Kofi Agyapong v. Jevco Insurance Company, 2016 ONFSCDRS 337

Financial Services

Commission of Ontario

Commission des services financiers

de l’Ontario

Neutral Citation: 2016 ONFSCDRS 337

Appeal P16-00014

Appellant

and

Respondent

BEFORE:

Delegate Jeffrey Rogers

Mr. Kwaku Bona, licensed paralegal, and Mr. Murray Tkatch, solicitor

for Mr. Agyapong

Mr. Paul Omeziri, solicitor for Jevco

November 29, 2016

Under section 283 of the Insurance Act, R.S.O. 1990 c. I.8 as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Regulation 664, R.R.O. 1990, as amended, it is ordered that:

This appeal is dismissed.
Mr. Agyapong shall pay Jevco its appeal expenses in the amount of $3,000.

December 16, 2016

Jeffrey Rogers

Director’s Delegate

Date

I. NATURE OF THE APPEAL

Mr. Agyapong appeals the Arbitrator’s decision of January 25, 2016. The Arbitrator denied his claims for non-earner benefits and for housekeeping and home maintenance benefits. Mr. Agyapong submits that the Arbitrator erred in:

Failing to award benefits until the time Jevco denied them, because of Jevco’s breach of its statutory obligations
Failing to accept hospital records as prima facie evidence of the cause of his impairments, and
Failing to apply the proper causation test or misapplying the causation test.

I reject Mr. Agyapong’s submissions. I find that the Arbitrator properly concluded that Mr. Agyapong was required to prove entitlement to the benefits he claimed, and properly concluded that he failed to do so. I find that the Arbitrator was not required to treat hospital records as evidence of causation and the Arbitrator properly applied the causation test. The Arbitrator therefore did not err in rejecting Mr. Agyapong’s claims. Consequently, the appeal is dismissed.

II. BACKGROUND

The arbitration arose from a motor vehicle accident on July 12, 2005. Mr. Agyapong, a pedestrian, was struck by a pick-up truck. A week earlier, Mr. Agyapong was also struck by a car while riding his bicycle. Before the two car accidents, there were several other incidents in which Mr. Agyapong sustained injuries. As the Arbitrator put it: “Mr. Agyapong was not the luckiest resident of Hamilton, Ontario.”¹

Jevco did not deny Mr. Agyapong’s claim for the benefits in dispute until March 30, 2011. Mr. Agyapong alleged that he had applied for the benefits shortly after the accident and he submitted that Jevco’s delay in responding meant that, until the date of denial, he was presumed to be entitled to the benefits he claimed. The Arbitrator rejected this submission. The Arbitrator was not satisfied that Mr. Agyapong made the application for benefits when he claimed that he did, proof of which “would be necessary to sustain the claim of deemed acceptance of the benefit claim.” The Arbitrator then went on to consider the decision of the Court of Appeal in Stranges v. Allstate Insurance Company of Canada.² The Arbitrator concluded that this decision meant that Mr. Agyapong still had to prove entitlement to the claimed benefits, even if Jevco committed a technical breach of the Schedule.³

Mr. Agyapong testified at the hearing. In addressing the question of proof of entitlement, the Arbitrator concluded that Mr. Agyapong was not a reliable witness. The Arbitrator found that Mr. Agyapong was not forthright when describing his impairments that pre-dated the accident, and that he functioned at a higher level than he reported following the accident. The Arbitrator concluded that:

This consistent pattern of denial of unfavourable facts, combined with Mr. Agyapong’s serial forgetfulness when challenged on a fact or statement causes me to place little reliance on Mr. Agyapong’s testimony, except where corroborated by other, credible, evidence.

The Arbitrator reviewed all of the evidence and ruled that Mr. Agyapong did not prove that his alleged impairments were caused by the incident with the pick-up truck, whether one applied the “but for” test for causation, or the “material contribution” test. The Arbitrator concluded that Mr. Agyapong did not prove that the accident caused functional deficits which were pre-requisites for entitlement to the benefits he claimed.

