Neutral Citation: 2016 ONFSCDRS 318 FSCO A15-006419

BETWEEN:

LUIS BRANDAO Applicant

and

BELAIR INSURANCE COMPANY INC. Insurer

DECISION ON A MOTION

Before: Arbitrator Charles Matheson Heard: By written submissions completed on October 31, 2016

Appearances: Mr. Jordan Palmer, lawyer, participated for Mr. Luis Brandao Mr. Sean Miller, lawyer, participated for Belair Insurance Company Inc.

Issues:

The Applicant, Mr. Luis Brandao, was injured in a motor vehicle accident on December 10, 2005. He applied for and received statutory accident benefits from Belair Insurance Company Inc. ("Belair"), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Brandao 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 this Motion is:

Is the Applicant statute barred from applying for Income Replacement Benefits ("IRBs")?
Who is liable to pay the reasonable legal expenses of this motion?

Result:

The Applicant is statute barred from pursuing IRBs at this Arbitration.
I shall defer the issue of expenses to the final Hearing Arbitrator. In the event that a final Hearing is not necessary and should the parties become unable to resolve this issue, they shall subsequently schedule an Expense Hearing before me, in accordance with the provisions of the Dispute Resolution Practice Code, once they have settled all other arbitration disputes between them.

EVIDENCE AND ANALYSIS:

Case Law and Legislation Considered

Turner v. State Farm Mutual Automobile Insurance Company, 2005 CanLII 2551 (ON CA) Smith v. Co-Operators General Insurance Company, 2002 SCC 30, [2002] 2 S.C.R. 129 (S.C.C.) Mangos and Aviva Canada Inc., 2007 CarswellOnt 6868 (FSCO A06-000847) Insurance Act, R.S.O. 1990, s. 281.1(1) Statutory Accident Benefits Schedule, s. 51 of O. Reg. 403/96

Background

The Applicant was a pedestrian who was struck by a pick-up truck while standing on a median, waiting to cross the road on December 10, 2005. The Applicant applied for IRBs as a result of this accident. After several attempts over the course of some 5 years, the Insurer finally received information about the Applicant's employment status. Some IRBs were eventually paid to the Applicant, but are now in dispute.

Decision

The pertinent legislation is the Insurance Act, R.S.O. 1990, s. 281.1(1) and the Statutory Accident Benefits Schedule, s. 51 of O. Reg. 403/96, which read as follows:

Insurance Act

Limitation period

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).

Statutory Accident Benefits Schedule

Time Limit for Proceedings

An application under subsection 280 (2) 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. 45/16, s. 5.

The undisputed evidence as submitted within the parties' Factums and Affidavits show the following timeline of events:

July 11, 2011: the Insurer issued a letter that denied payment of IRBs;
August 23, 2011: the Insurer issued a second letter denying IRBs;
September 16, 2011: the Insurer issued a letter which recognized an IRB payment was owed. This letter also defined what was owed, the amount being paid to the Applicant, and for what time period. It is also the letter the Insurer is relying upon to start the limitation period clock ticking. Attached to this letter was the Applicant's rights on how to dispute the Insurer's findings;
October 11, 2011: the Insurer issued the Applicant a blank Mediation Form as requested by the Applicant and another copy of the September 16, 2011 letter;
January 15, 2013: the Application for Mediation is received by FSCO;
February 27, 2013: the Mediation takes place;
March 1, 2013: the Report of Mediator is released;
October 1, 2013: the Insurer wrote a letter to the Applicant advising that there was no Application for Arbitration to date and provided the Applicant the consequences for same; and
July 22, 2015: the Application for Arbitration was filed.

The Insurer argues, in part, that the Applicant is statute barred from bringing the IRB issue to Arbitration because the Applicant waited more than two years from the denial letter of this benefit, to bring the issue to Arbitration.

The Applicant argues, in part, that the Insurer's letter of September 16, 2011 was ambiguous, and as such, the letter does not qualify as a proper denial, as the courts and other Arbitrators have defined.

I agree with the Insurer's position that the doctrine of discoverability does not apply in the accident benefit context, and the subjective understanding of the Applicant is irrelevant.

I am not persuaded that the Applicant did not understand that the Insurer was refusing to pay any further IRBs. The objective evidence in this case is that the Applicant asked for a Mediation Form, and then participated in the Mediation phase of the dispute resolution process.

In my view, I cannot find that the September 16, 2011 letter was ambiguous. The opposite must be true. On the balance of probability, the Applicant had enough information before him to begin the dispute resolution process, which is the crux of whether or not a proper denial had been made. Hence, the reasons for the denial, although not perfect, meet this test of communicating a denial message in a straightforward manner to an unsophisticated person, which meets the standard of sufficiency (not perfection) as argued by the Insurer. The evidence shows that the Applicant applied for Mediation.

The legislation mandates the Applicant had two years from the denial date to commence an Arbitration process, or 90 days after the Mediation failed. In this case, this means that the Applicant had from September 16, 2011 up to September 16, 2013 to apply for the Arbitration, not July 22, 2015.

For the reasons above, I now find and order that the Applicant is statute barred from pursuing IRBs at Arbitration.

EXPENSES:

I shall defer the issue of expenses to the final Hearing Arbitrator. In the event that a final Hearing is not necessary and should the parties become unable to resolve this issue, they shall subsequently schedule an Expense Hearing before me, in accordance with the provisions of the Dispute Resolution Practice Code, once they have settled all other Arbitration disputes between them.

November 28, 2016

Charles Matheson Arbitrator

Financial Services Commission of Ontario