Court of Appeal for Ontario

Date: 20200424 Docket: C66835

Before: Doherty, Brown and Thorburn JJ.A.

Between:

Brittany Pucci Plaintiff (Respondent)

And:

The Wawanesa Mutual Insurance Company Defendant (Appellant)

Counsel: Katy Commisso and David Scott, for the appellant Timothy Gindi and Anthony J. Potestio, for the respondent

Heard: February 14, 2020

On appeal from the judgment of Justice H.M. Pierce of the Superior Court of Justice, dated March 15, 2019, reported at 2019 ONSC 1706.

Doherty J.A.:

Overview

[1] This appeal raises a narrow question. Did the trial judge err in holding that the respondent (“Ms. Pucci”) was entitled to payment of household and attendant care expenses for the time period prior to judgment, even if Ms. Pucci had not actually incurred those expenses?

[2] I would allow the appeal. With respect, the trial judge erred in holding the expenses had been incurred. She made that finding without regard to the definition of “incurred” in s. 3(7)(e) of the Statutory Accident Benefit Schedule, O. Reg 34/10 (“SABS-2010”). The trial judge further erred in holding, in any event, those expenses should be deemed to have been incurred under s. 3(8) of the SABS-2010. In making that finding, the trial judge misapprehended material evidence and failed to consider a significant body of evidence relevant to the reasonableness inquiry mandated by s. 3(8).

[3] I am also satisfied this court cannot make the factual findings necessary to determine whether the payment of the expenses was unreasonably withheld by Wawanesa. I would order a new trial.

The Evidence

[4] Ms. Pucci was in a motor vehicle accident on June 16, 2013. She was 22 years old. A vehicle improperly entered the intersection and broadsided Ms. Pucci’s car. Her car was totally destroyed.

[5] Ms. Pucci went to the hospital. She had back, neck, and left thumb pain. She was unsure whether she had briefly lost consciousness at the time of the accident. A CAT scan was negative. Ms. Pucci was released from hospital on the same day.

[6] In the days, weeks, and months after the accident, Ms. Pucci’s condition worsened dramatically. Her physical symptoms continued. New symptoms suggestive of some kind of brain trauma appeared. For example, she temporarily lost vision in one eye. Most significantly, Ms. Pucci began to experience severe, debilitating, emotional and behavioural problems. Her speech, and then her behaviour, regressed to that of a young child. Her speech slowed noticeably and her thought processes became obviously impaired. Ms. Pucci had difficulty controlling her emotions and sometimes was oblivious to her surroundings. She also had trouble remembering things and often could not make even the most basic personal decisions.

[7] Ms. Pucci became unable to work or go to school. She could not look after her basic needs without help.

[8] There is no suggestion that Ms. Pucci was fabricating or exaggerating her conditions and symptoms. The two psychiatrists who testified at trial agreed Ms. Pucci’s symptoms met the criteria for conversion and somatic disorders, both major mental disorders. They also agreed Ms. Pucci’s condition related more to her psychiatric and emotional problems than to the physical sequela of the accident. Finally, the two experts agreed Ms. Pucci was unable to work or look after herself.

[9] The two experts disagreed about the connection, if any, between Ms. Pucci’s catastrophic impairment and her accident. Ms. Pucci had struggled, with intermittent success, to overcome several longstanding psychiatric and emotional problems pre-existing the car accident for many years. Dr. Feinstein, the expert called by Ms. Pucci, described the effect of those pre-accident conditions on Ms. Pucci’s post-accident condition:

And here, pre-accident psychological factors loom large. Ms. Pucci’s psychiatric history during her teenage years is a troubled one characterized by significant emotional trauma, related symptomatology, problematic relationships, severe substance abuse necessitating the use of methadone and extensive contact with mental health specialists. This history suggests she was highly vulnerable from a psychological perspective when the accident of June 16, 2013 occurred. This premorbid vulnerability should therefore be viewed as a key factor in understanding why her post-accident reactions had been so maladaptive and regressed. While Ms. Pucci’s pre-accident psychiatric history alone cannot explain her current presentation, it has nevertheless contributed to it.

[10] In his report and testimony, Dr. Feinstein indicated Ms. Pucci’s treatment team had incorrectly diagnosed her condition as attributable primarily to physical brain trauma suffered in the accident. He believed Ms. Pucci’s condition flowed primarily from a pre-existing cycle of psychopathology, properly described as somatic and conversion disorder. Dr. Feinstein also testified Ms. Pucci’s pre-accident condition was exacerbated by the significant chronic pain and emotional turmoil directly associated with the accident and the physical injuries suffered in the accident. In Dr. Feinstein’s opinion, Ms. Pucci’s treatment program should move from one centered on treating disabling cerebral trauma to one focusing on the major underlying psychiatric issues.

