Financial Services Commission of Ontario Commission des services financiers de l'Ontario

Neutral Citation: 2019 ONFSCDRS 9 Appeal P17-00076A/C OFFICE OF THE DIRECTOR OF ARBITRATIONS

ANANTH SANMUGARAJAH Appellant/Respondent by Cross-appeal

and

NORDIC INSURANCE COMPANY OF CANADA Respondent/Appellant by Cross-appeal

and

Appeal P18-00014

NORDIC INSURANCE COMPANY OF CANADA Appellant

and

ANANTH SANMUGARAJAH Respondent

BEFORE: David Evans

REPRESENTATIVES: David S. Wilson for Mr. Ananth Sanmugarajah Darrell March and Paul Omeziri for Nordic Insurance Company of Canada

HEARING DATE: July 11, 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:

1The Appeal and Cross-Appeal of the order of Arbitrator Robinson dated September 20, 2017, is allowed, as is the Appeal of the order of Arbitrator Matheson dated February 27, 2018. The decisions in their entirety are rescinded, and the matters herein are remitted to arbitration for a fresh re-hearing.

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

March 4, 2019 David Evans Director's Delegate

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This matter involves the SABS–1996,¹ although because some claims were made after September 1, 2010, the SABS–2010² is also applicable.

The insured, Mr. Ananth Sanmugarajah, and his insurer, Nordic Insurance Company of Canada, both appeal the order of Arbitrator Robinson dated September 20, 2017. Arbitrator Robinson dismissed some claims for failure to comply with time limits, but found Mr. Sanmugarajah suffered catastrophic impairment in the second of three accidents, and he also awarded a variety of medical/rehabilitation benefits and a cost of examination. Nordic appeals the order of Arbitrator Matheson dated February 27, 2018, in which Arbitrator Matheson dealt with interest and expense issues arising out of the main decision.

The appeals are allowed because Arbitrator Robinson breached natural justice and failed to give adequate reasons. Since the expense and interest decision by Arbitrator Matheson turned upon the result of Arbitrator Robinson, it too must be set aside.

II. BACKGROUND AND ANALYSIS

Because of the complicated nature of these appeals, I will not recite the two decisions and then provide analysis, but rather deal with each issue under appeal immediately.

By way of overview, Mr. Sanmugarajah was involved in three accidents. The first occurred on November 9, 2006. He claimed statutory accident benefits and disputes arose. He was then in a second accident on February 2, 2007, about which further disputes arose. Nordic was the insurer for both those accidents. He was involved in a third accident on April 15, 2008. The Arbitrator noted that the issue was not before him but the accident benefits file of the insurer for that accident, Economical Mutual, was in evidence and referred to occasionally.

Arbitrator Robinson conducted the hearing over several days starting on April 21, 2014, January and June 2015, and July and December 2016. The decision was released September 20, 2017. In the approximately 18 pages of reasons, the Arbitrator found Mr. Sanmugarajah:

• made his claims for attendant care benefits (ACBs) and housekeeping out of time
• was catastrophically injured in the second accident
• was entitled to various medical and rehabilitation benefits and costs of examination
• was not entitled to a special award, and
• was entitled to his arbitration expenses.

The Arbitrator first dealt with the "procedural issues" around the ACBs and housekeeping.

Attendant Care and Housekeeping Claims

The Arbitrator's opening paragraph in this section reads:

Pursuant to my written order dated December 3, 2015 and for reasons there given, I ruled that two Affidavits of Usha Ramayanam, each sworn June 17, 2015, would be admitted into evidence in this proceeding. The Applicant had closed his case, possibly in reliance upon counsel for the Insurer calling Ms. Ramayanam as a witness. In the event, Insurer's counsel did not do so. The facts contained in Ms. Ramayanam's Affidavits therefore went into evidence and were uncontradicted.

The Arbitrator then cited s. 32(1) of the Old SABS, which required a person to notify the insurer of their intention to apply for a benefit under the SABS. In turn, s. 32(1.1)(b) required such notice to be provided "the seventh day after the circumstances arose that give rise to the entitlement to the benefit, or as soon as practicable after that day, if those circumstances arose as a result of an accident that occurred on or after October 1, 2003."

