Financial Services Commission des Commission services financiers of Ontario de l’Ontario
Neutral Citation: 2008 ONFSCDRS 99
FSCO A06-000806, FSCO A06-002535 and FSCO A06-002534
BETWEEN: PATRICIA ABRAMS Applicant
and
AVIVA INSURANCE COMPANY OF CANADA (FORMERLY PILOT INSURANCE COMPANY) Insurer
AND BETWEEN:
PATRICIA ABRAMS on behalf of COURTNEY ABRAMS Applicant
and
AVIVA INSURANCE COMPANY OF CANADA (FORMERLY PILOT INSURANCE COMPANY) Insurer
AND BETWEEN:
PATRICIA ABRAMS on behalf of JOSHUA ABRAMS Applicant
and
AVIVA INSURANCE COMPANY OF CANADA (FORMERLY PILOT INSURANCE COMPANY) Insurer
REASONS FOR DECISION
Before: Denise Ashby
Heard: Written submissions were concluded on March 25, 2008
Appearances: Christopher Clifford for Patricia Abrams, Courtney Abrams and Joshua Abrams Susan Bromley for Pilot Insurance Company
Issues:
Carl Gibson was fatally injured in a motor vehicle accident on October 15, 2003. Patricia Abrams applied for and was denied a spousal death benefit by Aviva Insurance Company of Canada, formerly Pilot Insurance Company (“Aviva”), payable under the Schedule.1
Subsequently, Ms. Abrams applied for and was denied dependant death benefits on behalf of her children, Courtney Abrams and Joshua Abrams. The parties were unable to resolve their disputes through mediation, and Patricia Abrams applied for arbitration on her own behalf and on behalf of her children, at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The issues in this hearing are:
Is Patricia Abrams entitled to interest, for the overdue payment of a spousal death benefit, pursuant to section 46(2) of the Schedule?
Is Courtney Abrams entitled to interest, for the overdue payment of a dependant death benefit, pursuant to section 46(2) of the Schedule?
Is Joshua Abrams entitled to interest, for the overdue payment of a dependant death benefit, pursuant to section 46(2) of the Schedule?
Is Aviva liable to pay a special award pursuant to subsection 282(10) of the Insurance Act because it unreasonably withheld or delayed payments to Courtney Abrams?
Is Aviva liable to pay a special award pursuant to subsection 282(10) of the Insurance Act because it unreasonably withheld or delayed payments to Joshua Abrams?
Is Aviva liable to pay Patricia Abrams’, Courtney Abrams’ and Joshua Abrams’ their expenses in respect of the arbitration pursuant to subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?
Result:
Patricia Abrams is not entitled to interest, for the overdue payment of a spousal death benefit, pursuant to section 46(2) of the Schedule.
Courtney Abrams is entitled to interest, for the overdue payment of a dependant death benefit commencing 30 days following Aviva’s receipt of her application for the benefit, pursuant to section 46(2) of the Schedule.
Joshua Abrams is entitled to interest, for the overdue payment of a dependant death benefit commencing 30 days following Aviva’s receipt of his application for the benefit, pursuant to section 46(2) of the Schedule.
A hearing, in respect of the issue of Courtney Abrams’ and Joshua Abrams’ entitlement to a Special Award pursuant to subsection 282(10) of the Insurance Act, shall be convened before me in a manner and date to be determined.
Aviva shall pay Patricia Abrams’, Courtney Abrams’ and Joshua Abrams’ their expenses of $8,915.00.
PROCEDURAL HISTORY:
The arbitration hearing in respect of Patricia Abrams’ claim was scheduled to be heard on March 27 and 28, 2007. On March 16, 2007, the hearing was adjourned to permit time for a preliminary issue hearing. The arbitration hearing in respect of Patricia Abrams was subsequently rescheduled to proceed on August 15 and 16, 2007 when it would be heard at the same time and before the same hearing arbitrator as the matters relating to Courtney Abrams and Joshua Abrams. Prior to the hearing the issues in dispute were resolved except for those set out above.
EVIDENCE AND ANALYSIS:
Facts:
On October 15, 2003, Mr. Carl Gibson was fatally injured when the car he was driving was struck by a VIA train. At the time of his death, Mr. Gibson was living with Patricia Abrams and her two children from a previous relationship, Courtney Abrams and Joshua Abrams.