[11] Dr. Ozersky, Wawanesa’s expert, opined that Ms. Pucci’s symptomatology reflected her underlying psychiatric problems and were not the product of injury caused by the accident. In his report, Dr. Ozersky acknowledged the significant deterioration in Ms. Pucci’s condition post-accident, but said:

I find it hard to imagine that an accident of this nature could be responsible for this woman’s psychological regression, neither do I believe there is any head injury involved of any significance.

[12] Nowhere in the report does Dr. Ozersky explain what he meant when he said the accident was not “responsible” for Ms. Pucci’s psychiatric condition. In his testimony, he explained his understanding of causation:

My test is on the balance of probabilities, was the accident responsible for her conversion disorder ? And my answer would be no, it was not responsible. Her pre-existing history of sexual assault, drug abuse, depressions that’s what, working, those factors working together created the circumstance for a conversion disorder. The accident may have been the a trigger but in itself it would not be sufficient to cause a conversion disorder . [Emphasis added.]

[13] As I understand Dr. Ozersky’s evidence, he believed the accident was not “responsible” for Mr. Pucci’s subsequent psychiatric disorders for two reasons. First, he believed Ms. Pucci’s pre-accident condition put her on the edge of total emotional disintegration such that the slightest event could push her into the psychiatric disorders she developed post-accident. Consequently, because she was so close to disintegration, the accident could not be said to be “responsible” for her condition, even though it triggered the development of that condition. Second, Dr. Ozersky explained that the accident was not “responsible” for Ms. Pucci’s condition because the accident alone could not have caused that condition.

[14] The trial judge, after reviewing the evidence of the two experts, accepted Dr. Feinstein’s opinion that Ms. Pucci’s conversion disorder was triggered by the motor vehicle accident. The trial judge, at para. 83, referred to the accident as “the tipping point in the plaintiff’s ability to function on a day-to-day basis”. She said, at para. 84:

I conclude that, but for the collision, Ms. Pucci would not have suffered the conversion disorder described by her physicians. This disorder catastrophically impairs her ability to function from a mental or behavioural perspective.

[15] Wawanesa does not challenge the trial judge’s finding that, for the purposes of determining Ms. Pucci’s entitlements under the SABS-2010, the accident was the direct cause of her subsequent condition, [^1] or that the condition renders her catastrophically impaired.

Ms. Pucci’s Accident Benefits Claim

[16] At the time of the accident, Ms. Pucci was insured under a motor vehicle policy issued by Wawanesa. A representative of Wawanesa visited Ms. Pucci within days of the accident to provide information about her coverage. Ms. Pucci’s doctor submitted a disability certificate to Wawanesa, describing the nature of Ms. Pucci’s injuries and explaining that she could not work. Wawanesa immediately provided income replacement at the rate required under the SABS-2010, as of the date of the accident.

[17] Based on information provided from time-to-time by Ms. Pucci’s doctors, assessments done for Wawanesa, and treatment plans provided to Wawanesa, Wawanesa classified Ms. Pucci as eligible for the maximum household expenses and attendant care benefits available under the SABS-2010 to persons who had not been characterized as catastrophically injured. Under the SABS-2010, attendant care costs for persons not catastrophically injured were available for two years post-accident (104 weeks). Over that time, Wawanesa paid the benefits required under the SABS-2010. The amounts paid by Wawanesa approached closely the total amounts available under the scheme.

[18] Ms. Pucci’s lawyer advised Wawanesa in March 2015 that Ms. Pucci would apply under s. 45 of the SABS-2010 for a determination that her condition amounted to a catastrophic impairment. Under that designation, she would be entitled to recover certain expenses incurred more than two years post-accident.

[19] Wawanesa received Mrs. Pucci’s application in early May 2015. In July 2015, Wawanesa advised Ms. Pucci that it would not pay attendant care costs beyond the two years. Wawanesa also exercised its right to have Ms. Pucci assessed. That assessment involved a series of examinations performed by different experts appointed by Wawanesa.

[20] Ms. Pucci and her parents travelled to Toronto for the examinations in May and July of 2015. Unfortunately, Ms. Pucci became very tired during the July examinations and she could not finish the testing. The parties agreed the assessment would be completed six weeks later in Thunder Bay where Ms. Pucci lived. On the morning that the assessors were to fly to Thunder Bay, one of them suffered a medical condition, necessitating the cancellation of the trip. The examinations were completed about eight weeks later in October 2015. Wawanesa received the reports generated by the examinations in February 2016, and immediately forwarded those reports to Ms. Pucci’s lawyer.

