Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2005 ONFSCDRS 94

Appeal P04-00027

OFFICE OF THE DIRECTOR OF ARBITRATIONS

SUKWINDER KAUR VIRK

Appellant Respondent by Cross-Appeal

and

LIBERTY MUTUAL INSURANCE COMPANY OF CANADA (Now: Liberty Insurance Company of Canada)

Respondent Appellant by Cross-Appeal

Before:

Nancy Makepeace

Representatives:

Pradeep B. Pachai for Mrs. Virk

Peter Kazdan for Liberty Insurance

Hearing Date:

December 10, 2004

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Liberty's appeal is dismissed with respect to death benefits. Mrs. Virk's appeal is allowed with respect to interest on death benefits. Paragraph 1 of the arbitrator's order, dated August 4, 2004, is revoked and replaced with the following:

Liberty shall pay to Mrs. Virk death benefits of $10,020 for the death of her child Pushinder under subsection 51(5) of the SABS-1994, with interest under s. 68 of the SABS-1994 from 30 days after it received her application dated December 27, 1995.

2. Mrs. Virk's appeal is dismissed with respect to special award. Paragraph 2 of the arbitrator's order is confirmed.

3. If the parties are unable to agree on appeal expenses, they may contact me in accordance with Rule 79 of the Dispute Resolution Practice Code.

July 5, 2005

Nancy Makepeace Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Liberty Mutual Insurance Company ("Liberty") appeals from the arbitrator's decision that Mrs. Virk is entitled to death benefits in respect of her infant son, who was born the day after the accident and died fifteen days later. I am not persuaded the arbitrator erred.

Mrs. Virk appeals from the arbitrator's decision that she is only entitled to interest on the benefits owing from the date of the decision rather than 30 days after her application for benefits. She also appeals from the arbitrator's dismissal of her request for a special award in respect of Liberty's refusal to pay death benefits.

I am not persuaded the arbitrator erred with respect to the special award. However, interest began to accrue not from the date of the arbitration decision but from 30 days after the insurer received the application for death benefits. Paragraph 1 of the arbitration order will be varied accordingly.

My reasons follow.

II. BACKGROUND

The arbitration proceeded by way of agreed facts, which the arbitrator summarized at the start of her decision:

The Applicant, Sukwinder Kaur Virk, was 24 weeks pregnant when she was injured in a motor vehicle accident on November 25, 1995. She was admitted to hospital and the next day gave birth to a son, Pushinder Virk, by emergency cesarean section. Pushinder died 15 days later on December 11, either from complications arising from his premature birth, or from injuries sustained in the accident.

On December 27, 1995, Mrs. Virk applied for statutory death benefits and funeral expenses under the SABS-1994.¹ Liberty denied the claim by letter dated January 16, 1996. On October 31, 2003, about two weeks before the arbitration hearing, Liberty paid $750 for Pushinder's funeral expenses, plus interest of $3,767.89, but continued to dispute the death benefit claim.

Liberty explained its different positions on the two benefits claimed by relying on the different wording of the death and funeral benefits provisions of the SABS-1994. Funeral benefits are payable under s. 52(1), which states:

The insurer shall pay the funeral expenses incurred in respect of an insured person who dies as a result of an accident.

Death benefits are payable under s. 51(5):

If an insured person dies as a result of an accident and, at the time of the accident, the insured person was a dependant, the insurer shall pay $10,000,

(a) to the person upon whom the insured person was dependent . . .

"Dependant" is defined in s. 4 of the SABS-1994:

For the purpose of this Regulation, a person is a dependant of another person if the person is principally dependent for financial support or care on the other person or the other person's spouse.

Liberty conceded that Pushinder was an insured person and a dependant of his mother when he died, and that he died as a result of the accident. However, it argued that Pushinder was not an insured person or a dependant of his mother at the time of the accident. Liberty submitted this was a requirement under s. 51(5), though not for s. 52(1), which provides funeral benefits "in respect of an insured person who dies as a result of an accident," without reference to dependency or any particular time frame.

Liberty conceded "the long-established common law principle that an unborn child [a child en ventre sa mere] is not a 'person' at law, but may acquire certain property rights while in utero, rights which it can assert if it is subsequently born alive."² The parties disagreed about the application of that principle to Mrs. Virk's claim for death benefits. Liberty argued that the requirement in s. 51(5) that the insured person must have been a "dependant" "at the time of the accident" overrides the en ventre sa mere principle.

