COURT OF APPEAL FOR ONTARIO
CATZMAN, BORINS AND SHARPE JJ.A.
B E T W E E N :
BERNADETTE SMITH
(Plaintiff/
Appellant)
and
CO-OPERATORS GENERAL INSURANCE
COMPANY
(Defendant/
Respondent)
Andrew Kerr
for the plaintiff/appellant
Bruce Keay
for the defendant/respondent
Heard: November 29, 1999
On appeal from the judgment of MacKinnon J. dated June 23, 1999.
SHARPE J.A.:
1The appellant plaintiff claimed and received statutory
accident benefits from the defendant respondent as a result of a
motor vehicle accident that occurred on April 14, 1994. The
respondent ceased paying benefits on May 8, 1996 and that same
day advised the appellant in writing of the reasons for
terminating her benefits.
2After engaging in a course of correspondence in which she
unsuccessfully urged the respondent to reinstate her benefits,
the appellant filed for mediation as required by the provisions
of the Insurance Act, R.S.O. 1990, c.I.8 prescribing a dispute
resolution procedure for statutory accident benefits. The
mediation was held on August 11, 1997 but failed. The appellant
issued a statement of claim on September 8, 1998 claiming ongoing
statutory benefits. She was met with the defence that her claim
was statute barred by the Insurance Act, s.281(5) which requires
that any court action or arbitration claiming statutory no-fault
benefits be commenced within two years of “the insurer’s refusal
to pay the benefit claimed”.
3The appellant contends that the respondent is not entitled
to rely on this limitation provision on the ground that the
respondent failed to comply with s.71 of the Statutory Accident
Benefits Schedule – Accidents After January 1, 1994, O. Reg.
776/93:
- If an insurer refuses to pay a benefit
that a person has applied for under this
Regulation or reduces the amount of a benefit
that a person received under this Regulation,
the insurer shall inform the person in writing
of the procedure for resolving disputes relating
to benefits under sections 279 to 283 of the
Insurance Act.
4It is the appellant’s submission that, by virtue of s. 71,
the respondent was required to advise her of the two-year
limitation period and that its failure to do so disentitles the
respondent from relying upon the statutory limitation defence.
5The respondent successfully moved for summary judgment to
have the claim dismissed. The motions court judge rejected the
appellant’s submission that the limitation period contained in
the Insurance Act, s.281(5) only started to run upon an insurer’s
compliance with s. 71. He held that: “the two-year period
begins to run when the benefits have been refused, not when an
insurer advises an applicant of his or her rights to mediation
and of the existence of a time limit”. While I agree with the
final disposition by the motions court judge, I arrive at that
result for a different reason.
6The previous version of the Statutory Accident Benefits
Schedule, applying to accidents occurring before January 1, 1994
contained the following provision:
24(8) If the insurer refuses to pay the amount
claimed in an application for Statutory
Accident Benefits, the insurer shall forthwith
give written notice to the insured person giving
the reasons for the refusal.
7There is a consistent body of arbitral jurisprudence to the
effect that the limitation period contained in s. 281(5) did not
start to run unless and until the insurer complied with this
mandatory provision. Arbitrators have held that the insurer’s
refusal must be clear and unequivocal, that the refusal must be
in writing and it must contain reasons and that the onus is on
the insurer to demonstrate that it has complied with these
requirements in refusing the benefits. See: e.g. Zeppieri v.
Royal Insurance Co. of Canada, [1994] O.I.C.D. No. 17, File No. A-
005237, decided February 17, 1994 (Naylor, Arbitrator); Lamb v.
Pilot Insurance Company, [1995] O.I.C.D. No. 165, File No. A-
015289, decided October 19, 1995 (Robinson, Arbitrator).
