[AJ] v. Security National Insurance Co., 2021 CanLII 35586

Citation: [AJ] v. Security National Insurance Co., 2021 ONLAT 18-007658/AABS

Release date: 04/30/2021

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:

[AJ] Applicant

and

Security National Insurance Company Respondent

DECISION

ADJUDICATOR: Rebecca Hines

APPEARANCES:

For the Applicant: Imtiaz Hosein, Counsel Nathan Tischler, Counsel Peter Murray, Counsel

For the Respondent: Patricia Hill, Counsel Cody Moskovitz, Counsel

Court Reporter: Network Reporting (various court reporters)

HEARD by teleconference: October 8, 9, 2020 and written submissions

OVERVIEW

1The applicant was injured in an automobile accident on May 27, 2016 and sought benefits from the respondent pursuant to O. Reg. 34/10: Statutory Accident Benefits Schedule – Effective September 1, 2010 (the “Schedule”). The respondent refused to pay for certain benefits and the applicant applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of this dispute.

2A case conference was held, and the parties were unable to resolve the issues in dispute. The matter proceeded to a teleconference hearing on October 8 and 9, 2020, where I heard the testimony of Shannon Patterson, a claims advisor with the respondent.

ISSUES

3I have been asked to decide:

i. Is the applicant entitled to an award under Regulation 664 because the respondent unreasonably withheld or delayed the payment of benefits?

ii. Is the applicant entitled to interest on any overdue payment of benefits?

iii. Does the Tribunal have jurisdiction to decide claims for bad faith seeking punitive damages?

iv. Should the applicant’s request for costs pursuant to Rule 19 of the Licence Appeal Tribunal, Animal Care Review Board, and Fire Safety Commission Common Rules of Practice and Procedure, Version I (October 2, 2017) (the “Rules”) be added as an issue in dispute?

PROCEDURAL ISSUES

4In her closing oral submissions, the applicant requested to add a claim for bad faith seeking punitive damages and costs pursuant to Rule 19 of the Tribunal’s Rules. The applicant asked that a resumption case conference be scheduled following the hearing to determine how to proceed on these issues.

5The respondent opposed the applicant’s request on the basis that the Tribunal does not have jurisdiction to decide claims for bad faith seeking punitive damages. Further, it is not procedurally fair to the respondent for the applicant to request to add costs in her closing submissions. The parties were invited to file written submissions on whether the Tribunal has jurisdiction and whether the applicant’s request for costs should be added as an issue. I will address these issues following my analysis on whether the applicant is entitled to an award.

6The respondent also brought a motion requesting that the applicant’s reply submissions on the jurisdiction issue be excluded on the basis that she did not comply with the page limit set out in my order dated October 15, 2020. In light of my decision on the issue of jurisdiction, I do not feel that it is necessary to exclude the applicant’s reply submissions, as they ultimately did not impact my determination.

RESULT

7After reviewing both parties’ submissions, case law and all of the evidence, I find:

(i) The respondent is liable to pay an award in the amount of $8,598.95 (which is equal to 30%) plus interest payable in accordance with the regulation;

(ii) The Tribunal does not have jurisdiction to determine bad faith claims for punitive damages; and

(iii) The applicant’s request to add costs pursuant to Rule 19 is granted.

BACKGROUND

8Approximately two weeks after the accident, the applicant submitted a Disability Certificate (“OCF-3”) to the respondent dated June 13, 2016, which supported that she suffered a complete inability to carry on a normal life and therefore met the test for a non-earner benefit (“NEB”). The estimated duration of the disability was more than 12 weeks. However, at that time, the applicant did not qualify for payment of the NEB because section 12(4)(a) of the Schedule supports that an insured is not entitled to a NEB for the first 26 weeks following the onset of disability. In this case, the applicant would not be eligible to claim NEBs until November 27, 2016.

9On September 16, 2016, the respondent wrote to the applicant and requested that she submit an updated OCF-3 by October 11, 2016. The letter stated that an updated OCF-3 was required in order to determine her entitlement to NEBs. The applicant did not reply to the September 16, 2016 letter.

10On November 4, 2016, the respondent wrote to the applicant advising that her entitlement to NEBs was suspended because she failed to comply with s.37 of the Schedule and submit an updated OCF-3 by the deadline. The notice also advised the applicant that three in-person insurer’s examinations (IEs) were scheduled to help determine her eligibility for NEBs and whether her impairments fell within the Minor Injury Guideline (the “MIG”).

