Neutral Citation: 1998 ONFSCDRS 83

FSCO A97-001825

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

MONICA SIMMS

Applicant

and

MARKEL INSURANCE COMPANY OF CANADA

Insurer

DECISION on a PRELIMINARY ISSUE

Issues:

The Applicant, Monica Simms, was injured in a motor vehicle accident involving a Toronto Transit Commission ("TTC") vehicle on October 26, 1992. She applied for and received statutory accident benefits from Markel Insurance Company of Canada, payable under the Schedule¹ The Insurer terminated weekly income benefits effective February 7, 1995. The parties were unable to resolve their disputes through mediation, and Ms. Simms applied for arbitration at the Financial Services Commission of Ontario² under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The only issue in this hearing is:

1. Is the Applicant precluded from proceeding to arbitration because her application for arbitration was filed beyond the two-year limitation period set out in subsection 281(5) of the Act and subsection 26(1) of the Schedule?

Ms. Simms also claims her arbitration expenses incurred.

Result:

1. The application was untimely and cannot proceed.

2. The Applicant is entitled to her arbitration expenses incurred.

Hearing:

The hearing was held at the offices of the Financial Services Commission of Ontario in North York, Ontario, on September 9, 1998, before me, Nancy Makepeace, Arbitrator.

Present at the Hearing:

Applicant:

Monica Simms

Ms. Simms'

Lorne Farovitch

Representatives:

Barrister and Solicitor

Chapnick & Associates

Alan Leibovitch

Alan Leibovitch & Associates

TTC's

Karen McGuire

Representative:

Barrister and Solicitor

TTC's

Paul Ballantine

Officer:

Claims Supervisor

Witnesses:

Monica Simms, the Applicant

David Wilson, the Applicant's former lawyer

Exhibits:

Exhibit 1

Correspondence from the TTC file

Exhibit 2

Workable reports of January 19, 1995 and February 13, 1995

Exhibit 3

Correspondence from Mr. Wilson's file

Evidence and Findings:

Background and Issues

The Applicant was injured while a passenger on a TTC bus on October 26, 1992. She received non-earner (s. 13) benefits of $185 per week and caregiver benefits of $50 per week until February 7, 1995, when benefits ceased. On February 22, 1995, the TTC sent David Wilson, the Applicant's lawyer at that time, a termination letter, an Assessment of Claim form, and the Workable report of February 13, 1995 on which the TTC relied in terminating benefits.

The Applicant applied for mediation on May 5, 1997. The Report of Mediator, dated July 31, 1997, indicates that the TTC raised the limitation period issue at mediation. The Applicant applied for arbitration on October 14, 1997.

Subsection 281(5) of the Act states that an arbitration proceeding must be commenced within two years of the insurer's refusal to pay the benefit claimed, or within such longer period as may be provided in the Schedule. The Schedule does not extend the limitation period. Section 26 of the Schedule is as follows:

(1) A mediation proceeding under section 280 of the Insurance Act in respect of benefits under this Schedule must be commenced within two years from the insurer's refusal to pay the amount claimed in the application for statutory accident benefits . . .

(2) Despite subsection (1), an arbitration or court proceeding under section 281 of the Insurance Act may be commenced within ninety days after the mediator reports to the parties under subsection 280(8) of the Act.

The Applicant's application for mediation appears to have been filed about two and a half months beyond the two-year limitation period set out in subsection 281(5) of the Act and subsection 26(1) of the Schedule.

The Applicant submits that the limitation period did not begin to run on February 22, 1995 because the TTC did not satisfy the requirements for notice of termination set out in subsection 24(8) of the Schedule, which is as follows:

If the insurer refuses to pay an amount claimed in an application for statutory accident benefits, the insurer shall forthwith give written notice to the insured person giving the reasons for the refusal.

According to the Applicant, the TTC's notice was deficient in two respects: it was sent to Mr. Wilson and not to Ms. Simms, and its content was not "clear and unequivocal."³

Clear and unequivocal notice

The body of the TTC's letter of February 22, 1995 to Mr. Wilson is as follows:

Further to your letter of February 1, 1995. We have now received the Workable Centres Inc. Orthopaedic Multidisciplinary Assessment and enclose a copy for your review.

It appears there is no further weekly disability entitlement and no further payments will be made subsequent to February 7, 1995.

Enclosed is the Ontario Automobile Assessment of Claim by Insurer.

