Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2011 ONFSCDRS 70
Appeal P10-00016
OFFICE OF THE DIRECTOR OF ARBITRATIONS
J.S.
Appellant
and
GUARANTEE COMPANY OF NORTH AMERICA
Respondent
BEFORE:
David Evans
REPRESENTATIVES:
Daniel Fife for Mr. S.
Rose Bilash for Guarantee Company of North America
HEARING DATE:
August 16, 2011 in Kitchener
APPEAL ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
The appeal of the Arbitrator’s decision dated August 25, 2010 is hereby dismissed.
An appeal legal expense hearing shall be requested within thirty days of the date of this decision, accompanied by a Bill of Costs and written submissions, as set out below.
August 25, 2011
David Evans Director’s Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
J.S. appeals the Arbitrator’s order that he is not entitled to receive $204,130 for home renovations as a rehabilitation benefit. J.S. has already received funds towards the purchase of a new home, and is now claiming the further expenses of its renovation.
II. BACKGROUND
J.S. was 16 years old when he suffered catastrophic injuries – quadriplegia – in a motor vehicle accident on July 17, 2007. He was then living with his parents and brother on the main and upper floors of a rented house on Karn Street in Kitchener. Karn needed renovations to meet J.S.’s needs. Under s. 15(5)(i) of the SABS,1 a rehabilitation benefit may be payable for accident-related, reasonable and necessary “home modifications and home devices … to accommodate the needs of the insured person.” J.S.’s insurer, the Guarantee Company of North America, assessed the Karn modifications, but the landlord refused to allow them.
The alternative to home renovations under s. 15(5)(i) is “the purchase of a new home if it is more reasonable to purchase a new home to accommodate the needs of the insured person than to renovate the insured person’s existing home,” but s. 15(8) sets the benefit in that case as “the value of the renovations to the insured person’s existing home that would have been required to accommodate the needs of the insured person.” (The purpose of the above emphasis will be apparent below.) The Arbitrator stated that s. 15(8) “sets a maximum value on the rehabilitation benefit, where an insurer is required to purchase a new home.”
Guarantee advised J.S. in December 2007 that it was prepared to pay the estimated cost of renovating Karn towards a new home that had to meet both its pre-approval and J.S’s needs. The family found a house on Stirling Avenue in Kitchener. Guarantee had Stirling assessed for the costs of renovation and also determined that all suitable houses in the area required modifications. Stirling was, as the Arbitrator noted, “not only J.S.’s desired home, it was also the one that could be most reasonably purchased and modified.”
J.S. submitted a treatment plan for both Stirling’s purchase and renovation. However, although Guarantee determined the value of Stirling’s renovation, it would only pay the value of the Karn renovations, relying on s. 15(8).
The family nonetheless bought Stirling and moved into it in April 2008. Guarantee paid approximately $331,000 towards the purchase of Stirling; J.S. claimed about $200,000 more for its renovation.
J.S. argued that:
- Subsection 15(8) does not apply where renovations are not possible;
- By assessing the costs of renovating Stirling, Guarantee assumed the duty to pay them;
- Stirling was now J.S.’s “existing home,” entitling him to the costs of its renovation.
The Arbitrator rejected J.S.’s arguments. He followed the Divisional Court decision in Wynn v. Belair Direct, [2003] O.J. No. 3531, which held that the insurer is only required to pay what it would have cost to renovate the existing home, regardless of whether or not renovation was actually possible. He found there was no principle of equity requiring Guarantee to pay the costs of the Stirling renovations when it had only done its duty in assessing them. Most significantly for the purposes of this appeal, he found that the “existing home” was Karn.
Accordingly, he found that J.S. was not entitled to the costs of renovating Stirling but only to those entailed in notionally renovating the existing home, Karn.
III. ANALYSIS
The appeal focused on the undefined term “existing home.” The Arbitrator accepted the conclusions of Arbitrator Blackman in Cole and Allstate Insurance Company of Canada, (OIC A96-000394, January 15, 1997) that existing home could mean an insured’s home – or homes – at any point in time, its meaning depending on the particular facts of the case:
The absence of a definition of “existing home” leaves open the possibility that J.S. is entitled to further payment for modifications to the Stirling Residence, should his needs increase or change. He might also be entitled to funds for the purchase of another home, if it is then more reasonable to do so. [Emphasis added.]
