Neutral Citation: 2000 ONFSCDRS 99

FSCO A99-000794

BETWEEN:

SHUMAL YOUNIN

Applicant

and

HALIFAX INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Susan Sapin

Heard: April 6, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto

Appearances: Frank A. Sabetti for Mr. Younin Lorraine E. Takacs for Halifax Insurance Company

Issues:

The Applicant, Shumal Younin, was injured in a motor vehicle accident on September 29, 1996. Halifax Insurance Company ("Halifax") paid him statutory income replacement benefits ("IRBs") under the Schedule¹ beginning October 6, 1996. Halifax terminated benefits by way of written notice dated March 19, 1997. Mr. Younin disputed the termination and requested an assessment by a Designated Assessment Centre ("DAC") pursuant to section 64 of the Schedule. The DAC concluded that Mr. Younin was not substantially disabled from performing the essential tasks of his pre-accident employment.

Mr. Younin filed for mediation at the Financial Services Commission of Ontario (the "Commission") on February 11, 1999.² The parties were unable to resolve their disputes through mediation, and Mr. Younin applied for arbitration at the Commission under the Insurance Act, R.S.O. 1990, c.I.8, as amended. His Application for Arbitration was filed on August 10, 1999.

The preliminary issues are:

Was the Insurer's March 19, 1997 notice of termination of benefits clear and unequivocal?
If so, is Mr. Younin precluded from proceeding to arbitration because his Application for Arbitration was filed beyond the two-year limitation period as set out in subsection 281(5) of the Act and subsection 72(1) of the Schedule?

Result:

The Insurer's notice of termination of benefits dated March 19, 1997 was clear and unequivocal.
Mr. Younin is precluded from proceeding to arbitration on the issue of entitlement to ongoing benefits.

EVIDENCE AND ANALYSIS:

The case law is clear on a number of principles.³ The insurer's refusal to pay benefits must be clear, unequivocal and in writing. There must be a refusal to pay the benefit and the amount which is claimed.⁴ The time limit runs from the date the insurer refused to pay the benefits. Lastly, the onus is on the insurer to show that there was a refusal, when that was, and that the insured failed to institute proceedings within the requisite time.⁵

Zeppieri and Royal Insurance Company of Canada sets out a two-step approach.⁶ First, the arbitrator must determine if and when the insurer provided notice of its clear and unequivocal refusal to pay the benefits claimed. Second, the arbitrator must ask if the insurer is estopped from raising the limitation period because the insured person reasonably relied on its actions to his or her detriment.

Was the notice of termination clear and unequivocal?

Mr. Younin does not dispute that on March 21, 1997, the Insurer couriered to him a letter dated March 19, 1997, together with an Explanation of Benefits form, terminating IRBs effective April 4, 1997. The letter explains that the termination of IRBs is based on an Insurer's Medical Examination which concluded that Mr. Younin could return to work. It informs Mr. Younin of his right under section 64 to dispute the termination and to request an assessment by a DAC.

Mr. Younin requested the DAC assessment, and the Insurer continued to pay IRBs until it received the DAC report, as it is required by law to do. The Insurer sent Mr. Younin a copy of the DAC assessment, which confirmed the Insurer's decision that Mr. Younin was not entitled to IRBs, together with a letter dated June 19, 1997 clearly reiterating its refusal to pay IRBs.

I find that the Insurer has met all of the conditions for a proper termination of benefits as required by section 64 of the Schedule. Furthermore, I find that the letter of March 19, 1997 is notice of a clear and unequivocal decision to terminate benefits. I find that there is no evidence that the Insurer, either by words or conduct, ever wavered from the decision conveyed in its March 19, 1997 letter that Mr. Younin was not entitled to IRBs.

Is the Insurer estopped from relying on its clear and unequivocal refusal?

The Insurer's accountants, J. P. Flanagan & Associates Ltd., sent letters dated January 30, July 21 and August 13, 1997 to Mr.Younin's solicitor, copied to Halifax, requesting information necessary to calculate the quantum of his benefit:

It is imperative that we obtain access to or copies of the 1996 books and records as soon as possible in order that we can quantify gross annual income for the 52 weeks prior to the accident (assuming that this would yield a higher gross annual income than the 156 weeks prior to the accident)...As previously advised, if we have not received the necessary information and documentation by August 31, 1997, we will consider this matter closed and will advise Halifax, accordingly.⁷

This ongoing request for information originated prior to the termination of benefits and continued after it.

In addition, on March 22, 1999, Dina Pantaleon, Halifax's Casualty Claims Representative, wrote to the Commission's mediator as follows:

This will serve as the mediation response for the issues presented by Mr. Younin and his representative, Mr. Frank Sabetti.

