Mercier v. Royal & SunAlliance Insurance Company of Canada

Mercier v. Royal & SunAlliance Insurance Company of Canada [Indexed as: Mercier v. Royal & SunAlliance Insurance Co. of Canada]

72 O.R. (3d) 94

[2004] O.J. No. 3264

Docket No. C39902

Court of Appeal for Ontario,

McMurtry C.J.O., Gillese and Blair JJ.A.

August 5, 2004

Insurance -- Automobile insurance -- Statutory accident benefits -- Insurer discontinuing caregiver benefits on basis of Designated Assessment Centre Report indicating that insured was no longer disabled -- Trial judge not erring in finding that insured satisfied caregiver disability test under statutory Accident Benefits Schedule and that she was entitled to caregiver benefits and to payment of loss of earning capacity benefits -- Trial judge not erring in finding that unpaid caregiver benefits were "overdue" and therefore attracted compound interest obligations provided for by s. 68 of SABS -- Statutory Accident Benefits Schedule -- Accidents after December 31, 1993 and before November 1, 1996, O. Reg. 776/93.

The plaintiff was injured in a motor vehicle accident in 1994. At the time of the accident, she was the primary caregiver for her 19-month-old daughter. As a result of the accident, the plaintiff suffered intractable neck and head pain and severe headaches. She applied for benefits under the Statutory Accident Benefits Schedule -- Accidents after December 31, 1993 and before November 1, 1996 ("SABS -- 1994"). The defendant insurer began paying the plaintiff a weekly caregiver benefit. In March 1996, the defendant gave the plaintiff notice of intention to terminate [page95 ]payment of the caregiver benefit based on a "sign back" letter from the plaintiff's family doctor. The plaintiff disputed the termination and the defendant arranged for a disability assessment at a Designated Assessment Centre ("DAC"). Based upon the DAC report, which concluded that the plaintiff was not disabled, the defendant terminated her caregiver benefits. The plaintiff brought an action for an order requiring the de fendant to pay caregiver benefits. The action was allowed. The trial judge ordered the defendant to pay the plaintiff caregiver benefits, together with interest calculated according to s. 68 of the SABS -- 1994 and to provide her with an offer with respect to the payment of loss of earning capacity benefits ("LECB") pursuant to s. 21(1) of the SABS -- 1994. The defendant appealed.

Held, the appeal should be dismissed.

The trial judge did not err in finding that the plaintiff satisfied the caregiver disability test under the SABS -- 1994 as she was substantially disabled from performing the caregiving tasks that she enjoyed at the time of the accident. The trial judge was entitled to accept the evidence of the plaintiff, which was corroborated by the evidence of her husband and their two friends, who were often called upon to provide childcare for the plaintiff's child due to the plaintiff's incapacity from severe head and neck pain. That evidence was supported by medical evidence.

There were two aspects to consider in determining whether the trial judge erred in finding that the plaintiff was entitled to an LECB. The first was whether the plaintiff remained qualified for a caregiver benefit at 104 weeks post-accident. The trial judge found that she was so qualified. The second aspect was whether the plaintiff demonstrated a diminished capacity to earn income compared to her capacity at the time of the trial. There was no palpable and overriding error in the trial judge's finding that, even at the time of trial, the plaintiff suffered a diminished relative earning capacity as contemplated by para. 6 of s. 21(1) of the SABS -- 1994. Thus, there was no basis for interfering with the trial judge's determination that the defendant was obliged to make an LECB offer effective August 1998.

The trial judge did not err in finding that the unpaid caregiver benefits were "overdue" and therefore attracted the compound interest obligations provided for by s. 68 of the SABS -- 1994. Weekly benefits found at trial to be owing are "overdue" and attract s. 68 interest from the date that the increased payment was required, not from the date of trial. There was an ongoing requirement to pay in this case.

