RBC General Insurance Company v. Stalin Thiruchelvam, 2019 ONFSCDRS 16

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2019 ONFSCDRS 16

Appeal P18-00032

OFFICE OF THE DIRECTOR OF ARBITRATIONS

RBC GENERAL INSURANCE COMPANY Appellant

and

STALIN THIRUCHELVAM Respondent

BEFORE: David Evans

REPRESENTATIVES: Darrell March and Paul Omeziri for RBC General Insurance Company David S. Wilson for Mr. Stalin Thiruchelvam

HEARING DATE: On the record with submissions received by November 21, 2018

APPEAL ORDER

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:

1. The Appeal of the order of Arbitrator Louise Barrington dated April 26, 2018 is allowed. Paragraphs 1 through 6 of the decision are rescinded and replaced with the following:

   1. Mr. Stalin Thiruchelvam’s claims for statutory accident benefits and a determination of catastrophic impairment are dismissed.

   2. Mr. Stalin Thiruchelvam shall pay to RBC General Insurance Company its legal arbitration expenses of $43,796.00, inclusive of disbursements and HST.

2. A party may seek an order of legal appeal expenses, as set out below.

April 12, 2019

David Evans Director’s Delegate Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

RBC General Insurance Company appeals the decision of Arbitrator Barrington dated April 26, 2018, wherein she found Mr. Thiruchelvam was catastrophically impaired pursuant to the SABS‑2010.¹ She also found he was entitled to payment of medical benefits and the cost of an examination, and awarded him $49,331.63 as legal expenses of the arbitration.

However, the Arbitrator failed to apply the “but for” test of causation in this case where Mr. Thiruchelvam had pre-existing conditions before the accident of September 4, 2013, and this was not a “material contribution to risk” case. Furthermore, she breached the principles of fundamental justice by failing to consider whether an adjournment was warranted when Mr. Thiruchelvam served a 90-page report 30 days before the start of the arbitration hearing.

The appeal is therefore allowed.

II. BACKGROUND

Mr. Stalin Thiruchelvam was injured on September 4, 2013 in a motor vehicle accident (the MVA). The major issue in this case was his claim that he had suffered a catastrophic impairment. He also claimed entitlement to some medical benefits and the cost of an examination.

Mr. Thiruchelvam claimed that he suffered an impairment that, in accordance with the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, resulted in a class 4 impairment (marked impairment) or class 5 impairment (extreme impairment) due to mental or behavioural disorder: s. 3(2)(f) of the 2010 SABS. Since this accident preceded the 2016 amendments to the SABS, the Pastore² rule applied: a marked impairment of any one of the four relevant domains like adaptation or activities of daily living could qualify an applicant as suffering a catastrophic impairment.

Mr. Thiruchelvam was involved in several accidents before the MVA, and one afterwards. The most important of these were the two that occurred close together in 2002. Since the 2002 accidents, Mr. Thiruchelvam has not returned to work. He testified that the injuries and sequelae from these two accidents were serious and persistent. He suffered substantial disabilities, both physical and mental, and was still receiving treatment for complaints arising from those accidents in September 2013, particularly with respect to his mental health. Throughout the 11‑year period between 2002 and the MVA, Mr. Thiruchelvam said that all his activities were affected to some extent by pain, depression, lack of motivation and lack of interest. He testified that the pre-MVA impairments affected his social life, and household activities such as cleaning, cooking, financial management, attendance at church and childcare.

The Arbitrator noted that in his Post-Hearing Submissions, Mr. Thiruchelvam’s counsel stated that there had been an application for a Catastrophic Designation following those 2002 motor vehicle accidents.³ She referred to the reports of Dr. Tory Hoff and Dr. Maselle Virey respecting that claim.

With respect to the hearing itself, the Arbitrator noted that the first day was taken up with procedural issues. However, the only issue she discussed in her decision related to an OCF-19 Application for Determination of Catastrophic Impairment: an invalid, earlier one had been provided to RBC’s counsel. Over that counsel’s objection, she accepted the OCF-19 produced by Mr. Thiruchelvam’s counsel at the hearing that through inadvertence had not been provided to counsel, although there was evidence the proper one had been sent to RBC earlier.

Mr. Thiruchelvam testified that in the MVA, he was rear-ended, increasing his pre-existing pain. He did start some treatments like massage and physiotherapy for short-term pain relief. He also testified that his mental state worsened. The Arbitrator noted that Mr. Thiruchelvam had difficulty describing the change in his condition after the MVA and that Mr. Thiruchelvam’s demeanor seemed lethargic, almost sullen at times; he had obvious difficulties remembering details and often answered vaguely or he did not know or remember.

A large part of the decision therefore focused on the medical evidence.

Dr. Martin Lee, a rheumatologist, treated Mr. Thiruchelvam for fibromyalgia, and in November 2012 described him as massively symptomatic but stable.

Dr. Tory Hoff, a clinical psychologist, treated Mr. Thiruchelvam with psychotherapy between 2008 and 2015, and had authored a report on April 29, 2011. She diagnosed pain, depressive and anxiety disorders, including posttraumatic stress symptoms. In the 2011 report, she saw no end in sight to his chronic psychological condition.

In a second report dated September 11, 2014, Dr. Hoff wrote that the MVA had aggravated Mr. Thiruchelvam’s physical and psychological conditions, likely causing his condition to become more deeply entrenched. In a third report dated September 18, 2017, Dr. Hoff wrote that within about three months of the MVA he was behaviourally and functionally back to where he was before it occurred, although the accident subtly reinforced his negative thinking.

