Neutral Citation: 2014 ONFSCDRS 203 FSCO A12-006597

BETWEEN:

NICLAS OLSEN Applicant

and

ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA Insurer

DECISION ON A PRELIMINARY ISSUE

Before: James Robinson Heard: September 16th and 17th, 2014, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Andrew Bergel for Mr. Olsen Thomas Hughes for Royal & SunAlliance Insurance Company of Canada

Issues:

The Applicant, Niclas Olsen, was injured in an incident involving a motor vehicle on April 15, 2011. He applied for and received statutory accident benefits from Royal & SunAlliance Insurance Company of Canada (“Royal”), payable under the Schedule.¹ Royal terminated or did not pay some or all of these benefits on the basis that there had been no accident. The parties were unable to resolve their disputes through mediation, and Mr. Olsen applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. The issue of whether the Applicant’s claim can ultimately succeed on the merits is not before me.

The preliminary issue to be determined is:

Is the insurer barred by virtue of waiver or estoppel from disputing whether the incident which occurred on April 15, 2011 constituted an “accident” within the meaning of subsection 3(1) of the Schedule and, if not, did such incident constitute an “accident”?

Result:

The insurer has waived its right to dispute that the incident which occurred on April 15, 2011 is an “accident” within the meaning of subsection 3(1) of the Schedule.

EVIDENCE AND ANALYSIS:

Background:

The applicant was an independent owner-operator of a transport truck insured by the insurer pursuant to a commercial policy. On the morning of April 15, 2011 he was engaged in the transportation of a trailer-load of scrap metal from a location in Bowmanville, Ontario to the premises of Triple M. Metal LP (“Triple M”) located in the City of Hamilton, Ontario. He had done so on more than 50 occasions in the past. Triple M carries on the business of a scrap metal dealer. Its premises consist of a large yard where deliveries of scrap metal are accepted and where certain processing functions are undertaken.

On April 15, 2011 the applicant drove his truck through the gates and immediately onto a set of scales to “weigh in” with his load. A radiation test was then conducted with respect to his load before the yard attendant directed him to the area where he was to go to be unloaded. Having reached the designated area, he waited in his truck for the foreman’s further instructions. He was required by Triple M to remain in his vehicle until the truck ahead of him had discharged its load.

While sitting in his truck cab, the applicant was struck in the head and injured by an airborne piece of metal projected with great force.

Triple M’s health and safety officer was summoned as a witness by the applicant. Her evidence was that she investigated the accident immediately after it occurred and determined that the applicant had been hit by a piece of scrap metal that had been propelled out of the pit of a scrap metal ball breaker at high speed. The breaker was located some 150 feet from the applicant’s motor vehicle and the pit of the ball breaker itself was some 50 feet deep.

The applicant’s evidence is that he has not worked since the date of this incident.

The applicant made a claim for statutory accident benefits from the insurer. It will be useful for the purposes of these reasons to establish a brief chronology of the events following the applicant’s initial report of the claim. This information will be relevant to a consideration of whether the insurer waived its right to dispute that the applicant’s injuries were as a result of an “accident” as defined in the Schedule.

On September 19, 2011 the insurer delivered an OCF-9 form to the applicant acknowledging receipt of an OCF-1 Application for Accident Benefits and asking the applicant for “a written, detailed, reasonable explanation outlining why you failed to notify the insurer within 7 days of your accident.”
On October 13, 2011 the applicant’s counsel provided a response upon his behalf indicating that they had been retained in September after the applicant learned that he did not qualify for WSIB benefits.
On October 18, 2011 the insurer delivered a further OCF-9 in which it acknowledged the sufficiency of the applicant’s excuse for his delay in filing the claim. The OCF-9 further indicated “…the insurer does not accept your claim at this time. Further investigation into whether your claim meets the definition of ‘accident’ under the Statutory Accident Benefits Schedule is required. The insurer will keep you informed of the progress.”
On October 24, 2011 the insurer delivered an OCF-9 in which it advised that it was “still investigating whether the circumstances of your claim meet the definition of ‘accident’ as outlined in Section 3 of the Statutory Accident Benefits Schedule…Once our investigation is complete, we will advise you accordingly.”
On February 7, 2012 the insurer delivered a further OCF-9 stating as follows: “Income replacement benefits is not payable as the insurer is still investigating your claim and has not accepted your claim presently.”
In due course the insurer made arrangements to conduct an Examination Under Oath of the applicant. That examination was set for April 17, 2012. By letter dated April 9, 2012 the insurer’s former legal counsel cancelled the scheduled examination.
On April 13, 2012 the insurer delivered an OCF-9 stating in part as follows: “Please be advised that our investigation is complete and we are accepting your claim for accident benefits.”