The Arbitrator found that, based on the "uncontradicted" affidavit evidence, no claim for ACBs arising from either the first or second accident was received by Nordic before November 1, 2012, the date of the Application for Mediation. No Form 1 Assessment of Attendant Care Needs had been provided either, as required under s. 39(1) of the SABS. The Arbitrator found on the evidence before him that Mr. Sanmugarajah had not provided a reasonable excuse³ for failure to comply with the time limits in s. 32(1.1) and s. 39.

The Arbitrator then concluded that there had been no jurisdiction under the SABS to conduct a mediation on the ACBs. Although the Arbitrator did not cite it, s. 50(a) of the SABS provides that no mediation can be commenced unless the insured person notified the insurer of the circumstances giving rise to a claim for a benefit and submitted an application for the benefit within the times prescribed by the SABS – the 7 days.

The Arbitrator reached a similar conclusion about the housekeeping claim, with the additional finding that the claim was made out of time. Although the Arbitrator did not cite it, s. 51(1) of the SABS provides that mediation and arbitration have to be commenced "within two years after the insurer's refusal to pay the amount claimed." Based on the affidavits of Usha Ramayanam sworn June 17, 2015, the Arbitrator noted that Nordic paid housekeeping up to December 24, 2007, for both motor vehicle accidents. He found that evidence showed an OCF-9 Explanation of Benefits cancelled those benefits effective December 25, 2007, followed by a further OCF-9 dated February 27, 2008 confirming that the cancellation related to both accidents. The Arbitrator stated that the evidence also showed the Application for Mediation dated November 1, 2012 was the first notice that a claim was made from February 2, 2009 to date and ongoing, that is, from the two-year anniversary of the second accident.

However, the Arbitrator's statement at the beginning of this section that the two affidavits would be admitted pursuant to his Order of December 3, 2015 masks the strenuous objections by Mr. Sanmugarajah to their admittance and the fact the Arbitrator did not follow his own process in doing so. The affidavits were thus "uncontradicted" only in the sense that they were admitted and then the Arbitrator did not allow Mr. Sanmugarajah to cross-examine the affiant.

By way of background, on June 18, 2015, Mr. Sanmugarajah advised the Arbitrator that he had closed his case. The day before, the insurer's representative, Usha Ramahanam, had sworn two affidavits dated June 17, 2015, one dealing with housekeeping benefits and the other with ACBs and purported to deliver them that day. However, Nordic actually provided two copies of the ACBs affidavit. Only after Mr. Sanmugarajah's case was closed did he get the housekeeping affidavit. The insurer was seeking to file these affidavits as part of its case, although the hearing had started more than one year earlier in April 2014.

Mr. Sanmugarajah raised objections to the affidavits on both procedure and substance. For instance, he submitted that the limitation defense regarding the housekeeping had not been raised until then and there had been no prior notice of it. He submitted that had he known, he would have presented evidence to show it did not apply or had been waived, so there needed to be a disposition on whether the limitation argument could be raised in the first place. He also noted that certain documents had not been served, and the affidavits themselves were new documents, and whether Ms. Ramahanam testified or her affidavits were relied upon, the rules for witness notice had also been breached.

Ultimately, the Arbitrator agreed there was a legitimate issue regarding the affidavits' admissibility, so he stated that until this narrow issue was determined, the main motion (presumably, about whether the claims should be dismissed for failure to meet the time lines) could not proceed. He made directions for the delivery of submissions, and stated he would first rule on the admissibility before moving to the "next round," meaning presumably whether Nordic could rely on the limitations issue. Mr. Sanmugarajah filed written submissions dated July 15, 2015, Nordic filed its submissions on August 20, 2015, and Mr. Sanmugarajah filed a reply on September 17, 2015. Ultimately, the Arbitrator delivered his letter decision dated December 3, 2015, finding that the affidavits should be admitted but no cross-examination was allowed:

The following is my letter decision with reference to the insurer's motion upon the following issues, as I have restated them:

1. Whether the insurer should be permitted to rely on the Affidavits of Ms. Usha Ramayanam purported to be served on July 17, 2015⁴;

2. If the insurer is not permitted to rely on the Affidavits, whether Ms. Usha Ramayanam may attend the hearing as a witness?