APPEAL from a judgment ordering the defendant to pay the plaintiff caregiver benefits. [page96 ]

Attavar v. Allstate Insurance Co. of Canada (2003), 2003 7430 (ON CA), 63 O.R. (3d) 199, 37 M.V.R. (4th) 1, [2003] O.J. No. 213 (C.A.)., apld Langdon v. Pafco Insurance Co. Ltd., [2003] O.F.S.C.I.D. No. 105, distd Other cases referred to Housen v. Nikolaisen, [2002] 2 S.C.R. 235, 219 Sask. R. 1, 211 D.L.R. (4th) 577, 286 N.R. 1, 272 W.A.C. 1, [2002] 7 W.W.R. 1, 30 M.P.L.R. (3d) 1, 2002 SCC 33, 10 C.C.L.T. (3d) 157 Statutes referred to Statutory Accident Benefits Schedule -- Accidents after December 31, 1993 and before November 1, 1996, O. Reg. 776/ 93, ss. 21(1), (2), 23, 62, 64(11), (13), 68

John J. Aikins, for appellant. Gordon A. Wiggins and Katharine A. King, for respondent.

The judgment of the court was delivered by

[1] GILLESE J.A.: -- The appellant, Royal & SunAlliance Insurance Company of Canada, appeals from the judgment of Quinn J. dated March 26, 2003, in which he ordered Royal & SunAlliance: (1) to pay the respondent, Mary Mercier, caregiver benefits in the amount of $56,554.14; (2) together with interest calculated according to s. 68 of the Statutory Accident Benefits Schedule -- Accidents after December 31, 1993 and before November 1, 1996, O. Reg. 776/93 ("SABS--1994") in the amount of $126,501.60; and (3) to provide Ms. Mercier with an offer with respect to the payment of loss of earning capacity benefits ("LECB") pursuant to s. 21(1) of the SABS --1994.

[2] Royal & SunAlliance says that the trial judge erred in making each of those three orders and asks that the judgment be set aside and the action dismissed or, alternatively, that the judgment be set aside and a new trial ordered.

[3] For the reasons that follow, I would dismiss the appeal.

Background in Brief

[4] Mary Mercier and her husband, Andy Mercier, have a daughter, Mikaila Mercier. On November 5, 1994, Mrs. Mercier was injured in a car accident. At the time of the accident, Ms. Mercier was unemployed. She was the primary caregiver for Mikaila, who was approximately 19 months old.

[5] As a result of the accident, Ms. Mercier suffered intractable neck and head pain and terrible headaches. The pain was so great that she routinely vomited.

[6] At the time of the accident, Ms. Mercier was insured under a motor vehicle liability policy issued by Royal & SunAlliance. She applied for benefits under SABS--1994.

[7] Royal & SunAlliance accepted that Ms. Mercier had been impaired by the accident and began paying her a weekly caregiver benefit.

[8] On March 21, 1996, Royal & SunAlliance gave Ms. Mercier notice of intention to terminate payment of the caregiver benefit effective April 6, 1996. The basis of the notice was a "sign back" letter from Ms. Mercier's family physician, Dr. Kundi.1 [page97 ]

[9] Ms. Mercier disputed the termination and, in accordance with SABS procedures, Royal & SunAlliance arranged for a disability assessment at a Designated Assessment Centre ("DAC"). The DAC report was conducted by a chiropractor, Dr. Peter Diakow.

[10] Based upon Dr. Diakow's report, which concluded that Ms. Mercier was not disabled, Royal & SunAlliance terminated Ms. Mercier's caregiver benefits.

[11] Ms. Mercier saw a great many medical and healthcare specialists for her ongoing medical problems but obtained no relief until she began Botox injection therapy under Dr. Symington's care on July 26, 2000.

The Issues and Standard of Review

[12] Royal & SunAlliance argues that the trial judge improperly held that:

(1) Ms. Mercier satisfied the caregiver disability test between May 11, 1996 and July 26, 2000;

(2) Ms. Mercier was substantially unable to carry out her caregiving activities after July 26, 2000;

(3) Ms. Mercier was entitled to an LECB; and

(4) Ms. Mercier was entitled to compound interest calculated according to s. 68 of the SABS--1994.

In addition, the appellant submits that the trial judge:

(5) made a number of "processing errors" relating to trial fairness.

