Neutral Citation: 1999 ONFSCDRS 87

FSCO A98-001300

Between:

Voula Makrikostas, Applicant

and

Allianz Insurance Company of Canada, Insurer

Decision on a Preliminary Issue

Before: Stewart M. McMahon

Heard: April 28, and 30, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Murray Tkatch for Mrs. Makrikostas

Edmund W. Kent for Allianz Insurance Company of Canada

Issues:

The Applicant, Voula Makrikostas, was injured in a motor vehicle accident on April 22, 1996. She notified Allianz Insurance Company of Canada ("Allianz") of the accident and her intention to apply for benefits payable under the Schedule,¹ on March 20, 1997, approximately 11 months after the accident. The Insurer denied the claim on the basis that Mrs. Makrikostas failed to notify it of the incident within 30 days, as required by section 59 of the Schedule.

Mrs. Makrikostas takes the position that she had a reasonable excuse for the delay and seeks relief pursuant to the provisions of section 59(4). The parties were unable to resolve their disputes through mediation, and Ms. Makrikostas applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Result:

Mrs. Makrikostas's excuse for not notifying the Insurer within 30 days was reasonable and accordingly she may proceed to arbitrate her entitlement to benefits.

THE EVIDENCE AND ANALYSIS

(i) The Evidence:

Mrs. Makrikostas is 47 years old. She is married with three grown daughters. At the time of the accident she was a full-time student in her last year of high-school. On April 22, 1996, Mrs. Makrikostas was a passenger on a Toronto Transit Commission (TTC) streetcar that collided with a motor vehicle. Mrs. Makrikostas stated that she was jostled with sufficient force that her books and eyeglasses were knocked to the floor. She saw her family doctor the next day complaining of pain in her back and shoulder. The doctor gave her a neck collar and medication, and referred her to a physiotherapy clinic.

Mrs. Makrikostas called the TTC approximately a month later to put in a claim, but was told that she should refer the matter to her husband's insurer.² Mrs. Makrikostas testified that she asked her husband for the name of his insurer, but that he refused to provide it for fear that his rates would increase and the Insurer would refuse to renew his policy. Mrs. Makrikostas explained that her husband believed that either the TTC or the other vehicle was responsible, and that he should not have to involve his own insurer.

Mrs. Makrikostas testified that over the ensuing months she did not recover as she had expected to, and that she continued to rely on medication and physiotherapy. Mrs. Makrikostas did not return to school, and she stated that her daughters assumed many of her household obligations. She indicated that she repeatedly asked her husband for the name of his insurer, but he still refused to give it to her.

Mrs. Makrikostas called the TTC again on March 20, 1997, hoping that they would accept her claim. A TTC claim memo records that the representative told Mrs. Makrikostas that she must report the matter to her husband's insurer as soon as possible, and that if her husband would not supply the name of the insurer, that she was to call back and they (the TTC) would write to "the Ministry." I infer from the latter reference, that the TTC employee was proposing to write to the Ministry of Transport for the name of Mr. Makrikostas's insurer.

Mrs. Makrikostas testified that she spoke to her husband again after calling the TTC, and that this time he relented and gave her the name of his insurer. A log note in the Insurer's claim file indicates that Mrs. Makrikostas called her husband's broker on the same day that she spoke to the TTC, and that the broker in turn notified the Insurer.

Mr. Eric Parsons, a field representative with the Insurer was assigned to interview Mrs. Makrikostas. As is usual, Mr. Parsons asked Mrs. Makrikostas a number of questions, which she answered. He summarized the answers in a statement he wrote out and read to Mrs. Makrikostas, who then signed it. The statement refers to the fact that Mr. Makrikostas did not want his wife to call the Insurer for fear that his rates would go up, but there is no mention of Mr. Makrikostas refusing to provide the name of his insurer.

Mr. Parsons' field note indicates that he told Mrs. Makrikostas that her claim might be denied because of the delay in reporting the incident. Mrs. Makrikostas then retained counsel, and a formal application for benefits was submitted. The claim included education benefits and almost $30,000 in housekeeping and caregiver expenses. The claim was denied. The explanation of assessment form states; "claim submitted 11 months post-accident we therefore decline your application for accident benefits as you do not have a reasonable excuse for the delay."