Thank you for your cooperation. [emphasis added]

The Assessment of Claim form enclosed with the letter indicates that weekly non-earner and child care benefits were paid from November 2, 1992 to February 7, 1995 and that "[m]edical documentation no longer supports an inability to perform daily essential tasks." The "portion of claim denied" box is checked off.⁴

Workable Centres Inc. ("Workable") performed a Multidisciplinary Assessment of the Applicant on January 19, 1995. Its February 13, 1995 summary report, which was enclosed with the termination letter, concludes "... it appears that Ms. Simms is able to perform all of her pre-accident essential tasks as a Caregiver/Homemaker." [emphasis added]

On behalf of the Applicant, Mr. Farovitch submitted that this notice was deficient in that the letter did not explain the reason for termination but simply enclosed the Workable report, leaving the reader to infer that the TTC was relying on the report in support of its decision to terminate benefits. He also found the use of the phrase "it appears" confusing. He submitted that the report was unclear.

Mr. Wilson had no trouble understanding the letter. On cross-examination, he testified that he understood it to mean that the TTC was not going to pay any more benefits. I find no ambiguity in the letter or the Workable report. I find the use of "it appears" to be merely polite, and I am not persuaded that this phrase detracts from the main point of the letter, which is that "no further payments will be made subsequent to February 7, 1995."

I find that the TTC’s February 22, 1995 letter, read together with the enclosed Assessment of Claim form and Workable report, provided clear and unequivocal notice of termination with written reasons, as required by subsection 24(8).

Notice to the insured person's lawyer

The Insurer conceded that it did not send a copy of its February 22, 1995 letter to the Applicant personally. The Applicant testified that Mr. Wilson did not give her the letter or any other written notice, and did not tell her that her benefits were being terminated. Mr. Wilson testified that he received and reviewed the letter, but could not recall discussing the issue with the Applicant. His dockets, memos and correspondence after December 2, 1994 do not reflect any such correspondence or communication.⁵

The Insurer bears the burden of proving that this proceeding is untimely. As I am not satisified that the Applicant knew her benefits had been terminated, I need not decide whether actual notice is sufficient in the face of an insurer's noncompliance with the notice requirements of the Schedule. Because of preceding events, I do think the Applicant should have known that her benefits had been terminated. However, I do not accept that this answers the requirements of subsection 24(8), because any such reading would effectively nullify that provision.

At common law, "notice to a solicitor about a matter of which it is part of the solicitor's duty to inform himself or herself is actual notice to the client."⁶ On behalf of the Applicant, Mr. Farovitch submitted that subsection 24(8) supersedes this rule in that its plain language requires notice to "the insured person." He relied on Liberio and Constitution Ins. Co. of Canada⁷ in which Arbitrator Miller found that notice to the applicant's representative was not notice to the applicant. The Arbitrator relied on Holguin and Allstate Ins. Co. of Canada,⁸ in which Arbitrator Evans made the following comments:

Statutory Condition 13, in subsection 234(2) of the Insurance Act, which was in force in 1992, stated:

Written notice may be given to insured named in this contract by letter personally delivered to the insured or by registered mail addressed to the insured at the insured’s latest post office address as notified to the insurer. [Emphasis added.]

In this case, Mr. Holguin hired lawyers, who notified Allstate in writing that all further communications should be directed to them. There is no doubt that the lawyers were retained by Mr. Holguin to act on his behalf during the relevant period.

Arbitrator Evans concluded that the insurer was entitled to rely on the direction provided by the applicant.

I accept that the statutory accident benefit scheme and the dispute resolution process were intended to provide insured persons with a relatively inexpensive, informal and accessible system. Arbitration decisions have promoted values of transparency and responsiveness in interpreting subsection 24(8) and other notice provisions. Mr. Farovitch also pointed out that it would have cost the Insurer very little to mail the notice to the Applicant at the same time it was mailed to Mr. Wilson. This minimal cost contrasts sharply with the steep cost to the insured, who may be statute-barred from arbitration if her lawyer receives the notice but fails to pass it on to her. In my view, insurers should give notice of termination to the insured personally, as well as to his or her lawyer.