[13] When considering these issues, it is important to bear in mind the standard of review to be applied. An appellate court is not to interfere in the findings of fact made by a trial judge absent a palpable and overriding error. The same standard of review applies to questions of mixed fact and law unless it is clear that the trial judge made some inextricable error in principle with respect to the characterization of the principle or its application, in which case it may amount to an error of law and be subject to a standard of correctness. See Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, 211 D.L.R. (4th) 577.

Analysis

Issues 1 and 2 - Caregiver disability

[14] The finding that Ms. Mercier was substantially unable to carry out her caregiving activities between May 11, 1996 and [page98 ]July 26, 2000 is one of fact. The determination that she satisfied the caregiver disability test under the SABS --1994 involves a question of mixed law and fact.

[15] Ms. Mercier's entitlement to caregiver benefits depended upon whether, as a result of the accident, she was substantially unable to engage in the caregiving activities in which she engaged with her 19-month-old daughter at the time of the accident.

[16] I see no palpable or overriding error in the trial judge's finding that Ms. Mercier was substantially disabled from performing the caregiving tasks that she enjoyed at the time of the accident. The trial judge was entitled to accept the evidence of Ms. Mercier, which was corroborated by the evidence of her husband and their two friends, George Rowe and Rhea Tait, who were often called upon to provide childcare for Mikaila due to Ms. Mercier's incapacity from severe head and neck pain. He was also entitled to accept Dr. Kundi's evidence that his letter of March 25, 1996, in which he confirms Ms. Mercier's continued disability, represented his medical views at that time and that it amounted to a refutation of the views set out in the "sign back" letter.

[17] In addition, there was the analysis of Ms. Mercier's functioning in terms of childcare at the time of the accident and after that had been conducted by occupational and rehabilitation therapist Margaret Heikkila. The trial judge accepted Ms. Heikkila's opinion that until July 26, 2001, Ms. Mercier was substantially disabled from performing the essential tasks involved in interactions with her daughter and that after July 2000, Ms. Mercier's condition prevailed during intervals when the Botox injections were not effective. Ms. Heikkila's opinion was based on the history provided by Ms. Mercier, who gave the same evidence at trial, the medical information available and her own observations of Ms. Mercier during the interviews.

[18] In light of this evidence, I do not accept the appellant's argument that Ms. Mercier failed to satisfy her onus of proving a disability because she relied only upon "subjective" evidence.

[19] Nor do I accept the submission that the trial judge failed to consider the statements made by Ms. Mercier to the many doctors who had seen her over the relevant period. It is obvious from the trial judge's detailed and lengthy reasons that he was aware of the statements and that he accepted Ms. Mercier's explanations for them.

[20] Given the evidence that Ms. Mercier's husband and friends stepped in to perform many of the caregiving functions that Ms. Mercier had provided prior to the accident, I further reject the submission that failure to hire a nanny to replace Ms. Mercier is sufficient to disprove disability. [page99 ]

[21] Turning next to the period after July 26, 2000, when Ms. Mercier began receiving Botox injections and found some periodic relief from her condition, I see no error in the trial judge's determination that Royal & SunAlliance was obliged to pay a caregiver benefit for an average of one month in every three successive months after July 26, 2000 to the date of judgment. The evidence showed that although the Botox injections provided periodic relief from Ms. Mercier's chronic and disabling pain, there would be a lapse of several weeks between successive treatments during which time Ms. Mercier's disability returned. Although the duration of disability varied between Botox treatments, the trial judge's averaging does not amount to a palpable and overriding error.

Issue 3 - Entitlement to LECB

[22] Caregiver benefits continue to be paid after the 104- week post-accident mark if the insured continues to meet the substantial inability test. However, at week 104, the insurer is obliged to provide the insured with a notice of election to convert the caregiver benefits into an LECB. The insured may exercise this election for as long as he or she remains qualified for caregiver benefits and can demonstrate a diminished capacity to earn income compared to his or her capacity at the time of the accident. See s. 21(2) of the SABS --1994. If the election is exercised by the insured who is eligible for LECB, the insurer must promptly provide the insured with an LECB offer and, if a dispute arises, the dispute is processed in accordance with the provisions in s. 23 of the SABS--1994.

