Haldenby v. Dominion of Canada General Insurance Co.

[Indexed as: Haldenby v. Dominion of Canada General Insurance Co.]

55 O.R (3d) 470

[2001] O.J. No. 3317

Docket No. C35214

Court of Appeal for Ontario

Labrosse, Doherty and Feldman JJ.A.

August 17, 2001

Limitations -- Insurance -- Statutory accident benefits -- Section 26(1) of Statutory Accident Benefits Schedule contemplates one limitation period -- Insurer informed insured of intention to discontinue weekly income benefits after 156 weeks on ground that insured did not qualify for long-term benefits -- Insured subsequently lost her job as result of accident-related injuries and "reapplied" for weekly income benefits -- Limitation period began to run when insurer initially refused to pay further benefits -- Statutory Accident Benefits Schedule -- Accidents Before January 1st, 1994, O. Reg. 672/90, s. 26(1).

The plaintiff was involved in motor vehicle accidents on February 25, 1993 and April 1, 1993. She applied for accident benefits and received weekly income benefits from her automobile insurer, the defendant. On February 22, 1996, the defendant stopped paying weekly income benefits to the plaintiff on the ground that she did not qualify for long-term benefits. On May 21, 1996, the defendant advised the plaintiff by letter that it refused to pay weekly income benefits for any period in excess of 156 weeks subsequent to the motor vehicle accident of February 25, 1993. On October 30, 1998, the plaintiff requested "further weekly income benefits". The defendant did not respond. On May 14, 1999, the plaintiff completed an application for mediation of her "further weekly income benefits" claim. The defendant took the position that the claim was barred by the limitation period set out in s. 281(5) of the Insurance Act, R.S.O. 1990, c. I.8 and s. 26(1) of the Statutory Accident Benefits Schedule -- Accidents Before January 1st, 1994, O. Reg. 672/90 ("SABS"). The mediation failed. The plaintiff issued a statement of claim on August 13, 1999 for further weekly income benefit payments. She brought an application to determine when a limitation period commences to run under s. 26(1) of the SABS. The application judge declared that the two-year limitation period in s. 26(1) starts to run against an insured person when the insurer first gives written notice of termination of weekly benefits after the insured's initial application for such benefits. The plaintiff appealed, arguing that s. 26(1) creates two separate and distinct limitation periods: (a) two years from the insurer's refusal to pay the amount claimed in the application for statutory benefits; or (b) if the insured person has attended school or accepted, or returned to, an occupation or employment, within two years of the insurer's refusal to pay further benefits after reapplication.

Held, the appeal should be dismissed.

Section 26(1) of the SABS contemplates one limitation period, not two. It is the insurer's refusal which triggers the limitation period that can arise in two types of situation. The two parts of s. 26(1) apply respectively to the situations where (1) the insurer refuses to pay the amount claimed by the insured; or in the alternative where (2) the insurer refuses to pay further benefits if the claimant went to school or returned to work. The first part of s. 26(1) is designed to capture every situation in which a claimant is initially refused benefits or in which a claimant received benefits until the insurer refused to make further payments. The second part of s. 26(1) is aimed exclusively at those claimants who are receiving benefits and attempt a return to work or school as permitted by s. 16 of the SABS. The plaintiff "reapplied" for weekly benefits after her employment was terminated. It was her position that the two-year limitation period had not begun to run because there was no written refusal by the defendant to pay further benefits. However, there is no provision in the Act or the SABS which allows a claimant to reapply for further benefits after the benefits have been terminated by the insurer. The only remedy for the claimant is to appeal the termination of benefits within the two-year period. Section 16 allows a person who is receiving accident benefits to return to work or to school without affecting the benefits. There is nothing in s. 16 which provides any right to receive more benefits than are provided for under ss. 12 and 13 of the SABS, nor is there any provision which allows for an application for further benefits at any time. The plaintiff's claim that under the second part of s. 26(1) and s. 16, a person receiving benefits can return to work for any period of time after the accident, receive the full 156 weeks of benefits, and then reassert a claim for further benefits if at some time thereafter the person is unable to continue to work due to accident-related injuries, was contrary to the scheme of the SABS, which only allows payments in excess of 156 weeks if the person is continuously prevented from engaging in his or her employment as a result of the injury. If a person was working after the 156 weeks, that person was not continuously prevented beyond that period from working.

