Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1996 ONICDRG 114

Appeal P-006494

OFFICE OF THE DIRECTOR OF ARBITRATIONS

LUKE OFFEH

Appellant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Respondent

Before:

Susan Naylor, Director’s Delegate

Counsel:

Altor Shields (for Luke Offeh)

Todd McCarthy (for Allstate)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The arbitration order dated October 25, 1994 is confirmed and the appeal is dismissed.
Mr. Offeh is not entitled to his appeal expenses.

July 3, 1996

Susan Naylor Director’s Delegate

Date

REASONS FOR DECISION

I. THE NATURE OF THE APPEAL

Mr. Offeh appeals an arbitration order, dated October 25, 1994, in which his claim was held to be out-of-time. Mr. Offeh’s automobile accident happened on January 20, 1991, but he did not submit an application for accident benefits to Allstate Insurance Company of Canada (Allstate) until more than two years later.

The automobile policy sets time limits for claiming accident benefits. It reproduces section 22 of the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994, Ont. Reg 672, R.R.O. 1990 (the Schedule)¹ which states:

(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 statutory accident 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.

(Emphasis added)

Section 25 of the Schedule precludes a person from commencing mediation unless the requirements of section 22 have been satisfied.

Mr. Offeh submits that, by taking certain steps, Allstate waived the time requirement for submitting an application for benefits, and cannot rely upon it to defeat his claim.

II. THE FACTS

Mr. Offeh was a passenger in a vehicle that was involved in a collision on January 20, 1991.

The arbitrator found that in early February 1991, Mr. Offeh contacted an Allstate representative about his injuries in the accident. As a result of the information he received, he believed he did not have a claim and did not pursue the matter. Allstate did not send Mr. Offeh an application form for accident benefits.

The arbitrator found that much later on, Mr. Offeh discovered that he might have a right to make a claim and on December 16, 1992, retained a law firm to make a claim on his behalf. His lawyers sent Allstate an application for benefits, a medical certificate from Mr. Offeh’s family doctor, dated December 19, 1992, and a claim for the cost of the certificate. The package of material also included standard authorizations signed by Mr. Offeh for the release of medical and employment information. The documents were sent under cover of a letter dated January 27, 1993, although they may have been sent somewhat later than this.²

Allstate wrote to Mr. Offeh’s lawyers on March 15, 1993, acknowledging receipt of the application. The letter stated:

...we are unable to consider payment of accident benefits at this time. This application was received over two years post M.V.A., and we have no way of knowing if any of the present difficulties being alleged are related to the motor vehicle accident.

An attached Assessment of Claim form listed the same grounds for denying Mr. Offeh’s claim, and also cited the applicable part of the policy.

In the letter, Allstate requested an explanation for the delay in sending the application and details of the claim. It asked for a list of the names and addresses of Mr. Offeh’s treating doctors. It also asked for a meeting with Mr. Offeh to obtain a statement from him, detailing the nature of his injury and disability and his medical treatment. The letter ended:

Upon receipt of further information, we will be in a better position to give consideration to [Mr. Offeh’s] claim.

At the same time, Allstate wrote a letter to Mr. Offeh’s family doctor, acknowledging receipt of the medical certificate. It asked for information about Mr. Offeh’s condition, its relationship to the accident and treatment provided, enclosing Mr. Offeh’s authorization to release the information.

The meeting between Mr. Offeh and Allstate took place on March 23, 1993. Mr. Offeh provided Allstate with a signed statement.

On July 12, 1993, Allstate wrote to Mr. Offeh denying his claim and enclosing an Assessment of Claim form to the same effect. Allstate stated that it was rejecting the claim because Mr. Offeh had not complied with the notice provisions in the policy and had thereby prejudiced Allstate’s right to investigate the claim.

III. THE ARBITRATOR’S DECISION

Mr. Offeh put forward a two-fold argument at the arbitration: the first related to Allstate’s dealings with him before it received his application for benefits; the second related to Allstate’s actions after that time.

Mr. Offeh argued that Allstate’s claims representative had misled him about his rights when she spoke to him in February 1991. He also submitted that Allstate had failed to provide him with an application form in contravention of section 135(1) of the Insurance Act and that it was therefore estopped from relying on the time limits for filing a claim.