An affirmative answer upon the first issue will render it unnecessary to make any determination upon the second issue.

I have the benefit of the written submissions of insurer's counsel, dated August 25, 2015 and of the written submissions in reply of applicant's counsel, dated September 17, 2015.⁵

I find that the Affidavits of Ms. Usha Ramayanam are admissible and should be admitted.

I am satisfied on the basis of the available evidence that the Affidavits were delivered within the 30-day period required by the Dispute Resolution Practice Code. Counsel for the applicant appears to argue that the production was inadequate or defective because material relevant to or referred to in the affidavit material was not produced or, if produced, was improperly or confusingly indexed. I am not persuaded that any reasonable person would have been misled as to the nature of the contents or the intentions of the insurer in producing the affidavits. Neither do I see material prejudice to the applicant by their admission.

Applicant's counsel urges that I require strict compliance by insurer's counsel with the Code in the same spirit as insurer's counsel has himself repeatedly urged in this matter. While the maxim "live by the sword, die by the sword" has its attractions, the essential virtue of an administrative law proceeding must be its rejection of formalism merely for its own sake.

The affidavit material is relevant on a prima facie basis. It will be incumbent upon me to accord it appropriate weight, in accordance with the ordinary practice of any administrative tribunal.

Had it been necessary to decide, I would have been of the opinion that Ms. Ramayanam should not be allowed to testify. The mere placing of a prospective witness's name upon a witness list does not represent an undertaking to produce her at trial. Nothing in Mr. Wilson's correspondence could conceivably be construed as such an undertaking. She was not included in the witness list of insurer's counsel. There were no extraordinary circumstances that would have persuaded me to cure that apparent error, if it was one.

It is trite to say that, having elected not to call Ms. Ramayanam, applicant's counsel has no right to cross-examine her upon the affidavits so produced.

To start with, there was no evidence that the affidavits had been delivered within the 30-day period required by the Code. The Arbitrator was referring to Rule 39.1, which provides that, absent the exception for extraordinary circumstances in Rule 39.2, all documents to be introduced at a hearing by either party "must be served on the other party at least 30 days before the first day of the hearing." The first day of the hearing was April 22, 2014, and the Affidavits were served more than a year later, on June 17 and 18, 2015. The Arbitrator erred in law because no evidence showed that the affidavits were served 30 days before April 22, 2014 when they were not served until June 2015. He does not refer to any extraordinary circumstance to allow this late service, either. Furthermore, as seen above, he relied on those affidavits to make his findings regarding the ACB and housekeeping time limits.

The Arbitrator also had no legal basis to say that Mr. Sanmugarajah could not cross-examine on the affidavits. There is no trite law to that effect. Parties who close their cases have the right to cross-examine the other parties' witnesses, whether that evidence is given viva voce or by way of affidavit. Thus, the affidavits were only uncontradicted because Mr. Sanmugarajah had no notice they were going to be filed and he had no occasion to cross-examine on them.

The Arbitrator also abandoned the procedure he had put in place. As pointed out by counsel for Mr. Sanmugarajah in a letter to the Arbitrator dated October 26, 2015, he had ruled that after there was a determination on whether to admit the affidavits there would be a further determination as to whether the motion regarding the limitation period and other defenses could proceed. However, in his correspondence dated February 19, 2016, the Arbitrator ruled that the argument on that point would be reserved for final submissions. He went on to rule that Mr. Sanmugarajah had closed his case and had to rely on the record as it was.

