Anissa Pauls v. Aviva Insurance Company of Canada, 2023 ONLAT 21-011838/AABS

Licence Appeal Tribunal File Number: 21-011838/AABS

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

Between:

Anissa Pauls

Applicant

And

Aviva Insurance Company of Canada

Respondent

DECISION

ADJUDICATOR:

Michael Beauchesne

APPEARANCES:

For the Applicant:

Ray DiGregorio, Counsel

For the Respondent:

Kristofer Angle, Counsel

Court Reporter:

Marisa Kwan

Interpreter (Arabic language):

Fanar Rafo and Rasha Kiblawi

HEARD: by Videoconference:

February 15-16, 2023

OVERVIEW

1Ms. Anissa Pauls, the applicant, was a passenger in an automobile—registered to her husband, Mr. Alwan Kelayna—that was involved in an accident on August 5, 2018. The vehicle was insured under an auto insurance policy issued to the applicant by the respondent, Aviva Insurance Company of Canada.

2The applicant’s husband, Mr. Alwan Kelayna, was driving the vehicle at the time of the accident, but was excluded from doing so under the applicant’s auto insurance policy. The applicant 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, and applied to the Licence Appeal Tribunal—Automobile Accident Benefits Service (the “Tribunal”)—for resolution of the dispute.

PRELIMINARY ISSUE

3The applicant claims entitlement to an IRB in the amount of $263.00 per week from February 23, 2020, to date and ongoing. However, the respondent disputes this, claiming the applicant is barred from entitlement to an IRB because she intentionally failed to notify the insurer of a change in risk material to the insurance contract between the applicant and the respondent.

4Therefore, I must first decide whether the applicant barred by Section 31(b) of the Schedule from claiming an income replacement benefit (the “IRB”). The onus falls on the respondent to prove this.

The respondent is not required to pay an IRB

5The respondent relies on Section 31(b) of the Schedule to show it is not required to pay an IRB to the applicant. This section describes two separate exclusions that essentially exempt an insurer from paying an IRB. The first exclusion applies to: “… any person who has made, or who knows of, a material misrepresentation that induced the insurer to enter into the contract of auto insurance.” The second exclusion applies to: “… any person who intentionally failed to notify the insurer of a change in a risk material to the contract.”

6This is a narrow issue and the respondent’s arguments center on the second of the two exclusions. I have focused my analysis accordingly, and find the respondent has shown, on a balance of probabilities, that it is not required to pay an IRB to the applicant. My reasons for this follow.

The notification failure was intentional

7The respondent contends the applicant and Mr. Kelayna, were both aware he was an excluded driver on the applicant’s policy at the time of the accident. The respondent also submits Mr. Kelayna knew he or the applicant should have notified the insurer before driving the vehicle, and that his failure to do so was intentional.

8Mr. Kelayna’s testimony confirmed he was driving the vehicle insured under the applicant’s policy at the time of the August 2018 accident, and I accept Mr. Kelayna was excluded from driving this vehicle at that time. The exclusion is clearly set out in the policy and a form (the “OPCF-28A”) included with renewal documents dated January 24, 2018. The insurance policy in effect at the time of the accident lists Mr. Kelayna as an excluded driver, and the OPCF-28A clearly notes both the applicant and Mr. Kelayna promise he will not drive the insured vehicle, and understand that if he does, there is no coverage under the policy for “most accident benefits” and that the policy may be cancelled.

9The applicant argued the respondent should have “at least” established the policy renewal and exclusion documents were sent to the proper address if the renewal documents were to be relied upon. In my view, the respondent established this during cross-examination when the applicant confirmed a home address that is consistent with the address on the renewal letter, and testified she lived there up to the date of the accident and continues to reside there. Further, while the applicant was unable to say whether she specifically received the renewal notice, she described receiving “a lot of mail” from the respondent. As such, I have no reason to believe the renewal notice was not addressed correctly and believe it is more likely than not, that the renewal notice was sent to the correct address as listed in the January 2018 renewal letter.

10The applicant’s argument—that the respondent failed to prove the applicant or Mr. Kelayna knew the exclusion should apply at the time of the accident—was not persuasive. While I agree the respondent was unable to produce a signed OPCF-28A, I am nevertheless satisfied the applicant and Mr. Kelayna were earlier informed of the exclusion and its implications. This is supported by an adjuster log note entry (dated March 24, 2016) confirming the exclusion was earlier communicated to the applicant and Mr. Kelayna (i.e., “Alwan & Anissa”). In fact, this entry indicates Mr. Kelayna was:

“… uneligible (sic) due to convics (sic) adv (sic) need to sign 28(A) form and complete within 15 days or pol (sic) will be canx (sic) cx (sic) understood.”

11I interpret this to mean the respondent advised the applicant and Mr. Kelayna that his convictions made him ineligible to be insured as a driver under the applicant’s policy, and that the applicant understood a signed OPCF-28A would need to be completed within 15 days to avoid cancellation of the policy.