Mr. Thiruchelvam’s counsel also referred to the reports of Dr. Maselle Virey, a neuro-psychiatrist who treated Mr. Thiruchelvam over several years beginning on May 1, 2003. In March 2013, Dr. Virey reported that Mr. Thiruchelvam continued to endorse severe depressive symptoms. In his report of July 21, 2014, Dr. Virey noted some improvement in August 2013, namely that while Mr. Thiruchelvam was still suffering from depression, his general mood was better, and the accident caused recrudescent symptoms of post-traumatic stress disorder. He noted that Mr. Thiruchelvam nonetheless remained massively symptomatic. He added that recovery rates diminish with time, sinking from 54 percent at six months to 1 percent at five years.

In an August 27, 2014 report from Kaplan Psychologists Clinic, Dr. Brian Levitt produced an extensive review of Mr. Thiruchelvam’s history, going back to an earlier Kaplan report of March 20, 2007 regarding the 2002 accidents. The conclusion then: Mr. Thiruchelvam was markedly impaired with respect to adaptation, and moderately to markedly impaired with respect to the three other domains, so his impairment due to mental and behavioural disorders was marked overall. As for the 2013 MVA, Dr. Levitt wrote that it initially aggravated his symptoms, although the depression and pain were likely similar to before. But because Mr. Thiruchelvam’s auto travel anxiety worsened and his paranoid beliefs were reinforced, he concluded that all three accidents materially contributed to his current symptom picture and impairments from a psychological perspective. In an October 30, 2017 update, Dr. Levitt stated that had the 2013 accident not occurred, Mr. Thiruchelvam’s outcome had the potential to be different and his status after it could not reliably be predicted to be the same.

At para. 41 of [2018] O.F.S.C.D. No. 98, the Arbitrator then states this: “Counsel for the Applicant also referred to the 90-page report of Omega Medical Associates dated November 10, 2017 entitled Catastrophic Multidisciplinary Examinations - Criterion 8⁴ (the ‘Omega report’).”

Note the date of the Omega report: November 10, 2017. The hearing in this matter started December 11, 2017, a scant 31 days later. It barely met the 30-day requirement for document production in Rule 39.1 of the Dispute Resolution Practice Code. I will return to this point below when discussing the Arbitrator’s refusal to grant an adjournment to allow RBC to react to this report that dealt with the main issue at the hearing.

The Arbitrator noted that a major part of the Omega report reviewed and criticized reports from the Insurer’s Examination done by Viewpoint in response to the OCF-19 submitted by Dr. Garner on December 18, 2014. As for Omega’s own assessors, Dr. Dory Becker, psychologist, and Ms. Stacey Baboulas, occupational therapist, they concluded that there was insufficient evidence to suggest that Mr. Thiruchelvam’s functioning had deteriorated in Social Functioning, Concentration, Persistence, and Pace and Adaptation as a result of his involvement in the 2013 MVA. (It will be remembered that back in 2007 Mr. Thiruchelvam’s impairment had already been found to be marked in Adaptation.) However, Dr. Becker concluded that the accident had moved Mr. Thiruchelvam to a marked impairment in Activities of Daily Living from moderate to marked.

At para. 45, the Arbitrator noted that Dr. Garner, a specialist in physical medicine and rehabilitation, in his OCF-19 attributed cause to all three accidents, “which,” she wrote, “merely underscores the difficulty of establishing that the MVA directly caused the Applicant’s current impairment.” She also noted that in his report of August 26, 2014, Dr. Garner noted no significant functional limitations from the MVA but a subjective aggravation of symptoms.

The Arbitrator briefly reviewed the medical reports filed by RBC. Dr. Sherri MacKay of Centrum Medical Assessments assessed Mr. Thiruchelvam on October 31, 2014. Dr. MacKay concluded there may have been a minor exacerbation of pre-existing symptoms but there was no indication of any significant persistent increase in the severity of mental health symptoms due to the MVA. The Arbitrator preferred the evidence of Dr. Becker because she and Ms. Baboulas had more opportunity to observe and evaluate Mr. Thiruchelvam and his impairments, and they had access to his medical records from before the MVA.

The Arbitrator then started her analysis of the evidence. She found it not surprising that there were different conclusions reached by various professionals at different times over 15 years, but that made it extremely difficult to compare the assessments in order to ascertain whether there has been a real exacerbation of Mr. Thiruchelvam’s pre-MVA condition. Mr. Thiruchelvam was a poor witness and his testimony was often not particularly helpful. She noted that, at the hearing, Dr. Virey reiterated his written opinion that Mr. Thiruchelvam’s various psychiatric disorders had originated from the 2002 accidents, but that all three accidents had materially contributed to the impairments suffered by Mr. Thiruchelvam today. The Arbitrator accepted the Omega report as evidence of Class 4 Marked Impairment in the sphere of Adaptation. Accordingly, she found that Mr. Thiruchelvam, at the time of the hearing, was markedly impeded in useful functioning, at least in the sphere of Adaptation, and consequently met the SABS criteria for catastrophic impairment in his activities of daily living. She then turned to causation.

The Arbitrator noted that, generally, an applicant must show that “but for” the accident he would not have suffered the impairment:

However, in this case the pre-existing physical and psychological impairments resulting from previous accidents had created a “new normal” for the Applicant which his doctors thought would most probably have been permanent. Thus, it would be futile to ask the Applicant whether “but for” the MVA he would not be suffering his current impairment. He was already in a considerably impaired state before the MVA. As miserable as this “new normal” may have been for Mr. Thiruchelvam, it was this pre-MVA level of dysfunction to which his post-MVA impairments are to be compared.

The question the Arbitrator asked herself was, if Mr. Thiruchelvam could prove, on the balance of probabilities, that his pre-existing psychiatric impairment was exacerbated by the MVA, can that exacerbation be deemed a “material contribution”?

