Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2018 ONFSCDRS 59

FSCO A13-014950

BETWEEN:

HARRIET VANDEBORNE

Applicant

and

MIDDLESEX MUTUAL INSURANCE COMPANY

Insurer

DECISION

Before:

Lynda Tanaka, Arbitrator

Heard:

In person at London, Ontario on December 4, 2017 and by written submissions completed December 21, 2017

Appearances:

Harriet Vandeborne participated

Mr. Karl Arvai and Mr. Adam Stevenson, counsel for the Applicant

Mr. Ayren Brown and Mr. James K. Brown for the Insurer

Issues:

The Applicant, Harriet Vandeborne (“Applicant”), was injured in a motor vehicle accident on August 20, 2009 and sought accident benefits from Middlesex Mutual Insurance Company (“Middlesex”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and the Applicant, through her representatives, applied for arbitration at the Financial Services Commission of Ontario under 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 Ontario Regulation 664, as amended.

The parties resolved all the issues in this arbitration except the following:

1. Is the Applicant entitled to housekeeping benefits in the amount of $100.00 per week between October 14, 2009 and August 20, 2011, less amounts paid by Middlesex?

2. Is Middlesex entitled to deduct any sum from its obligation to pay an income replacement benefit (“IRB”) to the Applicant as a result of the receipt by the Applicant of a Long Term Disability benefit (“LTD”) lump sum payment of $177,933.91 net of tax on March 3, 2016 for the periods below:

a) September 7, 2010 to October 21, 2010;

b) October 22, 2010 to May 25, 2011; and

c) May 26, 2011 to March 3, 2016?

3. If Middlesex is entitled to a deduction, is it entitled to credit for the full amount of the LTD and Canada Pension Plan (“CPP”) disability received from September 7, 2010 to March 3, 2016, without regard to the timing of the payments for each of the above periods, or for only 12 months of LTD and CPP entitlement to March 3, 2016?

4. Is Middlesex entitled to a deduction to reflect the union dues that were deducted from the Applicant’s gross income, also for the same periods as is claimed for the collateral benefits, the LTD and CPP?

5. Is the Applicant entitled to interest on overdue payment of benefits?

6. Is either party entitled to its expenses of the arbitration?

Result:

1. The Applicant is entitled to housekeeping benefits in the amount of $100.00 per week between October 14, 2009 and August 20, 2011, less amounts paid by Middlesex.

2. Middlesex is not entitled to deduct any sum from its obligation to pay an income replacement benefit to the Applicant as a result of the receipt by the Applicant of a Long Term Disability benefit lump sum payment of $177,933.91, net of tax, on March 3, 2016.

3. As Middlesex is not entitled to a deduction as held under Issue 2, this issue is moot.

4. Middlesex is not entitled to a deduction to reflect the union dues that were deducted from the Applicant’s gross income, for the same period periods as is claimed for the collateral benefits, the LTD and CPP.

5. The Applicant is entitled to interest on overdue payment of benefits at 2% per month compounded monthly on all overdue amounts to date of payments and in particular, for IRBs, to June 22, 2016 (that is, $400 per week for the period May 25, 2010 to March 3, 2016) less the sum of $12,807.00 which was paid June 22, 2016 together with interest on the sum due as of June 22, 2016 at 2% per month compounded monthly from June 22, 2016 to date of payment.

6. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, 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, with the following modifications. The party who is requesting entitlement to expenses shall file its request not less than 20 calendar days following issuance of this decision. The party responding shall file its responding material not less than 10 calendar days following service of the request for expenses. Reply materials are due five calendar days after receipt of the responding material.

EVIDENCE AND ANALYSIS:

The parties had resolved the medical benefit claims that were part of the Application for Arbitration and had narrowed the issues to those stated above. They filed an Agreed Statement of Facts as Exhibit 1, together with a two-volume Joint Book of Authorities. The Applicant testified and an Applicant’s Document Brief and three OCF-6s with respect to housekeeping and home maintenance expenses were also filed as exhibits. The parties agreed on an exchange of written submissions on the issues with the Applicant filing on December 6, Middlesex filing submissions on December 15 and the Applicant filing reply submissions on December 21. The Applicant requested and received a one-day extension of the reply submissions filing requirement and Middlesex filed a Reply with respect to the interest issue.