8In Lamb v. Pilot Insurance Company, supra, Arbitrator
Robinson identified the purpose of the section in the following
terms: “The purpose of this section is to require an insurer to
tell an unsophisticated person, in a simple and easy to
understand written form, that the insurer will not pay certain
benefits and why it has decided not to pay.” That statement was
adopted by B. Wright J. in Hall v. The Canadian Surety Co.,
(1998) 76 O.T.C. 150 which also adopted the reasoning that the
limitation period contained in s. 285(1) did not start to run
until the insurer complied with s. 24(8). Leave to appeal to the
Divisional Court was granted [1998] O.J. 5778, but on the issue
of whether the notice in question was clear and unequivocal.
9In my view, the mandatory provisions of s. 71 should be
given the same effect, for much like the previous regulation this
is a consumer protection provision designed to require an insurer
who refuses or reduces benefits to give a claimant certain
information. In view of the nature of the required information,
and in order to be meaningful, the insurer must give it at the
same time benefits are refused or reduced. According to the
modern principles of statutory interpretation, the statutory
scheme should be read as an integrated whole. See R .v. Gladue,
1999 679 (SCC), [1999] 1 S.C.R. 688. In my view, an insurer cannot be said to
have refused to pay benefits within the meaning of the statutory
scheme unless and until it has complied with this provision. By
analogy to s. 24(8), the purpose of s. 71 is to require an
insurer to tell an unsophisticated person, in a simple and easy
to understand written form, the procedure for resolving disputes
pursuant to the statute.
10In my view, the real question in this case is whether the
respondent insurer did comply with the requirements of s. 71. In
advising the appellant that her benefits were being terminated,
the respondent used a printed form, apparently of its own design,
which contained the following notation in the upper left-hand
corner:
We have assessed your claim for accident
benefits. This form tells you how we calculated
your benefits. If you disagree with our
assessment, please contact us immediately.
If we cannot settle the application to
your satisfaction, you have the right to ask
for mediation through the Ontario Insurance
Commission. You can contact them in Toronto
at (416) 250-6750 or toll free at 1-800-668-
11It is the appellant’s contention that this notice is
insufficient in that it fails to advise her of the existence of
the two-year statutory limitation period. In my view, the
appellant’s submission on this point must be rejected. As I have
already indicated, the purpose of s. 71 is to ensure that an
unsophisticated claimant is advised of his or her rights in the
event that benefits are refused, terminated or reduced. It is
common ground that under the complex statutory dispute resolution
scheme mandated by ss. 279 – 283 of the Insurance Act, a claimant
who wishes to dispute the insurer’s decision is required as a
first step to file for mediation. It is only after mediation
that a claimant is in a position to submit his or her claim to
arbitration or to proceed by way of statement of claim and
ordinary action. The two-year limitation period only becomes
relevant after the dispute resolution procedures mandated by the
statute have been exhausted. An explanation of the limitation
period would require explanation of that complex dispute
resolution scheme.
12In my view, by advising the appellant that if she wished to
challenge the decision to terminate benefits she had a right to
request mediation through the Ontario Insurance Commission, the
respondent insurer provided the precise information the appellant
needed at that point in her dispute with the respondent, thereby
satisfying the requirements of s. 71 of the Statutory Accident
Benefits Schedule, and the consumer protection purpose of the
enactment and its regulations.
13Sections 279 – 283 run for several pages in the statute book
and contain detailed provisions with respect to the steps to be
taken and the procedures to be followed from mediation through to
the commencement of an action. Given the complexity of the
statutory scheme mandated by ss. 279 – 283, it is simply
unrealistic to expect that the insurer should provide a detailed
explanation of each step in the dispute resolution process, up to
and including the right to sue in the courts and the timing of
such suit.
14There is a very significant risk that if s. 71 were
expansively interpreted to require insurers to do more than
inform claimants of the next step they are to take, the result
would be to overwhelm claimants with a flood of incomprehensible
detail. A likely response of insurers to a judicial
interpretation requiring explanation of the significant elements
of the dispute resolution scheme would be simply to attach a copy
of the statutory provisions. This would be less helpful to the
unsophisticated insured wanting to know what to do next than the
simple statement contained in the form that the respondent sent
to the appellant. An overly expansive interpretation of s.71
could well defeat the consumer protection purpose for which it
was enacted, as claimants would be overwhelmed with information
that provides little real guidance on what they must do to assert
a claim in the face of the insurer’s refusal.
