COURT OF APPEAL FOR ONTARIO

2016 ONCA 804

DATE: 20161101

DOCKET: C60580

Laskin, MacFarland and Roberts JJ.A

BETWEEN

Anna Marie Van Galder

Applicant (Respondent)

and

Economical Mutual Insurance Company

Respondent (Appellant)

Christopher J. Schnarr and Tim Crljenica, for the Appellant

Joseph Y. Obagi and Elizabeth Quigley, for the Respondent

Heard: March 2, 2016

On appeal from the judgment of Justice Stanley J. Kershman of the Superior Court of Justice, dated May 21, 2015, with reasons reported at 2015 ONSC 3261.

Roberts J.A.:

Overview

[1] This appeal concerns the question of when interest starts to accrue on amounts owing to an insured person for statutory accident benefits under the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996, O. Reg. 403/96 (“the 1996 SABS”), and the Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10 (“the 2010 SABS”), of the Insurance Act, R.S.O. 1990, c. I.8. Specifically, it turns on the question of when additional catastrophic attendant care and housekeeping/home maintenance benefits became overdue so that interest started to accrue under those SABS.

[2] The appellant insurer appeals the order of the application judge that requires it to pay the respondent insured person interest in the amount of two percent per month, compounded monthly, on attendant care benefits from August 1, 2005, and housekeeping/home maintenance expenses from January 20, 2006 to date.

[3] The respondent was badly injured in a motor vehicle accident on January 20, 2004. The appellant paid her attendant care and housekeeping/home maintenance benefits for non-catastrophic cases until January 20, 2006, 104 weeks following her accident.

[4] The appellant took the position that the respondent’s medical documentation and assessments did not indicate that she had sustained a catastrophic impairment within the meaning of the SABS. Moreover, the appellant was of the view that it had no obligation to continue paying these benefits because the respondent had not made an application within the 104 weeks following her accident for a determination as to whether she was catastrophically impaired.

[5] Between 2007 and 2012, the respondent made four applications for a determination that she had suffered a catastrophic impairment as a result of her accident. Following the respondent’s fourth application, the appellant had its medical examiners evaluate the appellant’s injuries. The appellant accepted the reports of its medical experts. On July 19, 2013, the appellant conceded that the respondent had sustained a catastrophic impairment within the meaning of the SABS.

[6] The appellant paid the respondent a lump sum for the additional attendant care benefits owing retroactive to August 2005 and for housekeeping/home maintenance benefits back to January 2006.

[7] The appellant paid some interest on these amounts but refused to pay any interest from August 2005 on the attendant care benefits and from January 2006 on the housekeeping/home maintenance benefits. The appellant maintained that the additional amounts were not overdue absent a catastrophic injury application and determination, which did not occur until July 2013.

[8] The application judge allowed the respondent’s application, accepting that the respondent had suffered a catastrophic impairment at the time of her accident. He held that it would be inequitable to deprive the respondent of interest on the additional attendant care and housekeeping/home maintenance benefits, which were due to the respondent. As a result, the application judge ordered the appellant to pay interest from August 2005 on the attendant care benefits and January 2006 on the housekeeping/home maintenance benefits. The appellant appealed to this court.

[9] For the reasons that follow, I would dismiss the appeal.

Issues

[10] The appellant’s arguments on appeal can be summarized as follows. The application judge erred in determining that statutory accident benefits for attendant care and housekeeping/home maintenance were overdue and interest was payable, for the following reasons:

i. The respondent had not made an application for a catastrophic impairment determination until December 2007 and no catastrophic impairment determination was made until July 2013; and

ii. The respondent’s injuries did not in fact deteriorate to the level of catastrophic impairment and therefore did not meet the statutory requirements for a catastrophic impairment until 2013. As the respondent did not meet the statutory requirements for catastrophic impairment coverage until 2013, no monies were owing to her or overdue before that date.

Background Facts

[11] There is no issue that the respondent was seriously injured in a motor vehicle accident on January 20, 2004. She suffered significant physical injuries to both legs. Since the date of the accident, she has been unable to walk unaided and is now wheelchair-bound. Subsequent complications and surgeries that followed over the next several years resulted in the amputation of her lower right leg and left her with chronic pain.

