CITATION: Sidhu v. Aviva Canada Inc. 2018 ONSC 3710
DIVISIONAL COURT FILE NO.: DC-17-467-JR
DATE: 20180628
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
MARROCCO A.C.J.S.C., HARVISON YOUNG and MEW JJ.
BETWEEN:
DHARAM SIDHU
Applicant
– and –
AVIVA CANADA INC. and FINANCIAL SERVICES COMMISSION OF ONTARIO
Respondents
Kevin Doan, for the applicant
Robert H. Rogers, for Aviva Canada Inc.
Ariel Schneider, for Financial Services Commission of Ontario
HEARD at Toronto: 31 May 2018
REASONS FOR DECISION
(Application for Judicial Review)
MEW J.:
[1] The applicant, Dharam Sidhu, applies for judicial review of a decision of the Director’s Delegate, Jeffrey Rogers. That decision had dismissed his appeal from a decision dated rendered by Lynda Tanaka, a Financial Services Commission of Ontario (“FSCO”) arbitrator.
Background
[2] The applicant was injured in an automobile accident on 4 August 1990. He applied to his insurer – now known as Aviva Canada Inc. - for accident benefits. He received some benefits until 1993, when the insurer terminated payment. After a failed mediation, he commenced an action against the insurer on 22 June 1995, claiming that his benefits should have continued.
[3] That action was settled in 2003. An order was taken out dismissing the action without costs and, on 2 December 2003, the applicant signed a full and final release and a “Settlement Disclosure Notice” prepared by the insurer.
[4] In February 2014, the applicant purported to rescind the settlement notice. He says that he was entitled to do this because, at the time of the settlement in 2003, the Settlement Disclosure Notice provided by Aviva did not comply with s. 9.1 of the Settlement Regulation R.R.O. 1990, Reg. 664 then in force (the “Regulation”).
[5] He then brought a claim for payment of weekly income benefits from 11 August 1990 to date. Aviva rejected the claim. The applicant applied for arbitration at the Financial Services Commission of Ontario (“FSCO”) under the Insurance Act, R.S.O. 1990, c. I.8, as amended.
[6] On 3 February 2017, arbitrator Tanaka decided as a preliminary issue whether the arbitration should proceed given that a full and final release had been signed. She concluded, in reasons reported at [2017] O.F.S.C.D. No. 48 that, based on the binding effect of the Court of Appeal’s decisions in Walker v. Allstate Insurance Company (2002), 2002 44970 (ON CA), 59 O.R. (3d) 636 (C.A.) 59 O.R. (3d) 636 and Igbokwe v. HB Group Insurance Management (2001), 2001 3804 (ON CA), 55 O.R. (3rd) 313 (C.A.), (leave to appeal to the Supreme Court of Canada dismissed, [2001] S.C.C.A. No. 470), section 9.1 does not apply to settlements that occur after a court action has been commenced. Consequently, the arbitrator ordered that the applicant’s claim was barred.
[7] The arbitrator’s order was upheld on appeal by the Director’s Delegate on 21 July 2017: reported [2017] O.F.S.C.D. No. 214.
[8] Before this court, the applicant seeks judicial review of the decision of the Director’s Delegate. He says that the decision was both incorrect and unreasonable because the Walker and Igbokwe cases were decided before the version of the Regulation that was in force at the time of the settlement. As a result, those cases were not binding on the arbitrator or the Director’s Delegate.
[9] Alternatively, the applicant argues that Walker and Igbokwe should not have been followed because the Court of Appeal failed, in those cases, to consider the primacy of the insurance legislation over conflicting Rules of Civil Procedure and they were thus decided “per incuriam”.
[10] For the following reasons, I would dismiss the application.
The Legal Framework
[11] Section 279(2) of the Insurance Act reads:
(2) Any restriction on a party’s right to mediate, litigate, appeal or apply to vary an order as provided in sections 280 to 284, or on a party’s right to arbitrate under section 282, is void except as provided in the regulations.
