Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 23 FSCO A05-002715

BETWEEN:

WILLIAM HALLIDAY Applicant

and

CERTAS DIRECT INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Robert A. Kominar Heard: December 21, 2006, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: P. Michael Rotondo for Mr. Halliday Peter Yoo for Certas Direct Insurance Company

Issues:

The Applicant, William Halliday, was injured in motor vehicle accidents on August 14, 2002 and July 2, 2003. He applied for and received statutory accident medical benefits from Certas Direct Insurance Company ("Certas"), payable under the Schedule.¹ Certas denied his entitlement to weekly income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mr. Halliday 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 issues are:

1. Should Certas be granted leave to amend its Response by an Insurer to an Application for Arbitration by allowing it to add a further subprovision under Section 1 of Schedule "A" to its Response claiming that Mr. Halliday is precluded from claiming income replacement benefits based on his failure to comply with section 32 of the Schedule?

2. Is Mr. Halliday precluded from claiming income replacement benefits based on his delay in notifying Certas of his claim for these benefits as well as his failure to comply with section 32 of the Schedule?

Result:

1. Certas is granted leave to Amend its Response by an Insurer to an Application for Arbitration, nunc pro tunc, by adding a further sub-provision under section 1 of schedule "A" to its Response claiming that Mr. Halliday is precluded from claiming income replacement benefits based on his failure to comply with section 32 of the Schedule.

2. Mr. Halliday is not precluded from claiming income replacement benefits based on either his failure to notify Certas of this claim for these benefits or his failure to comply with section 32 of the Schedule.

FACTUAL BACKGROUND:

The issues in this hearing arise out of a series of interactions, and lack of interaction, between Mr. Halliday and Certas which extend over a period of roughly three years. Due to the nature of the issues and the relief claimed by Certas, it is necessary to set out a fairly detailed chronology of the parties' involvement with each other.

Mr. Halliday was injured in the first motor vehicle accident relevant to this hearing on August 14, 2002. He and his spouse were taken to hospital by ambulance and released on the same day. Mrs. Halliday notified Certas of the accident on the next day, telling them that their vehicle had suffered extensive damage and that both she and her husband had been injured. Mr. Halliday recalls that his wife told him that they would be receiving some forms from the insurer in the near future which would have to be filled out.

A Certas Claim Activity Log note dated August 28, 2002 indicates that Mrs. Halliday informed the insurer on that day as follows: "her husband is in some pain. Doctor has recommended therapy. however has not gone as runs store day in and day out. Business has a part-timer on vacation for 2 weeks." The log entry for that date goes on to note "discussed with C/S as self employed will keep file. May have some income loss. May just settle."

Mr. Halliday's evidence was that some weeks later he received Application for Accident Benefit (OCF-1) forms. His evidence was that the "package" he was sent included only the application forms and no supplementary information advising him of the nature of the benefits available under the Schedule, or the time limits for claiming them, or the consequences of missing time limits. Ms Anup Kaushal, Certas' representative at the hearing, gave evidence that, although she was not directly involved with this claim, her belief was that Mr. Halliday would have received a standard accident benefits package which she testified would have included supplementary information, including some information prepared by the Insurance Bureau of Canada which was not further described.

The Certas log notes indicate that there seems to have been some postal-related problem in getting the applications to Mr. Halliday and so they had to be sent out to him a second time by courier to his business address. Mr. Halliday stated that he filled the forms out to the best of his ability and dated them September 25, 2002. These forms were stamped as received by Certas on October 1, 2002. Mr. Halliday was then informed by the adjuster that he could seek some initial treatment at one of two recommended clinics and that he should see his doctor regarding any further treatment he may require.

