Neutral Citation: 1996 ONICDRG 120

OIC A96-000361

ONTARIO INSURANCE COMMISSION

BETWEEN:

GARY W. ROBERTSON

Applicant

and

ROYAL INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Issues:

The Applicant, Gary W. Robertson, was injured in a motor vehicle accident on August 3, 1993. He applied for statutory accident benefits from Royal Insurance Company of Canada ("Royal"), payable under Ontario Regulation 672.¹ Royal refused benefits, claiming that the Applicant did not provide it with a notice of claim or application for accident benefits within two years of the accident, as required by section 22 of the Schedule. The parties were unable to resolve their dispute through mediation and Mr. Robertson applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended. Royal contends that the Applicant is precluded from proceeding to arbitration under section 25 of the Schedule because of his failure to comply with section 22.

The issue in this hearing is:

The Applicant precluded, under section 25 of the Schedule, from proceeding to arbitration because of his failure to comply with the time limits set out in section 22?

The Applicant also claimed his expenses incurred in the proceeding.

Result:

The Applicant is precluded from proceeding to arbitration.

The Applicant is entitled to his expenses in the proceeding.

Hearing:

The hearing was held at the offices of the Ontario Insurance Commission in North York, Ontario, on June 25, 1996.

Present at the Hearing:

Applicant:

Gary W. Robertson

Mr. Robertson's Representative:

Daniel Monteith Barrister and Solicitor

Royal's Representative:

Wayne Edwards

Barrister and Solicitor

The Applicant testified. Both parties filed written briefs.

The Law:

Section 22(1) of the Schedule sets out time limits within which an insured person must give the insurer initial notice of claim and a completed application for accident benefits, as follows:

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.

Section 22(2) provides for these time limits to be extended in some circumstances:

22(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.

Section 25 sets out the consequence of an insured person's failure to comply with section 22:

25 No person may commence a mediation proceeding under section 280 of the Insurance Act in respect of benefits under this Schedule unless the requirements of section 22 have been satisfied and the insured person has made himself or herself reasonably available for any examination required under section 23.

The Applicant conceded that he failed to comply with all three time limits set out in section 22. He did not attempt to argue that section 22(2) allows me any discretion in extending the time limit beyond two years, and I find that it does not. The Applicant does not allege any estoppel or waiver on the Insurer's part.

The real issue in this case is whether the Applicant can seek relief under section 129 of the Insurance Act, which is as follows:

129 Where there has been imperfect compliance with a statutory condition as to the roof of loss to be given by the insured or other matter or thing required to be done or omitted by the insured with respect to the loss and a consequent forfeiture or avoidance of the insurance in whole or in part and the court considers it inequitable that the insurance should be forfeited or avoided on that ground, the court may relieve against the forfeiture or avoidance on such terms as it considers just.

Evidence and Findings:

The Applicant was injured in a motor vehicle accident on August 3, 1993. He was driving his own vehicle at the time of the accident. He did not hold any automobile insurance. Royal insured the other vehicle involved in the accident.

The Applicant testified that he suffered injuries to his neck, mid-back, and low back for which he receives ongoing medical treatment.

The parties agreed that the Applicant first notified Royal that he wished to claim statutory accident benefits by way of his lawyer's September 1, 1995 letter to the Insurer.

The Applicant testified that he had retained another lawyer a few days after the accident. The lawyer advised him that there was no need to take any action until all medical investigations were completed. After this first meeting at the lawyer's office, the Applicant ran into him by chance on three further occasions. On each occasion, the Applicant asked the lawyer if there was anything he should be doing, and on each occasion, the lawyer repeated his initial advice to wait for medical investigations to be completed.

On a Friday afternoon in mid-July 1995, someone told the Applicant about a two-year time limit with respect to accident claims. The Applicant testified that he called his lawyer's office the following Monday. The lawyer was on vacation, but when the Applicant explained his concerns to a "secretary" at the firm, she agreed to look into it and get back to him. She called the Applicant a little later and told him that she had arranged for him to meet with a lawyer in Mr. Monteith's firm on August 3, 1995. The Applicant testified that he then expressed his concern that this was the last day of the two-year period, but the secretary advised him that there would not be a problem if a claim were made that day.

On August 3, 1995, the Applicant met with a lawyer in Mr. Monteith's firm. A Notice of Claim was issued that day. They met again at the end of August, and the September 1, 1995 letter to the Insurer was sent shortly after that second meeting.

The Applicant is in his late thirties, and has a high school education. He worked steadily in residential construction before the accident. He testified that he had never had a car accident before, knew nothing about accident benefits at the time of the accident, and had only a vague idea that a lawyer could help him get compensation for his injuries resulting from the accident.

I found the Applicant to be straightforward and credible. I accept that he was unsophisticated in insurance matters. Since he held no automobile insurance on his vehicle, no adjuster contacted him following the accident. I am prepared to accept that he may not have realized he could claim first-party benefits from Royal.² In any event, he had retained a lawyer, and believed he could rely on the lawyer to protect his interests.

