Citation: Jarrett v. Aviva Insurance Company of Canada 2022 ONLAT 20-007746/AABS-M

Licence Appeal Tribunal File Number: 20-007746/AABS

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

Between:

Nakea Jarrett

Applicant

and

Aviva Insurance Company of Canada

Respondent

MOTION DECISION

ADJUDICATOR:

Craig Mazerolle

Motion Decision Dated:

January 19, 2022

BACKGROUND

1The applicant was injured in an automobile accident on June 7, 2015 and sought benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (the “Schedule”).

2A videoconference hearing is set to start on February 7, 2022.

3The issues in dispute include, in part, an award request.

NOTICE OF MOTION

4The applicant filed a Notice of Motion (submitted November 19, 2021) seeking the following relief:

a. An order adding punitive damages as an issue in dispute.

5The respondent did not consent to this motion.

PARTIES’ POSITIONS

6Citing Whiten v. Pilot Insurance Co. (“Whiten”),¹ the applicant claimed that there is a separate cause of action that arises when an insurer violates the duty of good faith it is expected to provide to its insured persons. She believes the respondent acted inappropriately in its handling of her OCF-19, so the applicant contended that there must be a means of addressing this bad faith behaviour apart from an award. That is, an award cannot address an insurer’s handling of a designation (in this case, catastrophic impairment), so damages are needed to remedy (and discourage) this kind of behaviour.

7In response to the submission that the Tribunal does not have the power to order punitive damages, the applicant turned to the Court of Appeal for Ontario’s decision in Stegenga v. Economical Insurance Company (“Stegenga”).² Briefly, since the Tribunal has exclusive jurisdiction over accident benefits (stemming from s. 280 of the Insurance Act³), the powers that were once held by the courts must apply to the Tribunal. Additionally, there is no express language removing the courts’ power to order damages, so the Tribunal must be able to grant this remedy. Finally, there is no prejudice to the respondent from adding this issue.

8The respondent opposed the request by submitting that the Tribunal has already determined that it does not have the power to order punitive damages, e.g., A.J. v. Security National Insurance Company (“A.J.”).⁴ Further, Stegenga established that the Tribunal has different remedial powers from the courts. Therefore, since the Legislature did not clearly indicate that damages are a power available to the Tribunal in a regulation—in line with s. 280(6) of the Insurance Act—the respondent concluded that the Tribunal cannot order damages.

9The respondent also challenged the applicant’s contention that there is no prejudice from adding this issue, as it would require the parties to argue about a remedy the Tribunal cannot grant. In contrast, there would be no prejudice facing the applicant from denying this motion, because the parties can still argue about the handling of her claim through her award request.

10In reply, the applicant highlighted the broad discretion provided to the Tribunal through ss. 23(1) and 25.0.1 of the Statutory Powers Procedure Act (“SPPA”)⁵ as a further means for establishing the power to order damages. The applicant also added that case law from the Tribunal is not binding on this determination.

ANALYSIS

11Section 280 of the Insurance Act provides as follows [subheadings and citations removed]:

280. (1) This section applies with respect to the resolution of disputes in respect of an insured person’s entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled.

(2) The insured person or the insurer may apply to the Licence Appeal Tribunal to resolve a dispute described in subsection (1).

(3) No person may bring a proceeding in any court with respect to a dispute described in subsection (1), other than an appeal from a decision of the Licence Appeal Tribunal or an application for judicial review.

(4) The dispute shall be resolved in accordance with the Statutory Accident Benefits Schedule.

(5) The regulations may provide for and govern the orders and interim orders that the Licence Appeal Tribunal may make and may provide for and govern the powers and duties that the Licence Appeal Tribunal shall have for the purposes of conducting the proceeding.

(6) Without limiting what else the regulations may provide for and govern, the regulations may provide for and govern the following:

1. Orders, including interim orders, to pay costs, including orders requiring a person representing a party to pay costs personally.

2. Orders, including interim orders, to pay amounts even if those amounts are not costs or amounts to which a party is entitled under the Statutory Accident Benefits Schedule.

12After careful consideration of these provisions and the parties’ submissions, I am satisfied that the Legislature did not provide the Tribunal with the authority to order punitive damages for accident benefits disputes. The motion is dismissed.