However, these policy considerations do not persuade me that they are required to do so where the insured has retained counsel to conduct all dealings with the insurer on her behalf. I find nothing in the language of subsection 24(8) to rebut the presumption against changing the common law.⁹

Mr. Farovitch submitted, alternatively, that this case is distinguishable from Holguin and Allstate in that Mr. Wilson did not obtain as broad a direction from his client as counsel had in that case. The Applicant's direction, which Mr. Wilson enclosed with his letter of July 12, 1994, directed the TTC to forward to Mr. Wilson "any and all information which [he] may require from you pertaining to myself." The direction did not expressly require the TTC to communicate with the Applicant exclusively through Mr. Wilson.

However, that is what happened. The TTC subsequently communicated only with Mr. Wilson, and there is no evidence that the Applicant objected to this or attempted to contact the TTC directly at any time before benefits were terminated.

In response to Mr. Wilson's initial letter, the TTC provided a benefits schedule and the reports prepared by Voc-Care Rehabilitation Management Inc. ("Voc-Care"). Subsequent medical reports prepared at the request of the TTC were also sent to Mr. Wilson. The TTC sent the Applicant's benefit cheques to Mr. Wilson, beginning with a cheque for weekly non-earner and caregiver benefits for the period July 19-August 29, 1994, and about once a month thereafter.¹⁰Ms. Simms testified that she either picked up her benefits cheques at Mr. Wilson's office or received them in the mail. She testified that Mr. Wilson deducted his fees before sending her a cheque. Mr. Wilson testified that he was unsure whether he simply passed on the TTC's cheque or issued a cheque from the firm's trust account, but his letters to the Applicant indicate that he simply forwarded the TTC draft.

On November 29, 1994, Mr. McCallum, a TTC Claims Adjuster, sent Mr. Wilson the Voc-Care Interim Status Report dated November 16, 1994. According to Mr. McCallum, the report indicated that the Applicant "is now performing her daily essential tasks." He concluded, "it would appear there are no further weekly disability benefits payable past November 21, 1994" and invited Mr. Wilson to indicate which tasks were in dispute if the Applicant disagreed with the report. Mr. Wilson sent the report to the Applicant by letter of December 2, 1994, and asked her to call him immediately. They met on December 9 at Mr. Wilson’s office. Mr. Wilson testified that he reviewed the Voc-Care report with her, and that the purpose of the meeting was to elicit her response to it. He could not recall whether he told her that the TTC intended to terminate benefits on the basis of the report, nor could he recall whether the telephone conversation with Mr. McCallum referred to in his docket entry for that day occurred while the Applicant was in the office.

On December 12, Mr. Wilson wrote Mr. McCallum that Ms. Simms was of the view "that the contents of the report are inaccurate and entirely misleading"; he then outlined the points of disagreement. This letter concluded with Mr. Wilson’s confirmation that the TTC would bring benefits up to date to December 19 and that Mr. Wilson and Mr. McCallum would meet.

Mr. McCallum attended at Mr. Wilson's office on December 15. Mr. Wilson was unable to recall the details of their discussion or whether the Applicant was present. However, his letter of December 20, 1994 to the Applicant implies that she was not at the meeting. The letter stated that Mr. McCallum agreed to continue paying benefits, "at least for the short term," on the basis that the Applicant would attend for an assessment in January 1995. Mr. McCallum gave the same account of this meeting in his December 19 letter to Mr. Wilson:

After some discussion, we agreed to a complete Multi-Disciplinary Assessment at Workable on the basis that we would bring weekly benefits to the date of the assessment.

In the same letter, Mr. McCallum forwarded the TTC's cheque for the Applicant's benefits between December 20, 1994 and January 23, 1995.

Several other letters passed between Mr. Wilson and Mr. McCallum in late December and early January 1995. On January 10, 1995, Mr. Wilson sent Ms. Simms a follow-up letter seeking a response to his letter of December 20, 1994. I find that these letters refute the Applicant’s testimony that she was unaware, in November and December 1994, that the TTC was about to terminate benefits.

On January 31, Mr. McCallum sent Mr. Wilson a cheque covering the Applicant's benefits for the period January 24 - February 7, 1995. Mr. Wilson sent "the TTC draft" to Ms. Simms by letter of February 9.

The next correspondence between the TTC and Mr. Wilson was the February 22, 1995 Notice of Termination.

