Neutral Citation: 1997 ONICDRG 183
Appeal P97-00017
OFFICE OF THE DIRECTOR OF ARBITRATIONS
HEAN KHENG H'NG and TAN AI KENG
Appellants
and
ALLSTATE INSURANCE COMPANY OF CANADA
Respondent
Before:
David R. Draper, Director's Delegate
Counsel:
Bill Wong (for Hean Kheng H'ng and Tan Keng)
Thomas Wright, Q.C. (for Allstate Insurance Company of Canada)
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 March 7, 1997, is confirmed.
Allstate Insurance Company of Canada shall pay the appellants, Hean Kheng H'ng and Tan Ai Keng, appeal expenses of $500.00.
October 1, 1997
David R. Draper
Director's Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
This is an appeal by Hean Kheng H'ng and Tan Ai Keng from an arbitrator's order that they cannot arbitrate their claim for death benefits because they failed to file an adequate application within the 90-day time limit in subsection 59(3) of Ontario Regulation 776/93, the Statutory Accident Benefits Schedule - Accidents On or After January 1, 1994 ("the SABS - 1994").
II. BACKGROUND
The appellants are the parents of Gaik Khian H'ng, who was fatally injured in an automobile accident on January 22, 1994. At the time of his accident, Mr. H'ng had been living in Ontario for about five years, running a restaurant. Most of his family, including his parents, lived in Malaysia.
The issue on appeal is whether the appellants applied for death benefits within the time limit established in subsection 59(3) of the SABS - 1994. The application process, including the time limits, is found in section 59:
59.—(1) A person who wants to apply for benefits under this Regulation shall notify the insurer within thirty days after the circumstances arose that gave rise to the entitlement to benefits, or as soon as practicable thereafter.
(2) The Insurer shall promptly provide the person with,
(a) the appropriate application forms;
(b) a written explanation of the benefits available under this Regulation; and
(c) written information to assist the person in applying for benefits, including information to assist the person in making any possible elections.
(3) The persons shall submit an application for the benefits to the insurer within ninety days of receiving the application forms.
(4) A failure to comply with a time limit set out in subsection (1) or (3) does not disentitle a person to benefits if the person has a reasonable excuse.
Because Mr. H'ng was a passenger in an automobile it insured, Allstate attempted to locate his family, without success. However, in June 1994, approximately five months after the accident, it received a letter from Charles Fair, a lawyer representing "the next of kin of Gaik Khian H'ng." Mr. Fair said he was investigating the fault aspects of the accident and then stated:
In the meantime, please forward to my attention the forms necessary for my client to apply for any death benefits they are entitled to and for reimbursement of the expenses incurred for Mr. H'ng's funeral.
Also, please advise whether optional death benefits will be provided under the insured policy insurance.
Allstate responded to Mr. Fair's letter, enclosing an accident benefits application package. This included the Application for Accident Benefits (OCF1), the Employer's Confirmation of Income (OCF2) and the Health Practitioner's Certificate (OCF3). It did not include the Death or Funeral Benefit Application (OCF4).
In August 1994, Mr. Fair sent Allstate a completed Death or Funeral Benefits Application (OCF4), but not the initial application form (OCF1). Allstate accepted this as an application for funeral and travel expenses and paid the amount claimed - $9,058.88. Death benefits were neither paid nor denied because Allstate's Claims Manager did not read the application as including a death benefits claim. The Explanation of Assessment by Insurance Company left the death benefits portion blank, suggesting no claim was considered.
After receiving payment, Mr. Fair wrote to Allstate, thanking them for the funeral and travel expenses. He then asked for their position on the Family Law Act claim and "whether anyone else has made a claim for benefits as a dependant." Allstate's Claims Manager phoned Mr. Fair to follow up on the Family Law Act claim, but he was not in. She left a message, but never received a return call. In May 1995, Allstate closed its accident benefits file.
In August 1995, approximately 18 months after the accident, the appellants' current lawyer, Bill Wong, contacted Allstate. Mr. Wong claimed death benefits for the appellants, arguing that Mr. Fair initiated the claim much earlier. Allstate refused to pay death benefits for two reasons. First, it argued that the claim was out-of-time. Second, it maintained that it had no evidence that the appellants were financially dependent on their son at the time of his accident.
After an unsuccessful attempt at mediation, the dispute went to arbitration. The pre-hearing arbitrator scheduled an initial hearing to deal only with the out-of-time issue. If the appellants succeeded on this issue, a subsequent hearing was to deal with whether they qualified as dependants.