The Arbitrator also did not discuss the submissions Mr. Sanmugarajah made regarding whether or not either s. 32 or the limitation period applied. With respect to s. 32, for instance, Mr. Sanmugarajah noted cases such as State Farm Mutual Automobile Insurance Company and L.F., (FSCO P02-00026, June 3, 2004). In that case, the information provided by the insured about his difficulties coping with his activities of daily living was sufficient to alert the insurer to the need to provide forms and information about ACBs. The insurer's failure to provide the appropriate application forms meant that it could not rely on the then-30 day time limit. Mr. Sanmugarajah submitted that various reports he filed should have likewise alerted Nordic to his potential claim for ACBs. Thus, his failure to submit a Form 1 possibly arose from Nordic's failure to provide him one in the first place.

Accordingly, the Arbitrator breached the rules of natural justice by preventing Mr. Sanmugarajah from cross-examining on the affidavits, by not following the procedures he had set out, and by not even addressing the issues Mr. Sanmugarajah raised about the limitation defenses. This was an error of law. Accordingly, the appeal is allowed regarding ACBs and housekeeping claims. The matter is remitted to arbitration.

The Arbitrator then turned to the substantive issues, starting with catastrophic impairment.

Catastrophic Impairment

The Arbitrator first set out some of Mr. Sanmugarajah's background. He was born in 1970 in Sri Lanka, immigrated in 1992, and worked almost exclusively in food services until late 2006. He is married with three children and has limited English skills.

The Arbitrator noted that Mr. Sanmugarajah claimed he was catastrophically impaired in both the first accident of November 9, 2006 and the second of February 2, 2007. The third accident of April 15, 2008 was not before the Arbitrator, although the accident benefits file from the accident was in evidence and referred to.

Regarding the pre-accident period, Mr. Sanmugarajah testified that in 2002 he began to suffer from depression and from issues with anger both in the workplace and at home. The Arbitrator found that Mr. Sanmugarajah had a number of pre-existing physical and psychological problems during the years prior to the motor vehicle accidents. In addition to occasional complaints of back pain, he had anger issues both at home and at work. He also suffered from depression to a degree that justified the supervision of a psychiatrist and a prescription for Paxil. Nonetheless, the Arbitrator found that Mr. Sanmugarajah was a functioning individual prior to November 2006.

The Arbitrator then set out Mr. Sanmugarajah's evidence regarding the period after the first and before the second accident. He testified that during this first accident period he suffered headaches, lower back pain, and tightness in his neck with varying pain. He could not lift and stopped working, attended physiotherapy four times a week, and received Tylenol 3. He also testified his mental state worsened.

Regarding the second accident period after February 2, 2007, Mr. Sanmugarajah testified that the accident was more severe, as were his symptoms. However, the Arbitrator also noted that Mr. Sanmugarajah's testimony was inconsistent in this regard.

The Arbitrator considered Mr. Sanmugarajah's credibility in relation to various medical reports. In several of these, Mr. Sanmugarajah was reported to have said he did not see a psychiatrist or have other issues or limitations before the accidents. The Arbitrator found Mr. Sanmugarajah likely did not understand the questions, or a pro forma intake interview should not constitute "a trap for the unwary," or the assessor was simply inattentive. Rather, any inconsistencies were due to poor memory.

The Arbitrator turned to the various catastrophic assessments upon which the parties relied. I pause at this point to note that the Arbitrator never actually set out the relevant definition of catastrophic impairment, and the only reference to the AMA Guides is in a quotation from a rebuttal report. As will be seen, the Arbitrator agreed with the assessment obtained by Mr. Sanmugarajah that he suffered a class 4 Marked psychiatric impairment in the domain of work adaptation. The relevant definition was therefore that in s. 2(1.2)(g) of the SABS, namely "an impairment that, in accordance with the American Medical Association's Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in a class 4 impairment (marked impairment) or class 5 impairment (extreme impairment) due to mental or behavioural disorder."

