Travelers Canada v. MacDonald et al.
 O.J. No. 3401
48 O.R. (2d) 714
14 D.L.R. (4th) 88
7 O.A.C. 280
8 C.C.L.I. 314
 I.L.R. 7215
 I.L.R. para. 1-1878 at 7215
39 M.V.R. 191
Court of Appeal
Mackinnon A.C.J.O., Zuber
and Tarnopolsky JJ.A.
December 19, 1984.
A. D. Houston, Q.C., and R. G. Colautti, for appellant.
H. David and L. C. Brown, for respondents, Douglas MacDonald and Lynne MacDonald.
T. H. Rachlin, Q.C., for respondent, Budget Rent-A-Car.
The judgment of the court was delivered by
1 ZUBER J.A.:-- This is an appeal from a judgment of Mr. Justice Saunders determining the rights of the parties pursuant to a policy of insurance.
2 The facts are as follows:
3 On September 20, 1981, Lynne MacDonald was seriously injured in a single-motor vehicle accident in Chelsea, Michigan. At the time of the accident Lynne MacDonald was a passenger in a van driven by Herbert Nunes. The van had been rented from Budget Rent-A-Car in Toronto. From the undisputed facts before the motions court judge, it is clear that Miss MacDonald resided with her parents in Willowdale, Ontario, and while at Andrews University in Michigan, she resided in the State of Michigan.
4 The Budget Rent-A-Car vehicle was insured by General Accident Assurance Company of Canada. Travelers Canada had issued a policy of automobile insurance to Douglas MacDonald, the father of Lynne, in which Lynne was named as an occasional driver.
5 In order to protect people insured by it, so that they might comply with Michigan financial responsibility laws, Travelers had filed in Michigan, pursuant to a Michigan statute, a certificate in the following form:
MICHIGAN CERTIFICATION FORM
MICHIGAN INSURANCE CODE -- CHAPTER 31, SEC. 3163
The Travelers Indemnity of 400 University Avenue
of Canada hearby (Company) (Address) 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
6 General Accident had also filed a certificate in Michigan in the same terms.
7 From these facts and the involvement of both Ontario and Michigan, some difficult problems arise. The threshold question in the solution of these problems is the determination of the applicable law -- the law of Michigan or the law of Ontario.
8 Travelers takes the position that the Ontario law must apply, pointing out that the insurance contract between Travelers and Douglas MacDonald was made in Ontario, that Travelers carries on business in Ontario ordinarily, that Douglas MacDonald is an Ontario resident, that the policy was delivered in Ontario and in general terms the policy is to be performed in Ontario. As a general proposition, the law of Ontario does apply to this policy but this general proposition does not extend to the specific problem at hand.
9 In filing the certificate with the Michigan authorities, Travelers extended its contract of insurance to provide special coverage in Michigan and subjected itself "to the personal and property protection system set forth in chapter 31 of the Michigan Insurance Code". There is no conflict between the principle that the Ontario law applies in general terms to the Travelers policy and the concept that for specific situations (i.e., accidents in Michigan) Travelers may enlarge the coverage in its policy by subscribing to the law of Michigan with respect to accidents in that jurisdiction.
10 This proposition is not new. It is, however, one that is necessary to accommodate the reality of insurance coverage which moves across jurisdictional borders. In Ex parte Dever; Re Suse and Sibeth (1887), 18 Q.B.D. 660, it was held that a New York statute was not incorporated into an English policy but Fry L.J. observed at p. 668 "that the extent to which the foreign law is incorporated is a mere question of construction of the instrument". The principle of construction of the instrument to determine whether or not the foreign law is incorporated is apt in this case. I think it clear that Travelers by the very terms of its contract, as extended by the Michigan certificate, has agreed that it should be governed by Michigan law in the determination of its liability pursuant to that extended coverage for injury or damage which occurs in Michigan.
11 I turn now to the specific issues raised. It is first argued by Travelers that Lynne MacDonald is not reached by the coverage extended by the Michigan certificate, i.e., that her injuries did not arise from the "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". I agree with Saunders J. that riding in the van as a passenger was a use of a motor vehicle.
12 It was also argued that she was not covered by the certificate because she was not a resident of Canada. Much was made of the fact that Miss MacDonald was a resident of Michigan. It is, however, clear that at all times she was also a resident of Canada. Residence is not an exclusive concept and the fact that she resided in Michigan does not detract from the fact that she was also a resident of Canada and therefore included in the wording of the certificate. In arriving at this conclusion, it is of little consequence whether one applies the law of Michigan or Ontario. It appears that in such a case the Michigan law may adopt a narrower view of residence, but this is of no assistance to the applicant.
13 The next question is whether Travelers is the insurer primarily liable to pay no-fault benefits to Lynne MacDonald. It appears that in this case there are at least two insurers involved. In cases where more than one insurer is liable for a loss, ordinarily the scheme of priorities is established by statute. Pursuant to Michigan law, Travelers would be primarily liable. According to Ontario law, Travelers would not occupy this position. In the case at hand, having concluded that it is the law of Michigan that governs, it follows that Travelers is primarily responsible.
14 The last question involves the limits of no-fault payments. The Michigan law provides a more generous scheme of benefits than does the law of Ontario. From what I have said earlier, it also follows that the Michigan scale governs.
15 I conclude that Saunders J. was right in his disposition of this matter. I am also in agreement with him in his conclusion that whatever subrogation rights Travelers may have should be the subject of a separate proceeding.
16 The appeal is dismissed with costs. The cross-appeal, which in view of the foregoing result becomes moot, is dismissed but without costs.