Neutral Citation: 1999 ONFSCDRS 239

FSCO A99-000290

BETWEEN:

EDWIN C. JOHNSON

Applicant

and

GAN CANADA INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

M. Kaye Joachim

Heard:

October 6, 1999, in London, Ontario.

Appearances:

Anthony F. Steele for Mr. Johnson

Maura Helsdon for GAN Canada Insurance Company

The Applicant, Edwin C. ("Cecil") Johnson, was injured in a motor vehicle accident on April 29, 1994. He applied for statutory accident benefits from GAN Canada Insurance Company ( GAN" ), payable under the Schedule.¹ GAN asserts that Mr. Johnson did not submit his application for accident benefits within the time period prescribed by section 59. The parties were unable to resolve their disputes through mediation, and Mr. Johnson applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

Is Mr. Johnson barred from receiving benefits because he failed to notify the insurer within 30 days of the circumstances that gave rise to entitlement, and failed to submit an application for benefits within 90 days of receiving the application forms, under section 59 of the Schedule?

Mr. Johnson is not barred from receiving accident benefits under section 59 of the Schedule.

Notice under Subsection 59(1) of the Schedule

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 give rise to the entitlement to benefits, or as soon as practicable thereafter.

Mr. Johnson owned and operated a towing operation in London, Ontario under the name of C. J.'s Towing. He was responsible for the towing aspect of the operation and his common-law partner, Kim Leslie, managed the administrative aspects of the business. On April 29, 1994, an irate customer arrived at the compound to claim his towed vehicle. While escorting the customer out of the compound, Mr. Johnson placed his arm into the driver's side open window. The driver rolled up the window, trapping Mr. Johnson's arm and drove some distance, dragging him along. A co-worker drove him to the hospital where he was checked and released.

At the outset, I note that Mr. Johnson's evidence about the chronology of events following the accident was vague, confusing and contradictory at times. I am unable to place much reliance on his evidence with respect to dates and times. However, I find that the documentary evidence in this case, coupled with the evidence of Derrick MacLeod and Fabian Bento provides an adequate evidentiary basis for the following findings.

Within a couple of days of the accident, Kim Leslie contacted the insurance broker, Derrick MacLeod of Cation & Associates, who had arranged Mr. Johnson's insurance with GAN. She advised him of the accident and notified him that Mr. Johnson was seeking medical attention. She was unable to give any details at that time of the driver or vehicle involved. Mr. MacLeod advised her to contact him again when she had further details of the other person involved, or if Mr. Johnson wanted to make a claim for accident benefits. I heard no evidence that Mr. MacLeod advised her or Mr. Johnson of the 30-day time limit for notifying the insurer of a claim for accident benefits. I am satisfied that he did not do so, since he testified that he did not believe that there were any time limits involved in this case. Derrick MacLeod did not advise GAN of the accident at that time.

In November 1994, Mr. Johnson or Kim Leslie contacted Derrick MacLeod again and advised him that the third party had been convicted of criminal negligence. They also submitted medical receipts and an Attending Physician's Statement completed by Mr. Johnson's family physician on July 14, 1994 advising of the need for extensive physiotherapy. On November 22, 1994, Mr. MacLeod sent an urgent fax to GAN advising of an accident which occurred during Mr. Johnson's last policy term.

GAN submitted that Mr. Johnson had failed to provide notice of his claim for benefits within 30 days of the accident giving rise to the claim, or as soon as practicable thereafter, and that he had not offered a reasonable excuse for failing to do so.

GAN did not dispute that Kim Leslie, acting on behalf of Mr. Johnson, notified the broker of the accident within days of the accident. However, it takes the position that this was not specific notice of Mr. Johnson's intention to file a claim.

I find that any information provided to the broker must be deemed to be information provided to the insurer. Derrick MacLeod testified that he acted for both insureds and the insurance companies with whom Cation had contracts. Cation had a contract with GAN at the time. Derrick MacLeod testified that he was obliged to notify insurers of claims made by his customers. In this sense, he was acting as agent for GAN when he received notice of an accident or a claim from a customer.

