Echelon General Insurance Company v. Unifund Assurance
This page is a summary and commentary on a publicly available court decision, written for general informational and educational purposes only. It is not legal advice and does not create a lawyer-client relationship with Azimi Law, regardless of how specific or applicable it may seem to your situation.
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The Facts
A passenger was hurt in a July 2012 collision and applied for statutory accident benefits the following month. Echelon insured the vehicle she was riding in and Unifund insured her father. Echelon paid the benefits while the question of who should pay was decided, as the priority rules require. At arbitration in 2018 it was found that Unifund was in priority, and Unifund was ordered to repay the benefits and the arbitration costs. The arbitrator declined to order repayment of the more than $100,000 Echelon had spent before the arbitration on adjusting, mediation and legal work. A Superior Court appeal judge reversed that part of the result on the basis of unjust enrichment. Unifund appealed. Whether the Fund, which sits last on the priority ladder, should be treated differently from private insurers was raised as a concern but was not directly before the court.
What the Court Decided
The Court of Appeal allowed Unifund's appeal, set aside the order for reimbursement and restored the arbitrator's decision. The court read Ontario Regulation 283/95 as permitting one insurer to recover another's pre-arbitration expenses in only one situation: where the second insurer improperly deflected the claim, as set out in section 2.1(7). The regulation's narrow wording was seen as a deliberate choice meant to keep priority arbitrations shorter and cheaper, so the court held that unjust enrichment could not be used to widen that rule in an ordinary case. The reasons also noted the Fund's concern that its handling costs are paid from public money, but because the Fund was not before the court on that point, the question was left undecided. The court indicated that any special recovery right for the Fund would be a matter for amendment of the legislation.
Priority disputes between insurers decide who pays an injured person's benefits, and the Fund is the payer of last resort when no insurer on the ladder applies. The ruling sets the baseline that insurers carry their own early costs, which reduces the incentive to litigate priority for its own sake. It does not change what an injured person is entitled to, and it leaves the Fund's cost-recovery question open.
Does This Affect You?
- ✓Your accident benefits are being paid by one insurer while two insurers argue about who is responsible.
- ✓You were injured in a hit-and-run or by an uninsured vehicle and the Fund may end up as the payer.
- ✓You need to understand why benefits may start with an insurer you have never dealt with before.
Key Takeaways
- An injured person is not a party to the priority arbitration, and the first insurer must keep paying benefits while the question is decided.
- Insurers generally bear their own pre-arbitration expenses unless the other insurer improperly deflected a claim.
- Whether the Fund can recover its own costs when it is in a priority fight was left for another day, and any change would likely come from legislation.