The arbitrator disagreed with Mr. Offeh. She concluded that the claims representative explained accident benefits and did not mislead him. She did not decide whether or not Allstate had an obligation to send Mr. Offeh an application form in the circumstances, but held that he obtained the application form through his lawyers later on and so could not blame Allstate when it was not filed in time.

Mr. Offeh also argued that Allstate waived the time requirements by looking into his claim after it received his late application for benefits. He pointed to the fact that Allstate did not insist upon a non-waiver agreement, which would have preserved its right to rely on the terms of the policy. The arbitrator did not accept these arguments. In her view, Allstate never indicated that it would not rely upon the time requirements for filing the application, merely that it might reconsider its decision to deny the claim on this basis, after it received additional information.

The arbitrator held that, unless she found a reason why Allstate was prevented from relying on the time requirements in the policy, she had no residual discretion to extend or ignore them. She concluded that there was no such reason and, therefore, Mr. Offeh could not proceed with his claim.

IV. ANALYSIS AND CONCLUSION

On appeal, Mr. Offeh argued that Allstate had waived its right to rely upon the time requirement for applying for benefits by:

failing to provide an application for statutory accident benefits, as required
using the authorization attached to his application to obtain information from his family doctor
meeting with him to obtain a statement
taking steps to investigate his claim
failing to get a non-waiver agreement

Under the doctrines of estoppel and waiver, an insurer is prevented from using a breach of a term of the policy to deny the claim, if it has somehow excused or authorized the breach.³ The two doctrines⁴ have been described as follows⁵:

waiver...involves either voluntary relinquishment of a known right or the choice between inconsistent remedies.

estoppel ...prevents a person from adopting an inconsistent position once there has been detrimental reliance upon his holding out.

In Mitchell and Jewell Limited v. Canadian Pacific Express Company, (1974) 1974 ALTASCAD 18, 3 W.W.R. 259 at page 270, Justice Prowse defined the elements of waiver in the following terms:

...where one party to a contract, with full knowledge that his obligation under the contract has not become operative by reason of the failure of the other party to comply with a condition of the contract, intentionally relinquishes his right to treat the contract or obligation as at an end but rather treats the contract or obligation as subsisting.

Mr. Offeh submitted that Allstate’s representative had misled him about his rights and had failed to send him an application form on a timely basis, as it was required to do. In his view, Allstate’s conduct indicated that it was not relying upon any time requirements in the policy for filing an application.

Whether the facts are considered under the rubric of estoppel or waiver⁶, I agree with the arbitrator that Allstate is not precluded from relying upon the time requirements.

Waiver requires an intentional relinquishment of rights; estoppel requires reliance. In the circumstances at hand, the fact that Allstate did not send Mr. Offeh an application form cannot be described as an intentional relinquishment of its rights so as to represent a waiver of the condition. In my view, it is more appropriately considered under the rubric of estoppel.

If an insurer fails in its duty to provide the insured with application forms for claiming benefits and the insured misses a time requirement, the insurer may be estopped from denying the claim because it is late. But reliance is a key ingredient of estoppel. According to the facts as found, Mr. Offeh had retained a law firm, obtained the forms and had partially completed them, before the expiry of the two year mark. Therefore, Allstate’s inaction was not responsible for his failure to file his application on time.

The arbitrator found that Allstate did not mislead Mr. Offeh in any way or act in an unscrupulous manner. She preferred the account of Allstate’s claims representative about the representative’s conversation with Mr. Offeh. There is no basis to interfere with her findings. In my view, this disposes of Mr. Offeh’s argument in this regard.

Mr. Offeh submitted that Allstate’s actions after it received his application and after the two year time period had expired, represented an unequivocal statement that it was excusing the delay. In particular, he pointed to Allstate’s attempt to obtain medical information from his family doctor, using the authorization that was attached to his application. He argued that use of the authorization, in circumstances where Allstate had made a decision to deny his application as late, would be improper and an invasion of his privacy rights. Therefore, Allstate must be taken as having accepted the application as timely.

Mr. Offeh submitted that once it was clear that he was in breach of the time requirements under the policy, Allstate could have relied upon the breach to deny the claim or it could have relinquished its defence and considered the claim on its merits. However, it could not do both without protecting its rights by a non-waiver agreement.