The arbitrator rejected Liberty's position. She concluded that the phrase, "at the time of the accident," was not sufficiently clear or specific to oust the common law principle that a child, once born, acquires rights of action arising out of injuries he suffered in utero. Noting the ancient providence of this principle, she described it as "a longstanding legal principle of fundamental importance."³ Considering the remedial purpose of the SABS, the case law on point, and "the common law of tort and negligence that informs the no-fault context,"⁴ she concluded that explicit words were not required to import the principle, but rather to exclude it. Since the SABS lacks any such exclusionary words, the terms "person," "insured person," and "dependant" must be read as importing the principle.

The arbitrator concluded that Mrs. Virk was entitled to death benefits of $10,020 under s. 51(5) of the SABS-1994, plus interest under s. 68 from the date of the decision. Liberty appeals from the death benefits award, and Mrs. Virk appeals on the interest issue, seeking interest from 30 days after she applied for the benefits.

The arbitrator ordered a special award of $1,500 inclusive of interest in respect of Liberty's delay in paying the funeral expenses. She was critical of the insurer's failure to review the legal issue with respect to death benefits but did not find its refusal unreasonable given the complexity of the issue and Mrs. Virk's failure to pursue it in a timely way. Mrs. Virk appealed with respect to the arbitrator's refusal to order a special award relating to death benefits. Liberty appealed the special award with respect to the funeral expenses, but withdrew the appeal prior to the hearing.

III. ANALYSIS

A. Death Benefits

On appeal, the parties restated the positions they put forward at arbitration. While the en ventre sa mere principle is well established in law, its application in this context is novel.

Canadian authorities begin with Montreal Tramways Co. v. Leveille, 1933 CanLII 41 (SCC), [1933] S.C.R. 456, in which it was held that a child could sue for pre-natal injuries.⁵ In the accident benefits context, Director's Delegate Draper recognized the principle in Christo and Royal Insurance Company of Canada, (OIC P96-00049, September 11, 1996), the leading Commission decision on point, at p. 5:

. . . the courts have long relied on a legal fiction to deal with the unfairness that would result if a child could not seek compensation in tort for an injury he or she suffered en ventre sa mere. The legal fiction is summarised in Seede et a(. v. Camco Inc. (1985), 1985 CanLII 1938 (ON HCJ), 50 O.R. (2d) 218:

In Ontario there is no right of action in an unborn child to recover damages nor in favour of an unborn child unless the child is born alive. On the other hand, when the unborn child becomes a living child through birth and suffers damages as a result of prenatal injuries caused by the fault or the negligence of another the cause of action is completed. This right to the born-alive child is provided by the law on the basis of a fiction in respect of property rights clothing an unborn child who is subsequently born alive with the same rights as a child living at the time of the death of the benefactor. . . (p. 221)

Confirming my arbitration decision, Delegate Draper concluded that a child born alive is an "insured person" for purposes of claiming medical-rehabilitation benefits under s. 6 of the SABS-1990 in relation to impairments he sustained en ventre sa mere as a result of the accident.

The application of the principle in other circumstances is less clear. A much litigated issue is whether a child en ventre sa mere at the time of the father's death can claim accident benefits or other remedies in relation to that death. In Ridgley and Zurich Insurance Company, (OIC P-004083, April 14, 1998), the other leading Commission case, Director Sachs confirmed the arbitrator's conclusion that no accident benefits claim lies in that situation because the child was not a "dependant" of his father "at the time of the accident," as required under s. 11(2)(c) of the SABS-1990.⁶ Applying the definition of "dependant" in s. 3(2) of the SABS-1990,⁷ she concluded that the child was neither a "person" nor "principally dependent for financial support" on his father at the time of the accident.

To the same effect as Ridgley, under earlier accident benefits schemes, are Scrimshaw and Constitution Insurance Co. of Canada, (1979) 1979 CanLII 2109 (ON HCJ), 26 O.R. (2d) 371 (Ont. Co. Ct.), which held that a child en ventre sa mere was not a "surviving dependant" of the deceased father, and was therefore not entitled to death benefits under the former Schedule E to the Insurance Act, and Vasey v. Economical Mutual Insurance Co. (1986) 1996 CanLII 7983 (ON CTGD), 28, O.R. (3d) 517 (Ont. Dist. Ct.), aff'd (1987) 1987 CanLII 4279 (ON HCJ), 60 O.R. (2d) 64 (Ont. H.C.J.), which came to the same conclusion under the dependants' death benefits provisions of the former Schedule C.