His own expert had said in 2007, six years prior to the MVA, that his chances of recovery stood at less than one per cent. The MVA may well have exacerbated the Applicant’s symptoms, but he himself is unable to tell us to what extent, or indeed if there was any serious deterioration after the MVA. There was no clinical measurement to allow doctors to state with certainty what proportion of the impairment stemmed from the MVA, nor the precise extent of his impairment.

The Arbitrator noted the reports showing Mr. Thiruchelvam had severe psychiatric problems following his 2002 accidents. However, she pointed out there was agreement among his treating and assessing professionals that despite those serious pre-existing psychiatric symptoms, he was now in worse condition than immediately before the MVA. She went on to state that causation was admittedly ambiguous and there was no certain way to ascertain the relative importance of the MVA. She then relied on the remedial consumer protection aspect of the SABS to decide in Mr. Thiruchelvam’s favour as follows:

Mr. Thiruchelvam may possibly have already been catastrophically impaired prior to the MVA, but that does not prevent the MVA from materially contributing to an even worse condition than what he was already suffering before it. The designations of impairment - Mild, Moderate, Marked and Extreme - are not pinpoints on a scale but each is rather a range. The characterisation cited in the OCF-19 of “moderate to marked” would indicate a range between high moderate and low marked. Even if Mr. Thiruchelvam had already been in a low marked range prior to the MVA, nothing prevents the MVA’s impact from worsening his impairment to a higher level within the Marked range, a level closer to, but which does not reach Extreme. In this light, an ambiguity must be resolved in favour of the Applicant. I find that, on the balance of probabilities, the MVA did have a material effect on the Applicant’s psychiatric condition, leaving him with impairments more severe than those he was already suffering before September 4, 2013, and which are catastrophic within the meaning of the Schedule.

The Arbitrator then turned to the claims for medical benefits. Mr. Thiruchelvam claimed chiropractic and physiotherapy treatments in two OCF-18s, one dated July 23, 2015 by Darren Hylton for $1,936.35, and the other dated September 8, 2015 by Scarborough Rehab for $1,696.30. The Arbitrator dealt with them together, as the evidence and arguments for both were similar. The Arbitrator noted the evidence that Mr. Thiruchelvam’s chronic pain and fibromyalgia persisted and that Mr. Thiruchelvam testified his pain had increased after the MVA but the treatments provided temporary relief. The Arbitrator found the treatments were reasonable and necessary, even if the relief was only temporary. She also found the treatments recommended fell within the range of reasonable cost and frequency.

Mr. Thiruchelvam had also claimed the cost of an examination for occupational therapy to be provided by Zaraska Rehab Associates as set out in an OCF-18 dated January 15, 2015, for an attendant care and occupational therapy assessment. She found Mr. Thiruchelvam entitled to the cost, given his persistent pain and difficulty with the activities of daily living, as a logical step to ascertain the necessity and reasonableness (or not) of attendant care and occupational therapy.

The Arbitrator found that Mr. Thiruchelvam was entitled to interest on overdue benefits but not to a special award.

Finally, she awarded expenses to Mr. Thiruchelvam, given his success. Her reasons are in one paragraph. She had before her both parties’ Bills of Costs. That of Mr. Thiruchelvam totaled $47,297.63 (although that included $1551 for a partial transcript, and I have ordered several times that transcript costs are not recoverable as arbitration or appeal expenses). She then noted: “By way of comparison, the Insurer’s Bill of Costs was for a roughly similar amount of $43,796.00, and this to my mind is an indication that both parties’ claimed costs for this particular case were reasonable.” Accordingly, she awarded Mr. Thiruchelvam his claimed expenses without any reduction or further analysis.

I will add that there were a number of procedural aspects of the decision that were also appealed with respect to the filing of documents and post-hearing amendments, discussed further below.

III. ANALYSIS

The biggest issue on this appeal is causation, in particular because the Arbitrator refused to apply the “but for” test. On that point, the Divisional Court recently confirmed that the predominant test in accident benefit cases is “but for,” as discussed below.

However, I note that, even on a “material contribution” basis, the Arbitrator erred in her decision regarding catastrophic impairment – because Mr. Thiruchelvam was already catastrophically impaired for a mental or behavioural disorder before the MVA. As the Arbitrator noted, in the domain of Adaptation, at most his impairment had moved from a low marked range to a higher marked range, simply getting him closer to Extreme. But it cannot be said that this made him more catastrophically impaired, which is in effect what the Arbitrator found.

I say this because “Catastrophic impairment” is not an impairment in and of itself. Rather, it is a term of art for a threshold based on various criteria. Thus, in cases regarding mental or behavioural disorders where the Pastore rule applies, it suffices if the applicant has a marked impairment in one domain. Someone who has two or more marked impairments is not more “catastrophically impaired,” in the sense that more benefits are available. Once you cross the threshold, greater benefits are possibly available, regardless of the number of marked domains. So while the Arbitrator found that Mr. Thiruchelvam’s impairment had worsened, he could not be more catastrophically impaired because he was already catastrophically impaired for a mental or behavioural disorder. I would allow the appeal regarding catastrophic impairment on that ground alone.

In any event, the Arbitrator failed to apply the “but for” test at all. The Divisional Court in Sabadash v. State Farm Mutual Automobile Insurance Company, 2019 ONSC 1121 (February 15, 2019), has confirmed that, pursuant to the Supreme Court decision in Clements v. Clements, 2012 SCC 32, the appropriate test is “but for” and not material contribution. However, it disagreed with my interpretation in my Sabadash decision⁵ that even in “material contribution to risk” cases the “but for” test still applied:

40The Director’s Delegate was also incorrect in holding at paragraph 24 of his reasons that: “I believe that, pursuant to Clements, the primary causation test is the ‘but for’ test. Even if it is appropriate to apply the ‘material contribution to risk’ test as discussed in Clements, the plaintiff or insured still has to pass the ‘but for’ test”. In light of the statement in Clements at paras. 13-15 that “but for” and “material contribution to risk of injury” are alternatives, “but for” need not be proven in a “material contribution to risk” case.

