Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2005 ONFSCDRS 102
FSCO A04-001021
BETWEEN:
DHARAM PAUL
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
DECISION ON A PRELIMINARY ISSUE
Before:
Edward Lee
Heard:
April 25, 2005, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
Mr. Paul on his own behalf
Stuart Aird for Allstate Insurance Company of Canada
Issues:
The Applicant, Dharam Paul, was injured in a motor vehicle accident on May 21, 1992. Several days later, he telephoned the offices of Allstate Insurance Company of Canada ("Allstate"), and informed a representative of Allstate of the accident. Nevertheless, a completed application for statutory accident benefits was not sent to Allstate until May 17, 1994. Allstate argues that Mr. Paul's claim is invalid because of his failure to comply with the time limits set out in section 22(1) of the Schedule1 (Bill 68). Mr. Paul argues that he has a reasonable excuse for failing to comply with the time limit. The parties were unable to resolve their disputes through mediation, and Mr. Paul 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:
- Does Mr. Paul have a "reasonable excuse" for failing to apply for statutory accident benefits within the time frame set out in section 22 of the Schedule?
Result:
Mr. Paul does have a "reasonable excuse" for failing to apply for statutory accident benefits within the time frame set out in section 22 of the Schedule.
Mr. Paul's arbitration may continue.
BACKGROUND:
Although Mr. Dharam Paul was injured in a motor vehicle accident on May 21, 1992, his completed application for statutory accident benefits was not sent to Allstate until May 17, 1994. Mr. Paul's excuse for not complying with section 22(1) was that he never received an application for statutory accident benefits from Allstate.
Allstate contested the claim on three preliminary grounds. First, Allstate did not admit that the completed application for statutory benefits had been received within the two-year period of section 22(2).
Second, even if there had been compliance within the two-year period, Allstate alleged Mr. Paul had indeed received an accident benefits package from them soon after he reported the accident. Allstate suggested that Mr. Paul's own inaction led to his not completing and submitting the application within the time delays of section 22(1). Thus, Mr. Paul did not have a reasonable excuse for failing to comply with section 22(1).
Third, and in the alternative, Allstate argued that even if Mr. Paul had not received the application for statutory accident benefits from Allstate, he should have known that he had an obligation to submit a completed application. Allstate suggested that Mr. Paul should have obtained the application elsewhere and submitted it. Therefore, his claim was invalidated because he did not have a "reasonable excuse" for not complying with section 22(1).
The Law
Section 22 of the Schedule applies in this case. It reads as follows:
22.(1)-The insured person or the person otherwise entitled to make a claim shall,
(a) give initial notice of a claim to the insurer, in writing, within thirty days from the date of the accident or as soon as practicable thereafter; and
(b) furnish to the insurer within ninety days of the giving of the notice under clause (a) a completed application for statutory accident benefits respecting the accident and the resulting loss.
(2) A failure to comply with a time limit set out in subsection (1) does not invalidate a claim if the claimant has a reasonable excuse and so long as there is compliance within two years of the accident.
EVIDENCE AND ANALYSIS:
Mr. Paul testified that he telephoned the insurer several days after the accident, and Allstate did not object to the lack of written notice from the Applicant.
Allstate's first issue is whether there was compliance within two years of the accident. Mr. Paul testified that his lawyer sent the completed application for statutory accident benefits on May 17, 1994. That application was sent with a letter filed as Tab 9 of Exhibit-1. The letter is marked "DELIVERED BY COURIER." Allstate did not rebut or contradict Mr. Paul's testimony, and I find that Mr. Paul did indeed furnish a completed application for statutory accident benefits within two years of the accident as required by section 22(2) of the Schedule, and there was compliance within two years of the accident. The question that remains is whether Mr. Paul had a "reasonable excuse" for failing to comply with the time limit set out in section 22(1).
Applicant's Evidence and Submissions
Mr. Paul testified that he notified Allstate of the accident on a Monday, a "few days" after the accident occurred. He stated that he had been "...in pain, didn't have time to call", but he did converse with an adjuster named Irene Kastrjyk and gave her details of the accident. He testified that he was not told that he would receive any application forms, and that he did not know he was qualified for benefits. According to Mr. Paul, he never received an application for statutory accident benefits or any other forms from Allstate. In fact, he later learned that Allstate had incorrectly addressed the forms. The street name was correct, but the number of the house was incorrect. It was not until he met his lawyer in early 1994 that he learned he was eligible for benefits, and he had the lawyer prepare and send the application forms to Allstate on May 17, 1994. Thus, because he had not been given the application forms, he had a reasonable excuse for not complying with the requirements of section 22(1).