Ridgely was distinguished in Christo on the basis that the SABS requires the claimant for dependants' death benefits to be an "insured person," as required for a medical benefits claim, and also a "dependant" "at the time of the accident."⁸ Liberty's appeal in this case does not challenge Christo directly, but it necessitates a reconsideration of Ridgley: if a child en ventre sa mere is a dependant at the time of the accident for the purpose of claiming death benefits in respect of his father, it follows, because statutory language must be given a consistent interpretation wherever it appears, that he is also a dependant at the time of the accident if he dies and his parent claims a death benefit.

In Ridgley, Director Sachs acknowledged the conflicting authorities on the dependant’s death benefits question. The Alberta Court of Appeal considered the question in the accident benefits context in Fitzsimonds v. Royal Insurance Co. of Canada (1984) 1984 ABCA 7, 7 D.L.R. (4th) 406, concluding that a child who was en ventre sa mere at the time of the accident was a "dependent relative" eligible to claim death benefits under Alberta’s accident benefits legislation. An additional factor in that case was the statutory requirement that the claimant be alive 60 days after the death; the child was born eight months later. McDermid J. relied on the fiction:

an unborn child who is subsequently born alive is in the same position as a child living at the time of the death of the benefactor. This fiction has existed for over a century and is so well established that for a statute conferring property rights on children to be interpreted as excluding a child who was en ventre sa mere at the time of the death of the father would require specific words of exclusion. . . . [this fiction] would be known to legislative draftsman [sic] and the legislation would be passed with this fiction in mind.

Reviewing earlier authorities, McDermid J. disagreed with Scrimshaw and agreed with Schofield v. Orrell Colliery Co., Ltd., [1909] 1 K.B. 178 (C.A.), which held that an unborn child, later born, could claim dependants death benefits under workers compensation legislation, and Smith v. Insurance Corporation of British Columbia (1980), 1980 CanLII 584 (BC SC), 21 B.C.L.R. 317 (B.C.S.C.), which came to the same conclusion under the death benefits provisions for dependent children in British Columbia's accident benefits legislation.

More recent authorities have generally preferred Schofield, Fitzsimonds and Smith over Scrimshaw, Vasey and Ridgley. In Bonisteel v. Pilot Insurance Company (1998), 1998 CanLII 14843 (ON CTGD), 40 O.R. (3d) 89 (Ont. Ct. Gen. Div.), McLean J. held that a child en ventre sa mere at the time of the accident in which his father died could claim death benefits as a dependant under the SABS-1990. In Breau (Litigation guardian of) v. General Accident Assurance Co. of Canada [2000] N.B.J. No. 192 (N.B.Q.B.), aff'd 2000 NBCA 51, [2000] N.B.J. No. 454 (N.B.C.A.), application for leave to appeal to the Supreme Court of Canada dismissed, [2001] S.C.C.A. No. 34, the defined terms "insured person," "person insured under the contract" and "dependent relative" in New Brunswick's automobile insurance legislation were given a "liberal and flexible interpretation" in accordance with the en ventre sa mere principle, with the result that the plaintiff child was entitled to recover under the uninsured and underinsured coverages of his parents' automobile policy.⁹

In my view, the cases reflect a developing consensus that absent exclusionary language, en ventre sa mere applies wherever it extends to an unborn child a benefit to which the child would have been entitled if he or she had already been born at the time the right to the benefit arose. As Fletcher Moulton L.J. stated in Schofield v. Orrell Colliery,

All our statutes are, of course, framed in language suitable to the case of existing persons, and thus the peculiar fiction of law by which a non-existent person is to be taken as existing is not provided for in their language; therefore you can always show that the language of a statute does not fit the case of the unborn. But that is not the way to consider the language of statutes when you are dealing with cases in which the law has given the same rights to a non-existent child as to an existing child. The true way . . . is to assume that the child is born, and to draw deductions in the same way as we should in the case of an existing person.

This was the arbitrator's point in describing the insurer's argument as circular: it is no response to a claim based on a common law principle to say that the principle applies only where it is codified by statutory language.¹³

Moreover, like Justice Gauthier in Willard, I can see no policy basis for withholding a dependant’s death benefit based only on the fact that the child lost his father as a result of an automobile accident before his birth, while allowing a child to claim in respect of a pre-natal injury. As stated in Smith v. ICBC:

It would run contrary to commonsense to exclude this unborn child from the death benefit for lack of specific words in the Automobile Insurance Act and regulations such as those just quoted. One obvious purpose of the Act is to provide financial help for survivors and surely a child yet unborn stands in as great a need as any already born and a highly restrictive interpretation, not consistent with the beneficial intent of the Act, would have to be applied to bar qualification for her. [para. 21]

For these reasons, I prefer the analysis in Willard to that in Ridgley. But Willard and the decisions on which it relies concern claims made on behalf of a child in respect of a father's death. The issue, in this case, is a mother's claim in respect of the death of a child. Liberty submits the en ventre sa mere principle does not extend so far. This is the insurer's strongest argument, but I am not persuaded, for several reasons.