I admit that I do not understand why the Court relied on paras. 13-15 of Clements for that proposition. The subsequent paragraphs in Clements go to great lengths to say that “but for” and “material contribution to risk of injury” are not alternatives. For instance, after reviewing the Canadian case law, the Court stated at para. 28 that “the Court has never in fact applied a material contribution to risk test.”

One of those Canadian cases Clements discussed, of course, was Athey v. Leonati, 1996 CanLII 183 (SCC), [1996] 3 S.C.R. 458. This is probably the most relevant Supreme Court case dealing with pre-existing conditions and a subsequent accident – that is, a situation where there is more than one potential cause of an injury. Ms. Athey, who suffered from pre-existing back problems, suffered a herniated disc after two motor vehicle accidents that, for the purposes of causation, were treated as effectively one accident. They contributed 25 percent to the herniation, which was sufficient. However, Major J. did make a couple of statements that were later used to suggest that “but for” and “material contribution” were alternatives. For instance, Major J. stated “[t]he plaintiff must prove causation by meeting the ‘but for’ or material contribution test” (para. 41), and that the 25 percent contribution found by the trial judge was a “material contribution” sufficient to meet the “but for” test. Nonetheless, the Supreme Court in Clements emphasized at para. 23 that “The term ‘material contribution,’ read in context, does not detract from the fact that the [Athey] Court in the end applied a robust, common sense application of the ‘but for’ test…”

For an example of the misapplication of the material contribution test, we can turn to the Alberta Court of Appeal decision in Hanke v. Resurfice Corp., 2005 ABCA 383. That Court relied on Athey to state that, where there is more than one potential cause, the “material contribution” test should be used. The Supreme Court reversed that decision precisely on that point. In Resurfice Corp. v. Hanke, 2007 SCC 7 at para. 19, the Supreme Court stated that the Court of Appeal erred in suggesting that, where there is more than one potential cause of an injury, such as where there is a pre-existing condition and an accident, the “material contribution” test must be used:

To accept this conclusion is to do away with the “but for” test altogether, given that there is more than one potential cause in virtually all litigated cases of negligence. If the Court of Appeal’s reasons in this regard are endorsed, the only conclusion that could be drawn is that the default test for cause-in-fact is now the material contribution test.

That is the same error the Arbitrator made when she stated the previous accidents had created a “new normal” making it futile to ask whether “but for” the MVA Mr. Thiruchelvam would not be suffering his current impairment. As in Resurfice, that would be doing away with the “but for” test whenever there were pre-existing conditions that were affected by an accident. It follows that this was not a “material contribution to risk” case.

Ultimately, the Supreme Court in Clements set out what is a material contribution to risk case in para. 46, item 2:

Exceptionally, a plaintiff may succeed by showing that the defendant’s conduct materially contributed to risk of the plaintiff’s injury, where (a) the plaintiff has established that her loss would not have occurred “but for” the negligence of two or more tortfeasors, each possibly in fact responsible for the loss; and (b) the plaintiff, through no fault of her own, is unable to show that any one of the possible tortfeasors in fact was the necessary or “but for” cause of her injury, because each can point to one another as the possible “but for” cause of the injury, defeating a finding of causation on a balance of probabilities against anyone. [Emphasis added.]

To repeat: in Clements, the Court stated that material contribution to risk may apply where the plaintiff has established that her loss would not have occurred “but for” the negligence of two or more tortfeasors.

The summary the Court provides in para. 46, item 2 is based on its discussion in earlier paragraphs dealing with the “impossibility” requirement, namely material contribution may be applied where it is impossible to prove negligence against a particular tortfeasor. At para. 37, the Court rejected the idea that one can distinguish between a case of true impossibility of factual proof and a situation where the plaintiff simply fails to meet her burden of establishing “but for” causation on the evidence because “In any difficult case, the plaintiff would be able to claim impossibility of proof of causation.” The Supreme Court thus stated in Clements that mere difficulty of proof is not a reason to apply the material contribution test. I note certain echoes with the difficulty of proof in this case, where the Arbitrator noted that Mr. Thiruchelvam himself was unable to tell us to what extent there was any serious deterioration after the MVA, and there was no clinical measurement to allow doctors to state with certainty what proportion of the impairment stemmed from the MVA, nor the precise extent of his impairment.

At para. 38, the Court further noted that, if scientific evidence of causation was not required, it was difficult to see how its absence could be raised as a basis for ousting the usual “but for” test.

Rather, at para. 39, the Court set out the “impossibility” requirement among multiple tortfeasors:

All are at fault, and one or more has in fact caused the plaintiff’s injury. The plaintiff would not have been injured “but for” their negligence, viewed globally. However, because each can point the finger at the other, it is impossible for the plaintiff to show on a balance of probabilities that any one of them in fact caused her injury. [Emphasis added.]

Furthermore, the Divisional Court in Sabadash paraphrased para. 46, item 2 from Clements as follows at para. 31.e:

In exceptional circumstances, where (i) the plaintiff establishes that her loss would not have occurred “but for” the negligence of two or more tortfeasors, each of whom could be responsible for the loss; but (ii) the plaintiff is unable through no fault of her own, to show that one tortfeasor is the “but for” cause of her injuries because each tortfeasor can point to the other as the possible “but for” cause of the injury, a plaintiff may establish liability against one defendant if that defendant’s conduct materially contributed to the plaintiff’s risk of injury: See Clements at paragraph 46. [Underline added, italics in the original.]

I simply cannot square the Court’s statement at para. 40 that “but for” need not be proven in a “material contribution to risk” case with its statement at para. 31 that in a “material contribution to risk” case the plaintiff must establish “that her loss would not have occurred ‘but for’ the negligence of two or more tortfeasors.”

