Citation: Zhai v. Security National Insurance Company, 2026 ONLAT 24-015164/AABS

Licence Appeal Tribunal File Number: 24-015164/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:

Wenmao Zhai

Applicant

and

Security National Insurance Company

Respondent

DECISION

VICE-CHAIR:

Robert Maich

APPEARANCES:

For the Applicant:

Jing Wang, Counsel

For the Respondent:

Kamil Podleszanski, Counsel

HEARD: In Writing

OVERVIEW

1Wenmao Zhai, the applicant, was involved in an automobile accident on February 4, 2024, 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, Security National Insurance Company, and applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of the dispute.

2A case conference was held on March 24, 2025, before the Tribunal in this matter. The parties identified the issues in dispute as outlined in the Case Conference Report and Order (“CCRO”) dated March 26, 2025. Further, the Tribunal outlined the particulars of document exchange, if any requested, and orders for production of documents, if any, in the CCRO.

PRELIMINARY ISSUES

3The respondent submits that the claim for a special award be dismissed because the applicant did not provide particulars of the award, which constitutes a breach of procedural fairness, accordingly, the respondent is materially prejudiced in its ability to prepare for and respond to the applicant’s submissions.

4The respondent relies upon Consagra vs. Economical Insurance, 2023 CanLII 4444 (ON LAT) and O’connor v Aviva General Insurance Company, 2022 CanLII 59511 (ON LAT) for the principle that an award claim cannot proceed where particulars were not provided. The respondent submitted it would be procedurally unfair to permit the hearing to proceed because it would prejudice the respondent’s ability to investigate and respond.

5The applicant submits that the respondent was given the full opportunity to respond to the award claim. No order was made at the case conference requiring the applicant to produce particulars upon receipt of the log notes; the respondent’s counsel chose not to obtain such an order at the case conference, delivered the log notes less than 30 days before the applicant’s written submissions were due, and made no request to the applicant’s counsel for particulars. The applicant further submits the respondent’s position is taken in bad faith.

6I have reviewed the CCRO and find that neither party made any requests for document exchange nor did either party request a production order, as per paragraphs [10] and [11]. I find this is a distinguishing feature from the cases relied upon by the respondent of Consagra vs. Economical Insurance and O’connor v Aviva General Insurance Company.

7I have also reviewed the application as filed on December 11, 2024 and note that the applicant indicated he would be seeking an award and disclosed under particulars of the award that he was seeking an award in relation to IRB. I find that as of December 11, 2024 the respondent knew that the applicant was seeking an award in respect to IRB.

8I find there was no specific request for the adjuster log notes nor a corresponding request for the particulars of an award upon disclosure of the adjuster log notes within the CCRO. Further, I find the terms of the CCRO were not breached in respect to the particulars of the award.

9I am likewise not persuaded that the respondent’s ability to investigate and respond to the applicant’s award claim was prejudiced. I find the respondent was aware of the award issue relating to the IRB issue at the outset of the application to the Tribunal. I find the respondent chose not to make a request for the particulars of the award at the case conference as the request is absent in the CCRO, despite the respondent having knowledge from the outset of the application that the applicant intended to seek an award for delay of IRB. Further, I find the particulars of the award were within the respondent’s knowledge at all times as recorded in the adjuster’s log notes. I find there was nothing further for the respondent to investigate other than to internally review its own processes, therefore it was not denied the opportunity to investigate and respond to particulars nor suffered any appreciable prejudice.

10I find the respondent had knowledge of the applicant’s legal submissions for the award at least 30 days prior to the hearing and the respondent had 15 days to file its responding submissions. I find that 15 days was ample opportunity for the respondent to address the legal basis of an award issue.

11Further, it was open to the respondent to seek an extension to file its responding submissions, if the respondent was of the opinion that it needed more time. It did not do so.

12I find there is no breach of procedural fairness by the applicant continuing to prosecute the issue of award at the written submission stage, particularly in light of the disclosure of the award issue in regards to IRB at the outset of the application and the absence of any order establishing the obligation to disclose further particulars of award in the CCRO after production of the adjuster’s log notes. Should the respondent have desired greater detail to address the award, it was open to it to request an order for particulars at the case conference. I find the respondent did not take the opportunity presented to it at the case conference to guard against this eventuality. Furthermore, all the facts pertaining to the award were within the respondent’s control at all times, and any further details of the IRB issue could have been gained at the case conference and included in the CCRO. Further, I find the respondent must not benefit from its own lack of interest of obtaining further details of the IRB award issue at the case conference.

13The respondent’s request to dismiss the applicant’s claim for a special award due to breach of procedural fairness is denied.

