Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1996 ONICDRG 99

Appeal P-004204

OFFICE OF THE DIRECTOR OF ARBITRATIONS

SIMCOE & ERIE GENERAL INSURANCE COMPANY

Appellant

and

VIOLET WIGGAN

Respondent

Before:

Elisabeth Sachs

Counsel:

Ralph D’Angelo (for Simcoe & Erie)

Altor Shields (for Violet Wiggan)

APPEAL ORDER

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

The appeal is dismissed and the arbitration order dated October 14, 1993 is confirmed.
Ms. Wiggan is entitled to her reasonable appeal expenses.

June 12, 1996

Elisabeth Sachs Director of Arbitrations

Date

REASONS FOR DECISION

I. NATURE OF APPEAL

Simcoe & Erie General Insurance Company (“Simcoe & Erie”or the “insurer”) appeals an order on a preliminary issue that determined Violet Wiggan had commenced her arbitration proceeding within the time limit of section 281(5) of the Insurance Act, R.S.O. 1990, c. I-8, (the Act). The section, prior to amendments which are not relevant to this case, provided:

A proceeding in a court or an arbitration proceeding in respect of no-fault accident benefits must be commenced within two years after the insurer’s refusal to pay the benefit claimed or within such longer period as may be provided in the No-Fault Benefits Schedule. (emphasis added)

At issue before the arbitrator and in this appeal is when did Simcoe & Erie provide the notice required under section 24(8) of O. Reg. 672, Statutory Accident Benefits Schedule - Accidents before January 1, 1994 (the Schedule) of its refusal to pay the claimed benefits, so it could rely on the limitation period for the commencement of an action thereafter. The section states:

If the insurer refuses to pay an amount claimed in an application for no-fault benefits, the insurer shall forthwith give written notice to the insured person giving the reasons for the refusal. (emphasis added)

The insurer is asking for an order rescinding the arbitral order, and dismissing Ms. Wiggan’s claim to an adjudication of her claims, on the basis that the arbitrator’s decision is wrong in law and his findings of fact are not supported by the evidence.

Ms. Wiggan claims although the arbitrator was correct in permitting her application to continue, he should have found that the Assessment of Claim form used by the insurer was defective because it did not comply with the explanatory requirements of section 24(8) of the Schedule. Additionally, Ms. Wiggan submits the arbitrator should have found section 26 of the Schedule, by inference, extends the limitation period set out in section 281(5) of the Act. Section 26 provides in part:

A mediation proceeding...in respect of benefits...must be commenced within two years from the insurer’s refusal to pay the amount claimed in the application for no-fault benefits...(emphasis added)

Ms. Wiggan argued that mediation is the initiating step in the dispute resolution process. Once it is started within the two year period, proceedings taken thereafter (whether arbitration or court action) should be considered as having fallen within the time limits of the Act.

Both parties agree, and I find, the decision erroneously refers to statutory condition 15 of section 148 of the Act. It is common ground that statutory condition 13 of section 234 is the relevant provision.

II. BACKGROUND FACTS AND EVIDENCE

The undisputed facts are:

Ms. Wiggan was injured in a motor vehicle accident on October 22, 1990. She applied to Simcoe & Erie for payment of weekly benefits, child care benefits and reimbursement of housekeeping expenses.
The insurer paid weekly benefits until April 29, 1991.
The insurer did not pay the claimed housekeeping expenses at any time.
On May 15, 1991, the insurer prepared an Assessment of Claim form. An “X” was placed next to the box entitled “entire claim denied” for weekly benefits and supplementary medical and rehabilitation benefits. Under each category, the written reason provided is that due to conflicting information received, further documentation and an evaluation of home needs were required.
Mediation, initiated by Ms. Wiggan on March 3, 1993 concluded on April 27, 1993. It did not resolve the dispute.
On May 25, 1993, Ms. Wiggan filed an Application for Appointment of Arbitrator.

Simcoe & Erie’s evidence at the hearing was that two items were “mailed” to Ms. Wiggan at her home address. The first was a letter sent on April 25, 1991, and the second an “Assessment of Claim by Insurer” form on May 15, 1991. The insurer alleged each document was a notice of refusal to pay benefits meeting the requirements of the Schedule. Consequently, the insurer argued Ms. Wiggan had until the end of April 1993 or at the latest, May 15, 1993 to apply for arbitration or start a court proceeding. If the later date applied, the insurer argued Ms. Wiggan’s application was ten days beyond the limitation period in the Act.

Simcoe & Erie’s claims examiner testified that after preparing the April letter and the May assessment form both addressed to Ms. Wiggan, she did not put them in any facility maintained by Canada Post. Instead, her evidence was that letters were normally placed in the company’s internal mail system for eventual delivery to Canada Post. Neither document was returned to Simcoe & Erie.

Ms. Wiggan did not testify at the hearing and no witnesses other than the claims examiner were heard. There is no evidence at all whether Ms. Wiggan did or did not receive either or both of the letters prepared by Simcoe & Erie.

