Pugh v. Zurich Insurance Company Ltd., 2025 CanLII 18245

Citation: Pugh v. Zurich Insurance Company Ltd., 2025 ONLAT 24-004393/AABS-PI

Licence Appeal Tribunal File Number: 24-004393/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:

Michael Pugh

Applicant

and

Zurich Insurance Company Ltd.

Respondent

PRELIMINARY ISSUE HEARING DECISION AND ORDER

ADJUDICATOR:

Rachel Levitsky

APPEARANCES:

For the Applicant:

Naphtali Silverman, Counsel

For the Respondent:

Sharla Bandoquillo, Counsel

HEARD:

By way of written submissions

OVERVIEW

1Michael Pugh (the “applicant”) was involved in an accident on June 6, 2023, 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 Zurich Insurance Company Ltd. (the “respondent”) and applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of the dispute.

PRELIMINARY ISSUE IN DISPUTE

2The preliminary issue to be decided is:

i. Is the applicant barred from proceeding with his claim for benefits as he failed to submit the application for benefits (OCF-1) within the time prescribed in the Schedule, pursuant to s. 32(5)?

RESULT

3The applicant has provided a reasonable explanation for the delay in submitting a completed OCF-1, and is therefore not barred from proceeding with his application to the Tribunal. However, as there are no substantive issues in dispute, the Tribunal file shall be closed.

ANALYSIS

4Section 55(1) of the Schedule states that an insured person shall not apply to the Tribunal if they have not notified the insurer of the circumstances giving rise to a claim for a benefit or has not submitted an application for the benefit within the times prescribed by the Schedule.

5Section 32(5) requires an insured person to submit a completed and signed application for benefits to the insurer within 30 days of receiving the application forms.

6Under s. 34, a person’s failure to comply with the time limit set out above does not disentitle the person to a benefit if the person has a reasonable explanation. The guiding principles of what constitutes a “reasonable explanation” were summarized in K. H. v. Northbridge, 2019 CanLII 101613 (“K. H.”), as follows:

i. An explanation must be determined to be credible or worthy of belief before its reasonableness can be assessed.

ii. The onus is on the insured person to establish a “reasonable explanation”.

iii. Ignorance of the law alone is not a “reasonable explanation”.

iv. The test for “reasonable explanation” is both a subjective and objective test that should take account of both personal characteristics and a “reasonable person” standard.

v. The lack of prejudice to the insurer does not make an explanation automatically reasonable.

vi. An assessment of reasonableness includes a balancing of prejudice to the insurer, hardship to the claimant, and whether it is equitable to relieve against the consequences of the failure to comply with the time limit.

7On June 9, 2023, the respondent spoke with the applicant by phone regarding the accident, and the respondent’s log notes from that call are before me. The applicant was driving a vehicle owned by his employer and was on his way to see a customer. The applicant advised the respondent that he was not aware of any claims being submitted through the Workplace Safety and Insurance Board (“WSIB”), and that he was not going to go through WSIB. The notes state: “I explained the WSIB jurisdiction to him despite not wanting to proceed with WSIB. He does want to commence legal action against the at fault party, from a pain & suffering perspective & mental anguish, not income loss. He had the meeting with the lawyer yesterday.”

8That same day, the respondent sent a letter to the applicant which enclosed an application package. The letter explained the forms, and that it required them in order to determine entitlement to specific accident benefits. It stated the following with respect to the OCF-1:

As per Section 32 of the Statutory Accident Benefits Schedule, please note that if you intend to present a claim for any of the benefits outlined in the attached booklet, the OCF-1 must be completed in its entirety and must be returned within 30 days of after receiving the Application for Accident Benefits. No benefits can be paid unless your application is complete. (emphasis in original)

9The letter did not set out the consequences for failing to provide the OCF-1.

10The respondent provided the applicant with a second letter that day, stating that because it determined that his accident occurred during the course of his employment, accident benefits were not payable if he was entitled to receive WSIB benefits unless he elected to bring legal action against the other party involved in the accident, and his election to bring legal action was not made primarily for the purpose of claiming accident benefits. The letter advised of the procedure to follow if the applicant was electing to bring legal action against the other party, which included providing proof of a formal election and an executed assignment of WSIB benefits in favour of the respondent. The letter concluded as follows:

If it is your intention to bring legal action, please return both the “election” form and the executed assignment to me as quickly as possible along with proof that you have commenced legal action. We would also require you to complete and return the attached Application for Accident Benefits (OCF-1) form within 30 days of your receipt of this letter pursuant to s. 32(5) of the SABS. Once we have the election form, proof of election to commence legal action and the WSIB has approved the “Assignment of Workplace Safety & Insurance Benefits” form, Zurich Insurance can then commence processing of your accident benefits claim. (emphasis in original)

11Again, the letter did not set out the consequences for failing to provide the OCF-1.