On March 29, 2004, Patricia Abrams provided Aviva with a written statement in which she stated that she had commenced living with Mr. Gibson in May 2001. As well, she notes that Mr. Gibson did not adopt her children.2
On April 13, 2004, Ms. Abrams applied for a spousal death benefit.
On May 31, 2004, Aviva denied payment of the spousal death benefit on the basis that Patricia Abrams had not co-habited with Mr. Gibson for three years and therefore was not a spouse as defined by the Insurance Act.
On June 7, 2004, Aviva received applications for death benefits on behalf of Mr. Gibson’s children from a previous relationship. Aviva initially denied these benefits on the basis that there was no evidence they were dependant on Mr. Gibson at the time of his death.
On February 4, 2005, applications for dependent death benefits were submitted to Aviva on behalf of Courtney Abrams and Joshua Abrams. Aviva denied these benefits on January 18, 2006.
On February 10, 2005, Patricia Abrams applied for Mediation at the Financial Services Commission. Filed with the application were six statements from family and friends. There are 3 statements dated August 1, 2004, from the father, sister and brother of the deceased which each state: “he (Carl) and Patricia Abrams have been together for the past 42 months at the least.” A friend stated in writing on August 7, 2004 that she and her husband first met Patricia Abrams when she and Mr. Gibson visited their home in February 2000. A few months later, she and her husband visited Patricia Abrams and Mr. Gibson at their home in Napanee. Another statement, provided by a co-worker who had known Patricia Abrams for seventeen years, dated April 5, 2004 stated that: “I know that she and Carl Gibson had lived together for about three years prior to his accident.” A final statement dated April 6, 2004, states that “I was aware of the 3 year relationship between Patricia Abrams and Carl Gibson.” It went on to indicate that Mr. Gibson provided for Patricia and her children during those three years.3
On May 30, 2005, a mediation was held by teleconference in respect of Patricia Abrams’ claim for a spousal death benefit. The issue was not resolved.
In September 2005, Aviva received copies of custody orders requiring Carl Gibson to provide financial support to his children of a previous relationship. Aviva subsequently paid dependant death benefits to those two children.
On January 16, 2006, Aviva advised Patricia Abrams that it did not accept that the statements she submitted were sufficient to establish that she was Mr. Gibson’s spouse, at the time of his death, within the meaning of the Insurance Act. Aviva required Ms. Abrams to provide evidence that she met the definition of “spouse” within 30 days failing which it would pay the spousal death benefit to Mr. Gibson’s children by a previous relationship in equal shares.
On April 25, 2006, Patricia Abrams applied for arbitration.
On August 24, 2006, a mediation was held in respect of Courtney Abrams’ and Joshua Abrams’ claims for dependant death benefits. The issues were not resolved.
On November 28, 2006, Applications for Arbitration were filed with the Commission on behalf of Courtney Abrams and Joshua Abrams.
On December 1, 2006, Aviva received three further statements submitted on behalf of Patricia Abrams’ claim that she had co-habited with Mr. Gibson for three years prior to the accident. One expanded on the letter dated August 7, 2004. It provided further details of the relationship between Patricia Abrams and Carl Gibson and stated: “Carl had an active part in Patricia children life [sic] and upbringing.” Another expanded on the letter dated April 6, 2004 providing further details of the couple’s relationship observed by the writer. It contains the following statement: “Soon after they moved in together, in the fall of 2000, my fiancé and I helped them move from Belleville Road in Napanee, to Raglan Street in Napanee.” As well there was an unsigned and undated statement which provided numerous details of Mr. Gibson’s relationship with Courtney Abrams and Joshua Abrams.4
On December 12, 2006, Aviva’s counsel advised Patricia Abrams that it did not accept these further statements as sufficient to establish that she was Mr. Gibson’s spouse within the meaning of the Insurance Act because the statements provided contradictory information regarding the date upon which she commenced living with Mr. Gibson. A request was made for an explanation of why Ms. Abrams erred in her initial statement.5
On March 12, 2007, Aviva obtained an Order of the Superior Court of Justice permitting it to pay the $25,000.00 spousal death benefit into court.
In August 2007, a Motion Record in respect of a proceeding in the Superior Court of Justice, was served on Aviva. It contained Patricia Abrams’ sworn affidavit in which she stated that she erred in her statement of March 2004 as a consequence of confusion caused by grief. She averred that she had commenced co-habiting with Carl Gibson in May 2000 and not 2001 as set out in her statement. As well, a transcript from the examination for discovery of Mr. Gibson’s mother and her statement dated April 30, 2007 were included in the materials.6
I accept the foregoing as the facts in respect of the Applicants’ claim for interest and expenses. As well, I accept the statement of the friend dated April 6th that Mr. Gibson had provided for Patricia Abrams and her children Courtney Abrams and Joshua Abrams.
