Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2013 ONFSCDRS 28

Appeal P11-00026

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ANDREW HAYWARD Appellant

and

ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA Respondent

and

Appeal P11-00028

ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA Appellant

and

ANDREW HAYWARD Respondent

BEFORE: David Evans

REPRESENTATIVES: Kyle Smith for Mr. Hayward Robert S. Franklin for Royal & SunAlliance Insurance Company of Canada

HEARING DATE: October 18, 2012

APPEAL ORDER

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

In Appeal P11-00026, the appeal of the Arbitrator’s order dated October 6, 2011 is dismissed and the decision is affirmed.
In Appeal P11-00028, in light of the finding in paragraph 1 above, the appeal of the Arbitrator’s order in a letter decision dated February 10, 2011 is moot.
If the parties are unable to agree on the legal expenses of this appeal, an expense hearing shall be requested pursuant to the Dispute Resolution Practice Code (Fourth Edition − Updated August 2011), but as set out below and within sixty days of the date of this decision.

March 6, 2013

David Evans Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Mr. Andrew Hayward and Royal & SunAlliance Insurance Company of Canada (Royal) appeal arbitration decisions about, respectively, workplace benefits and licence suspensions.

Mr. Hayward appeals the decision by Arbitrator Richards in Hayward and Royal & SunAlliance Insurance Company of Canada, (FSCO A10-000158, October 6, 2011), the “WSIB decision.” He held that Mr. Hayward’s entitlement to workplace benefits precludes him from claiming any accident benefits.

Royal appeals Arbitrator Muzzi’s preliminary issue letter decision of February 10, 2011, the “licence decision.” She held that, notwithstanding the suspension of Mr. Hayward’s driver’s licence, he can claim income replacement benefits (IRBs) under the SABS–1996.¹

II. BACKGROUND

On January 15, 2009, Mr. Hayward was injured in a motor vehicle accident. When he notified Royal, Royal advised him that he might be entitled to workplace benefits because he stated it occurred on his way to the bank before a sales call. Royal ultimately rejected his IRB claim because his driver’s licence was suspended: s. 30(1)(b) of the SABS provides that the insurer is not required to pay IRBs if the insured person “was driving the automobile without a valid driver’s licence.”

After Royal rejected his application due to the licence suspension, Mr. Hayward applied for workers’ compensation benefits pursuant to the Workplace Safety Insurance Act, 1997, S.O. 1997, c. 16, Sched. A, (“WSIA”), stating that he was on his way to meet a client when the accident took place. The Workplace Safety and Insurance Board (WSIB) accepted his claim in April 2009, but only for health care benefits, as it appeared he had continued to work. He did not advise Royal of his WSIB claim; rather, the information about his WSIB claim was in the employment file delivered to Royal in the fall of 2010. Subsection 59(1) of the SABS states that automobile insurers are not required to pay benefits where an insured person is entitled to workers’ compensation benefits. However, s. 59(2) exempts those who elect to bring an action so long as the election was not made primarily for the purpose of claiming accident benefits. In May 2010, Mr. Hayward brought a civil action; in April 2011, he withdrew his WSIB claim.

The first matter that was heard related to the licence suspension, before Arbitrator Muzzi. At that point, although the employment file had been delivered to Royal, Royal was not aware of the WSIB claim. Arbitrator Muzzi in her letter decision concluded that Mr. Hayward could claim IRBs because he “reasonably believed that his licence was valid at the time of the accident and he took all reasonable steps in the circumstances to avoid the suspension of his licence.”

The matter then proceeded to arbitration, but by the time the arbitration hearing was to begin, Royal had become aware of the WSIB claim and, pursuant to s. 59 of the SABS, moved before Arbitrator Richards to preclude Mr. Hayward from receiving accident benefits. While Mr. Hayward claimed Royal was estopped by Arbitrator Muzzi’s decision from even raising s. 59, Arbitrator Richards disagreed. He also found the court action was instituted primarily to claim accident benefits, and therefore Mr. Hayward could not re-elect them. Accordingly, Arbitrator Richards concluded that Mr. Hayward could not claim any accident benefits.

Below is a time line of events:

Interactions with Royal

Interactions with WSIB

15.10.2007 – Mr. Hayward receives a speeding ticket for driving 10 kilometres over the speed limit.

12.12.2007 – Conviction is recorded.

21.12.2007 – The $40 ticket arrives in the mail. Mr. Hayward claims he mailed in a cheque to pay for it.

