Financial Services Commission of Ontario
Neutral Citation: 2012 ONFSCDRS 14
Appeal P10-00016
OFFICE OF THE DIRECTOR OF ARBITRATIONS
J.S. Appellant
and
GUARANTEE COMPANY OF NORTH AMERICA Respondent
BEFORE: David Evans
REPRESENTATIVES: Sharon E. McKeown for Mr. S. Rose Bilash for Guarantee Company of North America
HEARING DATE: November 17, 2011 by teleconference
APPEAL EXPENSES ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- The parties shall bear their own legal expenses of this appeal.
February 16, 2012
David Evans Director’s Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
In an appeal decision dated August 25, 2011, I confirmed Arbitrator Rogers’ order under the SABS–19961 denying J.S. the cost of a home’s renovations after he had already received funds towards its purchase.
II. BACKGROUND
J.S. suffered quadriplegia in a motor vehicle accident on July 17, 2007. At the time, he was living with his family in a rented house on Karn Street in Kitchener. The landlord refused to allow renovations to the Karn residence to meet the needs of J.S.
One of the SABS rehabilitation benefits available under s. 15(5)(i) is for home modifications or, if it is more reasonable to accommodate the needs of the insured person than renovating the “existing home,” the purchase of a new home. In that latter case, s. 15(8) says the amount of the benefit “shall not exceed 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 family found and bought a suitable house on Stirling Avenue in Kitchener. Based on the costs of renovating the Karn residence, Guarantee paid approximately $331,000 towards the purchase of the Stirling home. J.S. then claimed $200,000 more under s. 15(5)(i) for home modifications to Stirling, claiming that it was now his “existing home.”
I upheld Arbitrator Rogers’ decision that the only “existing home” was the Karn residence, so J.S. was not entitled to the further renovation costs.
III. ANALYSIS
Pursuant to ss. 282(11) and 283(7) of the Insurance Act, I may award to either party all or part of such expenses incurred in respect of an appeal as are prescribed in the expense regulation, s. 12(2) of Ontario Regulation 664, R.R.O. 1990, as amended. The regulation provides that I shall consider only the criteria set out in it for awarding expenses. The parties agree that the relevant criteria of the expense regulation are para. 1, “Each party’s degree of success in the outcome of the proceeding,” and para. 3, “Whether novel issues are raised in the proceeding.”
The parties agree on Guarantee’s success, but disagree on whether novel issues were raised.
J.S. submits that the issues were novel, noting my quotation of the Arbitrator’s comment that there was “no precedent for finding that the Stirling Residence is the ‘existing home’ on the facts of this case.” I took “no precedent” to mean that until then there had been no arbitration or court decision dealing with an issue exactly like this one. J.S. accordingly submits that the parties should bear their own expenses.
Guarantee seeks its legal expenses on the basis that the issues were not novel. It submits that the law on this matter is well settled, relying on Cole and Allstate Insurance Company of Canada, (OIC A96-000394, January 15, 1997), Wynn v. Belair Direct, [2003] O.J. No. 3531 (Div. Ct.), “Wynn 2003,” and a prior case decided by Arbitrator Rogers, Vanden Berg-Rosentha and Motor Vehicle Accident Claims Fund, (FSCO A07-000417, May 14, 2007). Based on those cases, it submits that the Arbitrator was merely determining a factual situation, so there was no issue of law.
At issue in both Cole and Vanden Berg-Rosentha was the meaning of “existing home,” whereas the issue in Wynn 2003 was whether s. 15(8) applied where modifications could not be made to an existing home.
In Vanden Berg-Rosentha, the insured could not live in the home that the family owned and was staying in temporary rental housing. The Arbitrator was satisfied that as the insured had not requested modifications of any other home, had a reasonable connection to the proposed home, and had expressed a settled intention to live there, it was the “existing home.” However, the Arbitrator found that the benefit was limited to the costs of reducing or eliminating the effects of any accident-related disability and not to making the home habitable.
In Cole, the insured argued that her mother’s husband was the owner of the townhouse in which she lived at the time of the accident, so she did not have an “existing home.” She therefore submitted that s. 41(1) of the SABS–19942 – the equivalent of s. 15(8) – did not restrict the insurer’s general rehabilitative obligation. Arbitrator Blackman found that the meaning of “home” is not restricted to a residence that is owned and that the townhouse was obviously the insured’s existing home. Accordingly, the s. 15(8) restriction applied.
In Wynn 2003, the insured was living in rental accommodations and obtained a report stating that the best option for her would be a custom-built new house. Without obtaining a report of what it would cost to renovate her existing home, the insured moved for an injunction requiring the insurer to pay for a new home. In Wynn v. Belair Direct, 2002 CanLII 79683 (ON SC), [2002] O.J. No. 4180, “Wynn 2002,” the motions court judge held that s. 15(8) did not apply because no renovations could be made to the insured’s existing home, so the relief sought was granted. The insurer sought leave to appeal Wynn 2002 on the ground that there was good reason to doubt the correctness of the order, citing Cole. Lalonde J. in Wynn 2003 agreed that there was “an incorrect interpretation made by the motions court judge on s. 15(8) of SABS that sets limits for the housing renovations” and that what was “missing from the equation is what it [would] cost to renovate the existing home.” Accordingly, leave to appeal was granted.
As can be seen from a review of these cases, none of them dealt with the issue in this case. Certainly, there are some general principles one can draw from these cases. Vanden Berg-Rosentha stands for the proposition that remediation is limited to that which relates to the insured’s disabilities. In a sense, s. 15(8) is an expression of that principle. And in both Cole and Wynn, it was found that s. 15(8) has to be given effect, whether or not the “existing home” is owned by the insured or can be renovated. I also agreed with Arbitrator Rogers that to have required Guarantee to pay for the Stirling modifications would have negated the effect of s. 15(8).
Nonetheless, I find the novelty in this case was the determination of when an insured can have multiple “existing homes.” The Arbitrator accepted the proposition in Cole 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. However, that proposition in Cole was obiter in the facts of that case, so this appears to be the first case to apply that principle to a given factual situation. As such, it provides guidance to insurers and insureds regarding the meaning of “existing home” and whether or not one can have multiple “existing homes.”
Therefore, I agree with J.S.’s submission that the appeal, despite being unsuccessful, was warranted.
Since the relative merits of success and novelty balance each other, the parties shall bear their own legal expenses of this appeal.
February 16, 2012
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.
- The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended.