CITATION: Khan v. Allstate Insurance Company, 2023 ONSC 3652
DIVISIONAL COURT FILE NO.: 576/22
DATE: 20230620
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Sachs, Sutherland and Schabas JJ.
BETWEEN:
TIMUR KHAN
Appellant
– and –
ALLSTATE INSURANCE COMPANY and LICENCE APPEAL TRIBUNAL
Respondents
Ashu Ismail, for the Appellant
Peter Yoo, for the Respondent, Allstate Insurance Company
Douglas Lee and Olivia Filetti, for the Respondent, Licence Appeal Tribunal
HEARD at Toronto by videoconference: June 12, 2023
H. Sachs j.
OVERVIEW:
[1] This is an appeal of the decision and reconsideration decision of the License Appeal Tribunals (“LAT”) finding that the Appellant was not catastrophically impaired due to mental behavioural impairments. The Appellant asks this Court to quash the underlying decisions and remit the matter back to the LAT for a new hearing on two bases: (1) the hearing was procedurally unfair because the decision turned on a defence to the claim that was only raised by the Respondent Allstate Insurance Company at the beginning of the hearing and (2) the LAT applied the wrong causation test.
[2] For the reasons that follow, I would dismiss the appeal.
BACKGROUND:
[3] On February 21, 2017, the Appellant was involved in an automobile accident and sought benefits pursuant to the Statutory Accident Benefits Schedule (“SABS”). He sustained soft tissue injuries from the accident. He was granted certain benefits and exhausted his policy limits for those benefits.
[4] He claimed a catastrophic impairment caused by the accident exacerbating his extensive pre-accident medical conditions. The insurer declined catastrophic impairment entitlement, and the Appellant appealed to the LAT.
Initial Decision
[5] In its initial decision dated September 19, 2022, the LAT determined that the Appellant failed to prove his present impairments were caused by the accident and that he had a catastrophic impairment as a result of his accident injuries.
[6] On March 9, 2017, the Appellant had “what appeared to be” a fall and a seizure and was admitted to hospital for 20 days. He submitted to the LAT that this incident was a result of physiological conditions and physical injuries sustained from the February 2017 accident. The Respondent insurer denied that the March 2017 incident was due to the accident and submitted to the LAT that it was caused by the Appellant’s pre-accident medical conditions, or a condition not related to the accident. Following the March 2017 incident, the Appellant’s health deteriorated.
[7] The LAT undertook an analysis to determine whether the March 2017 incident was caused by the accident. The LAT determined: that the Appellant’s leg numbness (that possibly triggered the March 2017 fall) was not caused by the accident; that the Appellant did not suffer a traumatic brain injury in the accident (but sustained one during the March 2017 fall); and that the accident did not cause any psychological impairment. The LAT found that the cause of the March 2017 incident was most likely a black-out event where he struck his head, or he fell and struck his head. The LAT also found that the Appellant had a history of blackouts, vertigo and syncope pre-accident and that the Appellant did not provide a rational explanation for how an injury related to the accident caused him to blackout.
[8] The LAT did not accept the Appellant’s argument that despite his pre-accident health conditions, he was still functional. He also submitted his pre-accident health conditions had resolved, leading to his submission that since the accident happened 3 weeks before the March 2017 incident, the accident injuries caused the incident. The LAT found the evidence did not support this line of argument.
[9] The LAT determined that the Appellant failed to prove on a balance of probabilities that he sustained an impairment in the accident that met the relevant threshold for a catastrophic impairment designation. Thus, his claim was dismissed.
The Reconsideration Decision
[10] The Appellant filed a request for reconsideration of the Initial Decision. In a decision dated February 23, 2023, the LAT dismissed that request.
[11] In his request for reconsideration the Appellant submitted that the LAT violated the rules of procedural fairness because he did not have notice of the respondent’s position on causation until opening statements. The Appellant also argued that the LAT made an error of law by applying the “but for” causation test and not the “material contribution” test.
[12] With respect to the procedural fairness issue, the LAT found that communications between the Appellant and the Respondent insurer regarding the catastrophic impairment claim made clear that the cause of the Appellant’s impairments was in issue. As well the LAT noted that the Appellant’s counsel at the hearing made a submission that certain notes were not relevant to “the causation issue” before the Respondent’s opening statement. Further, the LAT found that if the opening statement was the first time the Appellant heard the causation argument, it should have been objected to. It was not, nor was any allegation of procedural fairness made at any point during the hearing. Concerns about being prejudiced by the issue of causation should have been raised at the hearing and could not be relied on to support a reconsideration request.
[13] On the issue of causation, the LAT found that the “but for” test was the proper one. The LAT was able to determine the key issue before it—namely whether the incident of March 9, 2017 was an intervening event. This was not one of those exceptional cases where the material contribution test should be applied. The LAT also found that even if the material contribution test was the correct test the result would not have been different
KEY ISSUES:
[14] This appeal raises the following questions:
Did the LAT violate the Appellant’s right to procedural fairness?
Did the LAT err in law by applying the wrong causation test?
COURT’S JURISDICTION:
[15] This Court has jurisdiction to hear the appeal pursuant to s. 11(6) of the License Tribunal Act, S.O. 1990, c. 12. This appeal right is limited to questions of law.
STANDARD OF REVIEW:
[16] On questions of law, the standard of review is correctness. With respect to questions of procedural fairness the standard is also correctness.
ANALYSIS:
Did the LAT violate the Appellant’s right to procedural fairness?
[17] The Appellant submits that until the first day of the hearing he did not know that the Respondent insurer’s defence to his claim of catastrophic impairment was going to revolve around the issue of causation and, more particularly, around the fact that the fall of March 9, 2017 was an intervening event that broke the chain of causation.
[18] On February 17, 2020, the Respondent insurer defended the CAT LAT application stating that the reasons for its denial would be provided in the case conference summary. However, no case conference summary was ever filed by the insurer and the case conference report and order of the Tribunal rendered after the case conference said nothing about having to determine whether the fall of March 9, 2017 broke the chain of causation. The question posed was “Has the appellant sustained a catastrophic impairment as defined by the Schedule.?”
[19] On October 20, 2020, the insurer issued their CAT denial via an Explanation of Benefits, which the Appellant argued said nothing about investigating causation. The reasons for denial were stated to be the following:
Thank you for attending insurer examinations to determine if your [sic] sustained catastrophic impairment under criteria 8, as a result of the subject accident. The assessors have concluded that you did not meet criteria 8 for catastrophic impairment as defined in the SABS.
[20] Enclosed with the denial were various reports. According to the Appellant, none of those reports addressed the question of whether the fall of March 9, 2017 was an intervening event that broke the chain of causation.
[21] On August 9, 2021, counsel for the insurer gave his opening statement. At that time, he indicated that the insurer was advancing a threefold defence to the Appellant’s claim, one of which was that if the Appellant did have a mental behavioural disorder, that disorder was not related to the accident, but to a fall that occurred on March 9, 2017. The Appellant maintains that this was his first notice that the insurer was raising this issue.
[22] According to the Appellant, raising a new issue for the first time at the hearing of the appeal ran contrary to the LAT rules and to the provisions of the SABS that require an insurer to be specific about its reasons for denying an insured’s CAT claim. The purpose of both is to ensure that the insured can make an informed decision about whether to appeal that denial and to ensure that the insured can adequately prepare and present its case at the appeal of that denial. Both the SABS (which is consumer protection legislation) and the common law rules of procedural fairness require that a person be given proper notice of the case they have to meet.
[23] The problem with this submission is that no objection was made when the insurer’s counsel made his opening statement; no objection was made before the Appellant began to present his evidence; and no objection or concern was raised at any other point during the hearing, including during the six-month period from August 2021 to February 2022 when the hearing was adjourned. The Appellant (who was represented by counsel at the hearing) acknowledges that the procedural fairness issue was never raised by him during the hearing and is being raised by him for the first time on appeal.
[24] As stated by the Court of Appeal for Ontario in Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101, 119 O.R. (3d) 81 at para. 75:
It is trite law that appellate courts are not to entertain any new issues except in very limited circumstances.
[25] Where the issue is one that relates to procedural fairness, it is particularly important that the issue be raised before the tribunal hearing the matter at first instance. That tribunal is in a position to listen to the submissions, and, if they have merit, grant a remedy that would allow the defect to be cured. The detrimental impact to the administration of justice if a procedural fairness issue is not raised before the tribunal who can do something to correct the unfairness is obvious—the injured party pursues an appeal before a different tribunal, which then may result in the holding of a second hearing. This in turn drastically increases the costs to the parties, results in delay, and demands the use of already scarce judicial and quasi-judicial resources.
