Financial Services Commission of Ontario

Neutral Citation: 2016 ONFSCDRS 104

FSCO A13-011759

BETWEEN:

TATE MORAN

Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Arbitrator Janette Mills

Heard: In person at ADR Chambers on February 22, 2016

Appearances: Mr. Jason Katz for Ms. Tate Moran Mr. Paul Kiddey for Economical Mutual Insurance Company

Issues:

The Applicant, Ms. Tate Moran, was injured in a motor vehicle accident on October 9, 2008 and sought accident benefits from Economical Mutual Insurance Company (“Economical”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Ms. Moran, through her representative, applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

Pre-Hearing discussions were held on March 16, 2015 and an Arbitration Hearing date set for February 22, 2016. Subsequently, on February 9, 2016, further Pre-Hearing discussions took place and the Arbitration Hearing date was converted to a Preliminary Issue Hearing date.

The issues in this Preliminary Issue Hearing are:

1. Is the Applicant’s non-earner benefit claim statute barred due to non-compliance with the applicable limitation period pursuant to the Insurance Act, s. 281.1(1)?

2. Did the Applicant fail to provide Economical with a Disability Certificate (OCF-3) pursuant to section 35(2) of Regulation 403/96 and section 36(3) of Regulation 34/10, and if so, does that mean her application for non-earner benefits cannot proceed to Arbitration?

Result:

1. The Applicant’s non-earner benefit claim is not statute barred due to non-compliance with the applicable limitation period pursuant to the Insurance Act, s. 281.1(1).

2. The Applicant’s application for non-earner benefits can proceed to Arbitration.

EVIDENCE AND ANALYSIS:

Background

The Applicant was injured in a motor vehicle accident on October 9, 2008. At the time of the accident she was 13 years old. An application package for accident benefits was sent to the Applicant on October 16, 2008. The Applicant’s mother assisted with her accident benefits claim forms and was listed on those forms as an adult with whom the Applicant lived. An Application for Accident Benefits (OCF-1) together with an Activities of Normal Life Form (OCF-12) was returned to Economical on November 12, 2008. On November 26, 2008, a Disability Certificate (OCF-3) was sent to Economical. The OCF-3 indicated that the Applicant did not suffer a complete inability to carry on the activities of her normal life.

As a result, on December 4, 2008, Economical sent an Explanation of Benefits (OCF-9) to the Applicant, wherein it indicated, inter alia, that she did not qualify for non-earner benefits as she did not meet the complete inability test. On September 28, 2012, the Applicant filed an Application for Mediation. On August 23, 2013, a Report of Mediator was issued and on September 19, 2013, an Application for Arbitration was filed. A further OCF-3 was provided to Economical on January 12, 2016.

There was no dispute between the parties regarding the chronology of the accident benefit claim. The parties agree that both the Limitations Act, 2002² and the Insurance Act³ govern limitation periods in all applications of statutory accident benefits involving minors. Furthermore, both parties agree that the issuance of the Explanation of Benefits (OCF-9) and accompanying letter on December 4, 2008 triggered the limitation period pursuant to the Insurance Act and the Schedules.⁴

Is the Applicant’s non-earner benefit claim statute barred due to non-compliance with the applicable limitation period?

The Position of Economical

Economical submits that whilst that the Limitations Act, 2002, s. 6 and the Insurance Act, s. 281.1 govern the limitation periods in all applications of statutory accident benefits where minors are involved, the conditions precedent of the Limitations Act, 2002 have been met and for this reason, the limitation period under the Insurance Act applies and runs from the time of the refusal on December 4, 2008. As such, the Applicant is statute barred from proceeding with her non-earner benefit claim pursuant to s. 281.1 of the Insurance Act; s. 51(1) of Regulation 403/96 and s. 56(1) of Regulation 34/10.

The Position of the Applicant

The Applicant submits that the conditions precedent of the Limitations Act, 2002, in regard to minors, have not been met. Therefore, the limitation period in the Insurance Act does not apply and the limitation period does not run until the person reaches the age of majority (18 years old in Ontario). The Applicant was 13 years old when the accident occurred. She reached the age of majority on November 23, 2012. The Applicant filed her Application for Mediation on September 28, 2012. As such, the Applicant is within the applicable two-year time period referred to in s. 281.1 of the Insurance Act; s. 51(1) of Regulation 403/96 and s. 56(1) Regulation 34/10, and is not statute barred from proceeding with her non-earner benefits claim.

Analysis

The Legislative Scheme

Limitations Act, 2002, S.O. 2002, c.24, Sched, B.