11.02.2008 – Mr. Hayward’s licence is suspended; he claims he received no notice of the suspension.

August 2008 – Royal assumes coverage of Mr. Hayward’s insurance.

15.01.2009 – Date of the MVA.

16.01.2009 – Mr. Hayward calls Royal to report the accident, stating that it occurred when he was on his way to the bank before a sales call. Royal replies that if he was in the course of his employment, then accident benefits are not payable to individuals entitled to workplace benefits, unless such individuals elect to sue an at-fault person. They ask him to contact them within 30 days, failing which they will assume he was pursuing workplace benefits.

28.01.2009 – Mr. Hayward’s licence is reinstated.

02.02.2009 –WSIB Worker’s Report of Injury/‌Disease (a claim form) is signed, indicating that Mr. Hayward was at work because he was on his way to meet a client when the accident took place. Forwarded to the WSIB on 03.03.2009

13.02.2009 – Mr. Hayward signs his Application for Accident Benefits, saying the MVA did not occur while he was at work.

18.02.2009 – Application faxed to Royal.

19.02.2009 – Date of Mr. Hayward’s written statement to Royal that the accident did not occur in the course of his employment and that he had never filed a workplace benefits claim.

20.02.2009 – After receiving the accident report showing Mr. Hayward’s suspended licence, Royal says in its Explanation of Benefits that he was not entitled to IRBs under s. 30(1)(b) due to the suspension

03.03.2009 – Mr. Hayward files a workplace benefits claim by submitting the Worker’s Report to the WSIB.

10.03.2009 – The WSIB requests a Form 7, Employer’s Report of Injury/Disease

25.03.2009 – Mr. Hayward signs a WSIB election form stating: he had not started a legal action regarding the accident; he understood choosing workers’ compensation benefits transferred his actionable rights to the WSIB; and, he chose WSIA benefits for his accident-related injuries.

08.04.2009 – The WSIB says it would allow Mr. Hayward’s health claims only, as he apparently missed no work due to his injuries.

27.05.2009 – The WSIB confirms its position denying loss of earnings benefits.

03.06.2009 – Mr. Hayward advises the WSIB that he wishes to appeal its denial.

18.05.2010 – Mr. Hayward starts a civil action against the allegedly at-fault driver.

30.11.2010 – Royal receives copies of Mr. Hayward’s employment file, which contains the WSIB info.

10.02.2011 – Arbitrator Muzzi issues her decision that Mr. Hayward is not precluded from claiming IRBs despite the licence suspension.

14.04.2011 – Mr. Hayward withdraws his WSIB appeal and any claim for workplace benefits.

I also had to decide two preliminary issues regarding both appeals. One dealt with whether or not the appeal of the licence decision was out of time, and the other with whether to allow fresh evidence on the appeal of the WSIB decision.

Regarding the licence decision, Royal did not immediately appeal, only filing its appeal after Mr. Hayward appealed the WSIB decision. Mr. Hayward submitted that the appeal of the licence decision should be rejected. In that regard, Rule 52.1 of the Dispute Resolution Practice Code, fourth edition, updated August 2011, states that an appellant “must file the Notice of Appeal within 30 days of the date of the arbitration order.” Rule 51.2(a) of the Code in turn states that an appeal may be rejected if it is out of time. However, Rule 52.2 provides that a delegate may extend the time for requesting an appeal on such terms as are considered appropriate, even after the 30-day time limit, if the delegate is “satisfied there are reasonable grounds for granting the extension.” Furthermore, Rule 50.2 provides that “A party may not appeal a preliminary or interim order of an arbitrator until all of the issues in dispute in the arbitration have been finally decided, unless the Director [or his delegate] orders otherwise.”

I issued a preliminary issue ruling in a letter dated December 15, 2011. I acknowledged the licence appeal on the following basis:

I agree with Royal’s submission that it could have been seen as premature if it had appealed Arbitrator Muzzi’s decision earlier. Royal apparently acted in accordance with the Rules in only issuing the appeal of her decision now.

