What makes a spouse? - Royal & Sun Alliance v. Desjardins/Certas, 2018 ONSC 4284 (CanLII)

December 03, 2018, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

What makes a spouse? - Royal & Sun Alliance v. Desjardins/Certas, 2018 ONSC 4284 (CanLII)

Date of Decision: July 10, 2018
Heard Before: E.M. Morgan  J.


DEFINITION OF SPOUSE: What is the definition of spouse for insurance matters; pursuant to SABs spouse is an insured person; driver and owner of car co-habitate but not formally married; insurance act requires co-habitation for a period of three years; Family Law Act; Insurance Act; should correctness standard be applied; is this a case of mixed fact and law what standard should apply; reasonableness standard applies

Royal has applied for a judicial review of Arbitrator Novick’s decision of February 24, 2017.  In that decision the Arbitrator determined that the Royal is in higher priority than the Desjardins to pay the accident benefit claims of Helen Halliday, who was injured in a car accident. Desjardins is the insurer of the driver that struck Ms. Halliday.

Ms. Halliday sought accident benefits from the Appellant through Mr. Zorony’s policy as his spouse. Pursuant to the priorities set out in section 268(2)2(i) of the Insurance Act, a non-occupant of an automobile such as Ms. Halliday has recourse, firstly, against “the insurer of an automobile in respect of which the non-occupant is an insured.” Only if recovery is unavailable against her own insurer does section 268(2)2(ii) provide for recovery against “the insurer of the automobile that struck the non-occupant”.

The “spouse of the named insured” falls within the definition of “insured person” in section 3(1) of the Statutory Accident Benefits Schedule, O Reg 34/10. Ms. Halliday and Mr. Zorony cohabitated at the time of the accident, but were not formally married and do not have children together.

For the purposes of an accident benefits or other claim, section 224(1)(c)(i) of the Insurance Act defines the word “spouse” as including “either of two persons who…have lived together in a conjugal relationship outside marriage, continuously for a period of not less than three years”. The Respondent submits that Ms. Halliday and Mr. Zorony fall within this definition of “spouse”. The Appellant submits that they do not.

The standard of review on a judicial review application such as this is generally one of “correctness in relation to questions of law and reasonableness in relation to questions of mixed fact and law.  As Leitch J. stated in para 5 of Ing, which raised a similar question of definition, “[t]he Arbitrator’s interpretation of the term ‘spouse’ in s. 224(1) of the Act is challenged on this appeal. This is a clear question of statutory interpretation, which is a question of general law outside the Arbitrator’s specialized area of expertise.”

Counsel for the Respondent relies on Intact Insurance Co. v Allstate Insurance Co., 2016 ONCA 609 (CanLII), in arguing that the present case raises a mixed question of fact and law and that a correctness standard should not be applied to the Arbitrator’s decision. He notes that in Intact, at para 35, the Court of Appeal indicated that “determining whether a person is ‘principally dependent’ on another is a question of mixed fact and law… And this court has already confirmed that, on appeals from insurance arbitrations involving an interpretation of dependency under SABS, mixed fact and law questions are reviewed for reasonableness.”

The dates and duration of Ms. Halliday’s and Mr. Zorony’s residences, both separately and together, were not in dispute. What was in dispute before the Arbitrator – the sole issue that the Arbitrator had to decide – was the definition of the word “spouse” to be applied to section 224(1) of the Insurance Act. While this can potentially be characterized as a purely legal question, as counsel for the Appellant urges, it inevitably has factual components built into it. One cannot determine what the words “lived together” or “conjugal relationship” mean without taking the factual context into account. The exercise here is similar to that which the Court of Appeal faced in Ing in defining and applying the phrase “principally dependent”.

Justice Morgan considers this a question of mixed fact and law, such that a reasonableness standard of review applies. Applying a reasonableness standard, “a court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes”. The court must respect the fact that interpreting and applying administrative schemes must account for “the imperatives and nuances of the legislative regime”:

Under the terms of the Insurance Act, Ms. Halliday and Mr. Zorony would have had to cohabitate together from February 24, 2011 to the date of Ms. Halliday’s accident on February 24, 2014. They clearly were not living together in the literal sense for the requisite three years. Mr. Zorony, in cross-examination, was specifically asked when he and Ms. Halliday moved in together, and he indicated that it was in February or March 2013 – i.e. one year prior to the accident.

Prior to that time they were involved in a romantic relationship but maintained separate residences. They had been seriously dating since at least 2008. and they saw each other on weekends and usually slept over at one or the other’s home on weekends – most often at Mr. Zorony’s home. They did not co-mingle their assets, have joint bank accounts, or financially support each other in any consistent way during this period.

Mr. Zorony testified that in February or March of 2013, he took a job as a long distance truck driver, and it was at that point that they actually moved in together. In cross-examination, Mr. Zorony was asked about the delay in living together, and he provided an explanation Ms. Halliday was living with her mother in order to provide care to her. He testified that if it had not been for that fact, they would likely have moved in together earlier. Justice Morgan determined that this must be considered in the analysis.