11On November 17, 2016, the applicant wrote to the respondent and advised that its notice was non-compliant with the Schedule because it did not provide proper medical reasons for the IEs. She also indicated that an updated OCF-3 was forthcoming and requested that the IEs be postponed until an OCF-3 was completed. An updated OCF-3 was submitted to the respondent on November 28, 2016. The applicant did not attend the IEs and the respondent held her in non-compliance with s.44 for not attending the IEs and suspended payment of the NEB.

12On December 20, 2016, February 1, 2017, August 17, 2017 and February 13, 2018, counsel for the applicant wrote to the respondent requesting a response to the OCF-3 and a status update on payment. The respondent did not respond to this correspondence or acknowledge receiving the updated OCF-3.

13On August 16, 2018, the applicant filed an application with the Tribunal disputing the respondent’s denial of her claim for NEBs. The respondent raised a preliminary issue seeking to bar her from proceeding with her dispute for failure to attend the IEs. A preliminary issue hearing was held. On May 29, 2019, the Tribunal released its decision finding that the applicant was not precluded from proceeding with her claim disputing her entitlement to NEBs because the respondent’s notice did not provide proper medical reasons. However, despite finding that the notice did not provide sufficient medical reasons, the adjudicator determined that the respondent’s request that the applicant attend the IEs was reasonable.

14Following the release of the Tribunal’s decision, on June 21, 2019, the respondent sent the applicant a letter advising that it was issuing payment to the applicant for NEBs (for the period of November 28, 2016 to June 16, 2019) in the amount of $28,663.16, plus interest. In its letter, the respondent did not provide an explanation for why it was now paying the benefit.

15The applicant filed an application seeking payment of an award and interest as a result of the respondent’s handling of her claim for NEBs.

ANALYSIS

Is the applicant entitled to an award under Regulation 664 because the respondent unreasonably withheld or delayed the payment of benefits?

16I find that the applicant is entitled to an award as I find the respondent unreasonably withheld and delayed payment of her claim for NEBs.

17Regulation 664, R.R.O. 1990 (Reg. 664) states that if the Tribunal finds that an insurer unreasonably withheld or delayed payments, the Tribunal, in addition to awarding the benefits and interest to which an insured person is entitled, may award a lump sum of up to 50 percent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.

18In analyzing whether an insurer’s conduct in withholding or denying a benefit warrants an award, an insurer’s behaviour must be seen as “excessive, imprudent, stubborn, inflexible, unyielding or immoderate.”¹

19The applicant argues that she is entitled to an award because the respondent maintained a stubborn and inflexible position regarding its handling of her claim for NEBS. In particular, she submits that the respondent:

a) Failed to respond to her submission of the OCF-3 regarding her entitlement to NEBs as well as multiple requests for status updates regarding payment;

b) Never provided her with a medical reason as to why her claim for the NEBs was denied. Further, it failed to properly schedule IEs in accordance with s.44 of the Schedule, and then tried to bar her from disputing the denial of NEBs for her failure to attend; and

c) When the respondent was unsuccessful on the preliminary issue hearing, it paid the applicant more than $28,000.00 for past NEBs, without explanation, which was a willful disregard of its obligations to inform her why she was now entitled to the benefit.

20The respondent submits that an award should not be granted in this case. It asserts that this accident happened in May 2016, which is prior to the amendments to the Schedule which required an insurer to include proper medical and other reasons in its notice of denials. It submits that at the time of its denial, the case law had not yet been defined with regards to what constitutes proper medical reasons. Therefore, its only mistake was not providing proper medical reasons for its request for the IEs. However, despite this, the adjudicator still determined that its request for the IEs was reasonable. Therefore, it should not be penalized for being unsuccessful on the preliminary issue hearing.

Suspending Payment of NEBs prior to Eligibility

21I find the respondent took an unreasonable and stubborn approach in its handling of the applicant’s claim for a NEB. First, it suspended payment of the applicant’s NEBs prior to her being eligible to claim the benefit. Second, when the applicant submitted the OCF-3, the respondent never acknowledged receiving it, and ignored several requests made by the applicant requesting confirmation and updates on the status of payment.