Consistency is the first. If a child en ventre sa mere is a dependant at the time of the accident for the purpose of claiming death benefits in respect of his father, it follows, because statutory language must be given a consistent interpretation wherever it appears, that he is also a dependant at the time of the accident if he dies and his parent claims a death benefit. Section 51 of the SABS does not provide any basis for distinguishing between these two kinds of death benefits.¹⁴

Secondly, I am not persuaded that the 'dependant at the time of the accident' requirement is intended to bar claims like Mrs. Virk's. Section 51(5) calls for dependency to be determined as of the time of the accident, but does not define dependency. Liberty recognizes, in accordance with Christo, that Pushinder was an "insured person" at the time of the accident, and paid funeral benefits accordingly. It follows, in my view, that he was a "dependant" at that time, as he certainly was not independent of parental care. I can make no sense of the proposition that a fetus is not entirely dependent on its mother for care, and, as the arbitrator said, "for life itself."¹⁵I do not accept Liberty's argument that the arbitrator's interpretation renders the 'dependant at the time of the accident' requirement meaningless. This reading does, for example, prevent a death benefits claim by the parent of a child not yet conceived at the time of the accident or an adult son or daughter who had already left home.¹⁶

This brings me to my third reason for confirming the arbitrator's decision. As stated, Liberty's strongest argument is that the en ventre sa mere principle applies only to benefit the child, not the mother, however sympathetic her claim. The arbitrator answered this question by reference to Fraczek v. Pascual, 2003 CanLII 21215 (ON CA), [2003] 64 O.R. (3d) 437 (Ont. C.A.), which she found persuasive on the purpose of the death benefit. The issue in that case was whether s. 25(2)5(i) of the SABS-1996 obliges an accident benefit insurer to pay a death benefit of $10,000 to each of the parents of the 17-year-old killed in the accident, or only requires a total pay-out of $10,000. Though the Court ultimately relied on textual and contextual analysis in concluding that only a single payment was required, Cronk J.A. began with consideration of the purpose of the death benefit in the SABS, with reference to the 1988 Osborne Report (Report of Inquiry into Motor Vehicle Accident Compensation in Ontario):

The purpose of the death benefit envisaged by s. 25(2)(5)(i) of the 1996 SABS, in my view, conforms to the observations of Osborne J. In recognition of the value of life, it is intended to provide modest, but not insignificant, short-term financial assistance to those who survive the loss of a dependant. For that reason, the benefit is available to defined classes of persons including, but not limited to, parents who suffer the loss of a dependent child through the tragedy of a motor vehicle accident. That legislative purpose informs the interpretation of s. 25(2)(5)(i).

The same purpose underlies s. 51(5) of the SABS-1996. The question is whether recognizing the en ventre sa mere principle in this context promotes the legislative objective of recognizing the value of children's lives. In my view, the answer to this question is yes. The arbitrator concluded,

. . . once born alive, [Pushinder's] life had no less value under the statute than would the life of any living child who died in or as a result of a motor vehicle accident, and for whom his mother would be entitled to the death benefit.

I was presented with no evidence of, or any jurisprudence supporting any compelling legal, policy or social reason, why Mrs. Virk should not be entitled to the death benefit in the particular circumstances of this case, or that such a result is in any way unreasonable, unjust, absurd, or in any way contrary to the purpose of the statute.¹⁷

I agree. Pushinder's imminent birth was undoubtedly deeply significant for his family, and his death as a result of the accident only days after his birth was exactly the kind of loss the legislature intended to recognize by granting death benefits not only for surviving dependants, but for survivors on whom the deceased was dependent.

I agree with the arbitrator.

B. Interest

Mrs. Virk submits that the arbitrator erred in ordering interest accruing only from the date of the arbitration decision (August 4, 2004) rather than from 30 days after Liberty received her application dated December 27, 1995, and in failing to give reasons for that order. She argues that interest under s. 68 of the SABS-1994 is mandatory, and does not require a finding that the insurer acted improperly in delaying benefits. The amount at issue is significant.

