Financial Services Tribunal & Pension Commission of Ontario Case Summaries/
Summaires des dcisions du Tribunal des services financiers et de la Commission des rgimes de retraite de l'Ontario

Case Name/nom du dossier:SNC Insurance Company (Barbados) Inc., Stop ‘N’ Cash 1000 Inc. v. Superintendent - I0243-2004

Type/type:Insurance/Assurance

Decision Date/Date de la dcision:2004-09-13

Tribunal/tribunal:FST/TSF

 



Franais

SNC Insurance Company (Barbados) Inc., Stop ‘N’ Cash 1000 Inc. v. Superintendent of Financial Services

FST File No.: I0243-2004

Date of Decisions: September 13, 2004
November 15, 2004

Members of Panel: Colin H.H. McNairn, Chair, Kevin Ashe, Florence A. Holden

Parties to Hearing: SNC Insurance Company (Barbados Inc.)
Stop ‘N’ Cash 1000 Inc.
The Superintendent of Financial Services

Subject: CEASE AND DESIST ORDER
CARRYING ON THE BUSINESS OF INSURANCE WITHOUT A LICENCE

Summary:

The Superintendent issued an interim cease and desist order against SNC Insurance Company (Barbados) Inc. and Stop ‘N’ Cash 1000 Inc. (together the “Applicants”) pursuant to s. 441(4) of the Insurance Act (the “Act”). The interim order alleged that the Applicants were carrying on insurance operations in Ontario without the requisite licences. SNC Insurance served as a captive insurer for the franchisor, Stop ‘N’ Cash 1000 Inc., by providing credit insurance on the loans made by the Stop ‘N’ Cash franchisees to their consumers. Subsequent to the making of the interim order, the Applicants prepared a new business model that would modify the way in which they carried on business and maintained at the hearing that upon implementation of this model, they would not be acting in violation of the Act. Under the new model, SNC Insurance would issue a master credit insurance policy in Barbados that would name Stop ‘N’ Cash 1000 Inc. and its franchisees as insureds.

The September 13, 2004 Decision:

The Tribunal denied the Applicants’ request for a stay of the Superintendent’s order pending the outcome of a hearing before the Tribunal on the order. The Applicants argued that serious harm would be done to the business and the Stop ‘N’ Cash franchises if the order were to continue in effect during the proceedings before the Tribunal. The Applicants also asked for a declaration that their activities were now in compliance with the Act, taking into account changes that had been made to their business operations. The Tribunal held that such a declaration would have the same effect as a stay of the order and therefore treated the two requests together. The Act did not give the Tribunal the authority to grant a stay of the decision of the Superintendent under s. 441(4). The Tribunal also found that section 25.0.1 of the Statutory Powers Procedure Act does not conflict with the provisions of the Act since s. 25.0.1 is a broad enabling provision which confirms that a tribunal may set its own procedures. Refusing to grant a stay for lack of specific authority to do so under the Act would not put the Tribunal in violation of that s. 25.0.1.

The November 15, 2004 Decision:

At the hearing on the merits of the Superintendent’s order, the Tribunal examined the elements of the new business model against the licensing requirements of the Act and considered whether they constituted carrying on business in Ontario pursuant to s. 39(3) of the Act. The property to be insured, the credit receivables of Stop ‘N’ Cash Inc. and those of its Ontario franchisees, were located in Ontario as were the risks that were thereby insured. The Tribunal found that since the master credit insurance policy issued by SNC Insurance under the new business model would not be signed, countersigned, issued, delivered or committed to another person for delivery in Ontario, neither the location of the property nor the location of the risks insured would trigger a requirement that SNC Insurance be licensed under the Act. There was no evidence to suggest that Stop ‘N’ Cash 1000 Inc. was the agent of SNC Insurance. In addition, the activities of the Stop ‘N’ Cash franchisor, by extending the option of the master insurance policy in Ontario to its franchisees, would not constitute the “transaction of the business of insurance” nor would it constitute distributing or publishing a proposal or other documents in Ontario. SNC Insurance would not be soliciting insurance in Ontario because the franchisor would be the only person that might be solicited and this would take place in Barbados. Although the customers of the franchisees would be receiving a benefit from the insurance, the Tribunal found that they were not being solicited because the contractual relationship would arise between SNC Insurance and Stop ‘N’ Cash 1000 Inc.; the customers would not be named as insureds in the master policy. Finally, there would be no issuance or delivery of a policy of insurance in Ontario, nor would there be any collecting, receiving or negotiating of premiums in Ontario. The amounts collected by the franchisees from their customers as an additional charge were not considered to be insurance premiums since they were collected under the terms of the loan agreement rather than under the terms of the master policy. The Tribunal ordered the Superintendent to revoke the order if and when the Applicants substantially implemented the new business model.


This summary is offered as a public service and should not be relied upon as legal advice. Many factors unknown to us may affect the applicability of any statement or comment made in the summary to your particular circumstances.