III. ANALYSIS

No presumed entitlement

Mr. Agyapong submits that the Arbitrator erred in concluding that he was not entitled to benefits before Jevco refused to pay them, because he was presumed to be entitled to them and there was no evidence to rebut that presumption. I reject this submission. As the Arbitrator correctly pointed out, any theory of presumption of entitlement was contingent upon proof that Mr. Agyapong applied for benefits as he claimed. The Arbitrator was not satisfied that he did.

Mr. Agyapong submits that the question of when he applied for benefits was not raised before the Arbitrator and he was therefore not prepared to prove it. I reject that submission. The Arbitrator’s decision shows that Jevco raised the issue and that Mr. Agyapong addressed it. The Arbitrator wrote:

As noted, the Insurer has taken the position that the initial claim for benefits included in the document briefs was not received by Jevco, certainly not around the date shown on the form.⁴

The Arbitrator stated the following in rejecting Mr. Agyapong’s theory of when he applied for accident benefits:

Mr. Tkatch has asked me to infer timely delivery merely from the existence of the form in the document brief and what may possibly be a delivery stamp on the form. That would require a leap of faith that is unsupported by any positive evidence, a leap that would be necessary to sustain the claim of deemed acceptance of the benefit claim.⁵

The Arbitrator’s determination regarding Mr. Agyapong’s delivery of his application for accident benefits is a finding of fact. Under s. 283(1) of the Insurance Act, appeals are limited to “a question of law”.

The leading case on the interpretation of s. 283(1) is Lombardi and State Farm Mutual Insurance Company.⁶ As discussed in that case, an error of law is a finding of fact made in the complete absence of supporting evidence, based on conjecture, or arising from a misapprehension of the evidence that is caused by a misdirection on a legal principle. There was ample evidence before the Arbitrator to support the factual findings of when Mr. Agyapong applied for accident benefits. There was no error. The Arbitrator was right in concluding that Mr. Agyapong did not prove the prerequisites for any consequences to be attached to his allegations of misconduct by Jevco.

Further, the Arbitrator was also correct in concluding that, even if Jevco breached its obligations under the Schedule, Mr. Agyapong still had to prove that he was entitled to the benefits he claimed. The Arbitrator relied on the decision of the Court of Appeal in Stranges to support this conclusion.

In Stranges it was argued that the insurer’s failure to give the plaintiff a valid notice of denial of her claim for income replacement benefits meant that she was entitled to payment until she was given a valid notice. The trial judge accepted this argument. The Court of Appeal reversed the decision. The trial judge relied on the decision of the Supreme Court of Canada in Smith v. Co-operators General Insurance Company⁷ in making the decision. The Court of Appeal found that: “the trial judge’s reliance on Smith was misplaced.⁸”

The Court reviewed Smith and concluded that it did not support the proposition that inadequate notice led to automatic entitlement. The Court stated:

Importantly, however, at para. 1 of the reasons, Gonthier J. noted: [T]here was no proper refusal made and the limitation period did not begin to run. The appellant is not barred from bringing her action. However, I make no conclusion about the merits of her claim, which a trial judge must assess. (Emphasis added)

The inadequate notice did not automatically entitle the insured to payment of benefits. She was still required, as the court acknowledged, to prove her claim.

That same reasoning applies to the facts of this case. The inadequacy of the refusal notice did not entitle the respondent to payment of benefits in perpetuity until proper notice was given or a proper DAC assessment was carried out. The respondent was still required to prove that she was entitled to the continued payment of IRBs because of her continued substantial inability to perform the essential tasks of her employment. Moreover, in this case no question of an expired limitation period arises.⁹