[12] The respondent’s physical injuries and difficulties were acknowledged and described as follows in the Executive Summary of the Catastrophic Impairment Determination Assessment dated June 26, 2013, which was requested by the appellant:

[The respondent] was taken by ambulance to Queensway-Carleton Hospital where she was diagnosed with a compound tri-malleolar fracture of the right ankle with neurovascular compromise, and an undisplaced fracture of the distal left tibia. Her immediate management included an open reduction and internal fixation of the right ankle fracture. Postoperative CAT scan of the left ankle showed an undisplaced fracture for which she was placed in a below-knee weight bearing cast. After discharge to home, her postoperative course has been complicated by multiple surgical procedures to address initially a non-union of the right distal ankle fracture. Multiple surgical procedures were unsuccessful in achieving union and a functional ankle. Ultimately, Ms. Van Galder opted for a right mid-tibial amputation in 2008. Her postoperative course from the tibial amputation was uncomplicated. Her wound healed uneventfully. However, she has been unsuccessful in achieving comfortable and regular prosthetic wear. Since her amputation, she has not had any further surgery.

[13] The respondent was insured under the appellant’s motor vehicle insurance policy and first submitted an application for attendant care and housekeeping/home maintenance statutory accident benefits dated February 7, 2004. The appellant received this application on February 12, 2004. There is no issue raised about the timeliness or completeness of the respondent’s initial application.

[14] As noted by the application judge, at the appellant’s request, the respondent submitted to nine assessments of her attendant care and housekeeping/home maintenance needs between February 2004 and November 2005. Under the SABS, the appellant could request assessments to determine whether the respondent’s benefits should continue, “as often as is reasonably necessary” (1996 SABS, s. 42(1)), and then “not more often than is reasonably necessary” (2010 SABS, s. 44(1)). The respondent never refused to submit to any assessments requested by the appellant.

[15] Starting in February 2004, the appellant paid the respondent attendant care benefits and housekeeping/home maintenance benefits. The amount of attendant care benefits fluctuated depending on the assessments. Assessments in July and September 2005 indicated attendant care benefits were required in excess of the ceiling for non-catastrophic injuries. The appellant elected to pay the respondent from August to December 2005 at the non-catastrophic level. Under s. 16(5)(2)(i) of the 1996 SABS, attendant care benefits for non-catastrophic injuries were limited to $3,000 per month.

[16] The respondent did not make an application for a catastrophic impairment determination within the 104-week period following the accident. It is common ground that had she done so, the respondent would have been deemed catastrophically impaired and have received enhanced attendant care benefits at the level of catastrophic injuries until the appellant made a catastrophic impairment determination: 1996 SABS, s. 40(3); 2010 SABS, s. 45(3).

[17] As a result, by letter dated December 22, 2005, the appellant notified the respondent that she would reach her maximum coverage for attendant care and housekeeping/home maintenance benefits as of January 20, 2006, “since [her] medical reports do not support that [she has] sustained a catastrophic impairment in [her] accident of January 20, 2004”. The appellant advised further: “We will therefore be unable to reimburse you for Attendant Care and Housekeeping/Home Maintenance Benefits beyond January 20, 2006.” The appellant did not advise the respondent that she could make an application for a catastrophic impairment determination or provide an application form for her to do so.

[18] On November 22, 2006, the respondent called the appellant, seeking ongoing housekeeping/home maintenance and attendant care benefits to follow her further surgery on her right ankle, which was anticipated to take place in January 2007.

[19] By letter of the same date, the appellant advised the respondent for the first time that she could submit an application for catastrophic impairment determination as “the exception” to the 104-week time limit for the payment of benefits in her insurance policy. The appellant provided the respondent with an application form, advised her that the documentation was to be completed and returned by her treating health professional, and that upon receipt of this completed documentation, the appellant would review her ongoing claim for attendant care and housekeeping/home maintenance benefits. The appellant also enclosed various consents for the respondent’s signature in order to obtain up to date records from her treating family physician, psychiatrist, and orthopaedic surgeon.

[20] On December 10, 2007, the appellant provided to the respondent another application form for a catastrophic impairment determination and another authorization for the release of the clinical notes and records of the respondent’s family physician. At that point, the respondent was assisted by a volunteer, Amelia Levey, who was not a lawyer.

[21] On December 28, 2007, the appellant received from Ms. Levey the respondent’s application, permission to disclose health information, power of attorney, and letter from the respondent’s psychiatrist outlining the difficult circumstances that the respondent had been in for the past few years.

[22] In her letter, Ms. Levey also advised the appellant that the respondent underwent a further surgery earlier in December 2007 to have her ankle fused, the first surgery having been unsuccessful, and that she was awaiting a convalescent bed in hospital where she would remain for three months, followed by a further period of rehabilitation in a rehabilitation facility. In the application, the respondent’s orthopedic surgeon, Dr. Ritter, wrote that when the fusion of the respondent’s ankle was complete, her impairment would significantly lessen and that her recovery would be six to twelve months.