15Accordingly, it is my view that, given the purpose of s. 71,
the respondent did comply with that provision and accordingly, it
is entitled to assert the limitation defence contained in s.
281(5).
16While the foregoing is sufficient to dispose of the appeal,
it might be noted in passing that evidence admitted before this
court as further evidence pursuant to the Courts of Justice Act,
R.S.O. 1990, c.C.43, s. 134(4)(b), reveals that the appellant was
advised of the two-year limitation period in the Report of the
Mediator sent to her on August 11, 1997 by the Ontario Insurance
Commission following the unsuccessful mediation. This provides
some evidence that, in practice, claimants are afforded the
information they require with respect to the limitation defence
at the appropriate moment.
17Given the complexity of the dispute resolution process
envisioned by the Act, and the potentially varying practices of
those involved in the industry, I endorse the suggestion of
Borins J.A. that the legislature consider the adoption of a
standard form simplification of ss. 279 to 283 to be included in
correspondence between insurer and insured.
18For these reasons, I would dismiss the appeal with costs.
“Robert J. Sharpe J.A.”
“I agree. M. A. Catzman J.A.”
Released: February 21, 2000
“MAC”
BORINS J.A. (Dissenting)
19I have had the opportunity to read the reasons for judgment
of my colleague, Sharpe J.A., dismissing this appeal. Although I
agree with Sharpe J.A.’s characterization of the purpose of s. 71
of the Statutory Benefits Schedule – Accidents after January 1,
1994, O. Reg. 776/93 and his conclusion that the limitation
period does not start to run until the insurer has complied with
s. 71, we disagree on whether the respondent insurer has complied
with s. 71.
20I begin with the proposition, as does Sharpe J.A., that the
purpose of s. 71 is to require an insurer to tell an
unsophisticated insured person, in a simple and easy to
understand written form, that the person has recourse to the
procedure for resolving disputes relating to accident benefits
which is set forth in ss. 279 to 283 of the Insurance Act, R.S.O.
1990, c.I. 8. However, s. 71 is clear and unambiguous. It is
mandatory and requires an insurer to supply the information
contained in the relevant sections of the Insurance Act. In my
respectful view, the interpretation of s. 71 which is implicit in
my colleague’s reasons fails to give effect to the clear language
of that section.
21In The Queen v. Ryder Truck Rental Canada Limited, released
February 9, 2000, Laskin J.A., on behalf of this court,
summarized the modern approach to statutory interpretation.
Referring to Sullivan, Driedger on the Construction of Statutes,
3d ed. (1994) at p. 131 and R. v. Gladue, 1999 679 (SCC), [1999] 1 S.C.R. 688 at
704, he stated:
The modern approach to statutory
interpretation calls on the court to
interpret a legislative provision in its
total context. The court should consider
and take into account all relevant and
admissible indicators of legislative
meaning. The court’s interpretation
should comply with the legislative text,
promote the legislative purpose, reflect
the legislature’s intent, and produce a
reasonable and just meaning. The Supreme
Court has repeatedly affirmed this
approach to statutory interpretation,
most recently in R. v. Gladue where Cory
and Iacobucci JJ. wrote:
As this Court has frequently
stated, the proper construction of
a statutory provision flows from
reading the words of the provision
in their grammatical and ordinary
sense and in their entire context,
harmoniously with the scheme of
the statute as a whole, the
purpose of the statute and the
intention of Parliament. The
purpose of the statute and the
intention of Parliament, in
particular, are to be determined
on the basis of intrinsic and
admissible extrinsic sources
regarding the Act’s legislative
history and the context of its
enactment.
