Esayas v. Pafco Insurance Company, 2023 CanLII 87430

Esayas v. Pafco Insurance Company, 2023 ONLAT 22-014027/AABS-PI

Licence Appeal Tribunal File Number: 22-014027/AABS

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:

Mebrhatu Gebrehawariat Esayas

Applicant

and

Pafco Insurance Company

Respondent

PRELIMINARY ISSUE HEARING DECISION AND ORDER

ADJUDICATOR:

Tavlin Kaur

APPEARANCES:

For the Applicant:

Andrew Franzke, Counsel

For the Respondent:

Jonathan White, Counsel

Heard by way of written submissions

OVERVIEW

1Mebrhatu Gebrehawariat Esayas, the applicant, was involved in an accident on September 24, 2022, and sought benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (including amendments effective June 1, 2016) (the “Schedule”). The applicant was denied benefits by the respondent, Pafco Insurance Company (“Pafco”), and applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of the dispute.

PRELIMINARY ISSUES IN DISPUTE

2The preliminary issues to be decided are:

1. Whether the insurer is required to pay income replacement benefits if the applicant was operating a vehicle not insured under a motor vehicle liability policy, pursuant to section 31(1)(a)(i) of the Schedule?

2. Whether the applicant is entitled to receive income replacement benefits for failing to submit a completed OCF-3 disability certificate pursuant to sections 36(2)-(3) of the Schedule?

RESULT

3The respondent has not proven that the applicant knew or ought reasonably to have known that his vehicle was not insured.

4The respondent is not liable to pay for the income replacement benefit for any period before a completed OCF-3 is submitted.

ANALYSIS

Background

5On September 3, 2021, the applicant signed an application for automobile insurance. The insurance policy expired on September 4, 2022. On August 18, 2022, the respondent notified the applicant in writing that their attempt to withdraw the amount of $447.11 was unsuccessful and returned by the bank due to insufficient funds. In this letter, the applicant was advised that in order to continue his monthly withdrawal privileges, he would need to forward a payment equal to the total of the missed payment, plus the next regularly scheduled payment with a handling fee of $50.00, plus any applicable taxes and fees.

6In a separate letter dated August 18, 2022 that was sent by registered mail, the applicant was notified that the respondent was unable to continue the protection on his policy because the first payment for the renewal was returned by the bank. The applicant was informed that the full payment was required before September 4, 2022 or the policy would be cancelled at 12:01 a.m. the following day. The respondent advised the applicant to contact his broker regarding the availability and requirements of reinstatement and alternative coverage if reinstatement was available.

7The applicant did not take the requested action before the deadline. The applicant was then involved in an accident on September 24, 2022. On September 29, 2022, the applicant contacted his insurance broker. The broker’s activity log notes are as follows:

Client failed to make his payment the policy was cancelled for non pay, Called Pafco underwriting to reinstate the policy spoke to underwriting (Haeoyoung), She explained to me that the policy cannot be reinstated and that it was client[sic] responsiblity [sic] to have paid his insurance premium [sic]. client recieved [sic] registered mail as well and he admited [sic] that he's seen the payment bounce from the account and said he assumed that they will try again on a different [sic] date but still decided to do nothing after realizing the payment has not come out. Also client admitted to me that he's been in a claim and is speaking to a claim adjuster, informed client that he must speak only to his claim adjuster regarding the claim as i cannot answer any of his questions on how his claim will go.

8The applicant submitted an OCF-1 and OCF-2 to the respondent on October 18, 2022. On February 2, 2023, the respondent informed the applicant that his policy was terminated on September 4, 2022 for non-payment and that the IRB was not payable because his insurance policy was not valid at the time of loss.

Parties’ positions

9The respondent submits that section 31(1)(a)(i) of the Schedule applies in this case. Its position is that the applicant knew or reasonably ought to have known from its correspondence and his telephone conversations with Tabone Insurance that there was no valid insurance policy in place at the time of the accident. The applicant knew his premium payment had not gone through at the bank but did not take action to pay the premium or associated fees. Therefore, there was no valid policy in existence at the time of the accident, and the application should be dismissed.