At its core, the dispute centres on the deduction of a lump sum payment made by the Applicant’s long term disability provider, Desjardins Insurance, on March 3, 2016, some 5 and a half years after the application for long term disability benefits was made. There is no dispute with respect to payments after that date.

Issue 1 - Is the Applicant entitled to housekeeping benefits in the amount of $100.00 per week between October 14, 2009 and August 20, 2011, less amounts paid by Middlesex?

The Applicant testified that she was employed at the time of the accident as a dietician at the local hospital. According to the employer’s statement on her disability claim, she worked 37.5 hours a week at an hourly rate of $37.30.² She lived alone and looked after her home, both the interior and the exterior, as well as her mother’s home two doors away.

After the accident, she struggled to keep up with her job as well as the housekeeping and caregiving, through the significant pain issues due to her injuries. She stopped looking after her mother’s house at some point which she could not remember and got help with her own house within 6 months of the accident. A friend, as well as one of her two sisters, assisted her. Her needs were assessed by an Occupational Therapist in the fall of 2009,³ two months after the accident and Middlesex approved up to $100 per week for housekeeping and home maintenance.

The Schedule requires that the Applicant pay for the services received and then seek reimbursement from Middlesex. The Applicant testified that she was unable to pay the $100.00 per week for services because of other bills and her struggle to keep on working. She was unsure how long she would be able to keep working with her difficulties in concentration, memory and pain. She struggled to complete tasks and left work early from time to time as a result. She stopped working in early February 2010 and did not return until an unsuccessful attempt in 2013 to go back part-time. Her employer provided her with sick pay from February to May 2010. Because she only received short term disability benefits, she was uncertain of her future benefit entitlements and therefore cautious about her spending on anything but her mortgage and other necessary bills.

In her testimony the Applicant described her housekeeping and home maintenance needs. She lives in a detached house with front and back yards on a 0.2 acre lot. The lawns take 75 minutes to cut using a self-propelled gas mower. In addition, she has gardens to maintain on the front, and side of the house. Prior to the accident, her neighbour always assisted with the heavy snow removal but otherwise she looked after snow removal herself, including the driveway which is two car lengths long.

The Applicant submitted OCF-6 applications for expenses on November 10, 2009, January 18, 2010, March 3, 2011, and March 11, 2013.⁴ She clearly understood that to be reimbursed for what she paid others for home maintenance and housekeeping, she needed to submit the forms but, in her evidence in December 2017, she was not able to consistently identify the signatures on the forms as her own, the names of the providers or the work done. Also, while the benefit was approved at $100 per week based on the Occupational Therapist’s assessment, she submitted OCF-6s in amounts less than that number. According to the agreed Statement of Facts⁵ Middlesex paid $5,620.00 for housekeeping services between August 20, 2009 and August 20, 2011. The claim in this Arbitration is for housekeeping services at a rate of $100 per week for the period October 14, 2009 to August 20, 2011.

The Applicant’s position is that she is entitled to the $100 per week benefits even though she cannot prove that she in fact spent that amount on a weekly basis throughout the period. Middlesex submits that the Applicant has not incurred the housekeeping expense within the meaning of the Schedule if she cannot prove that she spent the $100 per week on appropriate expenses, and therefore she is not entitled to be paid the benefit. Both parties refer to N. (T.) v. Personal Insurance Co. of Canada.⁶ The Applicant relies on the Court’s finding that whether or not the Applicant had paid for housekeeping assistance was not determinative of the issue of whether the expenses were incurred.⁷

Middlesex argues that the chronology of the submission of claims is noteworthy. The first claim was for $100.00 and was submitted November 25, 2009. The next submission was in January 2010, and again for only $100.00. Both submissions were for housekeeping services only and were submitted while she was still employed on a full-time basis. The next submission was not until March 3, 2011 and covers the period from the second submission to September 2010 at $100 per month and for the period October 2010 to February 2011 at $60 per month. The Applicant claimed both housekeeping expenses and landscaping and yard work services. Middlesex relies on the 10-month gap during which she stopped working and began receiving short term disability payments and applied for LTD. Middlesex also submits that the fact that the next submission is two years later and covers a period from September 8, 2009 to October 2011 is significant.

Middlesex submits that if the Applicant were concerned that it would not pay the expenses or if she was concerned about her finances, she would not have incurred the expenses at all or, if incurred, she would have been more prompt in submitting them. Middlesex correctly notes that for the entire period from May 2010 on, the Applicant had no income.