In any event, this analysis is only necessary if this was a “material contribution to risk” case in the first place. I have already suggested that this cannot be a material contribution to risk concerning the treatment plans and assessment cost. However, I will expand on the point by referring back to Major J.’s scenarios for when material contribution may apply, as set out in Athey.

The scenarios are set out in para. 41 of Athey. It will be remembered that the issue was whether the disc herniation was caused by the accident(s) or by the pre-existing back problem. The first scenario was as follows:

1. If the disc herniation would likely have occurred at the same time [as the accident], without the injuries sustained in the accident, then causation is not proven.

As I already noted, Mr. Thiruchelvam was already catastrophically impaired before the MVA, so scenario 1 applies to that claim. However, the other claims turn on the exacerbation of an existing impairment, so that leaves scenarios 2 and 3:

2. 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. [Emphasis in the original.]

3. If the accidents alone could have been a sufficient cause, and the pre-existing back condition alone could have been a sufficient cause, then it is unclear which was the cause-in-fact of the disc herniation. The trial judge must determine, on a balance of probabilities, whether the defendant’s negligence materially contributed to the injury.

Now, there could be an interesting discussion about how scenario 3 in Athey fits with the definition of a material contribution to risk case in Clements. However, it is not necessary for me to reconcile these here, since nothing suggests the accident alone was a sufficient cause of either the catastrophic impairment or the other impairments Mr. Thiruchelvam had suffered.

Thus, this accident falls into category 2, as will almost all accidents involving pre-existing conditions. Since this is not a material contribution to risk case, it was not enough for the Arbitrator to simply state that Mr. Thiruchelvam had an impairment at the time of the accident that was made worse as a result – that is, that the MVA materially contributed to his impairment.

However, the impairment need not arise only through the accident. That is, the adverb “directly” in the definition of accident – “an incident in which the use or operation of an automobile directly causes an impairment” – is not a synonym for “solely” or “uniquely.” Rather, it represents a more restrictive causation test than the less stringent “directly or indirectly” causation test that applied in earlier versions of the SABS.

Thus, in s. 2 of the 1990 SABS,⁶ “accident” was defined as follows:

“accident” means an incident in which the use or operation of an automobile causes, directly or indirectly, physical, psychological or mental injury…

The 1994 SABS ⁷ used the same causation test in s. 1:

“accident” means an incident in which, directly or indirectly, the use or operation of an automobile causes an impairment…

As Major J. stated in Amos v. Insurance Corp. of British Columbia, 1995 CanLII 66 (SCC), [1995] 3 S.C.R. 405, the use of “directly or indirectly” meant that the required nexus or causal relationship between a plaintiff's injuries and the use or operation of their car was not necessarily a direct or proximate causal relationship.

The stricter test came into force with the 1996 SABS as defined in s. 2(1):

“accident” means an incident in which the use or operation of an automobile directly causes an impairment or directly causes damage to any prescription eyewear, denture, hearing aid, prosthesis or other medical or dental device.

The same definition appears in s. 3 of the 2010 SABS.

In the much-cited decision Petrosoniak and Security National Insurance Company (FSCO A98‑000198, November 2, 1998), Arbitrator Novick noted that the changed definition raised two questions — whether the use or operation of an automobile was involved in the incident, and if so, whether that directly caused the Applicant’s injuries. In that case, the Applicant, while riding a bicycle, slipped on oil emitted from a truck, satisfying the use or operation test.⁸ Arbitrator Novick did not find it necessary to address the issue of whether the liquid in question came from a vehicle that was not insured under a motor vehicle liability policy.⁹

Arbitrator Novick then turned her attention to the direct causation aspect of the test. She found that cases under the older definition were not helpful, as the use of the word “indirectly” broadened the scope of recovery and allowed for a more remote causal connection, including even breaking the traditional chain of causation. Rather, she found most useful the definition of “direct cause” in Black’s Law Dictionary, which defined it as “the active, efficient cause that sets in motion a train of events which brings about a result without the intervention of any force started and working actively from a new and independent source.”

Petrosoniak in turn was cited in Chisholm v. Liberty Mutual Group, 2002 CanLII 45020 (ON CA), where the plaintiff was shot while driving his car. The Court noted that the lower court judge correctly applied the Black’s Law test in concluding that there was no unbroken chain of events. Rather, the shooting constituted an intervening act, independent of the vehicle’s use or operation that clearly broke the chain of causation.

The Court went on to note at para. 31 that “Conceivably road accidents may occur where there is more than one direct cause of a victim’s injuries and one of the direct causes is the use or operation of an automobile.”

I dealt directly with that issue in North Waterloo Farmers Mutual Insurance Company and Samad (FSCO P16-00037, March 2, 2017), [2017] O.F.S.C.D. No. 73, where there was a slip and fall involving both an assault and a continued use of an automobile. At para. 20 I specifically reiterated the proposition that there could be more than one direct cause of an impairment. I found the Arbitrator was correct to find that the use or operation of the vehicle was not simply incidental to the assault but contributed to the impairment. I noted as an example that if an assault occurs while an automobile is being operated that causes the vehicle to crash and the insured is injured in the subsequent collision, then the insurer would be liable to pay. On judicial review, the Court in North Waterloo Farmers Mutual Insurance Co. v. Samad, 2018 ONSC 2143 found that my decision was reasonable to uphold the Arbitrator’s finding that the use or operation of the vehicle was a direct cause of impairment as there was an unbroken chain of events.