At the initial hearing, both parties filed documents, but only one witness was called - the Claims Manager for Allstate Insurance Company of Canada ("Allstate"). The arbitrator accepted the appellants' argument that their claim should not be evaluated simply on their application form. After considering all the evidence, however, he concluded that their application "did not present the Insurer with a potential death benefit claim sufficiently evident or particularized to meet the requirements of section 59(3)." The arbitrator did not consider whether there was a reasonable excuse under subsection 59(4) for not meeting the 90-day time limit because the appellants "did not attempt" to make that argument. As a result, he ordered that the appellants could not proceed with the arbitration.
The appellants submit that the arbitrator erred. Their arguments overlap, but I would summarize them as follows:
(a) Allstate is not entitled to rely on the time limit because it failed to meet its obligations set out in subsection 59(2).
(b) The appellants submitted the appropriate application form within 90 days and, therefore, met the requirement in subsection 59(3).
(c) The appellants clearly indicated they were claiming death benefits, but even if their claim was ambiguous, they should not be prevented from pursuing it.
(d) The arbitrator erred in failing to make a finding that the appellants had no "reasonable excuse" for the delay, within the meaning of subsection 59(4).
III. ANALYSIS
The appeal proceeded by way of written and oral submissions. For the following reasons, I am not persuaded that the arbitrator erred.
A. Allstate's Obligations
The appellants' first argument is that Allstate did not send the proper form and, therefore, cannot rely on the time limit in subsection 59(3) of the SABS - 1994. More specifically, they argue that since Allstate did not send the Death or Funeral Benefit Application (OCF4), the 90-day period never started running.
I do not accept this argument. According to section 94 of the Schedule, the Commissioner of Insurance is to approve various forms, including the application forms referred to in paragraph 59(2)(a). By sending the accident benefits application package, Allstate gave the appellants the approved application form (OCF1) and the explanation of benefits required by paragraph 59(2)(b).
The Application for Accident Benefits (OCF1) is the initial application for accident benefits, including funeral expenses and death benefits. If Allstate had not sent this form or failed to respond once it was submitted, it would not have met its obligations. However, that is not what happened here. Allstate sent the Application for Accident Benefits (OCF1), but a completed Death or Funeral Benefit Application (OCF4) was returned. As stated by the arbitrator, Allstate could have required the OCF1 before dealing with the appellants' claim, but did not do so. In my view, this was to its credit, not a failure to meet its obligations. I conclude, therefore, that the 90-day period ran from Mr. Fair's receipt of the accident benefits package.
B. Compliance By Filing the Proper Form
The appellants submit that by filing the Death and Funeral Benefits Application (OCF4), they met the requirements of subsection 59(3), whether or not it specified a claim for death benefits. However, the legislation requires more than filing the application. It requires "an application for the benefits." I agree with the arbitrator that "[t]he process of notification and application, within the context of the legislative scheme as a whole, anticipates the claim will be presented by the applicant in sufficient detail to permit the insurer to act upon it and meet its obligations for timely payment under the Schedule. "
As an example, subsection 67(1) of the Schedule requires the insurer to pay benefits, including death benefits, within 30 days after receiving "an application for the benefits." The insurer cannot be expected to meet this obligation unless there is something to alert it to the fact that "the benefits" claimed include death benefits. The real question, addressed in the next section, is whether the application and other material filed was sufficient to demonstrate a claim for death benefits.
C. Substantial Compliance
The appellants clearly applied for death benefits in the summer of 1995, when Mr. Wong contacted Allstate. The question before the arbitrator was whether this was a new claim, or one included in the earlier application filed by Mr. Fair. The arbitrator was not persuaded that a death benefits claim was "intended, pursued, or demonstrated" in the earlier application. After reviewing the appeal record, I am satisfied that the evidence supports this assessment. I find no reason, therefore, to interfere with his conclusion that the appellants did not submit an adequate application for death benefits within the 90-day time limit in subsection 59(3).
The Death and Funeral Benefits Application filed by Mr. Fair in August 1994 describes Mr. H'ng as single with no dependants. The appellants are listed in Part 2, "Survivor Benefits." The form asks for their relationship to Mr. H'ng, as follows:
Relationship to Deceased: (attach copy of birth certificate or proof of dependency)
spouse □
parent □
guardian □
dependant □
former spouse entitled to support □
The box for "parent" is checked for both appellants and no proof of dependency was provided. Under Part 3, "Funeral Expenses," the form lists funeral expenses of $3,258.01 and $5,800.87 for travel expenses, which was paid.
The appellants rely on Mr. Fair's covering letter, which says: "Please find enclosed my clients' application for death and funeral benefits." However, I agree with the arbitrator that when the entire letter is read, this sentence is of little consequence. It describes the form more than the claim. The letter focuses on two claims - the Family Law Act claim and the claim for funeral and transportation expenses. The last two sentences of the letter read as follows:
My clients are prepared to settle their F.L.A. claims for the sum of $25,000 plus $750 legal costs.