It is worth noting that there is no note in the Insurer's file referring to concerns about difficulties in adjusting the file eleven months after the fact, nor is there any mention of prejudice. Mr. Parsons testified that the Insurer was prejudiced as it did not have an opportunity to assign an occupational therapist to do an in-home evaluation at the outset. Nor did it have an opportunity to arrange for a timely "insurer medical examination." I note that the Insurer did not arrange either form of examination after it received the application, notwithstanding the fact that it received a non-waiver agreement.

Because Mrs. Makrikostas did not volunteer to Mr. Parsons the fact that her husband had refused to identify his insurer for 11 months, counsel questions whether Mr. Makrikostas did indeed refuse to give Mrs. Makrikostas the information. The Insurer urged me to find that at most Mr. Makrikostas told his wife that he did not want her to submit a claim.

I accept Mrs. Makrikostas's evidence. It was corroborated by her husband and daughter, all of whom I found to be credible witnesses. More importantly, the memo prepared by the TTC claims representative provides independent corroboration that Mrs. Makrikostas complained about her husband's refusal to provide his insurance particulars, before she spoke with the Insurer, and before the question of a "reasonable excuse" became an issue.

In addition, Mr. Makrikostas had experienced trouble in the past with two separate insurers which had refused to renew homeowners policies after claims had been submitted. These events lead credence to Mr. Makrikostas fear (whether justified or not) that if a claim was submitted it could result in an increase in his premiums or outright cancellation of his policy. This in turn, lends support to the contention that he refused to tell his wife the name of his insurer thereby precluding her from making a claim.

In the alternative, the Insurer argued that Mrs. Makrikostas could have easily discovered the identity of the Insurer by looking in her husband's wallet, going through his papers, or searching the car. It also argued that Mrs. Makrikostas could and should have sought help from someone outside of the family such as a lawyer.

Mrs. Makrikostas admitted that she took no additional steps to identify the Insurer other than asking her daughters to try and persuade their father. The Insurer argues that having failed to take any independent steps to identify the Insurer, Mrs. Makrikostas cannot say that she was incapable of identifying the Insurer, and therefore unable to submit a claim in a timely fashion.

The Makrikostas family is organized on a very patriarchal model that excluded Mrs. Makrikostas from virtually any involvement in the family's business affairs, which were the sole domain of Mr. Makrikostas. Mrs. Makrikostas stated that she has never meddled in her husbands affairs. When asked why she did not look in his papers, she stated that she had been married for 32 years and that she did not want to "break her marriage."

When the daughter Helen Makrikostas was asked by her mother's counsel what could have happened if Mrs. Makrikostas had gone behind her father's back she said "no way" and laughed nervously in a fashion that suggested to me that the mere thought that her mother was capable of going behind her father's back was ridiculous. She later admitted on cross-examination that she was so tired of her mother's complaining, and so "pissed off" at her father's intransigence, that she thought about going through his papers herself, but in the end thought better of it.

Both Mrs. Makrikostas and her daughter were cross-examined extensively on what steps they could have taken to identify the Insurer and why they did nothing other than continuing to press Mr. Makrikostas for the details. I accept the evidence that in their own minds, going behind Mr. Makrikostas' back to obtain the information was not a viable option.

Mr. Makrikostas admitted that over the course of the 11 months, his wife had repeatedly asked for the name of the Insurer so that she could submit a claim. He admitted that his wife told him the TTC representative had explained that the claim had to be submitted to his own insurer, but that he put her off and would not give her the name of the Insurer. He stated that 10 or 11 months after the accident he heard from friends at a local cafe that the law had changed and that the claim had to be submitted to his own Insurer. He testified that after the second call to the TTC he relented and gave his wife the name of the Insurer so that she could submit a claim, despite his belief that he should not have to involve his own insurer.

Mr. Makrikostas indicated that he kept his insurance "pink slip" in his wallet. He was asked on cross-examination if there was anything that would have stopped his wife from going into his wallet. He replied indignantly that his wife never goes into his wallet, that she knows there are things that he does that are not her business, and that it has been like that for thirty years.

None of the family's evidence was undermined on cross-examination. I accept that within the circumstances of the Makrikostas family, the only viable option open to Mrs. Makrikostas was to convince her husband to supply the name of the Insurer. I am satisfied that going behind Mr. Makrikostas' back would have caused such a severe rift in the family that it was not a reasonable course of action. As long as he refused to give her the name, Mrs. Makrikostas had no way of identifying the Insurer, and hence no way of notifying it of the accident and her intention of making a claim.

