Neutral Citation: 1997 ONICDRG 129

OIC A-006978

ONTARIO INSURANCE COMMISSION

BETWEEN:

MOHAMED H. ELFEKI

Applicant

and

NON-MARINE UNDERWRITERS, MEMBERS OF LLOYD'S, LONDON, ENGLAND and TRADERS GENERAL INSURANCE COMPANY

Insurer

DECISION

Issues:

The Applicant, Mohamed H. Elfeki, was injured in a motor vehicle accident on July 24, 1991. He applied for and received minimal statutory accident benefits from Non-Marine Underwriters, Members of Lloyd's, London, England, payable under Ontario Regulation 672.¹ Lloyd's refused to pay weekly benefits on the basis that it is not the insurer responsible for paying benefits to Mr. Elfeki. Mr. Elfeki subsequently applied for benefits from Traders General Insurance Company. Traders refused to pay benefits on the basis that Mr. Elfeki had applied out of time. The parties were unable to resolve their disputes through mediation, and Mr. Elfeki applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Is Mr. Elfeki precluded from proceeding with arbitration against Traders for failing to comply with the notice provisions of the Schedule?

2. If Mr. Elfeki cannot proceed to arbitration against Traders, is Lloyd's responsible for paying benefits to Mr. Elfeki?

3. Is Mr. Elfeki entitled to a weekly benefit under section 13 of the Schedule?

4. Is Mr. Elfeki entitled to care benefits?

Mr. Elfeki also claims interest on any amounts owing and his expenses incurred in the hearing.

Result:

1. Mr. Elfeki is precluded from proceeding with his arbitration against Traders.

2. Lloyd's is not responsible for paying benefits to Mr. Elfeki.

As a result of my findings on the first two issues, it is not strictly necessary for me to make findings on the main issues. However, to assist in any further proceedings, I make the following findings on the main issues:

3. Mr. Elfeki would have been entitled to weekly benefits until January 1, 1992.

4. Mr. Elfeki would have been entitled to care benefits until January 1, 1992.

Mr. Elfeki is not entitled to his reasonable expenses of the hearing.

Hearing:

The hearing was held in London, Ontario, on October 1, 2, 3, 4, and 25, 1996, before me, David Evans, Arbitrator.

Details of those present at the hearing, the witnesses, and exhibits are in the Appendix.

Evidence and Findings:

Mr. Elfeki was injured when he drove from a side road in front of a truck. The truck demolished his car. Approximately one year after the accident Mr. Elfeki applied for accident benefits under the Schedule from Lloyd's.

Lloyd's insured the truck that hit Mr. Elfeki's uninsured vehicle. Lloyd's submits that the priority rules do not entitle Mr. Elfeki to claim from Lloyd's.

Paragraph 268(2)1. of the Insurance Act sets out the basic priority rules governing an insurer's liability to pay statutory accident benefits to the occupant of an automobile. The claimant first has recourse against the insurer of an automobile in respect of which the occupant is an insured (subparagraph i). The next insurer on the priority list is the insurer of the automobile in which the claimant was an occupant (subparagraph ii). Mr. Elfeki was driving his own uninsured automobile, and accordingly no recovery was available under subparagraph ii. If recovery is unavailable under subparagraph i or ii, subparagraph iii provides that the occupant has recourse against the insurer of any other automobile involved in the incident, which in this case was Lloyd's.

Mr. Elfeki submitted an application for section 13 benefits to Traders on January 3, 1996. Traders was the insurer of Mr. Elfeki's spouse at the time of the accident, Mrs. Elfeki, who was estranged from Mr. Elfeki. It was admitted that, as Traders first received notice in March 1995, Mr. Elfeki did not comply with the notice provisions of the Schedule for his claim against Traders.

The mandatory notice provisions set out in section 22 of the Schedule required Mr. Elfeki to give initial written notice of the claim to Traders within 30 days of the accident and, in the following 90 days, to provide a completed application for statutory accident benefits. Subsection 22(2) provides that a failure to comply with these time limits 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 provides that there can be no mediation unless the claimant satisfied the section 22 requirements. The Insurance Act requires mediation to precede arbitration: if Mr. Elfeki can no longer mediate, he cannot arbitrate.

Arguments with respect to Traders

Counsel for Mr. Elfeki argued that the late application to Traders was cured by the principle that notice to one insurer constitutes notice to all: that is, by giving notice to Lloyd's within two years after the accident, Mr. Elfeki in effect gave notice to Traders within that period.

