Sahra Jimcaale v. TTC Insurance Company Limited, 2002 ONFSCDRS 38

Neutral Citation: 2002 ONFSCDRS 38

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BETWEEN:

SAHRA JIMCAALE

Applicant

and

TTC INSURANCE COMPANY LIMITED

Insurer

DECISION ON A SECOND PRELIMINARY ISSUE

Before: K. Julaine Palmer

Heard: January 9, 2002, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Michael Krylov for Ms. Jimcaale Leonard Wilgus for TTC Insurance Company Limited

Issues:

Sahra Jimcaale claims she was injured on a TTC bus during a motor vehicle accident on April 19, 2000. In June 2000 she applied for statutory accident benefits from TTC Insurance Company Limited ("TTC"), payable under the Schedule.¹ TTC never paid any benefits because it says RBC Insurance is the insurer responsible for Ms. Jimcaale's statutory accident benefits. The parties were unable to resolve their disputes through mediation, and Ms. Jimcaale applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. On August 16, 2001 Arbitrator Leitch issued a decision on a preliminary issue in this arbitration. He was asked to determine if Ms. Jimcaale was the spouse of a named insured under a contract of insurance with RBC Insurance and whether she had to claim statutory accident benefits from RBC Insurance. The arbitrator found that the TTC

was required to pay whatever benefits Ms. Jimcaale was entitled to, despite its belief that RBC was the priority insurer. TTC could have contested its obligation to continue paying benefits by giving notice to RBC in accordance with the procedures established in the Priorities Regulation. However, as an arbitrator at the Financial Services Commission of Ontario, I do not have jurisdiction to determine whether RBC is the priority insurer. Jurisdiction with respect to that, and related questions, has been transferred to arbitrators acting under the Arbitrations Act, 1991. TTC cannot defend this claim before the Financial Service Commission of Ontario on the ground that it is not the priority insurer.

The arbitrator also ordered that pending resolution of the first preliminary issue in the proper forum, TTC was responsible for paying Ms. Jimcaale the statutory accident benefits to which she is entitled.

At this hearing the preliminary issue is:

Is Ms. Jimcaale precluded from receiving benefits from TTC because she wilfully misrepresented material facts with respect to an application for a benefit, contrary to subsection 48(1) of the Schedule?

Result:

Ms. Jimcaale is precluded from receiving benefits from TTC because she wilfully misrepresented material facts with respect to an application for a benefit.

EVIDENCE AND ANALYSIS:

In order to terminate Ms. Jimcaale's benefits under subsection 48(1) of the Schedule, the Insurer must prove that Ms. Jimcaale made a misrepresentation, that the misrepresentation was wilful, and that the wilful misrepresentation was of a material fact. The parties agreed that the insurer provided the insured person with notice of the reasons for terminating payment, as required by subsection 48(2) of the Schedule. Although section 48 speaks of payment of "the benefit" and an application for "a benefit," there is no disagreement here that a wilful misrepresentation by Ms. Jimcaale of certain key facts would disentitle her from payment by the TTC for all benefits.

At the previous preliminary issue hearing, Arbitrator Leitch found that the evidence had established the following facts. In the hearing before me, the evidence established the same facts:

Ms. Jimcaale was involved in two accidents in the month of April, 2000. The first happened on April 14 when she was driving a motor vehicle and the second happened on April 19 when she was riding in a Toronto Transit Commission bus.

On April 20, 2000, one day after the second accident, Ms. Jimcaale completed two Applications for Accident Benefits, one for each accident, both claiming caregiver benefits. However, she did not send both Applications to the same insurer at the same time.

Ms. Jimcaale sent her Application regarding the first accident to RBC Insurance ("RBC"), indicating in Part 4 that she was covered as a "spouse" under a policy RBC had issued to Ali Osman in respect of the vehicle she had been driving. With Mr. Caprani's assistance, Ms. Jimcaale negotiated a full and final settlement of her claim against RBC on June 13, 2000.