Minors

6. The limitation period established by section 4 does not run during any time in which the person with the claim,

(a) is a minor; and

(b) is not represented by a Litigation Guardian in relation to the claim. 2002, c. 24, Sched. B, s. 6.

Other Acts, etc.

19. (1) A limitation period set out in or under another Act that applies to a claim to which this Act applies is of no effect unless,

(a) the provision establishing it is listed in the Schedule to this Act; or

(b) the provision establishing it,

(i) is in existence on January 1, 2004, and

(ii) incorporates by reference a provision listed in the Schedule to this Act. 2002, c. 24, Sched. B, s. 19 (1); 2008, c. 19, Sched. L, s. 3.

Act prevails

(2) Subsection (1) applies despite any other Act. 2002, c. 24, Sched. B, s. 19 (2).

Interpretation

(3) The fact that a provision is listed in the Schedule shall not be construed as a statement that the limitation period established by the provision would otherwise apply to a claim as defined in this Act. 2002, c. 24, Sched. B, s. 19 (3).

Same

(4) If there is a conflict between a limitation period established by a provision referred to in subsection (1) and one established by any other provision of this Act, the limitation period established by the provision referred to in subsection (1) prevails. 2002, c. 24, Sched. B, s. 19 (4).

Period not to run

(5) Sections 6, 7 and 11 apply, with necessary modifications, to a limitation period established by a provision referred to in subsection (1). 2002, c. 24, Sched. B, s.19 (5).

Insurance Act

281.1 (1) A mediation proceeding or evaluation under section 280 or 280.1 or a court proceeding or arbitration under section 281 shall be commenced within two years after the insurer’s refusal to pay the benefit claimed. 2002, c. 24, Sched. B, s. 39 (6).

Exception

(2) Despite subsection (1), a proceeding or arbitration under clause 281 (1) (a) or (b) may be commenced,

(a) if there is an evaluation under section 280.1, within 30 days after the person performing the evaluation reports to the parties under clause 280.1 (4) (b);

(b) if mediation fails but there is no evaluation under section 280.1, within 90 days after the mediator reports to the parties under subsection 280 (8). 2002, c. 24, Sched. B, s. 39 (6).

Regulation 403/96

51. (1) A mediation proceeding or evaluation under section 280 or 280.1 of the Insurance Act or a court proceeding or arbitration under clause 281 (1) (a) or (b) of the Act in respect of a benefit under this Regulation shall be commenced within two years after the insurer’s refusal to pay the amount claimed. O. Reg. 403/96, s. 51 (1).

(2) Despite subsection (1), a court proceeding or arbitration under clause 281 (1) (a) or (b) of the Insurance Act may be commenced within 90 days after the mediator reports to the parties under subsection 280 (8) of the Act or within 30 days after the person performing the evaluation provides a report to the parties under section 280.1 of the Act, whichever is later. O. Reg. 403/96, s. 51 (2).

Regulation 34/10

56. (1) A mediation proceeding or evaluation under section 280 or 280.1 of the Act or a court proceeding or arbitration under clause 281 (1) (a) or (b) of the Act in respect of a benefit shall be commenced within two years after the insurer’s refusal to pay the amount claimed. O. Reg. 34/10, s. 56 (1).

(2) Despite subsection (1), a court proceeding or arbitration under clause 281 (1) (a) or (b) of the Act may be commenced within 90 days after the mediator reports to the parties under subsection 280 (8) of the Act or within 30 days after the person performing the evaluation provides a report to the parties under section 280.1 of the Act, whichever is later. O. Reg. 34/10, s. 56(2).

In determining whether or not the appropriate limitation period has been complied with, the only issue before me is whether or not the requirements of the Limitations Act, 2002 when read together with the requirements of the Insurance Act have been met.

Economical submits that from the beginning of the application for accident benefits process, the Applicant’s mother submitted the necessary forms on the Applicant’s behalf. In doing so, the Applicant’s mother acknowledged that she was acting as the Applicant’s representative. Economical further submits that the Applicant’s mother also complied with the Dispute Resolution Practice Code (“DRPC”) that requires that the Applicant, as a minor, commence mediation or other proceeding through, inter alia, a parent with whom the minor resides.⁵

Subsequently, the Applicant’s mother filed the Applicant’s Application for Accident Benefits as her substitute decision maker and she signed the requisite Form P on September 28, 2012.⁶ Economical submits that the DRPC requirement is analogous to the substitute decision maker acting as a Litigation Guardian. As such, the conditions of the Limitations Act, 2002 were met and, in keeping with the Insurance Act and the Schedules,⁷ the Applicant should have filed her Application for Mediation by October 9, 2010. By not doing so, she has run afoul of the limitation period and is statute barred from proceeding.