On October 8, 2002, the adjuster followed up with Mr. Halliday on the telephone as there was a concern that Part 8 of the OCF-1, which deals with income replacement benefits, had not been completed. According to the log note for that day, Mr. Halliday advised the adjuster that he had returned to work on August 19th after missing six days. He further advised the adjuster that he did need medical treatment but that he had not been able to absent himself from his business to obtain it. Certas prepared an Explanation of Benefits (OCF-9) on the same day finding that Mr. Halliday was not eligible for income replacement benefits. The explanation provided to him was:

You have not completed Part 8 of the Applications. However, I spoke with you on October 8, 2002 you confirmed with me that you returned to work full hours and full duties on August 19, 2002. You missed 6 days from work. Please not[e] that Section 4(2)(a) of the Statutory Accident Benefits Schedule states that the insurer is not required to pay an income replacement benefit for the first week of the disability. Therefore no Income Replacement Benefit is not payable. (emphasis added)

Mr. Halliday testified that he continued to suffer health problems associated with the accident and ultimately he sold his jewellery store business on March 31, 2003. The parties dispute whether this sale was caused by or associated with the accident-related injuries. However, that issue is not before me in this hearing. What is relevant to my decision is Mr. Halliday's evidence that he accepted and relied on the advice of the adjuster that he was not entitled to claim income replacement benefits because he was not off of work continuously for more than a week but only to medical treatment benefits as approved by the insurer.

Mr. Halliday continued to receive medical treatment for his injuries, which the parties agree Certas approved and paid for. On June 17, 2003, in a Progress Report from physiotherapist Danny Kuzmich, the insurer was advised that Mr. Halliday was progressing but that he still suffered from significant problems including a functional inability to stand for more than five minutes. Mr. Kuzmich recommended that Mr. Halliday be provided with a gym membership, training advice, and various assistive devices to help transition him from treatment in a clinical setting to a home based one.

On July 2, 2003, Mr. Halliday was involved in another motor vehicle accident.

A letter from Certas to Mr. Halliday, dated July 10, 2003, stated that a new application package for accident benefits was enclosed. Certas concedes that this correspondence appears on its face to have been incorrectly addressed. The insurer's evidence is that another letter, dated October 6, 2003, was sent to Mr. Halliday's correct address, once again enclosing accident benefit claim forms along with appropriate supplementary information. Mr. Halliday's evidence is that he did not receive this second letter from the insurer either.

I note that these two letters were not sent to Mr. Halliday by the same adjuster and also that there are some content differences between them. The July 10th letter was sent by Shannon Brown. She indicates that it had enclosed:

• Accident Benefits Application Package (Bill 59)
• Permission to Disclose Employment Information (OCF-16/59)
• Job Analysis Form
• Instructions for Completion of the described forms
• General Instructions and Guidelines When Claiming Benefits
• Pamphlets from the Insurance Bureau of Canada explaining the SABS benefits

The October 6th letter was sent by Nesreen Waters. She indicates that it had enclosed:

• Accident Benefits Application Package
• Activities of Normal Life Form
• Job Analysis Form
• Pre-approved Framework Treatment Confirmation Form (OCF-23/198)
• Instructions for completion of the described forms.
• General Instructions and Guidelines When Claiming Benefits
• Information sheets explaining the SABS benefits

In a log note dated October 23, 2003, it appears that a supervisor at Certas advised the claim adjuster:

Client had two MVAs. Injuries are similar i.e. WAD II & Lumbar sprain. Nesreen please close the second claim and carry on with the first. Please follow and adhere to authority limits and reporting with your CS. No Apps required. Please keep files together for reference. (emphasis added)

Mr. Halliday's evidence was that he first sought legal advice regarding his situation in September 2004, when he retained Mr. Rotondo. He stated that by that point in time he had been supporting his family on his savings for roughly a year and a half and he wanted to make sure that he had received all the insurance benefits to which he was entitled.

Mr. Rotondo initially told Mr. Halliday that he would need to review the history of the matter before he could properly advise him, and to this end Mr. Rotondo wrote to Certas on September 8, 2004, requesting a copy of the accident benefit file. Only after receiving two follow- up letters from Mr. Rotondo, did Certas respond to the request. The accident benefits file was sent to Mr. Rotondo by Certas on February 24, 2005, some four and a half months after it was first requested.

After receiving the file from Certas, Mr. Rotondo asked Mr. Halliday to provide him with financial information related to the operation and sale of his jewellery business. After reviewing this information Mr. Rotondo wrote to Certas on June 24, 2005 advising that Mr. Halliday intended to claim for income replacement benefits and business losses. He enclosed numerous financial documents which he believed would have been relevant to a determination of the quantum of an income replacement benefit for a self-employed individual such as Mr. Halliday.