Liberty submits that s. 17(2) of the Statutory Powers Procedure Act (SPPA) gives arbitrators discretion whether to award interest under s. 68 and from what date. Only the rate is mandatory, in the insurer’s view, and the intent of the mandatory language is to make it clear that the Courts of Justice Act rate does not apply. In this case, says Liberty, no interest should be payable because its decision was based on the existing authorities, Beiler and Ridgely, and because Mrs. Virk delayed in bringing her case forward.

Section 17 of the SPPA is as follows:

Decision

17. (1) A tribunal shall give its final decision and order, if any, in any proceeding in writing and shall give reasons in writing therefor if requested by a party.

Interest

(2) A tribunal that makes an order for the payment of money shall set out in the order the principal sum, and if interest is payable, the rate of interest and the date from which it is to be calculated.

The intent underlying s. 17(2) is to require that money orders be sufficiently clear to be enforceable in the courts in accordance with s. 19 of the SPPA.¹⁸ It does not give tribunals power to award interest, but provides, "if interest is payable" [emphasis added], the rate and start date must be specified. The substantive remedial power, if any, is left for a tribunal’s enabling legislation – s. 68 of the SABS-1994, in this case. That section states,

If payment of a benefit under this Regulation is overdue, the insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue at the rate of 2 per cent per month compounded monthly.

I summarized the state of the law on interest in Cole and Allstate Insurance Company, (FSCO P01-00016, May 23, 2003):

Commission adjudicators have frequently reaffirmed that interest under the SABS is mandatory, compensatory, and flows from late payment of overdue benefits. There is no need for a finding of insurer misconduct. Accordingly, upon a finding of entitlement, interest flows even though the insurer had legitimate reasons for questioning the claim or requiring more information. (p.16, footnotes omitted)

The main issue, then, is "when did payment become overdue?" The rules are set out in s. 67 of the SABS-1994, which states that a death benefit is "payable . . . to the person entitled within thirty days after the insurer receives an application for the benefit" and it follows that the amount is overdue if the insurer fails to comply. FSCO adjudicators have rejected the view that payment does not become overdue until entitlement is proven, even where the insurer had good reason to question the claim or require further information.

However, there is a limit to this principle. In Trendle and Economical Mutual Insurance Company, (OIC P96-00009, July 11, 1996), Delegate Draper ruled that interest would commence only after the appeal decision because of the claimant's unreliable evidence about his income:

. . . the arbitrator specifically found that "it was impossible for Economical to determine the correct amount of weekly income benefits payable to Mr. Trendle" without the "several days of hearing and the careful testimony and documentation of many witnesses to sort through the maze of half truths provided by Mr. Trendle" (p.40). In the circumstances I am not prepared to treat the payments as overdue until finally determined through the dispute resolution process, including this appeal. (pp. 15-16)

Delegate Draper returned to the issue in Bajic and Pafco Insurance Company and Zurich Insurance Company, (FSCO P00-00050, June 5, 2001), again rejecting the view that interest does not accrue until the claim is established:

While "overdue" must be given meaning, I find no indication that the legislative intention is to relieve insurers from paying interest whenever the insured person's entitlement is questionable. (p. 21)

The exception is narrow. It applies, as Delegate Draper stated in Bajic, where "the insured person acts in a manner that effectively prevents the insurer from assessing his or her entitlement." In that case, the delegate upheld the arbitrator’s conclusion that the insurer’s request for clarification of a health practitioner’s certificate did not delay the running of interest.

The compensatory principle has also been affirmed in death benefits cases. The dispute in Mark and Dominion of Canada General Insurance Company, (FSCO A96-000341, January 27, 1999), another SABS-1994 case, concerned two surviving spouses. The claimant was the common law spouse of the insured person who had died as a result of the accident. She claimed death benefits as a spouse and a dependant. The insurer denied the dependant’s claim, and paid half the statutory minimum spousal benefit on the basis that there was a second spouse, but the payment was made only some five months after the application for the death benefit, when the second spouse consented. The remainder of the benefit owed, and some interest, was paid some months later.