Mr. Farovitch presented no cases in support of his submission that the Applicant’s direction to the TTC was insufficient to make the notice binding on her. I find that Mr. Wilson had actual (implied or customary) authority to communicate with the TTC and receive communications from the TTC with respect to all aspects of the Applicant’s accident benefit claim. Alternatively, I find that Mr. Wilson had apparent or ostensible authority to do so.¹¹ His initial letter to Mr. McCallum in July 1994 indicates that they had already discussed the Applicant’s claim. Between then and the date when benefits were terminated in February 1995, Mr. McCallum, and later Mr. Ballantine, communicated only with Mr. Wilson. In November 1994, it was Mr. Wilson who received notice that the TTC intended to terminate benefits based on the Voc-Care report. Following further discussions between Mr. Wilson and Mr. McCallum, the TTC extended benefits three times, the last time pending the results of an assessment to which Mr. Wilson agreed. Mr. Wilson advised the Applicant about these developments by letter and sought her instructions. She received her benefits through his office and attended the assessment to which he had agreed. There is no evidence that she objected to any of this or attempted to communicate with the TTC directly at any time before her weekly benefits were terminated. In cross-examination, the Applicant testified that she was not disturbed that Mr. Wilson received her benefit cheques because "he was my lawyer." I find that by February 22, 1995, the TTC was entitled to rely on Mr. Wilson's authority to receive the Insurer's notice of termination.

In cross-examination, the Applicant testified that she called Mr. McCallum after her benefits were terminated, but he refused to talk to her and told her that Mr. Wilson would be contacting her. On the basis of this testimony, I considered whether the Applicant had thereby notified the TTC that she had terminated Mr. Wilson's agency at some point after benefits were terminated, and if so, whether the TTC was required to give Notice of Termination to her personally. She would have had to have done this by May 5, 1995 to save her application. However, the Applicant gave no date or details of her discussion with Mr. McCallum, and Mr. Wilson's correspondence supports his oral evidence that he continued to communicate with the TTC on her behalf throughout this period.

On April 11, he sent Mr. McCallum a list of some medical attendances and requested that the related transportation expenses be paid. Mr. McCallum replied that some of these expenses had been paid, and he enclosed payment of the unpaid amount. Mr. Wilson sent the TTC draft to Ms. Simms by letter of April 27, in which he referred to "the list of medical attendances which you previously left with me." It appears, then, that Ms. Simms attended at Mr. Wilson's office some time in March or April of 1995. There is no docket entry for any meeting. I heard no evidence as to whether she met with Mr. Wilson on that occasion, or merely dropped the list off at reception. In cross-examination, she admitted that she might have had one or two meetings with him after her weekly benefits were terminated.

On May 24, 1995, Mr. Wilson wrote to Mr. McCallum asking him to reconsider the termination of weekly benefits on the basis of a recent report from the Applicant's family doctor, or alternatively, to schedule another functional abilities evaluation. This proposal was rejected by Paul Ballantine, Claims Supervisor, who responded in Mr. McCallum's absence on June 6, 1995.

According to Ms. Simms, her retainer of Mr. Wilson continued until April 24, 1997, when she dismissed him by letter and retained Mr. Alan Leibovitch, a paralegal. She said it was not until she retained Mr. Leibovitch that she learned about her benefits being terminated. Mr. Wilson testified he stopped acting for the Applicant in mid-1995, and that around this time, a Mr. Selkin, a non-lawyer retained by Ms. Simms, appeared in his office to request the file. Mr. Wilson refused, and Ms. Simms complained to the Law Society. He could not recall whether Ms. Simms had contacted him directly about this.

In light of the documentary evidence that Mr. Wilson continued to act for the Applicant until at least the early summer of 1995, I am not satisfied that the TTC was required to give Notice of Termination to the Applicant personally at any time relevant to this proceeding.

Expenses:

I find that the Applicant raised legitimate factual and legal issues in this proceeding. Ms. McGuire submitted that the hearing was prolonged by the Applicant’s refusal to disclose her former lawyer's file in advance of the hearing. I find that the Applicant and Mr. Wilson raised a legitimate issue about solicitor-client privilege. I find this an appropriate case for the exercise of my discretion to award the Applicant her arbitration expenses, pursuant to the Expenses Schedule. The parties may proceed under Rule 77 of the Dispute Resolution Practice Code in case of any disagreement about the amount owing.

Order:

1. The application is dismissed.

2. The Applicant is entitled to her arbitration expenses incurred.

November 19, 1998

Nancy Makepeace

Arbitrator

Date

APPENDIX: SOLICITOR-CLIENT PRIVILEGE

At the outset of the hearing, the TTC requested production of Mr. Wilson's file from December 2, 1994 (a date the parties had agreed on) in order to determine whether Mr. Wilson communicated with his client about the termination of her benefits. The Applicant objected that Mr. Wilson's file was protected by solicitor-client privilege. The TTC submitted that the Applicant had put her state of mind and her communications with Mr. Wilson in issue by denying that she received notice. According to the TTC, the Applicant thereby waived privilege.