APPEAL from a judgment of Kealey J. (2000), 2000 CanLII 22702 (ON SC), 50 O.R. (3d) 760 (S.C.J.) determining when the limitation period in s. 26(1) of the Statutory Accident Benefits Schedule -- Accidents Before January 1st, 1994, O. Reg. 672/90 commences to run.

Cases referred to M. (K.) v. M. (H.), 1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6, 96 D.L.R. (4th) 289, 142 N.R. 321, 14 C.C.L.T. (2d) 1; Ontario (Minister of Transportation) v. Ryder Truck Rental Canada Ltd. (2000), 2000 CanLII 5647 (ON CA), 47 O.R. (3d) 171, 1 M.V.R. (4th) 10 (C.A.); Shirani v. Wellington Insurance Co. (1997), F.S.C.O. File No. A96-000114 Statutes referred to Insurance Act, R.S.O. 1990, c. I.8, s. 281 Rules and regulations referred to Statutory Accident Benefits Schedule -- Accidents Before January 1st, 1994, O. Reg. 672/90, ss. 12-17, 24(8), 26(1)

William J. Sammon, for appellant. Pat C. Peloso, for respondent.

The judgment of the court was delivered by

[1] LABROSSE and FELDMAN JJ.A.: -- This appeal involves the interpretation of s. 26(1) of the Statutory Accident Benefits Schedule -- Accidents Before January 1st, 1994, Ont. Reg. 672/ 90 ("SABS") which provides the limitation period for the commencement of proceedings in respect of statutory accident benefits.

[2] On an application to determine the applicable limitation period, the appellant argued that this section creates two separate and distinct limitation periods. Justice Kealey dismissed the application and held that the section contemplates only one limitation period which begins to run from the insurer's refusal to pay the amount claimed in the application for accident benefits. The appellant appeals that decision. For the reasons that follow, the appeal should be dismissed.

Relevant Legislation

[3] The relevant legislative sections are as follows:

Statutory Accident Benefits Schedule, Part IV -- Weekly Benefits

INCOME BENEFIT

12(1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident a weekly income benefit during the period in which the insured person suffers substantial inability to perform the essential tasks of his or her occupation or employment if the insured person meets the qualifications set out in subsection (2) or (3).

[Sections (2) and (3) are not relevant on this appeal.]

(5) The insurer is not required to pay a weekly benefit under subsection (1),

(a) for the first week of the disability;

(b) for any period in excess of 156 weeks unless it has been established that the injury continuously prevents the insured from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience.

DEDUCTIONS

15. The insurer may deduct from any benefit payable under this Part 80 per cent of any income received or available from any occupation or employment subsequent to the accident.

TEMPORARY RETURN TO SCHOOL OR WORK

16(1) Subject to section 15 and subsection (3), a person receiving a benefit under this Part may attend school or accept, or return to, work at any time during the first two years following the accident for any period of time without affecting his or her benefits under this Part if, as a result of the accident, he or she is unable to continue at school or in the occupation or employment.

(2) Subject to section 15 and subsection (3), after the two-year period referred to in subsection (1), a person receiving a benefit under this Part may attend school or accept, or return to, an occupation or employment for periods of up to ninety days without affecting his or her benefits under this Part if he or she, as a result of the injury, is unable to continue at school or in the occupation or employment.

Part VIII -- Miscellaneous

PAYMENT OF CLAIMS, REFUSAL TO PAY

24(8) If the insurer refuses to pay an 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.

TIME LIMIT FOR PROCEEDINGS

26(1) A mediation proceeding under section 280 of the Insurance Act or an arbitration or court proceeding under Section 281 of the Act in respect of benefits under this Regulation must be commenced within two years from the insurer's refusal to pay the amount claimed in the application for statutory accident benefits or, if the person has attended school or accepted, or returned to, an occupation or employment, as permitted by section 16, within two years of the insurer's refusal to pay further benefits.

Insurance Act, R.S.O. 1990, c. I.8

281(1) Subject to subsection (2),

(a) the insured person may bring a proceeding in a court of competent jurisdiction;

(b) the insured person may refer the issues in dispute to an arbitrator under section 282; or

(c) the insurer and the insured person may agree to submit any issue in dispute to any person for arbitration in accordance with the Arbitration Act, 1991.

(5) A step authorized by subsection (1) must be taken within two years after the insurer's refusal to pay the benefit claimed or within such longer period as may be provided in the Statutory Accident Benefits Schedule.