[12] The Regulation governs the settlement of disputes concerning an insured person’s entitlement to one or more benefits under the Statutory Accident Benefits Schedule. At the time of the 2003 settlement, it required the insurer to give the claimant a written disclosure notice, in a prescribed form, containing particulars of the settlement and its consequences. It also provided that a claimant had the right to rescind a settlement if the insurer had not complied with its obligation to provide a settlement notice containing the required information: see s. 9.1(5)
[13] In Igbokwe, an accident benefits dispute was in litigation. The insurer made an offer to settle under Rule 49 of the Rules of Civil Procedure which was initially accepted. However, the parties could not agree on costs and the claimant purported to rescind the settlement claiming, amongst other things, that the insurer had not complied with s. 9(1) of the Settlement Regulation. The Court of Appeal held that s. 9.1 was never intended to affect Rule 49. The Court stated (at para. 19) that the purpose of s. 9.1:
… is to provide a claimant with adequate information prior to the commencement of an action in order to avoid a quick and uninformed decision as to the benefits the claimant is entitled to receive from the insurer. Once an action is commenced, any such relevant information would be available in the course of litigation, something an insured would not otherwise be entitled to receive but for the requirements of s. 9.1.
[14] Walker also involved a litigated accident benefit dispute. It did not, however, involve Rule 49. There were two actions, both of which were settled at a private mediation. Orders were taken out on consent dismissing the actions without costs. The claimant then retained a new lawyer and moved for a declaration that the settlement agreement had been rescinded and for an order setting aside the order dismissing the action, arguing that the insurer had failed to comply with its obligation under s. 9.1(2)5 of what was then known as the Automobile Insurance Regulation to provide a statement of its estimate of the commuted value of the insured's supplementary medical and rehabilitation benefits and an explanation of how it determined the commuted value of those benefits. The Court of Appeal, applying Igbokwe, stated, at para. 9:
The respondent's claim was settled after litigation had been commenced. The settlement was not reached as a result of the dispute resolution procedures mandated by the regulation, but was reached at a privately arranged mediation initiated by the parties themselves after the commencement of the action. It follows that s. 9.1 of the regulation does not apply and that the appeal should be allowed.
[15] On 1 October 2003, the Settlement Regulation was amended. Section 9.1(10) replaced what had previously been s. 9.1(5). A subparagraph (underlined) was added so that the subsection read:
(10) A restriction on an insured person’s right to mediate, litigate, arbitrate, appeal or apply to vary an order under sections 280 to 284 of the Act is not void under subsection 279 (2) of the Act if,
(a) the restriction is contained in a settlement;
(b) the settlement is entered into on or after the first anniversary of the day of the accident that gave rise to the claim; and
(c) the insurer complied with subsections (2) and (3).
[16] A new subsection – s. 9.1(11) – provided in part:
(11) Despite clause (10) (b), a restriction contained in a settlement entered into before the first anniversary of the day of the accident that gave rise to the claim is not void under subsection 279 (2) of the Act if, in respect of the claim,
(a) the insured person brought a proceeding in a court of competent jurisdiction under clause 281 (1) (a) of the Act and examinations for discovery have commenced…
Issues
[17] Although expressed differently in the applicant’s factum, this application for judicial review boils down to the following core issues:
a. The standard of review;
b. Whether the Arbitrator and the Director’s Delegate made reviewable errors by following and applying the Igbokwe and Walker decisions.
Analysis
[18] The Divisional Court has jurisdiction to hear applications for judicial review and to grant any relief that an applicant would be entitled to in proceedings by way of an application for an order in the nature of certiorari or proceedings by way of an action for a declaration: Judicial Review Procedure Act, R.S.O. 1990, c. J.1, ss. 2 and 6(1).
Standard of Review
[19] The Insurance Act establishes a specialised dispute resolution system for disputes relating to statutory accident benefits that a person injured in an automobile accident in Ontario may be entitled to receive from an insurer.
