Neutral Citation: 1994 ONICDRG 26
P-002691
ONTARIO INSURANCE COMMISSION
OFFICE OF THE DIRECTOR OF ARBITRATIONS
BETWEEN:
ADOZINDA OLIVEIRA
Applicant (Respondent)
and
ZURICH INSURANCE COMPANY
Insurer (Appellant)
and
THE PERSONAL INSURANCE COMPANY OF CANADA
Insurer (Respondent)
Before:
Elisabeth Sachs Director of Arbitrations
Counsel:
James E.S. Allin (for Applicant, Respondent)
Ian M. Boundy (for Insurer, Appellant)
James R. Townsend (for Insurer, Respondent)
APPEAL DECISION
I. NATURE OF PROCEEDINGS
By Notice of Appeal filed September 9, 1993 Zurich Insurance Company (the appellant) appeals from the decision of Arbitrator Fred B. Sampliner, dated August 10, 1993 which determined that it, and not The Personal Insurance Company of Canada (The Personal) is responsible for payment of accident benefits to which Adozinda Oliveira (the respondent) may be entitled. No arbitration has yet been held to determine whether the respondent is entitled to any benefits under the No-Fault Benefits Schedule (O.Reg. 672, R.R.O. 1990)1, and is not being scheduled pending this appeal.
The respondent and The Personal filed written Responses to the Notice of Appeal. Transcripts of the proceeding before the arbitrator, including a full recording of all parties' oral submissions, were filed. In view of the comprehensive nature of those submissions, and reference to caselaw, this appeal is being determined on the record pursuant to s. 283(4) of the Insurance Act, R.S.O. 1990, c.I-8 (the Act).
II ISSUE
Two preliminary issues were dealt with by the arbitrator. First, he had to determine which insurer, the appellant or The Personal, was responsible to pay accident benefits pursuant to s.268 of the Act. Applying the priority rules in the section, the arbitrator held that as the respondent was the named insured under her own policy with the appellant, she must apply to the appellant for accident benefits before any other insurer might be considered liable.
The appellant does not dispute the arbitrator's finding on how the priority rules operate. It objects to the arbitrator's decision on the second issue, holding that the respondent had a reasonable excuse for failure to comply with the time limits in s. 22 of the Schedule, which sets out the notice provisions insured persons must follow when pursuing accident benefit claims.
III. THE FACTS
The essential facts are not in dispute. The respondent was involved in an automobile accident on December 28, 1990 in British Columbia while a passenger in her son's vehicle. Her son was insured by an Ontario motor vehicle insurance policy with The Personal. The respondent was the named insured under an Ontario motor vehicle insurance policy with the appellant.
During February, 1991, the respondent retained counsel. A letter claim for accident benefits was made by counsel to The Personal. In the intervening period, from the time of the accident to the time of the letter claim, the respondent's son had moved to Alberta. For reasons that are not clear in the evidence, although the respondent's claim was addressed to The Personal's office in Ontario, the entire claim file was transferred to the company's office in Alberta.
In response to the letter of her lawyer, The Personal sent a claim form to the respondent, but not an Ontario No-fault Benefit Application. As the file was being handled in The Personal's Calgary office, the completed form was sent to it there. Certain medical, physiotherapy and drug expenses were paid by The Personal thereafter.
The transcript of the examination and cross-examination of the respondent and her husband shows she went to her family lawyer after receiving a medical bill from British Columbia which she could not afford. She knew her son's vehicle was insured with The Personal and assumed it was the appropriate insurer. She referred the whole matter to her lawyer. When questioned why their insurance broker had not been contacted, the respondent and her husband indicated that due to Mr. Oliveira's medical condition at the time, they believed everything should go through their lawyer and he had the authority to do whatever was necessary to pursue the claim. Both the respondent and her husband stated they did not know of the possibility that the appellant could or should be notified of the accident and reliance was placed on the family solicitor.
The respondent testified at length about the physical and mental consequences to her of the accident. Not long after the automobile accident, Mr. Oliveira developed unrelated medical problems which resulted in his being unable to attend to various family and work matters he might otherwise have.
It was his evidence the family lawyer was to make the necessary inquiries and claims resulting from the accident, whereas previously he might have done so through his broker.
At some point in March, 1992, the respondent changed lawyers. It was agreed by the parties that on April 7, 1992, the respondent's new counsel sent a letter to the appellant notifying it, for the first time, of the respondent's accident benefit claim.
Correspondence ensued among all the parties and by July , 1992, The Personal took the position it was not liable for the respondent's claim and the appellant was. At about the same time, some four months after it had received notice of the claim, the appellant advised the respondent it was refusing to pay any benefits because of the delay in notification to it under the Schedule.
The arbitrator found the respondent had a reasonable excuse for the delay in submitting her claim to the appellant, the primary factor being The Personal's acceptance and payment of medical and drug expense claims made to it from March, 1991 until March, 1992. The arbitrator further found The Personal did not send the respondent the prescribed Ontario form and had it done so, it would immediately have been put on notice that the respondent was a named insured under a policy with the appellant. The arbitrator held it was The Personal's initial error, exacerbated by its actions thereafter, which caused the delay in submitting an application for accident benefits to the appellant.
