R.L. (Litigation Guardian) v. Intact Insurance Company, 2020 CanLII 63566

Citation: R.L (Litigation Guardian). vs. Allstate Insurance Company of Canada, 2020 ONLAT 18-005036/AABS

Released Date: 07/30/2020

In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8, in relation to statutory accident benefits.

Between:

R.L. (Litigation Guardian)

Applicant

And

INTACT INSURANCE COMPANY

Respondent

PRELIMINARY ISSUE DECISION

ADJUDICATOR: Sandeep Johal

APPEARANCES:

Counsel for the Applicant: Gregory C. Gilhooly

Counsel for the Respondent: Jason H. Goodman

Heard: By way of written submissions

OVERVIEW

1The applicant was injured in an automobile accident on April 27, 2013 and sought benefits pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010¹ (the ''Schedule'').

2The applicant completed an Application by an Injured Person for Auto Insurance Dispute Resolution dated June 1, 2018 to the Licence Appeal Tribunal – Automobile Accident Benefits Service (the “Tribunal”) on her own behalf seeking a catastrophic impairment determination and an award.

3On October 9, 2019 an Amended Application was submitted by the applicant’s newly retained counsel.

4The amended application seeks a catastrophic impairment determination, non-earner benefits (“NEB”) and an award. The applicant also served a Representing Minors and Mentally Incapable Persons form dated October 9, 2019.

5A preliminary issue was raised by the respondent that the applicant’s claim for an NEB was statute-barred as the claim was filed more than two years after the denial.

PRELIMINARY ISSUE

6Is the applicant statute barred from pursuing her claim for NEBs to the Tribunal due to the expiry of the limitation period in s. 56 of the Schedule?

RESULT

7The applicant’s appeal of the NEB was filed beyond the two-year limitation period, and I find that the justice of the case does not warrant an extension under s. 7 of the Licence Appeal Tribunal Act.²

ANALYSIS

Was the denial clear and unequivocal?

8Section 56 of the Schedule sets out that the application to dispute a denial of a benefit shall be commenced within two years after the insurer’s refusal to pay the amount claimed.

9To determine whether a denial is proper it must be in accordance with the principles outlined in Smith and Co-Operators General Insurance Company.³ According to the Smith case the refusal to pay the benefit must contain straightforward and clear language, it must be directed towards an unsophisticated person, it must outline the dispute resolution process and the relevant time limits that govern the process, and it must provide valid or other reasons for the denial. If the respondent’s notice to the applicant does not meet these basic requirements, the denial is invalid and the two-year limitation period in the Schedule is not triggered.

10In Seitzema v. Economical Insurance,⁴ the Court of Appeal found that a denial was valid if it gave the applicant a clear notice of their rights to mediation, followed by arbitration, litigation or neutral evaluation if the applicant wished to dispute the refusal and a clear notice of the two-year limitation period. Furthermore, Seitzema is also authority for the position that once a clear and unequivocal notice is given by the insurer cancelling the insured’s benefits, that was sufficient to trigger the limitation period, notwithstanding that the insurer gave legally incorrect reasons for cancelling the benefit.⁵

11In the present case, the respondent sent a denial letter dated November 26, 2014 to the applicant and her counsel at the time of Quinn Thiele Mineault Grodzki LLP.⁶ The letter states that as a result of the insurer examination (“IE”) reports the respondent has made a determination that the applicant is no longer eligible for the NEB as she no longer suffers a complete inability to carry on a normal life as a result of the accident and therefore the NEB is stopped effective November 12, 2014. The letter goes on to outline that the Applicant’s Right to Dispute form is attached should the applicant wish to dispute the denial. It sets out in capital and bold letters “WARNING: TWO YEAR TIME LIMIT” and includes the dispute resolution process.

12The applicant does not provide any submissions with respect to the adequacy of the denial in her submissions and I would take that to mean that this point is conceded. As a result, I will not address the issue of the validity of the denial except that on the evidence presented by the respondent, I find that the denial was clear and unequivocal and in accordance with the requirements of the Schedule and the Smith and Seitzema cases.