I heard no testimony from either of the Applicant's first two lawyers. For the purpose of this hearing, and in the absence of evidence to the contrary, I find that the Applicant was duly diligent in pursuing his remedies following the accident.

I also find that any prejudice to the Insurer in allowing this application for arbitration to proceed is outweighed by the prejudice to the Applicant in barring the application. I accept that the Insurer is prejudiced by losing the opportunity for early adjustment and investigation of the claim and early rehabilitation intervention. However, the application for benefits, along with the Motor Vehicle Accident Report, was furnished less than a month after the two-year limit set out in section 22(2). Given that the Schedule contemplates a delay of as much as two years in applying for benefits, I am not persuaded that an additional delay of one month imposes a substantial additional prejudice on the Insurer. On the other hand, if the application for arbitration is found to be time-barred, the Applicant is precluded from receiving potentially substantial accident benefits. This has serious consequences for the Applicant, who claims that he is unable to return to construction work as a result of his accident-related injuries. The Applicant is a single parent and has been on public assistance since the accident.

For all these reasons, I am inclined to relieve the Applicant from the consequences of his late application for accident benefits. The real issue in this case is whether I have power to do so.

Analysis:

The Applicant relied on the Supreme Court of Canada decision, FalkBros. Industries³ in which, commenting on identical language in the Saskatchewan Insurance Act, Madame Justice McLachlin, speaking for the unanimous court, stated that failure to comply with a time limit for giving notice of claim is "imperfect compliance," against which relief could be given. She noted that in contrast, the case law has generally treated failure to initiate an action within the prescribed time period as non-compliance, against which there could be no relief. The Insurer in the instant case did not disagree with the Applicant's submission that his late provision of an application for accident benefits falls within the definition of "imperfect compliance" in section 129 of the Insurance Act.

The Applicant also relied on the Morrone v. CAA decision, in which Mr. Justice MacPherson considered the interaction of section 129 of the Insurance Act and section 22 of the Schedule.⁴ In that case, the plaintiff had a potential claim against CAA, which insured her father's vehicle, and against Zurich, which insured the rental car she was driving at the time of the accident. She notified both insurers about the accident, but only claimed benefits from CAA. They paid benefits for three years, then terminated benefits, claiming, among other things, that Zurich was liable rather than CAA. Zurich submitted that the plaintiff's claim against it was barred because of section 22.

MacPherson J. dismissed Zurich's motion for summary judgement. In Falk Bros., the Supreme Court of Canada held that relief from forfeiture provisions could apply to relieve against forfeiture mandated by a contractual as well as statutory conditions, considering the remedial character of such provisions. MacPherson J held, for the same reasons, that s. 129 of the Act applies to conditions imposed by regulation - specifically, section 22 of the Schedule. The crux of the Morrone decision is the following passage:

Zurich states that a further extension [of the two-year time limit set out in section 22(2) of the Schedule] flowing from s. 129 of the Insurance Act would render s. 22(2) meaningless.

There is some merit in this argument. However, in the end, I do not regard it as controlling, particularly in the context of a motion for summary judgement. Although s. 22(2) does modify the notice periods in s. 22(1) of the No-Fault Benefits Schedule,⁵ I do not see why that should obliterate the general and remedial language in s. 129 of the Insurance Act. There is nothing in the language of s. 22(2) to suggest that it is a code-like provision that should be removed from any possible relationship with s. 129.

My reading of Morrone is that the judge was heavily influenced by the fact that the plaintiff had claimed benefits from CAA immediately after the accident, and was forced to claim against Zurich by CAA's decision, after three years, to dispute its liability for her benefits. She was "the true innocent" in the matter. In addition, CAA would be obliged to disclose to Zurich the particulars of its adjustment and investigation of the plaintiff's claim, mitigating to a great degree the prejudice to Zurich. I do not accept the Applicant's submission that this assumption is merely speculative. In any event, for reasons given below, I find that section 22(2) provides the only relief from forfeiture provision in respect of the time limits set out in section 22(1).

The Applicant also relied on Arbitrator William Renahan's decision in Kuronen and Allstate Insurance Company of Canada.⁶ The applicant in that case gave the insurer initial notice of his claim for accident benefits about 18 months after the accident. The Arbitrator held that the applicant was not precluded from proceeding to arbitration. He made the following comments about section 22(2), with which I agree:

Section 22(2) of the Schedule does not use the words "relief from forfeiture." However, the effect of section 22(2) is to give the arbitrator the power to relieve against the forfeiture of the insured's rights where the arbitrator finds that the claimant has a reasonable excuse for failing to comply with the notice requirements. Section 22(2) of the Schedule is a remedial section and as such should be given an appropriately broad interpretation. In my view, the considerations that apply to a court relieving against forfeiture for failure to comply with a time limit should equally apply to the issue of whether a claimant has a reasonable excuse for failing to comply with the section 22(1)(a) time limit. Both issues concern the reasons for an insured's failure to comply with a time limit in a notice provision and whether the insured should be relieved of the consequences of his failure to comply.

