Indexed as:

Travelers Canada v. MacDonald




Travelers Canada, Applicant, and

Douglas MacDonald, Lynne MacDonald, and Budget Rent-A-Car,



[1984] O.J. No. 290


4 C.C.L.I. 313


[1984] I.L.R. 6783


[1984] I.L.R. para. 1-1763 at 6783


24 A.C.W.S. (2d) 300


Action No. 227/84



 Ontario Supreme Court - High Court of Justice

 Toronto Motions Court


Saunders J.


Heard: January 26, 1984.

 Oral judgment: January 26, 1984.

 Judgment: March 13, 1984.


(10 pp.)


A.D. Houston, Q.C. and R. Colautti, for the Applicant.

H. David, for the Respondent Douglas MacDonald.

Mark L. Lyons, for the Respondents Budget Rent-A-Car and General Accident Assurance Company.





1     SAUNDERS J. (Orally):-- This is an application under Rule 612 by an insurer with respect to it's liability under an automobile policy. The source of the issue is an automobile accident that occurred in the state of Michigan in which Lynne MacDonald was severely injured. She was rendered a quadriplegic and will perhaps require medical and therapeutic care for the rest of her life. The applicant had issued a policy of automobile insurance to Douglas MacDonald, the father of Lynne, in which Lynne was named as an occasional driver.

2     At the time of the accident, Lynne was a passenger in a vehicle driven by Herbert L. Nunes and rented from the Respondent Budget Rent-A-Car. Budget Rent-A-Car is insured under a policy issued by the General Accident Assurance Company.

3     At the outset, two preliminary issues were raised by counsel for Budget. It was first submitted that the application did not come within Rule 612 but in my opinion, it does, as being an issue where the rights of the parties depend either upon the construction of an agreement and there are no material facts in dispute or upon undisputed facts and the proper inference from such facts. More importantly, counsel submitted that the determination of the questions raised on the motion would affect the rights of the insurer of Budget who was not before the court. Furthermore, neither the driver of the vehicle or his insurer were made parties to the application.

4     Considering that this motion was launched in September, 1983, that the "no fault benefits" under the applicant's policy in this case of serious injury have been exhausted, and that counsel for Budget had been retained and was appearing on the instructions of General Accident Assurance Company, I considered it appropriate to add General Accident Assurance Company as a respondent to this application without further delay. The issue here has been exposed for a considerable time and there is no prejudice in my view, to dealing with it now.

5     Turning now to the motion itself, the facts are undisputed and are set out in paragraphs 1 to 13 inclusive, of the memorandum of fact and law filed on behalf of the applicant. The issue is whether the obligation of the applicant, ("Travelers") to pay "no fault benefits" is limited to $25,000.00 provided in the policy. The following summary of some of the facts may be helpful in understanding the issue:


1.            Travelers, although it is an Ontario insurer, issuing standard automobile insurance policies under the laws of the Province of Ontario, voluntarily filed a written certification pursuant to the laws of the State of Michigan.

2.            The effect of the voluntary certification is that certain insureds are entitled to "no fault benefits" on the Michigan scale.

3.            Under Michigan law, in contrast to "no fault benefits" under the Ontario Insurance Act, R.S.O. 1980, c. 218, there is no limit of payment of medical and rehabilitation benefits.

4.            Michigan law which would be applicable pursuant to the certification provides that a person normally collects "no fault" benefits from his or her own no fault insurance policy. In other words, it is the injured passenger's automobile insurance policy which responds to the loss with respect to the medical and rehabilitation benefits payable. If such passenger does not have his or her own policy, the law of Michigan then requires that recourse be made to the insurance carrier of any parent if that passenger is domiciled in the same household.

5.            Michigan law further provides that if the injured passenger is not separately insured and is not domiciled in an insured parent policyholder's household, then the insurer of the owner of the vehicle which carried the passenger responds to the loss in respect of the no fault benefits.

6.            At the time of the accident, the following facts relating to the question of domicile were present with respect to Lynne MacDonald:


(a)          Lynne MacDonald is the daughter of the insured, Douglas MacDonald. She was born on August 27, 1958.

