
    of different words implies a legislative intention to express different
    meanings: Ruth Sullivan, Sullivan on the Construction of Statutes, 6th ed.
    (Markham: LexisNexis Canada, 2014), at p. 218. The arbitrators conclusion that
    s. 236(5) provides for
automatic renewal
is inconsistent with this
    principle. While s. 236(1) speaks of an intention not to
renew
a policy,
    s. 236(5) says the contract
is in force
until there is compliance with
    the notice provisions. Section 236(5) does not say that the contract is
renewed
until there is compliance.

[82]

Additionally,
    the arbitrators conclusion that upon renewal, an automobile insurance
    contract is like any other contract in that each renewal represents a new
    contract and requires its own offer and acceptance flies in the face of the
    plain language of s. 236(5), which provides that the contract continues to be
    in force absent compliance with the statutory requirements for non-renewal.
    There is no basis in the relevant statutory provisions to conclude, as the
    arbitrator did, that failure to give proper notice of non-renewal meant that
    the policy was renewed for one further six-month term.

[83]

Disagreement
    with the arbitrator and agreement with the reviewing judge is not the end of
    the inquiry. The reviewing judge could only set aside the arbitrators decision
    if the latters decision was unreasonable. The appellant argues that the
    reviewing judge in fact applied a correctness standard of review, although he
    articulated his conclusion by applying a reasonableness norm.

[84]

What
    is it that makes a decision interpreting a statute unreasonable? Some
    provisions admit of more than one reasonable interpretation. Choosing one
    reasonable interpretation over another does not make the decision unreasonable,
    even where the reviewing tribunal disagrees with that choice:
Teal Cedar
    Products Ltd.; and McLean v. British Columbia (Securities Commission)
,
    2013 SCC 67, [2013] 3 S.C.R. 895. In some circumstances, the autonomy of
    arbitrators may result in divergent lines of interpretation, both of which are
    reasonable.

[85]

However,
    as pointed out in
McLean
,

[38] It will not always be the
    case that a particular provision permits multiple reasonable interpretations.
    Where the ordinary tools of statutory interpretation lead to a single
    reasonable interpretation and the administrative decision maker adopts a
    different interpretation, its interpretation will necessarily be unreasonable
    no degree of deference can justify its acceptance; see, e.g.,
Dunsmuir
,
    at para. 75;
Mowat
, at para. 34.  In those cases, the range of
    reasonable outcomes
(Canada (Citizenship and Immigration) v. Khosa
,
    2009 SCC 12, [2009] 1 S.C.R. 339, at para. 4) will necessarily be limited to a
    single reasonable interpretation  and the administrative decision maker must
    adopt it.

[86]

Given
    the statutory language and context, there was only one reasonable
    interpretation here. The interpretative question in this case does not require
    a heavily context dependent application of a normative question such as
    reasonableness. This is not an area where arbitral pluralism is desirable.

[87]

I
    agree with the conclusions of the reviewing judge at para. 41 of his reasons:

I conclude that the Arbitrator
    failed to properly engage in an interpretative process in respect of s. 236(5)
    of the
Insurance Act
by taking into account the text, context and
    purpose of this provision. The Arbitrators conclusion that there was an
    automatic renewal of the contract of insurance under section 236(5) that was
    valid at most for only a further six months was, in my view, not only in error,
    but outside of a range of possible, acceptable, outcomes which are defensible
    in respect of the facts and law, because this conclusion fails to give effect
    to the clear words of section 236(5) when read in their entire context and in
    their grammatical and ordinary sense harmoniously with the scheme of the
Insurance
    Act
and its objects.

[88]

The
    arbitrator failed to give effect to the plain language of the section. He did
    not consider the purposes of the legislation, and did not consider the effects
    on persons who were not parties to the contract. His application of the notion
    of repudiation was flawed, as there was no communication of acceptance of
    repudiation by another contracting party. The insurer did not purport to
    rescind the policy by attempting to rely on common law authority to do so.
    There was no communication between the insured and the insurer that could be
    construed as a mutual agreement to terminate the policy.  Moreover, to allow
    subjective assumptions by either party to lead to a conclusion that there was
    no contract of insurance, in the face of statutory requirements for non-renewal
    or termination of such contracts, was unreasonable.

[89]

I
    would dismiss the appeal.

Released: October 9, 2018                                                        G.
    Pardu J.A.

[1]
The Fund did not make this argument on appeal to this court. Rather, the Fund
    argued instead that the effect of s. 236(5) is to extend the existing contract
    through statutory deeming, not to create a new or successive new contracts by
    automatic renewal: see Factum of the Respondent at para. 16.

[2]

Indeed, after the appeal decision in
Echelon
, the
    matter returned to the arbitrator for consideration of another argument  that
    after the ineffective notice of termination was given, the policy was
    terminated at the insureds request. The arbitrator considered the evidence and
    this argument (which had not been raised earlier in the proceedings) and agreed
    with it:
Echelon General Insurance Company v. Her Majesty the Queen in Right
    of Ontario, as represented by the Minister of Finance (The Motor Vehicle
    Accident Claims Fund)
, 2017 CarswellOnt 19967, (Arbitrator: Shari L.
    Novick). The decision was upheld on appeal to the Superior Court at 2018 ONSC
    5029.