Mr. Rotondo followed up with Certas in a letter dated July 13, 2005, in which he enclosed Mr. Halliday's 2004 tax return, as well as receipts for transportation and ambulance charges related to the two automobile accidents. Mr. Halliday's evidence is that Certas never responded to Mr. Rotondo's letters dated June 24 and July 13, 2005.

Not receiving any response from Certas, Mr. Halliday applied for mediation at the Commission, which occurred on September 30, 2005. The parties resolved the mediation issues related to medical expenses by way of Certas agreeing to pay for all of the medication, parking, taxi and ambulance expenses which Mr. Halliday had claimed. The parties were not able to resolve the issue of entitlement to income replacement benefits and business losses from March 31, 2003 ongoing or interest. I note at this point that the Report of Mediator does not disclose that Certas raised any preliminary or jurisdictional issues during the mediation. Nor does it appear from the evidence before me that any request was made for the mediator to amend her report after the mediation.

Mr. Halliday states that he authorized Mr. Rotondo to obtain an accountant's report to assist in the quantification of his potential income replacement benefit, due to Certas' failure to respond to Mr. Rotondo's correspondence. This report was apparently provided to Certas on the date of the mediation.

Based on the failed issue at mediation, Mr. Halliday applied for arbitration at the Commission on November 18, 2005. The Response by Insurer to an Application for Arbitration was filed by Certas on December 20, 2005. In schedule "A" to the Response, the Insurer pleads:

The Insurer denies that the Applicant is entitled to income replacement benefits from March 31, 2003 to date and ongoing for reasons which include the following:

a. The Applicant has not demonstrated entitlement to these benefits as per the dictates of the Schedule;

b. The Applicant has failed to provided the requisite documentation with respect to these benefits pursuant to the Schedule;

c. The Applicant did not suffer a substantial inability to perform the essential tasks of his pre-accident employment as a result of the subject accident.

In correspondence dated February 8, 2006, Certas' counsel, Mr. Yoo, wrote to the Commission and Mr. Rotondo, advising that Certas wished to amend its Response by adding the allegation that Mr. Halliday failed to comply with section 32 of the Schedule, thus disentitling him to income replacement benefits.

On February 17, 2006, Mr. Rotondo responded to Mr. Yoo that Mr. Halliday opposed Certas' request to amend its Response, thus giving rise to issues in this hearing.

ANALYSIS

Should Certas be allowed to amend its Response by Insurer to an Application for Arbitration?

I agree with the comments of Arbitrator Wilson in Graham and State Farm Mutual Automobile Insurance Company (A04-002268, July 26, 2005) where he makes the natural comparison of the function of Applications and Responses in arbitration to that of pleadings in the courts. The purpose of legal pleadings is to crystallize the precise issues in dispute and to set out the factual basis for the positions which the parties adopt. The history of the Common Law has seen an evolution from formalistic reliance on the arcane technicalities of pleading language into a much more functional approach where the goal of pleadings is primarily to clarify what the dispute is about and what reasons the parties have for adopting the positions they do on those issues. In the past, mistakes in pleading could result in actions or defences being dismissed for technical rather than substantive reasons. Mistakes in pleading were often difficult, if not impossible, to "correct" by way of amendments. However, today, Rule 26 of the Ontario Rules of Civil Procedure provides for a very different approach:

On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment. (emphasis added)

This is a mandatory section requiring that amendments to pleadings be allowed unless the court is persuaded of prejudice incurable by way of costs or adjournments. It is important to note that amendments under this rule are entertained at any stage of the proceeding, up to and including at trial.

In Graham, Arbitrator Wilson noted that the Dispute Resolution Practice Code is silent on the issue of amending Applications or Responses to arbitration and also that the arbitration alternative to litigation has the stated goals of being a "quicker, less expensive and less formal" process than one finds in the courts.² One would assume that the reasonable inference to be drawn from this is that amendments to Applications and Responses should be relatively easily accommodated within arbitration, unless, as Arbitrator Wilson cautions, they would complicate or delay the process, or prejudice a party, in some significant manner.