[21] Based on the opinion advanced by Dr. Ozersky in his report, Wawanesa took the position that Ms. Pucci’s admittedly catastrophic impairment was not directly caused by the accident. Wawanesa declined to provide Ms. Pucci with the benefits available to persons found to have suffered a catastrophic impairment as a result of an accident. Wawanesa acknowledged it was required, under the relevant SABS, to pay any attendant care and housekeeping benefits incurred by Ms. Pucci prior to Wawanesa’s notification to her in February 2016 that it had concluded she had not suffered a catastrophic impairment as a direct result of the car accident.

[22] Ms. Pucci was entitled to challenge Wawanesa’s determination and to seek mediation through the Financial Services Commission of Ontario (“FSCO”). The parties, however, agreed the mediation should be treated as failed without actually attempting mediation. This allowed Ms. Pucci to commence the action in the Superior Court which she did in late March 2016. The judgment was released some three years later. [^2]

The Trial Judgment

[23] The trial judge’s reasons focused primarily on causation. Was Ms. Pucci’s admittedly catastrophic impairment the direct result of her car accident? The trial judge found the necessary causal link and made a declaration to that effect in para. 1 of the trial judgment. That paragraph is not challenged on appeal.

[24] In para. 2 of the trial judgment, the trial judge made an order with respect to payments for income replacement. That paragraph of the judgment is not challenged on appeal.

[25] In paras. 3 and 4 of the judgment, the trial judge made orders pertaining to housekeeping (para. 3) and attendant care (para. 4) benefits. She declared Ms. Pucci was entitled to housekeeping expenses, fixed at the rate of $100 per week, and attendant care benefits at the rate of $6,000 per month. These are the maximum rates available under the SABS. The trial judge further provided these benefits were to run from June 14, 2015 (104 weeks post-accident) to the date of judgment and “thereafter as incurred”. Wawanesa appeals from the orders made in paras. 3 and 4 of the judgment.

Wawanesa’s Position

[26] Wawanesa accepts Ms. Pucci is entitled to the housekeeping and attendant care benefits flowing from the determination that she had suffered a catastrophic injury as a result of her car accident. Wawanesa argues, however, that while the trial judge properly limited payments for housekeeping and attendant care post-judgment to expenses “incurred”, she erred in failing to place the same limitation on any amounts owed in reference to those benefits for the pre-judgment period from February 2016 to March 2019. Wawanesa submits Ms. Pucci is entitled to expenses for that period only to the extent she actually incurred those expenses. The Agreed Statement of Facts filed at trial states that Ms. Pucci paid about $29,000 for attendant care in 2018. There is no evidence of any payments made by Ms. Pucci for housekeeping-related expenses in the time period prior to judgment.

[27] Wawanesa submits if the trial judge found the pre-judgment expenses had been “incurred”, she erred in law in failing to apply the definition of “incurred” in s. 3(7)(e) of the SABS-2010. Alternatively, Wawanesa submits, if the trial judge did not find the expenses were incurred, but rather deemed the expenses to have been incurred under s. 3(8) of the SABS-2010 on the basis of Wawanesa’s delay in providing its reports, she acted on a material misapprehension of the relevant evidence.

Analysis

Overview

[28] Pursuant to the declarations in paras. 3 and 4 of the trial judgment, Wawanesa was required to pay Ms. Pucci about $18,000 for housekeeping-related benefits and about $270,000 for attendant care benefits for the period prior to judgment (June 2015 – March 2019), regardless of what amount, if any, Ms. Pucci had spent in respect of either housekeeping or attendant care costs, and regardless of whether she had actually received any housekeeping or attendant care services.

[29] The SABS-2010 requires an insurer to pay expenses referable to benefits provided under the policy, if those expenses have been “incurred”. Section 3(7)(e) identifies when an expense will be said to have been “incurred”:

3(7) For the purposes of this regulation,

(e) subject to subsection (8), an expense in respect of goods or services referred to in this Regulation is not incurred by an insured person unless,

(i) the insured person has received the goods or services to which the expense relates,

(ii) the insured person has paid the expense, has promised to pay the expense or is otherwise legally obligated to pay the expense, and

(iii) the person who provided the goods or services,

(A) did so in the course of the employment, occupation or profession in which he or she would ordinarily have been engaged, but for the accident, or

(B) sustained an economic loss as a result of providing the goods or services to the insured person.