13In the present case, the respondent sent a denial of the applicant’s NEB on November 26, 2014 which was a clear and unequivocal denial and an application to dispute the NEB denial was not submitted to the Tribunal until October 9, 2019. The time period to dispute the denial was well over the two-year mark and contrary to s. 56 of the Schedule.

14The applicant submits that she did not have the requisite mental capacity during the limitation period and, as a result, the limitation period should be stayed as long as the applicant remains incapable.

15The parties do not provide submissions on whether or not the limitation period should be stayed as a result of incapacity, therefore this will not be addressed in detail. However in the case of K.T. v. Echelon Insurance Company,⁷ the Adjudicator agreed with the ruling in L.R. v. RSA Insurance, ⁸(“L.R.”) which stated as follows:

The Tribunal can and should take notice of the common law principle of affording protections to mentally incapacitated persons in cases where there is evidence that they are unable to determine and/or prosecute their claims due to a legal disability. In my view, Adjudicator Hines took these considerations into account when she decided 17-003732 v. Royal and Sun Alliance [citation omitted].

It should be clarified, however, that following the provisions of the Limitations Act to suspend limitations (sic) periods to the end of accommodating a legal disability is not the correct approach in light of s. 2(1) of the Limitations Act. In fact, considering whether a limitation period should be suspended as provided in the Limitations Act is not necessary, given that the Tribunal is empowered under s. 7 of the LAT Act to analyze whether an applicant’s time to apply to the Tribunal should be extended in appropriate circumstances, such as a legal disability.⁹

16I agree with the above from K.T. that suspending the limitation period is not the correct approach with respect to accommodating a legal disability. In my view the Limitations Act is not applicable and there is no statutory authority to suspend or stay a limitation period under the Schedule.

17It is the applicant’s position that the Tribunal has jurisdiction to extend the limitation period as a result of s. 7 of the Licence Appeal Tribunal Act.¹⁰ I will now turn to discuss whether s. 7 of the LAT Act is applicable.

Jurisdiction to invoke section 7 of the LAT Act

18According to the applicant the Tribunal has jurisdiction to extend the time for her to commence her Tribunal application by virtue of s. 7 of the LAT Act. The applicant relies upon the reconsideration decision of A.F .v. North Blenheim Mutual Insurance Company.¹¹

19The respondent’s position is that the Tribunal lacks the jurisdiction to extend the limitation period under s. 7 of the LAT Act and relies upon the Tribunal cases of S.S. v. Certas Home and Auto Insurance,¹² and M.N v. Aviva General Insurance Company.¹³

20The applicant submits that S.S. is currently under appeal to the Divisional Court and that I should follow the cases decided subsequent to S.S. that rejected the premise of S.S. that the Tribunal lacks jurisdiction to apply s. 7 of the LAT Act.¹⁴

21Adjudicator Boyce, in S.W. v. Aviva General Insurance stated the following with respect to S.S. and the Tribunal lacking jurisdiction to invoke s. 7 of the LAT Act:

Respectfully, I disagree with its analysis and ultimate conclusion and note that it is currently under appeal. In any event, I note that that decision is not binding on me here. Absent direction from a court of superior jurisdiction on the applicability of s. 7, I follow the significant body of existing jurisprudence from this Tribunal indicating that this Tribunal does have jurisdiction under s. 7 of the LAT Act to extend the limitation period if the justice of the case supports it.¹⁵

22I find Adjudicator Boyce’s comments persuasive and adopt it for the purposes of this decision. Absent direction from a court of superior jurisdiction on the applicability of s. 7, my preference is to rely on the significant body of jurisprudence at the Tribunal indicating that the Tribunal has jurisdiction to extend the limitation period.

23As a result, I will now turn to discuss whether or not the limitation period should be extended by invoking s. 7 of the LAT Act.

Should the Limitation period be extended by virtue of section 7 of the LAT Act?

24The Tribunal has jurisdiction to extend the time for filing of an appeal pursuant to section 7 of the LAT Act,¹⁶ which reads:

Despite any limitation of time fixed by or under any Act for the giving of any notice requiring a hearing by the Tribunal under section 11 or any other Act, if the Tribunal is satisfied that there are reasonable grounds for applying for the extension and for granting relief, it may,

a) extend the time for giving the notice either before or after the expiration of the limitation of time so limited; and

b) give the directions that it considers proper as a result of extending the time.