Stranges has been followed in several appeal decisions. In State Farm Mutual Automobile Insurance Company and Yogesvaran,¹⁰ the Arbitrator ruled that the applicant was entitled to benefits until properly terminated. Entitlement was imposed as a consequence of the insurer’s breach of s. 37(1)(a) of the Schedule which states that an insurer “shall” request that the insured person submit a new disability certificate as a prerequisite to a s. 42 insurer medical examination. Delegate Blackman found that Stranges compelled a different result. He ruled that the Arbitrator erred in deciding that the applicant did not have to prove entitlement. He varied the decision to limit payment to an interim order. He wrote:

In Stranges, notwithstanding the far more explicit statutory consequences where benefits should not have been stopped, the Court of Appeal held that the insured person was still required to prove her entitlement. In the version of the Schedule before me, the parties agree that there is no explicit consequence that in the event of procedural non-compliance the insurer must resume payment of benefits and pay the benefits that were not paid.

… [G]iven the Court of Appeal’s decision in a far more compelling situation, I find that I am bound by that case. Hence, following the Court of Appeal in Stranges, I find that the Respondent is still required to prove her entitlement to the benefits in dispute according to the legislated criteria of eligibility and respectfully, that the Arbitrator, without the benefit of that decision, erred in this regard.¹¹

Delegate Blackman reiterated the effect of Stranges, as it applies to breaches of s.37, in upholding the Arbitrator’s denial of income replacement benefits in Hill and Jevco Insurance Company.¹²

In Galarneau and Allstate Insurance Company of Canada¹³ Delegate Evans applied Stranges in rejecting the submission that the Arbitrator erred in failing to award non-earner benefits, based on an invalid denial. He wrote:

… in this case, the failure of Allstate to provide adequate notice or to request an assessment did not automatically entitle Mr. Galarneau to NEBs.

In this case, there has been an extensive review on the merits by the Arbitrator, and there is no procedural basis for overturning his decision. Since Stranges applies, there was no need for the Arbitrator to make findings about the merits of the EOBs, nor to go into a detailed discussion about any other procedural breaches. Accordingly, I find there was no error by the Arbitrator.¹⁴

In Zupnik and State Farm Mutual Automobile Insurance Company¹⁵ Delegate Evans again applied Stranges in upholding the Arbitrator’s denial of income replacement benefits, despite allegations of entitlement due to an invalid denial.

Mr. Agyapong cited no case in which the remedy he seeks has been granted. He argued that Stranges can be distinguished because his circumstances are different. He submits that the difference is that Jevco did nothing to adjust his claim for several years, whereas in Stranges the insurer properly acknowledged the application and then gave an invalid notice of denial. He points out that the language of s. 37 of the Schedule mandates action by an insurer. The section states that the insurer “shall” do certain things if it wishes to determine that an insured person is entitled to a benefit, and an insurer “shall not discontinue” paying a benefit unless certain things have occurred. He submits that to allow an insurer to breach its mandated obligations without consequence would encourage insurers to implement a practice of ignoring applications, hoping that they will just go away.

I find that Mr. Agyapong’s submission fails for several reasons. First, in Stranges the language used to impose the insurer’s obligations was no less authoritative than s.37. Further, the insurer’s breaches included failing to properly inform the insured person of the dispute resolution process. That should be considered a serious breach, in the context of consumer protection legislation. Nevertheless, as Delegate Blackman pointed out in Yogesvaran: “notwithstanding the far more explicit statutory consequences where benefits should not have been stopped, the Court of Appeal held that the insured person was still required to prove her entitlement.¹⁶”

Second, as Delegate Blackman also noted in Yogesvaran, the Schedule contains no explicit consequences for an insurer’s breach obligations under s.37. However, the Schedule does impose the consequence of payment of the claimed benefit where an insurer breaches other procedural obligations. For instance, s.38.2 (9) imposes the specific consequence of payment, where an insurer fails to properly respond to a request for an assessment or examination. Had the Legislature intended the consequence Mr. Agyapong seeks, it would have been specifically imposed. Delegate Feldman recently noted the difference between s. 38.2(9) and s. 37, in Green and Belair Insurance Company Inc.¹⁷ and he distinguished Stranges on this basis.