22I find that the respondent took an inflexible position when it suspended the applicant’s entitlement to NEBs prior to her being eligible to claim the benefit. Section 12(4)(a) of the Schedule supports that an insurer is not required to pay a NEB for the first 26 weeks after the onset of a complete inability to carry on a normal life. As noted above, the applicant was not eligible to apply for the NEB until November 27, 2016. In my view, it makes little sense that the respondent would request an updated OCF-3 two months in advance of the 26-week mark and then suspend the benefit prior to the applicant being eligible to claim it.

23Moreover, I find the respondent’s conduct stubborn and unyielding, as counsel for the applicant wrote to the respondent confirming that she had requested the clinic to submit an updated OCF-3 and asked that the IE be postponed until the OCF-3 was submitted. Further, she also forwarded the respondent a copy of the letter sent to the clinic dated September 27, 2016 requesting an updated OCF-3. Under the circumstances, I find that the applicant’s request to postpone the IEs was reasonable as it was within the realm of possibilities that the OCF-3 would not support that the applicant met the test for entitlement for NEBs. Therefore, the IEs may not have been required at all. In my opinion, since the applicant demonstrated that she was trying to cooperate with the respondent’s request it should have showed more leniency rather than automatically holding her in non-compliance with s.37 of the Schedule.

24Having said that, an insurer has the right to request an updated OCF-3 to determine whether an insured person is still entitled to a specified benefit and no time frame is provided in the Schedule for when it can make this request. However, s.37(1) of the Schedule states that the request for an OCF-3 cannot be made “more than is reasonably necessary”. Section 37(1)(a) of the Schedule also provides that an insured person must comply with a request to submit an OCF-3 within 15 business days from the date the insurer makes the request. A failure to comply with the deadline permits an insurer to suspend payment of the benefit.

25I find requesting the OCF-3 two months early was not reasonably necessary at that time as the applicant did not legally qualify for the benefit. Further, I find the respondent’s conduct inflexible as it pre-emptively suspended the NEB when the applicant was demonstrating that she was trying to comply with its request. I also find the timing in which the respondent scheduled the IEs to be premature as the first IE was scheduled for November 22, 2016 (prior to the time period of entitlement). Ultimately, I find the respondent should have been less rigid in its treatment of the applicant. In addition, I find the respondent’s actions set the tone for what transpired next.

Failure to Respond to OCF-3

26The applicant submitted an updated OCF-3 on November 28, 2016, which is one day after the date she qualified for NEBs. As of the date of the hearing, the respondent failed to acknowledge ever receiving it. Further, to date, it has ignored several requests made by the applicant for a status update on her entitlement to and payment of NEBs. The adjuster’s log notes confirm an entry noting that the applicant was being held in non-compliance for failing to submit the OCF-3 by the deadline. There are also references in the log notes to other treatment plans submitted. However, there is no entry in the log notes confirming receipt of the OCF-3 or that the document had been considered by the respondent.

27Under cross-examination, Ms. Patterson testified that when an OCF-3 is received she would usually respond in writing acknowledging receipt of same. However, this was not done in the applicant’s case. Although Ms. Patterson was not the adjuster at the time, she had no explanation for why the OCF-3 was never responded to. Ms. Patterson was also asked whether she felt it was reasonable for the adjuster not to respond to several letters sent by the applicant requesting confirmation that the OCF-3 was received and asking for status updates on payment. Ms. Patterson agreed that the adjuster should have responded to the OCF-3 and subsequent correspondence about it.

28In my view, the respondent’s lack of response to the OCF-3 was unreasonable, especially in light of the fact that it suspended her entitlement to the benefit for not submitting the form by the deadline. I find the respondent has an ongoing duty to promptly adjust its file when it receives new medical documentation. An OCF-3 is a medical document which supported entitlement to the NEB. The respondent had a duty to acknowledge receiving it and to respond to the applicant’s requests for status updates. While the respondent notified the applicant that it was holding her in non-compliance for failing to attend the IEs, it never acknowledged receiving the OCF-3. I find the fact that it did not respond to the OCF-3 to be an unreasonable withholding and delay in handling the applicant’s claim for a NEB. As a result, I find this conduct is worthy of an award.