On June 19, 2000, Ms. Jimcaale sent her Application regarding the second accident to TTC, indicating in Part 4 that she was not covered under any policy issued to herself, her spouse, her provider or listing her as a driver.

At the hearing, TTC's claims adjuster, Ms. Victoria Hughes, acknowledged that TTC was the first Insurer to receive Ms. Jimcaale's completed Application for benefits in respect of her April 19, 2000 accident. Ms. Hughes testified that upon receipt of this Application and a Disability Certificate on June 28, 2000, she noticed a reference to the April 14, 2000 accident in the Disability Certificate. By letter dated July 4, 2000 to Mr. Caprani, Ms. Hughes requested "information regarding the insurance company, policy number and claims adjuster handling the accident benefit file for the April 14, 2000 accident." Mr. Caprani failed to supply this information as requested.

On August 11, 2000, Ms. Jimcaale provided a signed statement to TTC in which she acknowledged that her claim with respect to the April 14, 2000 accident had been made "through my husband's insurer." In a letter to Ms. Hughes dated August 14, 2000, Mr. Caprani wrote:

Your claims adjuster took our client's statement August 11, 2000...It was found out that our client has coverage with her ex-husband's insurance and I would think that you will be putting them on notice in this regard.

By letter to Mr. Caprani dated August 22, 2000, Ms. Hughes responded as follows to his suggestion that she put RBC "on notice":

To date, there is no dispute between the TTC and your client's insurance company, RBC. Section 268(5) states that if a person is a named insured or the spouse, or the dependent of a named insured, he or she shall claim benefits under that policy.

We [sic] therefore returning your client's application to accident benefits for your further handling.

We deny any claim for accident benefits through the TTC Insurance Company.

Ms. Hughes testified that she understood Mr. Caprani's letter of August 14, 2000 to be a reference to the Priorities Regulation governing disputes between insurers. However, she stated that she believed that Ms. Jimcaale was obliged to present her April 19, 2000 claim to RBC and that it was then RBC's decision whether to invoke the Priorities Regulation in order to resolve any dispute between itself and other insurers.

On December 6, 2000, Ms. Hughes telephoned Ms. Kim Douna of RBC to request that RBC refund TTC its expenses in relation to Ms. Jimcaale's April 19, 2000 claim. Ms. Hughes' confirmation letter to Ms. Douna stated that RBC's policy was in effect on the day of the accident, that RBC had not denied coverage to Ms. Jimcaale and that, as the spouse of RBC's policyholder, Ms. Jimcaale was obliged to claim from RBC in accordance with section 268(5) of the Insurance Act.

Ms. Douna of RBC Insurance testified at the hearing before Arbitrator Leitch. She did not testify in this arbitration.

I am advised that no private arbitration under the Arbitrations Act, 1991, has been held in this matter. I have no evidence that the TTC has followed the procedure set out in section 3 of Ontario Regulation 283/95 "Disputes Between Insurers." RBC Insurance is not a party to this arbitration.

Material fact

It is trite law that concealing that you or your spouse has an insurance policy is "material" or significant in a claim against the insurer of a vehicle in which you were a passenger. The rule in subsection 268(5) of the Insurance Act, combined with the hierarchy set out in subsection 268(2), makes this plain. Ms. Jimcaale must claim statutory accident benefits from the policy insuring her husband, because she is his spouse as defined under section 224(1) of the Insurance Act and section 2 of the Schedule.

Arbitrator Leitch in the hearing on the first preliminary issue refused to opine on whether Ms. Jimcaale was the spouse of a named insured under a certain policy with RBC Insurance, deferring to the mechanism set up under Ontario Regulation 283/95 for dealing with "Disputes Between Insurers." While I agree with his decision with respect to the application of this regulation, I find that it is necessary and proper for me to make a determination of Ms. Jimcaale's spousal status under the Insurance Act and the Schedule in this arbitration, in order to determine her entitlement to benefits under the Schedule. I view this determination in the same way as the determination required in Abdulbaki and Royal Insurance Company of Canada, (OIC A-01025, December 12, 1995) which was approved of in the appeal case in Branchaud and Cooperators General Insurance Company, (OIC P96-00048, May 2, 1997).