The TTC relied on Toronto-Dominion Bank v. Leigh Instruments Ltd. (Trustees of) (1997), 1997 CanLII 12113 (ON CTGD), 32 O.R. (3d) 575 (Ont.Gen.Div.), in which it was held that the plaintiff bank had waived privilege over a number of documents, including a legal memorandum, by pleading that it had relied on the comfort letters provided by the defendant as guarantees of the bank's loan. In reaching this conclusion, Justice Winkler stated:¹²

Any consideration of waiver of privilege must involve balancing the competing interests of full disclosure on the one hand and preservation of solicitor-client confidentiality on the other.

He went on to say, "waiver may occur in the absence of an intention to waive the privilege, where the interests of fairness and consistency dictate."

In my view, fairness requires that the Insurer have access to the relevant portions of Mr. Wilson's file in order to have an opportunity to answer the Applicant's claim that he did not give her the Insurer's notice of termination. I find that Ms. Simms waived solicitor-client privilege with respect to communications with Mr. Wilson about the status of her benefits or termination of benefits, but not with respect to any other discussions about her claim.

I ordered Mr. Wilson to produce to me his correspondence file and dockets from December 2, 1994 on. I reviewed the file and selected five letters in which Mr. Wilson had communicated with Ms. Simms about the status of her benefit claim, as well as a docket sheet covering the same period. I deleted the portions of two letters (December 2 and December 20, 1994) in which Mr. Wilson gave advice and sought instruction about the client’s claim. The edited copies were then admitted as evidence.

I ruled that because I had reviewed privileged correspondence which fell outside the scope of my ruling with respect to a waiver, I would not be the Arbitrator to hear this matter, should I decide that it is not statute-barred.

In my view, a two-step process must determine whether the limitation period applies in the circumstances of this case. First, it is necessary to ask whether, and when, there was a refusal to pay benefits; and second, whether the insurer may rely on a limitation period that runs from the date of the refusal.

This approach has consistently been adopted by Arbitrators in subsequent time limits decisions and I apply it here.

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents On or Between June 22, 1990 and December 31, 1993, Regulation 672 of R.R.O. 1990, as amended by Ontario Regulations 660/93 and 779/93.
2. 2Effective July 1, 1998, the Ontario Insurance Commission was changed to the Financial Services Commission of Ontario, pursuant to the Financial Services Commission of Ontario Act, S.O. 1997, c.28.
3. 3The requirement that notice be "clear and unequivocal" was set out by Arbitrator Naylor in Zeppieri and Royal Insurance Co. Of Canada, (OIC A-005237, February 17, 1994) confirmed on appeal (OIC P-005237, December 22, 1994):
4. 4The form also indicated that the Applicant's medical and rehabilitation claim had been "accepted in entirety."
5. 5The Applicant resisted the Insurer's request for Mr. Wilson's file on the ground of solicitor-client privilege. My ruling is set out in an Appendix to the decision.
6. 6C.E.D. (Ont. 3rd), Barristers and Solicitors, para. 160. Ms. McGuire also relied on: St. John and Quebec R. Co. v. Bank of British North America and the Hibbard Co. (1921), 1921 CanLII 574 (SCC), 67 D.L.R. 650 (S.C.C.); Cross v. Dares et al., 1933 CanLII 331 (NS CA), [1933] 2 D.L.R. 97 (N.S.S.C.); and Dominion Readers' Service Ltd. v. Brant et al. (1982), 1982 CanLII 1771 (ON CA), 41 O.R. (2d) 1 (Ont. C.A.). See also The Law of Agency (6th ed.), G.H.L. Fridman (Butterworth's, 1990), at pp. 52-73 and 107-118, and especially pp. 319-320.
7. 7(OIC A95-000422, September 11, 1996)
8. 8(OIC A-009270, July 26, 1995)
9. 9Driedger on the Construction of Statutes (ThirdEdition), Ruth Sullivan (Butterworths, 1994), pp. 298-299.
10. 10Subsection 24(3) of the Schedule requires weekly benefits to be paid at least every two weeks.
11. 11Supra, Fridman, note 7.
12. 12At p. 590 O.R.