However, as Arbitrator Blackman pointed out, which home is the “existing home” depends on the particular facts of the case. There is no precedent for finding that the Stirling Residence is the “existing home” on the facts of this case. That approach would negate the intent of sections 15(5)(i) and 15(8) and instead require the insurer to purchase a new home and pay for modifications to the new home, with no maximum value. On the facts of this case, I find that the Karn Residence is J.S.’s “existing home.”
With respect to the Arbitrator’s statement that there is “no precedent” for finding the Stirling residence as the “existing home,” J.S. submits “that is a factual issue not a legal one. The fact is J.S. is living at the Stirling Residence. Furthermore, it is a fact that his needs require that residence to be modified. The arbitrator has held … that J.S. may be entitled to modifications at the Stirling Residence.” Accordingly, he submits, the Arbitrator erred in refusing to order payment of those modifications.
However, I take the Arbitrator’s reference to “no precedent” as meaning that until now there had been no arbitration or court decision dealing with an issue exactly like this one.
J.S. submits that the limit under s. 15(8) refers to “the amount that it would have cost to modify the ‘existing home’ at that time.” This was the analysis done initially at Karn. J.S. submits that “s. 15(8) now requires the same determination: is it more reasonable to modify the Stirling Residence or purchase a new home?” In other words, as J.S. put it in oral submissions, you take a snapshot now of J.S.’s needs at his current residence, regardless of what happened before.
I disagree. The Arbitrator was entitled to take a larger view and not just consider a snapshot. In doing so, he was considering the particular facts of this case. Before the move to Stirling, Karn was indubitably the existing home, so the maximum benefit available for purchase of a new home was the value of the Karn renovation. That is, if J.S. had found a $500,000 home requiring no further modifications, he would have been limited to the $331,000 benefit. I agree with the Arbitrator that to now require Guarantee to pay for the Stirling modifications would negate the effect of s. 15(8). Effectively, to return to the example I just gave, the insurer would be paying for the entire cost of a more expensive house. Rather, the Arbitrator looked at one scenario of two competing homes. In that scenario, there can only be one existing and one new home. The insurer was required to apply the value of the renovations for the existing Karn home to the purchase of the new Stirling home. That is what occurred, which the Arbitrator recognized.
J.S. submits that he was entitled to the benefit regardless of whether he moved and that, having received it, he could have lived at Karn for years before moving and then claimed the cost of modifications to the new existing home, regardless of the source of the purchase funds. In that regard, I note that s. 15(5) requires the expenses claimed to have to been “incurred.” It is true that, as discussed on judicial review in Belair Insurance Company v. McMichael, 2007 CanLII 17630 (ON SCDC), for instance, an insured can “incur” an expense even where, due to the insurer’s funding refusal, the rehabilitation service was never provided.2 However, I doubt Belair goes so far as to say insureds could receive funds for a rehabilitation benefit, not use them towards that end, and then claim them all over again.
J.S. also submits that, if Karn could have been modified, Guarantee would have paid for its modification. If J.S. later moved to a new home, his new existing home might require home modifications that Guarantee would have to pay for. However, s. 15(5) provides that a rehabilitation benefit is only payable if it meets one of the purposes referred to in s. 15(2), namely “reasonable and necessary measures undertaken by an insured person to reduce or eliminate the effects of any disability resulting from the impairment or to facilitate the insured person’s reintegration into his or her family, the rest of society and the labour market.” It is possible that modifications as a result of a further move might not meet that test.
More importantly, that is not what happened here.
The benefits of the SABS were never meant to be all-inclusive. As the Arbitrator noted, in citing the Wynn case referred to above,
The cost of renovations to the existing home sets the amount of the housing benefit. “There is a difference ... between what the needs are and what is paid under the legislation” as the Court [in Wynn] states. The insurer is only required to pay “what it will cost to renovate the existing home.”
The appeal is therefore dismissed.
IV. EXPENSES
If the parties are unable to agree about expenses of this appeal, an appeal legal expense hearing shall be requested within 30 days of the date of this decision in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition – Updated August 2011).
The request shall be accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs, as well as submissions regarding entitlement to and/or the quantum of such expenses.
August 25, 2011
David Evans Director’s Delegate
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- In the New SABS, the Statutory Accident Benefits Schedule — Effective September 1, 2010, O. Reg. 34/10, “incur” is now defined in s. 3(8).