Facts

[4] The appellant was involved in a motor vehicle accident on February 25, 1993 and in a second motor vehicle accident on April 1, 1993. The appellant was insured under a standard Ontario policy of automobile insurance with the respondent Dominion of Canada General Insurance Company.

[5] On March 18, 1993, the appellant applied for accident benefits and, as of March 4, 1993, received weekly income benefits from Dominion pursuant to s. 12 of the SABS.

[6] Before her accident, the appellant was a projects and initiatives analyst. After her February 1993 accident, she returned to work for nine days. After the April 1993 accident, she was off work until November 1, 1993. She then returned to work part-time until March 5, 1994 when she took a further month off due to her accident-related injuries.

[7] On February 22, 1996, Dominion stopped paying weekly income benefits to the appellant. As of that date, Dominion took the position that pursuant to para. 12(5)(b) of the SABS, the appellant did not qualify for weekly income benefits past the 156-week anniversary of the accident of February 25, 1993, because it was not established that "the injury continuously prevents the insured from engaging in any occupation or employment for which she is reasonably suited by education, training or experience."

[8] On May 21, 1996, Dominion advised the appellant by letter that it refused to pay weekly income benefits for any period in excess of 156 weeks subsequent to the motor vehicle accident of February 25, 1993. The letter stated:

In reviewing the file, we note no official Assessment of Claim form was ever sent to you upon termination of your disability benefit at the 156-week mark. As you know, at 156 weeks post-accident, the criteria for disability changes under the auto policy. At this time, you would need to be unable to perform any job for which you are qualified by training, education or experience. Since you are able to perform such a job, your benefits were terminated 156 weeks after the accident. I understand you were verbally advised of this, however, no written confirmation was sent and for this reason I am sending one now.

[9] The appellant acknowledged by letter that she had been advised of Dominion's refusal to pay her further weekly income benefits.

[10] The appellant was subsequently terminated from her employment in January 1997, due to her accident-related injuries.

[11] On October 30, 1998, the appellant wrote Dominion, in effect requesting "further weekly income benefits". Dominion did not respond.

[12] On May 14, 1999, the appellant completed an application for mediation of her "further weekly income benefits" claim. The mediation was conducted on August 9, 1999. Dominion took the position that the appellant's claim was barred by the limitation period set forth in s. 281(5) of the Insurance Act and s. 26(1) of the SABS. The mediation failed.

[13] The appellant issued the statement of claim on August 13, 1999 for further weekly income benefit payments. On December 22, 1999, the appellant brought an application to determine when a limitation period commences to run under s. 26(1) of the SABS against an insured person in relation to his or her claim for weekly income benefits.

[14] In a judgment dated November 3, 2000, the application judge declared that the two-year limitation period under s. 26(1) of the SABS commences to run against an insured person when the insurer first gives written notice of termination of weekly benefits after the insured's initial application for such benefits.

The Issue

[15] The issue can be properly formulated in the following terms: What is the nature of the limitation period contemplated by s. 26(1) of the SABS?

[16] On appeal, as in the court below, the appellant argued that s. 26(1) creates two separate and distinct limitation periods:

(a) Two years from the insurer's refusal to pay the amount claimed in the application for statutory benefits; or

(b) If the insured person has attended school or accepted, or returned to, an occupation or employment, as permitted by s. 16, within two years of the insurer's refusal to pay further benefits after reapplication.

Analysis

1. General principles

[17] Limitation periods play an important role in the administration of justice by achieving a balance between every individual's right to justice on one hand and the systemic need for finality on the other. In their operation, limitation periods encourage the timely resolution of legal controversies and reconcile the competing interests of potential claimants, potential defendants and society at large.

[18] The application judge properly outlined the three rationales underlying limitation periods, as set out by La Forest J. in M. (K.) v. M. (H.), 1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6, 96 D.L.R. (4th) 289 at pp. 28-30 S.C.R., pp. 301-02 D.L.R. They are:

1. Certainty rationale: "a potential defendant should be secure in his reasonable expectation that he will not be held to account for ancient obligations."

2. Evidentiary rationale: this "concerns the desire to foreclose claims based on stale evidence. Once the limitation period has lapsed, the potential defendant should no longer be concerned about the preservation of evidence relevant to the claim."