The example I gave in Samad was similar to the facts in Salamone and Aviva Canada Inc. (FSCO P15-00072, June 16, 2016). However, instead of an assault leading to a crash, there was a heart attack leading to a crash. Unfortunately, even though there was a person at the scene who could have immediately applied CPR after the crash, the insured’s position in the van delayed treatment and worsened his condition. This case thus had the combined issues of use and operation and direct causation as well as the effect of an accident on a pre-existing impairment. On both of those prongs, I noted that there could be more than one direct cause of an impairment. On the first point, I found that the Arbitrator erred in finding Mr. Salamone failed the “but for” test.¹⁰ The proper question was: but for the insured’s car entrapping him, would Mr. Salamone have received treatment sooner? The answer was yes, because the trained bystander could have provided CPR right away. I also found the Arbitrator erred in not recognizing that Mr. Salamone continued to use the van as it ricocheted down the road, so there was no intervening act. With respect to the “dominant feature” test, I found the Arbitrator erred in concluding that the dominant feature was the heart attack, which he stated “was the triggering event. The heart attack caused the crash which led to the vehicle ending up in the ditch.” I also noted that this was really a case dealing with a pre-existing impairment – even though it had pre-existed for only moments – caused by an unrelated incident and I stated the issue was whether the incident at issue made a material contribution to the impairment. Now, as you can see, I still applied the “material contribution” test regarding pre-existing impairment. I relied on earlier case law that the “material contribution” test applies where there are more than one possible direct causes of an impairment. However, as is likely the case in many decisions where the “material contribution” test was applied, the “but for” test was also met. The Arbitrator found the “delay of 11 minutes, by all accounts, clearly took the impairment suffered by the Applicant from being possibly a good result to the serious impairment that resulted” and he accepted “the fact that earlier intervention would likely have resulted in a more positive result.” That is, but for Mr. Salamone’s entrapment in the van, he would have received earlier treatment and his condition would not have deteriorated as much as it did.

A somewhat similar situation came before the Court of Appeal in Dittmann v. Aviva Insurance Company of Canada, 2017 ONCA 617.¹¹ In that case, Aviva appealed the order by way of motion for summary judgment in Dittmann v. Aviva Insurance Company of Canada, 2016 ONSC 6429. The motion judge found that Ms. Dittman was injured in an “accident” as defined in the SABS when she sustained serious burns to her lower body when the entire contents of a coffee cup she ordered at a McDonald’s drive-through spilled as she attempted to transfer the cup from the drive-through window to the cup holder in her vehicle. The motion judge found that but for the use of her vehicle, she would not have been in that position and, further, “but for her being seated and restrained by a lap and shoulder harness she may have been able to take evasive action to avoid or lessen the amount of coffee that was spilled on her.¹²” Thus, as with Mr. Salamone, while the triggering event might have been the spilling of the coffee, the restraint caused by the seat belt worsened the impairment. The Appeal Court agreed with the motion judge’s finding and was “satisfied that, as pointed out in the respondent’s factum, the restraint of the seatbelt increased the respondent’s exposure to the scalding liquid and thereby increased the level of her impairment.¹³” The Court of Appeal added at para. 7:

As pointed out in Salamone v. Aviva Canada, 2016 OFSCD No 191, at para. 31, the issue is not, what was the “triggering event” of the incident, but rather, what caused the impairment. In this case, the use of a running motor vehicle in gear to access the drive-through and the seatbelt restraint were direct causes and dominant features of the impairment the respondent suffered. [Emphasis added.]

While the Courts above were dealing with the definition of “accident” and whether or not the incident met the tests set out in cases such as Greenhalgh v. ING Halifax Insurance Company Co., 2004 CanLII 21045 (ON CA), [2004] O.J. No. 3485 (C.A.), and Downer v. Personal Insurance Co., 2012 ONCA 302, in doing so they also answered the “but for” question raised when there are more than two direct causes of impairment in the same way I did in Salamone.

On a final point, it may also happen that after a series of accidents, the last one might be the “tipping point” to put the insured past the threshold for catastrophic impairment. For instance, in The Dominion of Canada v. Chambers, 2013 ONSC 6122, the insured was in two car accidents in 2003 and a third in 2005. As the Court described it at para. 45:

In this case, neither the first nor the second accidents alone were sufficient to render the plaintiff catastrophically injured. It was the third accident that might have done so. In other words, it is the third accident that may have transformed or elevated the plaintiff’s non-catastrophic situation into a catastrophic one. It was the catalyst or tipping point.

In 2012, Ms. Chambers applied for a designation of catastrophic impairment pursuant to s. 45(1) of the 2010 SABS, which provides that an insured who sustains an impairment as a result of an accident may apply for catastrophic designation. However, she claimed catastrophic impairment for all three accidents, even though it was only the third that might have pushed her past the threshold for whole-body impairment or for a mental or behavioural disorder. She thereby sought to triple the possible catastrophic limits. The Court found that, pursuant to the SABS, she could only claim to be catastrophically impaired for one accident at a time. However, the Court was careful to word the relief sought in that application to prevent it from being interpreted as meaning that an application referring to one identified accident may not claim that the insured is catastrophically impaired as a result of the cumulative effect of multiple car accidents, where the last was the “tipping point” that had propelled the plaintiff toward a catastrophic designation:

In the result, I simply declare and order as follows: Section 45 of the Statutory Accident Benefits Schedule requires an insured person to specify one accident in respect of which a determination of catastrophic impairment is requested. In my view, this is sufficient to address the insurer’s valid concerns without restricting the parties’ ability to make appropriate reference to an injured person’s condition, as a result of previous accidents or otherwise upon which the identified accident was superimposed. [Para. 53.]

