COURT FILE NO.: 271/08
DATE: 20090618
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
lederman, karakatsanis and van reNSburg jj.
B E T W E E N:
AVIVA CANADA INC.
Applicant
- and -
PARAMSOTHY MURUGAPPA and the FINANCIAL SERVICES COMMISSION OF ONTARIO
Respondents
Todd J. McCarthy and Tara L. Lemke, for the Applicant,
Joe Nemet, for the Respondent, Financial Services Commission
Owen Elliot, for the Respondent, Paramsothy Murugappa
HEARD at Toronto: June 18, 2009
LEDERMAN J.: (Orally)
[1] This is an application for judicial review by Aviva Canada Inc. (the “Applicant”) of an appeal decision by the Director’s Delegate of the Financial Services Commission of Ontario (the “Directors’ Delegate”) dated May 1, 2008. That decision overturned a Preliminary Arbitration Order which precluded the respondent from proceeding to arbitration because his application was filed beyond the limitation period set out in the Insurance Act.
[2] The Applicant seeks to set aside the appeal order of the Director’s Delegate and restore the Preliminary Arbitration Order.
[3] The background facts are as follows:
(a) The respondent Murugappa was receiving benefits from his insurer following a motor vehicle accident;
(b) On July 30, 2003, the Applicant gave notice to the respondent in writing of stoppage of benefits after August 16, 2003 in accordance with the Statutory Accident Benefits Schedule (“SABS”);
(c) On July 31, 2003, in accordance with the procedure set out in the SABS, the respondent disputed termination of his income replacement benefits and requested an assessment at a Designated Assessment Centre (“DAC”). Under the SABS, the Applicant was required to keep paying the benefits pending the DAC report;
(d) The DAC report was completed on November 20, 2003 and concluded that the respondent was not substantially disabled from performing the tasks of his employment. Upon receipt of the DAC report, the Applicant gave notice that it was stopping payment of the income replacement benefits immediately because of the assessment findings;
(e) On September 30, 2005 the respondent filed an application for mediation with the Financial Services Commission of Ontario (the “FSCO”). The matter proceeded to mediation on November 28, 2005 where the Applicant raised the preliminary issue that the respondent had not commenced the mediation request within the requisite two years of the insurer’s refusal to pay benefits;
(f) The preliminary issue was decided by the FSCO in a decision released on November 10, 2006 with the result being that the respondent was precluded from proceeding to arbitration because the application was filed beyond the two year limitation period set out in s.281.1(1) of the Insurance Act and s.51(1) of the SABS. Section 281.1(1) of the Act provides:
281.1(1) A mediation proceeding or evaluation under s.280 or 280.1 or a court proceeding or arbitration under s.281 shall be commenced within two years after the insurer’s refusal to pay the benefit claimed.
Section 51(1) of the SABS provides:
51(1) A mediation proceeding or evaluation under s.280 or 280.1 of the Insurance Act or a court proceeding or arbitration under clause 281(1)(a) or (b) of the Act in respect of a benefit under this Regulation shall be commenced within two years after the insurer’s refusal to pay the amount claimed.
(g) The decision on the preliminary issue was appealed by the respondent to the Director’s Delegate who overturned it on the basis that the limitation period did not begin to run until after the Applicant provided its notice following the negative DAC report to the respondent.
[4] The sole legal issue for determination on this application is when should the two-year limitation period as set out in s.281.1(1) of the Insurance Act and s.51(1) of the SABS begin to run when an insured requests a DAC assessment under s.37 of the SABS.
[5] As noted in Dunsmuir v. New Brunswick, 2009 SCC 9, [2009] S.C.J. No. 9 (at paras. 54, 55 and 60), the standard of review for questions of law may depend on the nature of the question of law. Where the question at issue is one of general law that is both of central importance to the legal system as a whole and outside the adjudicator’s specialized areas of expertise, a standard of correctness will apply. Deference will usually result where a tribunal is interpreting its own statute or statutes closely connected to its function, with which it will have particular familiarity. Deference may also be warranted where an administrative tribunal has developed a particular expertise in the application of a general common law or civil law rule in relation to a specific statutory context.
[6] The Director’s Delegate decision is protected by a full privative clause, found in s.20(2) of the Insurance Act. A measure of deference is appropriate where the Act provides a tribunal with specialized adjudicative regime for resolving disputes that includes an appeal process on questions of law. Deference will usually result where a tribunal is interpreting its own statute with which it will have particular familiarity. The interpretation of the SABS and of the benefits available under that regime is at the very core of the tribunal’s specialized expertise as is the interpretation and application of the limitations clause which is part of the SABS regime. All of the above factors warrant a deferential “reasonableness” standard.
[7] The Applicant submits that the decision that the insured was not entitled to benefits under s.37(1) of the SABS is the refusal set out in the limitation provisions in the Act and SABS and triggers the running of the limitation period. He submits that s.37 sets out a pay pending dispute resolution procedure that does not interrupt or affect the running of the limitation period.
[8] The Applicant makes a distinction between refusal and stoppage of payment under s.37. However ss.(4) requires the insurer to determine whether it will stop payment following a negative DAC assessment and to give notice of its reasons. The Director’s Delegate was not unreasonable in finding that that decision constituted a refusal to pay and triggered the running of the limitation period. That was the definitive refusal to pay the benefits claimed. The decision does not appear unreasonable given the language of sections 37, 50 and 51(1) of SABS.
[9] The communication by the insurance company to the insured following the DAC assessment is also consistent with this result.
[10] In the end, we are of the view that the Director’s Delegate was reasonable in concluding that it was an error in law for the arbitrator to preclude the respondent from proceeding to arbitration. The application is therefore dismissed.
[11] I endorse the Application Record: “The application is dismissed for oral reasons delivered. The respondent Murugappa will have his costs fixed at $3,500.00.”
LEDERMAN J.
KARAKATSANIS J.
VAN RENSBURG J.
Date of Reasons for Judgment: June 18, 2009
Date of Release: June 30, 2009
COURT FILE NO.: 271/08
DATE: 20090618
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
lederman, karakatsanis and van reNSburg jj.
B E T W E E N:
AVIVA CANADA INC.
Applicant
- and -
PARAMSOTHY MURUGAPPA and the FINANCIAL SERVICES COMMISSION OF ONTARIO
Respondents
ORAL REASONS FOR JUDGMENT
LEDERMAN J.
Date of Reasons for Judgment: June 18, 2009
Date of Release: June 30, 2009