The Applicant in this case relies mainly on the following comments of Arbitrator Renahan:

Further, under section 281 of the Insurance Act the insured person may bring his proceeding in court or refer the matter to an arbitrator. Under section 129 of the Insurance Act, the court has discretion to relieve against forfeiture where there has been imperfect compliance with a statutory condition as to the proof of loss. As stated above, this provision also applies to regulations. I can see no reason why the legislature would formulate different tests in the court system and the arbitration system for relief from forfeiture where there has been imperfect compliance with the 30-day notice provision.

Arbitrator Renahan was not required to deal with the application of section 129 beyond the two year limit set out in section 22(2), because the applicant in his case gave notice within two years of the accident. I do not read Kuronen as standing for the proposition that section 129 of the Act provides relief from forfeiture beyond that two year limit, in addition to the relief provided under section 22(2).

In my view, the only natural reading of section 22 is that an insured person who fails to comply with the 30-day and 90-day time limits set out in section 22(1) may still have a valid claim, if he has a reasonable excuse and complied within two years: otherwise, his claim is invalidated. The Applicant offered no alternative reading of section 22(2). I can think of no other interpretation which gives meaning to the word "invalidated" and the clause "so long as there is compliance within two years of the accident." It is, of course, a basic principle of statutory interpretation that each word and section of a statute or regulation must be given meaning.

Further, I find that section 129 gives power to "the court" to grant an equitable remedy. An arbitrator is not a "court" within the meaning of the Courts of Justice Act (or the Constitution Act, 1867). Rather, an arbitrator is a "tribunal" as defined by the Statutory Powers Procedure Act ("SPPA"), a creature of statute.⁷ The Insurance Act distinguishes between a court and an arbitrator throughout. Section 279(1) of the Act provides that statutory accident benefit disputes "shall be resolved in accordance with section 280 to 283 and the Statutory Accident Benefit Schedule." If the drafters had intended section 129 of the Act to further qualify section 22 of the Schedule, they could easily have said so.

Prior arbitration decisions have held that section 129 of the Act gives no discretion to extend the time limits set out in section 22 of the Schedule⁸ For the reasons given above, I agree.⁹

I conclude that the Applicant is precluded from proceeding to arbitration because he failed to apply for accident benefits within two years of the accident.

Expenses:

Although the Insurer succeeded in this motion, the Applicant's case presented sympathetic facts and a somewhat novel legal issue. In accordance with the Commission's usual practice, the Applicant is entitled to be reimbursed for his expenses incurred in the proceeding, subject to the limits set out in Regulation 664 (Schedule F of the Dispute Resolution Practice Code - 1995 Release).

Order:

1. The Applicant is precluded from proceeding to arbitration.

2. The Insurer will reimburse the Applicant for his expenses incurred in respect of the arbitration. Any dispute about the amount payable may be brought before me.

July 11, 1996

Nancy Makepeace

Arbitrator

Date

Footnotes

1. 1Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule —Accidents Before January 1, 1994. In this decision, the term "Schedule" will be used to refer to Regulation 672.
2. 2I heard no evidence of any conviction for driving without insurance, so as to give rise to an exclusion under section 17(1)(c) of the Schedule.
3. 3Elance Steel Fabricating Co. v. Falk Brothers Industries Ltd. (1989), 1989 CanLII 38 (SCC), 39 C.C.L. I. 161 (S.C.C.)
4. 4Morrone v. CAA Insurance Company (Ontario) et al., [1996] I.L.R. 1-3295 (Ont.Div.Ct.), October 16, 1995
5. 5Now the Statutory Accident Benefits Schedule - Accidents before January 1, 1994.
6. 6(December 29, 1995), OIC A95-1897.
7. 7Section 1(1) of the SPPA says, "In this Act, ... 'tribunal' means one or more persons, whether or not incorporated and however described, upon which a statutory power of decision is conferred by or under a statute." Sections 3(2)(b) and 3(2)(c) state that the procedural rules set out in the SPPA do not apply to a proceeding before a court or a proceeding to which the Rules of Civil Procedure apply.
8. 8Offeh and Allstate Insurance Company (November 23, 1994), OIC A-006494, confirmed on appeal (July 3, 1996), OIC P-006494, Rahman and Cooperators General Insurance Company (December 21, 1993), OIC A-000854, Zeppieri and Royal Insurance Company (December 22, 1994), OIC P-005237, Zere and Royal Insurance Company (April 22, 1994), OIC A-001827 and Foster and Royal Insurance Company of Canada (April 19, 1995), OIC A-011628.
9. 9In addition, the Applicant did not seek to rely on M.(K) v. M.(H), in which the Supreme Court of Canada held that an action for damages arising from childhood sexual abuse did not accrue until the plaintiff was reasonably capable of discovering the wrongful nature of the defendant's acts and the relationship between these acts and her injuries. I find that this case does not apply because the Applicant was immediately aware of his injuries and their relation to the accident.