The case law under the Schedule is clear that the word “incurred” is to be given a broad meaning. The Court of Appeal in Monks v. ING⁸ rejected a narrow construction of the word “incurred” in the Schedule. The Court held that a purposeful and remedial interpretation must be given to the legislation. It should not be read so as to require that an insured person must actually receive the services or spend the money or become legally obliged to do so, nor to require that an insured person finance or pledge her credit in order to secure her benefits.⁹ The Court goes on to point out that the policy objective of the Schedule is that accident victims promptly receive the benefits to which they are entitled. Further its goal is to prevent an insurer from benefiting from an insured’s lack of financial resources. According to the Court of Appeal, the legislation was designed for the protection of the insured and should be construed in the way most favourable to her.¹⁰

I do not accept Middlesex’s arguments as to what the Applicant would have or should have done in the circumstances here and that in the absence of that conduct she should not be believed. The Applicant was an hourly paid employee whose impairments caused her to leave work early in the early months after the accident and who therefore was likely facing pressure at work and on her income. Her impairments resulting from the accident are both physical and cognitive. During a period of over five years, her income had been reduced to nil and she was denied benefits to which she thought she was entitled (rightfully as finally admitted by the insurers in question). She was forced to pursue litigation and arbitration against both her insurers. She also had responsibility for care of her elderly mother that had somehow to be managed. With all these stressors and distractions, I do not accept that an expectation of perfect compliance with the Schedule is an appropriate test of the Applicant’s credibility.

I find that the Applicant has established her entitlement to the benefit for housekeeping as claimed in the amount of $100.00 per week for the period October 14, 2009 to August 10, 2011, less moneys already paid. Despite the fact that Middlesex deals with post-104 housekeeping benefits in its submissions, there is no claim for housekeeping benefits after the expiry of the 104 week period after the accident and therefore there is no issue of such a claim after that date.

Issues 2 and 3 Collateral benefit

Issue 2 - Is Middlesex entitled to deduct any sum from its obligation to pay an income replacement benefit to the Applicant as a result of the receipt by the Applicant of an LTD lump sum payment of $177,933.91, net of tax, on March 3, 2016 for the periods below:

a) September 7, 2010 to October 21, 2010;

b) October 22, 2010 to May 25, 2011; and

c) May 26, 2011 to March 3, 2016?

Issue 3 - If Middlesex is entitled to a deduction, is it entitled to credit for the full amount of the LTD and CPP disability received from September 7, 2010 to March 3, 2016, without regard to the timing of the payments for each of the above periods, or only 12 months of LTD and CPP entitlement to March 3, 2016?

As set out in the Agreed Statement of Facts, the Applicant received short term disability benefits to which she was entitled as an employee of the hospital from February to May 2010 from Desjardins Insurance and, when that ended, Middlesex paid her IRBs for a brief period from May 25, 2010 to September 7, 2010. She applied for long term disability benefits (“LTB”) from Desjardins Insurance to which she was also entitled on appropriate proof of disability as an employee of the hospital. If her application had been successful, such benefits would have commenced on September 7, 2010.

Desjardins Insurance refused her application for LTD on November 25, 2010 without paying any LTB and she commenced legal action against it on March 31, 2011. The litigation proceeded for five years and she finally obtained a lump sum payment of $177,933.91, net of tax, as settlement of the litigation on March 3, 2016. From the settlement funds, her lawyers deducted their fees of $50,285.00 inclusive of HST and disbursements totalling $46,991.67 inclusive of HST. Middlesex now agrees that the Applicant was entitled to IRBs from May 25, 2010 to the present at a maximum rate of $400.00 per week.

The settlement information in the Agreed Statement of Facts does not include the calculation but it is specified that none of the payment was for interest. If averaged over a five year period, in essence, they paid her about $22,000 per year net of her legal fees.

In the course of the written argument, one issue was resolved, that being that Middlesex is not claiming an entitlement to repayment of benefits under Section 47 of the Schedule as the basis of the deduction of the collateral benefits. The Applicant’s argument was that, if Middlesex was entitled to set off the deduction under s. 47 as a repayment, then not only would Middlesex have to prove the appropriate demand for repayment had been made (which it had not) but also, the repayment (and therefore the deduction of collateral benefits) was limited to only 12 months. Middlesex has agreed that it is not seeking repayment or basing its entitlement to deduct the collateral benefits under s. 47. Therefore Middlesex was bringing its claim for deduction squarely under the provisions of s. 7(1) of the Schedule.