I had difficulty understanding counsel's submissions on this point. He appeared to suggest that this case presented a priorities dispute and argued that I should consider O.Reg. 283/95, which governs disputes between insurers. This regulation was filed May 10, 1995, so it cannot govern the dispute in this case. Further, I can see no priority dispute: if Traders had been properly put on notice, it would have had to respond to the claim. Finally, the Regulation enunciates no principle that notice to one insurer constitutes notice to all.

Counsel also suggested that I have a discretion to "deem" that notice to Lloyd's constituted notice to Traders. He relied on my power under section 20 of the Insurance Act to determine all questions of fact and law before me. However, that power does not give me the discretion to simply declare that notice to Traders constituted notice to Lloyd's.

Counsel also submitted that Mr. Elfeki is entitled to relief from forfeiture.

Arbitrator Makepeace comprehensively dealt with an arbitrator's powers to provide relief from forfeiture in Robertson v. Royal Insurance Company of Canada² I agree with her conclusion that insured persons who fail to comply with the notice periods set out in section 22(1) may still have a valid claim, if they have a reasonable excuse and they comply within two years: otherwise, their claim is invalidated. As subsection 22(2) provides the only relief from forfeiture provision in respect of the time limits set out in subsection 22(1), and as many arbitration cases have held that arbitrators have no other discretion to extend time limits, I conclude that Mr. Elfeki is precluded from proceeding to arbitration against Traders because he failed to apply for accident benefits from that company within two years of the accident.

After the conclusion of this hearing, counsel provided further cases and submissions on the "discoverability rule," which holds that for the purposes of a limitation period a cause of action arises when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence. In Luke Offeh and Allstate Insurance Company of Canada,³, Arbitrator Manji considered M.(K) v. M.(H), 1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6, in which the Supreme Court of Canada gave specific and detailed reasons why it applied the reasonable discoverability principle in the context of an action for damages arising from incest. Arbitrator Manji was not satisfied that these reasons were applicable in the context of a case where the section 22 notice provisions of the Schedule were at issue.

Since then, the Court of Appeal of Ontario has considered the rule in Peixeiro v.Haberman (1995), 1995 CanLII 932 (ON CA), 25 O.R. (3d) 1. The court held that the particular wording of a limitation statute is not relevant with respect to the general principle of the reasonable discoverability rule. That is, whether the limitation period runs from the date "on which the cause of action arose" or from "the date of the accident," the rule appears to be established that a limitation statute commences to run when the material facts upon which the action is based have been discovered or ought to have been discovered by the exercise of reasonable diligence.

If I applied this principle to section 22 of the Schedule, then notwithstanding the phrase in subsection 22(2) requiring "compliance within two years of the accident," the limitation period would actually expire two years from the date a material fact (such as the fact Mr. Elfeki was married to a named insured) was reasonably discoverable.

The Supreme Court of Canada recently upheld the Peixeiro Court of Appeal decision (1997 CanLII 325 (SCC), [1997] S.C.J. No. 31, reasons to follow). The court in Grenier v. Canadian General Insurance Co. (1997), 1997 CanLII 12100 (ON CTGD), 32 O.R. (3d) 343, applied Peixeiro. The plaintiffs in Grenier reasonably believed that the tortfeasor was uninsured and recovered from their own insurer. The plaintiffs discovered after the relevant limitation period that the tortfeasor was in fact insured at time of accident. The court held that the cause of action arose only when the plaintiffs uncovered the existence of a valid insurance policy issued to the tortfeasor.

However, I agree with Arbitrator Manji's comment in Offeh that no provision in the Act or the Schedule confers on me the discretion to extend or suspend temporarily the time limit set out in section 22 of the Schedule. As Carthy J.A. noted in Peixeiro, the discoverability rule appears to be a singular example of the court's engagement in legislating. This "legislative" power resides in the court's inherent jurisdiction — a jurisdiction which I do not possess.