Economical further submits that support is found for this position on a proper reading of the Limitations Act, 2002, s. 19(5). Section 19(5) states that s. 6 applies with necessary modifications (italics added) to a limitation period. Economical submits that necessary modifications can reasonably be said to include the following:

(i) The fact that there is no portion or mechanism in the applicable statutory framework for accident benefits to add someone as the claimant’s Litigation Guardian;

(ii) The fact that the applicable statutory framework for accident benefits permits someone like the Applicant’s mother to act as the minor claimant’s representative and that she so chose to act;

(iii) The fact that the applicable statutory framework for accident benefits permits any notices to be sent to someone like the Applicant’s mother as the Applicant’s agent and substitute decision maker.

The Applicant submits that notwithstanding her mother’s assistance in completing the required Application for Accident Benefits and Application for Mediation, the Applicant’s mother cannot reasonably be said to be a Litigation Guardian and for this reason the Limitations Act, 2002 has not been complied with and the limitation periods in the Insurance Act and the Schedules do not apply to her until she reached the age of majority.

Furthermore, necessary modifications refers only to the specifics of the relevant statute. It was included to allow the language in s. 6 to make sense when applied to different acts. In regard to the Insurance Act, necessary modifications refers to the two-year limitation period. In other words, whenever the Limitations Act, 2002 is to be applied, the stipulated limitation period in the given Act in question does not run. This is what is referred to as the necessary modifications in s. 19(5).

I am in agreement with the parties that the Limitations Act, 2002 applies in the circumstances of this case.

In Novakovic and Coseco Insurance,⁸ Arbitrator Ashby found that limitation periods in the Schedule were still subject to the Limitation Act and that the rights of a minor are postponed until such time as the minor reaches the age of majority:

…to conclude otherwise would be contrary to the finding of the Supreme Court in Smith v. Co-operators General Insurance Co. that a purpose of the Insurance Act was consumer protection.⁹

She went on to find that these considerations outweigh any prejudice to the Insurer.¹⁰

I acknowledge that Novakovic was decided under the previous Limitation Act. Notwithstanding, the relevant section of the previous Act is substantially the same as the current Limitations Act, 2002, with respect to minors, stating that the action may be brought and shall commence from the date the person became of full age or of sound mind.¹¹

Furthermore, I am in agreement with the Applicant’s interpretation of necessary modifications; it is in keeping with a plain reading of the Limitations Act, 2002. In my view, if the intention of the legislature was to override the protection afforded to minor’s under the Limitations Act, 2002, it would have specified so.

Also, I cannot agree that acting as a minor’s representative or substitute decision maker is analogous to acting as a Litigation Guardian. Under the Rules of Civil Procedure,¹² in the case of minors, court approval is required before a settlement is final. In order to obtain court approval, the minor must have a Litigation Guardian. Unless that person is the Children’s Lawyer or Public Guardian and Trustee, he or she must file an Affidavit in which the person consents to act as Litigation Guardian, stating that he or she has no interest in the proceeding adverse to that of the person under disability and acknowledging that he or she has been informed of his or her liability to pay personally any costs awarded against him or her or against the person under disability.¹³ The same applies where the minor is a plaintiff in a court action.

In addition, DRPC Rule 10.7 requires a representative of a minor to comply with the approval of settlement requirements under the Rules of Civil Procedure, as above. This suggests that a representative of a minor and a Litigation Guardian cannot reasonably be said to be the same and I do not accept Economical’s position that necessary modifications extends to converting a minor’s representative or substitute decision maker into a Litigation Guardian.

Economical submits that there is no mechanism to appoint a Litigation Guardian under the Schedule. In my view, there is nothing to prevent the appointment of a Litigation Guardian under the Rules of Civil Procedure. In fact, the DRPC contemplates this in Rule 10.7 referred to above.

The same reasoning applies to Economical’s position that the Schedule permits someone like the Applicant’s mother to act as her representative and that it permits notices to be sent to the Applicant’s representative. As above, I find nothing in the Schedule to suggest that a representative can act as a Litigation Guardian. The Rules of Civil Procedure make clear that a more rigorous process must be undergone before such a designation is afforded someone.

Further support for this positon is found in the Applicant’s submission, which I accept, that the Limitations Act, 2002 specifically refers to the condition precedent that a minor must have a Litigation Guardian before the limitation period begins to run. It does not refer to a parent, representative or guardian.

Having regard to the special protections afforded to minors in our society and having regard to the necessity of strictly construing a limitation defence, since it denies the person an opportunity to have their claim adjudicated,¹⁴ I find that the Applicant did not have a Litigation Guardian and therefore the limitation period did not begin to run until she was 18 years old. As such, she is not statute barred from proceeding to Arbitration.