The 30-day time limit for advising the insurer of an intention to make a claim for accident benefits must be interpreted in a purposive fashion. In Kuronen and Allstate,² Arbitrator Renahan stated that:

One of the goals of the no-fault accident scheme is that insurers and insured persons work together to achieve a consensus as to the appropriate rehabilitation. I presume that one of the purposes of the 30-day notice provision in the no-fault coverage is to give the insurer the early opportunity to participate in this rehabilitation process, so that the insured recovers from his injuries as much and as soon as possible. Compliance with the notice provisions is a condition precedent to any recourse the insured has against the insurer. Failure to comply with the notice provisions results in forfeiture of the insured's rights.

Subsection 59(1) of the Schedule does not specify the detail which must be provided in the notice. In light of the purpose of the 30-day provision, the brevity of the time period, and the consequence to the insured, I am of the view that the requirement to give notice should not be interpreted too strictly. I am satisfied, based on Mr. MacLeod's evidence, that he was advised of the circumstances of the accident and the fact that Mr. Johnson was seeking medical attention, within 30 days of the accident.

GAN submitted that Mr. Johnson did not specifically advise that he was making a claim for benefits. I find that this sets too high a standard on the facts of this particular case. Having been advised of the accident and need for medical attention, Mr. MacLeod ought to have treated that information as notice of a claim for benefits and advised GAN to forward the appropriate forms, or at least have advised Mr. Johnson of the 30-day time limit for making a claim.

I conclude that Mr. Johnson did provide the notice required by subsection 59(1) within 30 days of the accident.

Reasonable Excuse

If I am in error in my conclusion that Mr. Johnson had complied with subsection 59(1), I am satisfied that he had a reasonable excuse for failing to do so. Subsection 59(4) of the Schedule states:

59(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.

I adopt the approach taken by Arbitrator Renahan in the Kuronen case, referred to above:

In my opinion, the reasonable excuse advanced by the claimant must be examined with regard to all the circumstances connected to the delay, including prejudice to the insurer, hardship to the claimant and whether it is equitable to relieve against the consequences of the failure to comply with the time limit.

First, if notifying the broker, rather than GAN directly is not sufficient to comply with subsection 59(1), I find that Mr. Johnson had a reasonable excuse for not notifying GAN directly. Mr. Johnson reasonably believed that the appropriate notice had been given when Ms. Leslie contacted Mr. MacLeod. It would be inequitable to visit Mr. MacLeod's error in not immediately notifying GAN on Mr. Johnson.

If advising of the accident and the need for medical treatment was not sufficient notice of a claim for benefits, I find that Mr. Johnson had a reasonable excuse for failing to provide the required notice. Mr. Johnson reasonably believed that he had given the appropriate notice. This belief was fostered by Mr. MacLeod, who failed to notify him of the subtle distinction between advising of medical treatment and advising of a claim and also failed to advise him of the 30-day time limit.

Finally, I note that GAN called no evidence to demonstrate any prejudice it has suffered in this case. Indeed it is difficult to imagine any. GAN did receive notice of the claim by November 22, 1994, approximately six months after the accident. The third party involved has been tried and convicted. The facts surrounding the circumstances of the accident have been well preserved in the investigating officer's notes.³ There is no suggestion that the hospital records or the clinical notes and records of the family doctor are unavailable.

GAN submitted that it has been prejudiced by its inability to participate in the early rehabilitation of Mr. Johnson and its inability to obtain an early medical examination. It is ironic that GAN asserts this prejudice, as when it was advised of Mr. Johnson's injuries on November 29, 1994 and further advised that Mr. Johnson was obliged to give up physiotherapy treatment due to a lack of funds,⁴ GAN took no steps to assist him with his rehabilitation. I am satisfied that the reasonableness of Mr. Johnson's actions far outweighs this form of prejudice in this case.