Over the course of the following year the parties entered into a course of dealings with respect to proof of the quantum of benefits that would be payable. Certain minor payments were made to the applicant but the parties were unsuccessful in coming to any agreement with respect to the quantum of income replacement benefit to be paid to the applicant. Five separate letters on this issue were sent to the insurer by the applicant’s counsel.² This was essentially a succession of demands that the insurer pay IRB’s to the applicant in accordance with its commitment on April 13, 2012 that such benefits would be paid.

From and after April 13, 2012 the insurer also delivered correspondence to applicant’s counsel dealing with various aspects of the applicant’s claim.
Then, on April 12, 2013 the insurer sent a further OCF-9 to the applicant which stated in part as follows: “Income replacement benefit – we are terminating your benefit because the incident giving rise to your injuries is not an “accident” as defined in Sect 2(1) of the SABS”.

The Issue of Waiver:

I am deciding this case on the basis of waiver. It will accordingly not be necessary to consider the issue of estoppel, nor will it be necessary to consider the many complex and sometimes conflicting decisions upon the issue of “accident.”

The law with respect to the doctrine of waiver was concisely stated by Director’s Delegate Evans in McDonald and Guarantee Company of North America.³ The test is as follows:

(1) A party must knowingly forego reliance upon some known right or defect: one should not be able to waive rights of which one was not fully aware or apprised;

(2) The conduct purporting to be a waiver must be express and unequivocal; and

(3) What must be ascertained is a conscious intention to abandon a known right.

The submission of applicant’s counsel is that in the present case each of the three branches of the test have been satisfied.

The applicant states that the insurer’s statement in its OCF-9 dated April 13, 2012 that “our investigation is complete and we are accepting your claim for accident benefits…” shows that it intends to “knowingly forgo reliance” upon its right to dispute the issue of whether this was an “accident.” The applicant states that the original application for benefits had been submitted in September 2011. The insurer had raised the subsection 3(1) issue almost immediately. The applicant states that the insurer should be considered to have spent at least seven months investigating that issue.

A redacted copy of the adjuster’s log notes was produced in evidence. It is evident from those notes that the adjuster, Mr. Hissa, obtained legal advice on a number of occasions during 2011 and early 2012 with reference to this file.

On April 13, 2012 the aforesaid OCF-9 was delivered by the insurer, confirming the insurer’s investigation was “complete” and “accepting the applicant’s claim for accident benefits.”

The insurer’s position on waiver is set forth in its factum, as follows:

Arthur Hissa has indicated that he did not know about the nature of the loss until after August 2012. For that reason, his action of April 12, 2012 can not be constituted a waiver, as he could not have knowingly forgone a right.

This submission is consistent with the testimony tendered by Mr. Hissa at the hearing.

The insurer submits that the incident was not an “accident” and that the insurer was entitled to continue to investigate the claim notwithstanding the position it set forth in its OCF- 9 dated April 13, 2012.

The insurer argues that Mr. Hissa did not fully turn his mind to the facts of the case until months after the OCF-9 dated April 13, 2012. The insurer says there was therefore no “conscious intention” to relinquish its rights to dispute that this was an “accident.”

I cannot accept that argument for the following reasons.

Mr. Hissa is not a clerk or junior functionary of the insurer company. The applicant has suffered what may conceivably be a catastrophic impairment. The claim is a matter of the greatest importance to all concerned. I am satisfied that it was for this reason that it was assigned to Mr. Hissa, a very experienced claims adjuster. On the evidence of the redacted adjuster’s notes, Mr. Hissa had exclusive carriage of this matter from and after September 19, 2011.

On April 13, 2012, which on the evidence of the redacted adjuster’s notes was the last occasion upon which he sought legal advice from his former legal counsel, Mr. Hissa confirmed to the applicant that his investigation was “complete.”

This brings us squarely to the question of “conscious intention,” the third branch of the test articulated in the McDonald decision supra.

It is trite to say that when, in law, we find a “conscious intention” we do so on the basis of someone’s overt behaviour. We look at what people do or have done and form reasonable inferences about their intentions.

Insurer’s counsel submits that the investigation of the applicant’s claim was an ongoing matter. He maintains that I should accept the testimony of Mr. Hissa that he did not “know about the nature of the loss” until after August 2012. Insurer’s counsel submits that case law supports the proposition that an insurer can continue its investigation notwithstanding the payment of benefits and, if necessary, recover benefits if it ultimately determines that it had no obligation to pay under the Schedule.