Ms. Jimcaale testified that she married Osman Ali in Somalia in 1989 and immigrated to Canada in 1990. She and Mr. Ali have three children, all born in Canada. She has been separated from Mr. Ali since 1997 but has never been divorced. Mr. Ali pays support for their children, who reside with Ms. Jimcaale. I accept Ms. Jimcaale's testimony as to her marital status. I find she is the spouse of Osman Ali because she is married to him and has never been divorced. Her evidence is uncontroverted. Mr. Ali did not testify in this arbitration, although he was present at the Commission on the day of the hearing.

I am also satisfied from the written evidence filed in this matter and the oral evidence of Ms. Jimcaale and Ms. Hughes that a policy of insurance with RBC Insurance covering Ms. Jimcaale was in existence on the date of this accident.

Wilful misrepresentation

Ms. Jimcaale acknowledged her signature on the Application for Benefits dated April 20, 2000 in this arbitration. That application in Part 4 denies she is covered under her own or her spouse's policy of insurance and claims under the TTC policy. Ms. Jimcaale testified in English and stated she read "some English." She testified she gave Mr. Caprani the information on page one, such as that her marital status was "separated" and that she had three dependants. I find this application was sent to the TTC by Vickar & Associates about June 19, 2000 after Ms. Jimcaale's claim for accident benefits from the April 14, 2000 accident was settled with RBC Insurance.

On August 11, 2000, at her lawyer's office, Ms. Jimcaale gave a statement to TTC in which she revealed details of her accident of April 14, 2000 and her estranged husband, Osmond Ali's motor vehicle insurance.

As her agent, Mr. Caprani, a law clerk with Vickar & Associates, completed Ms. Jimcaale's Application for Accident Benefits dated April 20, 2000. He acknowledged that the completed application was mostly in his handwriting. I find Mr. Caprani recklessly or intentionally failed to disclose the existence of the insurance of Ms. Jimcaale's spouse, Osmond Ali, in Ms. Jimcaale's Application.

Even if Ms. Jimcaale had no personal intention to mislead the TTC, I find that her reliance on Mr. Caprani to fill in the application for benefits fulfills the requirements of the misrepresentation described in section 48 of the Schedule. The law of agency is based on the Latin maxim "Qui facit per alium, facit per se," which means "he who acts through another is deemed in law to do it himself." I find Ms. Jimcaale is bound by the actions of the personnel of Vickar & Associates by the law of agency, with respect to the contents of the Application that she signed and which was sent to the TTC. I therefore find that Ms. Jimcaale wilfully misrepresented critical information to the TTC in her Application for Accident Benefits dated April 20, 2000 by omitting the information that her spouse, Osmond Ali, had an automobile insurance policy under which she was covered. I find this misrepresentation was "wilfull" or deliberate and intentional, even though I find it is more probable than not that Ms. Jimcaale signed an application for accident benefits on April 20, 2000 that was largely left incomplete — a mostly blank form. I find that application was later filled in by Mr. Caprani, based on his admission.

I find that this misrepresentation was "wilful" in that it was made either intentionally or recklessly. I find that the level of recklessness that was displayed was that cited in the Reliable Distributors Ltd. case²

wilful ... meaning that the act must have been intentional or with such reckless and wanton disregard of the rights of others as to be the equivalent of intent.

In contradiction to the information in the Application for Accident Benefits dated April 20, 2000 (but mailed to the TTC in June 2000) on April 25, 2000, Mr. Brent Vickar, the principal of Vickar & Associates law office, wrote to the TTC disclosing that RBC Insurance and a certain policy number was the applicable accident benefits insurer and policy and confirming "that an application for statutory accident benefits has been made by our client." The statement that an application for accident benefits had been made was then true with respect to the April 14, 2000 accident but inaccurate with respect to the TTC accident on April 19, 2000.