Interest:
Section 46 of the Schedule provides:
(1) An amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under this Part.
(2) 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.
The part referred to is Part X — Procedures for Claiming Benefits.
Section 33 sets out the obligations of an insured to provide information to the insurer if requested. Subsection 33(1)1 requires that the insured to provide “any information reasonably required to assist the insurer in determining the person’s entitlement to a benefit.” Subsection 33(1.1) provides authority for the insurer to request that the insured submit to an examination under oath.
Section 41 requires that an insurer pay a death benefit or give notice of the reasons for its refusal to pay the benefit within 30 days of receipt of the application.
Patricia Abrams:
Patricia Abrams seeks interest on a spousal death benefit pursuant to subsection 46(2) of the Schedule from 30 days following Aviva’s receipt of her application until she received the funds on November 7, 2007, less interest accrued while the funds were held by the court. She submits that the provisions of section 46 are mandatory and are not determined by the reasonableness of an insurer’s denial of payment of the benefit.
Aviva submits that it did not have sufficient information upon which to determine Patricia Abrams’ entitlement to the benefit until it was served with her motion record in August 2007. Aviva relies on the narrow exception set in Bajic and Pafco Insurance Company Limited and Zurich Insurance Company7 in which the Director’s Delegate held that interest does not accrue where the actions of the insured person prevents the insurer from determining entitlement. Aviva further submits that the date upon which Ms. Abrams began co-habiting with Mr. Gibson was within Ms. Abrams’ knowledge. It was not until receipt of her August 2007 affidavit that Ms. Abrams informed Aviva that she had erred. The various statements provided to Aviva in February 2005 and December 2006 do not provide a reliable basis upon which to find that Ms. Abrams lived with Mr. Gibson for 3 years prior to the accident.
The provisions of section 33 of the Schedule balance the obligation of an insured to provide information to the insurer while providing the insurer with the tools to obtain information necessary to adjust the file. The Bajic exception should not be taken as authority for an insurer to avoid paying interest on unpaid benefits when it has information which on balance establishes entitlement. Nor is it authority for an insurer avoiding payment of interest where the insurer fails to pay benefits on the basis its requests for further information have been unanswered where the information sought is either superfluous or unavailable. In the circumstances of this matter, did Aviva have an obligation to exhaust the procedures available to it to clarify the factual dispute if it is to avoid paying interest? Are there consequences to Aviva’s decision not to request that Ms. Abrams attend for an examination under oath pursuant to the Schedule?
In March 2004, Patricia Abrams provided a statement to Aviva that she commenced co-habiting with Mr. Gibson in May 2001. As a consequence, Aviva denied Ms. Abrams’ claim for a spousal death benefit on May 31, 2004 on the basis that she had not co-habited with Mr. Gibson for three years as required by the definition of “spouse” in the Insurance Act. Neither party has submitted Aviva’s denial of benefits. Therefore, I infer that Patricia Abrams accepts that the denial provided sufficient information for her to know the reason Aviva denied her a spousal benefit.
The statements which Patricia Abrams submitted with her Application for Mediation in February 2005 were dated in March and April 2004. No explanation for this delay has been provided. There is no evidence that Patricia Abrams provided Aviva with an amendment to her March 2004 statement, explaining her error until her affidavit was served on Aviva in August 2007. The statements provided in February 2004 and December 2006 do not provide a reliable date or time when Patricia Abrams began to co-habit with Mr. Gibson. Friends and family cannot be expected to have exact knowledge of such an event.
Ms. Abrams erred. At some point between March 2004 and August 2007 she realized her mistake. It would have taken very little effort on her part to write to Aviva explain her error and amend her statement as she did in her affidavit. She failed to do this.
I accept that Patricia Abrams’ memory was compromised by grief when she made her statement in March 2004. However, Aviva was entitled to rely on Ms. Abrams’ statement that she began living with Mr. Gibson in May 2001 until she gave written notice that she had erred and provided a reasonable explanation for the error. The statements of her friends and Mr. Gibson’s family do not provide a reliable alternative to the date she initially provided.