[23] Finally, Ms. Levey informed the appellant that the respondent had separated from her husband in July 2007, and was currently supported by Welfare and living a modest existence in a subsidized apartment.

[24] By letter dated January 15, 2008, the appellant rejected the respondent’s application as being incomplete because a box in Part 5, Criterion 1, indicating which catastrophic impairment criteria applied, had not been checked.

[25] Part 5 of the appellant’s form mirrored the various statutory definitions of “catastrophic impairment” under s. 2 of the 1996 SABS. These definitions of “catastrophic impairment” in the statute and the appellant’s form included the following provisions:

i. Subsections 2(1.1) (b) and (c) specify that the amputation or other impairment must cause the total and permanent loss of use of both arms or both legs, or of one or both arms and one or both legs. (Emphasis added.)

ii. Subsection 2 (1.1)(f) allows for an impairment or combination of impairments that results in 55 per cent or more impairment of the whole person (“whole person impairment”).

iii. Subsection 2(1.1)(g) provides for a class 4 impairment (marked impairment) or class 5 impairment (extreme impairment) due to mental or behavioural disorder.

[26] In response to the respondent’s application, the appellant could have requested that the respondent submit to a medical assessment for a catastrophic impairment determination, but did not do so: 1996 SABS, s. 42(1); 2010 SABS, s. 44(1).

[27] On February 1, 2008, according to the appellant, but unknown to the respondent, Dr. Ritter withdrew the respondent’s catastrophic application.

[28] On March 23, 2009, the appellant received the respondent’s second application dated October 23, 2008. It was submitted after the respondent’s lower right leg below her knee was amputated as a result of the injury sustained in the motor vehicle accident. Dr. Di Silvestro, the respondent’s orthopaedic surgeon who performed the amputation, indicated that she had a 28 per cent whole person impairment. The appellant was also advised that the respondent was in hospital.

[29] On April 9, 2009, the appellant rejected the respondent’s application as incomplete, again because Part 5 had not been completed. The appellant advised that the application was not considered an application until it was completed in its entirety and that once the fully completed form was received, the appellant would be able to respond accordingly. The appellant did not request that the respondent undergo a catastrophic impairment determination assessment.

[30] An exchange of telephone calls and correspondence between the appellant and Dr. Di Silvestro followed. At the appellant’s request, on April 23, 2009, Dr. Di Silvestro signed and returned the appellant’s form. This form indicated that Dr. Di Silvestro was unable to complete Part 5 of the application because from an orthopaedic standpoint, none of the criteria required for a catastrophic impairment applied in the case of the respondent. It repeated Dr. Di Silvestro’s earlier opinion that the respondent’s injuries resulted in a 28 per cent whole person impairment.

[31] In its July 14, 2009 letter, the appellant advised the respondent of Dr. Di Silvestro’s opinion and provided another application form to the respondent at her request. Although the appellant treated the form signed by Dr. Di Silvestro as a withdrawal of the respondent’s application, in its letter, it did not advise the respondent that this was its position. The appellant did not request that the respondent undergo a catastrophic impairment assessment.

[32] The respondent submitted a third application signed by Dr. Ritter on December 4, 2009. In that application, Dr. Ritter confirmed the previous advice that the respondent had undergone a below the knee amputation for chronic pain. He completed Part 5 and opined that the respondent met the criteria for catastrophic impairment because of her amputation.

[33] In its responding letter dated December 22, 2009, the appellant advised the respondent that her application was incomplete for the following reasons:

We require Part 1 to be fully completed including a reason for reapplication, your signature, and a date. Furthermore, we require the report from Dr. Ritter explaining the impairment and findings as it relates to the criteria he used for determination of catastrophic impairment.

Please note that the OCF-19 is not considered an Application until it is completed in its entirety. Once we have received the fully completed form we will be able to respond accordingly.

[34] The appellant did not request that the respondent undergo a catastrophic impairment assessment.

[35] The respondent resubmitted her third application, now signed and dated; she explained the reason for reapplication was that she had the wrong surgeon fill out the form.

[36] In its response dated January 26, 2010, the appellant rejected the respondent’s third application as still incomplete, repeating its request for a report from Dr. Ritter explaining the impairment and his findings. The appellant stated:

We are aware of you having one leg amputated below the knee and appreciate the severity of your injury; however, as discussed this does not qualify as a “Catastrophic Impairment” in accordance with the definition under the Statutory Accident Benefits Schedule.

[37] The appellant reiterated its previous advice that the respondent’s application was not considered an application until it was completed in its entirety. The appellant did not request that the respondent undergo a catastrophic impairment assessment.