SNC Insurance Company (Barbados) Inc., Stop ‘N’ Cash 1000 Inc. c. Surintendant des services financiers

No de dossier du TSF : I0243-2004

Date des dcisions : Le 13 septembre 2004
Le 15 novembre 2004

Groupe d’experts : Colin H.H. McNairn, prsident, Kevin Ashe, Florence A. Holden

Parties B l’audience : SNC Insurance Company (Barbados Inc.)
Stop ‘N’ Cash 1000 Inc.
Surintendant des services financiers

Objet : ORDONNANCE DE CESSER ET DE S’ABSTENIR
EXPLOITER UNE ENTREPRISE D’ASSURANCE SANS PERMIS

Sommaire :

Le Surintendant a mis une ordonnance intrimaire de cesser et de s’abstenir contre SNC Insurance Company (Barbados) Inc. et Stop ‘N’ Cash 1000 Inc. (ensemble les demandeurs ) en vertu du paragraphe 441(4) de la Loi sur les assurances (la Loi ). L’ordonnance intrimaire allguait que les demandeurs exploitaient une entreprise d’assurance en Ontario sans les permis requis. SNC Insurance jouait le rle de socit d’assurances captive auprPs du franchiseur, Stop ‘N’ Cash 1000 Inc., en offrant de l’assurance crdit sur les prLts consentis par les franchises Stop ‘N’ Cash B leurs clients. AprPs que l’ordonnance intrimaire eut t rendue, les demandeurs ont prpar un nouveau modPle d’entreprise modifiant la faon dont ils exploitaient leur entreprise et ont indiqu durant l’audience que, dPs que ce modPle serait mis en uvre, ils n’enfreindraient plus la Loi. Aux termes du nouveau modPle, SNC Insurance tablirait un contrat-cadre d’assurance crdit B la Barbade nommant Stop ‘N’ Cash 1000 Inc. et ses franchiss comme assurs.

Dcision du 13 septembre 2004 :

Les demandeurs ont demand une suspension de l’ordonnance du Surintendant en attendant l’issue d’une audience y affrente, mais le Tribunal a rejet leur demande. Les demandeurs ont fait valoir que l’entreprise et les franchises Stop ‘N’ Cash subiraient un tort immense si l’ordonnance restait en vigueur durant l’instance devant le Tribunal. Ils ont galement rclam une dclaration affirmant que leurs activits taient maintenant conformes B la Loi, tant donn les changements apports B leur oprations commerciales. Le Tribunal a tabli qu’une telle dclaration aurait le mLme effet qu’une suspension de l’ordonnance et, par consquent, a trait les deux demandes ensemble. La Loi ne confrait pas au Tribunal l’autorit de suspendre la dcision du Surintendant en vertu du paragraphe 441(4). Il a galement conclu que l’article 25.0.1 de la Loi sur l’exercice des comptences lgales n’entre pas en conflit avec les dispositions de la Loi car il consiste en une vaste disposition confirmant qu’un tribunal peut tablir ses propres procdures. En refusant d’accorder un sursis par manque de comptence explicite en vertu de la Loi, le Tribunal n’enfreindrait pas l’article 25.0.1.

Dcision du 15 novembre 2004 :

A l’audience sur le bien-fond de l’ordonnance du Surintendant, le Tribunal a examin les lments du nouveau modPle d’entreprise B la lumiPre des prescriptions concernant l’autorisation d’exercer de la Loi et a tent de dterminer s’ils entraient dans le champ d’application du paragraphe 39(3) de la Loi sur le commerce de l’assurance en Ontario. Le bien B assurer, les dbiteurs de Stop ‘N’ Cash Inc. et ceux de ses franchiss ontariens taient situs en Ontario, de mLme que les risques qui taient assurs. Le Tribunal a conclu que, tant donn que le contrat-cadre d’assurance crdit tabli par SNC Insurance aux termes du nouveau modPle d’entreprise ne serait pas sign, contresign, tabli ou remis B une autre personne pour Ltre remis en Ontario, ni l’emplacement du bien, ni l’emplacement des risques assurs n’obligerait la compagnie SNC Insurance B Ltre autorise en vertu de la Loi. Rien ne dmontrait que Stop ‘N’ Cash 1000 Inc. tait l’agent de SNC Insurance. En outre, en largissant l’option du contrat-cadre d’assurance en Ontario B ses franchiss, le franchiseur Stop ‘N’ Cash ne serait pas rput faire des oprations d’assurance ni distribuer ou publier une proposition ou d’autres documents en Ontario. SNC Insurance ne s’adonnerait pas B la sollicitation d’assurance en Ontario parce que le franchiseur serait la seule personne pouvant Ltre sollicite et ce, B la Barbade. Les clients des franchiss bnficieraient de l’assurance, mais le Tribunal a conclu qu’ils n’taient pas sollicits parce que la relation contractuelle mettrait en cause SNC Insurance et Stop ‘N’ Cash 1000 Inc.; les clients ne seraient pas nomms comme assurs dans le contrat-cadre. Enfin, aucune police d’assurance ne serait tablie ou remise en Ontario et les primes ne seraient pas perues, reues ni ngocies en Ontario. Les sommes perues par les franchiss auprPs de leurs clients B titre de frais additionnels n’taient pas considres comme des primes d’assurance car elles taient perues aux termes de l’accord de prLt plutt qu’aux termes du contrat-cadre. Le Tribunal a enjoint au Surintendant de rvoquer l’ordonnance dPs que les demandeurs auraient essentiellement mis en uvre le nouveau modPle d’entreprise.


Ce sommaire est offert B titre de service public et ne saurait constituer des avis juridiques. Nombreux sont les facteurs que nous ignorons et qui peuvent avoir une incidence sur l’application de nos commentaires B votre cas particulier.