I wholly reject these submissions. First, I do not accept that it was only in August that Mr. Hissa turned his mind to an investigation of the actual basis of the applicant’s claim. That assertion is without foundation in the documentary record. It is clear that this experienced adjuster was refusing to admit liability on behalf of the insurer over a period of many months until he had satisfied himself, supported by the advice of legal counsel, that the applicant’s injury occurred as a result of an “accident.”

In so concluding I emphasize that it is not relevant to know what specific legal advice Mr. Hissa received nor do I need to know whether he followed it. All that is important here is that he availed himself of the opportunity to take legal advice on a number of occasions prior to issuing his OCF-9 dated April 13, 2012 in which he accepted the claim and confirmed that his investigation was “complete.”

The insurer would have us believe the OCF-9 dated April 13, 2012 was delivered without “conscious intention.” The insurer submits that as long as Mr. Hissa or any other claims adjuster is willing to testify ex post facto that his confirmation of coverage was merely provisional, the objectives of the McDonald test are met. That assertion cannot be right. If accepted it would remit us to a metaphysical inquiry about “conscious intention” in virtually every case. The door would never be closed.

In the present case, I am not satisfied that it was only much later that Mr. Hissa turned his mind to the issues in this case. It begs belief that his uncorroborated assertion about his “conscious intention” in August 2012 should be accepted over the well-documented facts that: (a) he had the opportunity to receive legal advice; (b) he admitted liability on behalf of the insurer on April 13, 2012; and (c) he proceeded to negotiate with applicant’s counsel over a period of many months with respect to the kind of evidence he required to prove the quantum of benefits to which the applicant was entitled.

I find that the OCF-9 dated April 13, 2012 represented a waiver on the issue of “accident” made with conscious intention, in full knowledge of the insurer’s rights and that it was express and unequivocal. At that point the door was closed and the insurer cannot now reopen the issue.

The cases raised by insurer in submission are clearly distinguishable. In Quraishi and Belair Insurance Company Inc.⁴ The insurer began to pay benefits but reconsidered its decision on the basis that there had been no “accident.” In that case, unlike this, there had been no advertent prior consideration of the issue. Moreover, in that case Arbitrator Renahan placed much weight upon considerations of policy. His view that it was better to put benefits into the hands of the insured immediately and to allow the insurer the opportunity — in a proper case — to reconsider than to leave the insured without resources. That of course is the very opposite of what has happened in this case. The insurer, while appropriating to itself the right to pursue what was essentially an investigation followed by a “remorse” investigation, has failed to pay income replacement benefits at all to this very day. The insurer’s position in the present case turns common sense on its head.

Pilleggi and TTC Insurance Company Inc.⁵ was also decided on the basis of facts substantially different than those which obtained here. In that case the insurer had scheduled a section 42 examination and had requested a Disability Certificate before its investigation concluded that no accident had occurred. In the present case, contrary to the submissions of counsel, there had been an investigation and a conclusion as of April 13, 2012. In the present case, contrary to the submissions of counsel, there was not one long continuing investigation. There was an attempt to conduct two different investigations.

The decision in Manzanares and Pembridge Insurance Company (Pafco Ins. Co.)⁶ was also offered in argument by counsel for the insurer. In that case the Arbitrator found that there was nothing in the evidence “…to indicate Pembridge internally discussed the issue and intentionally relinquished its right.” That case is clearly distinguishable from the facts in the present case. Here, after a period of many months during which time the adjuster was alert to the relevant issue and had the benefit of extensive consultation with legal counsel, the insurer expressly confirmed that it had “completed” its investigation. In Manzanares, none of this occurred.

Conclusion:

The insurer issued an OCF-9 on April 13, 2012 in which it confirmed to the applicant that it had completed its investigation and that it was accepting the applicant’s claim for income replacement benefits. The confirmation was not a clerical oversight nor was it qualified in any way. The issue was identified by the insurer at a very early date and the insurer’s claims adjuster had the benefit of legal advice at all material times prior to issuing the OCF-9. There was a conscious intention on the part of the insurer to waive rights of which it was fully apprised. Its communication was clear and unambiguous. The insurer cannot now resile from that commitment.

In view of the fact that the applicant has been successful on the foregoing issue, it is unnecessary for me to consider the issues of “estoppel” or “accident” argued before me.

EXPENSES:

The parties may apply for an assessment of expenses if they cannot agree.

December 30, 2014

James Robinson Arbitrator

ARBITRATION ORDER

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

Royal & SunAlliance Insurance Company of Canada is precluded from disputing that the incident on April 15, 2011 which gave rise to the injuries of Niclas Olsen was an “accident” within the meaning of subsection 3(1)(a) of the Schedule.
Niclas Olsen is entitled to the expenses of this preliminary issue hearing.