(ii) The Law:

Section 59 of the Schedule provides that any person who intends to apply for benefits shall notify the insurer within 30 days. Subsection (4) provides that a failure to comply with this notice does not disentitle the person to benefits if she "has a reasonable excuse." In an oral ruling I delivered recently during the course of a hearing in Alves and Commercial Union (FSCO A96-000247, May 13, 1999), I considered the parameters of this relief provision. In the course of those reasons I stated that in my view the provision represented a limited form of relief from forfeiture and that it was appropriate to review the way in which courts had exercised their discretion. I cited the following passage from Brown and Menzies in their text, Insurance Law in Canada 2nd edition, at p 229:

In addition to these factors relevant to the conduct of the insured, the concept of equity in the context of the legislation also takes account of the insurer's position. From this perspective the test used by the courts is whether the insurer has been prejudiced by the imperfect compliance. If the insurer has been prejudiced, relief will not be granted. Conversely, where the insurer is not prejudiced, grant of relief is more likely but not absolutely certain.

Traditional relief from forfeiture provisions grant courts the discretion to forgive imperfect compliance where it would not be "inequitable" to do so. In contrast subsection 59(4) authorizes relief where the insured person has a "reasonable excuse." To my mind, the reference to a reasonable excuse focuses the inquiry more on the insured person's circumstances and less on the impact on the Insurer, than would normally be expected in a traditional relief from forfeiture examination. Arbitrator Renahan indicated in Kuronen and Allstate (OIC A95-001897, December 29, 1995) that:

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

I adopt Arbitrator Renahan's reasoning, and apply it in this case.

The Insurer argued that the named insured's failure to supply his insurance particulars can never be a reasonable excuse. To my mind, this improperly focuses the inquiry on Mr. Makrikostas, rather than Mrs. Makrikostas. It is her claim we are considering, not his. The excuse offered is the inability of the applicant to learn the identity of the insurer, and therefore her inability to notify the insurer. Her husband's conduct is merely the reason behind the excuse. With this excuse in mind, I must balance the prejudice to the Insurer in letting the matter go forward, against the hardship to Mrs. Makrikostas if I dismiss the claim.

(iii) Conclusion:

The hardship to Mrs. Makrikostas is largely self-evident. She will be unable to pursue her claim. The prejudice to the Insurer is also largely self evident. It is the inability to conduct a timely investigation.

The Applicant's counsel suggested that the absence of any reference to prejudice in the claim file suggests that there has in fact been no prejudice. I reject this argument. The passage of time will virtually always lead to some prejudice, hence the notice requirement. At the same time, the inclusion of a relief provision indicates that the drafters did not intend to automatically preclude all late claims merely on the basis of the prejudice inherent in the late notice.

Neither party provided me with copies of either the family doctor's or the physiotherapy clinic's notes, so I am unable to ascertain how much first hand information is or is not available for the 11 month period in question. Nor have any insurer medical examinations been conducted, so I have no direct evidence of how difficult it will be for the Insurer's medical experts to comment on Mrs. Makrikostas's condition and needs during the first 11 months.

Mrs. Makrikostas's excuse is valid, and I have determined there was no reasonable way for her to have informed the Insurer earlier. In addition, the delay was not inordinate, and it would appear that the Insurer will have some contemporaneous material available in the form of doctor's and physiotherapist's notes. In addition Mrs. Makrikostas did receive timely medical and physiotherapy attention, and accordingly the Insurer's concern regarding the need for an immediate occupational therapy assessment is alleviated to some degree.

The amount of the benefits being sought in the first 11 months gives me some pause. In addition to the education benefit, Mrs. Makrikostas contends that she was unable to care for her elderly mother and mother-in-law, and was unable to fulfill her other household duties. Mrs. Makrikostas stated that her daughters had to take on these responsibilities. Mrs. Makrikostas has not yet paid her daughters, but is claiming almost $30,000 in benefits. This is a considerable sum of money, and I have no doubt that if this claim had been presented earlier, it would have been carefully scrutinized. However, Mrs. Makrikostas will still have to present sufficient evidence to prove this claim.

On balance, I am satisfied that Mrs. Makrikostas should not be precluded from advancing her claim.

EXPENSES:

Although Mrs. Makrikostas was successful on this preliminary issue, she was in effect seeking an indulgence, by asking the Commission to forgive her late notice. In the circumstance, I leave the question of the expenses associated with the preliminary hearing to the arbitrator who conducts the hearing into the main issues.

May 13, 1999

Stewart M. McMahon Arbitrator

Arbitration Order