Mr. Hayward’s submission that Arbitrator Muzzi’s decision did finally decide “all the issues in dispute” has some merit, and in the court system then perhaps his argument would prevail. R.S. v. R.H., 2000 CanLII 17038 (ON CA), discussed the difference between motions that are final and those that are interlocutory. The Court looked at Rule 21 of the Rules of Civil Procedure, Determination of an Issue Before Trial, and in particular the difference between Rules 21.01(1)(a) [pre-trial determination of a question of law] and 21.01(1)(b) [striking a pleading]. It held that a dismissal of a motion to strike a pleading under R. 21.01(1)(b) was interlocutory. It noted that in Ball v. Donais (1993), 1993 CanLII 8613 (ON CA), 13 O.R. (3d) 322 (CA), by way of contrast, the Court held that a determination before trial under R. 21.01(1)(a) of a question of law raised by the pleadings relating to the application of a limitation period provision was final. As was stated in Ball, “While that order [finding the limitation defence inapplicable] did not finally dispose of the rights of the parties to the litigation, it did, subject to appeal therefrom, finally dispose of the issue raised by that defence, and thereby deprived the defendant of a substantive right which could be determinative of the entire action.”

Similarly, Arbitrator Muzzi’s decision disposed of the issue raised by the defence that there was no valid licence. This was in effect a pre-trial determination of a question of law.

However, our Rules are different, as DRPC Rule 67.1 simply states that “An adjudicator may make preliminary or interim orders within a proceeding, pending a final order.” I am not aware of an equivalent to Rule 21.01(1)(a) in our system. By definition, motions are preliminary or interim. Furthermore, Rule 50.2 provides that “A party may not appeal a preliminary or interim order of an arbitrator until all of the issues in dispute in the arbitration have been finally decided, unless the Director orders otherwise.” Since the arbitration was allowed to continue, not all issues in dispute have been finally decided.

Finally, I am not persuaded that an appeal brought shortly after Arbitrator Muzzi issued her decision was guaranteed to have been accepted at that time.

However, if necessary, I am willing to extend the time for the appeal. This is consistent with the finding in Levenson and General Accident Assurance Company of Canada, (OIC P-000260, September 29, 1992). In that case, too, there had been in effect a determination of a question of law, namely whether or not the statutory regime even applied, which would have been equally determinative. Nonetheless, it was held that the insurer was allowed to bring its appeal outside the 30 days in order to refrain from interfering in the arbitral process.

Thus, to exclude Royal’s appeal at this time would go against case law extending back 20 years. Absent some clear declaration from the Commission that in future matters that could be seen as determinative of an issue in the sense of Rule 21.01(1)(a) should be appealed within the 30 days and would be guaranteed to be acknowledged, I am not prepared to exclude Royal’s appeal.

Turning to the WSIB decision, Mr. Hayward wished to file additional evidence and provide viva voce evidence. I rejected his request in the following terms in a letter dated December 19, 2011:

Although in my letter of November 9, 2011, I referred to a number of recent decisions on this issue, Mr. Hayward instead referred to the older case of Bruno and Liberty Mutual Insurance Company, (OIC P-002249, August 31, 1993). In that case, the Director referred to her “wide latitude and discretion to admit evidence that would be otherwise inadmissible in a court of law on appeal.” In doing so, she relied in part on s. 283(4) of the Insurance Act. As I discussed in Brookes and Aviva Canada Inc., (FSCO P09-00004, December 2, 2009), that subsection used to provide that an appeal could include a rehearing of the matter. The current s. 283(4) makes no such reference to a rehearing, and the Divisional Court in Kanareitsev v. TTC Insurance Company Limited, 2008 CanLII 26262, affirmed that a Director’s Delegate must not try the case de novo or simply substitute his or her views for those of the trial judge.

Accordingly, the fresh evidence criteria must be viewed in that light. Perhaps I could have been clearer in Brookes on that point.

In any event, the first criterion for admitting fresh evidence, as noted in Ms. Z and Dominion of Canada General Insurance Company, (FSCO P00-00023, September 11, 2001), is whether, by due diligence, the evidence could have been adduced at the hearing.

As is conceded in Mr. Hayward’s supplementary submissions, Mr. Hayward could have testified about his motives in bringing the action and the state of the action. As to why he did not testify, the importance of the motion should have been apparent, and it was not up to the Arbitrator to advise that oral testimony was necessary. In that regard, the Arbitrator did not put some sort of onerous onus on Mr. Hayward. It is s. 59(2) of the SABS that put the onus on him to prove that his “election [was] not made primarily for the purpose of claiming benefits.” Nor is there any guarantee that uncontradicted evidence will be inevitably accepted by an Arbitrator.

I also disagree with Mr. Hayward’s submission that the Arbitrator ignored evidence about the state of the action in his decision. That information was apparently given only in submissions, and submissions are not evidence.

The same considerations apply with respect to the affidavit evidence, as most of the proposed evidence could have been presented at the hearing.