Does the Applicant’s failure to provide Economical with a Disability Certificate (OCF-3) pursuant to section 35(2) of Regulation 403/96 and section 36(2) of Regulation 34/10 mean that her application for non-earner benefits cannot succeed?

Position of Economical

Economical submits that pursuant to s. 35(2) of Regulation 403/96 and s. 36(2) of Regulation 34/10, the Applicant is required to submit a Disability Certificate that certifies the Applicant meets the criterion for non-earner benefits and failure to do so means that the claim cannot succeed. The Applicant submitted a Disability Certificate that stated she did not suffer a complete inability to carry on a normal life. For this reason, she is ineligible to receive non-earner benefits before January 2016 when a Disability Certificate meeting the criteria was filed.

Position of the Applicant

The Applicant submits that s. 35(2) and s. 36(2) of the Schedules require only that a Disability Certificate be submitted. There is no requirement that the Disability Certificate certifies that a claimant meets the criterion. The Applicant submitted a Disability Certificate on November 26, 2008. Therefore she has complied with the statutory requirements.

Analysis

Legislative Scheme

Regulation 403/96

35. (1) In this section and section 37,

“specified benefit” means an income replacement benefit, non-earner benefit, caregiver benefit or a payment for housekeeping or home maintenance services under section 22.

(2) An insured person who applies for a specified benefit shall submit with the application a Disability Certificate completed no earlier than 10 business days before the date the application is submitted.

Regulation 34/10

36. (1) In this section and section 37,

“specified benefit” means an income replacement benefit, non-earner benefit, caregiver benefit or a payment for housekeeping or home maintenance services under section 23. O. Reg. 34/10, s. 36 (1).

(2) An applicant for a specified benefit shall submit a completed Disability Certificate with his or her application under section 32. O. Reg. 34/10, s. 36 (2).

(3) An applicant who fails to submit a completed Disability Certificate is not entitled to a specified benefit for any period before the completed Disability Certificate is submitted. O. Reg. 34/10, s. 36 (3).

In support of its position, Economical relies on the cases of Steele v. Intact and Sagan v. Dominion.¹⁵ In Steele, the Superior Court, in awarding summary judgement against the plaintiff, stated that in addition to not responding to the Insurer’s enquiries and not appearing in court for the summary judgment motion, the plaintiff had failed to submit a Disability Certificate that certified she met the criteria. In doing so, the Court cited Sagan. The Court did not explain its use of that decision and for the reason below I find it difficult to reconcile the two decisions.

In Sagan, the Court of Appeal dealt with the correct application of the two-year limitation period and with section 35 and the need for a Disability Certificate to be filed. In that case, the appellant argued that the limitation period should not run until a Disability Certificate was filed. The Court of Appeal found that a Disability Certificate is to be filed with an Application for Benefits and that a Disability Certificate is not the application. As such, the limitation period runs from when the application is filed and not from when the Disability Certificate is filed.

The Court of Appeal went on to find that support for this position can be found in s. 35(6) which provides for claims to be considered when there is no Disability Certificate submitted at all. The Court did not directly address the issue of whether or not a Disability Certificate must meet the criterion in order for it to be considered submitted within the meaning of the sections.

Whilst at first blush, it seems reasonable that if a claim can be considered when no Disability Certificate has been filed, then a claim should not be prevented from proceeding when a Disability Certificate has been filed but does not meet the criterion. However, on considering the definition of a Disability Certificate under the Schedules, I do not think that this reasoning can logically flow from a correct reading of Sagan or s. 35(6). The Schedules define a Disability Certificate to be:

“Disability Certificate” means, in respect of a person, a certificate from a health practitioner of the person’s choice that states the cause and nature of the person’s impairment and contains an estimate of the duration of the disability in respect of which the person is making or has made a claim for a benefit set out in this Regulation; (“certificat d’invalidité”)¹⁶

Requiring that the Disability Certificate “contains an estimate of the duration of the disability in respect of which the person is making or has made an application for a benefit” suggests that a Disability Certificate must meet the criterion in order to be a Disability Certificate with respect to the applied for benefit. It follows that if the Disability Certificate doesn’t meet the criterion then it is not a Disability Certificate under the Schedules. In this case, the Applicant did not file a Disability Certificate that met the criterion for non-earner benefits.

Notwithstanding, I am persuaded by the reasoning of Arbitrator Alves in Beltrame and Dominion,¹⁷ that the analysis should not rest on whether the Disability Certificate met the criterion but whether or not the totality of the dealings between the Insurer and the Insured establishes that there was an application for a benefit. To find otherwise would be to put form over substance and ignore the consumer protection purpose of the legislation.