COURT OF APPEAL FOR ONTARIO

CITATION: Platnick v. Bent, 2018 ONCA 851

DATE: 20181024

DOCKET: C63103

Doherty, Brown and Huscroft JJ.A.

BETWEEN

Howard Platnick

Plaintiff (Appellant)

and

Maia Bent and Lerners LLP

Defendants (Respondents)

Timothy S. B. Danson and Marjan Delavar, for the
    appellant

Howard Winkler and Eryn Pond, for the respondent, Maia
    Bent

Terrence J. OSullivan and Andrew Winton, for the
    respondent, Lerners LLP

Heard: June 28, 2017

On appeal from the order of Justice Sean F. Dunphy of the
    Superior Court of Justice, dated December 1, 2016, with reasons reported at
    2016 ONSC 7340, 136 O.R. (3d) 339, and from the costs order, dated January 24,
    2017, with reasons reported at 2017 ONSC 585.

COSTS ENDORSEMENT

A.

costs of the motion

[1]

Having reviewed the written submissions provided by counsel we order
    that there should be no costs on the motion before Dunphy J. We make that order
    for three reasons. First, the presumption in s. 137.1(8) of the
Courts of
    Justice Act,
R.S.O. 1990, c. C.43
,
    favors a no costs order when the moving party is unsuccessful on the motion.

[2]

Second, a significant part of the proceedings on the motion involved
    meritless constitutional and procedural arguments brought by the appellant.
    Whatever costs the appellant might have received in light of his success on the
    s. 137.1 motion, would have been substantially offset by costs payable to the
    respondents in respect of the other unsuccessful and meritless motions brought
    by the appellant.

[3]

Third, it is impossible on the material filed before us to distinguish
    between the costs attributable to the appellants defence of the s. 137.1
    motion and the costs attributable to the various other motions brought by the
    appellant.

[4]

We considered requesting bills of costs in respect of the motion with a
    view to attributing costs to either the s. 137.1 motion, or the various other motions
    brought by the appellant. However in the end we are satisfied that request
    would only prolong the resolution of the proceeding underlying this motion.
    Presumably this matter will proceed to trial. The trial judge will have full
    authority to deal with all cost issues relating to the trial proceedings. Some
    of the costs already incurred may be recoverable as trial costs.

B.

costs of the appeal

[5]

We would award costs of the appeal to the appellant on a partial
    indemnity basis. Those costs must however be reduced to reflect time spent and
    expenses incurred in respect of constitutional and procedural arguments raised
    by the appellant that had no merit. In our view a proper reflection of both the
    outcome of the appeal and the unnecessary time and expense generated by some of
    the appellants submissions is an order of costs to the appellant in the amount
    of $10,000, as against the respondent, Bent, and $10,000, as against Lerners
    LLP. Those figures include disbursements and relevant taxes.

Doherty J.A.

David Brown J.A.

Grant Huscroft J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Prince v. Capital One Bank (Canada Branch), 2018
    ONCA 829

DATE: 20181015

DOCKET: C64767

Hourigan, Miller and Trotter JJ.A.

BETWEEN

Igbinedion Odion Prince

Plaintiff

(Appellant)

and

Sonny Singh (Owner of Universal Rent-A-Car Inc.),
    Universal Rent-A-Car Inc.,
Capital One Bank (Canada Branch)
and American
    Bankers Insurance Company of Florida

Defendants

(Respondent)

Igbinedion Odion Prince, representing himself

Christina Wadsworth, for the respondent

Heard: October 5, 2018

On appeal from the judgment of Justice Markus Koehnen of
    the Superior Court of Justice, dated December 1, 2017.

APPEAL BOOK ENDORSEMENT

[1]

The appellant appeals from the order of the motion judge dismissing his
    claim against the respondent. The dispute arises from amounts billed to the
    appellants credit card that he submits were unauthorized.

[2]

We see no basis to interfere with the motion judges order.

[3]

The appellant complains that the first affidavit filed by the respondent
    was inaccurate regarding credit agency collections on his account. That is
    true, but the error was corrected in a second affidavit filed by the
    respondent, which was before the motion judge. Therefore, the error had no
    material impact on the motion judges analysis.

[4]

At the initial return of the motion, the appellant raised for the first
    time two new charges on his credit card. The motion judge adjourned the motion
    to permit him to adduce evidence regarding those charges. On the return of the
    motion he failed to do so. In the circumstances, the motion judge did not err
    in dismissing these allegations, nor do we see any error in the motion judges
    dismissal of the appellants other claims.

[5]

With respect to the cost order below, the appellant failed to seek leave
    to appeal that order as he was required to do under the Rules. In any event, we
    see no error in the motion judges cost order and would accordingly not grant
    leave to appeal.

[6]

The appeal is dismissed. The appellant shall pay the respondent, Capital
    Ones, costs of the appeal in the all-inclusive sum of $3,500.