[30] Under the definition in s. 3(7)(e), the expense for goods or services is incurred only if the insured has received the goods or service and has either paid for the goods or services or assumed an obligation to do so. Further, the expenses related to the goods or service is incurred only if the person supplying the goods or service does so in its ordinary course of business or has sustained an economic loss as a result of providing the goods or services.

[31] Section 3(8) of the SABS-2010 provides an exception to the requirement that expenses must be incurred before they are payable by the insurer. At the relevant time, that section read:

If in a dispute to which sections 279 to 293 of the Act apply, a Court or arbitrator finds that an expense was not incurred because the insurer unreasonably withheld or delayed payment of a benefit in respect of the expense, the Court or arbitrator may, for the purpose of determining an insured person’s entitlement to the benefit, deem the expense to have been incurred.

[32] The exception created by s. 3(8) requires three things:

• payment for the benefit in issue must be payable under the SABS;
• the insurer must have “withheld or delayed payment”; and,
• the withholding or delaying of payment must have been “unreasonable”.

[33] The focus of s. 3(8) is primarily on the actions of the insurer. An insured’s need for the services or benefits, or her inability to pay for those services or benefits on her own, cannot justify the deeming of the expense to have occurred under s. 3(8): Stegenga v. Economical Mutual Insurance Company, 2019 ONCA 615, 147 O.R. (3d) 65 at para. 47; Veley v. Motor Vehicle Accident Claims Fund, 2014 CarswellOnt 6405 (Ont. F.S.C.), at para. 25 (Ont. F.S.C.), rev’d on other grounds 2015 CarswellOnt. 6752 (Ont. F.S.C. App. Div.).

Were the Expenses Incurred?

[34] The trial judge did not refer to s. 3(7)(e) in her reasons. Apart from the payments for attendant care in 2018, set out in the Agreed Statement of Facts, there was no evidence that any of the payments ordered in paras. 3 and 4 of the judgment, as it related to the time period before judgment, were payments for expenses incurred within the meaning of s. 3(7)(e) of the SABS-2010.

[35] Although the trial judge did not refer to the definition of “incurred” in s. 3(7)(e), she did refer, at paras. 102-106, to a line of cases interpreting the word “incurred” as used in the SABS prior to the enactment of s. 3(7)(e): [^3] e.g., see Monks v. ING Insurance Company of Canada, 2008 ONCA 269, 90 O.R. (3d) 689 at paras. 46-52; McMichael v. Belair Insurance Co. (2007), 86 O.R. (3d) 68 (Ont. Div. Ct.). Under those authorities, expenses were said to be incurred as long as there was a reasonable necessity for the service or item in issue and the costs of that service or item could be determined, with certainty, within a designated period. On that approach, expenses for goods and services could be incurred, even when those goods or services had not been provided or obtained. There was also no requirement that the insured have paid for, or assumed the obligation to pay for, the services or goods.

[36] The judge-made definition of “incurred”, adopted in Monks and McMichael, is clearly much broader than the legislative definition found in s. 3(7)(e). The broader meaning found in the case law has been overtaken by the more precise language of s. 3(7)(e).

[37] Although it is not entirely clear, I take the trial judge to have relied on the broad meaning of “incurred” advanced in the earlier caselaw to hold that the expenses she had ordered paid in paras. 3 and 4 of the judgment had been “incurred” by Ms. Pucci. The trial judge, at para. 106, referred to McMichael and related cases as “on point with this case.”

[38] The trial judge was obliged to apply s. 3(7)(e) to determine whether Ms. Pucci had incurred the relevant household and attendant care expenses. She erred in law in applying the broader meaning found in the earlier case law. On the definition of “incurred” in s. 3(7)(e), there was no evidence of any incurred expenses, apart from the payments for attendant care in 2018. Setting aside the possible application of the exception in s. 3(8) for the moment, the declarations in paras. 3 and 4 of the judgment, requiring Wawanesa to pay household and attendant care expenses for the period prior to judgment (March 2019) should have required payment only of expenses “incurred” by Ms. Pucci within the meaning of s. 3(7)(e) of the SABS-2010.

The Application of s. 3(8) of SABS-2010

[39] At trial, counsel for Ms. Pucci argued Wawanesa had acted unreasonably in withholding payments based exclusively on Dr. Ozersky’s causation opinion. Counsel highlighted certain alleged shortcomings in the report and in Dr. Ozersky’s approach to his task. Counsel also emphasized Dr. Ozersky’s causation opinion conflicted with the opinion of other experts, some of whom had been retained by Wawanesa in the course of its management of Ms. Pucci’s benefits claim. Counsel submitted Wawanesa acted unreasonably in accepting, apparently without question, Dr. Ozersky’s opinion when his opinion was inconsistent with the position Wawanesa had taken in the first two years of its management of Ms. Pucci’s benefits claim.