Allstate's Evidence and Submissions
Allstate submitted that the application forms for statutory accident benefits and other documents were sent to Mr. Paul by post several days after his conversation with Allstate's adjuster, Irene Kastrjyk. Allstate admitted that the street address on the envelope was incorrect, but both parties agreed that Mr. Paul's postal code was correct.
Allstate's only witness was Ms. Irene Kastrjyk, the adjuster who originally conversed with Mr. Paul and handled the file. She had no independent memory of the events which occurred almost thirteen years before, but she attended the hearing with the computerized printout of the diary pertaining to this file (Exhibit-5). Following questioning by Allstate, I was satisfied that she had created those entries, that the notes had been made contemporaneously with the events they described, and that they had not been modified since their creation. Ms. Kastrjyk's testimony went only to elucidate the shorthand notations made in the notes concerning the events described.
Ms. Kastrjyk was questioned about page 9 of Exhibit-5, in regard to a single notation at the end of the first paragraph which states, "I EXPL ABS: PRIM." Ms. Kastrjyk stated that this meant, "I explain ABS, primary: no total disability."
Ms. Kastrjyk then testified that she knew the accident benefits claims forms and other documents had been sent because of her notations at page 15 of Exhibit-5, which describe six documents sent from May 1992 to September 1992 to various persons who had been involved in the accident. According to her printout, the fifth reference at page 15 of Exhibit-5 referred to documents sent to Mr. Paul, and included the letter of May 25, 1992 entered as Tab 7 of Exhibit-1, and an application for statutory accident benefits.
Ms. Kastrjyk also testified that there was nothing in the printout to indicate that the application forms and package had ever been returned to Allstate by the post office. Further, she added that had the documents been returned by the post office, she would have been notified by Allstate's clerical staff.
Allstate then drew my attention to the letter sent by Mr. Paul's lawyer, dated August 17, 1994 at Tab 13 of Exhibit-1, wherein Mr. Paul's lawyer states the following at the third paragraph:
Ms Kasprzyk (sic) advised Mr. Paul that she would forward him a package of materials to be completed. Mr. Paul does not recall any discussion with Ms. Kasprzyk about accident benefits and whether or not he was eligible. Mr. Paul did not realize at the time, or subsequently that he was eligible for accident benefits until he spoke with Mr. Jess Bush of our office in March 1994.
Allstate's closing submissions were two-fold. First, Allstate submitted that the application for statutory accident benefits, although incorrectly addressed, had been received by Mr. Paul, and it had been Mr. Paul's inaction that delayed the furnishing of the completed accident benefits application until May 1994. This delay was entirely due to Mr. Paul, and could not be construed as a "reasonable excuse."
In the alternative, Allstate submitted that even if the application for statutory accident benefits had not been delivered, Mr. Paul had knowledge of the accident benefits scheme and should have known that he was required to submit the completed forms within the delays of section 22(1). The test of a "reasonable excuse" has a subjective component, and Mr. Paul should have taken steps to obtain the forms.
Finally, neither Allstate nor Mr. Paul referred me to any arbitral or Court jurisprudence to support their arguments.
Analysis
I have no doubt that Allstate sent an application form for statutory accident benefits and a package to Mr. Paul soon after his discussion with Ms. Kastrjyk, but I do not find that Mr. Paul ever received this package. The clear testimony of Mr. Paul was that the package never came to him, and the envelope enclosing these materials was incorrectly addressed. The postal code was correct, but none of the evidence I heard convinced me that this was sufficient in itself to guarantee that an otherwise incorrectly addressed envelope would arrive at the correct destination. Further, the fact that Ms. Kastrjyk's computerized printout did not indicate that the envelope had been returned by Canada Post to Allstate's clerical staff does not convince me that it had been delivered to Mr. Paul, its intended recipient. Therefore, I find that Mr. Paul never received the application for statutory accident benefits, package, and documents sent to him by Allstate in May 2002 because Allstate incorrectly addressed the envelope.
In Smith and Co-operators General Insurance Company2, the Supreme Court of Canada held the following at page 7:
As I have mentioned above, insurance law is, in many respects, geared towards protection of the consumer. This approach obliges the courts to impose bright-line boundaries between the permissible and the impermissible without undue solicitude for particular circumstances that might operate against claimants in certain cases. Moreover, as previously discussed, the insurer's obligation extends beyond mere communication of the limitation period.
Although that decision was rendered under the subsequent Statutory Accidents Benefits Schedule - Accidents after December 31, 1993 and before November 1, 1996, O. Reg. 776/93, (Bill 164), and examined a different limitation period, the principles enunciated in regard to insurers' obligations are applicable to the instant case.