22In addition, the Insurance Act and the Regulation, are
remedial legislation and should receive “such fair, large and
liberal construction and interpretation as will best ensure the
attainment of the object of the Act according to its true intent,
meaning and spirit”: Interpretation Act, R.S.O. 1990, c. I. 11,
s. 10. Moreover, there was no provision equivalent to s. 71 in
the Statutory Accident Benefits Schedule applying to accidents
occurring before January 1, 1994. In my view, the inclusion of
s. 71 in the Schedule which applies in this appeal indicates a
legislative intention to expand the information which an insurer
must provide to an insured person upon the insurer’s refusal to
pay, or decision to reduce the amount of accident benefits. This
information is intended to fully inform the insured of his or her
statutory rights in such circumstances and the procedure by which
the insured person is able to exercise those rights.
23Legislation regarding insurance has been characterized as
consumer protection legislation. This was the opinion of the
Saskatchewan Court of Queen’s Bench in Bury v. Saskatchewan
Government Insurance, [1990] S.J. No. 693. In Perron-Malenfant
v. Malenfant (Trustee of) (1999), 1999 663 (SCC), 177 D.L.R. (4th) 257 at 278-9
(S.C.C.), Gonthier J. stated that consumer protection was one of
the overriding concerns of the Quebec legislature in enacting new
insurance legislation governing the relationship between the
insured and the insurer. In my view, the statutory accident
benefits dispute resolution provisions in ss. 279 to 283 of the
Insurance Act, together with s. 71 of O/Reg. 776/93, are consumer
protection legislation as they provide an insured person with a
process to challenge the refusal to pay, or reduction of,
accident benefits which an insurer is by statute, and contract,
obliged to pay.
24The significance of characterizing s. 71 as consumer
protection legislation is that the provision must be construed in
a manner that achieves that objective. As s. 71 was enacted to
ensure that insurers provide insured persons with the information
required to enable them to challenge the refusal to pay, or
reduction of the amount of, accident benefits, then s. 71 should
be construed to require insurers to completely and clearly
provide that information to insured persons.
25Section 71 is mandatory. The plain meaning of that section
indicates that an insurer does not comply if, as the respondent
did in this appeal, the insurer merely informs an insured person
that she has the right to ask for mediation through the Ontario
Insurance Commission if the insurer cannot settle her application
for accident benefits to her satisfaction. Such information
represents only the first step of the dispute resolution process
described by ss. 279 to 283 of the Act.
26There is no doubt that the dispute resolution provisions of
the Act are extensive, as well as complex. Indeed, they occupy
six pages of the Act. Among the features of the dispute
esolution process are the following:
the insured may refer to a mediator any issue in dispute (s.
280(1));
mediation has failed when certain circumstances are present
(s. 280(7)):
a mediator shall prepare a report if mediation fails (s. 280(8));
if mediation fails, the parties or mediator may refer the
issues in dispute for an evaluation of the probable outcome (s.
280.1(1));
the insured may bring a proceeding in a court, or refer the
issues in dispute to an arbitrator (s. 281(1));
as a precondition to the right to bring a proceeding in
court or to arbitrate, the insured must have sought mediation,
the mediation must have failed, and, if applicable, the
evaluation report was given to the parties (s. 281(2));
if mediation fails, the insurer shall pay benefits until
otherwise agreed by the parties, or otherwise ordered by a court
or an arbitrator (s. 281(3));
the insured must bring a proceeding in a court or seek
arbitration within two years of the insurer’s refusal to pay (s.
281(5));
extensive provisions governing the arbitration process (s.
282), including the right of a party to the arbitration to appeal
the order on a question of law (s. 283(1)).
27Thus, in general, ss. 279 to 283 of the Act describe the
basic rules covering the process of dispute resolution for
accident benefit claims which require mandatory mediation, and
allowing for either arbitration or a court proceeding thereafter
should mediation be unsuccessful. Moreover, s. 281(2) contains a
limitation period requiring that arbitration or a court
proceeding “must be taken within two years after the insurer’s
refusal to pay the benefit claimed”.