Aviva’s counsel’s letter of December 12, 2006, sets out information which might assist in establishing that Ms. Abrams had co-habited with Mr. Gibson for three years prior to his death. As well, she made a clear request for an explanation of why Patricia Abrams erred in her initial statement. Ms. Abrams did not provide such an explanation until she served her motion record in August 2007.
I find that Aviva could not establish Patricia Abrams’ entitlement to the death benefit until she amended her initial statement. Pursuant to subsection 31(1)1 of the Schedule, Ms. Abrams had an obligation to provide Aviva with notice, in writing, that she had erred with a reasonable explanation. As this information, was solely within Patricia Abrams’ knowledge and could easily be communicated, it would be unreasonable to expect Aviva to request an examination under oath to obtain it.
I find Ms. Abrams’ failure to provide an amendment to her initial statement brings her within the narrow confines of Bajic. As a result, the payment of the spousal death benefit was not due until August 2007 when Ms. Abrams served her affidavit upon Aviva. By then, Aviva had paid the funds into court. Therefore, Aviva is not liable to pay Patricia Abrams interest pursuant to subsection 46(2) of the Schedule.
Courtney Abrams and Joshua Abrams:
Courtney and Joshua Abrams claim interest on the unpaid dependant death benefit from 30 days after Aviva received the applications submitted on their behalf.
On February 4, 2005, applications for dependant death benefits were submitted to Aviva on behalf of Courtney Abrams and Joshua Abrams. Aviva failed to either pay the benefits within 30 days or provide the reasons for its denial of their applications within that period. It was not until January 18, 2006, that Aviva denied the benefits.
“Dependant” unlike “spouse” is undefined in both the Insurance Act and the Schedule. I find that the information received by Aviva in February 2005 was sufficient to establish, on a balance of probabilities, that Courtney Abrams and Joshua Abrams were dependants of Mr. Gibson at the time of his death. I also find that the additional statements received by Aviva on December 1, 2006 were sufficient to establish on clear and convincing evidence that Courtney Abrams and Joshua Abrams were the dependants of Mr. Gibson at the time of his death.
On the basis of the foregoing, Aviva shall pay Courtney Abrams and Joshua Abrams interest pursuant to subsection 46(2) of the Schedule commencing 30 days following Aviva’s receipt of their applications.
EXPENSES:
Entitlement to Expenses of the Arbitration Proceeding:
The Expense Regulation sets out the criteria used in determining entitlement to expenses. The criteria are: degree of success, whether there were written offers to settle, were the issues novel, conduct of the parties and was any part of the proceeding improper or unnecessary.
All of the Applicants were successful in their claims.
I find that Patricia Abrams, although unsuccessful in her claim for interest, would not have received the spousal death benefit to which she was entitled without the arbitration process. Aviva complicated the proceedings by paying those funds into court on the eve of her arbitration hearing and thereby forced Patricia Abrams to engage in unnecessary proceedings. I am further satisfied that Patricia Abrams acted properly in the conduct of the arbitration proceeding and is therefore entitled to her expenses.
Aviva failed to assume liability for the dependant death benefits owed to both Courtney Abrams and Joshua Abrams until the eve of their hearing. The claims of Courtney Abrams and Joshua Abrams although settled in or about August 2007 had not been paid at the conclusion of the written submissions in respect of this proceeding. I find that these proceedings were necessary for them to obtain the dependant death benefits to which they are entitled. Therefore, both Courtney Abrams and Joshua Abrams are entitled to their expenses.
Quantum of Expenses:
Patricia Abrams, Courtney Abrams and Joshua Abrams have submitted one bill of costs representing their joint expenses in the amount of $11,111.81.
The dockets filed as the Bill of Costs reflect expenses from March 6, 2006 to February 28, 2008. The expenses from March 6 to August 24, 2006 follow the mediation in respect of Patricia Abrams but are incurred prior to the mediation in respect of Courtney Abrams and Joshua Abrams. Mediation expenses are not recoverable pursuant to the Insurance Act. Therefore, I disallow any expenses incurred in respect of the mediation held on August 24, 2006.
The dockets indicate that much of the work was done by the firm’s law clerks at an hourly rate of $50.00. I find both their hourly rate and the amount of time expended, in respect of the arbitration proceeding, reasonable and award those expenses in full.