Failure to Properly Arrange IEs

29The applicant also maintains that she is entitled to an award because the respondent did not provide a medical reason for the IEs and did not properly arrange the IEs pursuant to s.44 of the Schedule. Therefore, it was unreasonable for the respondent to suspend payment of her NEBs and attempt to bar her from proceeding with her application to Tribunal. As a starting point, I do not find the respondent’s failure to provide a proper medical reason or the fact that it raised the preliminary issue attempting to bar her application worthy of an award. Despite the fact that I have determined that the respondent should have been more flexible in how it handled the late submission of the OCF-3 and its obligation to respond to it, the case law is clear that a party should not be penalized with an award just because a decision was not in their favour.

30Further, there is nothing in the Schedule that sets out any consequence for when an insurer has failed to provide medical records to an IE assessor. In my view, while this specific issue was not addressed in the preliminary issue decision, a determination was already made on whether the respondent’s notice complied with s.44 or complied with its procedural obligations in scheduling the IEs. The adjudicator determined that the notice did not comply, and the consequence was that it had to pay for the NEB. In my view, the Tribunal already dealt with the insufficiency of the respondent’s notice in its preliminary issue decision. I also do not find the case law relied upon by the applicant helpful in justifying that an award is warranted for an insurer’s failure to provide medical records to an IE assessor in this circumstance.

Failure to Provide an Explanation for Payment

31The applicant maintains that she is entitled to an award because the respondent failed to provide an explanation for paying the NEB on June 21, 2019. I disagree as there is nothing in the Schedule which supports that an explanation has to be provided for when payment of a specified benefit is made. Section 36(4)(a) of the Schedule provides that once an insurer receives an OCF-3 the first option is to pay the benefit. This section does not elaborate and state that an explanation for payment needs to be provided. Section 36(4)(b) provides that if the benefit is being denied (or IEs are scheduled) then an insurer must provide an explanation including any medical reasons for its decision.

32Ms. Patterson testified that the respondent likely issued payment following receipt of the Tribunal’s decision which found its notice requesting the IEs insufficient. Ultimately, since its notice was defective it had to pay for the benefit until it issued a notice which complied with the Schedule. Consequently, I do not find the lack of explanation for issuing payment of the NEB conduct worthy of an award.

What is the appropriate quantum of the award?

33I find the applicant is entitled to an award in the amount of $8,598.95 (which is equal to 30%) for the following reasons.

34In determining the appropriate quantum of an award, the case law² provides guidance on the factors to consider:

i. the overall length of the delay; ii. the blameworthiness of the insurer’s conduct; iii. the vulnerability of the insured person; iv. the harm or potential harm directed at the insured person; v. the need for deterrence; and vi. the advantage wrongfully gained by the insurer from the misconduct.

35In addition to the above factors, other criteria which may be considered is whether the respondent acted professionally in its handling of an insured’s claim or whether there has been a pattern of unreasonable conduct in the respondent’s handling of the applicant’s claim in relation to other benefits.

36The applicant seeks an award of 50%. She submits that the NEB is an important benefit for individuals and a higher quantum should be awarded because it is a specified benefit as opposed to just a treatment plan. She also argues that the respondent’s attempt to bar her from proceeding with her application when it knew its notice was deficient is worthy of an award of 50%. As already noted, I do not find the fact that the respondent was unsuccessful on the preliminary issue hearing worthy of an award. The applicant maintains that she has been negatively impacted because, unlike the insurer, she does not have unlimited resources and had to incur additional expenses by filing an application to dispute the benefit.

The Overall Length of the Delay

37From November 27, 2016 to June 21, 2019, the respondent did not acknowledge receiving the OCF-3 or issue payment for the benefit. In my view, this was a lengthy and unreasonable delay. Further, I find the fact that the respondent ignored multiple requests for status updates on December 20, 2016, February 1, 2017, August 17, 2017 and February 13, 2018 to be an aggravating factor. The respondent has a duty to its insured to take reasonable and timely steps in response to applications for benefits. The applicant is the respondent’s customer and I find that the adjuster did not act professionally by not responding to an application for a benefit and correspondence requesting status updates that required a response.

Blameworthiness of the Respondent’s Conduct

38While the applicant was initially delayed in submitting the updated OCF-3, I do not fault her because she was not legally entitled to the benefit yet. As of November 27, 2016, I find the respondent completely responsible for its failure to acknowledge the OCF-3 and subsequent correspondence. The lack of response was unreasonable and the blame for the delay rests entirely with the respondent. No valid explanation was provided by Ms. Patterson to explain why the adjuster ignored the OCF-3 or requests for updates about it. Further, when the applicant filed the application with the Tribunal the respondent could have reviewed the reasonableness of its past conduct and could have taken steps to mitigate. However, it did not.