The Applicant relies on the wording of s. 7(1) which describes deductions for net weekly payments for loss of income (collateral benefits) “being received by” an insured or net weekly payments for loss of income that are not being received but are available unless the Applicant has applied to receive the payments for loss of income.

The Applicant’s position is that to enable Middlesex to reduce the IRB payable, the Applicant must have been actively receiving periodic payments for loss of income (the LTD benefit) and Middlesex must have been paying the IRB. No periodic payments were received by the Applicant in the period May 25, 2010 and March 3, 2016 and therefore the first part of section 7 does not apply. The Applicant does however come within the provision of the second part of section 7, dealing with available payment for loss of income that is not being received but is available unless the Applicant has applied to receive such payments. The Applicant did apply for such payments but was denied, leading to the litigation that finally resolved March 3, 2016 with a lump sum payment by the collateral benefits insurer.

The Applicant relies on the Superior Court decision in Vanderkop v. Personal Insurance.¹¹ The Applicant submits that this case is determinative as it was an identical situation and under the same version of the Schedule. In that case, the Court stated:

IRBs are to be reduced by LTD being received as a result of the accident. The legislation does not entitle Personal to set off hypothetical benefits applied for but refused. Ms. Vanderkop was not in receipt of LTD. As Manulife had denied her claim, she cannot be described as entitled to the payment of LTD. That is, LTD was not available to her.¹²

The Applicant also analysed the wording under the Schedule in the context of other versions of the legislation which used the phrases “received by” or “have been received by” an insured. The Applicant points out that other versions enacted since the Schedule would in fact catch her situation and permit the deduction that Middlesex seeks. Given those legislative changes, the conclusion the Applicant asks me to draw is that the legislation cannot be interpreted to give effect to Middlesex’s argument. If the legislation were to be interpreted that way then the wording changes would not have been necessary.

Middlesex submits that the wording changes in s. 7 of the Schedule do not imply an intended change to the laws by virtue of s. 56 of the [Legislation Act, 2006].¹³ The Ontario Court of Appeal has stated as follows:

… a mere amendment of a regulation does not imply anything about the previous state of the law, and especially does not imply that the previous state of law was different… Equally, however, the court should not presume the law is the same despite the amendment.¹⁴

The provisions of the Legislation Act, 2006 do not affect the presumption that amendments to a statute are intended to be purposeful; nor do they preclude me from considering that the legislature may well have amended the statute to bring about change.¹⁵

I agree with the Applicant that the amendments to the Schedule were intended to make change and that the foremost purpose of the amendment to the wording of s. 7(1) in the previous version of the regulation that was made under O. Reg. 403/96 was to limit the deduction to collateral benefits actively being received by the insured. No other logical explanation of the regulation amendment has been brought forward and the change from “benefits received” to “benefits being received” drives that interpretation. The Applicant’s interpretation is also consistent with the principles set out by the Court of Appeal in Monks v. ING case referred to above, that is, that coverage exclusions and restrictions are to be construed narrowly in favour of the insured.¹⁶

Middlesex has provided references to other cases decided under the other versions of the Schedule but I find these are of limited assistance and can be given little weight in face of the Vanderkop decision. Middlesex has also referred to other cases than Monk v. ING on the issue of statutory interpretation, but the principles and issues in the Monk case apply specifically to the situation before me.

Middlesex relies for its interpretation of s. 7 on a decision of Arbitrator Anschell in Stepien v. Security National insurance Co. /Monnex Insurance Mgmt Inc.¹⁷ in which she held that the insurer was entitled to deduct a lump sum payment paid by the collateral benefits insurer to the insured under s. 7(1) and that to do otherwise would allow the insured person to achieve a double recovery. Arbitrator Anschell also held that it did not matter that the payments were paid in a lump sum, relying on a decision of the Superior Court¹⁸ which held that the fact that a policy provided for benefit payments to be made monthly rather than weekly did not disqualify the benefits from being deducted from the IRBs if the benefits otherwise qualified for deduction.