In my view, this is the appropriate approach to adopt regarding amendments to Applications and Responses in arbitration. The arbitrator's statutory duty is to resolve "all issues in dispute."³ In order to do this in a fair and expeditious way, it is useful to acknowledge that a "dispute" can evolve as the parties interact and share information with each other. Parties are required to file Applications and Responses at the outset of the arbitration process but it is also the case that one of the primary functions of the arbitration pre-hearing is "identifying and obtaining agreement as to the issues for arbitration."⁴ In reality, it is not uncommon for the issues in dispute to be clarified, refined, added to, or abandoned at the arbitration pre-hearing stage and even afterwards. There are many occasions where an applicant initially raises an issue in an Application for Arbitration without providing all of the specifics necessary to properly discuss settlement of or adjudicate it. There are also many occasions where insurers file boilerplate Responses which contain nothing but generic and largely uninformative denials of any claim the Applicant may wish to assert. The existence of the ongoing pre-hearing process within arbitration, with its focus on clarifying issues for the hearing, perhaps provides an unintended inducement to parties to be less than meticulous in the preparation and submission of originating documents on the faith that deficiencies can be easily cured later. Notwithstanding my view that most such amendments should be accommodated, parties still run the real risk of delay and expense awards being made against them if a lax approach to "pleading" at the Commission is adopted. In this regard, I am compelled to express my disagreement with Mr. Yoo's submissions that inserting "protective" phrases in Responses, such as that the insurer denies entitlement to a benefit for reasons "which include the following," (emphasis added) is legally sufficient to automatically allow the insurer to fill in the information gap in any way they choose at any time they desire. Had this request for an amendment been made closer to the hearing date than it was, it may well have attracted a very different result, as there clearly comes a point where delaying the Applicant from proceeding with the case likely cannot be reasonably balanced by either an adjournment to allow for further preparation or a simple award of legal expenses.

Since Certas requested to amend its Response relatively promptly after filing it, I find that it is reasonable to allow the amendment. I also find that there was not, at the time the request was made, nor is there now, any unwarranted prejudice to Mr. Halliday to allow the Insurer to clarify the exact nature of the defence it wished to assert to his claims. It is well accepted that the type of prejudice we are talking about in this situation does not arise simply out of one side asserting a claim or a defence that, if proved true, may alter the substantive outcome of the hearing. Relying on procedural formalisms and technicalities should not be perceived as a route to defeating the other side's ability to fully and transparently put forward its case.

In conclusion, Certas will be allowed to, nunc pro tunc, amend its Response by Insurer to an Application for Arbitration as requested.

Is Mr. Halliday precluded from claiming income replacement benefits based on his delay in notifying Certas of his claim for these benefits as well as his failure to comply with section 32 of the Schedule?

The essence of Certas' position on this issue is that Mr. Halliday notified the adjuster that he returned to his work as a self-employed jeweller six days after his first accident. He never, until Mr. Rotondo contacted the Insurer on June 24, 2005, claimed income replacement benefits or compensation for business losses. In Certas view, this is a clear breach of the obligation on an insured person set out in sections 31 and 32 of the Schedule:

PART X

PROCEDURES FOR CLAIMING BENEFITS

Failure to Comply with Time Limits

31.(1) A person's failure to comply with a time limit set out in this Part does not disentitle the person to a benefit if the person has a reasonable explanation. O. Reg. 403/96, s. 31 (1).

(2) Subsection (1) does not apply to the time limits set out in section 51. O. Reg. 403/96, s. 31 (2).

Notice and Application for Benefits

32.(1) A person shall notify the insurer of his or her intention to apply for a benefit under this Regulation. O. Reg. 281/03, s. 11 (1).

(1.1) A person shall notify the insurer under subsection (1) no later than,

(a) the 30th day after the circumstances arose that gave rise to the entitlement to the benefit, or as soon as practicable after that day, if those circumstances arose as a result of an accident that occurred before October 1, 2003; or

(b) the seventh day after the circumstances arose that give rise to the entitlement to the benefit, or as soon as practicable after that day, if those circumstances arose as a result of an accident that occurred on or after October 1, 2003. O. Reg. 281/03, s. 11 (1).