Even if I could grant relief or apply the discoverability rule, I would not grant the relief in this case. Mr. Elfeki was fully aware of the material fact that, although he and his wife were separated, they were married at the time of the accident, and he wilfully refused to obtain information about his wife's policy. He contended that he could not contact his wife to obtain information about her policy. I find this incredible: the evidence showed and I find that he knew where she lived and worked. Furthermore, Mr. Elfeki described Mrs. Elfeki as his "friend," and she had even contacted him after the accident to inquire about his condition. He testified that their daughter acted as a "mediator" between them. At the latest, by January 1993 Mr. Elfeki knew of the importance of discovering other insurance policies, as he had discussed this issue with his lawyer, Mr. Handelman, after the Lloyd's adjuster wrote asking about other policies. Mr. Handelman wrote to Lloyd's in January 1993 advising (presumably on Mr. Elfeki's own instructions) that Mr. Elfeki had no spouse. Since Traders was only put on notice in March 1995, I find that, even if time only started to run from January 1993, relief would not be available.

Arguments with respect to Lloyd's

In the event that I found that Traders was not liable, Mr. Elfeki argued that Lloyd’s continues to be responsible for paying his benefits.

Mr. Elfeki submits that Lloyd’s is estopped from denying him benefits because he was relying on them: he believed his interests were being looked after, as Lloyd’s had made a small payment.

The definition of estoppel set out in Greenwood v. Martins Bank, Ltd., [1933] A.C. 51 at 57, requires as its first element a representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made.

Mr. Elfeki argues that the representation by word was an acceptance of his claim. I find that Lloyd’s never unequivocally accepted Mr. Elfeki’s claim. In its letter to Mr. Elfeki’s solicitor on December 21, 1992, Lloyd’s expressly asked for confirmation that Mr. Elfeki did not have any insurance available or applicable and that he was not insured under a spousal or garage policy. Lloyd's continued to raise the possibility of other insurance coverage, notably before and at the initial mediation.

I find that the initial minimal payment made by Lloyd’s does not constitute a representation by deed. The Schedule requires insurers to make payments, often before full investigation, and it would be unfair to deny them the right to raise issues of coverage simply on the basis that they have made such payments. Furthermore, at the time the payments were made, benefits were available to Mr. Elfeki from another insurer (Traders) pursuant to the priority list in subsection 268(2) of the Insurance Act.

I find that the first element of an estoppel (the representation) is missing. Accordingly, I find that Lloyd's is not estopped from refusing to pay benefits to Mr. Elfeki.

Finally, counsel submitted that if Mr. Elfeki cannot recover against Traders, then pursuant to section 268(2) he can recover from Lloyd's.

Pursuant to subsection 268(2) of the Insurance Act, Mr. Elfeki has recourse for accident benefits against Lloyd's only if recovery is unavailable under subparagraph i of paragraph 268(2)1. Subparagraph i provides that Mr. Elfeki has recourse against the insurer of an automobile in respect of which he is an insured. It is not disputed that Mr. Elfeki was an insured of Traders.

Mr. Elfeki submits that, as his claim was presented out of time to Traders, recovery is unavailable against Traders. Therefore, he can seek recourse against Lloyd's.

However, at the time Mr. Elfeki sought recourse from Lloyd's, recourse was available from Traders: Mr. Elfeki was Mrs. Elfeki's spouse, and Mrs. Elfeki was insured by Traders. This in itself is a complete answer to Mr. Elfeki's claim. Until the expiration of the time limit for notice under section 22 of the Schedule, recovery was available to Mr. Elfeki by seeking recourse against Traders. At the time he made the claim to Lloyd's, Mr. Elfeki had no recourse against Lloyd's.

Furthermore, if Mr. Elfeki can now claim against Lloyd's, he would have a choice of insurer that is repugnant to the scheme of the Insurance Act. Section 268 sets out which insurers may be liable to pay benefits. An applicant has a choice of insurer in only certain narrow circumstances. Subsection 268(4) gives a discretion to an applicant to choose an insurer if more than one insurer fits within the definition of subparagraph i. The applicant does not have a discretion to choose between insurers, one of which fits within subparagraph i, and the other of which fits within subparagraph iii: that is, Mr. Elfeki did not have a choice between Traders and Lloyd's.

Subsection 268(5) further narrows the discretion to choose insurers, in that a spouse of a named insured under a contract evidenced by a motor vehicle liability policy shall claim accident benefits against the insurer under that policy. Mr. Elfeki was the spouse of a named insured under the Traders policy, and subsection 268(5) required him to seek accident benefits from Traders.

Finally, subsection 22(2) of the Schedule provides that a failure to comply with the time limits 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 corollary of this proposition is that failure to comply within two years of the accident invalidates the claim. Therefore, Mr. Elfeki’s claim has been invalidated, and he has no claim to present to Lloyd’s.