I am also not persuaded that the proposed evidence would be expected to have affected the result, considering that among the factors the Arbitrator took into account was the timing of the initiation of the action and the withdrawal of the workplace benefits claim in relation to the hearing itself.

III. ANALYSIS

Since the WSIB decision is the more inclusive decision, in that it entirely prevents Mr. Hayward from receiving any accident benefits, I will deal with it first.

A. WSIB Decision Appeal

Estoppel and Detriment

Mr. Hayward submitted to Arbitrator Richards at the WSIB decision arbitration hearing that Royal was estopped from asserting s. 59 as a defence to his claims under the SABS because it misled him when it initially denied benefits. He submitted that, since Arbitrator Muzzi in the licence decision had ruled that Mr. Hayward could pursue accident benefits despite the suspended licence, then Royal misinformed him, and he relied on the misinformation and applied for workplace benefits to his detriment.

Arbitrator Richards, citing Veldhuizen and Coseco Insurance Company, (FSCO A-015549, October 12, 1995), agreed that an insurer could be estopped from relying on provisions such as a limitation period if applicants relied to their detriment on the insurer’s conduct. However, he found that Royal was entitled to assert the licence suspension defense because it was not a misrepresentation, since “Royal merely advanced, and properly advised, Mr. Hayward of its position.”

Mr. Hayward submits that Arbitrator Richards’ decision conflicts with that of Arbitrator Muzzi since, in dismissing the insurer’s suspended licence defence, she effectively found that the insurer was not entitled to assert this defence. Therefore, the insurer has to be found accountable for taking a position that was ultimately determined to be untenable. Furthermore, the insurer did not mention anything in its notice in relation to mitigation (which ultimately exempted Mr. Hayward from the strict application of the suspended licence rule), and Mr. Hayward had to take this into account in relation to seeking alternative sources of benefits, including WSIB. He submits that upholding the decision would allow the insurer to profit from taking an untenable position, because its decision to do so forced him to seek alternate benefits.

However, I agree with Royal’s submission that its lack of success on the suspended licence defence at the hearing does not mean it made a misrepresentation or misinformed Mr. Hayward.

Indeed, in reading Arbitrator Muzzi’s decision, I see nothing to suggest she found anything improper in the insurer raising the issue. Mr. Hayward’s licence was suspended, so it was up to him to show whether he should nevertheless be excused from the application of s. 30(1)(b) of the SABS. Her decision was also heavily fact-based.

For instance, Arbitrator Muzzi found that, although there was no dispute that Mr. Hayward’s driver’s licence was suspended at the time of the accident, he had no reason to suspect his licence was suspended for non-payment of a speeding ticket because he kept driving around, he used his licence to cross the border, he renewed the car’s licence plate stickers, and when Royal assumed coverage of his policy in 2008 after the suspension, he was not informed of the suspension. She also accepted Mr. Hayward’s evidence that he sent in a cheque to pay the $40 fine, despite the lack of any paper trail such as a cheque stub. She did not find his failure to see if the cheque was cashed fatal to his defence. She was also satisfied that Mr. Hayward never received a notice of licence suspension from the Ministry of Transportation, MTO, and she did not accept Royal’s submission that Mr. Hayward’s failure to remedy his problems in receiving mail demonstrated a lack of due diligence.

In its appeal, Royal raises issues about most of these findings, although I will only focus on the last. For the moment, it suffices to note how much Arbitrator Muzzi’s finding depended on her findings about Mr. Hayward’s credibility. Her conclusions were not so self-evident that Royal could have foreseen them when it denied his IRBs. Essentially, Mr. Hayward is seeking to impose 20/20 hindsight on Royal. That would mean that every insurer who loses on a similar defence after a hearing would be seen as having misled its insured. Accordingly, I agree with Arbitrator Richards that in asserting the defence, Royal was not misleading Mr. Hayward.