[20] Until 1 April 2016, disputes could be determined by arbitrators appointed by the Financial Services Commission of Ontario (“FSCO”).
[21] Sections 282(3) and (4) of the Insurance Act provide that arbitrators appointed by FSCO shall “determine all issues in dispute… in accordance with the procedures and within the time limits set out in the regulations.” A party to a FSCO arbitration could appeal the arbitrator’s order to the Director on a question of law: Insurance Act, s. 283(1). On appeal, the Director (or his delegate) may confirm, vary, or rescind the arbitrator’s order or substitute his or her order for that of the arbitrator.
[22] Section 20(2) of the Insurance Act provides that arbitrators and the Director have:
… exclusive jurisdiction to exercise the powers conferred upon him or her under the Act and to determine all questions of fact or law that arise in any proceeding before him or her and, unless an appeal is provided for under this Act, his or her decision is final and conclusive for all purposes.
[23] As the Court of Appeal has held on a number of occasions, the standard of review applicable to the Director’s Delegate when he or she has engaged in the interpretation and application of the Insurance Act (his or her home statute) and its regulations, is reasonableness: Gordyukova v. Certas Insurance Company, 2012 ONCA 563, at paras 15-18; Aviva Canada Inc. v. Pastore, 2012 ONCA 642, at paras 18-26; Aviva Canada Inc. v. Pastore, 2012 ONCA 887 (reconsideration refused); Allstate Insurance Co. of Canada v. Klimitz, 2015 ONCA 698, at para 4; aff’g 2014 ONSC 7108 (Div Ct) at paras 28-30.
[24] The applicant argues that the crux of the issue decided by the arbitrator and the Director’s Delegate was the application of the legal principle of stare decisis, an issue of central importance to the legal system as a whole and, as such, falling outside the FSCO’s home statute and its specialist expertise. In such circumstances the applicant says that the standard of review is correctness.
[25] We disagree. The appeal to the Director’s Delegate concerned an issue of statutory interpretation: whether the Regulation was applicable to the circumstances of the proceeding. The standard of review is reasonableness.
[26] Reasonableness is a deferential standard that recognises that the legislature has conferred certain authority on certain decision makers by statute and should therefore be given a margin of appreciation in in making its decisions, particularly when interpreting its home statute. As the Supreme Court put it in Dunsmuir v. New Brunswick, 2008 SCC 9, at para. 47,
Reasonableness is concerned mostly with the existence of justification transparency and intelligibility within the decision-making process. But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.
Application of the Igbokwe and Walker Decisions
[27] The applicant argues that the arbitrator and the Director’s Delegate were not bound by the Igbokwe or Walker decisions because:
a. in Igbokwe (which was wholly adopted by Walker), the court did not consider s. 66(3) of the Courts of Justice Act, R.S.O. 1990, c. C.43, which, if applied, would have resulted in a different conclusion on the interplay between s. 279 of the Insurance Act and Rule 49 of the Rules of Civil Procedure;
b. as a result of the amendments to the Settlement Regulation in October 2003, the regulation should be construed as applying to all settlements of statutory accident benefits claims, regardless of whether they occurred during court actions or FSCO arbitrations or private arbitrations.
[28] On the first of those arguments, s. 66(3) of the Courts of Justice Act precludes the making of Rules of Civil Procedure that conflict with an Act. Accordingly, to the extent that there was an inconsistency between Rule 49 of the Rules of Civil Procedure and the provisions in s. 279 of the Insurance Act and the Settlement Regulation, the applicant asserts that the conflict should have been resolved in favour of the settlement provisions of the Insurance Act.
[29] This argument misses the point. In Igbokwe, the Court of Appeal was not called upon to resolve a conflict between the Regulation’s predecessor and the Rules of Civil Procedure, because it concluded that s. 9.1 of the Regulation was never intended to and therefore did not apply to Rule 49 (emphasis added). Furthermore, Walker did not involve Rule 49 at all. But the Court of Appeal did take the opportunity in Walker to repeat the rationale for the Insurance Act settlement provisions, namely to protect claimants who settle their claims other than in the course of litigation by requiring them to be given adequate information about their entitlements to accident benefits, and to provide limited opportunities to rescind hasty or uninformed settlements.