ISSUES

14The issues in dispute are:

1. Is the respondent liable to pay an award under s. 10 of Reg. 664 because it unreasonably withheld or delayed payments to the applicant for the following resolved issues?

(a) An income replacement benefit at $281.75/week, from February 29, 2024 to January 28, 2025.

RESULT

15The respondent is liable to pay an award under s. 10 of Reg. 664 because it unreasonably withheld or delayed payments to the applicant for IRB at $281.75/week, from February 29, 2024 to April 4, 2024. I find the award is $704.36, being 50% of the delayed IRB payments.

16The applicant is entitled to interest on the award in accordance with Reg. 664.

PROCEDURAL ISSUES

17The applicant withdrew all issues in dispute except for award for IRB which was limited to the period February 12, 2024 to January 28, 2025 reflecting the period between the applicant’s initial entitlement and the date the respondent paid IRB.

ANALYSIS

Is the respondent liable to pay an award under s. 10 of Reg. 664 because it unreasonably withheld or delayed payments to the applicant for IRB at $281.75/week, from February 12, 2024 to January 28, 2025?

18The respondent is liable to pay an award under s. 10 of Reg. 664 because it unreasonably withheld or delayed payments to the applicant for IRB at $281.75/week, from February 29, 2024 to April 4, 2024.

19Pursuant to section 10 of Reg. 664, an award of up to 50% of the amounts withheld may be payable by the respondent if it is determined that it unreasonably withheld or delayed payment of a benefit. Awards are determined on an individual basis and generally depend on a finding that the respondent’s withholding or delay was excessive, imprudent, stubborn, inflexible, unyielding, or immoderate.

20The applicant submits an insured and an insurer are in a good faith relationship. The insurer has a duty to treat an insured fairly and reasonably; the Schedule is consumer protection legislation. The duty of good faith requires an insurer to act promptly and fairly when investigating, assessing and attempting to resolve claims. The insurer has an ongoing duty to assess and reassess a claim as new information is available.

21The applicant submits it relies upon [The Applicant] v. Portage La Prairie Mutual Insurance Company, 2019 CanLII 101649 (ONLAT) para 76:

“The quantum of a special award should be proportionate to: (i) the blameworthiness of the respondent’s conduct; (ii) the vulnerability of the applicant; (iii) the harm or potential harm directed at the applicant; (iv) the need for deterrence; (v) the advantage wrongfully gained by the insurer from the misconduct; and (vi) should take into account any other penalties or sanctions that have been or likely will be imposed on the insurer due to its misconduct. The Tribunal has added a seventh factor, being the overall length of the delay.”

22The applicant submits he was involved in an accident as a pedestrian on February 4, 2024 and submitted on February 8, 2024 an OCF-1 and OCF-10 election of IRB; on February 14, 2024 he submitted an OCF-2 confirming his employment along with pay stubs confirming a total gross income of $1,610.00 for the relevant period as claimed on the OCF-2. On February 15, 2024 the applicant submitted his OCF-3 dated February 9, 2024 as completed by Dr. Palantzas confirming he was unable to complete the essential tasks of his employment with duration of disability indicated as greater than 12 weeks.

23The applicant submits the respondent had all of the information reasonably required to address the applicant’s IRB by February 15, 2024 but the respondent failed to comply with s. 36(4) of the Schedule; the respondent should have either paid IRB or made a request pursuant to s.33 within 10 business days of the completed application for IRB, specifically the OCF-1, OCF-10, OCF-2, and OCF-3. An adjuster for the respondent attempted a telephone call on February 22 and 27; however, on February 29, 2024, the adjuster indicated receipt of the OCF-3.

24The applicant submits the respondent’s conduct is cause for award and outlines the following attempts to address this matter:

i. March 5, 2024, email to the handling adjuster requesting a response to the claim;

ii. March 18, 2024, email to the handling adjuster requesting a response with respect to the claim, now nearly a month overdue;

iii. March 19, 2024 and March 20, 2024, emails to TD to different other adjusters to confirm the handling adjuster of this file;

iv. March 22, 2024, email to the handling adjuster advising should this matter not be addressed, the applicant will make a formal complaint;

v. March 27, 2024, the applicant’s representative makes a complaint to TD Customer Care Team, the investigation team responded on April 4, 2024;

vi. March 28, 2024, email from TD confirmed the name of handling adjuster;

vii. April 4, 2024, the handling adjuster informed the legal representative’s office that he has responded to OCF-1, and the response letter will be sent to the representative.