That disposes of the first part of the estoppel argument. As to the second part, detriment, Arbitrator Richards did not find that Mr. Hayward relied on Royal’s position to his detriment because

Mr. Hayward’s application for benefits in another forum is not an action that can be deemed detrimental to him in this case. The statutory accident benefits scheme and the workers’ compensation scheme operate as mutually exclusive benefit systems. Where a motor vehicle accident occurs in the course of one’s employment, the default benefit scheme is the workers’ compensation scheme. Where a worker believes that it would be prudent to pursue a legal action, then that worker can opt out of the workers’ compensation scheme and collect accident benefits while prosecuting his or her tort claim. The interplay between the two systems is not meant to create an election based on the amount or types of benefits a claimant could collect under one system as opposed to the other. The decision to elect workplace benefits or accident benefits is not based on the relative advantages or detriment of one system versus another, but rather on an individual’s entitlement to workplace benefits or accident benefits. Mr. Hayward chose to pursue workers’ compensation benefits because he believed he was entitled to them, and he was, in fact, determined to be entitled to workplace benefits. Royal’s defense to his claims was not a misrepresentation and did not compel him to act to his detriment. Royal’s defense only prompted Mr. Hayward to apply for benefits to which he was entitled.

Mr. Hayward submits that Arbitrator Richards was incorrect in this respect due to the fact that the WSIB application took away Mr. Hayward’s right to claim accident benefits (pursuant to the Arbitrator’s decision in this respect). He also submits that “Clearly, from a practical standpoint, Mr. Hayward has relied on the insurer’s conduct to his own detriment, as he has attempted to apply for accident benefits and has been denied that option by the decision of Arbitrator Richards. It is submitted that it would be an absurd result to find that this form of ‘detriment’ somehow does not count.”

I do not agree. Although Royal flagged the WSIB issue at the beginning of its adjustment of the file, Mr. Hayward told Royal that he was not in the course of employment and had not filed a WSIB claim. While this was true at the time of his statement, he had already filled in the WSIB forms and stated different things to the two bodies. Royal was not relying on the WSIB issue to deny his claim and did not even know about the WSIB claim until many months later. In fact, the system was working as it was supposed to, with Mr. Hayward applying for benefits to the default benefit scheme in the situation where his accident occurred in the course of employment. I fail to see how this can be logically turned around to mean that Royal made Mr. Hayward act to his detriment. Accordingly, I agree with the view taken by the Arbitrator.

Mr. Hayward submits that the Arbitrator erred in stating that he misrepresented his work situation at the time he applied for accident benefits. The passage in question occurs near the end of the Arbitrator’s discussion about estoppel, where he is discussing the alleged failure of Royal to act in good faith, about which the Arbitrator stated that “Mr. Hayward never specifically clarified the nature and scope of Royal’s duty of good faith,” although it apparently had something to do with Royal’s allegedly adversarial position. The Arbitrator went on to state:

Royal’s raising a section 59 defense in response to Mr. Hayward’s claim is not an indication of Royal’s continued adversarial position towards Mr. Hayward from the commencement of his claim. Rather, it is Royal’s response to Mr. Hayward’s misrepresentation at the outset of his claim that he was not in the course of his employment when the motor vehicle accident took place. Royal raised the defense because it was appropriate to do so.

Mr. Hayward submits that at the time he applied for accident benefits he had not yet filed his WSIB claim, so technically, he submits, this is an error. However, if it is – and I doubt it, as just a couple of weeks earlier Mr. Hayward had filled in the WSIB form saying he was in the course of employment – then nothing turns on it, as he is merely reiterating that Royal validly raised the licence suspension defense when it did, so the fact that it later raised the s. 59 defense after it learned of the WSIB claim does nothing to invalidate its original defense.

Application of Section 59 to Mr. Hayward’s claims

Turning now to the second major aspect of Mr. Hayward’s appeal, the application of s. 59 to his claims, Arbitrator Richards found that s. 59(1) of the SABS applied to Mr. Hayward because he was entitled to workplace benefits. He noted that Mr. Hayward had even tried to contest the WSIB’s position that he was entitled only to health benefits. The Arbitrator then turned to whether Mr. Hayward fell under the s. 59(2) exception, stating: “Mr. Hayward has the onus to prove that his legal action was not commenced primarily for the purpose of claiming accident benefits under the Schedule.”

The Arbitrator noted that, as stated in Sumal and American Home Assurance Company, (FSCO P07-00029, June 25, 2008), determining Mr. Hayward’s motivation in commencing a legal action required considering both objective and subjective factors. The Arbitrator found that the only objective evidence was the statement of claim. He found that a report by a Dr. Prutis, dated July 2, 2009, did not assist him in weighing the action’s merits. The Arbitrator noted that Mr. Hayward did not file the statement of defense in the legal action, presented no evidence about the WSIB’s position concerning the legal action even though he had signed a WSIB election form, and did not testify in support of his position. Regarding the subjective factors, the Arbitrator noted that Mr. Hayward filed the statement of claim about sixteen months after the accident and only abandoned all claims for workplace benefits shortly before the hearing. The Arbitrator found that, based on these factors, Mr. Hayward commenced the legal action primarily for the purpose of claiming accident benefits under the SABS and so could not rely on the exception in s. 59(2).