[38] After the respondent’s submission of her third application, the 2010 SABS came into force. The definition of “catastrophic impairment” in relation to amputation or impairment of limbs had been amended: ss. 3(2)(b) of the 2010 SABS stipulates that “the amputation of an arm or leg or another impairment causing the total and permanent loss of use of an arm or a leg” can constitute a “catastrophic impairment” (emphasis added). Following this amendment, the appellant did not request that the respondent undergo a catastrophic impairment assessment.

[39] On August 30, 2012, the appellant received the respondent’s fourth application, completed by Dr. Ritter on July 27, 2012. This application was virtually identical to the respondent’s 2009 application.

[40] By letter dated August 31, 2012, the appellant advised the respondent that it was unable to determine if her injuries met the definition of catastrophic impairment. However, for the first time, the appellant indicated that it required the respondent to be assessed to determine whether her injuries met the definition of catastrophic impairment.

[41] Between February 14 and May 17, 2013, the respondent submitted to various examinations by the appellant’s psychiatrist, orthopaedic surgeon, occupational therapist, and physiatrist.

[42] On July 9, 2013, the appellant received its examiners’ reports. The appellant’s examiners concluded that the respondent met the threshold for catastrophic impairment because she suffered a combination of impairments that results in an estimated 60 per cent whole person impairment, as well as a class 4 marked impairment due to mental or behavioural disorder.

[43] In their report, the appellant’s examiners referenced “a recent court of appeal decision” that “has ruled that physical and non-physical impairment can be combined to determine whole person impairment. This will be left to the discretion of the insurer”. The referenced decision was Kusnierz v. Economical Mutual Insurance Co., 2011 ONCA 823, 108 O.R. (3d) 272, which was released by this court on December 23, 2011, a few months before the appellant requested that the respondent undergo a catastrophic impairment assessment.

[44] In Kusnierz, this court had allowed the appeal and declared that the insured person in that case met the definition of “catastrophic impairment” by virtue of a combination of various criteria under s. 2 of the 1996 SABS. Specifically, this court held that an insured person could establish the requisite 55 per cent whole person impairment definition under the SABS by combining mental and behavioural impairments with physical impairments. Accordingly, on that basis, this court ordered the insurer to pay enhanced benefits for catastrophic impairment.

[45] On July 19, 2013, the appellant provided to the respondent a copy of its experts’ reports. The appellant advised the respondent that based on the conclusions of the insurer examinations, the appellant accepted that the respondent had sustained a catastrophic impairment as a result of the accident.

[46] Pursuant to s. 45(6) of the 2010 SABS, the appellant was required to pay the respondent $133,161.99 for additional, retroactive attendant care benefits and $40,400 for additional, retroactive housekeeping/home maintenance benefits.

[47] This subsection represented a significant amendment to the 1996 SABS, which did not contain this provision. Once an insured person is determined to have suffered a catastrophic impairment as a result of an accident, this provision requires that retroactive payment is made, without regard to the question of when the insured person actually became catastrophically impaired.

[48] In the present case, these additional benefits were paid retroactive to August 2005 in the case of the attendant care benefits, and to January 2006 for housekeeping/home maintenance benefits. Almost all of the additional benefits were paid for the period following January 2006 when the appellant had previously stopped paying them to the respondent.

[49] Interest on the additional payments for attendant care and housekeeping/home maintenance was paid from July 23, 2013, the date the appellant said payment was due, to the date of payment of these additional benefits, as follows: $520.83 attendant care interest from July 23, 2013 to July 29, 2013; $3,680.18 housekeeping/home maintenance interest from July 23, 2013 to December 4, 2013.

[50] The respondent claimed interest from August 2005, the date that her additional attendant care benefits had been allowed, and from January 2006, the date that her housekeeping/home maintenance benefits had previously been terminated. The appellant maintained that interest was not payable until the additional payments were overdue. According to the appellant, additional payments were not overdue until the appellant made the determination in July 2013 that the respondent was catastrophically impaired as a result of the accident.

[51] On February 6, 2014, a mediation was held but failed to resolve the issue of the outstanding interest claimed by the respondent.

[52] The respondent commenced her application on August 6, 2014, which was heard on January 29, 2015.

Reasons for Judgment by the application judge

[53] The application judge considered whether further interest was owing on the additional attendant care and housekeeping/home maintenance benefits paid to the respondent following the appellant’s determination in July 2013 that the respondent was catastrophically impaired.

[54] The respondent submitted that interest was payable because she has been catastrophically impaired since her accident and the additional amounts were therefore overdue.

[55] The appellant argued that the amounts were not overdue in the absence of the respondent’s application for a catastrophic impairment determination and such a determination having been made by the appellant. Further, the additional amounts did not become overdue until 2013 when the appellant made its determination that the respondent was catastrophically impaired because of the accident.