28In my view, this limitation period is central to the dispute
resolution process contained in the Act. Without being informed
of the limitation period, an insured person would not appreciate
the need to proceed expeditiously in taking the steps which must
be taken before he or she is entitled to arbitrate or litigate.
Nor would the insured person know that after a certain period of
time he or she is precluded from arbitrating or litigating.
Indeed, it is very much in the interest of an insurer not to
expressly inform an insured of the limitation period as mandated
by s. 71 of the Regulation and then, as in this appeal, to
attempt to take advantage of the limitation period to dismiss a
claim brought against it by an insured.
29I agree with Sharpe J.A. that it is unrealistic to require
an insurer to provide an insured person with a copy of ss. 279 to
283 of the Act as their complexity would make them difficult for
the average insured person to understand. On the other hand, to
conclude that informing the insured person only of the next step
consequent to an insurer’s refusal to pay, or reducing of the
amount of, the accident benefits ignores the important notice –
giving function, as well as the plain meaning, of s. 71 of the
Regulation. As well, to interpret s. 71 restrictively would be
contrary to s. 10 of the Interpretation Act and would give
insurers an incentive not to comply with the mandatory
requirements of the section. Moreover, as s. 71 is consumer
protection legislation, there should be strict compliance by
insurers with its requirements so that an insured person will be
fully informed of his or her rights and responsibilities.
30Applying the principles canvassed above, I would suggest
that to comply with s. 71 an insurer should provide, as a
minimum, the following information:
that the insured has the right to dispute the insurer’s
refusal to pay;
that the right to arbitrate or file a claim depends upon the
insured having sought mediation;
that the right to arbitrate or file a claim is subject to a
two-year limitation period, running from the insurer’s refusal to
pay; and
that the release of the mediator’s report extends the
limitation period by 90 days.
In my view, this information would fulfill the purpose of s. 71
which is to require an insurer to tell an unsophisticated insured
person, in a simple and easy to understand written form, that the
person has recourse to the procedure for resolving disputes
relating to accident benefits contained in ss. 279 to 283 of the
Act.
31A standard form, using language which is easily understood
and containing the basic information which s. 71 requires an
insurer to provide to an insured person upon refusing to pay, or
reducing the amount of, accident benefits, would eliminate
situations like the one presented by this appeal. I would
recommend that the legislature develop and include such a
standard form in the Act or the Regulation.
32I appreciate that in this appeal there is evidence that the
appellant acquired knowledge of the limitation period following
the unsuccessful mediation. However, this should not detract
from the insurer’s statutory obligation to comply with s. 71. As
well, this fact does not assist in resolving the issue presented
by this appeal, which is the content of the information an
insurer is required to provide an insured person and whether the
information which the insurer provided in this appeal constituted
proper compliance with s. 71.
33In my opinion it is desirable that the court provide
insurers and insured persons with appropriate guidance respecting
the content of a s. 71 notice to ensure a level playing field.
In my respectful view, the decision of the majority will produce
the result that compliance with s. 71 will be decided on a case
by case basis. If the information which the insured provided in
this appeal is regarded as the standard for compliance with s.
71, there is no guarantee, as occurred in this appeal, that the
limitation period will come to the attention of the insured. If
informing the insured person of the first step in the dispute
resolution process is held to be adequate compliance with s. 71
of the Regulation, I am at a loss to understand on whom the
obligation rests to inform an insured person of the subsequent
steps in the process including, of course, the limitation period.
34For the foregoing reasons, I am of the opinion that the
information which the respondent provided to the appellant does
not fulfill the mandatory requirements of s. 71 of the
Regulation. As the two-year limitation period contained in s.
281(2) of the Act does not begin to run until an insurer has
complied with s. 71, the appellant is not precluded from
proceeding with her claim against the respondent.
35Therefore, I would allow the appeal, set aside the summary
judgment dismissing the appellant’s claim and order that the
action proceed to trial. The appellant will have her costs of
the motion and the appeal.
“S. Borins J.A.”
Released: February 21, 2000