IV. SUBMISSIONS & ANALYSIS
The appellant submits the arbitrator erred in finding there was a reasonable excuse for the respondent's failure to notify it of her accident benefits claim more than 16 months after the accident on the basis that ignorance of the law cannot constitute a reasonable excuse. It submits the respondent's then lawyer was negligent in not advising the respondent of her proper recourse, namely against the appellant. The appellant submits the negligence of counsel cannot be a reasonable excuse under s. 22(2) of the Schedule and the respondent's remedy lies elsewhere.
The appellant also contends it is now prejudiced as it would have taken different and more aggressive steps in the respondent's rehabilitation than The Personal. It urges the proper conclusion in this case is, as there is no reasonable excuse for the delay in notice, that coverage is unavailable from it, and the priority rules in s. 268 of the Act point to the next available insurer, The Personal.
The Personal, in its submissions, takes no issue with the arbitrator's findings but believes the order should be varied to make clear that the liability of any insurer is conditional on the respondent establishing an entitlement to benefits under the Schedule.
The respondent opposes the appeal on the basis that it is premature as no final decision has yet been made on her entitlement to benefits. Obviously, the respondent is indifferent as to which insurer eventually might be called upon to pay.
Section 22 of the Schedule reads:
"22.-(1) The insured person or the person otherwise entitled to make a claim shall,
(a) give initial notice of a claim to the insurer, in writing, within thirty days from the date of the accident or as soon as practicable thereafter; and
(b) furnish to the insurer within ninety days of the giving of the notice under clause (a) a completed application for no-fault benefits respecting the accident and the resulting loss.
(2) A failure to comply with a time limit set out in subsection (1) does not invalidate a claim if the claimant has a reasonable excuse and so long as there is compliance within two years of the accident.
The claim finally made to the appellant was within two years of the accident.
The arbitrator referred to s. 135 of the Act which he found, when read together with ss. 227(1), required The Personal to provide a form, approved by the Commissioner of Insurance, on which to make proof of loss not later than 60 days after receipt of the notice. Having sent a form which was not in compliance with the section and then making payment on the claim, the arbitrator determined the respondent was not put to further inquiry as to whether or not she had a claim against the appellant.
Subsection 135(3) of the Act makes clear the providing of forms by an insurer does not constitute an admission that a valid contract is in force, or that the loss falls within the coverage provided by a particular contract. The furnishing of the incorrect form alone cannot be taken as providing the respondent with the reasonable excuse contemplated by ss. 22(2) of the Schedule.
However, the arbitrator found The Personal admitted responsibility by its subsequent actions, and a review of the correspondence in evidence shows that to be the case. It was not until another counsel reviewed the matter that a second insurer's potential liability was discovered.
The arbitrator's findings of fact surrounding the initial making of the claim to The Personal, the actions of The Personal, the respondent and her husband thereafter, and the eventual notification to the appellant, are fully supported by the transcript. In accordance with the principles set out in Calogero and The Co-operators General Insurance Company (OIC File No. P-000251, February 13, 1992), I see no reason to disturb those findings.
More troublesome is the role played by the respondent's first lawyer in pursuing a claim on her behalf. While I agree with the appellant that ignorance of the statutory law cannot be a reasonable excuse, this was but one factor in the accumulation and compounding of errors made in the case.
The combination of incorrect documentation, The Personal's admission of liability and payment of submitted expenses, and the respondent's personal circumstances, all contributed to the delay in making a claim to the appellant. Each of these factors standing by itself is not enough, in my view, to constitute a reasonable excuse for failure to notify the appellant promptly. Taken together, however, the effect is that the respondent did whatever was required of her, was not disabused of her assumption as to who might be responsible for payment of any legitimate benefits, and when that was challenged, immediately took steps to make the appropriate claim.
It took the appellant four months to take the position it would not accept the claim. Its investigation appeared to be concerned mainly with the respondent's entitlement to benefits, not the timeliness of notice. The appellant argued that based on the negligence of the first solicitor, and the actions of The Personal which in themselves were negligent, the appellant cannot be held responsible. I agree, if negligence was the only ground on which the case was founded, the appellant has a strong position. However, as brought out in the cross-examination, in particular, the respondent's and her husband's personal situation after the accident, while not the principal cause of the delay in notice nor necessarily a reasonable excuse, when added to the other factors present here do amount to a reasonable excuse.
Section 22(2) of the Schedule must be interpreted within the entire scheme of statutory accident benefits which is flexible and remedial. In all of the circumstances, it cannot be said the arbitrator misdirected himself by looking at all the aspects present and concluding the net result was to provide a reasonable excuse for the respondent not to have made a claim to her insurer sooner.
V ORDER
The appeal from the Order of Arbitrator Sampliner, finding the appellant responsible to pay for any accident benefits to which the respondent may be entitled, is dismissed.
There will be no order as to expenses of this appeal.
March 21, 1994
Elisabeth Sachs Director of Arbitrations
Date