Court File and Parties
CITATION: Atwi v. Certas Direct Insurance, 2015 ONSC 2683
DIVISIONAL COURT FILE NO.: 14-2064
DATE: 2015/04/24
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D.L. CORBETT, C.T. HACKLAND and R. POMERANCE JJ.
BETWEEN:
HALA ATWI
Plaintiff
– and –
THE MANUFACTURERS LIFE INSURANCE COMPANY
(Appellant) Defendant
– and –
CERTAS DIRECT INSURANCE
No one appearing for the Plaintiff
Gordon Jermane, Meg Kawasaki for the (Appellant) Defendant
Christopher F. Reil, for the Respondent
Respondent
HEARD: at Ottawa April 22, 2015
REASONS FOR JUDGMENT
HACKLAND J.
[1] This is an appeal from the decision of a motion judge granting the Respondent Certas Direct Insurance (Certas) leave to add itself as a Defendant in this action under rule 5.03 of the Rules of Civil Procedure, RRO 1990, Reg 194.
[2] The Plaintiff was injured in a motor vehicle accident occurring June 9, 2009 in which she received injuries rendering her unable to continue her employment. In this action she claims long-term disability (LTD) benefits against the Defendant, the Manufacturers Life Insurance Company (Manulife) who provided group disability coverage through her employer. She made application for disability benefits and Manulife has refused her claim, resulting in this action. The action is currently at the discovery stage.
[3] The Plaintiff has been and continues to receive income replacement benefits (IRBs) from her automobile statutory accident benefits insurer, the Respondent Certas, pursuant to the Statutory Accident Benefit Schedule, O. Reg. 403/96.
[4] The motion judge allowed the accident benefits insurer’s motion to be added as a party defendant on the basis that “they want to be made a party to help the Plaintiff get LTD from the Defendant which will be in their best interest because they will be reimbursed.” In other words, the motion judge was of the view that if the Plaintiff succeeded in obtaining LTD benefits from her disability insurer, Manulife, the accident benefits insurer would be entitled to reimbursement from that recovery for the IRB benefits paid to the Plaintiff.
[5] For the reasons below, I disagree with the motion judge’s decision and would allow the appeal and set aside the order adding Certas to the action as a party defendant.
[6] Rule 5.03 requires that every person “whose presence is necessary to enable the court to adjudicate effectively and completely on the issues in a proceeding” shall be joined as a party. The issue is therefore whether the participation of the accident benefits insurer as a party defendant in this action is necessary for the Court to adjudicate on the issues. The accident benefits insurer is not a party to the contract or group disability insurance provided by the Defendant, Manulife. They have no rights or obligations thereunder. They have no cause of action against Manulife.
[7] As noted, the motion judge accepted the Respondent’s submission that it should be made a Defendant so that it could help the Plaintiff establish her entitlement to LTD benefits. However the issue is whether it is necessary that it be made a party. In any event, the suggested help is that the accident benefits insurer could make available to assist the Plaintiff’s case, the medical evidence that has been generated in the course of establishing the Plaintiff’s entitlement to the statutory accident benefits she has received. I would observe that such evidence is in the Plaintiff’s possession or could be made available to her and such medical reports or viva voce evidence could be called by the Plaintiff. It is not necessary that the accident benefits insurer be made a Defendant for this purpose.
[8] The Statutory Accident Benefit’s Schedule contemplates a reduction in IRB payments for any long-term disability benefits “received” by or “available” to the Plaintiff. However, the reduction does not apply if the Plaintiff applies for “available” benefits but does not “receive” them.
[9] The Respondent’s position is not supported by the case law. On the contrary, in Vanderkop v. Personal Insurance Co., 2008 22926 (ON SC), [2008] O.J. No. 1937, affid, 2009 ONCA 511 the court held that the accident benefits insurer had no right to reduce the IRB benefits for LTD benefits applied for and not received, or in that case for a settlement of the claimant’s LTD benefits. The court stated at para 27:
Having said that, we wish to note Ms. Vanderkop’s concession that Personal could have recouped the $57,500 paid to her by Manulife, had it followed the necessary statutory procedures. That is, she has conceded that after the mediation, had Personal paid Ms. Vanderkop the IRBs to which she was entitled, it could have deducted the $57, 500 from those ongoing payments in the manner permitted by the legislation. It chose not to.
[10] In Vanderkop the Court of Appeal pointed out that treating an LTD entitlement as being available to an insured so as to reduce an accident benefits insurer’s obligation to pay IRBs benefits would be to inappropriately place an insured in the position of having to litigate with their collateral benefits insurer for the benefit of the accident benefit insurer. The court stated at para. 26:
IRBs are to be reduced by LTD being received as a result of the accident. The legislation does not entitle Personal to set off hypothetical benefits applied for but refused. Ms. Vanderkop was not in receipt of LTD. As Manulife had denied her claim, she cannot be described as entitled to the payment of LTD. That is, LTD was not “available” to her. To treat LTD as being available would effectively oblige an insured to litigate with their collateral benefits insurer, at their own risk and expense, for the benefit and at the discretion of, their accident benefits insurer. In our view, SBAS places no such obligation on an insured.
[11] In Ng v. Cole et al. 2013 ONSC 6588 it was held that an accident benefits insurer had no cause of action on the principles of unjust enrichment against an LTD insurer who had denied benefits to a Plaintiff suing for LTD benefits arising from injuries suffered in a motor vehicle accident.
[12] I am further of the view that in the circumstances of this case, permitting the accident benefits insurer to become a party to this Plaintiff’s action for LTD benefits against her collateral benefits insurer would encumber the action with extraneous issues to the potential detriment of the Plaintiff.
[13] Certas is not a necessary party, the order of the motions judge is set aside and the motion is dismissed. Costs of the motion for leave to appeal and of the appeal are awarded to the Respondent, Manulife, in the sum of $8,800 inclusive of disbursements and HST, plus $2,000 all inclusive for the motion below, payable forthwith.
Hackland J.
D.L. Corbett J.
Pomerance J.
Released: April 24, 2015
CITATION: Atwi v. Certas Direct Insurance, 2015 ONSC 2683
DIVISIONAL COURT FILE NO.: 14-2064
DATE: 2015/04/24
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT (OTTAWA)
D.L. CORBETT, C.T. HACKLAND, and R. POMERANCE JJ.
HALA ATWI
Plaintiff
– and –
THE MANUFACTURERS LIFE INSURANCE COMPANY
(Appellant) Defendant
– and –
CERTAS DIRECT INSURANCE
Respondent
REASONS FOR JUDGMENT
D.L. Corbett J.
Hackland J.
Pomerance J.
Released: April 24, 2015