10The applicant submits that he did not know about the default, never received the registered mail, and only found out about the default when he took steps to report the accident. It is the applicant’s position that the respondent has not adduced any history of prior non-compliance with this policy. The evidence discloses that he was explicitly contemplating and taking steps to renew the policy prior to the accident. Furthermore, he submits that the evidence of the notice card having been left at the applicant’s residence is not enough to discharge the respondent’s burden of proof under the applicable test. He asserts that there are huge gaps in the evidentiary record, which the respondent had the opportunity to fill but did not. Furthermore, if the Tribunal finds that the respondent discharged its burden of proof, then the Tribunal should exercise its discretion in equity to grant the applicant relief from forfeiture in relation to the unpaid premium.

Section 31(1)(a)(i)

11Pursuant to section 31(1)(a)(i), the insurer is not required to pay an income replacement benefit, a non-earner benefit or a benefit under section 21, 22 or 23 in respect of a person who was the driver of an automobile at the time of the accident if the driver knew or ought reasonably to have known that he or she was operating the automobile while it was not insured under a motor vehicle liability policy.

12It is the respondent’s onus to prove that the exemption in section 31(1)(a)(i) applies and that the applicant knew or ought reasonably to have known that on September 24, 2022, he was operating his vehicle while it was not insured under a motor vehicle liability policy.

13The respondent is relying on the activity log from the broker dated September 29, 2022 in support of its case. There is a comment in the log which notes that the applicant received the registered mail. It is unclear to me whether this is something that the applicant admitted or whether this was the underwriter telling the applicant’s broker that the applicant received registered mail regarding the non-payment issue. I cannot definitively conclude that the applicant admitted to the underwriter that he received the registered mail.

14In his affidavit dated September 1, 2023, the applicant states “I never received the registered mail that was allegedly sent to me by the insurer on August 18, 2022, informing me about the defaulted payment and the cancellation of my policy.” He further alleges that mail has been stolen from the mailbox because his residence is located next to a homeless shelter. I have reviewed the tracking information from Canada Post. The August 23, 2022 entry notes that the item was available for pick up at the post office. However, there is nothing that suggests that the notice was picked up nor is there a signature.

15However, the respondent points out that a copy of the letter was attached to the applicant’s application that was filed with the Tribunal. According to the respondent, this demonstrates that the applicant was in possession of the letter and provided a copy to his legal representative. The respondent states that, “it is therefore not reasonable for the applicant to believe he was insured at the time of the accident.” I am not persuaded by this argument. On October 18, 2022, the respondent was notified that the applicant had retained legal counsel. A general authorization was forwarded to the respondent instructing the respondent to provide copies of the entire file to the applicant’s legal counsel.

16The respondent has not provided any evidence that shows when the copy of the applicant’s file was forwarded to his legal counsel. In my view, it is plausible that the notice letters were forwarded by the respondent to the applicant’s counsel prior to the filing of the application and that is why the letters were included. If the respondent had demonstrated that the file was forwarded after the filing of the application with the Tribunal, then perhaps this argument would support their position. The applicant’s counsel also failed to address this argument. Without the timeline of when the file was forwarded to the applicant’s legal counsel, I cannot conclude that the applicant was aware of the notice, as alleged by the respondent.

17On the balance of probabilities, I find that the respondent did not prove that the applicant knew or ought reasonably to have known that on September 24, 2022, he was operating his vehicle while it was not insured under a motor vehicle liability policy. Therefore, I find that the exclusion under section 31(1)(a)(i) of the Schedule does not apply.

The applicant is not entitled to the IRB

Parties’ positions

18The respondent submits that it has never received a disability certificate (“OCF-3”) for the applicant. The applicant has never provided an explanation for failing to submit an OCF-3. Therefore, the applicant is not entitled to the IRB.

19The applicant submits that the Tribunal should invoke its discretion in the circumstances of this case to relieve him from the statutory consequences of his failure to submit an OCF-3, which was served on August 31, 2023.