[56] The application judge noted that the respondent had missed the 104-week deadline of which “she received less than a month’s warning, over the Christmas holidays” from the appellant, and that the appellant had notified the respondent that her benefits would be terminated as of January 20, 2006.

[57] Nevertheless, the application judge excused the respondent’s delay and ordered the appellant to pay interest for the reason that it would be inequitable to deny the respondent interest in the circumstances of this case. These circumstances included the following:

i. the respondent has been catastrophically impaired since her accident;

ii. the respondent had less than a month’s notice that her benefits would be discontinued on January 20, 2006;

iii. the appellant failed to give the respondent instructions on how to apply for a catastrophic impairment determination;

iv. the numerous applications that were filled out incorrectly for the respondent or otherwise rejected by the appellant were not the respondent’s fault; and

v. eight[^1] claims examiners had been assigned to the respondent’s file.

[58] The application judge determined that the respondent’s catastrophic impairment, manifested by her chronic pain and other serious health issues, while she was undergoing numerous medical assessments, made it easy for her to miss a deadline or to become confused about the purpose of so many medical assessments and applications.

[59] In para. 27 of his reasons, the application judge concluded as follows:

On the facts of this case, the Court finds that it would be inequitable to deny the Applicant the interest on the costs she incurred as a result of her delayed Catastrophic Injury Determination. The intention of SABS interest regime is to compensate victims; it is not punitive. While the respondent paid the amount they felt was owed in good faith, the Court finds that the Applicant’s subsequent Catastrophic Injury Determination rendered additional amounts overdue and owing to the Applicant in this case; this finding is specific to the Applicant in this case in light of her circumstances and the numerous applications that were rejected or withdrawn through no fault of her own. As such, these overdue amounts will attract interest.

[60] As he noted in para. 29 of his reasons, the application judge restricted his decision to the particular facts of the case before him, explaining that “this ruling is meant to apply only to the narrow factual situation before the Court; it is not to apply more broadly to allow any insured to obtain interest on amounts left unapplied for after 104 weeks. Nor is [sic] does it go so far as to say that interest will always be overdue immediately after a Catastrophic Injury Determination”.

[61] Accordingly, the application judge ordered that the respondent was entitled to interest on the overdue attendant care benefits as of August 1, 2005, and on her housekeeping/home maintenance benefits from January 20, 2006, both at a rate of two percent compounded monthly.

Analysis

[62] This appeal turns on the question of when the additional catastrophic attendant care and housekeeping/home maintenance benefits that were payable to the respondent became overdue so that interest started to accrue.

Application of SABS interest provisions

[63] Under the SABS, interest is payable on overdue amounts owing to an insured person. What is meant by “overdue” is also defined in the SABS: “An amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under this Part”: 1996 SABS, s. 46. The 2010 SABS, s. 51, refers instead to “the time required under this Regulation”.

[64] The appellant submits that the additional payments were not due (and therefore not overdue) until the respondent made an application for a catastrophic impairment determination and the appellant made the determination, in accordance with its examiners’ assessment, that she was in fact catastrophically impaired.

[65] The difficulty with the appellant’s submission is that it ignores the application judge’s acceptance of the respondent’s position that she has been catastrophically impaired since the time of her accident. In para. 25 of his reasons, the application judge made the following core findings that he applied to the respondent:

One can see that during the relevant time period, the Applicant was rigorously undergoing medical assessments; all the while dealing with chronic pain and the amputation of a limb. She experienced many changes in doctors and insurance adjusters. When one is catastrophically injured, their focus is, quite appropriately, on dealing with their new health issues and finding a new way of life. It is easy to miss a deadline, or become confused about the purpose of so many medical assessments and applications. (Emphasis added).

[66] Under the 1996 SABS, an insurer could terminate an insured's attendant care and housekeeping/home maintenance benefits following the 104-week anniversary of the accident: 1996 SABS. ss. 18(2), 22(3).

[67] Similar rules applied under the 2010 SABS, with certain changes: the time period in relation to attendant care benefits was extended to 260 weeks, and housekeeping/home maintenance benefits were not payable at all unless the insured sustained a catastrophic impairment, in which case they were payable indefinitely: 2010 SABS, ss. 20, 23, 45(4).