39One mitigating factor which I have considered is the fact that the respondent issued payment for NEBs once it received the Tribunal’s decision on the preliminary issue. The final percentage of the award should reflect this mitigating factor.

Vulnerability, Harm, Wrongful Advantage and Need for Deterrence

40The applicant is a vulnerable individual because she was injured in an accident. I am not commenting on whether she met the test for entitlement to NEBs when the updated OCF-3 was submitted as no evidence is before me to confirm same. However, the OCF-3 which the respondent ignored supported that she suffered a complete inability to carry on a normal life, which is a serious impairment. The respondent should have taken the OCF-3 more seriously and had a duty to respond promptly.

41As a result of the respondent’s lack of response, the applicant did not receive payment of the benefit. In addition, she had to file an application with the Tribunal in order to get a response from her insurer, which resulted in further delay. One thing which I found lacking from the applicant’s submissions was how she was prejudiced by the respondent’s conduct. In her closing submissions she referred to case law which she maintains provides guidance for the quantum which should be awarded in her case. However, she failed to articulate how she was negatively impacted by the respondent’s behaviour.

42Regardless, I agree with the applicant that the respondent’s past behaviour in this case needs to be deterred, considering that it is a sophisticated and well-resourced party, and the applicant is a vulnerable person.

43I do not find that the maximum award of 50% is appropriate because the respondent mitigated by issuing payment for past NEBs plus interest in June 2019. Further, its conduct was not part of a pattern for how it adjusted the applicant’s claim as a whole. The log notes reflect that the respondent promptly responded to other benefits. For example, it properly evaluated medical documentation received and removed her from the MIG without the need for an IE. Further, there was no pattern of unreasonable delays in its response to other benefits.

44The applicant relied on M.M. v. Aviva in support of her position that an award in the amount of 50% is appropriate. In that decision, the adjudicator determined that the insurer’s request for an IE was unreasonable as it had enough information to approve the treatment plan without the IE. I find this decision distinguishable from the present case. Although I have determined that the respondent’s conduct was inflexible and unyielding in its handling (and lack of response) to the submission of the OCF-3, the applicant has not submitted evidence to support that she met the test for entitlement to the NEB at that time.

45After considering all of the above factors, I find the applicant is entitled to an award in the amount of 30%. Important to my determination was the respondent’s conduct as a whole in its response to the applicant’s claim for the NEB, the length of delay and lack of response to the submission of the OCF-3, and the need for deterrence. The applicant has failed to persuade me that I should award the maximum of 50%, as she has failed to demonstrate how she was prejudiced by the respondent’s conduct.

46Consequently, I find the applicant is entitled to an award in the amount of $8,598.95 (which is 30% of $28,663.16) plus interest payable in accordance with the regulation.

Is the applicant entitled to interest on overdue payment of benefits?

47The applicant listed interest on the award as a separate issue in dispute. Since the regulation already incorporates how interest is to be paid on an award, I do not find that it is necessary to address interest as a separate issue. As per the regulation, interest is payable at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule. I find interest to be payable from the date the benefit became payable on November 28, 2016 to the date the respondent issued payment on June 21, 2019.

Does the Tribunal have jurisdiction to determine bad faith claims and order punitive damages?

48I do not find that the Tribunal has jurisdiction to determine bad faith claims for punitive damages for the following reasons.

49Both parties relied on the Court of Appeal’s decision in Stegenga v. Economical³ in support of their positions that the Tribunal does or does not have jurisdiction to determine bad faith claims for punitive damages.

50The applicant argues that Stegenga supports her position that the Tribunal has jurisdiction to determine bad faith claims for punitive damages because the Court stated that the removal of the Court’s jurisdiction under s.280 of the Insurance Act is coextensive with the powers given to the Tribunal. Further, in paragraph 54 of its decision, the Court indicates that bad faith claims do not automatically fall outside the reach of s.280 of the Insurance Act.⁴ Further, she asserts that a common law remedy such as punitive damages cannot be extinguished or altered without explicit language from the legislature indicating its intent to do so.⁵ The applicant also relies on the Court of Appeal’s decision in Tomec v. Economical⁶ in support of her argument that if the Tribunal does not have jurisdiction to award punitive damages it would create an absurd result as it would yield the consumer protection objectives of the Schedule toothless and prevent access to justice.