Failure to Submit an Application for Benefits under Subsection 59(3) of the Schedule

Subsection 59(3) provides that a person shall submit "an application for benefits" to the insurer within ninety days of receiving the application forms. Subsection 59(2)(a) provides that the insurer shall promptly provide the person with the "appropriate application forms." Subsection 94.6 provides that the application forms referred to in 59(2)(a) shall be in a form approved by the Commissioner of Insurance. The Commissioner of Insurance approved an accident benefits package for use under subsection 59(2).⁵ The Accident Benefits Application Package contained three forms, an OCF 1, Application for Accident Benefits, an OCF 2, Employer's Confirmation of Income and an OCF 3, Health Practitioner's Certificate.

Upon being advised of the accident, GAN contacted an outside adjuster, Fabian Bento of Adjusters Canada, to take a statement from Mr. Johnson, complete an accident benefits questionnaire and deliver an accident benefits package. Mr. Bento contacted Mr. Johnson and met with him on November 29, 1994. He obtained a signed statement from Mr. Johnson describing the circumstances of the incident, his symptoms following the accident, and his medical treatment to date. Mr. Johnson advised that he was unable to return to his pre-accident duties. Mr. Bento also completed a detailed Accident Benefits Questionnaire, which contains the same information required in the Application for Accident Benefits. Mr. Johnson signed a self-employed questionnaire, an educational questionnaire, and a recreational questionnaire. He also provided information about the essential tasks of his employment and the work demands involved.

When was the Application Submitted?

Mr. Bento testified that he left an accident benefit package with Mr. Johnson on November 29, 1994 and advised him to complete it and send it in.

I am satisfied that Mr. Johnson partially completed the Application for Accident Benefits (the OCF 1), signed it on December 16, 1994 and mailed it to GAN Canada. I note that Mr. Johnson was unable to specifically recall mailing the application in December 1994. However, I am satisfied from the other evidence, that it was in fact mailed. I draw this inference from the fact that the application which was faxed to GAN in March 1995 was dated December 16, 1994 and that Mr. Johnson faxed a letter dated February 28, 1995 to GAN stating "I mailed this claim to your office in December 1994 and to date have not had a response."

GAN denies receiving this application in December 1994. However, no one from GAN testified to this effect. I note that the application faxed on March 1, 1995 (which GAN concedes receiving in part) was missing from GAN's file. In all the circumstances and despite GAN's claim not having received the document, I remain satisfied that it was in fact mailed. Accordingly, I conclude that Mr. Johnson submitted an application within the 90-day time period.

Incomplete Application

GAN asserted that the original application dated December 16, 1994 was so incomplete that it does not comply with the statutory requirement to submit an application for benefits within 90 days of receiving it.

While the application form signed December 16, 1994 is almost blank, I am satisfied that when all the evidence and documents are considered, Mr. Johnson has substantially satisfied the requirements of subsection 59(3).

I note that there is no statutory requirement that the application be "fully completed."

Further, by the time the application signed December 16, 1994 was submitted, Mr. Johnson had already provided the following information to GAN's adjuster: a signed statement;⁶ an Accident Benefits Questionnaire; a self-employed questionnaire; an educational questionnaire; a recreational questionnaire and information about the essential tasks of his employment and the work demands involved.⁷ He had also submitted an Attending Physician's Statement dated July 22, 1994.⁸ I find that these documents can be considered as attachments to Mr. Johnson's application.