[68] There were relevant exceptions. First, the right to terminate benefits did not apply where the insured had sustained a catastrophic impairment as a result of the accident: 1996 SABS, ss. 18(3), 22(4); 2010 SABS, ss. 20, 23. Second, with respect to attendant care benefits, where the insured made an application for a catastrophic impairment determination within 104 weeks of the accident under the 1996 SABS or within 260 weeks of the accident under the 2010 SABS, the insured was deemed catastrophically impaired and was to receive attendant care benefits at the level of catastrophic impairment until the insurer made its determination: 1996 SABS, s. 40(3); 2010 SABS, s. 45(4).

[69] In the present case, the respondent did not make an application for a catastrophic impairment determination within the 104-week period following her accident. However, the respondent did make her initial application in February 2004 for statutory benefits within the statutory deadlines and submitted to numerous assessments.

[70] In response to that application, benefits were to be paid to the respondent, subject to different maximum amounts and time periods for catastrophic and non-catastrophic impairments: 1996 SABS, ss. 16(4), (5), 18(2), (3), 22(3), (4). In July 2005, the appellant had received an assessment for the respondent indicating an attendant care benefit that exceeded the non-catastrophic limit.

[71] The application judge accepted that the respondent has been catastrophically impaired since the accident. This means that the appellant should have paid and continued to pay the respondent attendant care benefits and housekeeping/home maintenance benefits up to the catastrophic impairment ceiling and beyond the 104-week period.

[72] The appellant had the respondent’s initial application and assessments. That in good faith it failed to recognize earlier that the respondent was catastrophically impaired and should have received enhanced benefits does not affect the fact that those benefits were owing and then overdue to the respondent from August 2005 for attendant care and January 2006 for housekeeping/home maintenance.

New argument raised on appeal

[73] The appellant argues that application judge erred because the respondent was not in fact catastrophically impaired at the time of the accident, and her injuries did not deteriorate to the level of catastrophic impairment until she was assessed by the appellant’s experts in 2013. As a result, the appellant submits, the respondent did not have any entitlement to the enhanced level of catastrophic benefits and none was overdue until 2013 when the appellant made the determination that the respondent was catastrophically impaired.

[74] The appellant submits that as a result, the application judge misconstrued the reason that the respondent was not paid the additional benefits and erroneously applied equitable principles in awarding SABS interest to the respondent. The respondent was not paid the additional benefits because her injuries did not meet any of the statutory definitions of a catastrophic impairment until 2013, and not because of the withdrawal of the respondent’s applications or their rejection by the appellant for deficiencies.

[75] The respondent objects to the appellant’s raising this argument for the first time on appeal. In my view, this objection is well founded.

[76] The appellant concedes that this argument was not put to the application judge. Indeed, it is not even set out as one of the enumerated grounds of appeal in the Notice of Appeal.

[77] Most significantly, as already noted, the application judge’s decision is premised on his acceptance of the respondent’s position that she has in fact been catastrophically impaired since her accident. The appellant did not challenge this factual position on the hearing of the application. It was therefore not necessary for the application judge to resolve a factual dispute on this issue because it was not contested.

[78] Rather, as noted by the application judge at para. 13, the appellant advanced the position that “it cannot be responsible for the interest on those amounts that were not overdue, in the sense that they were not owing absent a catastrophic injury application and determination”. In other words, on the hearing of the application, the appellant did not take issue with the timing of the respondent’s catastrophic impairment; instead, the appellant focussed its argument on the timing of the respondent’s application for a catastrophic impairment determination and its acceptance by the appellant.

[79] It is well established that this court should only receive an argument for the first time on appeal if persuaded that all of the facts necessary to address the point are before the court as fully as if the issue had been raised at first instance, and that the party against whom the issue is raised will not be prejudiced by it: Shtaif v. Toronto International Publishing Co. Ltd., 2013 ONCA 405, 306 O.A.C. 155, at para. 46.

[80] In my view, the appellant has not met this test.

[81] First, the record is not satisfactory to address this new factual issue. The respondent submits that had this issue been raised before the application judge, she would have filed additional evidence to demonstrate that she has in fact always been catastrophically impaired since her accident rather than deteriorating to that level only by the time she was examined by the appellant’s medical experts in 2013.

[82] I agree that the respondent would be prejudiced were this court to consider this new issue without a complete factual record.

[83] Further, the appellant has not sought to put forward any fresh evidence that would contradict the respondent’s position, accepted by the application judge, that she has in fact been catastrophically impaired since her accident.

[84] The application judge accepted the respondent’s unchallenged position that she has in fact been catastrophically injured since the date of her accident. The record before him was consistent with the respondent’s position.

[85] In these circumstances, it would be exceedingly unfair to permit the appellant to challenge on appeal a factual issue that it could and should have contested before the application judge. This matter proceeded as an application for a declaration under r. 14.05(3)(d) and (h) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which meant that there were no material facts in dispute. Had the appellant contested the factual basis for the respondent’s position that she has been catastrophically impaired since her accident, the matter would have proceeded to at least a trial of this factual issue.