I find that Lloyd’s is not responsible for paying benefits to Mr. Elfeki.

Accident Benefits

Mr. Elfeki was injured on April 26, 1983, in an automobile accident. The no-fault and tort lawsuits arising from that first accident settled in 1987.

Mr. Elfeki invested most of the settlement proceeds in a used car business called Silver Shadow Motors. It had ceased to function by the end of 1990 and had essentially been wound down prior to the second accident of July 24, 1991.

Mr. Elfeki was driving his last functioning automobile from his business to auction when the accident occurred. According to the police report, Mr. Elfeki did not see an approaching tractor trailer while turning left onto a highway and drove in front of it, causing the accident.

The ambulance call report indicates that Mr. Elfeki was lying prone on the roadway conscious, alert, and oriented. Mr. Elfeki had a large abrasion on the right side of his back and numerous lacerations and abrasions on his arms and face. The ambulance took Mr. Elfeki to Woodstock General Hospital where he complained of pain in his neck, chest, right hip, pelvis, and low back. The surgical department debrided and sutured Mr. Elfeki's multiple lacerations and abrasions. He was discharged from the Woodstock General Hospital on July 31, 1991. A scaphoid cast was applied to Mr. Elfeki's left arm on August 7, 1991, and removed on November 6, 1991.

Mr. Elfeki's activities were severely limited in the two months after the accident, which were described as the "acute" phase of his injuries at the hearing. He received care services during this period from Ms. Joyce Deniet, who had moved in with him around the time of the accident. A second phase followed the acute phase during which Mr. Elfeki's functional abilities improved. The second phase ended a few weeks after the removal of the scaphoid cast on November 6, 1991. Mr. Elfeki testified that he had some residual weakness and lack of function of the hand immediately after the cast was removed. During this second phase Mr. Elfeki relied less on Ms. Deniet.

Mr. Elfeki is entitled to a weekly benefit during the period in which he suffers a substantial inability to perform the essential tasks in which he would normally engage. For any period in excess of 156 weeks he must establish that the injury continously prevents him from engaging in substantially all of the activities in which he would normally engage. Ms. Deniet must establish that she has provided Mr. Elfeki with care, goods, or services he reasonably required resulting from the accident of July 24, 1991.

Substantial Inability to Perform the Essential tasks

After Mr. Elfeki's business had collapsed around the end of 1990, he spent most of the next six months in a state of depression. He testified that during that period he watched television, read, listened to music, spent time with Ms. Deniet, and attended off-track betting establishments. At the end of July 1991, Ms. Deniet was spending a considerable amount of time with Mr. Elfeki and was helping him with the household.

Mr. Elfeki testified that his typical day now includes feeding and watching his fish, enjoying his plants, reading books, watching television, and walking his dogs, but he cannot sustain these activities for very long because he tires easily. On the other hand, he can make himself coffee and meals, go to the bathroom, meet friends for coffee, and go to restaurants.

Mr. Elfeki has resumed attending off-track betting establishments. Although Mr. Elfeki testified that he has difficulty getting dressed and undressed without Ms. Deniet s, on one occasion while under surveillance and while Ms. Deniet was not in the apartment he took only eight minutes to enter his apartment building dressed in one outfit and to leave it in another. The investigators also observed Mr. Elfeki making adjustments to the seat of his car, twisting and turning around in his car, and bending and stretching. He was also filmed taking his dogs for short walks even when there was deep snow outside.

I find that Mr. Elfeki has been able to resume his essential activities. At best, they may be somewhat reduced, in that he may not be able to walk or drive as long as he used to. I find that Mr. Elfeki resumed his essential tasks as of January 1, 1992.

All Reasonable Expenses Resulting From the Accident in Caring for Mr. Elfeki

Ms. Deniet testified that she devoted about ten hours a day to caring for Mr. Elfeki during the acute phase of his injuries following the accident. During the second phase, Mr. Elfeki started to resume many of his activities. Ms. Deniet provided fewer services to Mr. Elfeki as he improved. She testified that at present the only service she provides now that she did not provide before the accident is approximately an hour to an hour and a quarter spent massaging him.