Allstate’s letter of March 15, 1993 to Mr. Offeh’s lawyers does not suggest that it is not relying upon the time requirements for filing a claim. It clearly indicates the reverse. There was no evidence that Mr. Offeh was misled in any way or at any time, about Allstate’s position.

Allstate indicated that it would give further consideration to the claim after it received additional information about Mr. Offeh’s condition. It pursued its own inquiries directly with his doctor, pursuant to an authorization which Mr. Offeh had provided of his own accord. It also met with Mr. Offeh and took a statement from him. He argues that Allstate thereby waived its right to rely upon the terms of the policy.

Whether an insurer is estopped from enforcing, or has waived, requirements of the policy is a question of fact, based upon the particular circumstances of the case. Much of the discussion in the case-law and literature about waiver⁷ concerns fairness, conflicting interests and contractual principles in the liability insurance context, where an insurer seeks to protect its interest in defending an action on behalf of its insured while challenging the insured’s claim to indemnity. In Minassian v. Toonen, (1987) 1987 CanLII 4052 (ON HCJ), 61 O.R. (2d) 765, Justice McDermid discussed the difficulty faced by insurers:

One way of solving that dilemma is for the insurer to enter into a non-waiver agreement with its insured. The most salient feature of such an agreement in this context is that the insurer may defend the action brought by the third party, thus protecting its own interest, while at the same time preserving its right to deny coverage to its insured. The insurer, therefore, is permitted to fulfil its obligations to defend the insured at the same time preserving its right to deny him indemnity should the defence of the action brought against its insured be unsuccessful. (P. 778)

If a non-waiver agreement had been used here, it probably would have resolved the question from the outset, but I do not accept that the absence of such an agreement is fatal to Allstate’s position.

Somewhat different considerations may inform the inquiry in this case. The principles governing statutory accident benefits reinforce insurers’ obligations to give full and fair consideration to every claim, and if claims are denied, to take a fresh look if new information is available or circumstances may have changed.⁸ Allstate could have refused to consider Mr. Offeh’s late claim entirely. Instead, it advised him of its initial stance but agreed to look at the situation. Even though the two year limit for complying with the time requirements has expired, this does not preclude a responsible insurer from looking into whether there are any extenuating or particular circumstances that might affect its position, and of evaluating the degree of prejudice the delay causes it. Seeking information about the accident, the seriousness of Mr. Offeh’s injuries and their effect, and the causal relationship between the two, were legitimate lines of inquiry for Allstate in giving the case fair consideration. They were also within the parameters of the medical authorization provided by Mr. Offeh to Allstate.

According to the evidence, Mr. Offeh was under no illusions about Allstate’s position. He was not misled in any way or lulled into the belief that his claim would be allowed. There was no evidence that Allstate acted other than in good faith in reviewing the circumstances of his claim, or in seeking the information it requested. The arbitrator did not find that Mr. Offeh suffered any prejudice as a result of these actions. In the circumstances, I am not prepared to find that Allstate is precluded from relying upon the time limits for filing an application under the policy.

Mr. Offeh did not put forward any other ground for interfering with the arbitrator’s decision, and his appeal therefore fails.

V. EXPENSES

Although Mr. Offeh was unsuccessful at arbitration, the arbitrator found that he had raised legitimate issues and that therefore he should be awarded his arbitration expenses.

Other appeal decisions⁹ have noted that considerations in awarding expenses on appeal are somewhat different than at arbitration. The purpose of an appeal is not to hear the case over again but to determine if the arbitrator made a material error in reviewing the evidence and coming to his or her conclusions about it, or whether he or she misapplied the Insurance Act, regulations or other relevant law. Expenses are not usually granted in the event of an unsuccessful appeal unless it raises an important legal principle or has substantial merit.

Although this appeal was framed in legal terms, the appellant’s real objection was with the arbitrator’s findings of fact. Essentially, it came down to a disagreement about the result. In Calogero and Cooperators¹⁰, the Director of Arbitrations held that, in the absence of a specific error or other reason, disagreement with the arbitrator’s factual findings is not sufficient to justify an award of expenses. While Mr. Offeh put forward some grounds for the appeal, I am not persuaded that his appeal was of sufficient substance to warrant expenses.