[26] The Appellant’s reasons for not raising the issue before the LAT are twofold. First, it never occurred to the Appellant that the LAT would actually make a decision on the basis of an issue that had not been raised before the appeal and second, even if his concerns had been raised, the LAT would not have done anything to correct the problem.
[27] To accept either of these submissions as a reason for entertaining the Appellant’s argument on procedural fairness would be to say that the high threshold for hearing arguments that are raised for the first time on appeal can be met on the basis of speculation and assumptions. In spite of the insurer’s clearly articulated position during the appeal hearing, the Appellant assumed that the LAT would not give effect to the insurer’s arguments based on his unarticulated concern about procedural fairness. The Appellant also failed to raise his concern because of his speculation that the LAT would not give any weight to his concern. However, his failure to raise this concern before the LAT deprived this court of the evidence necessary to establish how the LAT would in fact have dealt with the concern.
Did the LAT apply the wrong causation test?
[28] According to the Appellant, this was a case that required the LAT to apply the “material contribution” causation test. This is because determining the cause of the March 9, 2017 fall was a complex matter. As put by the insurer’s own neurologist, Dr. Soric, [the Appellant] subsequently experienced neurological events which were subsequently investigated. Based on a review of the available documentation, the cause/etioloty of these neurological events and subjective symptoms has never been established.” In other words, according to the Appellant, Dr. Soric acknowledged that the etiology or cause of the March 9, 2017 fall has never been established. In such a situation, the Appellant argues, the law requires the use of the material contribution test.
[29] In Clements v. Clements, 2012 SCC 32, [2012] 2 S.C.R. 181, the Supreme Court of Canada stated the following at para. 13:
To recap, the basic rule of recovery for negligence is that the plaintiff must establish on a balance of probabilities that the defendant caused the plaintiff’s injuries on the “but for” test. This is a factual determination. Exceptionally, however, courts have accepted that a plaintiff may be able to recover on the basis of “material risk of contribution to risk of injury”, without showing factual “but for” causation.
[30] The LAT applied the normal test for causation. The Appellant is asserting that this case falls within that exceptional class of cases where the “material risk of contribution” test should be applied.
[31] The material risk of contribution test is to be applied “only where it is impossible to say that a particular defendant’s negligent act in fact caused the injury. It imposes liability not because the evidence establishes that the defendant’s act caused the injury, but because the act contributed to the risk that injury would occur”: Clements at para. 15. Because eliminating the necessity to prove causation as an element of negligence is a “radical step” that goes against a fundamental principle that a wrongdoer is only a wrongdoer in respect of the damage they actually cause, the material contribution to risk test is only employed very rarely.
[32] In Clements, the Supreme Court summarized the state of the law in Canada at para. 46 as follows:
The foregoing discussion leads me to the following conclusions as to the present state of the law in Canada:
(1) As a general rule, a plaintiff cannot succeed unless she shows as a matter of fact that she would not have suffered the loss “but for” the negligent acts of the defendant….
(2) Exceptionally, a plaintiff may succeed by showing that the defendant’s conduct materially contributed to risk of the plaintiff’s injury, where (a) the plaintiff has established that her loss would not have occurred “but for” the negligence of two or more tortfeasors, each possibly responsible for the loss, and (b) the plaintiff, through no fault of her own, is unable to show that any one of the possible tortfeasors in fact was the necessary or “but for” cause of her injury, because each can point to one another as the possible “ but for” cause of the injury, defeating a finding of causation on a balance of probabilities against anyone.
[33] This is not a case involving sorting out causation in a situation where there are multiple tortfeasors, with the attendant risk that they can escape liability by pointing the finger at each other. Therefore, the LAT was correct in law when it applied the “but for” test.
CONCLUSION:
[34] For these reasons the appeal is dismissed. Pursuant to the agreement of the parties, the Respondent insurer is entitled to its costs of the appeal from the Appellant, fixed in the amount of $5000, all inclusive.
Sachs J.
I agree _______________________________
Sutherland J.
I agree _______________________________
Schabas J.
Released: June 20, 2023
CITATION: Khan v. Allstate Insurance Company, 2023 ONSC 3652
DIVISIONAL COURT FILE NO.: 576/22
DATE: 20230620
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Sachs, Sutherland and Schabas JJ.
BETWEEN:
TIMUR KHAN
Appellant
– and –
ALLSTATE INSURANCE COMPANY and LICENCE APPEAL TRIBUNAL
Respondents
REASONS FOR JUDGMENT
H. SACHS J.
Released: June 20, 2023