[86] Having accepted that the respondent has been catastrophically impaired since her accident, the application judge determined that the additional amounts for attendant care benefits and home maintenance/housekeeping expenses were therefore overdue and thus attracted interest respectively from August 2005 and January 20, 2006.

Argument of prejudice to the appellant

[87] The appellant submits further that the amount of interest ordered payable of about $500,000 was in error because it is grossly disproportionate to the additional attendant care and housekeeping/home maintenance benefits of $173,561.99, which were paid to the respondent. The appellant argues that the interest award is seriously punitive and therefore prejudicial in the circumstances of this case.

[88] As the application judge observed, the appellant’s argument disregards the compensatory nature of the SABS regime.

[89] The SABS regime of no-fault automobile insurance has been part of the Ontario insurance landscape since 1990. Notwithstanding the numerous amendments over the ensuing years, the regime’s compensatory purpose has not changed since its enactment: in exchange for significantly restricting the scope of traditional tort rights, the no-fault regime provides for enhanced no-fault benefits and a structure to ensure prompt payment of those benefits: Zacharias v. Zurich Insurance Co., 2013 ONCA 482, 116 O.R. (3d) 342, at para. 10.

[90] It is well established that like the other benefits, the payment of interest is part of the SABS compensatory regime, and not meant as punitive to the insurer: Attavar v. Allstate Insurance Co. of Canada (2003), 2003 7430 (ON CA), 63 O.R. (3d) 199 (C.A.), at para. 49; Zacharias, at para. 58.

[91] As the application judge also observed, the fact that the appellant had in good faith paid a different amount to the respondent or stopped payments in good faith is irrelevant to the compensatory nature of the regime. The application of the interest provisions of the SABS is not dependent on the good or bad faith of any party but is purely compensatory.

[92] The legislative intent of the requirement that insurers pay interest on overdue amounts owed to insured persons is to compensate insured persons for the loss of the time value of money and to encourage insurers to pay accident benefits promptly: Attavar, at para. 49; Zacharias, at para. 38.

[93] The appellant submits that the application judge’s order has the opposite effect: it “incentivizes” an insured person to delay his or her catastrophic application as long as possible in order to accrue tremendous amounts of interest in the interim. According to the appellant, this would also create difficulty for insurers in properly establishing reserves for claims files open beyond the 104 (or 260)-week period.

[94] These arguments were submitted to and rejected by the application judge. I also would not give effect to them.

[95] First and foremost, it defies common sense that a catastrophically impaired insured person would delay making an application that would open the door to desperately needed enhanced catastrophic benefits. I agree with the application judge’s observations in this regard:

A catastrophic injury is a serious one; catastrophically injured people require assistance to perform their activities of everyday living and to cover medical expenses. The nature of these expenses are such that they cannot be forgone by a victim or denied by an insurer, with the aim of accruing or avoiding costs.

[96] There is no question that the SABS requires an insured person to make the necessary applications and provide the required information to an insurer. However, these obligations must be understood in the context of a catastrophic impairment. The nature of many catastrophic impairments may necessarily render a catastrophically impaired insured person incapable of navigating and completing the complicated and detailed application process for a catastrophic impairment determination. As the application judge found, this is clearly what happened in the present case.

[97] While payment is not overdue until the insured person has provided the required information in support of the claim, “this does not require the claim to be established to an insurer’s or an arbitrator’s satisfaction. Only where ‘the insured person acts in a manner that effectively prevents the insurer from assessing his or her entitlement,’ will interest accrual be delayed”: Sorokin v. Wawanesa Mutual Insurance Co., [2005] O.F.S.C.D. No. 105 (FSCO), at para. 61, citing Bajic v. Pafco Insurance Co., [2001] O.F.S.C.I.D. No. 84 (FSCO), at para. 57, cited in Hejnowicz v. Coachman Insurance Co., [2006] O.F.S.C.D. No. 130 (FSCO), at para. 11.

[98] There is no evidence that the respondent acted in a manner to prevent the appellant from assessing her entitlement to catastrophic impairment benefits. As the application judge found, the respondent attended frequent assessments at the request of the appellant, including nine assessments in the year following the accident, and further assessments between 2006 and 2010. She made her initial application for benefits and then four subsequent applications for a catastrophic impairment determination. Though the appellant initially chose to reject those applications for alleged deficiencies, the difficulties with her applications were not the respondent’s fault.