25The applicant submits that the handling adjuster failed on numerous occasions to respond to the applicant’s legal representative. Such conduct was neither procedurally appropriate nor dealing with a claim in good faith. As a result, the claim was unreasonably delayed for at least 42 days, from February 22, 2024 (when the adjuster first contacted the Applicant) to April 4, 2024; the applicant submits this demonstrates the adjuster’s conduct was excessive, imprudent, immoderate, and unreasonable.

26The applicant further submits that the respondent’s conduct was imprudent and unreasonable in failing to ensure that the proper adjuster was assigned to manage the file. Specifically, the handling adjuster neither sent nor intended to send a notification letter confirming that he was responsible for handling the claim. The significant period of time spent in merely identifying the proper adjuster caused unnecessary delay in dealing with the applicant’s claim. Moreover, the respondent’s failure to notify the applicant of the proper handling adjuster created significant confusion and chaos, making it difficult to manage the claim and further delaying its resolution. Such conduct is contrary to the consumer protection objective of ensuring that claims are addressed in a timely manner.

27The applicant also submits on April 4, 2024, the handling adjuster responded to the representative and requested an OCF-3 again, despite having already confirmed receipt of the OCF-3 on February 29, 2024; on April 10, 2024, the applicant’s representative advised the handling adjuster that the OCF-3 had been sent on February 15, 2024. On May 1, 2024, the handling adjuster responded to the OCF-1 and OCF-2, stating that the OCF-2 did not disclose the gross income in Part 4; however, the OCF-2 properly disclosed the applicant’s gross income in part 4.21. On May 2, 2024, the applicant’s representative sent a clarification email to the handling adjuster confirming that the applicant had not returned to work; the handling adjuster subsequently retained an accounting firm to calculate IRB.

28The applicant submits on May 21, 2024, he submitted a revised OCF-1 to correct the error in the original OCF-1, which had incorrectly indicated that the applicant was self-employed at the time of the accident; the error did not reflect the accurate employer as described in the OCF-2 and OCF-3. The handling adjuster subsequently commissioned a report prepared by PWC, dated August 29, 2024, (“PWC report”) that calculated the applicant’s entitlement to IRB up to August 23, 2024, was $7,808.50, based on a weekly IRB of $281.75. This report was not provided to the applicant until it was disclosed as part of the respondent’s complete accident benefits file during the exchange of hearing productions. On January 16, 2025, the respondent finally paid IRB for the period of February 12, 2024, to January 16, 2025, in the amount of $15,288.84, based on the PWC report; however, there was no indication that interest was paid until confirmed on March 20, 2025.

29The applicant submits that he is entitled to an award in the amount of 50% of the unreasonably withheld and delayed IRB, specifically 50% of the $15,288.84 from February 12, 2024 to January 16, 2025. The applicant relies upon Ni v. Aviva Insurance Company of Canada, 2022 CanLII 124663 (ON LAT) for the authority that 50% award is appropriate in similar circumstances.

30The applicant also relies upon 17-006757 v Aviva Insurance Company, 2018 CanLII 81949 (ON LAT) as authority for an award in circumstances where the insurer failed to answer the documents that were submitted by the insured, failed to give reasonable consideration to all the information and failed to comply with the procedural requirement would lead to the payment of the benefits.

31Further the applicant submits an aggravating factor is that the respondent continued to withhold IRBs, despite receiving the PWC report dated August 29, 2024, and provided no explanation, no notification and no IRB payment to the applicant.

32The respondent submits the record demonstrates active investigation, reliance on professional accounting, prompt payment once the claimant’s work status was clarified, and the eventual IRB payment included interest. The respondent further submits it adjusted the file in good faith and on its merits; it accepted the applicant’s reported employment status and later paid the IRB when adequate information was provided demonstrating flexibility, a willingness to reconsider its position with new information, and an intention to adjust the claim on its merits. The respondent also submits its conduct fell within reasonable standards for claims adjusting, and any oversight fell well short of the “excessive, imprudent, stubborn, inflexible, unyielding or immoderate” standard for a s.10 award.

33The respondent submits on May 21, 2024, a revised Form 1 was served by the applicant correcting an earlier error and correctly indicating that the applicant was an employee; request for tax records was made to the applicant on May 24, 2024 and, the respondent advised that it would pay for the cost of the PWC report and ordered the same date. The PWC report was received and dated August 29, 2024, which opined that the IRB benefits are payable from February 12, 2024 to August 23, 2024 in the amount of $281.75 per week at $7808.50 for the specified time period.