(b)          Lynne MacDonald had been a student for three (3) years at Andrews University in Michigan in order to obtain a teaching degree.

(c)          Lynne MacDonald resided at the University during school semesters.

(d)          While in attendance at the University, Lynne MacDonald worked approximately 20 hours per week at a book bindery at a wage of $3.50 per hour. Her 1981 wages to the date of the accident totalled $2,083.38.

(e)          Douglas MacDonald has been employed at Etobicoke Board of Education since 1966. He is approximately 50 years old.

(f)           There are three (3) other children of the MacDonald's: Charlene, aged approximately 26; Karen, aged approximately 23 and Drew, aged approximately 10.

(g)          The MacDonald family resides in a rented four (4) bedroom home at 8 Kenton Drive, in Willowdale, Ontario. One of the bedrooms of the home was available for Lynne MacDonald's use on long weekends and during summer vacations.

(h)          Douglas MacDonald and his wife paid the difference between Lynne MacDonald's wages earned while she was at University and the total of her living expenses and tuition. This amounted to approximately 75% of the total cost of her attendance at the University.

(i)           Lynne MacDonald had directed all her mail to her father's residence.

(j)           Douglas MacDonald had claimed Lynne MacDonald as a dependant on his income tax return.

(k) The subject vehicle was owned by Budget Rent-A-Car, a Canadian company carrying on business in Ontario. The vehicle is insured by the General Accident Assurance Company by a policy which was issued in Ontario pursuant to the Ontario Insurance Act.


(l)           After the accident, Lynne MacDonald was cared for in a Michigan hospital while in a coma for a period of four (4) months, following which she was transferred by air-ambulance to Toronto, Ontario, where she remains in hospital in a chronic care unit.

6     The Michigan certification form under the Michigan Insurance Code, Chapter 31, Section 3163, filed by Travelers appears on page 35 of the record and provides as follows:






The Travelers Indemnity


400 University Avenue



of Canada










                 certifies that any accidental bodily injury or property damage occurring in the State of Michigan on or after October 1, 1973, arising from the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle by a resident of Canada or any State of the United States of America, other than Michigan, who is insured under any automobile liability policy issued by said company shall be subject to the personal and property protection insurance system set forth in Chapter 31 of the Michigan Insurance Code, excepting that said company shall provide collision damage benefits equivalent to benefits which would have been recoverable under property damage liability had tort not been abolished. Such certification is further conditioned to the extent that if such policy also provides direct benefits without regard to fault pursuant to contractual agreement, the law of Canada or the law of such other state or territory, the (1) personal and property protection insurance benefits provided for and in accordance with this certification shall not apply to the extent that benefits for the same elements of loss are paid, payable or required to be provided under such contractual agreement, the law of Canada or the law of such other state or territory, and (2) the total amounts of personal and property protection insurance benefits which would be payable in accordance with this certification shall be reduced by the amount paid, payable or required to be provided for the same elements of loss under such contractual agreement, the law of Canada or the law of such other state or territory.



Mr. G.A. MacKay









7     The insurance contract which is the subject matter of this application is between Travelers and Douglas MacDonald. It was submitted that the certificate was an extension of the contract, and as the contract is clearly an Ontario contract, the extension should be interpreted in accordance with Ontario law.

8     It was submitted on behalf of General Accident that the certificate was independent of the contract, although it did provide benefits to the insured which flowed through the contract and that Michigan law was the proper law for interpretation of the certificate.

9     Foreign law is a matter of evidence and there is a presumption that foreign law is the same as the law of Ontario unless there is evidence to the contrary. The only issue raised in argument of a difference between Ontario law and Michigan law with respect to the certification, is on the meaning to be given to the word "resident". In Ontario, it is well recognized that residence is distinct from domicile, but on the basis of two cases cited in argument, Workman v. Detroit Automobile Inter-Insurance Exchange, (174) 404 Mich. 477 and Dairyland Insurance Company v. Auto-Owners Insurance Company, (1983) 123 Mich. APP 675, it would appear that in Michigan, in certain circumstances at least, residence is synonymous with domicile. The effect of this difference, if such be the case, will be referred to later.