[99] Moreover, the appellant’s argument belies the statutory and practical tools at an insurer’s disposal to manage its risk by making an early determination as to whether an insured person is catastrophically impaired and by facilitating the application and assessment process.

[100] While not statutorily required to do so, to manage its risk, the appellant could have taken steps to facilitate and expedite the application process. For example, the appellant could have provided the respondent with longer notice of the termination of her benefits at the 104-week anniversary date; and it could have informed her prior to (rather than after) the expiry of the 104 weeks of the “exception” to the 104-week deadline.

[101] This is not a case of an uncooperative insured person with minor injuries who kept the insurer in the dark. There is no question that from the date of her accident, the respondent’s injuries were severe. Moreover, the appellant was kept well apprised of the respondent’s serious and precarious physical, emotional and social circumstances through the numerous assessments that she underwent at the appellant’s request, and from the information provided on her behalf by Amelia Levey and the respondent’s treating physicians.

[102] The appellant could have required at any time that the respondent undergo the kind of catastrophic impairment assessment that it did not request until 2012. Certainly, nothing had changed in the reporting of the respondent’s condition between her third application in 2009 and her application in 2012. Indeed, the substantive basis for the respondent’s claim of catastrophic impairment had not changed since her 2007 catastrophic impairment application.

[103] In Kusnierz, released in 2011, this court had directed the appellant in the manner that it was to assess all claimants’ injuries for the purpose of determining whole body impairment. There was no indication that the appellant had re-assessed the respondent’s well-documented injuriesin accordance with this court’s clear direction until receipt of its medical examiners’ assessments in 2013.

[104] When asked what prompted its decision after the respondent’s fourth application to request an assessment in 2012, appellant’s counsel responded that the appellant gave the respondent the benefit of the doubt at that point. That it chose not to do so earlier was its option. However, the appellant cannot now argue prejudice because of the passage of time. The appellant ran the risk that the respondent was catastrophically impaired at the time of the accident. It had many options to manage its risk. This was a business decision that the appellant chose to make.

[105] The appellant could also have reduced or eliminated the amount of the benefits that attract interest by continuing to pay the respondent’s benefits past the 104-week mark pending a catastrophic impairment determination: Attavar, at para. 48. Contrary to the appellant’s submission, there is nothing in the 1996 SABS that required the appellant to stop payments: s. 18(2) merely provides that “[n]o attendant care benefit is payable for expenses incurred more than 104 weeks after the accident; and 22(3) reads only that “[n]o payment [for housekeeping/home maintenance expenses] is required under this section for expenses incurred more than 104 weeks after the onset of the disability”.

[106] As a result, the appellant had the use of the money that it would otherwise have been required to pay to the respondent.

[107] For all of these reasons, the SABS puts the risk of delayed payment on insurers: Attavar, at para. 49; Hejnowicz, at para. 11. In these circumstances, there is no unfairness to the appellant.

[108] It is important to recall that the application judge made a particular determination based on the unique factors of the case before him. In considering these issues, I have adopted and applied the standard of review as articulated by this court in Mercier v. Royal & Sunalliance Insurance Co. of Canada (2004), 2004 5551 (ON CA), 72 O.R. (3d) 94 (C.A.), at para. 13:

An appellate court is not to interfere in the findings of fact made by a trial judge absent a palpable and overriding error. The same standard of review applies to questions of mixed fact and law unless it is clear that the trial judge made some extricable error in principle with respect to the characterization of the principle or its application in which case it may amount to an error of law and be subject to a standard of correctness. See Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, 211 D.L.R. (4^th) 577 (S.C.C.).

[109] The application judge addressed the question of possible prejudice, responding directly to the appellant’s submissions, which included the potential for broad, general prejudice to insurers, and concluded that his ruling would not create prejudice for insurers but was restricted to the respondent’s particular case. These conclusions were open to the application judge on the unchallenged record before him.

[110] In my view, there is no error in the application judge’s findings of fact, analysis or conclusions. Accordingly, I see no basis to interfere with the application judge’s decision to grant the respondent interest on the additional attendant care from August 2005 and housekeeping/home maintenance benefits from January 2006 onwards.

Disposition

[111] Accordingly, I would dismiss the appeal.

[112] The parties have agreed that the respondent, as the successful party on the appeal, is entitled to her costs in the all-inclusive amount of $20,000.

Released: November 1, 2016

“L.B. Roberts J.A.”

“I agree John Laskin J.A.”

“I agree J. MacFarland J.A.”

[^1]: According to the appellant’s affiant, there were in fact nine claims examiners assigned to the respondent’s file from 2004 to 2015: see the affidavit of Vitoria Brzszyenski, sworn January 16, 2015, para. 3.