Arbitrators’ decisions are not binding on other arbitrators. The decisions of the Director and the Director’s Delegates are binding on arbitrators as are the decisions of the courts. There is however merit in arbitrators deciding like cases in a consistent manner and therefore I have carefully considered Arbitrator Anschell’s decision.

Respectfully, I am unable to come to the same conclusion as she did as to the deductibility of the lump sum payments of collateral benefits paid by Desjardins Insurance. I have no dispute with her finding that the legislative purpose of s. 7(1) is to prevent an insured person from receiving double recovery. I note her reference to Allstate Insurance Co. of Canada v. Da Rosa¹⁹ where Director’s Delegate Makepeace ruled that, in addition to preventing double recovery, the collateral benefits rules were to give effect to rules about priority of payers, ensure appropriate relief for accident victims and minimize litigation.²⁰

In my view the interpretation of s. 7 applied by Arbitrator Anschell and urged on me by Middlesex defeats the purpose of ensuring appropriate relief for accident victims and minimizing litigation. To accede to Middlesex’s argument is to invite insurers to delay payment of IRBs in circumstances where there may be collateral benefits. Further, I do not agree that a lump sum payment made following over five years of litigation is comparable to a payment made on a monthly basis rather than a weekly basis, as provided under the specific wording of an insurance policy. This was the situation in Cromwell that Arbitrator Anschell relies on to reach her conclusion. Arbitrator Anschell does not refer to the Vanderkop decision decided in 2008 by Justice Lofchik and therefore she did not consider the reasoning and applicability of it in arriving at her decision. The same applies to the Arulappu decision of Arbitrator Pressman²¹ relied on by Middlesex with respect to deductibility of disability benefits from IRBs.

Middlesex also relies on Trottier v. Royal & SunAlliance Insurance Co. of Canada,²² a decision of Director’s Delegate Draper. This case dealt with a repayment demand by the insurer for overpayment of IRBs when collateral benefits were received. The collateral benefits insurer had initially refused to pay the benefit but, after receiving new information and about a month after the Statement of Claim was served, that insurer accepted the claim for long term disability benefits. The insurer paid the insured a lump sum for the two years of benefits that he was owed. When he received the payment, he informed his accident benefit insurer who had been paying IRBs and it sought repayment of the overpayment of IRBs. The dispute turned on the interpretation of s. 47, the repayment provision, and whether or not the repayment was limited to 12 months. Delegate Draper held that the insurer could not recover accident benefits paid more than 12 months prior to the notice demanding repayment, even if that meant that that an insured person may get to keep benefits that he or she should not have received.

I also note that Royal & SunAlliance was paying IRBs, unlike this case where Middlesex did not pay IRBs during the dispute with Desjardins Insurance in the courts. This fact difference is significant for the interpretation of s. 7.

Both the Monks case and the Vanderkop case are decided later than Trottier. Also, whatever unfairness Middlesex may perceive in this outcome, Delegate Draper properly points out that there was no obligation on the insured to institute litigation to pursue his collateral benefits and, having done so and been successful, the insurer is the beneficiary overall of the insured’s efforts in the litigation by being able to make a deduction of those collateral benefits received.²³

Middlesex dismisses the Applicant’s concern that to make the finding that a lump sum payment secured after years of litigation will encourage insurers to deny IRBs pending the outcome of a lawsuit regarding collateral benefits when they have been denied and thus receive full credit for all collateral benefits received. In contrast, if the insurer pays periodic IRB benefits when due, the insurer would only recover 12 months of IRB overpayment following a s. 47 notice. Middlesex points to the interest provisions on overdue benefits as well as the potential of a special award as sufficient to discourage such conduct. I share the Applicant’s concern and note that on the facts of this case, the intent of the legislation to ensure prompt payment of benefits to accident victims and minimize litigation have been effectively nullified in the process that this Applicant has had to pursue. I also agree that there are significant limitations on the availability of the special award remedy which counter any mitigating effects it might have on insurer conduct.

The case law and the interpretation given to the legislation on the issues of the deductibility of collateral benefits is based on the policy that the collateral benefits are the first source of income support and the accident benefits are excess to those collateral benefits. Here, neither provided income support until they were forced, one after five years of litigation and without interest and the other only after that litigation had been resolved.