The law

20Section 32(5) requires that an applicant submit a completed and signed application for benefits to the insurer within 30 days after receiving the application forms. Section 36(2) of the Schedule specifies that “an applicant for a specified benefit shall submit a completed disability certificate with his or her application under section 32.” Therefore, the correct limitation period to submit the OCF-3 along with the OCF-1 remains 30 days after receiving the application forms from the respondent, as provided by section 32.

21In order for an OCF-3 to be considered complete, it must be filled out and signed by a health practitioner of the applicant's choice. Once the insurer receives that completed OCF-3, it has 10 business days to either pay the benefit, ask for a section 44 assessment or make a request for more information under section 33.

22Section 36(3) states “an applicant who fails to submit a completed disability certificate is not entitled to a specified benefit for any period before the completed disability certificate is submitted.”

23Section 34 of the Schedule states that “a person’s failure to comply with a time limit set out in this Part does not disentitle the person to a benefit if the person has a reasonable explanation.” The onus is on the applicant to establish a reasonable explanation for the delay. The interpretation of “reasonable explanation” is guided by Horvath and Allstate Insurance Company of Canada, FSCO A02-000482, June 9, 2003, and was more recently reiterated in K.H. vs Northbridge, 2019 CanLII 101613 (ON LAT).

24Based on the evidence before me, it appears that the applicant did not submit his OCF-3 to the respondent until August 21, 2023. The applicant did not provide any submissions or evidence to refute this fact. While section 34 of the Schedule allows an extension of a deadline if there is a reasonable explanation for the delay, the applicant has not offered one.

Relief from forfeiture

25I also find the applicant’s submissions regarding relief from forfeiture to be unhelpful. The Tribunal does not have the jurisdiction to grant relief from forfeiture. A statutory administrative tribunal obtains its jurisdiction from two sources: explicit powers expressly granted by statute, and implicit powers by application of the common law doctrine of jurisdiction by necessary implication: see ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board), 2006 SCC 4 at para. 38. The Legislature has given the Tribunal exclusive jurisdiction to resolve disputes relating to an insured’s entitlement to statutory accident benefits pursuant to section 280 of the Insurance Act and, more specifically, section 280(4) requires this Tribunal to resolve such disputes in accordance with the Schedule.

26The Schedule does not provide for equitable remedies such as relief from forfeiture. Section 129 of the Act provides that:

Where there has been imperfect compliance with a statutory condition as to the proof of loss to be given by the insured or other matter or thing required to be done or omitted by the insured with respect to the loss and a consequent forfeiture or avoidance of the insurance in whole or in part and the court considers it inequitable that the insurance should be forfeited or avoided on that ground, the court may relieve against the forfeiture or avoidance on such terms as it considers just.

27I do not find that section 129 of the Act is available for me to use as an adjudicator at the Tribunal. Section 129 uses the word “court”. The Tribunal is not a court. I interpret this to mean that the legislature did not intend for section 129 to be available to the Tribunal as court is explicitly noted while Tribunal is not.

28Furthermore, section 122 establishes the following restriction in relation to specific forms of insurance that are not subject to the “Part” of the Act that includes section 129 [emphasis added]:

Except where otherwise provided and where not inconsistent with other provisions of this Act, this Part applies to every contract of insurance made in Ontario, other than contracts of,

(a) accident and sickness insurance;

29In support of his position that the Tribunal has the jurisdiction to grant relief from forfeiture, the applicant is relying on the reasoning in Botbyl v Heartland Farm Mutual Inc., 2023 CanLII 72662 (ON LAT). I respectfully disagree with the Tribunal’s finding regarding the relief from forfeiture. In my view, the Tribunal does not have the jurisdiction to provide equitable relief in the form of relief from forfeiture. Therefore, I decline to follow it.

30I find that the applicant has failed to provide a reasonable explanation for the delay. The respondent is not liable to pay for the income replacement benefit for any period before a completed OCF-3 is submitted.

ORDER

31The respondent has not proven that the applicant knew or ought reasonably to have known that his vehicle was not insured. Preliminary issue #1 is dismissed.

32As for preliminary issue #2, the respondent is not liable to pay for the income replacement benefit for any period before a completed OCF-3 is submitted.