25In Manuel v. Registrar, Motor Vehicle Dealers Act, 2002,¹⁷ the Divisional Court ruled that the overriding consideration on a request for an extension of time is whether the justice of the case requires that the extension be granted. The factors to be considered in making this determination are:

a. The existence of a bona fide intention to appeal within the appeal period;

b. The length of the delay;

c. Prejudice to the other party; and

d. The merits of the appeal.

26The applicant has the onus to establish that the justice of the case requires the granting of the extension, but he or she need not satisfy all four factors. Rather, the analysis requires a balancing of the conclusions reached when applying the facts of the case to the factors.

Did the applicant have a bona fide intention to appeal?

27The applicant submits that she lacked capacity well before the two-year limitation period expired as a result of her steady decline into substance abuse and psychosis.¹⁸ Furthermore, the applicant relies upon the capacity assessor’s opinion from a report dated April 22, 2019 in which Dr. Sarazin found the applicant lacked capacity since at the latest the summer of 2016 and possibly as early as the Fall of 2015.¹⁹

28The applicant further relies upon the Disability Certificate (OCF-3) dated June 6, 2016 where her doctor, Dr. Abramenko reported that she attempted to go to work but was unable to manage work and make competent decisions.

29The respondent’s position is that the applicant’s intention to appeal is evidenced by her initial application to the Tribunal in June of 2018 which she obtained with the help of a Pro Bono law office. Furthermore, the applicant was represented by counsel shortly after the accident in 2013 and was still represented by counsel on November 26, 2016 when the two-year limitation period for NEBs expired.

30The respondent also relies upon the Financial Services Commission of Ontario (“FSCO”) case of G.(L.) v. Lombard General Insurance Co. of Canada²⁰ that the test for incapacity is not simply addressed by medical observation, but that the test for capacity is time and situation specific, there must be an application of the medical evidence to the circumstances in which capacity is required. Capacity in such cases becomes a medical-legal analysis rather than a strictly medical analysis.²¹

31The respondent further relies upon court case law which have provided guidance on capacity. In Koch, Re²² Justice Quinn noted the following considerations with respect to capacity:²³

a. There is a distinction to be drawn between failing to understand and appreciated risks and consequence and being unable to understand and appreciate risks and consequences. Only the latter can lead to a finding of incapacity.

b. It is immaterial whether one’s words, deeds and choices appear reasonable to others. Reasonableness in the eyes of other is not the test.

c. What is in one’s best interest must not be confused with one’s cognitive capacity. The former is not relevant to a determination of capacity.

d. The test for incapacity is an objective one.

e. It is mental capacity and not wisdom that is at issue.

f. Compelling evidence is required to override the presumption of capacity.

32The respondent also relies upon the Ontario Superior Court decision of Ponniah et al. v. Ramachandran et al ²⁴ in support of its position that the appointment of a litigation guardian should be not pursued with the primary purpose of retroactively tolling a limitation period.²⁵

33The onus is on the party alleging the incapacity, as no person has to prove their own capacity. In the present case, the onus is on the applicant to prove on a balance of probabilities that she was incapable during the appeal period to satisfy this first factor.

34In my view, the applicant has not done so. Despite the fact that the applicant points to her doctor’s clinical notes and records in support of her declining health from the date of denial of the NEB through the two-year limitation period, I find that the medical evidence does not establish on a balance of probabilities a mental incapacity dating back to 2015. Although I am not bound by FSCO decisions, I agree with the G.(L.) case that the test for incapacity is not simply addressed by medical observation and that capacity is a medical-legal rather than a strictly medical analysis.

35Despite numerous medical appointments with her medical practitioners for physical and mental health concerns, not one medical practitioner recommended a capacity assessment for the applicant until April 2019 and the Order of Justice McLeod appointing a litigation guardian is effective September 13, 2019 and does not mention her incapacity being applied retroactively.

36On November 6, 2015 the applicant’s doctor recommends counselling.²⁶ No concerns were noted of the applicant possibly have a mental capacity.