Mr. Hayward submits that the Arbitrator applied the incorrect onus with respect to the s. 59(2) exception. Subsection 59(2) reads as follows:

Subsection (1) does not apply in respect of an insured person who elects to bring an action referred to in section 30 of the Workplace Safety and Insurance Act, 1997² so long as the election is not made primarily for the purpose of claiming benefits under this Regulation.

Mr. Hayward submits that the first part of s. 59(2) is a coverage provision to be broadly construed, and the second part of s. 59(2) is an exclusion clause to be narrowly construed. He submits that the correct manner of applying this section is that the section imposes a shifting onus. The Applicant’s only onus is to establish that an action was commenced that complies with s.20 of the WSIA (the requirement to elect). The insurer has the onus to establish a defence that the Applicant has commenced the claim for the purpose of claiming benefits under the SABS. He submits that the wording “so long as” indicates the shift in onus, once the Applicant has established that a claim has been commenced.

However, this interpretation goes against long-standing case law at the Commission. For instance, in Sofantzidelis and AXA Insurance (Canada), (OIC P96-00086, January 26, 1998), the Director’s Delegate confirmed that the applicant had the onus of proving he fit within the exception. The Delegate went on to note that, while the timing of a court action is not determinative, it is a legitimate factor in assessing the insured person’s motivation. Similarly, in Mahadeo and Aviva Canada Inc., (FSCO P06‑00015, March 22, 2007), the Director’s Delegate stated:

There is little, if any, dispute about the applicable principles. The claimant has the burden of bringing himself within the exception provided in subsection 59(2). The test is whether the election was made primarily for the purpose of claiming accident benefits…. The claimant’s action or inaction, before and after making the election, provides important evidence of his purpose in making the election. Delay in bringing an action or failure to prosecute it are likely to undermine a claimant’s accident benefits claim.

I agree with these statements. The test Mr. Hayward proposes would set such a low bar as to be meaningless, essentially requiring only that the claimant issue a third-party statement of claim. More than that is required.

Accordingly, the Arbitrator applied the correct test. The rest of his findings were based on the evidence before him. While Mr. Hayward submits that he only withdrew the WSIB claim at the last minute because he was not aware it was still outstanding, the evidence of its withdrawal was before the Arbitrator, and it was up to him to weigh it.

Re-election

Finally, turning to the last issue in Mr. Hayward’s appeal, he submits that the Arbitrator erred in finding that he is not entitled to re-elect benefits. Arbitrator Richards states: “Mr. Hayward pointed me to no authority either under the Schedule or the WSIA that would allow him to re-elect to pursue accident benefits once he has already pursued and been deemed entitled to workplace benefits.”

Mr. Hayward submits that Davis and Pafco Insurance Company Limited, (OIC P97-00010, July 22, 1997), “clearly establishes that an insured is free to re-elect.” He cites the Director’s Delegate’s statement that “the clear implication of subsection 10(15) is that re-elections are allowed.” However, the reference was to s. 10(15) under the previous Workers’ Compensation Act, R.S.O. 1990, c.W.11. As Delegate Makepeace said in Mahadeo, in discussing the s. 59(2) exception under the current WSIA,

Though the subjective element of the test in subsection 59(2) likely reflects the legislature’s recognition that evolving prospects are a litigation reality, this must be understood in the context of the clear intent of subsection 59(1): there is no election between accident benefits and workers’ compensation.

In any event, to return to the Davis and Pafco case, Mr. Davis was found not entitled to accident benefits because his re-election was made primarily for the purpose of claiming accident benefits. Since Arbitrator Richards made the same finding here regarding Mr. Hayward, Davis does not assist him.

Accordingly, the appeal is denied and the decision of Arbitrator Richards is affirmed.

B. Licence Decision Appeal

The finding above renders any finding in Royal’s appeal about Arbitrator Muzzi’s decision moot. However, I will deal with the strongest point raised by Royal in its appeal, if I am in error about the WSIB decision.