In Beltrame and Dominion, the Applicant had filed three OCF-3s that stated, inter alia, that she did not meet the test for non-earner benefits. However, Arbitrator Alves found that the OCF-3s filed were not filed in respect of non-earner benefits because they did not provide an estimate of the duration of disability in relation to non-earner benefits in accordance with the Schedule.

Dominion argued that because Disability Certificates did not establish that Ms. Beltrame met the test for non-earner benefits, she failed to apply for the non-earner benefit. Arbitrator Alves determined that case law establishes that a consideration of the totality of the dealings between the Insurer and the Insured is required to determine whether there was an application for a benefit.¹⁸ After finding that the Applicant had not filed a Disability Certificate relating to non-earner benefits, she found that the Applicant had filed sufficient information to establish potential entitlement to non-earner benefits and that the Insurer had sufficient information to deny the benefit.¹⁹

In my view, as in Beltrame and Dominion, there was sufficient information provided to Economical in the OCF-12 to establish a potential claim for non-earner benefits.²⁰ Furthermore, it is worth noting that Economical did not deny the claim on the ground that no Disability Certificate had been filed, suggesting that in its view it had sufficient information upon which to deny the benefit.²¹ Also, as in Beltrame and Dominion, the issue of the Applicant not having filed a Disability Certificate for non-earner benefits was not raised until the Arbitration Pre-Hearing.

For these reasons, I conclude that while the Applicant did not file a Disability Certificate within the meaning of the Schedules, the Applicant had filed sufficient information to establish potential entitlement to non-earner benefits and sufficient information to deny the benefits, and she may proceed to Arbitration with her claim for non-earner benefits.

I note that Economical made submissions on the application of ss. 35(13) and 36(3). However, the entitlement and quantum of non-earner benefits is not for me to determine and I leave those issues to the Arbitration proper.

Conclusion

In conclusion, I find that the Applicant is not statute barred from pursuing her claim for accident benefits. I further find that the Applicant is not precluded from proceeding to Arbitration with her claim for non-earner benefits.

EXPENSES:

I defer the issue of expenses to the Hearing Arbitrator who will have the benefit of full submissions prior to arriving at a decision. If the parties resolve the matter without the necessity of a Hearing the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

April 1, 2016

Janette Mills Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2016 ONFSCDRS 104

FSCO A13-011759

BETWEEN:

TATE MORAN

Applicant

and

ECONOMICAL MUTUAL 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:

1. The Applicant’s non-earner benefits claim is not statute barred due to non-compliance with the applicable limitation period pursuant to the Insurance Act, s. 281.1(1).

2. The Applicant’s application for non-earner benefits can proceed to Arbitration.

April 1, 2016

Janette Mills Arbitrator

Date

Footnotes

1. 1Effective September 1, 2010, the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the “new SABS”) came into force. The transition rules in the new SABS provide that, subject to certain exceptions, benefits that would have been available pursuant to the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996 (the “old SABS”) shall be paid under the new SABS, but in amounts determined under the old SABS.
2. 22002 S.O. c.24 Sch. B, ss. 6, 19(1) and (5).
3. 3R.S.O. 1990, c.I.8, s. 281.1.
4. 4Regulation 403/96, s. 51(1) and Regulation 34/10, s. 56(1); the parties agree that both Schedules are applicable given the date of loss and the date that the applicant reached the age of majority.
5. 5DRPC, Rule 10.2.
6. 6Insurer’s Book of Exhibits at Tab C.
7. 7Regulation 403/96 and Regulation 34/10.
8. 8FSCO A04-000733, February 22, 2005.
9. 9Ibid., at p. 13.
10. 10Ibid.
11. 11Limitations Act, 2002, R.S.O. 1990, c. L15, s. 47.
12. 12R.R.O. 1990, Regulation 194.
13. 13Ibid., Rules 1.03(1), 7.08(1), 7.08(4) and 7.02(2).
14. 14Francis and Allstate Insurance Co. of Canada, 1999 CarswellOnt 5524 at para. 15.
15. 152014 ONSC 6999; 2014 ONCA 720.
16. 16Regulation 403/96, s. 2(1): Regulation 34/10, s. 3(1).
17. 17FSCO No. A12-001522; [2014] O.F.S.C.D. No.108.
18. 18Ibid., at para. 21.
19. 19Ibid., at para. 26.
20. 20Book of Exhibits of the Insurer at Tab C.
21. 21Ibid., at Tab E.