III. ANALYSIS AND FINDINGS

The arbitrator made two essential findings of fact. The first was that the assessment form dated May 15, 1991 was unequivocal, and a refusal to pay benefits by the insurer. Despite Ms. Wiggan’s arguments to the contrary, that finding is, in my view, amply supported by the documentation.

The second finding is that given the lack of evidence surrounding the integrity of the insurer’s internal mailing system, it could not be found, or even inferred, that the May 15 document ever left Simcoe & Erie’s premises to find its way into the postal system. On that basis the arbitrator refused to find “delivery” to Ms. Wiggan of a notice of refusal to pay benefits. He also concluded the handling of the notice did not comply with section 234(1), statutory condition 13, which provides in part:

Written notice may be given to the insured named in this contract ...by letter personally delivered to the insured or by registered mail addressed to the insured ... (emphasis added)

The insurer argued that the statutory condition and section 24(8) of the Schedule are not linked. The Schedule only requires written notice to a claimant for benefits, with no form or means of delivery specified. The claimant is not necessarily an “insured named” in the contract. Furthermore, the limitation period runs from the “insurer’s refusal to pay the benefit”, not from actual receipt of a notice. It was also argued section 234 deals with general notices and contract cancellation as well as termination. The use of the word “may” in that section suggests a discretionary mode of giving the written notice, not the only mode.

Ms Wiggan did nothing to advance her claims for almost two years after receiving the last benefit cheque. Simcoe & Erie submitted the only logical inference to be drawn was that she received actual notice of the refusal since no cheques flowed after April 29, 1991.¹ Also, on the facts the insurer argued the onus shifted to Ms. Wiggan to show she did not get notice once there was the prima facie evidence of the claims examiner as to her handling of the letters, .

Ms. Wiggan’s position is simply that the statutory conditions are part of every motor vehicle policy, and the insurer is under a positive obligation in section 24 of the Schedule to “forthwith give written notice” with reasons. Leaving aside her arguments that there was a defect in the form of the notice, Ms. Wiggan’s basic point is that the Act permits only two modes of delivery of the written notice. Further, the difficulty of factually proving that mail service was effective does not excuse Simcoe & Erie’s failure to comply with the Schedule. Ms. Wiggan points out all the cases relied on by the insurer² involved findings of fact or conclusions by the trial judge that the insured either received the document or it was placed directly into the national postal system. In those cases the statutory condition was, in effect, waived.

Ms. Wiggan also argued an insurer putting forward a limitation period defence has to prove some form of receipt of the notice refusing to pay benefits, and it is not up to the insured to disprove it.

As the arbitrator found on the facts here that there was no evidence whether the notices ever left Simcoe & Erie’s offices, it cannot rely on the “mailbox rule”. The rule provides that where parties to a contract have contemplated the use of the mail system as the method of communication between them, then a letter or document mailed by one to the other is deemed received once mailed, regardless of what actually happens to that communication subsequently. The best that can be said on the available evidence is that at some point prior to applying for mediation, Ms. Wiggan must have become conscious of the fact that no funds were forthcoming from Simcoe & Erie. Just because payments were not made after April 29, 1991, that does not necessarily imply a refusal to pay when there is no evidence written notice as required by the Schedule ever reached Ms. Wiggan.

I find, on the documentation and the evidence as outlined in the arbitration decision, two conclusions emerge: first, the notice of May 15, 1991 constituted a written notice of a refusal to pay benefits, and second, there is no indication where that document went after leaving the hands of the claims examiner who could only say it went into some form of internal company distribution system. There is no evidence Ms. Wiggan did or did not ever receive written notice of refusal. Although cheques were not sent to Ms. Wiggan after those letters were prepared, there is no basis on which an adjudicator can or ought to infer deemed or actual notice took place on May 15, 1993 as urged by the insurer.

Simcoe & Erie raised a limitation period defence which must be strictly construed, where the result is to deny Ms. Wiggan the opportunity to have her claims adjudicated. I am not saying an insurer must prove actual receipt of the notice, but a claimant must have knowledge of the refusal. Nor do I find the mailbox rule is inapplicable in proceedings concerning contracts with statutory conditions. On the available facts, knowledge of the refusal was incapable of proof, and the application of the “mailbox rule” subject to insufficient evidence. As a result, the arbitrator did not have to find, or impute an intent to the Legislature, that “insurers provide their insureds with delivery of a notice not mere postal deposit”. The evidence was that no one could say if the written notice had left the offices of the insurer, nor could a date be placed on the communication of the refusal. The insurer’s selection of a date, in and of itself, is meaningless unless communication of the act of refusal is made. How that is shown will depend on the facts of each case where the issue arises. It was not proven here.

As a result, the appeal fails and the stay of arbitration proceedings imposed earlier on Ms. Wiggan is lifted.

IV. EXPENSES

Ms. Wiggan is the successful respondent in this case. She is entitled to her reasonable appeal expenses. If the parties can not agree on the amount of expenses, written application may be made to the Registrar.