12The testimony of both the applicant and Mr. Kelayna corroborate this evidence. The applicant testified that Mr. Kelayna was unable to drive for two years because of speeding tickets. Mr. Kelayna’s testimony confirmed he received speeding tickets and that, during the phone call with the respondent, he was characterized as a “high-risk driver” due to these tickets. He recalled being told the insurance policy would be cancelled unless he signed “a paper that said I cannot drive the car.”

13Mr. Kelayna went on to explain the applicant knew he was excluded from driving the vehicle insured under her policy “because I told her I was excluded.” Mr. Kelayna also testified he signed “the paper” by email, but that he later presumed he could drive the car insured under the applicant’s policy—and no longer believed he was an excluded driver—because the respondent had since issued him his own insurance policy on a different car (I will discuss this argument in more detail in the next section that deals with material risk). Mr. Kelayna confirmed he did not seek to confirm his assumption was correct with the respondent at any time prior to the accident.

14There is more evidence to indicate the applicant and Mr. Kelayna most likely received and signed an OPCF-28A at least once prior to the accident. First, the applicant confirmed during cross-examination that her auto insurance policy remained in force after March 2016 and was not cancelled prior to the accident. Second, the log note entry on September 24, 2018, says: “The (applicant) agreed to the excluded form, and signed off on it. The (applicant) must request to have the (exclusion) removed from policy, and never did”.

15Taken together, this evidence leads me to conclude on a balance of probabilities that the applicant and Mr. Kelayna were both aware of the driving exclusion at the time of the accident, and did not seek to confirm the status of the exclusion, request the exclusion be removed from the policy, or otherwise notify the respondent that Mr. Kelayna was driving the vehicle prior to the accident. As such, I conclude this was an intentional failure on the part of the applicant and Mr. Kelayna to notify the respondent Mr. Kelayna would be driving the vehicle, owing to their mistaken assumption the exclusion had been removed.

The change in risk is material

16I find the change in risk posed by Mr. Kelayna driving the vehicle insured under the applicant’s policy is material. I agree that risk increased when he took the wheel. This is because Mr. Kelayna has a history of speeding that led to his exclusion. Although Mr. Kelayna testified these were just “a couple of minor tickets,” I am mindful that these infractions were of sufficient severity that Mr. Kelayna was reportedly unable to drive for more than a year.

17I also think the premium rate merits consideration as argued by the respondent. I accept the premium paid by the applicant for her car insurance policy cannot contemplate the risk of Mr. Kelayna driving the car if he was an excluded driver. Therefore, it must follow that the risk of Mr. Kelayna driving the car is material to the respondent because the money paid by the applicant to insure the car does not reflect the increased risk of loss posed by Mr. Kelayna as a driver. Therefore, Mr. Kelayna’s decision to drive the car posed a material financial risk to the respondent.

18I was not persuaded by the applicant’s contention that Mr. Kelayna no longer posed a material risk because he was able to obtain an insurance policy on a different vehicle from the respondent prior to the accident. I note that this policy was issued by RBC Insurance Co., which later—and prior to the accident—was brought under the umbrella of Aviva Insurance Company of Canada.

19Mr. Kelayna testified he arranged this insurance policy over the phone. The evidence of this is what appears to be a welcome letter to Mr. Kelayna from the respondent that was emailed on September 1, 2017, and references auto policy W0101786. There is also a Motor Vehicle Liability Insurance Card issued by the respondent with that same policy number as well as an effective date of September 2, 2018, and a termination date of September 2, 2019.

20I accept this establishes the applicant was able to obtain an auto insurance policy from the respondent 18 months after being excluded from driving on a different policy issued by the respondent to the applicant. But that, in and of itself, does not satisfy the parameters set out in Section 31 (b) of the Schedule. It remains that neither Mr. Kelayna, nor the applicant, sought to notify the respondent that he was the driver of a vehicle that he was excluded from driving, or seek a removal of the exclusion owing to having been approved for auto insurance by the same insurer on a different car. Mr. Kelayna’s testimony on this issue, was that he told the respondent about the applicant’s auto policy, but that he did not seek clarification on the driving exclusion. It also remains that the premiums being paid by the applicant for her policy had not been reviewed by the respondent with Mr. Kelayna in mind as a driver of that car.

21As such, my view is that the material risk to the respondent on the applicant’s policy cannot be removed by approving Mr. Kelayna for a different auto policy on a different vehicle. And contrary to the applicant’s assertion that the respondent had an onus to “check back” on the exclusion, my interpretation of Section 31(b) is that the onus falls on the applicant to notify the respondent of the change in risk.

22Although Ms. Jennifer Walters (adjuster), provided testimony relevant to notification onus and material risk as it relates to this appeal, I did not place much weight on her evidence because, by Ms. Walters’ own admission, assessing risk is not her speciality— “I am not a risk assessor pertaining to policy approval … I apply the endorsements … I do not assess the risk.”

23I find the respondent has satisfied its onus to show that Section 31(b) applies in this case. The evidence shows the applicant (and Mr. Kelayna) intentionally failed to notify the respondent of a change in a risk material to the contract. The applicant is therefore barred from claiming an IRB under the policy.