Third, the Schedule already has mechanisms in place to encourage insurers to respond promptly to claims. Where an insurer delays, it must pay interest pursuant to s. 46. Where the insurer’s delay is unreasonable, an Arbitrator may also impose a special award pursuant to s. 282(10) of the Insurance Act. These mechanisms act to preserve consumer protection. In my view, the principle is not advanced by granting windfalls of weekly accident benefits to individuals who would otherwise not be entitled.

As noted earlier, I agree with the Arbitrator that Stranges applies in Mr. Agyapong’s circumstances and I find that the Arbitrator was correct in denying his claims.

No error in treatment of hospital records

Mr. Agyapong submits that the Arbitrator erred by failing to accept hospital records as proof of the cause of his impairments. He relies on the following statement by the Supreme Court of Canada, in Ares v. Venner:¹⁸

Hospital records, including nurses’ notes, made contemporaneously by someone having a personal knowledge of the matters then being recorded and under a duty to make the entry or record should be received in evidence as prima facie proof of the facts stated therein. This should, in no way, preclude a party wishing to challenge the accuracy of the records or entries from doing so.

Mr. Agyapong misreads the statement by the Court. Ares resolved the question of whether

hospital records were admissible, or excludes as hearsay. The Court found them admissible only to the extent that they were “made contemporaneously by someone having a personal knowledge of the matters then being recorded …” If made without personal knowledge, information in hospital records remains hearsay. No one who made the hospital records had personal knowledge of the cause of Mr. Agyapong’s impairments. Assigning weight to the hearsay contained in them was within the Arbitrator’s discretion. The Arbitrator did not err in deciding not to treat them as proof of the cause of Mr. Agyapong’s impairments.

No error in applying causation test

Mr. Agyapong submits that the Arbitrator erred because he did not correctly apply the causation test. As I stated earlier, I reject that submission.

In arriving at the decision, the Arbitrator reviewed the jurisprudence on the issue of causation and concluded that it is not clear whether the test to be applied was the “but for” test or the “material contribution test”. The “but for” test requires answering the question of whether “but for the accident” the insured person would have sustained the impairments required for entitlement. The “material contribution” test asks whether the accident materially contributed to the impairments. The Arbitrator resolved the uncertainty in the jurisprudence by applying both tests. He concluded that Mr. Agyapong met neither test. He wrote:

While I accept that the days of the ritual application of the “material contribution” test in accident benefit matters are numbered at best, I do not believe that Mr. Agyapong has met either test in this matter.¹⁹

Mr. Agyapong submits that the “but for” test does not apply in his circumstances. I find it unnecessary to address that submission since the Arbitrator applied both tests and correctly applied the test upon which Mr. Agyapong relies.

In both written and oral submissions, counsel for Mr. Agyapong referred to the proper causation test as “material contribution to risk”. I wondered whether this was a new approach. At the hearing, counsel clarified that this was not a new test. Rather, it is his preferred way of referring to the test which is generally called the “material contribution” test. According to Mr. Agyapong, the Arbitrator misunderstood the test because he gave meaning to “material” as a qualifier of “contribution”.

The Arbitrator engaged in the following analysis:

The mere existence of complaints after an accident is not in itself sufficient to attribute causation. The use of the word “material” to modify “contribution” in the phrase “material contribution” suggests that the contribution of the subject accident must be more significant and not form simply a minor or insignificant part of the causation spectrum.

Notwithstanding Mr. Agyapong’s evidence to the contrary, I do not find that the July 5, 2005 accident was either significant or influential in creating the disability reported post-accident.²⁰

Mr. Agyapong submits that the above analysis is flawed because the test does not require him to prove that the “accident was either significant or influential in creating the disability reported”. He submits that he was only required to prove that he sustained some injury as a result of the accident. Once he did that, he did not have to also prove that any ongoing impairment was caused by the accident. In support of this submission, Mr. Agyapong relies on the decision of the Supreme Court of Canada in Athey v. Leonati.²¹ Specifically, Mr. Agyapong relies on this statement: “Even if the accidents played a minor role, the defendant would be fully liable because the accidents were still a necessary contributing cause.²²” However, this submission focusses on the Court’s use of the term “minor role” and ignores the context.