The assessment upon which Mr. Sanmugarajah relied was the Catastrophic Impairment report of Dr. H. Rosenblat, psychiatrist, dated April 14, 2010 (that is, two years after the third accident and more than three years after the second). The Arbitrator's analysis of this report consisted simply of setting out the reports Dr. Rosenblat discussed, his diagnosis based on the DSC-IV-TR axial system, and his conclusion that Mr. Sanmugarajah was catastrophically impaired from a purely psychiatric point of view based on his rating of a Class 4 Marked impairment in the domain of work adaptation.

With respect to the insurer's assessments, the Arbitrator focused on the two psychiatric assessments by Dr. Brian Hines for Riverfront Medical Services regarding the first and second accidents. The Arbitrator noted that the two assessments had the same diagnoses according to the Axes in the DSM-IV. He highlighted that the Global Assessment of Functioning scale (GAF) was a retrospective assessment of 65 but the report noted that the ratings were done for the current evaluation period. Dr. Hines concluded that the impairments in all domains were mild.

The Arbitrator then cited two passages from the CAT Rebuttal Report by Dr. Harold Becker dated August 31, 2010. In the first passage, Dr. Becker wrote that Dr. Hines found under the AMA Guides (Chapter 14) protocols that Mr. Sanmugarajah suffered only a mild psychiatric impairment from the first accident, representing 10% WPI.⁶ Dr. Becker added that he was unsure how to interpret the comment that the GAF score was a retrospective estimate but the ratings were done for the current evaluation period. In the second passage, he commented that it was difficult to identify the effects of several accidents years afterwards and that the difference between a mild and marked impairment was beyond the typical variance one would like to see.

Finally, the Arbitrator briefly discussed a rebuttal letter dated May 2, 2011 by Dr. Hines and his colleague Dr. Dost, a neurologist. He dismissed most of it as argumentative and possibly repetitive, but noted a statement that Mr. Sanmugarajah had improved emotionally by 50% by the time of the second motor vehicle accident.

The Arbitrator then devoted a page and a half of analysis to arrive at the conclusion that Mr. Sanmugarajah was catastrophically impaired as a result of the second accident. In the first three paragraphs, he expressed his concerns about the reports by Dr. Hines and the addendum. He found that it was impossible to prepare two different retrospective reports years after the events. He also found there was no support for the statement that Mr. Sanmugarajah had allegedly improved emotionally by the time of the second accident.

In the fourth paragraph, in six sentences, the Arbitrator reaches his conclusion about catastrophic impairment. The first three sentences read as follows:

The Catastrophic Impairment Report submitted by the applicant, and in particular the opinion of Dr. Rosenblat, is more persuasive. This is especially the case because the observations of Dr. Rosenblat are consistent with the behaviour and demeanour of the applicant who appeared before me. The applicant was phlegmatic, often glowered, struggled with concentration and occasionally struggled with simple reasoning.

Thus, the only ground the Arbitrator sets out for finding the Rosenblat report more persuasive is that he recognized Mr. Sanmugarajah in Dr. Rosenblat's observations.

In the fourth sentence, the Arbitrator repeats Dr. Rosenblat's findings. The last two sentences then set out the Arbitrator's conclusions:

I find on the balance of probabilities and on the basis of the available evidence that this individual suffers those degrees of impairment and that they were caused by the second motor vehicle accident, the accident of February 2, 2007. Whatever contribution the first motor vehicle accident may have made to the applicant's overall condition, I find that the second motor vehicle accident was the "tipping point" into his state of catastrophic impairment.

In his concluding paragraph in this section, the Arbitrator refers to the suggestion by Mr. Sanmugarajah's experts that his psychological condition could cause chronic pain:

Certain assessors were of the view that there was no objective physical basis for the applicant's complaints of physical pain. This view was challenged by the applicant's experts on the basis that the applicant's psychological condition could very well cause symptoms of pain or chronic pain in any event. Again, I am persuaded on the basis of the evidence available to me, including the medical reports, clinical notes and records of medical practitioners consulted by him, and the testimony of the applicant and his wife, that the applicant does in fact experience ongoing pain as a result of the accident. I am also satisfied on the basis of such evidence that the pain is alleviated by treatment modalities available to him including but not limited to physiotherapy, exercise and medical injections.