The arbitrator upheld the insurer's position on both the spousal and dependant's claims, but awarded interest for the overdue period. She rejected the insurer's submission that the benefit was not overdue until the claimant proved she was "the person entitled" to the payment within the meaning of s. 67(1).¹⁹ Reviewing the cases, including Trendle, on which the insurer relied, the arbitrator preferred Sebastian, the leading case in which Director's Delegate Naylor held that interest was mandatory and there was no residual discretion. Though the arbitrator noted the requirement of a "completed application" in s. 24(1) of the SABS-1990, which is absent from the payment provisions of the SABS-1994, the main point of her decision was the mandatory compensatory nature of interest under the SABS.²⁰

Liberty does not suggest that the Trendle-Bajic exception applies in Mrs. Virk's case, but submits that her delay in applying for mediation of the dispute justifies limiting any interest award. When mediation occurred in the fall of 2002, Liberty argued that the application was out of time, but that issue was resolved by reference to Smith v. Co-operators General Insurance Company, 2002 SCC 30, [2002] 2 S.C.R 129. There being no current limitation issue, Mrs. Virk submits delay does not offer a basis for limiting the accrual of interest.

Cole arguably supports the insurer's position. The insurer in that case terminated the claimant's income replacement benefits when he returned to work, but he was laid off shortly thereafter. He did not seek reinstatement of his IRBs until he applied for mediation some three years later. I found that the arbitrator erred in awarding interest from 14 days after benefits were terminated, and substituted an order that interest began to run 14 days after the application for mediation. However, Cole was an unusual case:

The circumstances of Mr. Cole’s Nortel lay-off meant Allstate had good reason to believe he had accepted its decision to terminate benefits. He did not challenge that decision by requesting a DAC assessment, commencing mediation, or communicating his views in some other way for almost four years. At the arbitration hearing, on cross-examination, he admitted that he "had absolutely no medical treatment for his . . . accident injuries" since the summer of 1996. [footnote omitted]

He applied for mediation of the IRB issue only after commencing mediation and arbitration claiming LECBs. His IRB application seems to have been prompted by the need to establish ongoing qualification for weekly benefits in order to pursue the LECB claim. (p. 19)

In addition, because I held that s. 72(1), the return to work provision in the SABS-1994, "contemplates a request [for reinstatement of benefits] and refusal after a failed return to work," (p. 17), the Cole decision is essentially about a claimant’s delay in bringing an application, not a delay in commencing mediation after a refusal. It does not stand for the general proposition that interest is delayed where the claimant delays in commencing mediation.

In J.C. and Progressive Casualty Insurance Company, (FSCO A03-000290, September 24, 2004), the claimant was denied interest for the period between the insurer’s proper termination of benefits and his counsel’s first approach to the insurer about reinstating benefits:

The lag in time before the Applicant approached Progressive again, although understandable given the Applicant's medical conditions, is not attributable to the conduct of Progressive. The situation was clearly out of Progressive's hands during that period. I accept Progressive's counsel's submissions that Progressive was disadvantaged in the circumstances by not having the opportunity to follow through with medical assessments and rehabilitation and the evaluation of his employment situation.²¹

Unlike Cole and J.C., which concerned weekly benefits, Mrs. Virk claims a lump sum death benefit, and there is no suggestion that the delay prejudiced the insurer's adjustment of the claim. Liberty refused the claim based on its view of the law, a view it continued to advance throughout this appeal.

In any event, I am not satisfied that s. 68 gives me discretion to delay the accrual of interest once the insurer receives – and refuses – an application for benefits to which the claimant is ultimately found to be entitled. Nothing in s. 68 suggests an intent to grant adjudicators discretion to withhold interest owed on overdue benefits based on litigation delay.

Like many other provisions in the SABS, s. 68 works rough justice in some cases. However, FSCO adjudicators have reaffirmed on numerous occasions that s. 68 means the insurer bears the financial risk of being wrong in refusing benefits. The arbitrator's order will be varied to state that Mrs. Virk is entitled to interest from 30 days after Liberty received her application for death benefits.

C. Special Award

Subsection 282(10) of the Insurance Act states that an arbitrator shall order a special award if she concludes that the insurer "unreasonably withheld or delayed" benefits to which the claimant was entitled. The arbitrator ordered a special award of $1,500, inclusive of interest, with respect to the insurer's delay in paying funeral benefits, but refused a special award with respect to the insurer's refusal of death benefits. The arbitrator criticized Liberty for making "a quick and superficial" death benefits decision, instead of referring the claim for "a legal opinion, or, at the very least, an opinion from a senior claims person familiar with issues of legal interpretation, none of which appears to have been undertaken until quite late in the claim." However, she concluded the insurer’s continued refusal was reasonable, "given the evolving and complex case law and legislation, and the Applicant’s failure to pursue the dispute resolution process in a timely fashion." Mrs. Virk argues that an insurer is not absolved of its obligations because the law in the area is evolving or complex. She submits Liberty’s refusal was unreasonable, especially in light of its eventual acceptance of her funeral benefits claim.