37On February 4, 2016 the applicant was encouraged to attend the hospital emergency room to seek psychiatric help, however there was no mention that she may be mentally incapable nor was there a recommendation for a capacity assessment.²⁷

38On February 11, 2016 her doctor was able to get the applicant to sign a consent form for the release of information in order for the applicant to attend at the hospital. Once again, there was no concern about her mental capacity to sign the consent form and no recommendation for a capacity assessment.²⁸

39On February 17, 2016 the applicant was diagnosed with anxiety and depression.²⁹

40Under Part 6 Disability Tests and Information of the Disability Certificate (OCF-3) dated June 6, 2016, Dr. Abramenko answered “No” to the question of “Can the applicant return to work on modified hours and/or duties?” Dr. Abramenko then goes not to explain that, “Patient attempted to go back to work but was unable manage work a (sic) make competent decisions.”³⁰ It is not clear based on that statement if Dr. Abramenko meant that the applicant was unable to make competent decisions with respect to her employment that she attempted to return to or whether it was with respect to her being unable to understand and appreciate risks and consequences,³¹ such that she may be mentally incapable. Despite Dr. Abramenko’s comment of “competent decisions”, I note that there are no notations in the clinical notes and records of Dr. Abramenko around the same time as the OCF-3 that she recommends a capacity assessment for the applicant.

41On July 26, 2016 the applicant met with Dr. Rioux for a psychiatry consultation where it was noted that her judgement was poor. Her cognition, however, was not formally assessed but it was found to be appropriate.³²

42From July 27 to August 11, 2016 the applicant was admitted to [the Hospital] for further investigation and treatment. She was diagnosed with chronic adjustment disorder with anxiety secondary to multiple psychosocial stressors, borderline personality traits, paranoid personality traits and substance use disorder.³³ Once again, there was no recommendation for a capacity assessment or that she may be mentally incapable of making and appreciating the risks and consequences of her decisions.

43Dr. Abramenko noted on August 18, 2016 that she feels the applicant has poor judgement and poor insight, however this was not the assessment of the psychiatrists at [the Hospital].³⁴ Once again, Dr. Abramenko does not make a recommendation for a capacity assessment.

44A formal capacity assessment was not completed on the applicant until April 22, 2019 and Dr. Sarazin opines that the applicant was not competent to instruct a lawyer in relation to the settlement of any claim or an ongoing civil litigation matter from the Fall of 2015 to the Summer of 2016. ³⁵ However, during the appeal period, I have not been persuaded that the applicant had a bona fide intention to appeal. The applicant was represented by counsel during this period of time and also visited with numerous medical practitioners and not one made a recommendation for a capacity assessment. As a result, I find that this factor is not in support of the applicant that she had a bona fide intention to appeal within the appeal period.

The length of the delay

45The length of the delay in filing the appeal application is over 35 months or approximately 3 years. It has been over 5.5 years since the denial of the NEB. The respondent submits this delay is significant.

46The applicant submits the delay is longer than some but is explainable in all the circumstances and relies upon the L.R. case wherein the limitation period was extended for an incapable person where the delay was 11 months. However, in the L.R. case the applicant was assessed to be mentally incapable within the appeal period and the applicant’s wife in L.R. who was his litigation guardian, was only his litigation guardian for a specific court action and not with respect to the Tribunal application. The delay was due to various legal proceedings and administrative reasons. I do not find those facts similar to the present case and I therefore distinguish L.R. on that basis and do not find it to be of assistance to the applicant.

47The applicant further relies upon the K.T.³⁶ case where the limitation period was extended by more than 28 months. However in the K.T. case, the applicant was once again, found to be formally incapable on or about April 15, 2016 which was within the limitation period. That was similar to the situation in L.R. As a result, I find both cases to be distinguishable from the present case. Furthermore, in K.T. the delay in filing the appeal was due to the fact that the applicant had a belief that a proceeding could not be commenced without a litigation guardian and steps were taken from late summer of 2016 until June 2017 to find a litigation guardian, which was within the appeal period.

48In the present case, I am not presented with compelling evidence of an incapacity situation during the appeal period or that there were administrative reasons in appointing a litigation guardian as the reason for the length of the delay.