[40] The trial judge did set out the text of s. 3(8) of the SABS-2010 in the part of her reasons that addressed Ms. Pucci’s entitlement to the various benefits. The trial judge did not, however, address Ms. Pucci’s submission that reliance on Dr. Ozersky’s opinion constituted an unreasonable withholding or delaying of payment of a benefit in all of the circumstances. Instead, as I read her reasons, the trial judge focused on two things in determining that Wawanesa had unreasonably withheld payments.

[41] First, at paras. 107-108, the trial judge referred to what she described as the unfairness in reimbursing only insured persons who were able to fund their own expenses while the dispute with their insurer over their entitlement to benefits was ongoing. Second, the trial judge referred specifically to the delay in providing the defence catastrophic impairment assessments. She said, at para. 108:

While an insurer is entitled to seek its own opinions to determine liability under a policy, a delay of nine months to produce the report is not reasonable.

[42] In my view, the trial judge’s assessment of the fairness of the scheme for payment of expenses established under the SABS-2010 is irrelevant to whether the insurer acted unreasonably in withholding or delaying payments. The scheme is predicated on the repayment of expenses “incurred” within the very specific definition provided in s. 3(7)(e). The scheme does not create entitlement to payment based on need or a damages-like assessment of the insured’s entitlements. Whatever the merits of the policy reflected in the current scheme, the operation of that policy in a given case does not assist in determining whether an insurer acted unreasonably in withholding payments.

[43] I turn next to the trial judge’s finding that the nine-month delay in producing the reports was “not reasonable.” She made no reference to the evidence in making this finding. Nor had counsel for Ms. Pucci argued that any delay in providing the reports made the refusal to pay the benefits unreasonable.

[44] I have reviewed the relevant evidence above (see para. 20). The examinations began in May 2015 but did not end until late October 2015. The completion of the examinations took some time, first, because Ms. Pucci was physically unable to complete the assessments in July, and second, because one of the testers retained by Wawanesa fell ill on the day he was scheduled to fly to Thunder Bay to complete those tests and could not fly to Thunder Bay.

[45] The delay in completing the assessments between May 2015 and October 2015 cannot be attributed to any inappropriate, unnecessary, or unreasonable conduct by Wawanesa. One might argue that it took longer than it should have to prepare the reports after the assessments were completed (end of October 2015 to early February 2016). There was no evidence on this point. However, even if the reports should have been prepared somewhat more quickly, there is no basis in the evidence for the trial judge’s finding that a nine-month delay was unreasonable.

[46] Counsel for Ms. Pucci submits that the trial judge relied on factors other than the delay in obtaining the necessary reports in finding that Wawanesa’s conduct amounted to an unreasonable withholding of the benefits. Counsel refers to the trial judge’s summary of various parts of the evidence in the course of her detailed reasons.

[47] I cannot accept this submission. Although the trial judge did summarize some of the evidence relevant to various issues in the trial, she did not relate that evidence to the fundamental question raised by s. 3(8) – did Wawanesa act unreasonably in not paying the benefits?

[48] I also reject counsel for Ms. Pucci’s submission that the meaning of “incur” in the case law prior to the enactment of s. 3(7)(e) can assist in assessing the reasonableness of Wawanesa’s conduct for the purposes of s. 3(8). The overtaken case law provided a broad definition of “incurred”. Under that definition, expenses could be incurred, even though they were not paid for or received. Section 3(8) applies only where expenses were not incurred and looks to the reasonableness of the insurer’s conduct. Case law which provided a meaning of “incurred” in the absence of a statutory meaning had no relevance to whether an insurer acted reasonably in withholding payment of certain expenses.

[49] The trial judge materially misapprehended the evidence in concluding that there had been a nine-month delay in producing the reports. She also made that finding without considering Ms. Pucci’s argument that the insurer acted unreasonably in relying on Dr. Ozersky’s opinion.

Ms. Pucci’s Alternative Arguments

[50] Counsel for Ms. Pucci submits that even if the trial judge erred in finding that Wawanesa was obliged to pay the household and attendant care expenses, either because they were “incurred”, or because Wawanesa acted unreasonably in withholding them, Wawanesa could not raise causation for the first time in response to Ms. Pucci’s request for a determination that she had suffered a catastrophic injury.