They are contending that Income Replacement Benefits should be ongoing past May 30, 1997... ⁸

We are requesting the documentation be provided, prior to proceeding with mediation, to support Mr. Younin's claim for the period after May 30/97 that Mr. Younin is claiming. This is so that we may properly review and respond to same. However, in addition to this medical documentation, Halifax Insurance Company reserves the right to obtain and review information/documentation regarding his employment earnings after May 30/97... We deem this necessary information if we are to reconsider and review Mr. Younin's eligibility for benefits past May 30/97....

The case law is clear that ongoing negotiations or requests for further information do not extend the time limits for disputing a clear and unequivocal refusal of benefits.⁹

Mr. Younin did not testify. I heard no evidence that he reasonably relied on these letters or on any conduct of the Insurer to the effect that the Insurer is estopped from raising the limitation period. I heard no evidence that he ever responded to the letters or provided the information requested, or that he or his solicitor turned their minds to the letters at all.

On the contrary, I find that it is clear that Mr. Younin was aware that Halifax steadfastly maintained its March 19, 1997 refusal to pay IRBs. He disputed the termination by requesting a DAC assessment¹⁰, and acknowledged that "...[t]he insurance company arbitrarily refuses to pay Income Replacement Benefits..." in Schedule "A" to his Application for Mediation.¹¹ I find that he received clear and unequivocal notice of termination on March 21, 1997, and I further find that with respect to the issue of ongoing entitlement, the limitation period begins to run from that date.

The law as expressed in the leading case of Field and State Farm Mutual Automobile Insurance Company is clear that there must be a refusal to pay both the benefit and the amount which is claimed.¹² In this case, despite the Insurer's position that its file was closed in June of 1997,¹³I find, based on the accountant's letters noted above, that the Insurer's March 19, 1997 letter refusing ongoing benefits did not include a refusal to consider the quantum of benefits. I find that the time limit for disputing quantum only begins to run from August 31, 1997, the date by which the accountant stated it would close its file if it did not receive the information requested.

Was Mr. Younin's Application for Arbitration timely?

Section 281(5) of the Insurance Act establishes a two-year time limit for applying for arbitration:

281.—(5) A proceeding in a court or an arbitration proceeding in respect of statutory accident benefits must be commenced within two years after the insurer's refusal to pay the benefit claimed or within such longer period as may be provided in the Statutory Accident Benefits Schedule. R.S.O. 1990, c. I.8, s. 281 (5); 1993, c. 10, s. 1.

Section 72(1) of the Schedule modifies the time limit as follows:

72—(1) A mediation proceeding under section 280 of the Insurance Act or an arbitration or court proceeding under section 281 of the Act in respect of a benefit under this Regulation shall be commenced within two years from the insurer's refusal to pay the amount claimed or, if the person has engaged in an employment as permitted by section 14 or has returned to elementary, secondary or post-secondary education as permitted by section 17, within two years of the insurer's refusal to pay further 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. [emphasis added]

Mr. Younin's Application for Mediation was received by the Commission on February 11, 1999, and was therefore timely. However, I find that the Application for Arbitration was not filed within the time limit prescribed by s. 72(2) and, therefore, is not timely.

The Report of Mediator is dated April 8, 1999. I heard no evidence about the actual date on which the mediator "reported" to the parties. Section 7.3 of the Dispute Resolution Practice Code provides that service of a document by the Commission is considered to take place on the fifth day after the day the document is mailed. That is the latest day on which Mr. Younin could be deemed to have received the report. I find that Mr. Younin filed his Application for Arbitration on August 10, 1999, more than 90 days after the date the mediator reported to the parties, and that he is therefore precluded from proceeding to arbitration on the issue of ongoing entitlement to benefits.

I find that section 72(1) of the Schedule precludes Mr. Younin from applying for mediation on the issue of quantum of benefits because, as noted above, the time limit began to run on August 31, 1997, and the time limit to apply for mediation has expired.

Furthermore, I find that Mr. Younin did not dispute the quantum of benefits in his August 10, 1999 Application for Arbitration and that it is clear from the April 8, 1999 Report of Mediator that this issue was not mediated.

Section 281(2) of the Insurance Act specifically provides that:

(2) No person may bring a proceeding in any court or refer a matter to arbitration unless mediation has first been sought and has failed. R.S.O. 1990, c.1.8, s. 281(1,2).

Mr. Younin is, therefore, precluded from proceeding to arbitration on the issue of quantum.

EXPENSES:

Having heard the submissions of the parties and reviewed the criteria for awarding expenses as set out in Section F of the Dispute Resolution Practice Code, I exercise my discretion to deny Mr. Younin his expenses incurred in this preliminary issue hearing. The issue of time limits is well settled in the jurisprudence of the Commission. Mr. Younin's case is straightforward. No novel issue was raised on his behalf.

June 7, 2000

Susan Sapin Arbitrator

Date