I have set out most of the findings by Arbitrator Muzzi above, but I did note I would discuss in more detail Mr. Hayward’s somewhat chaotic mail situation. This ties in to the point emphasized by Royal: that Arbitrator Muzzi erred in finding that Mr. Hayward never received the notice of suspension despite exercising due diligence to ensure he could receive his mail. Thus, after finding that Mr. Hayward did not know his licence was suspended and had taken all reasonable steps to pay the fine, Arbitrator Muzzi stated:

Third, I am satisfied that Mr. Hayward never received a notice of licence suspension from MTO and was therefore unable to rectify the problem in a timely manner.

Royal submitted that Mr. Hayward’s failure to remedy a confusing situation at his residence with respect to mail delivery demonstrated a lack of due diligence but I do not agree. Mr. Hayward rents the basement apartment of a large house that has been divided into several units. He testified that he has had problems in the past receiving some mail because there is no proper mail box at the house. Sometimes, mail just gets left in a pile on the front porch. Some letter carriers know about and drop the mail off in the two, side-by-side milk boxes at the side of the house that have been divided into four compartments, ostensibly to be used as mail boxes for the residents. However, these boxes have not been marked to indicate specific units so the mail is often left in one of them in a bundle. In either case, whether the mail is on the porch or in one or more of the side boxes, the residents generally sort out their own mail.

I agree that this is not an ideal situation. On the other hand, Mr. Hayward has lived in the basement apartment in this house since 2000. He has had a driver’s licence for many years. While he admitted that he has had trouble receiving mail before, there was no evidence before me that he has ever had a similar problem with his licence before this time. I do not accept that he had every reason to believe that Ministry notices if they were sent would not come to his attention.

Furthermore, Mr. Hayward has never withheld his correct address. The evidence shows that the address on his driver’s licence is the same as the address he provided to his insurance broker, to Royal, to the MTO, to his bank, and to this Commission. His failure to specify his unit, i.e., “basement apartment”, is also in my view irrelevant. Since none of the mail boxes at his residence is even marked with a unit number, it would have made no difference to the timely or proper receipt of his mail. The MTO sends suspension notices via regular mail. It does not strain credulity to believe that items mailed by regular mail might not get where they are supposed to go. And in the particular circumstances of this case, it does not strain credulity to believe that Mr. Hayward’s notice of licence suspension simply did not reach him. [Footnote omitted.]

I note that, for the discussion about Mr. Hayward’s due diligence, the Arbitrator was referred to my decision in Royal and SunAlliance Insurance Company of Canada and Giordano, (FSCO P06-00014, October 19, 2007). However, I noted in Giordano that I was not considering cases that dealt with licence suspensions. Rather, the issue here is knowledge about a licence suspension, and the starting point is Day Estate v. Pandurevic, 2008 ONCA 266, where the Court of Appeal stated:

To the extent that knowledge of one’s licence suspension is relevant to whether statutory condition 4(1) has been breached, that knowledge requirement is addressed in s. 52 of the Highway Traffic Act.³ Here, the respondent concedes that Mr. Pandurevic did not bring himself within the relieving provisions of s. 52 because he received notice of the suspension. Accordingly, by driving at the time of the accident, Mr. Pandurevic breached statutory condition 4(1) under the Insurance Act. He was driving when he was not authorized by law to do so.

While that decision was concerned with statutory condition 4(1), which refers to not being authorized by law to drive, I find it applies equally to driving without a valid driver’s licence, based on Commission case law. As was discussed in Manzaneres and Pembridge Insurance Company (Pafco Ins. Co.), (FSCO P03-00025, April 11, 2005),

Section 30 of the SABS–1996 differs from its predecessors in a number of respects. Most significant for this appeal, it uses the phrase “without a valid driver’s licence” in place of “not authorized by law.” … The exclusion applies to anyone who is ‘driving the automobile without a valid driver’s licence.’ There is no longer an exception for those suspended for non-payment of a fine.

In Traganis and Security National Insurance Company, (OIC A-001198, July 30, 1993), which dealt with the 1990 SABS,⁴ it was found that the phrase “authorized by law” refers to licensing matters. Similarly, in Bodo and Royal Insurance Company of Canada, (OIC A96-001102, October 23, 1997),⁵ which dealt with the 1994 SABS, the arbitrator considered the effect of a suspended licence and the phrase “not authorized by law.” And most recently, in Kereluik v. Jevco Insurance Company, 2012 ONCA 338, the Court of Appeal noted that considerable jurisprudence supports the proposition that Condition 4 (driving while not authorized) is concerned with the validity and terms of the licence to drive. Accordingly, s. 52 of the HTA is relevant to considering s. 30(1)(b), driving “without a valid driver’s licence.”