Ms. Deniet's testimony supports an amount of 10 hours a day during the initial phase. I find that her role was reduced to its present status by January 1992. In addition, Ms. Deniet was massaging Mr. Elfeki before the accident, and I find it difficult to separate the massage from her pre-accident role. There must be some minimal level below which a caregiver benefit is not payable, and in these circumstances I find that a caregiver benefit would only be payable until the time I found Mr. Elfeki resumed his essential tasks, namely January 1, 1992. I would allow five hours a day during the second phase.

If recovery were available, then, I find that a caregiver benefit would be payable for 10 hours a day for 9 weeks at $6 an hour, and then for five hours a day over the remaining period to January 1, 1992.

Amount of the weekly benefit

I heard submissions from Lloyd's on the issue of the quantum of benefits should weekly benefits be payable. In light of my conclusions above, it is not necessary for me to make a finding on these points.

Expenses:

Mr. Elfeki is not entitled to his reasonable expenses of the hearing. Mr. Elfeki elected to misrepresent his marital status to Lloyd s. This misrepresentation led to a lengthy hearing that would not have been necessary if he had not made that misrepresentation. Furthermore, for reasons known only to himself, Mr. Elfeki destroyed his chances of obtaining benefits, unnecessarily involved Lloyd s, and contacted Traders long after the notice period had expired.

Order:

1. Mr. Elfeki is precluded from proceeding with his arbitration against Traders.

2. Lloyd’s is not responsible for paying benefits to Mr. Elfeki.

3. Mr. Elfeki is not entitled to his reasonable expenses of the hearing.

July 14, 1997

David Evans Arbitrator

Date

Appendix

Present at the Hearing:

Applicant:

Mohamed H. Elfeki

Mr. Elfeki’s

David E. Rowcliffe

Representative:

Barrister and Solicitor

Lloyd’s

Graeme Mew

Representative:

Barrister and Solicitor

Trader’s

Scott McTaggart

Representative:

Barrister and Solicitor

Reporter:

Val Newsome

Triune Reporting

Witnesses:

Mohamed H. Elfeki

Gary Robb

Joyce Deniet

Ken Laidlaw

Exhibits:

Exhibit 1

Written Submissions of Traders General Insurance Company

Exhibit 2

Traders Mediation/Arbitration Documents

Exhibit 3

Lloyd’s Mediation/Arbitration Documents

Exhibit 4

Applicant’s Correspondence Brief

Exhibit 5

Affidavit of Robert Allen, Barrister and Solicitor

Exhibit 6

Letter dated December 1, 1987, from Bresver Grossman Scheininger & Davis

Exhibit 7

Transcript of the Examination for Discovery of Mr. Elfeki in Action No. 221028/84

Exhibit 8

Letter dated January 25, 1993, from Jeffery Associates to Transportation Fleet Services

Exhibit 9

Trial Record in Action No. 221028/84

Exhibit 10

Trial Record in Action No. 6707/85

Exhibit 11

Statement of Defence in Action No. 6707/85

Exhibit 12

Report dated May 31, 1993, from Transportation Fleet Services to Lloyd's

Exhibit 13

Report dated June 28, 1993, from Transportation Fleet Services to Lloyd's

Exhibit 14

Report dated July 23, 1993, from Transportation Fleet Services to Lloyd's

Exhibit 15

Applicant's Documents Brief

Exhibit 16

Applicant's Medical Brief, Volume I

Exhibit 17

Applicant's Medical Brief, Volume II

Exhibit 18

Dr. Paul Steinberg's Independent Psychiatric Assessment of Mr. Elfeki and attached curriculum vitae

Exhibit 19

Consultation Letter dated April 11, 1985, from Dr. Steinberg to Dr. B. Deathe

Exhibit 20

Consultation Notes of Dr. Donald Millar, chiropractor

Exhibit 21

Letter dated September 23, 1996, from Dr. H. Finestone to Smith, Lyons

Exhibit 22

Letter dated November 18, 1987, from Bresver Grossman Scheininger & Davis to Mr. Elfeki

Exhibit 23

Video of Mr. Elfeki taped February 17 and February 20, 1995

Exhibit 24

Video of Mr. Elfeki taped February 14, 1996

Exhibit 25

Two reports from Eckler Partners Ltd. dated May 26 and May 27, 1985

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 On or Between June 22, 1990 and December 31, 1993. In this decision, the term "Schedule" will be used to refer to Regulation 672.
2. 2(July 11, 1996), OIC A96-000361
3. 3(October 25, 1994), OIC A-006494.