49A delay of approximately 3 years past the limitation period is a significant delay and the total delay is over 5 years since the initial denial. In my view the total delay is a factor in determining the issue and I find that there has not been a reasonable explanation for the length of the delay or why an appeal could not have been filed during the time the applicant was represented by her former counsel. Furthermore, there was no capacity assessment recommended by any of her medical practitioners at the time to justify the length of the delay. As a result, I find this factor is also not in favour of the applicant.

Prejudice to the respondent

50The respondent submits the Tribunal has found on numerous occasions that a significant passage of time is prejudicial to an insurer and relies upon the Tribunal case of J.L. v TD Insurance Meloche Monnex,³⁷ where an extension was not granted two years past the limitation period and a total delay of four years was found to be prejudicial for the insurer because it would be forced to rely on old evidence, some of which may no longer be producible for a hearing.

51The respondent further relies on 18-001548 v. Aviva Insurance Canada,³⁸ where it was held that a delay of almost five years was a significant delay and the prejudice to the respondent outweighed the prejudice to the applicant as it would be procedurally unfair to defend a case based on outdated medical reports. Further, the respondent relies on the case of R.M. v. Certas Home and Auto Insurance Company,³⁹ where it was found that there was prejudice to the respondent to have to defend its denial well over two years outside the limitation period.

52The applicant submits the prejudice to the respondent is non-existent as the respondent did not raise the issue of any prejudice in its moving submissions but the respondent did so in its reply submissions. In my view, the respondent was the moving party to this preliminary issue hearing and it was entitled to reply submissions. In those reply submissions, the respondent is entitled to reply to the issues raised by the applicant in her submissions.

53The applicant further submits that the respondent did not do anything to investigate the issue and failed in its duty of good faith to the applicant after it received the OCF-3 dated June 6, 2016 where it noted the applicant was unable to make competent decisions. The applicant relies upon 688857 Ontario Limited v. Aviva Insurance Company of Canada,⁴⁰ and Usanovic v. La Capitale Life Insurance Company,⁴¹ in support of her position.

54In 688857 Ontario Limited the Court referred to the following statement with respect to the duty of good faith:

This general duty involves two requirements. The first is that the insurer must pay a claim in a timely fashion if there is no reason to contest it. The second is to treat the customer fairly throughout the process of investigating and assessing the claim. This applies both to the manner of investigation and assessment and the decision whether or not to pay.⁴²

55In Usanovic the Court referred to the duty of good faith as follows:

The duty is not a fiduciary duty but includes certain elements akin thereto. A fiduciary who owes a duty of individual loyalty to his/her principal and in exercising powers of discretion arising from the fiduciary relationship must treat the principal’s interest as paramount. In contrast, an insurer in fulfilling its contractual obligations may give consideration to its own interests. However, the insurer must give as much consideration to the welfare of the insured as it gives to its own interests. The insurer cannot do anything to injure the rights of the insured to receive the benefits under the policy.⁴³

56The applicant has not directed me to any evidence of the applicant not being treated fairly or a situation where the respondent did something to injure the rights of the applicant to receive benefits under her policy.

57In my view, the duty to act in good faith does not mean the respondent has to advance the applicant’s case or present defences in support of her position. Furthermore, the applicant’s submission with respect to the respondent’s duty of good faith does not support the applicant’s position that there is no prejudice to the respondent.

58As a result, I find this factor to be in support of the respondent that the delay is prejudicial to the respondent and this factor is not in favour of the applicant.

Merits of the appeal

59This factor does not require me to make a determinative ruling on the merits, but on the facts to assess whether the applicant has a reasonable chance of success.

60The respondent submits that despite Dr. Sarazin’s report suggesting the applicant lacked mental capacity possibly in the fall of 2015, the evidence suggests that the applicant was working full-time in 2014 and 2015 when the time period to prove entitlement to the NEB must be established. According to the respondent, the applicant was more functional during the post-104 week period following the accident than she was in the period preceding the accident as the applicant did not work between her previous accident in 2010 and the current accident. The respondent further submits that the applicant’s psychiatric status may have deteriorated in the fall of 2015 and that is beyond the 104 weeks post accident period and would have no bearing on her entitlement to the NEB.