(2) The insurer shall promptly provide the person with,

(a) the appropriate application forms;

(b) a written explanation of the benefits available under this Regulation;

(c) information to assist the person in applying for benefits; and

(d) information on any possible elections relating to income replacement, non-earner and caregiver benefits. O. Reg. 403/96, s. 32 (2).

(3) The person shall submit an application for the benefit to the insurer within 30 days after receiving the application forms. O.CReg. 403/96, s.c32c(3).

(3.1) If an insurer receives an incomplete application for a benefit under this Regulation, the insurer shall notify the person within 10 business days after receiving the incomplete application that the application is incomplete and shall indicate the information that is missing. O. Reg. 281/03, s.Cl1C(2); O.CReg. 546/05, s.c5 (1).

(3.2) Subsection (3.1) applies only if the insurer, after a reasonable review of the incomplete application, is unable to determine without the missing information if a benefit is payable. O.CReg. 281/03, s.C11C(2).

(4) If a person is required by an insurer to submit an additional application in respect of a benefit that the person is receiving or may be eligible to receive, the person shall submit the additional application to the insurer within 30 days after receiving the additional application forms from the insurer. O.CReg. 403/96, s.C32C(4).

(5) If subsection (3.1) applies in respect of an incomplete application, no benefit is payable before the person provides the missing information. O.CReg. 281/03, s.C11C(2).

(6) Despite any shorter time limit in this Regulation, if a person fails without a reasonable explanation to notify an insurer under subsection (1) within the time required under subsection (1.1), the insurer may delay determining if the person is entitled to a benefit under section 35, 38, 39 or 41 and may delay paying the benefit until the later of,

(a) 45 days after the day the insurer receives the person's application; or

(b) 10 business days after the day the person complies with any request made by the insurer under subsection 33 (1) or (1.1). O.CReg. 546/05, s.c5c(2)

At the times of the accidents here, the process for claiming benefits was that Mr. Halliday had to notify the Insurer of his "intention to apply for a benefit" within 30 days of an accident or as soon as practicable after that. The Insurer was supposed to promptly send out application forms and specified supplementary materials to him, which he was to return to the Insurer within 30 days of receipt. If the application was deemed incomplete, the Insurer was required to notify the Applicant within 10 business days of receipt and advise him what information it required to process his claim. The Insurer may or may not have required a new application form to be filled out. If a new application was required, it would have had to be returned within 30 days of receipt of new forms. There is a proviso that even if an application is incomplete, an insurer must make a reasonable inquiry to see if it can determine if a benefit is payable without further information before notifying the applicant that it needs more information.

As has been noted many times in arbitration decisions, the essence of the accident benefits claim process is that it is meant to be started easily and promptly after an accident, often with less than complete information, which can be filled in as the claim continues to be processed.

I find on the evidence before me that Mr. Halliday notified the Insurer promptly after both accidents of his injuries and it is uncontested that Certas did approve and pay for medical treatment arising out of those injuries. The problematic issue relates to the interaction between Mr. Halliday and Certas on the issue of entitlement to other benefits, specifically income replacement benefits.

As I have noted above, there were problems associated with getting information from Certas to Mr. Halliday. After the first accident, the evidence before me is that application documents had to be sent out twice, the second time by courier, to reach Mr. Halliday. After the second accident, Certas, notwithstanding the difficulty they experienced in getting documentation to Mr. Halliday in the past, initially mailed documentation to what they knew, or certainly should have known, was the incorrect address. This was no doubt unintentional, but I find that the failure to properly address this correspondence reflects a pattern of lack of attention to important details. The same lack of attention to detail can be seen in the explanation of benefits sent to Mr. Halliday, dated October 8, 2002. Within that explanation there is a spelling mistake, an incorrect identification of the specific section of the Schedule which the insurer claims disentitles Mr. Halliday from income replacement benefits, and finally a double negative grammatical construction which, from a strictly logical point of view, advises Mr. Halliday that he "is" entitled to income replacement benefits.