Clause 52(1)(b) of the HTA provides that, as the Arbitrator noted, the MTO sends suspension notices by regular mail. In fact, the clause states: “Where a person’s driver’s licence is suspended, notice of the suspension [in the case of suspensions not for criminal convictions] is sufficiently given if … sent by mail addressed to the person to whom the licence was issued at the latest current address of the person appearing on the records of the Ministry.” Thus, from the law’s point of view, mailing the suspension by regular mail is giving sufficient notice of the suspension, unless the driver fits within the exception of s. 52(2):

Notice sent … by mail under clause (1) (b) shall be deemed to have been given on the seventh day after the mailing unless the person to whom the notice is sent establishes that he or she did not, acting in good faith, through absence, accident, illness or other cause beyond his or her control, receive the notice. [Emphasis added.]

The Arbitrator should have addressed whether it was beyond Mr. Hayward’s control to do anything about the mail situation, such as putting his name on one of the milk boxes at the side of the house. For a cause to be beyond one’s control, more than a mere passive acceptance of a situation is required. In that regard, I note that in Williams v. York Fire & Casualty Insurance Company, 2007 ONCA 479, the appellant had been absent from his residence for about half a year, and so was not aware that a licence suspension had been sent to his Toronto residence. The court stated: “The [plaintiff], although aware that if the Ministry needed to contact him it would do so at this address, did not think it necessary to notify the Ministry if he was going to travel or be on vacation. He did not provide any forwarding address to the Ministry while he was away.” While the court did not deal directly with the “absence” exception in s. 52(2) of the HTA, its statement suggests that one has to take more than a passive interest in being reachable by the MTO.

Beyond that, the Arbitrator stated: “[Mr. Hayward] testified that he has had problems in the past receiving some mail because there is no proper mail box at the house… While he admitted that he has had trouble receiving mail before, there was no evidence before me that he has ever had a similar problem with his licence before this time. I do not accept that he had [any] reason to believe that Ministry notices if they were sent would not come to his attention.”

However, I find that the conclusion does not follow. Mr. Hayward admitted he had on occasion had trouble receiving his mail, and the notices sent by the MTO are mail, so there would be every reason to believe that he could have trouble receiving MTO notices. There was a foreseeable risk of not getting a notice which should have been addressed. This principle was discussed in the Bodo case, referred to above. In Bodo, Arbitrator Leitch discusses the element of an insured’s knowledge in relation to a suspended licence. He notes that the exclusion in s. 58(1)(d) of the 1994 SABS simply states that an insurer is not liable to pay IRBs “if the driver was not authorized by law to drive the automobile.” He goes on to state:

Section 58(1)(d) makes no reference to what the driver knew or ought to have known about his/her authority in law to drive and, in this regard, plainly differs from those exclusions which do refer to the driver’s state of knowledge. Section 58(1)(f), dealing with driving without the owner’s consent, provides the clearest but not the only example of how section 58 draws this precise distinction in certain situations through the use of the words “knew or ought reasonably to have known.” The absence of this distinction in section 58(1)(d) leads me to the conclusion that the exclusion applies even if Mr. Bodo was not aware of the suspension of his driver’s licence at the time of the accident.

The same contrast can be drawn between s. 30(1)(b), “if the driver was driving the automobile without a valid driver’s licence,” and s. 30(1)(d), “if the driver knew or ought reasonably to have known that he or she was operating the automobile without the owner’s consent.”

Having found that driver awareness of the suspension is not required for the exclusion to apply, Arbitrator Leitch went on to find that “This means that the driver bears the risk that he/she does not receive notices of suspension sent in compliance with the legislation. The driver can obviously reduce this risk by notifying the Ministry of Transportation of changes of address and by picking up registered mail sent by the Ministry.”

Or in this case, Mr. Hayward could have reduced the risk by taking steps to ensure that notices from the MTO did not get lost due to a chaotic mail situation.

In conclusion, the Arbitrator did not direct her mind to the test of whether Mr. Hayward established that he did not, acting in good faith, through a cause beyond his control, receive the notice. She also agreed with Mr. Hayward’s speculation that he had no reason to believe that Ministry notices if they were sent would not come to his attention. These are errors of law that, in other circumstances, would have required her to reconsider the matter.

IV. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, an expense hearing shall be requested within sixty days of the date of this decision. The request shall be accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs, as well as written submissions regarding entitlement to or the quantum of these expenses, or both, as are in dispute.