[51] Counsel makes three arguments. First, counsel contends that by paying the expenses in the first two years post-accident, Wawanesa waived any right to assert that the accident was not a direct cause of Ms. Pucci’s admittedly catastrophic condition. Second, counsel submits Wawanesa, by paying the benefits for the first 104 weeks, is estopped from challenging causation at the catastrophic impairment stage of the process. Third, counsel relies on the language of s. 45 of the SABS-2010:

An insured person who sustains an impairment as a result of an accident may apply to the insurer for a determination of whether the impairment is a catastrophic impairment.

[52] Counsel contends that s. 45 precludes any causation inquiry at the catastrophic impairment inquiry. On counsel’s interpretation, only the nature and extent of the impairment can be addressed at that point in the SABS process.

[53] I begin with s. 45. I do not read the section as requiring the insurer, at the catastrophic injury phase of the process, to accept the impairment in issue was caused by the accident. I read the opening language of the section, which requires the insured to have sustained “an impairment as a result of an accident”, as setting down a precondition to the bringing of an application for the determination that the insured has suffered a catastrophic impairment. Under the generally applicable principles of proof, it falls to the insured, as the party seeking the determination of catastrophic impairment, to demonstrate the existence of the pre-condition.

[54] Apart from the language of s. 45, there could be significant harm to the fair and efficient operation of the SABS benefit scheme if payments of benefits post-accident by the insurer were to be taken as foreclosing any causation-based argument at some later point in the process. Were that interpretation of s. 45 to prevail, I would think it would strongly disincentivize the timely payment of benefits in the immediate aftermath of accidents. Prudent insurers, before making any payments for expenses referable to benefits claimed, would first fully explore any potential causation-related issues. Resolving those issues can require significant input from experts. That exercise takes time.

[55] The waiver and estoppel arguments must also fail. This court recently considered both doctrines in the context of the insured/insurer relationship: Bradfield v. Royal Sun Alliance Insurance Company of Canada, 2019 ONCA 800, 148 O.R. (3d) 161. I need not repeat the principles summarized in Bradfield.

[56] Waiver has no application. There is no evidence that Wawanesa knew, or had reason to believe, that Ms. Pucci’s condition was not the result of her accident, but chose to waive any reliance on the absence of a causal connection and make payments according to the policy. Ms. Pucci’s position at trial was not that Wawanesa waived any right it had under the policy, but that the causal connection was clearly established and accepted by Wawanesa from the outset. The trial judge ultimately accepted her position.

[57] I would also reject the estoppel argument. Estoppel is essentially an evidence-based claim. Estoppel requires reliance. There is no basis in the evidence to suggest that Ms. Pucci relied, to her detriment, on anything done by Wawanesa. To the contrary, at the appropriate time in the process, she initiated the catastrophic impairment determination. In doing so, she advanced a full and ultimately convincing case for a finding that her condition was the direct result of the accident. She was not prejudiced by anything done by Wawanesa in advancing that position.

[58] The waiver and estoppel arguments also fail for another reason. On the appeal, Wawanesa accepts Ms. Pucci was catastrophically injured as a result of the car accident. To the extent that estoppel or waiver might have application, they would foreclose Wawanesa from arguing that the causal connection was not established. Wawanesa does not make that argument on appeal.

[59] The factual issue on which this appeal turns – did Wawanesa act unreasonably in denying payment of the expenses – cannot be answered by resort to the doctrines of waiver or estoppel. Wawanesa’s conduct is relevant to the question before the court, not as a waiver or an estoppel, but as one of the factors to be considered in determining whether Wawanesa acted unreasonably in withholding payment of the benefits.

The Appropriate Order

[60] The errors outlined above do not necessarily compel the quashing of paras. 3 and 4 of the judgment. Section 134(4)(a) of the Courts of Justice Act allows this court to draw inferences of fact from the evidence, as long as those inferences are not inconsistent with any finding made by the trial judge that has not been set aside by this court. In this appeal, the court could first set aside the trial judge’s finding that Wawanesa acted unreasonably in withholding the benefits because that finding was based on a material misapprehension of the evidence and a failure to consider relevant evidence, and then, on its own review of the evidentiary record, make a finding that Wawanesa did act unreasonably. If the court exercised its limited fact-finding power and made that finding, it would dismiss the appeal. Paragraphs 3 and 4 of the trial judgment would stand.

[61] Appellate courts do not routinely exercise fact-finding powers. For example, appellate courts will not make findings of fact if credibility assessments are required, or if the evidentiary basis required for the drawing of the necessary inferences is inadequately developed in the trial record: see, Cook v. Joyce, 2017 ONCA 49, at para. 82; Weyerhaeuser Company Limited v. Ontario (Attorney General), 2017 ONCA 1007, at para. 166.