ISSUES

24The issues in dispute are:

i. Is the applicant entitled to payment of $2,835.00 for the IRB accounting invoice by S&T Accounting, dated October 28, 2021?

ii. Is the respondent liable to pay an award under section 10 of O. Reg. 664 because it unreasonably withheld or delayed payments to the applicant?

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

RESULT

25The applicant is entitled to payment for accounting expenses plus interest.

26The respondent is not entitled to an award.

The applicant is entitled to IRB accounting report expenses

27Section 7(4) of the Schedule says the respondent shall pay an expense incurred by, or on behalf of the applicant, to prepare a report for the purpose of calculating the applicant’s income from employment or self-employment if all the following conditions are satisfied:

i. The applicant is applying for an income replacement benefit that is based on the employment or self-employment considered in the report.

ii. The report is prepared by a member of a designated body within the meaning of the Public Accounting Act, 2004.

iii. The expense is reasonable and necessary for the purpose of determining the applicant’s entitlement to an income replacement benefit.

28This is to be read in concert with Section 7(5) of the Schedule, which allows up to $2,500.00 in total for the report expenses.

29I find the applicant meets all these conditions.

30The evidence shows the applicant applied for an IRB. There is a letter (dated April 1, 2019) from the respondent that indicates the applicant may be entitled to an IRB, and that only a disability certificate (the “OCF-3”) remained outstanding to determine eligibility. This requirement was satisfied sometime between June 14, 2020, and July 20, 2020, when the OCF-3 was signed by Dr. Hala Akladios (family physician), and acknowledged by the respondent, respectively.

31While I agree the applicant did not complete Part 1 or sign Part 4 of the OCF-3 as argued by the respondent, I am nevertheless satisfied the OCF-3 applies to the applicant because the respondent accepted it as such at the time it was submitted. Dr. Akladios indicates on the OCF-3 that the applicant is “substantially unable to perform the essential tasks of her employment … as a result of … the accident,” which meets the eligibility criteria for an IRB at Section 5 of the Schedule.

32Further, the employment considered in the accounting report submitted by the applicant is her work as maintenance clerk since June 17, 2013, which is the same work the applicant was employed to do at the time of the accident. The applicant’s IRB—per the OCF-3—is also based on this maintenance clerk employment.

33For the second condition, I note the S&T Accounting report of the applicant’s IRB calculation (completed October 19, 2021) indicates the preparer—Mr. Ivan Semenov—is a CPA-CMA who is a member of a designated body within the meaning of the Public Accounting Act, 2004.

34The third condition requires me to consider the reasonableness and necessity of the expense report. The applicant submits it is reasonable to propose to quantify the benefits she would be entitled to, further explaining the report is necessary because she had gone back to work for a period after the accident, so the calculation was not straightforward. The respondent argues the applicant was never entitled to the IRB, and therefore, because the quantum of the benefit is not an issue, the report cannot be considered reasonable or necessary. I note the respondent did not provide any context for this position in the cases provided as part of its authority brief.

35I agree the applicant has demonstrated the accounting report is both reasonable and necessary. The OCF-3 confirms the applicant met the eligibility criteria for an IRB and neither party could anticipate the outcome of the appeal. So, in my view, it was reasonable for the applicant to exercise prudence and calculate the value of the benefit in anticipation of the hearing because the preliminary issue would be heard at the same time as the substantive issues, leaving the parties no time to assess quantum if the respondent’s arguments on Section 31(b) failed.

36Further, after reviewing the evidence, I agree the calculation was not straightforward and that the necessity of the accounting report is established by the need for professional assistance (i.e., an accountant). However, I disagree with Mr. Semenov’s opinion that tax should be allowed on top of the limit prescribed in Section 7(5) of the Schedule. This section clearly notes the “insurer is not required to pay more than a total of $2,500.00 …” and there is no provision for tax to be added here. I am also mindful that tax is not added to payments of other expenses under the Schedule—and particularly those at Section 25(5)(a) that limit assessment fees and expenses to $2,000.00 for each report. I see no reason to make an exception in this case.

37As such, I conclude the applicant has proved she meets all the conditions specified at Section 7(4) of the Schedule, and is therefore entitled to be paid $2,500.00 for the accounting report prepared by S&T Accounting, plus any interest that may be owing.

The respondent is not liable to pay an award

38The applicant seeks an award under s. 10 of Reg. 664. The Tribunal may grant an award of up to 50 per cent of the total benefits payable if it finds that an insurer unreasonably withheld or delayed the payment of benefits.

39I find there is no merit to this award claim. The only payment owing is for the accounting report, and I agree with the respondent that the applicant did not provide submissions or evidence on the award. As such, the applicant failed to persuade me that payment of any benefit was unreasonably withheld or delayed.

ORDER

40I dismiss the applicant’s IRB and award claim.

41The respondent shall pay the applicant $2,500.00 plus any interest owing for unpaid balances on the accounting report expense incurred to calculate the IRB quantum.