34The respondent further submitted a s. 25 report dated November 3, 2024 indicates the IRB benefits payable at $281.75 totaling $10,706.50 from February 12, 2024 to November 3, 2024; the report was served to the respondent on November 19, 2024. The respondent subsequently requested the applicant’s return to work status on December 5, 2024, and on January 15, 2025, the representative confirmed work status, and payment for IRBs was made on January 16, 2025 with a letter advising the payment of IRBs, the commencement of bi-weekly IRB payments and an attached a copy of the s. 44 PWC report. I find this contradicts the applicant’s submission that it did not have the PWC report until close of document exchange as per the CCRO.

35I have reviewed the respondent’s correspondence of January 16, 2025 and find the correspondence indicates the PWC report was attached; however, the respondent’s brief containing the correspondence of January 16, 2025 does not include the attached referenced PWC report with the January 16, 2025 correspondence, but it does include the form entitled “Applicant’s Right to Dispute” referred to in the correspondence as enclosed. I am at a loss to understand why a reproduced document would include one document referred to as enclosed, but not another document referred to as attached. Specifically, I fail to understand why one document form entitled “Applicant’s Right to Dispute” enclosed with the correspondence of January 16, 2025 would be included in the reproduction for the Tribunal, but not another document referred to as attached, namely the PWC report. I find this to be an indication that the PWC report was most probably omitted in error with the original correspondence of January 16, 2025.

36The respondent submits that an insurer should not be held to a standard of perfection and relies upon Awadalla v Intact Insurance Company, 2021 CanLII 93245 (ON LAT). Further, the respondent submitted its conduct adjusting the entire file should be evaluated in determining award and not one particular issue; the respondent relies upon Malitskiy v. Unica Insurance Inc., 2021 ONSC 4603.

37The respondent submits that in reviewing its overall conduct adjusting the file, that the Tribunal should consider that once the inconsistency was cleared up by the applicant in relation to its income source the file was adjusted expeditiously. Further the respondent submits it demonstrated flexibility by removing the applicant from the MIG upon receipt of s.25 reports in October 2024. Further the respondent distinguishes its conduct and willingness to adjust from 17-006757/AABS v Aviva, where the insurer refused to consider new information.

38I have considered the submissions of the parties and reviewed the records before me. I conclude there was a significant shift in the manner in which the applicant’s file was adjusted by the handling adjuster some time shortly after the applicant’s counsel lodged a complaint with TD customer care. I find prior to this event the handling adjuster did not react in a timely manner to this file. Further, I find the employment status inconsistency between the OCF-1, OCF-2, and OCF-3 was squarely within the respondent’s knowledge since February 15, 2024 and the respondent did not comment until corrected by the applicant in May 2024, this begs the question whether the handling adjuster had thoroughly reviewed the file until May 2024.

39I find that an adjuster actively reviewing the file with care would have raised a question about the employment status inconsistency at the first instance of a response required under the Schedule, specifically in this circumstance by February 29, 2024 being ten business days after the submission of the OCF-3. The respondent’s submission that confusion about the applicant’s employment status was the cause of the delay, strains any realistic evaluation of the timing involved. I find the complaint process initiated by the applicant was responsible for a shift in adjusting to responsive good faith adjusting. I find the respondent’s conduct between February 29, 2024 until April 4, 2024 to be “excessive, imprudent, stubborn, inflexible, unyielding or immoderate”. I find after April 4, 2024 and the initiation of the complain process by the applicant, that the shift in adjusting was to a responsive good faith model and cannot attract an award as to do so would penalize the respondent after its correction of conduct and would be against good public policy, as an insurer must gain some consideration by the Tribunal for a constructive change in conduct.

40I find that from February 29, 2024 through April 4, 2024 represents approximately five weeks of the period covered by the PWC report that established the applicant’s entitlement to IRB from January 28, 2024 up to August 23, 2024, was a weekly IRB of $281.75. I find the amount payable in IRB during the five week period between February 29, 2024 until April 4, 2024 to be $1,408.75. I find the applicant’s submission persuasive that a 50% award is appropriate in similar circumstances as demonstrated in Ni v. Aviva Insurance Company of Canada, 2022 CanLII 124663 (ON LAT). Accordingly, I fix the award at $704.38 plus interest in accordance with s. 51 of the Schedule, and interest in accordance with s.10 of Reg. 664.

ORDER

41The Tribunal’s final Orders:

i. The respondent is liable to pay an award under s.10 of Reg. 664 because it unreasonably withheld or delayed payments to the applicant for IRB at $281.75/week, from February 29, 2024 to April 4, 2024.

ii. The award is $704.36, being 50% of the delayed IRB payments.

iii. The applicant is entitled to interest on the award in accordance with Reg. 664.

Released: June 1, 2026

__________________________

Robert Maich

Vice-Chair