10     The issue is whether the applicant, Travelers, is required to provide "no fault benefits" to Lynne MacDonald under the Michigan scheme and that depends on whether Travelers have assumed that obligation by virtue of the wording of the certificate which provides in part, "that any accidental bodily injury...occurring in the State of Michigan...arising from the ownership, operation, maintenance or use of a motor vehicle as a motor vehicle by a resident of Canada or any State of the United States of America, other than Michigan, who is insured under any automobile liability policy issued by the said company" (Travelers).

11     It was submitted by Travelers that Lynne MacDonald did not come within the certificate because as a passenger, she could not be said to have suffered injury arising from her use of the motor vehicle. With respect, I consider this too narrow an interpretation of the wording of the certificate, particularly when it is considered in the context of the phrase "ownership, operation, maintenance or use". It would seem to me that on the plain meaning of the words that Lynne MacDonald was using the vehicle to travel to wherever her destination may have been that day.

12     I have little difficulty, and it was not submitted otherwise, in finding that Lynne MacDonald was a resident of Canada. Her presence in the United States was due to the fact that she was pursuing her education there but she had, as the evidence reveals, considerable connection with the home of her parents in Canada and, under Canadian law, there would be, in my view, no doubt that she was a Canadian resident. A person may be a resident of more than one jurisdiction. Under Ontario law, I would also consider that she was a resident of Michigan but if the submissions with respect to the law of Michigan are correct, it would appear that she might not be regarded by Michigan as a resident of that state if she was not domiciled there. Be that as it may, I do not think it makes any difference because once she qualifies for inclusion in the certificate as a resident of Canada, the language does not, in my opinion, go so far as to exclude her if she also happens to be a resident of Michigan.

13     As indicated earlier, she is named as an occasional driver in the policy issued to Douglas MacDonald and in my opinion, she is therefore insured under an automobile liability policy issued by Travelers. It was submitted that the policy referred to in the certificate was the policy that had been issued with respect to the motor vehicle which was the subject matter of the accident, but in my opinion, the language does not bear that construction. The reference to the automobile liability policy, in my view, is with reference to the person who is insured thereunder, and that would be Lynne MacDonald.

14     Therefore to summarise, Lynne MacDonald suffered bodily injury arising from the use of a motor vehicle by her as a resident of Canada, and was insured under an automobile liability policy issued by Travelers. Having reached that conclusion, it is agreed that Travelers would be primarily liable under the certificate and that its liability would exceed the Ontario "no fault limits" of $25,000.

15     There was a third question included in the notice of motion as to whether, if Travelers was bound to pay the medical and rehabilitation benefits without limit, it was entitled to subrogation rights in respect to such benefits paid out in excess of $25,000.

16     Generally speaking, at common law, a person such as Travelers, who pays money to its insured, is entitled to stand in the shoes of the insured and recover what it has paid from persons responsible to the insured. Such common law provision is limited by statute in Ontario, and specifically, in the case of "no fault benefits", there is no such right of subrogation. The principle problem in dealing with this question is that the persons against whom subrogation would be asserted are not before the Court and it would seem to me, inappropriate to endeavour to deal with that issue at this time. Therefore, I propose not to answer that question. Even if the other parties had been here, I would have had some difficulty on the material before me because there is, in my view, a strong possibility that the subrogation rights, if any, of Travelers may fall to be determined under Michigan law. The obligation imposed on Travelers result from it in effect attorning to the Michigan scheme and we do not have enough material before us to deal with the subrogation question.

17     In summary, therefore, the answer to question (a) will be yes, the answer to question (b) will be no, in the sense that Travelers is not bound by the $25,000 limit to payments contained in the Ontario Insurance Act. Question (c) will not be answered.

18     Costs to the respondent Douglas MacDonald and one set of costs to respondents Budget and General payable forthwith after taxation.