12The applicant spoke with the respondent again on June 23, 2023, and the log notes from that call indicate that they discussed pain and suffering damages in tort. There is no indication in the notes that the OCF-1 or WSIB were discussed.

13The respondent did not contact the applicant again. On August 2, 2023, the respondent proceeded to close the applicant’s file, but there is no evidence before me that it advised the applicant that it had done so. On February 20, 2024, the applicant submitted the OCF-1. The respondent requested a reasonable explanation for the delay but did not accept the one provided.

14The applicant submits that the respondent’s letter regarding WSIB was very confusing, leading him to believe he did not have entitlement to accident benefits and that this was a WSIB matter. He did not have legal counsel and was in the acute stage of recovering from his injuries. His employer submitted the employer’s form for WSIB on his behalf, but as he was able to return to work within a couple of weeks of the accident, he did not believe he was entitled to any WSIB benefits and never claimed any. He submits that, in early 2024, after his injury failed to improve and he realized it was much worse than he had anticipated, he retained a lawyer who subsequently realized that no OCF-1 had been submitted. He then submitted the form.

15The respondent submits that the application and election process and 30-day deadline to submit the OCF-1 were explained in its letters to the applicant. Further, it submits that the applicant demonstrated sophistication and an excellent command of English over the phone, has a college degree in business and management, and has held managerial positions for many years. As such, it submits that the applicant’s confusion over the application and election process is not worthy of belief considering his linguistic, occupational, and academic background. The respondent also argues that the applicant had an open line of communication with the respondent’s representative but did not utilize it.

16I accept the applicant’s explanation that the letter provided by the respondent regarding WSIB was confusing and that he believed he did not have access to accident benefits. Even considering his background, in my view it was reasonable for the applicant to have been confused by the process of having to contact WSIB and apply for benefits he did not want, then elect otherwise for the purpose of a tort action and not primarily for the purpose of claiming accident benefits, but also apply for accident benefits. The letter also required him to provide the respondent with proof that he had commenced legal action, which he had not done or retained a lawyer to do yet.

17The respondent points out that, according to the log notes, the applicant apparently met with a lawyer on June 8, 2023, and therefore could have discussed the WSIB and accident benefits interplay with them. I am not persuaded by this, as it occurred before he spoke with the respondent, was provided with the letters, or was advised of the procedure with respect to WSIB. Further, there is no information before me regarding the practice area of the lawyer, whether the applicant ever met with them again, or what advice he was provided. I accept the evidence contained in the email from the applicant’s counsel to the respondent on July 29, 2024, that he did not have legal counsel at that time and retained counsel in early 2024.

18The respondent also submits that the applicant could have contacted the respondent to seek clarification. I am not convinced that the applicant’s explanation is less credible as a result of his failure to do so. He did ultimately seek further clarification from counsel, albeit approximately seven months after the deadline for submitting the OCF-1 had passed. Considering that the consequences of his failure to submit the OCF-1 within 30 days were not explained by the respondent, I am not prepared to discount the applicant’s explanation simply because he did not seek clarification faster than that.

19Given the nature of the application process as a result of WSIB’s involvement, I accept that the applicant was confused and that his explanation for the delay was reasonable.

20The respondent submits that the delay was presumptively prejudicial as it was denied the opportunity to investigate, administer, and assess the applicant’s claim contemporaneously when benefits may have been payable. Although the respondent relies on K. H. in support of its claim of presumptive prejudice, the delay in that case was approximately two years. The Tribunal commented that lengthy delays are presumptively prejudicial, but was not addressing relatively short delays such as the one in the case before me. Further, in arguing that there would be no hardship on the applicant if his claim were barred, the respondent submits that the applicant had access to short-term disability, extended health coverage, and OHIP. The respondent effectively admits its belief that it was not required to pay benefits, but is also arguing that it did not have the opportunity to assess the applicant’s claim when benefits may have been payable. If benefits may have been payable, there is presumptive hardship to the applicant if his claim is completely barred. As such, even if some presumptive prejudice to the respondent exists, I am not persuaded that it is so severe that it should override the applicant’s reasonable explanation and completely bar his claim.

ORDER

21The applicant has provided a reasonable explanation for the delay in submitting a completed OCF-1, and is therefore not barred from proceeding with his application to the Tribunal. However, as there are no substantive issues in dispute, the Tribunal file shall be closed.