The Application for Accident Benefits contains eleven parts. Part 1 requests the name, address of the person applying and where the applicant can be reached. Mr. Johnson provided this information in the Accident Benefits Questionnaire. Part 2 requests information about the applicant's representative. Mr. Johnson did not have a representative at that time. Part 3 requests details of the accident, including questions about the police investigation and medical and health care. These details are found in Mr. Johnson's signed statement and the Accident Benefits Questionnaire. Part 4 requests details of automobile insurance. This information had been provided by the adjuster, Derrick MacLeod in his initial fax of November 22, 1994. Part 5 requests details of other insurance. This information was provided in the Accident Benefits Questionnaire. Part 6 requests information about treatment expenses. This part of the Application for Accident Benefits dated December 16, 1994 was completed. Supporting receipts had been submitted to the broker in November 1994. Part 8, caregiver details, is not applicable. Part 9 requests information about employment situation at the time of the accident and Part 10 requests details of employment history. This information was provided in the Accident Benefits Questionnaire. Part 11 is the signature portion. This was signed on the December 16, 1994 Application for Accident Benefits.

Assuming that the one of the purposes of application for benefits is to provide sufficient information to the insurer so that it may adjust the claim, I am satisfied that GAN had such information by the time Mr. Johnson submitted his Application for Accident Benefits in December 1994. Whether GAN had sufficient financial documentation to support Mr. Johnson's alleged self-employment income is addressed below.

Insufficient Financial Documentation

GAN submitted that the application for benefits was incomplete because it lacked sufficient financial documentation to enable it to calculate the amount of Mr. Johnson's benefit. During the interview of November 29, 1994, Mr. Johnson advised that he earned a "draw" of approximately $45,000 per year. He was asked to produce his company's financial statements, income tax returns, bank statements, and GST returns since 1994.

Following receipt of part of Mr. Johnson's application by fax on March 1, 1995, GAN requested further documentation to calculate Mr. Johnson's benefit: his personal income tax returns from 1991 to 1994, including all slips and schedules; Notices of Assessment with respect to these income tax returns; financial statements of C. J.'s Towing for the 1991 to 1994 fiscal year ends; a summary of revenue generated by month by C. J.'s Towing from May 1991 and supporting documentation of additional expenses incurred by C. J.'s Towing as a result of Mr. Johnson's accident. It further advised that it may require additional information or an opportunity to meet with Mr. Johnson to clarify any outstanding issues.

Neither Mr. Johnson nor his law firm responded to these requests. On February 28, 1996, almost one year later, Lerner and Associates wrote to GAN inquiring about the status of Mr. Johnson's claim. GAN advised that it was still awaiting an original Application. On April 30, 1996, GAN received a second Application for Accident Benefits, signed March 3, 1996 and some business documents, including invoice listings and GST returns for the years 1994 and 1995. GAN took the position that the application was late and requested an explanation under subsection 59(3). Lerner explained the lack of financial information on the basis that Mr. Johnson's wife had control of the business records, that they had been experiencing marital difficulties and that this impeded Mr. Johnson's ability to obtain the records.

GAN submitted that until the requested financial documentation was provided, Mr. Johnson could not be considered to have submitted an application for benefits within the meaning of subsection 59(3).

I reject the submission that an application for benefits has not been submitted until all the supporting financial documentation has been provided. I note that the Commissioner-approved Application for Accident Benefits (OCF 112/93) merely required the insured to provide the gross income from employment. While Mr. Johnson did not provide this information on the application for benefits he signed on December 16, 1994, he did advise Mr. Bento on November 29, 1994, that he took an annual draw of $45,000. I have already stated that the information given on November 29, 1994 can be considered an attachment to the application. Thus, Mr. Johnson provided sufficient financial information on his application to satisfy the requirements of subsection 59(3).

While the gross earnings will generally be insufficient for the insurer to calculate wage loss in a self-employment situation, that is all the approved form required. In self-employment situations, the calculation of income and earnings can be quite complex and may require documents which take much longer than ninety days to obtain.