In the meantime, kindly forward payment of the funeral expenses in the amount of $9,058.88 to Charles F. Fair in Trust.
It is not surprising that Allstate treated this as an application for funeral and travel expenses, not death benefits. To qualify for death benefits, the appellants had to show that at the time of their son's accident, they were principally dependent on him for financial support. Not only did the application list no dependants and provide no proof of dependency, Mr. Fair's covering letter included the following information in respect of the Family Law Act claim:
- In Chinese culture, there is a very strong expectation that a son will contribute financially to the well being of his parents. Indeed, even though the deceased's parents are fairly well off, the deceased made at least one payment of $2,000.00 to his family in August 1988 (Please find enclosed a photocopy of the envelope and "pay-in" slip issued by the Public Bank Berhard.) Had Mr. H'ng not passed away so tragically, his parents would have expected to receive financial support in the future, however difficult it may to to [sic] ascertain the precise amount of that support.
This paragraph suggests that any significant financial reliance was anticipated, not current. While this might have helped the Family Law Act claim, it did not suggest entitlement to death benefits under the Schedule.
The appellants also rely on Mr. Fair's follow-up letter, described above, asking Allstate for its position on the Family Law Act claim and "whether anyone else has made a claim for benefits as a dependant." I agree with the arbitrator that this last question is unclear, but is not persuasive evidence that a claim for death benefits was pending. In my view, it is more significant that Mr. Fair did not protest Allstate's failure to deal with death benefits or pursue the claim.
D. Reasonable Excuse
Subsection 59(4) of the SABS - 1994 makes it clear that the 90-day time limit is not absolute. Applications made after the time limit can proceed if the applicant "has a reasonable excuse." The appellants claim that the arbitrator should not have precluded them from proceeding to arbitration without making a finding that they had no reasonable excuse for the delay.
This argument is compelling because it is easy to imagine possible reasons for the delay, perhaps due to language or cultural barriers, the fact that the appellants were living overseas, or a misunderstanding between Mr. Fair and Allstate's Claims Manager. However, the arbitrator makes a strong finding that the appellants did not attempt to argue a reasonable excuse. In other words, they chose to argue that an application for death benefits was filed in time, not that there was a reasonable excuse for the delay in submitting it. I am satisfied that the evidence supports this finding.
Allstate's position on the time issue has been consistent. It relied on subsection 59(3), arguing that the appellants did not apply for death benefits until the summer of 1995, long after the 90-day period passed. It was up to the appellants to respond. They had at least three potential arguments:
(1) The claim was included in the original application and, therefore, was made within the 90-day time limit.
(2) Allstate failed to meet its obligations and, therefore, could not rely on the time limit.
(3) If the claim was made beyond the time limit, there was a reasonable excuse for the delay.
The appellants made the first two arguments. If they wanted to make the third, the most obvious sources of supporting evidence were Mr. Fair and anyone involved in instructing him. However, no such evidence was presented at the arbitration hearing.
This is particularly important due to the production orders made at the pre-hearing. The Appellants were required to produce Mr. Fair's notes to the extent they were not privileged. They did not do so. My understanding is that when Allstate objected, the appellants told the arbitrator that they would not be relying on Mr. Fair's evidence. In my opinion, the arbitrator reasonably inferred that they made a tactical decision not to pursue the reasonable excuse argument.
The appellants argue that they were not required to present their reasonable excuse argument until the arbitrator found that their application was out-of-time. That is a possible, though cumbersome, procedure. In this case, however, the record is clear that a two-step process was adopted, not three steps. The pre-hearing arbitrator identified a preliminary issue and two substantive issues, as follows:
Preliminary Issue:
- Are the Applicants disentitled to death benefits because they failed to comply with the time limit set out in section 59(3) of the Schedule?
Substantive Issues:
Are the Applicants entitled to death benefits under section 51(2) of the Schedule?
What is the correct amount of death benefits to which the Applicants are entitled?
The preliminary issue was scheduled for a hearing in January 1997, with a date in March 1997 for the substantive issues. There is no suggestion that the appellants could save any of their arguments on the preliminary issue for a later date. Therefore, I do not accept this part of the appeal.
IV. EXPENSES
Appeal expenses are generally not awarded to unsuccessful appellants, unless the appeal raises novel issues of significance. Although the appeal was decided on its particular facts, it raised questions of law and was the first appeal dealing with the insurer's obligations under section 59 of the SABS - 1994. I am persuaded that the appellants should recover appeal expenses limited to $500.00.
October 1, 1997
David R. Draper
Director's Delegate
Date