13To start, the Court of Appeal’s ruling in Stegenga provides several helpful observations for this motion at paragraphs 51 and 52:

The appellant points out that the remedies the LAT can grant, such as a special award, are different from what a court may award. For example, even if the LAT finds a delay or withholding of benefits that was unreasonable, and in making that determination finds conduct that would at common law amount to bad faith, it could not grant consequential or punitive damages as a court might…

In my view this remedial difference does not bear on the issue of what types of disputes are captured by the grant of authority to the LAT and the parallel prohibition on court proceedings. The legislature made a choice as to what disputes would be within the exclusive jurisdiction of the LAT, and what remedial powers the LAT would have. That was a policy choice it was entitled to make. The Insurance Act and its regulations form a comprehensive scheme for the regulation of insurers and insurance. The legislature must be taken to have armed the LAT with the remedial powers it considered appropriate to deal with improper insurer behaviour, knowing those remedial powers were different from the court’s.

14Based on the assumption that legislators understand the consequences of their actions and words, the Court of Appeal reasoned that the Legislature must have been aware of the difference between the remedial powers available to the courts versus the Tribunal, yet it still made the change. That is, the Legislature was alive to the fact that certain remedial powers were altered during this transfer of jurisdiction, and it accepted these differences.

15I do recognize the applicant’s argument that the Court of Appeal in Stegenga was not focused on the specific question at hand, i.e., whether this Tribunal has the authority to grant punitive damages. However, it is clear that the Court of Appeal accepted the position that there is a difference between a judge’s wide-reaching powers—based both in legislation and the common law—versus an administrative tribunal’s statutory grant of authority.

16Following on this line of reasoning, one must then consider the language of s. 280(6) of the Insurance Act and its interaction with s. 280(4). Despite the requirement under s. 280(4) that the Tribunal shall resolve accident benefit disputes “in accordance with” the Schedule, the Legislature did allow for powers to exist outside of this otherwise complete code. That is, s. 280(6) provides an avenue for the Tribunal to order amounts outside of those allowed in the Schedule, but only if there is a corresponding regulation. For instance, s. 280(6) allows the Tribunal to grant awards by way of s. 10 of O. Reg. 664.

17Without a regulation allowing for damages, I am satisfied that the Legislature understood the consequences of its actions during the transfer of accident benefit disputes to the Tribunal, and it—in turn—decided not to provide the Tribunal with the power to grant damages (as used to be ordered by the courts).

18The applicant argued that there is broad discretion afforded to this Tribunal under the SPPA, and this authority could be used to order damages. I do not find it is appropriate to use this discretion to ground a remedy as wide-ranging (and potentially impactful) as punitive damages, especially when there is a specific statutory route under s. 280(6).

19The discretion afforded under ss. 23(1) and 25.0.1 of the SPPA allows a tribunal to control its own processes and procedures. Therefore, aside from disregarding the Legislature’s clear intention on this point, the Tribunal’s ability to grant damages would be based solely in the broad language of these general provisions. I do not find this kind of interpretation of the SPPA is merited.

20Turning to the other arguments from the applicant, while it is true that my decision is not bound by the rulings of my fellow members, I do find A.J. to be compelling. Not only did Adjudicator Hines share my reading of Stegenga, but she used this interpretation to demonstrate how the analysis underpinning punitive damages can be subsumed into the analysis used for awards. This ruling is cogent and sensible, and I see no need to depart from it—especially considering its grounding in the binding reasons from Stegenga.

21This point concerning the application of the bad faith analysis from damages to awards is also of import to this dispute, as I am satisfied that there is no prejudice to the applicant from denying her motion. Any allegations of bad faith will still be addressed in this proceeding. On the other hand, requiring the respondent to make specific arguments about a remedy that the Tribunal cannot order is a waste of resources and time that would amount to prejudice.

22Finally, I am satisfied that—despite the applicant’s arguments about the lack of remedies available to those who claim bad faith adjusting of designations, as well as the special role of punitive damages noted in Whiten—it was within the Legislature’s purview to remove this remedial power from the Tribunal. Paraphrasing paragraph 53 of A.J., the Legislature is the body tasked with reaching these delicate balances between social policy and individual outcomes [emphasis added by Adjudicator Hines in the original decision]:

In my view, I find the Court [in Stegenga] 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.”…

As an administrative body, the Tribunal must respect the Legislature’s role in crafting social policy, and, in turn, it must respect the choice to not include punitive damages in its remedial toolbox.

DISPOSITION

23The applicant’s motion is denied.

Footnotes

1. 12002 SCC 18.
2. 22019 ONCA 615.
3. 3R.S.O. 1990, c. I.8.
4. 42021 CanLII 35586 (ON LAT) – upheld on reconsideration.
5. 5R.S.O. 1990, c. S.22.