Both parties submit that the Arbitrator erred in providing reasons, Mr. Sanmugarajah on the basis that the Arbitrator did not explain why he was determined to be catastrophic only after the second accident, and Nordic generally for failing to explain why Mr. Sanmugarajah was found catastrophic in the first place.

Indeed, the Arbitrator's reasons are conclusory. Conclusory reasons are conclusions without explanations for them: R. v. M. (Y.) (2004), CanLII 39045 (ON CA). I find the Arbitrator's reasons to be conclusory because he did not explain how the evidence lead to his conclusions. For instance, he simply stated that, based on the evidence before him, Mr. Sanmugarajah suffered catastrophic impairments after the second accident, and he did not explain what in particular was the "tipping point" as a result of the second accident. Similarly, with respect to pain, he simply stated that based on the evidence Mr. Sanmugarajah had pain as a result of the accident that was alleviated by treatment. An Arbitrator must provide adequate reasons to permit appellate review⁷ and a failure to give reasons is a breach of natural justice that mandates setting aside the decision.⁸

With respect to that "tipping point" statement, Nordic also submits that the Arbitrator failed to follow the correct "but for" causation test, as discussed in my decision State Farm Mutual Automobile Insurance Company and Sabadash, (FSCO P16-00029, September 18, 2017). In that case where Arbitrator Smith refused to apply the "but for" test, I found that pursuant to the Supreme Court decision in Clements v. Clements, 2012 SCC 32, the appropriate test is "but for" and not material contribution. I noted that in Blake v. Dominion of Canada General Insurance Company, 2015 ONCA 165, the Court of Appeal applied the "but for" test in the accident benefits context. I discussed how in Clements the Supreme Court found that the material contribution test could be used only in exceptional circumstances, and even then the "but for" test still applied.

The Divisional Court has just issued its judicial review of my decision, Sabadash v. State Farm Mutual Automobile Insurance Company, 2019 ONSC 1121 (February 15, 2019). At para. 31, the Court set out a number of propositions, mainly derived from Clements, including that the test for establishing causation is the "but for" test and cited the general rule from para. 46(1) of Clements that the "but for" test applies. It also paraphrased para. 46(2) of Clements, wherein the Supreme Court set out the exceptional circumstances where material contribution can have a role.

The Divisional Court found that the Arbitrator in that case erred in law by not applying the "but for" test and that I was correct in finding that the test to be applied to establish causation is the "but for" test. At para. 36, the Court stated "The Director's Delegate correctly noted at paras. 18, 36 and 38 of his decision that the Arbitrator erred in the following way" and set out several passages of my decision.

However, while the Court rejected the judicial review, it found that I erred in two ways. First, it found a sentence of mine suggested that the accident had to be "the" cause and not "a" cause of the impairment because I used the term "a sufficient cause."⁹

The second way the Court found I erred was with respect to determining when material contribution comes into play. It stated that "but for" need not be proven in a "material contribution to risk" case in light of the statement in Clements at paras. 13-15 that "but for" and "material contribution to risk of injury" are alternatives.¹⁰

For the purposes of attempting to correctly apply the law, I do not take the Court as saying that in every accident benefit case where there are two or more potential causes of injury or impairment – like a pre-existing condition and injuries arising from an accident, as in Athey – then "but for" need not be proven. Otherwise, given that in many accident benefit cases there is more than one potential cause of impairment, "but for" would not need to be proven and material contribution would become the default test.¹¹ That would also contradict the Court's own finding in Sabadash that the Arbitrator erred in not applying "but for" in a case where there was a pre-existing condition and an accident – that is, where there was more than one potential cause for the impairment.¹²

In this case, the Arbitrator did not apply the "but for" test. In fact, it is impossible to discern on what basis he found that Mr. Sanmugarajah was catastrophically impaired in the first place or why it was as a result of the second accident and not the first or the third. And even if this is a material contribution to risk case where "but for" need not be proven, the Arbitrator's reasons do not support a finding of material contribution.¹³ His comment that a "tipping point" was reached occurs in a factual vacuum without reference to any medical or expert evidence to support either "but for" or material contribution, and he did not answer the question of whether Mr. Sanmugarajah's impairment would have occurred "but for" the 2007 accident or adequately explain how the second accident made a material contribution as compared to the first or third accidents.