3. Diligence rationale: "plaintiffs are expected to act diligently and not 'sleep on their rights'; statutes of limitation are an incentive for plaintiffs to bring suit in timely fashion."

[19] Also, in a more general sense, the SABS must be read in accordance with the modern approach to statutory interpretation. Thus, 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": Ontario (Minister of Transportation) v. Ryder Truck Rental Canada Ltd. (2000), 2000 CanLII 5647 (ON CA), 47 O.R. (3d) 171 at p. 174, 1 M.V.R. (4th) 10 (C.A.).

2. Section 281(5) of the Insurance Act

[20] Section 281(5) of the Insurance Act sets the general limitation period for statutory accident benefits claims. Specifically, an insured person must initiate proceedings within two years of the insurer's refusal to pay the benefit claimed, or within such longer period as may be provided by the SABS. The appellant says that the second half of s. 26(1) provides a longer period for an insured person to initiate proceedings.

3. Section 26 of the SABS

[21] Section 26(1) of the SABS contains two triggering events for the commencement of the two-year limitation period. First, it specifies that proceedings in respect of benefits must be commenced within two years from the insurer's refusal to pay the amount claimed in the application for statutory accident benefits. Second, where a person has attended school, or accepted or returned to an employment in accordance with s. 16, proceedings in respect of benefits must be commenced within two years of the insurer's refusal to pay further benefits.

[22] The appellant submits that the two alternatives set out in s. 26(1) describe two distinct limitation periods. We disagree.

[23] As properly noted by the application judge, the relevant statutory language is not free of ambiguity. However, in our view, s. 26(1) contemplates one limitation period. It is the insurer's refusal which triggers the limitation period that can arise out of two types of situations. Indeed, the two parts of s. 26(1) apply respectively to the situations where (1) the insurer refuses to pay the amount claimed by the insured; or in the alternative where (2) the insurer refuses to pay further benefits if the claimant went to school or returned to work as permitted by s. 16.

[24] For example, the first part of s. 26(1) would apply to a claimant whose initial application for benefits is refused by the insurer. That claimant would then have two years from the date of that refusal to commence proceedings regarding his or her claim. Also, the first part of s. 26(1) would apply to situations where a claimant successfully applied for benefits and, after a period of time, the insurer stops paying benefits to the claimant. The first part of s. 26(1) is designed to capture every situation in which a claimant is initially refused benefits or in which a claimant received benefits until the insurer refused to make further payments.

[25] By contrast, the second part of s. 26(1) is aimed exclusively at those claimants who are receiving benefits under the Schedule and attempt a return to work or school "as permitted by s. 16". Basically, s. 16 provides that a person receiving benefits under the Schedule may attend school or return to work without prejudicing his or her entitlement to benefits. It must be noted that the protection offered by s. 16 applies solely to "a person receiving a benefit under this Part". "This Part" refers to Part IV of the Schedule, that is ss. 12 to 17 inclusively. Therefore, consideration must be given to those sections when interpreting the return to work provisions of the Schedule.

[26] Section 12 is particularly important. It sets out the insurer's obligation to pay benefits (s. 12(1)), the criteria for entitlement to benefits (ss. 12(2) and (3)), the amount of the benefit (ss. 12(4) and (7)), and most importantly, the limits of entitlement to benefits (ss. 12(5) and (6)).

[27] For the purposes of this case, s. 12(5) is determinative. It provides that an insurer is not required to pay benefits to an insured for any period "in excess of 156 weeks unless it has been established that the injury continuously prevents the insured from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience".

4. The case on appeal

[28] The appellant's position is that she was a person covered by s. 16(1) of the SABS who returned to work within the two years after the accident and received benefits for 156 weeks, at which point in time her benefits were terminated. However, she remained employed. She was only terminated from her employment some months thereafter. It was one-and-a-half years after her employment was terminated that she applied again for benefits and there has been no written refusal from the insurer to pay those benefits since that time. Her position therefore is that as there has been no refusal, the two-year limitation period has not run from the time she reapplied for further benefits.

[29] The first basis for the appellant's argument is that because she remained employed after having received 156 weeks of benefits, she was not eligible at that time to receive further benefits. But once she was terminated from employment as a result of accident related injuries, she could then take the position that she was permanently disabled as a result of the accident, and therefore entitled to further weekly benefits.