While the issue as stated refers to CPP disability payments there is no reference in the Agreed Statement of Facts to her receiving the disability payments; nor are there any submissions referencing the legislation or cases dealing with these. The order requested by the Respondent deals only with the deductibility of the LTD payment made March 3, 2016 and no other payments for CPP. Therefore I decline to make any order concerning the CPP disability payments.

Issue 4 - Is Middlesex also entitled to a deduction to reflect the union dues that were deducted from the Applicant’s gross income, also for the same period periods as is claimed for the collateral benefits, the LTD and CPP?

Section 6(1) of the Schedule provides for the amount of an IRB as 80 per cent of the insured’s net weekly income from employment. The phrase “net weekly income from employment” is not defined, but the Schedule provides a calculation to arrive at the net weekly income from employment, based on annual gross income from employment with deductions for the annual premium for employment insurance, the annual contribution payable under the Canada Pension Plan, and the income tax payable by the insured on the gross annual income from employment.

Middlesex argues that the intent of the legislation is to bring the IRB payments as close as possible to the after tax income, that is, the money that an insured had available to support herself out of her pay cheques before the accident. Middlesex submits that the union dues should be deducted in determining net weekly income from employment. Union dues are not specifically referred to in the relevant sections of the Schedule. Middlesex relies on Dhir v. Non-Marine Underwriters, Lloyd’s London.²⁴ In that case there was a dispute concerning Mr. Dhir’s status as an employee (as opposed to a self-employed person) and the large number and quantity of business expenses that his contract with his employer permitted. The Court noted that, if his employment expenses were not accounted for in the calculation of his net weekly income, his IRB would grossly exceed his after-tax income, an outcome it described as inconsistent with the legislative intent, unjust and to be avoided if it could be done without distorting the wording of the relevant regulation.

Arbitrator Feldman in the Sitnikov v. Markel Insurance Co. of Canada²⁵ noted what he called a trend towards harmonizing an insured’s IRB with his or her reported pre-accident after-tax employment income.

The Applicant resists Middlesex’s efforts to expand the items that can be deducted from the IRBs to include the union dues. She points out that Middlesex did not deduct the union dues previously in paying the IRBs, even though it had full disclosure of the gross income and deductions. Also she argues that the issue is moot as the amount paid for the union dues is so small it will not impact on the $400 per week that the Applicant is entitled to by agreement of the parties.

I accept the Applicant’s submissions. The Schedule contains a specific list of deductions to be made from gross annual income and there is no ambiguity in its terms relevant to the facts of this case; nor is there a policy reason for me to write in another deduction. The legislature has excluded other deductions that might be made such as pension contributions from the list in the section.

Also, Middlesex has not claimed for repayment of IRBs by Middlesex and it paid the IRBs it calculated in June 2016 in a lump sum without that deduction. Director Draper in Trottier v. Royal & Sun Alliance Insurance Co. of Canada²⁶ held that an insured:

is entitled to rely on the insurer’s expertise in calculating the quantum of no fault benefits and is further entitled to assume the quantum of the benefits, as represented by the insurer’s payment is correct.

The Trottier case also stands for the proposition that the Schedule contemplates in some circumstances that an insured will receive an overpayment or double recovery and be entitled to keep it.

The facts in the Dhir case are distinguishable from this case. There is no suggestion that the amount is so large that denying the deduction would distort the intent of the legislation or put the Applicant in a significantly better position than before she was injured. The decision in Sitnikov is not binding on me and I refuse to follow it on the facts of this case. Therefore I find that Middlesex is not entitled to deduct the union dues payable by the Applicant in arriving at the net weekly income from employment.

Issue 5 - Interest

The Applicant claims interest at 2% per month compounded monthly on all overdue amounts of IRB to June 22, 2016 (that is, $400 per week for the period May 25, 2010 to March 3, 2016 less the sum of $12,807.00 which was paid June 22, 2016). She also claims interest on the sum due as of June 22, 2016 at 2% per month compounded monthly from June 22, 2016 to date of payment. She is also entitled to interest on overdue housekeeping benefits.

The Applicant has been found entitled to benefits that have not been paid and are overdue and therefore should receive the interest to which she is entitled under the section.

Middlesex objects to the claim for interest on the payment due as of June 22, 2016 on the basis that it is punitive. I am reminded that it was Middlesex who argued that interest would be a factor discouraging an insurer from delaying payment of IRBs pending the LTD lawsuit. I am not persuaded by its argument now that it should not pay interest on the benefit that is found to be overdue, given that it made a specific decision not to pay interest at the time on the lump sum payment made June 22, 2016. It could have protected itself in making that payment by giving notice then that it would claim repayment under s. 47 and it did not. I therefore award the Applicant interest as claimed.