The Arbitrator also failed to follow the appropriate test for determining catastrophic impairment. As already noted, he did not refer to s. 2(1.2)(g) of the SABS and the only reference to the AMA Guides was in a quotation from one report. In the Guides at Chapter 14, page 301 sets out five classes of impairment: none, mild, moderate, marked and extreme. A Class 4 "marked impairment" is defined as "a level of impairment that significantly impedes useful functioning" and a Class 5 Impairment or Extreme Impairment is defined as an impairment that precludes useful functioning. The four areas or aspects of functioning that are rated include: activities of daily living, social functioning, concentration and adaptation. Mr. Sanmugarajah was found by his own expert to be marked only in adaptation, which applies to deterioration or decompensation in work-like settings, including decisions, attendance, schedules, completing tasks, and supervisor and peer interaction. The Arbitrator made no finding that Mr. Sanmugarajah had failed, repeatedly, to adapt to and withdraw from stressful situations as a result of a mental disorder.

The Court of Appeal in Pastore v. Aviva Canada Inc., 2012 ONCA 642 noted that Chapter 14 of the Guides sets out a three-stage process for evaluating catastrophic impairment based on mental disorder using four categories of functional limitation and five levels of dysfunction. The first stage is diagnosis of any mental disorders, followed by the second stage where the impact on daily life is identified. The third stage is assessing the severity of limitations by assigning them into the four categories and determining their levels of impairment.

The Court of Appeal also noted that the Guides state that because it is rare for pain to be a symptom only of a mental disorder, such pain must be carefully assessed. In order to determine whether pain is a symptom of a mental disorder, the assessor needs to remove from consideration, to the extent possible, any physical causes.

In this case, the Arbitrator failed to follow the three-stage process for determining catastrophic impairment established in Pastore. Further, his discussion about pain failed to draw any distinction between physical pain, treatable by physiotherapy, and psychological sources of pain related to a pain disorder. The Arbitrator did not make a finding that Mr. Sanmugarajah had a psychologically-based pain disorder and did not explicitly note that this pain arose from a psychological condition, rather than a physical source. Finally, his only basis for preferring Mr. Sanmugarajah's expert was his own observation of Mr. Sanmugarajah at the hearing.

In conclusion, the Arbitrator's reasons for determining Mr. Sanmugarajah was catastrophically impaired in the second accident are inadequate, and he failed to address the criteria for making such a finding.

The cross-appeal by Nordic is therefore allowed. The matter is remitted to arbitration for a new hearing.

Medical Benefits, Costs of Examination and Rehabilitation Benefits

In the space of about a page, the Arbitrator then dealt with these claims for various benefits. Generally speaking, he utilized the same formula of finding that the benefits should be awarded based on the available evidence. Again, that statement does not constitute reviewable reasons.

With respect to various treatment plans, he failed to address whether Mr. Sanmugarajah had reached maximum medical benefit and whether the treatment proposed in the Treatment Plan was appropriate to aid in his recovery or rehabilitation, explain what treatment was being proposed, or why physiotherapy treatment would be required for psychologically-based pain disorder. With respect to a proposed nutritional assessment, he failed to explain the particulars.

Accordingly, the appeal with respect to these benefits and costs of examination is allowed. The matter is remitted to arbitration for a new hearing.

Expenses and Interest

The Arbitrator found that Mr. Sanmugarajah was entitled to his arbitration expenses, but without hearing from the parties, which is a breach of natural justice.

The determination of the quantum of expenses and interest on the awards made was remitted to Arbitrator Matheson. Given that the entirety of the matter is being remitted to arbitration, and so success to any degree is unknown, the order of Arbitrator Matheson cannot stand, either, as it is based on the assumption that Mr. Sanmugarajah had some success and was entitled to interest on benefits owed. I also note that, with respect to interest on the medical and rehabilitation benefits awarded, Arbitrator Matheson applied the wrong SABS, as the treatment plans and other items were all submitted long after the SABS–2010 went into effect.