[62] Appellate fact-finding can, however, promote finality and efficiency in the civil justice process. In civil proceedings, appellate courts should avoid ordering a new trial if, in light of the nature of the factual issues, and the state of the trial record, the appellate court can confidently make the necessary factual findings without working any unfairness to either party: Cook, at para. 78-80.

[63] Ms. Pucci argued at trial Wawanesa acted unreasonably by relying on the opinion of Dr. Ozersky to effectively deny payment of benefits over a three-year period. The trial judge did not address that argument in her reasons.

[64] Can this court, on the basis of the trial record, make a finding that Wawanesa acted unreasonably in relying on Dr. Ozersky’s opinion?

[65] Wawanesa, as Ms. Pucci’s insurer, owed her a duty of good faith. In 702535 Ontario Inc. v. Non-Marine Underwriters, Lloyd’s London England, 184 D.L.R. (4th) 687, at paras. 27-29, O’Connor J.A. described the scope of the insurer’s duty of good faith in the context of a claim for damages based on an allegation of bad faith against the insurer. [^4] His observations are, however, apposite here:

The relationship between an insurer and an insured is contractual in nature. The contract is one of utmost good faith …

The duty of good faith also requires an insurer to deal with its insured’s claim fairly. The duty to act fairly applies both to the manner in which the insurer investigates and assesses the claim and to the decision whether or not to pay the claim. In making a decision whether to refuse payment of a claim from its insured, an insurer must assess the merits of the claim in a balanced and reasonable manner. It must not deny coverage or delay payment in order to take advantage of the insured’s economic vulnerability or to gain bargaining leverage in negotiating a settlement. A decision by an insurer to refuse payment should be based on a reasonable interpretation of its obligations under the policy. This duty of fairness, however, does not require an insurer necessarily to be correct in making a decision to dispute its obligation to pay a claim. Mere denial of a claim that ultimately succeeds is not, in itself, an act of bad faith.

[66] Wawanesa’s duty of good faith required it to fully and fairly assess Ms. Pucci’s claim that she had been catastrophically impaired as a result of the car accident. Wawanesa could not simply treat Ms. Pucci as though she were a tort claimant and, armed with an expert’s opinion, put her to the proof of her claim: see, for example, Personal Insurance Company v. Hoang, 2014 ONSC 81, 319 O.A.C. 90 at para. 55 (Div. Ct.); 17001681 v. Motor Vehicle Accident Claims Fund, 2018 CarswellOnt 19835 (Ont. Licence App. Tribunal), at para. 85; 16-004073 v. TD Insurance Company, 2017 CarswellOnt 14273 (Ont. Licence App. Tribunal), at paras. 26-29. [^5]

[67] The steps an insurer must take to fulfil its good faith obligations will depend on the specific circumstances. Here, Wawanesa knew that Dr. Ozersky’s causation opinion contradicted the position Wawanesa had taken for two years. Wawanesa also knew that Dr. Ozersky’s opinion stood alone. Finally, Wawanesa appreciated Ms. Pucci’s vulnerability. She was catastrophically impaired and very much in need of the household and attendant care services she claimed. She could not fund those services on her own. These facts dictated that Wawanesa take a long careful look at Dr. Ozersky’s causation opinion before relying on it to deny benefits.

[68] There is merit in Ms. Pucci’s submission that Dr. Ozersky’s opinion on causation would not have withstood a critical analysis by Wawanesa. As counsel points out, Dr. Ozersky’s concession in cross-examination, that the car accident “triggered” Ms. Pucci’s condition seems entirely inconsistent with the assertion that the car accident did not cause her condition. The trial judge specifically referred to Dr. Ozersky’s concession in cross-examination in finding that the accident was the immediate cause of Ms. Pucci’s condition.

[69] There is an additional problem with Dr. Ozersky’s opinion, that may also assist in determining whether Wawanesa acted reasonably in relying on that opinion. In his report, Dr. Ozersky indicated that the accident was “not responsible” for Ms. Pucci’s condition. He provided little, if any, insight into the analysis that led to that conclusion.

[70] In his testimony, particularly his cross-examination, Dr. Ozersky elaborated on what he meant when he opined in his report that the accident was “not responsible” for Ms. Pucci’s condition. I have reviewed Dr. Ozersky’s evidence relating to causation earlier in these reasons (see paras. 11-13). As summarized, he offered two reasons for his opinion that the accident was “not responsible” for Ms. Pucci’s condition. After acknowledging that the accident triggered the condition, he went on to assert that the accident, while a trigger, was not a cause because the accident, on its own, would not have caused the conversion disorder. Second, Dr. Ozersky testified that the accident was “not responsible” for Ms. Pucci’s condition because, given her tenuous psychiatric state, had the accident not triggered her condition, some other event, even a minor one, would have triggered the condition.