EXPENSES:

The parties are urged to agree on the issue of entitlement and quantum of expenses. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, 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, with the following modifications as discussed with the parties at the in person portion of this Hearing. The party who is requesting entitlement to expenses shall file its request not less than 20 calendar days following issuance of this decision. The party responding shall file its responding material not less than 10 calendar days following service of the request for expenses. Reply materials are due five calendar days after receipt of the responding material.

March 19, 2018

Lynda Tanaka

Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2018 ONFSCDRS 59

FSCO A13-014950

BETWEEN:

HARRIET VANDEBORNE

Applicant

and

MIDDLESEX MUTUAL INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 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 Ontario Regulation 664, as amended, it is ordered that:

1. The Applicant is entitled to housekeeping benefits in the amount of $100.00 per week between October 14, 2009 and August 20, 2011, less amounts paid by Middlesex.

2. Middlesex is not entitled to deduct any sum from its obligation to pay an income replacement benefit to the Applicant as a result of the receipt by the Applicant of a Long Term Disability benefit lump sum payment of $177,933.91, net of tax, on March 3, 2016.

3. As Middlesex is not entitled to a deduction as held under Issue 2, this issue is moot.

4. Middlesex is not entitled to a deduction to reflect the union dues that were deducted from the Applicant’s gross income, for the same period periods as is claimed for the collateral benefits, the LTD and CPP.

5. The Applicant is entitled to interest on overdue payment of benefits at 2% per month compounded monthly on all overdue amounts to date of payments and in particular, for IRBs, to June 22, 2016 (that is, $400 per week for the period May 25, 2010 to March 3, 2016) less the sum of $12,807.00 which was paid June 22, 2016 together with interest on the sum due as of June 22, 2016 at 2% per month compounded monthly from June 22, 2016 to date of payment.

6. If the parties are unable to agree on the entitlement to, or quantum of the expenses of this matter, 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, with the following modifications. The party who is requesting entitlement to expenses shall file its request not less than 20 calendar days following issuance of this decision. The party responding shall file its responding material not less than 10 calendar days following service of the request for expenses. Reply materials are due five calendar days after receipt of the responding material.

March 19, 2018

Lynda Tanaka

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Exhibit 2, Tab 1, July 14, 2010.
3. 3Ibid., Tab 9, Report of Mellissa Knott of Pursuit Health Management, October 13, 2009.
4. 4Exhibits 2 to 5 inclusive.
5. 5Para. 23.
6. 62012 CarswellOnt 1008.
7. 7Ibid. at para. 133.
8. 82008 ONCA 269.
9. 9Ibid. at para 49 referring to Wawanesa Mutual Insurance Co. v. Smith (Committee of), (1998) 1998 CanLII 18861 (ON CTGD), 42 O.R. (3d) 441 (Ont. Div. Ct.) at paras. 38 and 29.
10. 10Monks v. ING at para. 52.
11. 112008 CanLII 22926 (ON SC), [2008] O.J. No. 1937 (ON SC).
12. 12Ibid. at para. 26.
13. 13S.O. 2006 c. 21 Sch. F.
14. 14Demers v. B.R. Davidson Mining & Development Ltd., 2012 ONCA 384 (ONCA), Laskin J. at para. 43.
15. 15Michelle Santarsieri Inc. Manitoba (Deputy Minister of Finance), 2015 MBCA 71 at paras. 52 and 53.
16. 16At para. 52.
17. 17(2016) 2016 CarswellOnt 2364.
18. 18Cromwell v. Liberty Mutual Insurance Co. (2008), 2008 CarswellOnt 470.
19. 192006 CarswellOnt 3673 at para. 41.
20. 20Stepien v. Security National at para. 40.
21. 21TD Home and Auto Insurance Co. v. Arulappu, 2015 CarswellOnt 13176.
22. 222003 CarswellOnt 5083.
23. 23At para. 48.
24. 242000 CarswellOnt 4136.
25. 252009 CarswellOnt 6351 at para. 44.
26. 26[2003] O.F.S.C.D. No. 173 at para. 31.