51The respondent argues that the Stegenga decision was clear that punitive damages for bad faith claims has been eliminated as an available remedy in both the courts and this Tribunal. It relied on both Stegenga and a motion decision of this Tribunal in Sheikh v. Continental⁷ in which the Vice Chair determined that the Tribunal does not have jurisdiction to determine bad faith claims for punitive damages. For the following reasons, I agree with the respondent.

52I find that Stegenga clearly sets out the types of remedies this Tribunal has jurisdiction to award. The Court highlights that if the Tribunal determines that an insurer has unreasonably withheld or delayed payment of a benefit, the Tribunal may deem the benefit incurred pursuant to s.3(8) of the Schedule. Further, Regulation 664 provides the Tribunal with the power to grant an award of up to 50% of the benefits. In paragraph 6 of its decision, the Court states:

Interpreted in light of the principles of statutory interpretation, s. 280 grants the LAT jurisdiction over Ms. Stegenga’s claim, and prohibits the claim from proceeding as an action in court, notwithstanding that the action alleges bad faith and the remedies the LAT can grant are different from those a court could. This result is a consequence of the policy choice the legislature made in enacting s. 280.

53In my view, I find the Court was clear and consistent in stating throughout its decision the difference between the remedies previously available through the courts compared to those that are available at the Tribunal. While the Court says it in other words, I find that the decision supports that an insured person’s right to file bad faith claims for punitive damages is no longer available. Further, that this was a policy choice made by the legislature. In coming to that conclusion, the Court states that the purpose of the legislature’s policy decision was to reduce insurance rates and provide for the fast and efficient resolution of disputes and avoid a duplication of processes. Of significance, the Court states that the legislature must have considered “the importance of its objectives of efficiency and cost reduction to outweigh the loss of insured individuals’ access to the courts and to the full range of remedies available there.” [Emphasis added]⁸

54In my view, I find the underlined sentence above supports that an insured person’s right to file a claim seeking punitive damages has been eliminated in both the courts and at this Tribunal. Having said that, I do agree with the applicant that Stegenga clarifies that the Tribunal may consider an insurer’s bad faith conduct in finding that an award is payable, or in deeming a benefit to be incurred. For example, whether an insurer follows its procedural obligations and responds to applications for benefits in a timely manner, along with its processes for administering a claim, can be factors taken into consideration in finding an award payable. As noted above, I have already considered these factors in determining that an award is warranted in this case. Nevertheless, nothing in the Insurance Act or regulations grant the Tribunal the authority to award punitive damages.

55The applicant submits that Tribunal’s authority to award punitive damages does not need to be explicitly conferred to it by statute or regulation. She maintains that s.3(2) of the Licence Appeal Tribunal Act¸ 1999 provides the Tribunal with all of the powers necessary or expedient for carrying out its duties. I find the applicant interprets this power too broadly.

56I also do not find the applicant’s submissions, or the case law relied upon, support that the Tribunal has jurisdiction to determine bad faith claims for punitive damages. Most of her submissions and case law focused on the criteria the courts have considered in the past for determining bad faith claims, and the difference between an award and bad faith claims.¹⁰ The majority of the decisions relied upon predate the transition of power from the courts to this Tribunal. The case law sets out that a claim of bad faith arises where there has been “an actionable wrong which is independent of and in addition to the breach of a contractual duty”. It is also “a separate cause of action that is distinct from the cause of action founded on the express terms of the policy.” In Stegenga, the Court held it is not the remedy sought but the facts giving rise to the dispute that determines jurisdiction.¹¹

57In the present case, the applicant’s claim arises from the respondent’s handling and denial of her application for NEBs. These are the facts that give rise to the Tribunal’s jurisdiction to determine this matter. In addition, I have already considered the respondent’s conduct in its administrative handling of the applicant’s claim in determining that an award is payable.

58I agree with the respondent that if the legislature intended for the Tribunal to have jurisdiction to grant punitive damages for bad faith claims it would have expressly conferred this power to the Tribunal by statute or regulation. The legislature has not done so. Further, whether the legislature’s elimination of punitive damages as an available remedy creates an absurd result is outside the scope of my authority to determine. I also find the Tomec decision distinguishable from the present case as that decision dealt with the rules of discoverability and the application of limitation periods in a catastrophic case.

