19-001148/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:
Jeyanathan Thangarajah
Applicant
and
Certas Home and Auto Insurance Company
Respondent
MOTION DECISION
ADJUDICATOR:
Rebecca Hines
APPEARANCES:
For the Applicant:
David S. Wilson, Counsel
For the Respondent:
Jonathan Schrieder, Counsel
Heard by way of written submissions
BACKGROUND
1This matter stems from my decision dated June 3, 2022, in which I deemed a treatment plan (“OCF-18”) for home modifications in the amount of $166,437.70 incurred pursuant to s. 3(8) of the Statutory Accident Benefits Schedule – Effective September 1, 2010. Further, I granted the applicant an award equal to 25% of the OCF-18.
2On July 6, 2022, the respondent issued payment to the applicant in the amount of $208,047.12 which included payment of the OCF-18 in the amount of $166,437.70, plus 25% equal to $41,609.42, being the quantum of the award. The respondent advised the applicant that it was in the process of having an accounting report done to calculate interest.
3On October 7, 2022, the respondent issued payment in the amount of $36,839.56, representing the interest owed on the OCF-18, which included interest from December 21, 2017 to January 19, 2021, which was the date it offered to approve the OCF-18. A dispute arose over the interest payable on the OCF-18 for home modifications and the applicant filed a motion seeking a determination on the interest issue.
ISSUE
4I have been asked to decide:
i) What interest is payable on the OCF-18 for home-modifications and is the applicant entitled to interest on the award of 25% pursuant to the Regulation 664?
RESULT
5After reviewing the parties’ submissions and the evidence, I find the applicant is entitled to interest outstanding on the OCF-18 and the award in the amount of $154,028.00.
ANALYSIS
The applicant is entitled to interest outstanding on the OCF-18 and the award in the amount of $154,028.00.
6Section 51(1) of the Schedule states that an amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under this regulation. Sections 51(2) and (3) state that if payment is overdue, the insurer shall pay interest at the rate of 1% per month, compounded monthly from the date on which the amount becomes overdue until the date in which the overdue amount is paid.
7Section 51(4) provides that in cases involving a dispute about accident benefits, interest on the benefit in dispute is calculated at the prejudgment rate described in s. 128(3) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”) that is used for past pecuniary loss, and is payable for the period that begins on the date on which an application to the Licence Appeal Tribunal is brought under subsection 280 (2) of the Act and ends on the date a settlement is reached or a decision is issued that finally disposes of the dispute.
8Section 128(3) of the CJA supports that if an order includes an amount for past pecuniary loss, the interest calculated under subsection (1) shall be calculated on the total past pecuniary loss at the end of each six-month period and at the date of the order.
9Section 10 of Regulation 664 RSO 1990 states as follows:
If the Licence Appeal Tribunal finds that an insurer has unreasonably withheld or delayed payments, the Licence Appeal Tribunal, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, may award [my emphasis] a lump sum of up to 50% 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 month, compounded monthly from the time the benefits first became payable under the Schedule.
10The applicant submits that when the Schedule and Regulation are read together, interest is calculated based on the benefits awarded, plus interest pursuant to s. 51 of the Schedule, plus 2% compounded interest on that amount. The applicant maintains that the 2% compounded interest referred to in the Regulation is mandatory and is not within the adjudicator’s discretion. The applicant relies on the decisions of the Ontario Insurance Commission in Beiler v. Alpina Insurance Company Limited, A-003051 and Murray v. Wawanesa Insurance Company, OIC A-003224 in support of his position. I am not bound by these decisions. However, I did find them helpful as far as the formula to be applied in cases where an award is granted. The arbitrator provided that an award includes “benefits awarded, plus 2% (in the present case it is 1%) plus 2% compounded interest from the date benefits became overdue”. However, the arbitrator did note that there was nothing preventing a decision maker from awarding a lump sum inclusive of interest.
11The respondent argues that I did not order interest on the award because in paragraph [76] of my decision, I state: “I find an award of 25% appropriate.” It submits that I did not expressly state that interest is payable on top of the lump sum percentage. Further, it contends that statutory interpretation of s.10 of Regulation 664 makes clear that while an adjudicator has the option to award up to 50% plus interest, this is simply an upper limit. In its view, the adjudicator has discretion to award any amount below the upper limit, and there is no requirement that interest be added. It relies on decisions of this Tribunal in Awadalla v Intact Insurance Company, 2022 CanLII 92734 (ON LAT) and K.W. v Aviva General Insurance, 2020 CanLII 35506 (ON LAT), in support of its position that interest is not mandatory on awards. I did not find either of these decisions helpful as they did not specifically address the issue of whether interest is or is not payable on awards.