Under Bill 68, there was no expressed duty on the insurer to provide the application forms for statutory accident benefits to the applicant, but the issue was considered in Steele and Zurich Insurance Company.3 In that decision, the applicant did not receive the accident benefits claims forms from the insurer until some seventy to seventy-seven days after the accident. The arbitrator made the following ruling at page 28:
It was not argued before me that the Applicant should have obtained the application for accident benefits elsewhere than from her Insurer, nor that there is no obligation on an Insurer to furnish to an applicant the prescribed forms for her use in completing her application. Indeed, although this obligation is not specifically set out in the No Fault Benefits Schedule, the whole scheme of statutory accident benefits calls for fast, efficient service and prompt payment. In my view, it is implicit in the operation of the scheme that an insurer, once notified of injury by an applicant, must forward promptly the prescribed claim forms.[emphasis mine]
The Applicant gave several reasons for her failure to comply with the 90-day time limit, not the least of which was the lengthy period which had elapsed before she received the application from the Insurer and the Insurer's failure to indicate any imminent time limits to her.
In that case, the arbitrator held that a seventy to seventy-seven day delay in the sending of the forms amounted to a "lengthy period" and this was sufficient to find that the applicant had a "reasonable excuse" for not complying with the requirements of section 22(1). In the instant case, the Applicant never received the forms because the Insurer did not send them to the correct address.
Allstate's alternative argument relates to the personal circumstances of Mr. Paul, and suggests that his previous involvement in another accident benefits case should be considered in the determination of the reasonableness of his excuse.
In Barr and Canadian Surety Company4, the arbitrator held the following at page 9:
The test of a reasonable excuse is a subjective/objective test, that is, what would a reasonable person standing in Ms. Barr's shoes have done? This test takes into account the personal characteristics of Ms. Barr, like the fact she was an insurance broker, but also measures her actions against those of the reasonable person.
In Barr5, the applicant was a licenced insurance broker. She did not report the accident to her insurance company until some twenty months had passed. Amongst other factors, the arbitrator considered her personal circumstances, including her five years experience as a registered insurance broker who sold automobile insurance policies, statutory accident benefits, and received reports of accidents from insured persons, and held that she did not have a reasonable excuse for failing to comply with section 22 of the Schedule.
In the instant case, Mr. Paul had some familiarity with the accident benefits scheme because he had previously been involved in another motor vehicle accident in December 1990 and had represented himself. Further, as confirmed in his lawyer's letter of August 17, 1994, Mr. Paul knew he would receive a package from Allstate. Nevertheless, Mr. Paul's testimony was that he did not know he would receive an application for statutory accidents benefits, and that he had not been told that he would have to return this package within a specified time. I found this testimony credible and nothing in Ms. Kastrjyk's sparse notes convinced me that he had been told otherwise.
Further, during the period shortly after his accident, Mr. Paul testified that he had been "... in pain", and he didn't "...have time to call..." and that he was receiving "one or two prescriptions." Personal circumstances, including the applicant's physical injuries, are relevant in the determination of delays and whether the applicant had a reasonable excuse.6
Finally, in contrast to the facts in the Barr7 case, Mr. Paul reported his accident within days of its occurrence. Through no fault of his own, the application form for statutory accident benefits was never delivered to him. After a period during which nothing occurred, he sought legal counsel in early 1994 to aid him in the prosecution of his case. His application was received before the expiry of the two-year period of section 22(2). I find that he acted reasonably. Even if he had been involved in a previous accident benefits case, there is no evidence to lead me to impute to him the knowledge of a professional insurance broker. As held in Steele8, and following the principles set out in Smith9, the insurer has an obligation to promptly forward the prescribed forms to the applicant. Under these circumstances, I find that Mr. Paul had a reasonable excuse for not meeting the requirements of section 22(1) of the Schedule.
EXPENSES:
The issue of expenses of this preliminary issue hearing shall be addressed in conjunction with the final determination of this matter.
July 21, 2005
Edward Lee Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2005 ONFSCDRS 102
FSCO A04-001021
BETWEEN:
DHARAM PAUL
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Mr. Paul has a reasonable excuse for not complying with the time frames of section 22(1) of the Schedule.
Mr. Paul's arbitration may continue.
July 21, 2005
Edward Lee Arbitrator
Date
1 The Statutory Accident Benefits Schedule —Accidents Before January 1, 1994, Regulation 672 of R.R.O. 1990, as amended by Ontario Regulations 660/93 and 779/93. 2 Smith and Co-operators General Insurance Company 2002 SCC 30, [2002] 2 S.C.R. 129 3 Steele and Zurich Insurance Company (FSCO A-001024, December 3, 1992) 4 (FSCO A97-001567, July 16, 1998) 5 Barr, supra, at p.9 6 Steele, supra, at p.29 7 Barr, supra 8 Steele, supra, at 29. 9 Smith, supra at 1.