[23] Since Ms. Mercier's caregiver benefits were terminated by the insurer prior to 104 weeks following the accident, the LECB provisions were not triggered and their implementation depended on an adjudication on the question of entitlement at the 104-week mark as well as diminished capacity to earn income. At trial, the parties agreed that should Ms. Mercier be found entitled to caregiver benefits on the second anniversary of the accident, the issue date of the statement of claim (August 28, 1998) would be accepted as the date that she would be deemed to have exercised her election under para. 6 of s. 21(1) and s. 21(2) of the SABS--1994 to convert the caregiver benefit into an LECB.

[24] There are two aspects to consider in determining whether the trial judge erred in finding that Ms. Mercier was entitled to an LECB. The first is whether Ms. Mercier remained qualified for a caregiver benefit at 104 weeks post-accident. As discussed above, the trial judge found that she was so qualified. [page100]

[25] The second aspect is whether Ms. Mercier demonstrated a diminished capacity to earn income compared to her capacity at the time of trial. I see no palpable and overriding error in the trial judge's finding that, even at the time of trial, Ms. Mercier suffered a diminished relative earning capacity as contemplated by para. 6 of s. 21(1) of the SABS--1994. The trial judge relied on the evidence of Dr. Symington and Ms. Heikkila to find that her earning capacity was compromised when the Botox injections were not effective.

[26] Thus, there is no basis for interfering with the trial judge's determination that Royal & SunAlliance was obliged to make an LECB offer effective August 1998.

[27] The appellant argues that even if the trial judge properly concluded that it had to make an LECB offer, the trial judge erred in not determining the amount of the LECB.

[28] I understand that in dealing only with entitlement and not quantum, the trial judge was responding to the agreement of counsel for both parties at trial. In effect, the trial judge placed the claim back "on track" under the SABS--1994 so that the parties could avail themselves of the assessment process, followed by mediation and dispute resolution, if necessary, governed by the LECB provisions. I see no error in such a determination in light of trial counsel's agreement on the point.

Issue 4 - Interest on the unpaid caregiver benefits

[29] The trial judge found that the unpaid caregiver benefits were "overdue" and therefore attracted the compound interest obligations provided for by s. 68 of SABS--1994.

[30] Section 68 provides for the interest to be paid on a benefit that is overdue in these terms:

68. If payment of a benefit under this Regulation is overdue, the insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue at the rate of 2 per cent per month compounded monthly.

"Overdue" is defined in s. 62:

62(1) An insurer shall mail or deliver a weekly benefit that is payable under Part II, section 15, Part IV or Part V to the insured person within fourteen days after the insurer receives an application for the benefit.

(2) The insurer shall mail or deliver weekly benefits under Part II, section 15 or Part IV, V or VI to the insured person at least once every second week while the insured person remains entitled to receive the benefits.

(4) An amount payable under Part II, section 15 or Part IV, V or VI is overdue if the insurer fails to comply with subsection (1) or (2).

(Emphasis added) [page101]

[31] This court recently considered s. 68 in the context of LECB in Attavar v. Allstate Insurance Co. of Canada (2003), 2003 7430 (ON CA), 63 O.R. (3d) 199, [2003] O.J. No. 213 (C.A.). Laskin J.A., writing for the court, held that weekly benefits found at trial to be owing are "overdue" and attract s. 68 interest from the date that the increased payment was required, not from the date of trial.

[32] In coming to this conclusion, Laskin J.A. states that the compound interest provisions in s. 68 are compensatory, not punitive. He further explains, at p. 212, that:

The provision is designed to compensate insureds for the time value of money and to encourage insurers to pay accident benefits promptly.

[33] The appellant argues that Attavar is distinguishable because in Attavar there was an ongoing obligation to pay (although the parties did not agree on the amount of the payment) whereas in the instant case, as a result of having received a negative DAC report, s. 64(11) expressly permitted the appellant to cease making payments. Given that the appellant was empowered to stop making the benefits, so the argument runs, it cannot be said that the insured was "entitled to receive a benefit" and therefore payments could not have been overdue.