59For all of the above reasons, I find the Tribunal does not have jurisdiction to determine bad faith claims for punitive damages. Consequently, the applicant’s request to add a claim for bad faith for punitive damages is dismissed.

Should the applicant’s request for costs be added as an issue at this stage of the proceedings?

60The applicant’s request to add costs as an issue in dispute is added.

61Rule 19.2 of the Tribunal’s Rules provides that a request for costs can be added at any time before the Tribunal issues an order or decision. Since the applicant’s request to add costs was made before a decision was rendered her request falls within what is provided for in the Rules.

62The applicant submits that her request to add costs should be granted because the basis for her request arose during the course of the hearing. For example, the respondent served her with new productions halfway through the hearing despite repeated requests for complete productions of these records. The applicant also argues that evidence has been adduced at the hearing that the respondent knew that she was entitled to NEBs but attempted to bar her application based on the allegation that she did not attend an IE which was never arranged.

63The respondent submits that it is inappropriate for the applicant to request to add costs in her closing submissions. It argues that the applicant’s last-minute request to add costs is a “hearing by ambush.” It maintains that if costs are added as an issue in dispute at this time it would be prejudiced because it would not have the opportunity to investigate, assess and make decisions regarding the evidence it would submit on the issue. In addition, it would be procedurally unfair and would undermine the Tribunal’s mandate for the fair, efficient and timely resolution of this dispute.

64The applicant asserts that the respondent will not be prejudiced by her request as she has requested that a case conference be scheduled to outline the parameters for the issue to be dealt with. If a case conference is granted, there is no prejudice to the respondent for not having the opportunity to investigate, assess and make decisions with respect to the evidence it would present in the course of the hearing on that issue.

65I agree with the applicant and order that costs be added as an issue in dispute. I agree that the basis for the applicant’s request for costs arose during the course of the proceedings as the respondent failed to comply with earlier production orders by the Tribunal. Whether the respondent’s conduct meets the high threshold for costs is another issue. To provide for efficiency and prevent further delay, I do not find that a further case conference is necessary to discuss the issue of costs. The respondent will not be prejudiced as it will have time to review the applicant’s submissions on costs prior to fling a response.

ORDER

66For all of the above reasons, I order as follows:

(i) The respondent is liable to pay an award in the amount of $8,598.95 (which is equal to 30%) plus interest payable in accordance with the regulation;

(ii) The Tribunal does not have jurisdiction to determine bad faith claims for punitive damages; and

(iii) The applicant’s request to add costs pursuant to Rule 19 is granted. The parties are ordered to file written submissions according to the following timetable:

a) Applicant’s submissions are due: May 28, 2021

b) Respondent’s submissions are due: June 11, 2021

c) Applicant’s reply, if necessary, are due: June 25, 2021

67Initial submissions shall be a maximum of 10 pages, double spaced, 12-point font and reply, if necessary, shall be a total of 5 pages. Submissions in excess of the page limits will not be considered. I am seized and the cost issue will be before me.

Footnotes

1. 1M.M. v. Aviva Insurance Canada, 2020 CanLII 42663(ON LAT) (Reconsideration) (“M.M. v. Aviva”) at para. 28.
2. 2M.M. v. Aviva, para 34.
3. 3Stegenga v. Economical Mutual Insurance Company, 2019 ONCA 615 (“Stegenga”)
4. 4Insurance Act, R.S.O. 1990, c. I.8
5. 5Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29
6. 6Tomec v. Economical Mutual Insurance Company, 2019 ONCA 882, (“Tomec”) at paras 46 & 50.
7. 7Sheikh v. Continental Casualty Insurance Company (19-003567/AABS)
8. 8Stegenga, para 39.
9. 10Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 SCR 595; Ferme Gerald Laplante & Fils Ltee v. Grenville Patron Mutual Fire Insurance Co., 2002 CanLII 45070 (ONCA); and Dundas v. Zurich Canada, 2012 ONCA 181, 109 O.R. (3d) 521.
10. 11Stegenga, para 66.
11. 9Licence Appeal Tribunal Act¸ 1999, S.O. 1999, c. 12, Sched G, s. 3(2).