CITATION: Aviva Canada Inc. v. Sidhu, 2018 ONSC 6506
DIVISIONAL COURT FILE NO.: 17-879-JR DATE: 20181030
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
HEENEY, CONWAY, and SUTHERLAND JJ.
BETWEEN:
Aviva Canada Inc.
Applicant
– and –
Dharam Sidhu and Financial Services Commission of Ontario
Respondents
K. Griffiths, for the Applicant
K. Doan, for the Respondent, Dharam Sidhu
A. Schneider, for the Respondent, Financial Services Commission of Ontario
HEARD at Hamilton: October 30, 2018
Conway J.
[1] Aviva Canada Inc. seeks judicial review of the decision of Delegate Rogers of the Financial Services Commission of Ontario (“FSCO”) dated July 21, 2017. The decision upheld the preliminary ruling of Arbitrator Tanaka that Mr. Sidhu’s claim for income replacement benefits was not statute barred.
Background
[2] Mr. Sidhu was involved in an accident in 1996, for which he received income replacement benefits. In May 1996, Aviva notified Mr. Sidhu that it intended to terminate his benefits.
[3] Mr. Sidhu exercised his right to undergo an assessment at a Designated Assessment Centre (DAC). In August 1996, Aviva sent Mr. Sidhu an Explanation of Assessment indicating the DAC had concluded he was not disabled. In September 1996, Aviva sent a letter to Mr. Sidhu reiterating Aviva’s position that he was not entitled to further benefits. The letter noted that mediation was the next step. The letter included a copy of section 64 of the Statutory Accident Benefits Schedule – Accidents After December 31, 1993 and Before November 1, 1996, O. Reg. 776/93, as amended (SABS).
[4] For 18 years, from September 1996 to June 2014, Mr. Sidhu and Aviva did not contact one other. In June 2014, Mr. Sidhu applied to mediate his entitlement to benefits from the 1996 accident. Mediation ended unsuccessfully.
[5] In October 2014, Mr. Sidhu applied for arbitration at FSCO. Aviva brought a preliminary motion to determine whether Mr. Sidhu’s claim for income replacement benefits was statute barred. Arbitrator Tanaka found that it was not, as the contents of the notices did not meet the requirements set out in Smith v. Co-operators General Insurance Company, [2002] S.C.R. 129. Smith requires that the insurer inform the insured of the dispute resolution process and the applicable time limits in straightforward and clear language.
[6] The Arbitrator specifically found that Aviva’s documentation failed to state the time limits on Mr. Sidhu’s exercising his rights, his rights should mediation fail, or the pre-requisite that mediation occur before further steps could be taken. Since the notices did not meet the Smith requirements, the limitation period did not start to run and Mr. Sidhu was entitled to proceed with his claim.
[7] Aviva concedes that the notices did not meet the Smith requirements.
[8] The Arbitrator distinguished the case of Golic v ING Insurance Company of Canada 2009 ONCA 836, in which the Court of Appeal concluded that a claim was statute barred where the insurer’s letter included an extensive description of the process, referred to the insured’s previous history of participating in two mediations, and set out the provisions of the Insurance Act, R.S.O. 1990, C. I.8 and the steps to be taken in the event the mediation failed.
[9] Delegate Rogers dismissed Aviva’s appeal. He agreed with the Arbitrator that the case was more consistent with Smith than Golic. The Delegate stated that there was no getting around the bright-lines approach of Smith when a defective notice was at issue and that the Supreme Court of Canada’s ruling was clear.
Standard of Review
[10] The parties agree that the applicable standard of review of the Delegate’s decision is reasonableness.
Analysis
[11] In Smith, the court stated that the consumer protection focus of insurance law requires courts to take a “bright-line” approach in determining whether an insurer has met its obligation to provide a proper notice of denial, which that would start the limitation period. The court stated, at para. 16, that the courts must impose “bright-line boundaries between the permissible and the impermissible without undue solicitude for particular circumstances that might operate against claimants in certain cases.”
[12] While Aviva concedes that its notices do not meet the Smith requirements, it submits that courts have taken a more contextual approach since Smith, considering factors outside the notices to determine whether the insured was aware of the time and process for disputing an insurer’s refusal to pay benefits. Aviva submits that the Delegate erred when he rejected the contextual approach in favour of the bright-line test under Smith.
[13] I disagree. In Golic, the Court of Appeal explicitly confirmed that the analysis must focus on whether the insurer provided a proper notice of refusal and that outside circumstances should not be considered in determining whether the insurer had complied with its notice obligations. As stated by O’Connor A.C.J.O. at para. 12:
Courts should not look to circumstances beyond the insurer's notice of refusal, such as the mediator's report in Smith, to relieve the insurance company of its obligation to provide a proper refusal.
[14] Although the court in Golic found that the claim was statute barred in that case, it did so on the basis that the insurer’s letter itself met the Smith requirements and constituted proper notice of the denial of benefits. The court found that the surrounding factual circumstances of the insured (such as his participation in previous mediation processes) were specifically addressed and raised in the insurer’s notices to him. The court added that it was not necessary to go outside the letter and look at the insured’s circumstances in determining whether the insurer’s denial notice was proper, stating at para. 21:
While I agree with the result reached by the motion judge, I am satisfied that the same conclusion is available from the letter standing alone. It is not necessary to go outside the letter in order to find that the respondent had given the appellant proper notice of its refusal to pay benefits.
[15] In my view, given the requirements of Smith, the interpretation of Smith in Golic, and Aviva’s concession that its notice did not meet the Smith requirements, it was reasonable for the Delegate to hold that Aviva had failed to meet its obligation to provide a proper denial notice and that the limitation period had not started to run.
[16] The Applicant conceded that if it did not succeed on this submission, then the remainder of its arguments on appeal would be moot.
[17] The application is dismissed. In accordance with the agreement of counsel, Aviva shall pay costs to Mr. Sidhu in the amount of $7500, all inclusive. FSCO does not seek costs of the application.
___________________________ Conway J.
I agree
Heeney J.
I agree
Sutherland J.
Date of Release: October 30, 2018
CITATION: Aviva Canada Inc. v. Sidhu, 2018 ONSC 6506
DIVISIONAL COURT FILE NO.: 17-879-JR
DATE: 20181030
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
HEENEY, CONWAY, and SUTHERLAND JJ.
BETWEEN:
Aviva Canada Inc.
Applicant
– and –
Dharam Sidhu and Financial Services Commission of Ontario
Respondents
REASONS FOR JUDGMENT
Conway J.
Date of Release: October 30, 2018