Now, in Sabadash, the Divisional Court disapproved of this sentence of mine: “In the accident benefit context, a sufficient cause means that the injury arising from the accident must be enough to directly cause an impairment.” The Court took this to suggest that I was saying the accident in issue must be sufficient in itself to have caused the impairment: that it must be “the cause” as opposed to “a necessary cause.” The discussion above shows that I have always recognized that there can be two direct causes to an impairment. Furthermore, I was using the same term –sufficient – that the Supreme Court used itself. As the Clements Court stated about Athey:

Major J. [in Athey] concluded that the 25 percent contribution found by the trial judge was a “material contribution” sufficient to meet the “but for” test. [Para. 23; Emphasis added.]

Since the 1996 SABS was enacted, the incident must directly cause the impairment, as the earlier directly or indirectly test no longer applies. So to sufficiently meet the “but for” test in the accident benefit context since 1996, the cause must be direct, although it need not be the only or even – as seen in Athey – the major cause.

Turning to cases such as this where an accident exacerbates a pre-existing injury, the question is whether “but for” the accident the benefit claimed is payable. If the claim passes the “but for” test, then the entire amount claimed is payable, not just the proportion based upon the accident: Athey. While this requirement can raise difficult evidentiary issues, mere difficulty in proving a case does not make it a material contribution case: Clements. For instance, Mr. Thiruchelvam had a long history of back pain. The Arbitrator awarded the treatment plans basically for temporary pain relief. However, the pain relief would surely have been equally useful to him prior to the MVA, so what distinguished the need for post-accident pain relief? I note that Dr. Levitt in August 2014 reported that Mr. Thiruchelvam’s post-MVA depression and pain were likely similar to that before the MVA, Dr. Hoff in September 2017 reported that within about three months of the MVA Mr. Thiruchelvam was behaviourally and functionally back to where he was before it, and Dr. Garner in August 2014 reported no significant functional limitations from the MVA. Similarly, Mr. Thiruchelvam already had difficulties with activities of daily living, so how did the assessment show that, “but for” the MVA, he needed additional relief beyond what he could have already used?

The Arbitrator failed to address these issues. Furthermore, she essentially relied on the difficulty of proof to find in favour of Mr. Thiruchelvam, when Clements makes clear that, if your case is too difficult to prove, you have simply not proven it. The consumer protection aspect of the SABS cannot be used by an adjudicator to tip the scales of proof in favour of an insured.

For these reasons alone, I would allow the appeal.

But even if I am wrong, I would still allow the appeal because of the breaches of fundamental justice, particularly in relation to the Arbitrator’s refusal to even consider an adjournment in light of the delivery of a lengthy report just before the production deadline.

As noted above, 31 days before the hearing, Mr. Thiruchelvam’s counsel obtained a 90-page report. It was thus served and filed barely outside the time limits for filing documents under the Dispute Resolution Practice Code. Furthermore, it was well known that ADR Chambers was closing at that point, so Arbitrators were under orders not to allow adjournments, no matter how meritorious. This fettering of an arbitrator’s discretion could lead to a breach of natural justice, as seen in Certas Direct Insurance Company v. Gonsalves, 2011 ONSC 3986, where it was found the Director’s Delegate had fettered the discretion of the arbitrator in that case. There, too, new reports were delivered 30 days before the start of the hearing, leaving no time for the insurer to respond absent an adjournment. As the Court noted at paras. 8 and 10:

Fundamental to any administrative process, is the requirement that it be fair. At its most basic, procedural fairness requires that a party have an opportunity to be heard and that it be able to respond to the position taken against it… In our view, the insurer would be denied the right to make a full response and would not be heard as the dictates of procedural fairness require. It is not enough to say that the delivery of these reports was made within the permitted time frame…

The Court went on to note that Arbitrators are supposed to have a wide discretion to ensure a fair hearing, Now, in that case, the Arbitrator made a finding of fact that fairness required an adjournment.

However, in this case, the Arbitrator did not even consider whether fairness required an adjournment because of her fettered discretion, as set out in the hearing transcript for December 11, 2017, starting at p. 41, after Mr. March, counsel for RBC, repeated his request for an adjournment:

6 THE ARBITRATOR: I said, "Implicitly I 7 have said 'no' to that", and the reason for that is 8 that I'm not adjourning anything at all. 9 MR. MARCH: Why not? 10 THE ARBITRATOR: Because I will not have 11 jurisdiction after December 31st this year. 12 MR. MARCH: Would that be an appropriate 13 reason, Madam Arbitrator, not to adjourn it, given 14 the fact that you will not have jurisdiction? 15 THE ARBITRATOR: Yes, it is an 16 appropriate reason. It is FSCO's policy. We have 17 been told again and again we are not allowed to 18 adjourn anything now. Everything is going forward. 19 MR. MARCH: Then I say to you, Madam 20 Arbitrator, and I just raised it for the purposes 21 of... 22 THE ARBITRATOR: You can appeal it. 23 MR. MARCH: No, I get that, but just 24 before I appeal it I have to state my position, 25 obviously, that, Madam Arbitrator, if, indeed, that

• 42 - General Discussion 1 you are denying our motion to adjourn, it's simply 2 because you are not available or not have 3 jurisdiction after, you said January 1 or January 4 31, I say to you, Madam Arbitrator, it's an 5 inappropriate basis in which to make this decision. 6 We have two parties here that have followed 7 a process, through an application for arbitration, 8 in which we responded, it is legitimately a 9 proceeding within administrative considerations of 10 the Province of Ontario. And basic fairness is such 11 that the decision, with respect to adjournments, 12 should be made on its merits, not with regard to the 13 restrictions of the arbitrator. 14 THE ARBITRATOR: Thank you. Mr. March, 15 all counsel doing FSCO work have been aware, for the 16 past year, that this was the end of the line for 17 FSCO, so if I were to adjourn it there would be a 18 substantial risk that this could not continue. In 19 that case there would be a denial of justice to the 20 applicant, so I cannot give you any other decision, 21 except that I cannot adjourn this case. 22 And you were told that, I believe, by Ms. 23 Parish,¹⁴ at the time that you made this application 24 the first time, in the first place, and it's simply 25 not going to change. I appreciate your arguments,
• 43 - General Discussion 1 and if necessary you will take them further, at the 2 end of this hearing, but it's not, in my...I'm not 3 capable of adjourning.