[30] As the applicant argued, albeit in a different context, the Regulation exists to protect insured persons – i.e. consumers.
[31] On the one hand, civil litigation brings with it a range of procedural attributes including pleadings, disclosure and discovery and, in the vast majority of cases involving personal injury litigation, representation of all parties by lawyers.
[32] Settlements arrived at outside of litigation, on the other hand, often occur without many of these procedural protections. Indeed, many such claims are settled at or shortly following a mandatory mediation where there can be a distinct power imbalance between an experienced insurance representative or even a lawyer on the one hand and an unrepresented claimant on the other.
[33] The driving force behind the Court of Appeal’s decisions in Igbokwe and Walker is a recognition of a legislative intent to provide certain protections to consumers who settle accident benefit claims outside of litigation. By contrast, Mr. Sidhu, with the benefit of legal representation, settled his accident benefit claim after eight years of litigation.
[34] Given the overall rationale for the need for special measures to protect consumers when accident benefit claims are settled outside of court actions, a consideration of s. 66(3) of the Courts of Justice Act would have had been superfluous and would have had no impact on the outcome of the decisions in Igbokwe and Walker.
[35] With respect to the second argument, the amendments to the Regulation which came into force in October 2003 did broaden the application of the Regulation. The requirement to deliver a settlement disclosure notice was expressly extended to, inter alia, claims which are settled less than one year after the accident giving rise to the claim, where an action has been started, but examinations for discovery have not commenced. The applicant argues that it must follow, by necessary implication, that the Regulation is intended to apply to all settlements.
[36] Again, we do not agree. The amendments to the Regulation preclude all settlements, including those made in the context of a court action, before the first anniversary of the accident that gave rise to the claim: s. 9.6 (10). This is subject to the exemptions provided for in s. 9.6(11), one of which, as already noted, is if settlement occurs in the context of a court action in which examinations for discovery have commenced. The encroachment on the general principle enunciated in in Igbokwe and Walker is therefore very limited.
[37] It does not, however, follow that because the Regulation now applies to some settlements occurring during the course of an action, it must apply to all settlements which take place in the context of an action. In that regard, we adopt the following observations of the Director’s Delegate, at p.9:
I agree with Aviva that the amendments must be interpreted in the context of the exception that Igbokwe and Walker established. In that context, sections 9.6 (10) and 9.6 (11) are seen to recognize the mischief of premature settlements, but also acknowledge that the mischief is diminished in the context of a court action, as the Court did in Igbokwe and Walker. I agree with Aviva that, having recognized that settlements in the context of court actions require less protection, the Legislature would have employed specific, clear and unambiguous language, if it also intended to erode the exception that Igbokwe and Walker created.
[38] The decisions of the arbitrator and the Director’s Delegate were not only reasonable; they were correct.
Disposition
[39] The application for judicial review is dismissed with costs fixed in the all-inclusive amount of $10,000 payable by the applicant to the respondent Aviva Canada Inc.
___________________________ MEW J.
I agree.
___________________________ MARROCCO J.
I agree.
___________________________ HARVISON YOUNG J.
RELEASED: 28 June 2018
CITATION: Sidhu v. Aviva Canada Inc. 2018 ONSC 3710
DIVISIONAL COURT FILE NO.: DC-17-467-JR
DATE: 20180628
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Marrocco A.C.J.S.C., Harvison Young and Mew JJ.
B E T W E E N :
DHARAM SIDHU
Applicant
– and –
AVIVA CANADA INC. and FINANCIAL SERVICES COMMISSION OF ONTARIO
Respondents
REASONS FOR DECISION
(Application for Judicial Review)
MEW J.
RELEASED: 28 June 2018