The Arbitrator looked at the nature of their relationship based on Family Law Act which defines  “spouse” for the purposes of spousal support in the event of marital breakdown. This case requires a more global or “unitary” approach taking into account a number of features of the couple’s life together and contains appropriate flexibility. Much of this, the Court indicated, turns on how the couple is socially perceived – especially in the context of a same-sex relationship which was at issue in M v H – as different types of relationships may be subject to varying social perceptions.

Morgan J. reviewed the cases put before him, the law, and definitions under the Insurance Act and, Family Law Act, noting that the Court of Appeal has made it clear that the meaning of words used in the Family Law Act is not necessarily the same as the meaning of the identical words as used in the Insurance Act. But even if the Arbitrator’s approach was wrong, was it unreasonable?

The Insurance Act requires that an insured party and his or her spouse “live together in a conjugal relationship” for a period of 3 years.

The Arbitrator noted that in their ordinary meaning, the statute’s words seem to require that the couple actually live together – i.e. “occupy the same premises”. The Arbitrator put it at para 35 – for 3 years, notwithstanding that literal interpretation, “the Court of Appeal has made it clear that the analysis must be broader than that.” Based on that mandate for a broader interpretation, the Arbitrator applied the reasoning in the Supreme Court of Canada’s innovative M v H decision in order to expand the definition of “spouse” beyond what it had previously meant.

The Arbitrator also was careful to mention that the case law, including the Court of Appeal case law that she specifically relied upon, all came from the family law context. What she ignored, however, is the Court of Appeal’s admonishment in Intact, supra, that the insurance law policy context is for all relevant purposes distinct from the family law policy context. Instead of addressing the policy context of the respective legislative schemes, the Arbitrator simply noted, at para 33 of her decision, that the phrases used in the respective statutes are the same:

While the relevant definitions in both the Family Law Reform Act (the applicable statute when Molodowich was decided) and the Family Law Act (in place when the later cases were considered) define a spouse as someone who has cohabited with someone else for the requisite period of time, the word ‘cohabit’ is further defined in those statutes to mean ‘live together in a conjugal relationship, whether within or outside marriage’. It is that phrase that appears in subsection (c) of the ‘spouse’ definition in the Insurance Act and in that way, the Insurance Act definition perfectly mirrors the definition in the FLA. In other words, when the definition of ‘cohabit’ in section 1(b) of the FLA is plugged in to the ‘spouse’ definition in that statute, the wording is identical to that of the definition of ‘spouse’ in the Insurance Act.

In other words, the Arbitrator embraced a body of Family Law Act cases that eschew a literal interpretation of the phrase “live together in a conjugal relationship”, in favour of an interpretation that plugs that phrase into the distinctive policy context of spousal support. She then applied those cases to the Insurance Act, without explaining why a policy interpretation from family law should apply there. Ironically, the Arbitrator rejected a literal interpretation in favor of a contextualized, policy interpretation, only to apply that interpretation literally, and without context, to a different statutory scheme embodying a different set of policies. 

The Court of Appeal has explained the grounds that might be invoked in finding that a decision under review is unreasonable. In Intact Insurance Company v Allstate LaForme JA reasoned, at paras 64-65:

When reviewing a decision for reasonableness, a court must consider the reasons proffered and the substantive outcome in light of the legal and factual context in which the decision was rendered.

A decision may be unreasonable where a decision maker fails to carry out the proper analysis or where the decision is inconsistent with underlying legal principles. A decision may also be unreasonable where the outcome ignores or cannot be supported by the evidence.

This approach is a further elaboration on what the Supreme Court of Canada said in Dunsmuir, the where it indicated that there are two senses in which a decision under review might be unreasonable. In the present case, the Arbitrator appears to have fallen short on both accounts.

  • First, the Arbitrator failed to articulate reasons why Family Law Act cases should apply to the Insurance Act, other than to point to the literal similarity of the words used. There might be a reason to apply family law concepts to an insurance law context other than a coincidence of wording in the legislation, but the Arbitrator did not provide one.
  • Second, the outcome of the decision was to find persons who admittedly have not lived together for 3 years to have notionally lived together for 3 years. What’s more, the decision arrived at this outcome by ignoring the very “imperatives and nuances of the legislative regime” that the Supreme Court says must form the basis of the analysis: Dunsmuir, at para 49.

Unlike the Family Law Act, the Insurance Act provides automatic benefits to spouses regardless of need. It therefore requires a context-specific approach of its own. More specifically, the insurance context contains no imperative to deviate from the ordinary understanding of what it means for two persons to “live together”. In the family law sense of the term, where dependency is crucial to the spousal support context, persons can “live together” – i.e. live interdependent lives – but maintain separate physical residences. In most non-family law contexts, and particularly in the insurance law context of automatic benefits without a broad sociological foundation on which to base those benefits, people who “live together” can be considered spouses, but only if they do so in the normal sense of those words and for the requisite period of time.

Ms. Halliday and Mr. Zorony can be said to have “lived together” for only 1 year, from February/March 2013 when Mr. Zorony got his truck driving job, to March 2014, when Ms. Halliday was struck by the Respondent’s insured. They therefore did not qualify as each other’s “spouse” under the Insurance Act.

The decision of the Arbitrator dismissing the arbitration brought by the Appellant is quashed.

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