[30] The problem with this submission is that there is no provision in the Act or the SABS which allows a claimant to reapply for further benefits after an insured person's benefits have been terminated by the insurer. The only remedy for the insured person is to appeal the termination of benefits within the two-year period.

[31] Section 16 allows a person who was injured in an accident and began to receive benefits because the person could not initially return to work, to later return to work or to school without affecting the benefits. The effect of the section is to encourage people to try to return to work or to school after an accident. However, there is nothing in s. 16 which provides any right to receive more benefits than are provided for under ss. 12 and 13 ("Benefit if No Income") of the SABS, nor is there any provision which allows for an application for further benefits at any time.

[32] Second, the appellant argues that interpreting s. 26 to provide for only one limitation period makes redundant the phrase at the end of the section which describes the alternative situation. We disagree. Rather, as stated above, the section clarifies the two possible scenarios for receipt of weekly benefits under the section -- people not working and people working or attending school after a period of not working. Claimants may only qualify under s. 16 if they are already receiving benefits, i.e. people whose benefits have been terminated do not qualify. Although the phrase "further benefits" is not found in the section, a person whose benefits continue after going back to work can be said to receive "further benefits" following the initial weekly benefits when the person was unable to work. (Note that by s. 16(3), if a person goes back to school, the insurer is not required to pay any amount for weekly benefits while the person is in school.)

[33] Third, the appellant takes the position that s. 15, which allows the insurer to deduct from benefits payable 80 per cent of the income which a person may receive from employment, can result in the benefit payment amount being reduced to zero during the time the person returns to work under s. 16. The appellant argues that this may be perceived as a termination or refusal to pay, triggering the limitation period and thereby forcing the person to launch an appeal when the person has no complaint at the particular time. In our view, this issue does not arise out of the operation of s. 15. By s. 24(8) a refusal must be in writing and must provide reasons. Where the amount of the benefit payable is zero, that is not a refusal by the insurer to pay a benefit. Therefore, the limitation period is not triggered by the operation of s. 15.

[34] Finally, the appellant claims that May 21, 1996 (the date of the termination letter) is not the proper date by which to determine the limitation period. She submits that under the second part of s. 26(1) and s. 16, a person receiving benefits can return to work for any period of time after the accident, receive the full 156 weeks of benefits and, if at some time thereafter the person is entirely unable to continue to work due to accident-related injuries, can reassert a claim for further benefits at any time, and the limitation period does not begin to run until the insurer refuses to pay the further benefits claimed.

[35] The appellant's interpretation of s. 26(1) was properly rejected by David Evans, the arbitrator in Shirani v. Wellington Insurance Co. (F.S.C.O. File No. A96-000114, January 7, 1997) since it suggests that, in effect, there would be no limitation period. The appellant's interpretation of s. 26(1) would allow a person receiving benefits who has successfully returned to work, to apply for further benefits at any time in an undetermined future. The limitation period in s. 26(1) would only be engaged when such an application was refused.

[36] As noted by the application judge (para. 8), the appellant's approach would extend a claimant's entitlement to benefits for an indeterminate period of time and is "inconsistent with the Supreme Court of Canada's rationale which underlined the common sense of, and the need for limitation periods". Indeed, as discussed above, such an interpretation of ss. 26(1) and 16 would unreasonably controvert the systemic need for finality, certainty and the principle of diligence.

[37] In any event, the appellant's interpretation is contrary to the scheme of the SABS. Section 12(5)(b) provides that the insurer is not required to pay a weekly benefit under subsection (1) for any period in excess of 156 weeks, unless it has been established that "the injury continuously prevents the insured from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience." The appellant's argument is that an insured person can receive benefits for 156 weeks, continue to work at a job after the 156 weeks, and then apply for further benefits. That would contradict the scheme of the Act which only allows payments in excess of 156 weeks if the person is continuously prevented from engaging in his or her employment as a result of the injury. Clearly, if a person was working after the 156 weeks, that person was not continuously prevented beyond that period from working. As a result, it would be inconsistent with s. 12(5)(b) to allow a person to reapply for benefits after that time. The person would never be entitled to such benefits. There can therefore be no extended limitation period based on such a reapplication.

Conclusion

[38] As stated above, the appellant in this case initiated proceedings three years after receiving Dominion's refusal to pay further benefits. The limitation period had expired.

[39] For these reasons, the appeal is dismissed with costs.

Appeal dismissed.