Counsel fees are claimed at the rate of $110.00 per hour for both Mr. Clifford and Ms. Chun who are described as being called less than 10 years. Mr. Clifford is a partner in the firm. The dockets suggest that Ms. Chun acted as his junior. I award Mr. Clifford his hourly rate, as claimed, of $110.00. I award Ms. Chun an hourly rate of $92.23.8
I find the amount of time expended by counsel in the preparation and conduct of the arbitration reasonable. Therefore, the time claimed by counsel in respect of the arbitration is awarded in full.
The dockets establish that on balance the mediation in respect of Courtney Abrams and Joshua Abrams was dealt with by the law clerks with minimal supervision by Mr. Clifford. I deduct 9 hours of the law clerks’ time at their hourly rate of $50.00 for a total of $350.00. As well, I deduct $110.00, or one hour of Mr. Clifford’s time, in respect of his supervision of his clerks. GST on the total of $460.00 is $23.00.
The dockets reflect that Ms. Chun claimed 10 hours at the rate of $110.00 for a total of $1100.00 plus GST of $55.00, for a total of $1155.00. At the allowed rate of $92.23 her fees amount to $922.30 plus GST of $46.12 for a total of $968.42. The difference between her charged and allowed rates inclusive of GST is $186.58.
On the basis of the foregoing, the total to be deducted from the Bill of Costs is $669.58. Therefore, I award Patricia Abrams, Courtney Abrams and Joshua Abrams their expenses in the amount of $8,915.87.
SPECIAL AWARD:
I have found that the information provided to Aviva in February 2006 was sufficient to establish on a balance of probabilities that Courtney Abrams and Joshua Abrams were dependants of the deceased, Carl Gibson. Further, I have found that when the additional information was provided in December 2006, it was sufficient to establish that relationship on clear and convincing evidence. The materials filed on their behalf in this hearing indicate that at the time of filing, Aviva had not yet paid either Courtney Abrams or Joshua Abrams a dependant death benefit, notwithstanding the issue had been settled in or about August 2007.
Subsection 282(10) of the Insurance Act provides:
If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.
The language of the provisions of subsection 282(10) is mandatory. My findings in respect of the dependant relationship between Courtney Abrams, Joshua Abrams and Carl Gibson raise a prima facie case that Aviva may have unreasonably delayed payment of the dependant death benefits.
Neither Courtney Abrams nor Joshua Abrams have sought a Special Award. However, the issue of a special award is always before a hearing arbitrator and is within his or her discretion to award. This discretion is unfettered save for the rules of natural justice and fairness.9 Therefore, a hearing in respect to the issue of a Special Award shall be convened before me in a manner and date to be determined.
June 23, 2008
Denise Ashby Arbitrator
Date
Financial Services Commission des Commission services financiers of Ontario de l’Ontario
Neutral Citation: 2008 ONFSCDRS 99
FSCO A06-000806, FSCO A06-002535 and FSCO A06-002534
BETWEEN: PATRICIA ABRAMS Applicant
and
AVIVA INSURANCE COMPANY OF CANADA (FORMERLY PILOT INSURANCE COMPANY) Insurer
AND BETWEEN:
PATRICIA ABRAMS on behalf of COURTNEY ABRAMS Applicant
and
AVIVA INSURANCE COMPANY OF CANADA (FORMERLY PILOT INSURANCE COMPANY) Insurer
AND BETWEEN:
PATRICIA ABRAMS on behalf of JOSHUA ABRAMS Applicant
and
AVIVA INSURANCE COMPANY OF CANADA (FORMERLY PILOT 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:
Aviva shall pay Courtney Abrams interest, for the overdue payment of a dependant death benefit commencing 30 days following Aviva’s receipt of her application for the benefit.
Aviva shall pay Joshua Abrams interest, for the overdue payment of a dependant death benefit commencing 30 days following Aviva’s receipt of his application for the benefit.
Aviva shall pay Patricia Abrams’, Courtney Abrams’ and Joshua Abrams’ their expenses of $8,915.00.
June 23, 2008
Denise Ashby Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- Arbitration Brief of the Respondent, Tab “A”
- Arbitration Brief of the Respondent, Tab “B”
- Arbitration Brief of the Respondent, Tab “C”
- Arbitration Brief of the Respondent, Tab “D”
- Arbitration Brief of the Respondent, Tab “F”
- (FSCO P00-00050, June 5, 2001) Appeal
- Legal Aid Services Act, 1998, Ontario Regulation 107/99
- Royal Insurance Company of Canada and Clark, (OIC P97-00008, September 26, 1997), Zurich North America Canada and Stargratt, (P01-00045, March 31, 2003) page 21