You will note that at lines 15-17 on page 42, the Arbitrator stated that counsel knew of the impending end of hearings at ADR. But of course Mr. March did not know that a 90-page report was going to land on his desk 30 days before the hearing. As noted by the Divisional Court in Gonsalves, the Arbitrator was supposed to have a wide discretion to consider fairness. In light of the similarity of the facts between this case and Gonsalves, RBC was entitled to have such a determination, which it was denied.

RBC alleges a number of other breaches of natural justice, such as the Arbitrator’s refusal to allow it to file responding reports although she admitted documents filed late by Mr. Thiruchelvam, and her amendment of her own decision after she had already released it (including increasing the amount of expenses awarded by over $2,000). However, I find that the Arbitrator’s failure to consider an adjournment for principled reasons is sufficient to allow the appeal for reasons of fundamental justice.

RBC also appeals the award of expenses against it. RBC submits that the Arbitrator failed to apply the well-known principles for determining awards, nor to provide any consideration of reasonableness or proportionality, and she inappropriately awarded the total amount claimed. I note that the award was based on Mr. Thiruchelvam’s success, but now that RBC is successful, it follows that the award cannot stand. Ordinarily, I would return the matter to arbitration for determination of the quantum of expenses (the Arbitrator having already found that the only relevant criterion was success). However, the Arbitrator specifically found that both Bills were reasonable. Not only that, Mr. Thiruchelvam supports the Arbitrator’s reasoning, as seen on p.21 of his responding submissions on appeal:

It is submitted that the Arbitrator considered the factor which has always been considered the main factor in considering this issue, namely, the reasonableness of the amount claimed. She noted that the amount claimed for expenses by the insured was $49,331.63, with the amount being claimed by the insurer being for a roughly similar amount of $43,796.00. She concluded that the similarity in amounts was an indication that the claim for costs was reasonable. Although brief, the reasons are, it is submitted, sufficient in law.

Since Mr. Thiruchelvam submits that the Arbitrator’s reasons are sufficient in law, he can have no objection to the award being made against him based on the same reasoning. I have also confirmed that RBC did not claim any transcript costs in its Bill. Therefore, the Arbitrator’s order will be amended to award $43,796.00 in legal arbitration fees to RBC, payable by Mr. Thiruchelvam.

IV. EXPENSES

Normally, if the parties are unable to agree about expenses of this appeal, an expense hearing would be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

However, given the pending closure of this tribunal, it is unlikely legal appeal expenses could be assessed in the normal course. I suggest RBC determine a round figure forthwith, based on the kind of average figures we have awarded insurers in the past (but not including any transcript costs), and provide it to Mr. Thiruchelvam for a response. Mr. Thiruchelvam can either provide his own rounded figure, or provide reasons why RBC should not be entitled to its appeal expenses.

April 12, 2019

David Evans Director’s Delegate Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Effective September 1, 2010, Ontario Regulation 34/10, as amended.
2. 2Pastore v. Aviva Canada Inc., 2012 ONCA 642. The case dealt with the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996, O. Reg. 403/96, s. 2(1.1)(g). The Arbitrator referred to 2(1.1)(g) in her decision, but the definitions between the two SABS were identical.
3. 3Thus, the pre-hearing letter dated April 4, 2006 lists as issue 4 whether Mr. Thiruchelvam suffered a catastrophic impairment as a result of the motor vehicle accidents that occurred on March 16 and March 21, 2002.
4. 4“Criterion 8” is how practitioners refer to catastrophic impairment for mental and behavioural disorders under the 2010 SABS.
5. 5State Farm Mutual Automobile Insurance Company and Sabadash (FSCO P16-00029, September 18, 2017)
6. 6Statutory Accident Benefits Schedule – Accidents Before January 1, 1994, R.R.O. 1990, Reg. 672.
7. 7Statutory Accident Benefits Schedule – Accidents After December 31, 1993 and Before November 1, 1996, O. Reg. 776/93.
8. 8Other cases on use or operation depended on whether the automobile was simply the venue for the activity that caused the impairment, like an assault on a bus or a shooting, or whether the activity fell outside the ordinary and well-known activities to which automobiles are put. See for instance my decision in Economical Mutual Insurance Company and Whipple (FSCO P10-00020, October 6, 2011), where I agreed with the Arbitrator that, in context, the case only involved the ordinary and well-known use of a stripper pole in a party bus. Judicial review dismissed: Economical Mutual Insurance Company v. Whipple 2012 ONSC 2612
9. 9If a vehicle is not an automobile in ordinary parlance or a vehicle listed in the policy, the question is whether it was an automobile under any extended definition of automobile. That generally raises the question of whether the vehicle had to be insured under a motor vehicle policy. See my decision in Benson and Belair Insurance Company Inc., (FSCO P15-00059, February 15, 2017). Judicial review dismissed: Benson v. Belair Insurance Co. Inc., 2018 ONSC 2297.
10. 10In these types of causation cases, “but for” is a minimal test, as it only serves to eliminate from consideration factually irrelevant causes, but does not conclusively establish legal causation.
11. 11Leave to appeal to the Supreme Court denied: Aviva Insurance Company of Canada v. Erin Dittmann, 2018 CanLII 12956 (SCC).
12. 12Paragraph 13, 2016 ONSC 6429.
13. 13Paragraph 5, 2017 ONCA 617, emphasis added.
14. 14A motion to adjourn had already been made before Arbitrator Parish, who denied it.