In my view, the arbitrator had good reason to conclude that the death benefits claim raised additional and more difficult issues than the funeral benefits claim. The Christo arbitration decision, released in April 1996, held that a child en ventre sa mere at the time of the accident was an "insured person," and the decision was upheld on appeal in September 1996, about seven years before the funeral benefits were paid based on the decision. Ridgely, on the other hand, gave the insurer some basis for believing it was not required to pay death benefits. Though the arbitrator ultimately concluded that death benefits were payable, that did not necessarily mean the benefits were "unreasonably withheld or delayed," as required for a special award. The insurer’s position, though ultimately it did not prevail, was reasonable and legitimate, considering the law at that time. I am not persuaded the arbitrator erred.

IV. EXPENSES

If the parties are unable to agree on appeal expenses, they may request an expenses hearing in accordance with Rule 79 of the Dispute Resolution Practice Code.

July 5, 2005

Nancy Makepeace Director’s Delegate

Date

There is no eligibility in respect of a stillbirth or death in utero: Whale and Guarantee Company of North America, (FSCO A01-000545, January 18, 2002), Mathison v. Hofer, 1984 CanLII 3664 (MB QB), [1984] M.J. No. 74, Seede et al. v. Camco Inc. (1985), 1985 CanLII 1938 (ON HCJ), 50 O.R. (2d) 218 (S.C.O.), appeal dism'd (1986), 1986 CanLII 2753 (ON CA), 55 O.R. 352 (Ont. C.A.), application for leave to appeal to the Supreme Court of Canada dismissed, June 23, 1986, and Davey v. Victoria General Hospital. 1995 CanLII 16195 (MB QB), [1996] M.J. No. 19 (Man. Q.B.).

The en ventre sa mere principle has been reaffirmed in decisions upholding abortion rights (Dehler v. Ottawa Civic Hospital (1980), 1980 CanLII 2715 (ON CA), 29 O.R. (2d) 677 (Ont.C.A.), Borowski v. A-G Canada (1987), 1987 CanLII 6815 (SK CA), 39 D.L.R. (4th) 731 (Sask. C.A.), Tremblay v. Daigle, 1989 CanLII 33 (SCC), [1989] 2 S.C.R. 530); refusing to compel a pregnant woman to enter a drug treatment program for the protection of the fetus (Winnipeg Child and Family Services (Northwest Area) v. D.F.G., 1997 CanLII 336 (SCC), [1997] 3 S.C.R. 925); and finding a child cannot sue his mother in relation to pre-natal injuries caused by her negligent driving (Dobson (Litigation Guardian of) v. Dobson, 1999 CanLII 698 (SCC), [1999] 2 S.C.R. 753, Hall (Litigation Guardian of) v. Kellar, [2002] O.J. No. 5564 (Ont. S.C.J.)).

This question was not argued in this appeal, and accordingly I need not consider it further, except to note that the additional requirements in s. 18 - the claimant must also establish that she was "not employed on a full-time basis and was not self-employed at the time of the accident" and "suffers a substantial inability to engage in the caregiving activities in which . . . she engaged at the time of the accident, or . . . suffers a partial or complete inability to carry on a normal life" - would tend to exclude a claim based only on the fact of the claimant's pregnancy at the time of the accident.

The same comments apply to s. 54(1) of the SABS-1994, which states, "If an insured person sustains an impairment as a result of an accident, the insurer shall pay for additional expenses reasonably incurred by or on behalf of the insured person in caring for the insured person's dependants as a result of the accident." [emphasis added] The benefits are available only if the insured person "was employed at the time of the accident and . . . is not receiving weekly caregiver benefits. . ." Unlike s. 18, which provides weekly benefits to recognize the disability of a stay-at-home parent, s. 54 provides day-care expenses for a working parent who cannot work or look after the children as a result of the accident, and therefore incurs extra care expenses.

Finally, I note that both sections 18 and 54 arise from the insured person's impairment, not the dependant's. In the case of death and funeral benefits, the claimant is deemed an "insured person" by virtue of s. 279(3) of the Insurance Act.