Perhaps individually, each of these errors do not amount to much. However, I find that the pattern they illustrate supports Mr. Halliday's claims that he was dealt with rather summarily by Certas when it came to asserting accident benefit claims other than medical treatment. Mr. Halliday was not represented at the time and thus he was depending on the adjuster to guide him through the claims process. Given that this is a first-party claim his legitimate expectation was that the Insurer would actively assist him in identifying and claiming appropriate benefits. I find it significant that Mr. Halliday did not know that he could have submitted claims for ambulances, transportation and medication and that these issues were resolved with him by Certas at the mediation. Mr. Halliday's unawareness that he could claim such expenses supports his evidence that he was simply told by the adjuster shortly after the first accident that we was not entitled to income replacement benefits and he thereafter relied on that advice until he met Mr. Rotondo.

Mr. Halliday's further evidence is that he did not receive replacement application documentation from Certas after the second accident, which seems to have been sent approximately three months after the improperly addressed material was mailed. On this issue I accept the testimony of Mr. Halliday that he did not receive this information, as this seems to be generally supported by the log note dated October 23 which explicitly directs the adjuster not to require a second application from Mr. Halliday but to continue to adjust the two accidents under one file.

The final evidence which I find to be supportive of Mr. Halliday's position is the failure of Certas to respond in anything approaching a timely fashion to Mr. Rotondo's inquiries about the matter. Either Certas was hoping to stonewall Mr. Rotondo in the hopes he would go away, or their failure to respond to him manifested the same inattentive approach they had manifested while communicating with Mr. Halliday directly.

The legal issue involved here was well canvassed by Arbitrator Leitch in Horvath and Allstate Insurance Company of Canada (A02-000482, June 9, 2003)). Certas argues that Mr. Halliday should be precluded from further arbitrating the issue of income replacement benefits because he failed to comply with section 32 of the Schedule which requires him to notify the Insurer in a timely fashion of his intention to apply for a benefit. Mr. Halliday's response is, effectively, that Certas should be estopped from relying on that section as it was Certas itself that induced Mr. Halliday to believe that he was not entitled to claim income replacement benefits both through what it said and what it failed to say to him.

I adopt the approach taken by Arbitrator Leitch in Horvath. The evidence before me leads to the inference that it is likely that Mr. Halliday did not receive all of the information he should have after these two accidents. Although Ms Kaushal testified that Mr. Halliday "would have" received a standard application package, including documentation from the Insurance Bureau of Canada, she was unable to testify as to what was actually sent to him, or significantly, to produce the documentation prepared by the Insurance Bureau. Although it would be surprising if, in the four distinct attempts it made to send Mr. Halliday application forms, Certas did not enclose more than bare application forms, the fact is that I have no evidence before me as to what exactly was sent. I am not prepared to take notice of the contents of the purportedly enclosed documentation. What I am prepared to conclude from the evidence is that Mr. Halliday was not at any time prior to meeting Mr. Rotondo, fully informed about the potential accident benefits he was entitled to or what the full criteria of entitlement to the benefits was. Specifically, I find that Mr. Halliday was not adequately informed about the implications of being self employed for the purposes of claiming income replacement benefits. When Certas elected not to require that he complete a new application for benefits, which may have been administratively reasonable from its internal point of view, it actually deprived Mr. Halliday of the opportunity to once again assert claims for benefits arising out of the second accident and, importantly, to have Certas explain to him what his potential entitlements were.

The rationale for Certas' position is that Mr. Halliday initially advised them that he had returned to work within six days after the first accident. Section 5.1(2)(a) of the Schedule does state that an insurer does not have to "pay" for the first week of disability. The problem is that the adjuster seems to have concluded, rather perfunctorily, that Mr. Halliday was not disabled despite knowing that he said he needed treatment but was finding it impracticable to leave his small business. In saying this, I am not finding that Mr. Halliday was disabled at any given time such that he would have been entitled to income replacement benefits; that is for the ultimate hearing arbitrator to determine. My only conclusion at this point is that Certas has not satisfied me that Mr. Halliday was provided with the appropriate information he needed, in a form easily understood by an unrepresented person, to make an informed decision whether to claim benefits or not.