I note that this approach is consistent to the approach of Director's Delegate Naylor in Sebastian and Canadian Surety.⁹ In that case, the insurer submitted that it was not required to pay interest on outstanding weekly benefits until the date when the insured provided sufficient information and documentation to allow it to determine the amount of benefits. The insurer is required to pay interest on overdue payments. Subsection 24(2) and (3) of the Schedule in effect at that time, provided that benefits became overdue if they were not mailed or delivered within 10 days after the insurer received a "completed application for statutory accident benefits." Director's Delegate Naylor rejected the insurer's approach. In her view, the application was "completed" when the prescribed form has been filled in.¹⁰ She found that the insured, a self-employed tile installer, had fully complied with this provision when he listed his gross weekly income from his self-employment on the application form. The application form did not require that proof of self-employment be attached. As discussed above, I find that Mr. Johnson provided his gross income from self-employment.

Whether and when GAN had sufficient information and documentation to accurately calculate the quantum of Mr. Johnson's benefits is not an issue before me.

Failure to Submit an OCF 2 and OCF 3

GAN also submitted that subsection 59(3) has not been complied with until the insured submits all the forms in the package.

I note that the instructions included in the accident benefit package approved by the Commission advised the insured to always" fill out the Application for Accident Benefits. However, with respect to the Health Practitioner's Certificate, the instructions advise:

If the insurance company asks you to, give this form to your health practitioner (chiropractor, dentist, optometrist, physician, or psychologist). Fill out the first section. Your health practitioner will fill out the rest of the form and return it directly to the insurance company. This form should be returned within six weeks after your insurance company asks you to complete it. (Emphasis added).

With respect to the Employer's Confirmation of Income, the instructions also state: "If the insurance company asks you to, give this form to your employer..."

The evidence established that Mr. Bento left the accident benefit package with Mr. Johnson and requested that all the forms be completed and returned.¹¹ The Employer's Confirmation of Income form would not seem to be suited to the situation of a self-employed individual, since it would require the insured to confirm employment income about himself or herself. In any event, Mr. Johnson had provided all the information requested on this form to the adjuster on November 29, 1994. Further, Mr. Johnson had already submitted an Attending Physician's Statement which provided similar medical information as that requested on the OCF 3.

I am satisfied that Mr. Johnson had substantially complied with the requirements of subsection 59(3) by December 16, 1994.

Reasonable Excuse for Failing to Submit the Application Forms

In the alternative, if the application forms and related documentation submitted by December 1994 were not sufficient to satisfy the requirements of subsection 59(3), I find that Mr. Johnson had a reasonable excuse for failing to file his application until April 1996.

I find that Mr. Johnson honestly believed that he had submitted an application for benefits in December 1994. Although this application did not contain detailed information, Mr. Johnson had reason to believe that the required information had been provided to GAN on November 29, 1994. Mr. Johnson reasonably believed that he submitted his application a second time in March 1995. In addition, Mr. Johnson reasonably relied upon his lawyers to monitor the status of his file and advise him of any further information required. While the failure to produce any financial records until 1996 is unfortunate, I accept Mr. Johnson's explanation that his difficulties with his common law partner, who was responsible for the business records, impeded his ability to obtain the necessary information.

In contrast to these factors favouring equitable relief, I note that GAN has not established any prejudice caused by the delay. By November 29, 1994, GAN had in its possession virtually all the information it required had the proper forms been fully completed, signed and submitted.

GAN relied upon the assumed prejudice in not being able to participate in Mr. Johnson's early rehabilitation. GAN also asserted that it was prejudiced in its ability to obtain timely medical examinations. I note that GAN has known since November 29, 1994 that Mr. Johnson was suffering residual injuries from the accident and could have taken steps to assist Mr. Johnson in his rehabilitation. I am not satisfied that GAN was impeded in its ability to arrange timely medical examinations.

Accordingly, if necessary, I find that Mr. Johnson had a reasonable excuse for not submitting an application for benefits within the time limits prescribed by subsection 59(3).

EXPENSES:

The issue of expenses may now be addressed, if the parties are unable to resolve this issue.

December 9, 1999

M. Kaye Joachim Arbitrator

Date