The Appeal of Arbitrator Matheson's order dated February 27, 2018 is therefore allowed.

Accordingly, the entirety of this matter is remitted for a re-hearing.

III. EXPENSES

If the parties are unable to agree about expenses of this appeal, any party seeking expenses should serve and file a Bill of Expenses within 45 days of the date of this decision, including any written submissions on entitlement and other particulars. The opposing party will then have 30 days to serve and file a response. The party seeking expenses will then have 15 days to serve and file a reply and any required documentation. The appeal expense hearing will be on the record.

March 4, 2019 David Evans Director's Delegate

"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…" Clements, para. 46(2). Emphasis added.

In Resurfice Corp. v. Hanke, 2007 SCC 7 at para. 19, the Supreme Court stated that the Alberta 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."

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended, also called the "old SABS."
2. 2Effective September 1, 2010, the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the "new SABS") came into force. Although the incident occurred before then, the transition rules in the new SABS provide that, subject to certain exceptions, benefits that would have been available pursuant to the 1996 SABS (the "old SABS") shall be paid under the new SABS, but in amounts determined under the old SABS. As a result, both the old SABS and the new SABS are applicable to accidents that occurred on or after November 1, 1996 and before September 1, 2010 and both should be considered.
3. 3The Arbitrator did not cite it but was evidently referring to s. 31(1), which provides that a person's failure to comply with a time limit set out in Part X, including s. 32 and s. 39, does not disentitle the person to a benefit if the person has a reasonable explanation.
4. 4In fact, the affidavits were served June 17 and June 18, 2015.
5. 5The Arbitrator did not refer to Mr. Sanmugarajah's submissions of July 16, 2015.
6. 6As noted before, this is the only reference to the AMA Guides in the decision.
7. 7Economical Mutual Insurance Company and Ms. M.G. (FSCO P13-00001, July 21, 2014)
8. 8State Farm Mutual Automobile Insurance Company and Asamoah (FSCO P16-00067, March 21, 2017), judicial review dismissed State Farm v. Asamoah et al., 2017 ONSC 6696.
9. 9"The Director's Delegate correctly noted … that the Arbitrator erred in the following way … the primary causation test is the 'but for' test, although a cause meeting that test need not be the major cause." Sabadash, para. 36. Major J. at para. 41 in Athey v. Leonati, 1996 CanLII 183 (SCC), [1996] 3 S.C.R.458 discussed the situation where both a pre-existing disc herniation and the accidents "alone could have been a sufficient cause," making it "unclear which was the cause-in-fact of the disc herniation." Emphasis added. "'Accident' is defined in the SABS as 'an incident in which the use or operation of an automobile directly causes an impairment or damage…'" Sabadash, para. 38. Emphasis added.
10. 10"The Director's Delegate correctly noted … that the Arbitrator erred in the following way … A proper understanding of Athey shows that it is not true that an adjudicator can simply choose between the 'but for' test and a material contribution to risk test. Rather the 'but for' test is paramount…" Sabadash, para. 36.
11. 11In Clements, the Court affirmed that Major J. in Athey applied the "but for" test where there was a pre-existing condition. Thus, at para. 41, subpara. 2., Major J. stated: "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.
12. 12I also note that the Court of Appeal in Blake v. Dominion of Canada General Insurance Company, 2015 ONCA 165, which was an accident benefit case, confirmed that the general test for causation was "but for," although the Court did not set out in what circumstances "but for" would not apply, other than when the issue was first raised only on appeal.
13. 13Since my decision in Sabadash was issued only days before the Arbitrator in this case issued his decision, it may be that, pursuant to Blake, I should only consider material contribution. In any event, the Arbitrator failed to provide adequate reasons why Mr. Sanmugarajah even suffered a catastrophic impairment, so my decision does not turn on causation alone.