Arbitrator Leitch discusses the equitable principle of "estoppel by silence" in Horvath, finding that it is not inherently incompatible with the purposes or procedures of the Schedule. Importantly, in my view, he notes that the application of this principle by arbitrators may have the salutary effect of "encouraging ongoing communication between an insured person and his or her first-party insurer." I completely agree.

In this particular case I find that the adjuster appears to have "written off" Mr. Halliday's non medical claims very early on, witness the log note of August 28, 2002, just two weeks after the first accident, wherein the adjuster notes that the file may "just settle," notwithstanding that he also noted "may have some income loss." Thereafter, Certas appears to have dealt with Mr. Halliday as a medical claim and did nothing further to communicate with him regarding income replacement benefits. Although it is true that Mr. Halliday did nothing further for a long time to raise the issue with Certas, I find that this arose out of Mr. Halliday's reliance on the adjuster's advice that the income replacement benefit issue was a non-starter.

Mr. Halliday claims that he relied on this information from the adjuster to his detriment and that ultimately he was forced to sell his business due to an inability to work caused by the accidents. Whether he will be able to establish the nexus between the sale of the business and the accidents, whether there were losses or not, and whether he ever met the disability test for income replacement benefits are all issues reserved for the hearing arbitrator. At this point, my finding is that Mr. Halliday should be allowed to continue to develop his case to prove entitlement to the benefits he is seeking.

It is now well known that the Supreme Court of Canada has, in Smith v. Co-operators General Insurance Co.,⁵ identified and exposed to view the consumer protection foundations of accident benefit law. As a result of this, it is unequivocally clear now that insurers must provide insured persons with complete and understandable information about the potential benefits they may be entitled to and actual assistance in applying for those benefits, including information about the full set of options for dealing with disputes.

Based on my findings that there is plausible reason to believe that Mr. Halliday did not receive some of the information which Certas claims it sent to him, that it is unclear exactly what information might actually have been in these "packages" Certas claims to have sent, that Certas internally decided not to require a new application for benefits from him after the second accident, nor did they ever require him to fully complete the first application he was sent, I find that Certas is not in any "clean hands" position to rely on Mr. Halliday's failure to explicitly notify them that he wanted to claim income replacement benefits prior to retaining Mr. Rotondo and prior to Mr. Rotondo learning of the history of the matter from Certas. Any delay here is likely to have arisen directly from Certas not adequately assisting Mr. Halliday in understanding his benefits. Although Mr. Halliday cannot rely of being "ignorant of the law" as an excuse, this is not what is involved here. What Mr. Halliday relies on is the advice he received on the telephone from the adjuster, the carelessly prepared explanation of benefits, and what I have found to have been the lack of sufficient supplementary information to help him make an informed decision about asserting a claim notwithstanding what the adjuster had told him. In my view, Mr. Halliday has demonstrated on a balance of probabilities that he had a reasonable excuse for not identifying to Certas earlier than he did that his intention was to claim income replacement benefits.

In conclusion, I find that Mr. Halliday is not precluded from arbitrating his claims for income replacement benefits because he has failed to comply with section 32 of the Schedule.

The issue of expenses was not addressed by the parties and is reserved to the hearing arbitrator.

February 9, 2007

Robert A. Kominar Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 23 FSCO A05-002715

BETWEEN:

WILLIAM HALLIDAY Applicant

and

CERTAS DIRECT INSURANCE COMPANY Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Certas is granted leave to Amend its Response by Insurer to an Application for Arbitration, nunc pro tunc, by adding a further sub-provision under Section 1 of schedule "A" to its Response claiming that Mr. Halliday is precluded from claiming income replacement benefits based on his failure to comply with section 32 of the Schedule.

2. Mr. Halliday is not precluded from claiming income replacement benefits based on his failure to notify Certas of his intention to claim these benefits pursuant to section 32 of the Schedule.

February 9, 2007

Robert A. Kominar Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2DRPC, Introduction at p.10
3. 3Subsection 282(3) of the Insurance Act
4. 4Dispute Resolution Practice Code, 4th Edition - Updated October 2003) - Rule 33.1(a)
5. 52002 SCC 30, [2002] 2 S.C.R. 129