[71] It appears to me that the two explanations offered by Dr. Ozersky for his conclusion that the accident was not “responsible” for the condition are not medical opinions but are, instead, legal opinions about the meaning of causation under s. 3(1) of the SABS-2010. Dr. Ozersky was, of course, not qualified to advance legal opinions. Additionally, his evidence suggests an understanding of causation that is at odds with the meaning given to causation under s. 3(1) in a series of decisions from this court: Greenhalgh v. ING Halifax Insurance Company, 243 D.L.R. (4th) 635, at paras. 10-12, 36; Martin v. 2064324 Ontario Inc. (Freeze Night Club), 2013 ONCA 19, 113 O.R. (3d) 561 at para. 37; Chisholm v. Liberty Mutual, 217 D.L.R. (4th) 145, at paras. 24-31. Nothing in those cases supports the proposition that the proverbial “thin skulled” driver, who has an accident that precipitates or triggers consequences that are particularly dire because of the driver’s prior medical vulnerability, is not covered under her motor vehicle insurance policy.

[72] My difficulty in making a finding of fact as to the reasonableness of Wawanesa’s refusal to pay the benefits lies in the paucity of evidence permitting informed inferences about the steps, if any, Wawanesa took to critically review Dr. Ozersky’s report, and the steps, if any, counsel for Ms. Pucci took to bring the inadequacies in Dr. Ozersky’s report to the attention of Wawanesa. While the trial judge ultimately rejected Dr. Ozersky’s opinion, and for good reason, one must bear in mind that he was an admittedly qualified expert to whom Wawanesa could legitimately look for a medical opinion in respect of causation. Ms. Pucci’s condition was far from straightforward or a common result of a relatively minor accident. Even Dr. Feinstein took a significantly different position with respect to the nature of Ms. Pucci’s condition than had earlier experts retained on her behalf.

[73] Neither Ms. Pucci nor Wawanesa chose to proceed with mediation once Wawanesa had given the reports to Ms. Pucci. There is nothing in the record about any interaction between the parties after Wawanesa sent its reports in February 2016. It would appear that both sides simply chose to proceed to trial once the conflicting opinions had been exchanged. Ms. Pucci did not plead s. 3(8) of the SABS-2010 in her statement of claim.

[74] In my view, the record does not permit a finding of fact in this court about the reasonableness of Wawanesa’s denial of coverage. The question attracted little attention in the development of the evidence at trial. Any attempt to draw the necessary inferences from this record would quickly slip into speculation.

[75] The trial record provides ample basis to question the reasonableness of Wawanesa’s reliance on Dr. Ozersky’s opinion. It does not, however, speak with sufficient clarity and force to justify this court’s exercising of its fact-finding function. There must be a new trial.

Conclusion

[76] I would allow the appeal, set aside paras. 3 and 4 of the trial judge’s order, and direct a new trial on those issues.

[77] Wawanesa is entitled to its costs on the appeal, fixed at $15,000, inclusive of taxes and disbursements.

Released: April 24, 2020 Doherty J.A. I agree David Brown J.A. I agree Thorburn J.A.

[^1]: The test for causation is found in s. 3(1) of the SABS-2010, which provides: “Accident” means an incident in which the use or operation of an automobile directly causes an impairment …

[^2]: The legislative scheme governing disputes relating to entitlement under the SABS-2010 has changed (effective April 1, 2016). Under the present legislation, the Licence Appeal Tribunal has exclusive jurisdiction to resolve disputes over entitlement to benefits under the SABS: see Stegenga v. Economical Mutual Insurance Co., 2019 ONCA 615. The amendments were motivated, in part, by efforts to speed up adjudication of these disputes.

[^3]: A new Statutory Accident Benefit Schedule became effective September 1, 2010. This amendment narrowed the prior definition of “incurred” under s. 3(7)(e).

[^4]: Ms. Pucci alleged bad faith against Wawanesa in her statement of claim, but did not pursue that claim at trial.

[^5]: Hoang is concerned with the making of a lump sum payment under s. 282(10) of the Insurance Act (now found in Automobile Insurance, O. Reg. 664, s. 10). That special award is, however, predicated on the insurer acting unreasonably in delaying or withhold payment. Cases decided under that provision clearly have relevance to the assessment required under s. 3(8) of the SABS-2010.