Ms. Vicky Hughes, the accident benefits adjuster for TTC on Ms. Jimcaale's accident benefits file, testified she had no knowledge of the April 25, 2000 letter from Vickar & Associates prior to the arbitration hearing. She testified such a letter would have been directed to the tort adjusters in the Claims Department at the TTC, a separate unit from the unit in which she worked, as it contained a section 258.3(1) Notice under the Insurance Act and the information required by that section prior to the commencement of a court action for economic loss. In any event, the information in the letter with respect to the application having been made to RBC Insurance for accident benefits I find to be false, except as it relates to the April 14, 2000 accident, to which the letter also refers.³

I do not find that the letter of April 25, 2000 from Brent Vickar to the TTC is an amendment to the Application for Benefits dated April 20, 2000 or that the information contained in that letter is sufficient to excuse or cure the misrepresentations contained in the Application. The letter refers to an Application for Benefits to RBC Insurance that has never been made until this time, to the best of my knowledge.

Ms. Hughes testified that she wrote on several occasions during the summer of 2000 to Mr. Caprani seeking information about the insurance for the April 14, 2000 accident. The letters were filed at the hearing. Mr. Caprani, in turn, wrote to Ms. Hughes several times, enclosing various OCF forms and housekeeping and caregiving expense claims, but did not respond to Ms. Hughes' inquiry about other insurance. Finally after the statement had been taken from Ms. Jimcaale, Ms. Hughes returned the application to Mr. Caprani on August 22, 2000 for his "further handling," denying that any accident benefits could be claimed through TTC Insurance Company Limited.

The Applicant's counsel in his submissions urged me to view Ms. Jimcaale's statement of August 11, 2000 as remedying the misrepresentation, if I found there was one, in the Application. In my view, this is no answer to the statements contained in the Application dated in April and mailed in June. In addition, this submission does not acknowedge the finality of the termination language used in subsection 48(1) of the Schedule.

The Applicant suggested that I should make a special award under subsection 282(10) of the Insurance Act, because the TTC has paid no benefits to Ms. Jimcaale since Arbitrator Leitch's order. In my view, that would be beyond the scope of my inquiry in this preliminary issue hearing.

Procedure here

In his decision dated August 16, 2001, Arbitrator Leitch held that the TTC could not defend Ms. Jimcaale's claim before the Financial Services Commission of Ontario on the ground that it is not the priority insurer. When the parties returned before Arbitrator Leitch on September 7, 2001, he held a pre-hearing conference with them, on the condition that he would not further be involved in adjudicating this matter as a hearing arbitrator.

Arbitrator Leitch wrote in his letter to the parties following this pre-hearing conference that the preliminary issue hearing at which I was the arbitrator "will not be restricted to the Insurer's allegation of misrepresentation. In addition, the Applicant will be at liberty to challenge the procedure used by the Insurer to raise the issue of misrepresentation and to seek the appropriate remedy or relief for any defect in this procedure."

The Applicant did not challenge the procedure used by the Insurer to raise the issue of misrepresentation before me.

EXPENSES:

After the TTC received Ms. Jimcaale's Application for Benefits, it failed to follow the procedures laid down in Ontario Regulation 283/95 for dealing with a claim that was brought against it when it alleged another insurer was responsible. Instead the TTC proceeded to mediation then two hearings of preliminary issues at the Commission in an effort to dispose of the claim. In that, finally, it has been successful. The Applicant here persisted in a claim where I have found she wilfully misrepresented her status as an insured person. I have found the conduct of the personnel in her lawyer's office regarding her Application was recklessly or intentionally misleading. I exercise my discretion to award neither party any expenses incurred in this preliminary issue hearing.

February 27, 2002

K. Julaine Palmer Arbitrator

Date