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended.
2. 2Arbitration decision, p. 4.
3. 3Arbitration decision, p. 10.
4. 4Arbitration decision, p. 13.
5. 5Another often-cited decision is Duval v. Seguin, (1972), 1972 CanLII 371 (ON HCJ), 2 O.R. 686 (Ont. H.C.), aff'd (1973), 1973 CanLII 693 (ON CA), 1 O.R. (2d) 482 (Ont.C.A.), which affirmed that a child has a cause of action based on pre-natal injuries in an automobile accident.
6. 6The Statutory Accident Benefits Schedule — Accidents before January 1, 1994, Ontario Regulation 672, as amended.
7. 7Subsection 3(2) reads: "For the purposes of this Regulation, a person is a dependant of another person if the person is principally dependent for financial support on the other person or the other person's spouse."
8. 8See p. 7 of the arbitration decision (OIC A-015318, April 23, 1996) and pp. 3-4 of the appeal decision in Christo.
9. 9Breau follows Treverton v. Canada (Superintendent of Insurance) (1989), 67 O.R. (3d) 765 (Ont. H.C.J.), in which Osborne J. held that en ventre sa mere applies for the purpose of claiming underinsured coverage under the S.E.F. 42.
10. 13Liberty noted s. 66 of the Family Law Act, referred to in footnote 10, above, and s. 1(1) (definitions of "child" and "issue") and s. 47(8) (intestate distribution) of the Succession Law Reform Act. Section 1(1) (definition of "child") in the Compensation for Victims of Crime Act also codifies the principle.
11. 14Because of the consistency principle, I considered the implications of this appeal for caregiver benefits under s. 18 of the SABS-1994 and dependant care expenses under s. 54. Section 18 of the SABS-1994 provides for caregiver benefits if, "at the time of the accident, the insured person was residing with a person in respect of whom the insured person was the primary caregiver and the person receiving the care was less than sixteen years of age or required the care because of physical or mental incapacity. "[emphasis added] Section 13 of the SABS-1996 requires "a person in need of care." There is no requirement that "the person receiving the care" be a "dependant" as defined, though it can be expected that will usually follow. In any event, it could be argued that the en ventre sa mere principle applies to the operative terms in the same way. This was rejected, based on Ridgley, in Beiler and Alpina Insurance Company, Limited, (OIC A-003051, August 9, 1994). The arbitrator in that case held that the claimant, who was pregnant at the time of the accident, was not entitled to an additional caregiver benefit under s. 13(4) of the SABS-1990, which allows $50 per week "for each person [receiving care] who at the time of the accident was residing with the insured person and in respect of whom the insured person was the primary caregiver."
12. 15Arbitration decision, p. 14.
13. 16The arbitrator discussed some typical fact situations at p. 15 of her decision.
14. 17Arbitration decision, p. 12.
15. 18See, for example, the discussion in Persofsky and Liberty Mutual Insurance Company, (FSCO P00-00041, January 31, 2003), at para. 39 ff.
16. 19". . . an insurer shall mail or deliver a benefit that is payable under . . . Part XI, . . . to the person entitled within thirty days after the insurer receives an application for the benefit." [emphasis added]
17. 20In Totic and Primmum Insurance Company, (FSCO P03-00033, July 26, 2004), another SABS-1994 death benefits case, the insurer argued that benefits were not overdue until the parents of the deceased submitted sufficient evidence of their dependence on their adult son. The arbitrator rejected this view, and the decision was upheld on appeal. See also Kuchiak and Wawanesa Mutual Insurance Company, (OIC P97-00025A, December 8, 1997).
18. 21At p. 36. This was upheld on appeal, (FSCO P04-00036, February 15, 2005), released after the appeal hearing in this case. Delegate Evans held that "the insured person's conduct, including delay, can affect his or her right to interest." (at p. 4)
19. 10Seed et al. v. Delhey (1989), 1989 CanLII 4181 (ON HCJ), 70 O.R. (2d) 692 (Ont. H.C.) and Garland v. Rowsell (1990) 1990 CanLII 6972 (ON HCJ), 73 O.R. (2d) 280 (Ont. Dist. Ct.), held that s. 61 of the Family Law Act, which provides a statutory remedy for the "children" (amongst other family members) of a person injured or killed by the fault or neglect of another, applies to a child conceived before but born after the death or injury. See, contra, Stone v. Hartman, [1996] O.J. No. 3107. Section 66 of the Family Law Act states, "No person is disentitled from recovering damages in respect of injuries for the reason only that the injuries were incurred before his or her birth."
20. 11Paragraph 42.
21. 12Paragraph 46.