[34] In my view, Attavar cannot be distinguished on this basis. In Attavar, the insurer followed the procedure set out in s. 23 of the SABS--1994 for determining the insured's LECB and found the amount to be paid was $132.44 bi-weekly. Despite the insurer's compliance with the results of a DAC assessment report (known as a "REC/DAC"), the insured was held to be entitled to receive the LECB amount set by the trial judge ($291.03 per week) and the insurer was required to pay s. 68 interest on the difference between the amount that was set based on the REC/DAC assessment and the amount set by the trial judge.

[35] The appellant also argues that s. 64(13) specifies what must happen if an insured successfully challenges a negative DAC. Section 64(13) provides that the insurer must (1) resume payment of benefits; and (2) pay the benefits that were not paid. The appellant says that as s. 64(13) does not specify compound interest, it cannot be intended that the insurer is to pay s. 68 interest in such situations.

[36] This same argument is addressed in Attavar and the reasoning applies in the instant case. In Attavar, Laskin J.A. interpreted silence in respect of the interest to be paid to mean that the drafters intended the compound interest provisions in s. 68 to apply. As he said, at p. 211:

Had the drafters of the [SABS--1994] intended that insurers avoid s. 68 by paying the amount recommended by the REC/DAC assessment, they could [page102] have said so. For example, by contrast, s. 62(5) of the [SABS--1994] expressly states that a payment is not overdue where an insured person fails to furnish a health practitioner's certificate in response to a request for one from an insurer. Section 62 does not contain a similar provision saying a payment is not overdue if the insurer pays the amount recommended in a REC/DAC.

(Emphasis added)

[37] I do not find that the case of Langdon v. Pafco Insurance Co. Ltd., [2003] O.F.S.C.I.D. No. 105, also relied upon by the appellant, offers support for its position. In Pafco, Director's Delegate McMahon considered the following question:

[I]f a Designated Assessment Centre ("DAC") reports that a medical expense is not reasonable and necessary, but an arbitrator ultimately decides that some, or all, of the expenses are payable, is the insured person entitled to interest on these expenses?

Director's Delegate McMahon concluded, at para. 7, that:

[I]f a disputed expense is submitted to a DAC assessment, and the report does not state the expense is reasonable and necessary, s. 38 does not impose any payment obligations, short of a finding by an adjudicator that a benefit is owing. In the absence of an obligation to pay in advance of the order, there is no foundation for a finding that the amount was payable prior to the order.

(Footnotes removed)

[38] While this conclusion may appear to support the appellant's argument, it does not.

[39] Unlike the situation in Pafco and contrary to the appellant's claim, in the present case there was an ongoing requirement to pay. The ongoing obligation was established by operation of s. 62(2). As Laskin J.A. noted in Attavar, under s. 62(2) an insurer is required to mail or deliver weekly benefits at least once every second week while the insured person remains entitled to the benefit. Indeed, in Attavar, Laskin J.A. found that weekly benefits in the form of LECB in the amount set by the trial judge were payable prior to the date that the trial judge's decision was rendered. Unlike Pafco, where the medical benefits in question were a disputed expense, weekly benefits are benefits that an insurer is required to pay.

[40] It is significant also that Director's Delegate McMahon expressly distinguished Pafco from Attavar on the basis that the provisions governing medical benefits contain explicit rules concerning whether such payments are overdue. This accords with Laskin J.A.'s comments set out above that absent express language that a payment is not overdue, s. 68 applies.

[41] Accordingly, I would dismiss this ground of appeal. [page103]

Issue 5 - Trial fairness

[42] The appellant argues that the trial judge made a number of "processing errors" when making his credibility findings with respect to a number of the professional witnesses and that these errors result in a palpable or overriding error affecting his conclusions.

[43] In my view, the trial judge was entitled to make the credibility findings that he did. He examined the evidence at length and gave reasons for his findings that are supported on the record.

Conclusion

[44] Accordingly, I would dismiss the appeal with costs to the respondent. If the parties are unable to agree on the quantum, they may make brief written submissions in respect of the same within 20 days of the release of these reasons.

Appeal dismissed.