The full statement by the Court was:

If it was necessary to have both the accidents and the pre-existing back condition for the herniation to occur, then causation is proven, since the herniation would not have occurred but for the accidents. Even if the accidents played a minor role, the defendant would be fully liable because the accidents were still a necessary contributing cause.

Note that the statement is made in applying the “but for” test, which Mr. Agyapong says does not apply in his circumstances. In any event, the Court ruled that it must be proven that the accident was a “necessary” element. The Arbitrator found that the accident played no part in Mr. Agyapong’s ongoing impairments. He wrote:

From these records, I find it impossible to ascertain if and why the subject accident had any significant effect on the ongoing difficulties experienced by Mr. Agyapong. His significant problems being much same before and after the accident, I cannot find that but for the accident, they would not have happened.²³

In Athey, the Court did specifically address and define the “material” qualifier. The Court stated: “A contributing factor is material if it falls outside the de minimis range²⁴”. Then, the Court applied the de minimis qualifier as follows:

The trial judge’s conclusion on the evidence was that “[i]n my view, the plaintiff has proven, on a balance of probabilities, that the injuries suffered in the two earlier accidents contributed to some degree to the subsequent disc herniation”. She assessed this contribution at 25 percent. This falls outside the de minimis range and is therefore a material contribution…²⁵”

When the Arbitrator determined that the accident was neither significant nor influential in creating post-accident disability, he engaged in the de minimis analysis applied in Athey. There was no error.

Mr. Agyapong was entitled to a non-earner benefit upon proving that the accident caused him to suffer a complete inability to carry on a normal life. Mr. Agyapong was entitled to housekeeping and home maintenance benefits if the accident caused a substantial inability to engage in his pre-accident housekeeping and home maintenance activities. Having properly determined that the accident was neither significant nor influential in creating post-accident disability, the Arbitrator correctly concluded that the accident did not cause the functional deficits required for entitlement to the benefits Mr. Agyapong claimed. Mr. Agyapong’s appeal must therefore be dismissed.

IV. EXPENSES

Jevco sought its expenses in the amount of $3,771.52, if successful. Mr. Agyapong sought $3,500, if successful. He submitted that the parties should bear their own expenses in the event of Jevco’s success. He submitted that his appeal was made in good faith and that Jevco should not be “rewarded” in circumstances where it has breached its obligations to adjust his claim.

I have no doubt that the appeal was made in good faith, but the fact is that Mr. Agyapong has unsuccessfully pursued an appeal and there was no finding that Jevco breached its obligations. I find that Jevco is entitled to its expenses of the appeal, based upon its success. Given the history of the appeal, I fix the quantum at $3,000. I have ordered Mr. Agyapong to pay Jevco its appeal expenses in that amount.

December 16, 2016

Jeffrey Rogers

Director’s Delegate

Date

Footnotes

(FSCO A11-003445, January 25, 2016) at page 2
2010 ONCA 457
The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
At page 6
At page 6
(FSCO P01-00022, February 26, 2003)
[2002] S.C.R. No. 129
At paragraph 5
At paragraphs 8-10
(FSCO P09-00042, October 28, 2010)
At pages 11-12
(FSCO P13-00017, October 1, 2014)
(FSCO P13-00031, May 27, 2015)
At page 6
(FSCO P15-00037, September 16, 2016)
See footnote 10 above
(FSCO P15-00007, November 16, 2016)
1970 CanLII 5 (SCC)
At page 14
At page 16
1996 CanLII 183 (SCC), [1996] 3 SCR 458
At paragraph 41(2)
At page 15
At paragraph 15
At paragraph 44