12The respondent also argues that the award of 25% on the OCF-18 itself is enough of a deterrence and any interest on top of this would not be proportional or rationale in considering its conduct. It relies on this Tribunal’s decision in 17-006757 v. Aviva Insurance Canada, 2018 CanLII 81949 (ON LAT) which supports that the amount of the award should be determined based on the principles of rationality and proportionality.
13I agree with the applicant’s interpretation of Regulation 664, and find it is not within an adjudicator’s discretion to exclude payment of interest on an award. Of note, the previous version of the regulation stated an adjudicator “shall award” instead of “may award.” I do not find the amendment to the regulation resulted in a change to the meaning of, or the intent of Regulation 664. In Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27 (3rd ed. 1994, the Supreme Court found that the modern approach to statutory interpretation requires that the words of a statute be read “in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of parliament.” This approach involves consideration of three factors: a) the language of the provision; b) the context in which the language is used; and c) the purpose of the legislation or statutory scheme in which the language is found.
14The Schedule is consumer protection legislation. Further, the purpose of an award is to hold an insurer accountable to adjusting its file in good faith and to punish it for its misconduct and to deter others from acting similarly in the future. It is well established that payment of interest is not meant to be punitive. However, interest is a consequence of an insurer’s delay in the payment of, or unreasonable withholding of, accident benefits. When reading the regulation within its grammatical sense, I find that it does not support the respondent’s position that the 2% compounded interest on an award is discretionary. In my view, if it was meant to be discretionary the legislature would have added language and grammar to support same. For example, an adjudicator “may award a lump sum of 50%” and “then may award interest compounded at the rate of 2% monthly”. The fact that this language was not included does not support the respondent’s interpretation. Nor did the respondent refer me to any case law that supports its position that interest on an award is not mandatory and or that it is within an adjudicator’s discretion.
15Although I acknowledge that my decision on the quantum of the award could have been clearer, the applicant is correct in that I alluded to interest being payable on the award when I stated in paragraph [77] of my decision that “since I do not have the specific information necessary to calculate the precise amounts of the award, I leave it to the parties to calculate.”
16The applicant commissioned an accounting report completed by ADS dated February 6, 2023. ADS calculated the total outstanding amount of the award, including interest, based on the following two scenarios:
a) $209,512.00: which includes the s. 51 interest as of the date of the accident, plus the award interest up until June 3, 2022, the date of my decision;
b) $176,342.00: which includes the s. 51 interest from the date of the application to the Tribunal up until June 3, 2022, plus the award interest.
17The respondent relies on the accounting report of BDO dated July 25, 2022, which calculated s. 51 interest in the amount of $32,111.30, which represented interest payable from December 21, 2017, to August 31, 2022. In assessing the time period in which interest was payable, the respondent considered the date that it agreed to pay for the OCF-18. I do not find this factor relevant because I deemed the OCF-18 incurred pursuant to s.3 (8) of the Schedule. In my initial decision, I made a finding that the OCF-18 should have been approved 10 days after it was submitted.
18I prefer the calculation outlined in option b) in the amount of $176,342.00 in the ADS report, as I find it more consistent with sections 51(3), and 51(4) of the Schedule and s. 10 of the Regulation. For example, the respondent’s accounting report did not include interest on the award and the time frame for which interest was calculated did not comply with the Schedule. By contrast, the applicant’s report provided a detailed breakdown of the various calculations for the different time periods, which I find are more accurately reflected in the provisions of the Schedule. Further, I did not find the respondent’s submissions helpful in refuting the applicant’s arguments by its stance that interest is not automatically payable on awards or its interpretation of the Schedule in relation to same. It did not address the applicant’s accounting report at all, did not address the time periods outlined in the applicant’s submissions or report or provide clear arguments for its interpretation of the Schedule and Regulation. As a result of its position, the only persuasive evidence left for me to consider was the ADS report.
19The ADS report provided the following breakdown on interest outstanding on the award:
Benefits Outstanding at Decision
SABS Interest
Special Award
Total Outstanding
Payments Received post decision
Post Judgment Interest
Total Outstanding
$166,438
$53,034
$176,342
$395,814
$244,877
$3,101
$154,028
20I find the applicant is entitled to payment of $154,028.00 for the outstanding interest on the award which accounts for payments already made by the respondent.
ORDER
21For all of the above-noted reasons, I order as follows:
i) The balance owing to the applicant for payment of interest on the OCF-18 for home modifications inclusive of interest and the award is $154,028.00.
Released: June 15, 2023
___________________________
Rebecca Hines
Adjudicator