61The applicant submits the respondent’s insurer examination (“IE”) assessor, Dr. Rossy noted in her report,⁴⁴ that the applicant’s functioning had decreased tremendously since 2013. Furthermore that the applicant’s physician noted a steady and precipitous decline in her function since the subject accident.

62In my view, this written hearing was a preliminary issue hearing and not on the merits of the applicant’s case. A detailed analysis of proving entitlement to the NEB is not necessary in deciding whether this factor would support the applicant. Even if I were to find that the applicant’s case had some merit, that would make this the only factor that may possibly be in support of the applicant’s request to extend the limitation period.

63As mentioned above, all four factors do not need to be satisfied; however, an analysis and balancing all the factors as discussed above is required. After a consideration of the four factors, I find that the applicant did not have a bona fide intention to appeal within the appeal period and although the applicant’s psychological condition was deteriorating, there was no recommendation for a capacity assessment by any medical practitioner during the appeal period that would provide an explanation for the delay. Combined with the prejudice that would result to the respondent as a result of over five years having elapsed since the denial, I find that the justice of the case does not warrant extending the limitation period for the applicant to dispute the NEB denial.

ORDER

64The applicant’s appeal of the NEB was filed beyond the two-year limitation period, and I find that under s. 7 of the Licence Appeal Tribunal Act, the justice of the case does not warrant the limitation period to be extended.

Footnotes

1. 1O. Reg. 34/10.
2. 2S.O. 1990, c.12 (“LAT Act”).
3. 32002 SCC 30, at para. 14.
4. 42014 ONCA 111 at para. 14.
5. 5Ibid at para. 13.
6. 6Written Submissions of the Respondent at Tab 10.
7. 72019 CanLII 94052 (ON LAT) (“K.T.”)
8. 818-002989 v RSA Insurance Company of Canada, 2019 CanLII 76846 (ON LAT)
9. 9K.T. at para. 14.
10. 10S.O. 1990, c. 12, Sched G., (“LAT Act”)
11. 112017 CanLII 87545 (ON LAT) (“North Blenheim”)
12. 122016 CanLII 153125 (ON LAT) (“S.S.”).
13. 132019 CanLII 119731 (ON LAT) (“M.N.”).
14. 14V.M.L. v. Aviva Insurance Company, 2020 CanLII 12745 (ON LAT); S.W. v. Aviva General Insurance, 2020 CanLII 12727 (ON LAT); R.M. v. Certas Home and Auto Insurance Company, 2020 CanLII 19575 (ON LAT).
15. 15S.W. v. Aviva General Insurance, 2020 CanLII 12727 (ON LAT) at para. 14.
16. 16Ibid.
17. 172012 ONSC 1492 (“Manuel”).
18. 18Written Submissions of the Applicant at Tab 3, Clinical Notes and Records of Dr. Abramenko dated April 2013-March 28, 2019.
19. 19Ibid at Tab 8.
20. 20FSCO A09-000531 (“G.(L.)”).
21. 21Ibid at para. 24.
22. 221997 CarswellOnt 824 (“Koch”).
23. 23Ibid at para. 69.
24. 242018 ONSC 2646.
25. 25Ibid at para. 18.
26. 26Written Submissions of the Applicant at Tab 3.
27. 27Ibid, at pg. 640.
28. 28Ibid.
29. 29Ibid.
30. 30Ibid at Tab 1.
31. 31Koch at para. 69.
32. 32Ibid at Tab 4. Psychiatry Consultation dated July 26, 2016 with Dr. Rioux.
33. 33Written Submissions of the Applicant at Tab 8, pg. 3.
34. 34Ibid.
35. 35Ibid at Tab 8, pg. 7.
36. 362019 CanLII 94052 (ON LAT).
37. 372019 CanLII 76982 (ON LAT) at para 17.
38. 382019 CanLII 58160 (ON LAT) at para. 24.
39. 392020 CanLII 19575 (ON LAT) at para. 23.
40. 402018 ONSC 5891 (“688857 Ontario Limited”).
41. 412016 ONSC 4624 (“Usanovic”).
42. 42688857 Ontario Limited, at para. 119.
43. 43Usanovic at para. 31.
44. 44Written Submissions of the Applicant at Tab 2. Psychological Report dated October 16, 2013.