Court File and Parties

CITATION: Tagoe v. The Personal Insurance Company, 2023 ONSC 5715

DIVISIONAL COURT FILE NO.: 028/23

DATE: 2023-10-13

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: SAMUEL TAGOE, Appellant

AND: THE PERSONAL INSURANCE COMPANY, Respondent

BEFORE: ACJ McWatt, J.A. Ramsay and Matheson JJ.

COUNSEL: Shahen Alexanian and David Kapanadze, for the Appellant Bruce Chambers, for the Respondent The Personal Insurance Company Douglas Lee, for the Intervenor Licence Appeal Tribunal

HEARD: October 11, 2023 at Toronto

Endorsement

J.A. RAMSAY J.

[1] The insured person appeals under s. 280 of the Insurance Act, R.S.O. 1990, c. I.8, from the decision of the Licence Appeal Tribunal reported at 2022 ONLAT 21-001365/AABS and the internal reconsideration thereof reported at 2022 ONLAT 21-001365/AABS - R. The effect of the decisions is to deny income replacement benefits under the Statutory Accident Benefits Schedule, O.Reg. 34/10 (“SABS”). The appeal is limited to a question of law: Licence Appeal Tribunal Act, 1999, S.O. 1999, c.12, Sched. G, s.11. The standard of review is correctness. The adjudicator dismissed the application on the ground that it had been brought after the two-year limitation period in s. 56 of the SABS.

[2] The insurer denied income replacement benefits in an Explanation of Benefits dated May 20, 2016. In its letter denying benefits it said that the appellant was not entitled to income replacement benefits because he did not suffer from a substantial inability to perform the essential task of his employment. The letter pointed out that the OCF-3 submitted by the appellant indicated that he had continued to work. He therefore had no initial eligibility for the income replacement benefits. In the letter, there was also a discussion about income earner benefits that included a statement that he was not entitled to non-earner benefits because he qualified for income replacement benefits.

[3] In January 2017, the insurer denied the appellant’s claim for non-earner benefits.

[4] In July 2017, the appellant stopped work, having worked for 16 months after the accident. He claimed that the injuries from the accident contributed to his inability to work. If the matter went to a hearing on the merits, this issue would be in dispute.

[5] In August 2017, the appellant underwent hip replacement surgery. In April 2018 he had a stroke.

[6] Between June 2018 and June 2020, the appellant and the insurer corresponded about income replacement benefits.

[7] In January 2019, the appellant applied for income replacement benefits.

[8] In June 2020, the insurer informed the appellant that his claim was barred by the expiry of the limitation period on May 20, 2018, relying on the Explanation of Benefits dated May 20, 2016.

[9] On February 23, 2021, the appellant applied to the Licence Appeal Tribunal under s.280(2) of the Insurance Act to resolve the dispute. The adjudicator decided as follows:

a. The denial letter of August 2016 was clear and unequivocal.

b. The insurer could, as a matter of law, deny future benefits.

c. The Explanation of Benefits from May 20, 2016 was not overridden on the basis that the respondent had made requests for further information and documentation.

d. The adjudicator would not, as a matter of the statutory discretion under s. 7 of the Licence Appeal Tribunal Act, 1999, extend the limitation period.

[10] The appellant’s request for reconsideration was denied.

[11] The appellant argues as follows:

a. The adjudicator erred in finding that the denial of benefits of May 2016 was clear and unequivocal. The denial said both that the appellant was not eligible for income replacement benefits and that he was eligible for income replacement benefits. It was not open to the adjudicator to find to the contrary.

b. The adjudicator erred by ignoring the discoverability doctrine, failing to follow the Court of Appeal in Tomec v. Economical Mutual Insurance Company, 2019 ONCA 82. The appellant had gone back to work a day after the accident and did not know that he could not work until the time came in July 2017. The limitation period could not have begun to run before he became eligible for income replacement benefits.

c. The adjudicator erred by failing expressly to address the issue of whether the insurer was estopped by its conduct under s.131 of the Insurance Act which provides:

131 (1) The obligation of an insured to comply with a requirement under a contract is excused to the extent that, … (b) the insurer’s conduct reasonably causes the insured to believe that the insured’s compliance with the requirement is excused in whole or in part, and the insured acts on that belief to the insured’s detriment.

Denial of benefits

[12] For the limitation period to run, the denial of benefits must be clear and unequivocal from the point of view of an unsophisticated person: Smith v. Cooperators General Insurance Company, 2002 SCC 30. In dismissing the application, the adjudicator said:

[32] On the evidence, I find that the respondent’s EOB [Explanation of Benefits] letter to [the appellant] satisfied the basic requirements of Smith because it stated the reasons for the denial of the IRBs; it clearly indicates the [appellant] is not eligible for IRBs; provides particulars as to why he is not eligible; and it provides, in straightforward language, the dispute process available to [the appellant] should he disagree with the denial. The respondent provided a clear indication of a denial.

[13] The adjudicator went on expressly to acknowledge that the reference to income replacement benefits in the discussion of non-earner benefits may have presented as confusing but noted that it must be read within the context of the entire form. The adjudicator concluded that she was persuaded that the respondent’s clear language of “you do not qualify for an IRB benefit”, which appeared under the appropriate IRB section, would extinguish any such uncertainty. The adjudicator did not err by looking through the lens of counsel instead of an unsophisticated person. The adjudicator added that the appellant had counsel who would have made an effort to obtain clarification if needed. The reference to counsel was an added comment, and not a central part of the analysis.

[14] This finding was open to the adjudicator on the evidence. She made no error of law.

Discoverability

[15] On this issue, the adjudicator said this in her reconsideration decision:

[24] The [appellant] submits that the Tribunal made an error of law by allegedly failing to apply the Court of Appeal’s decision in Tomec and address the argument relating to discoverability and prematurity of the denial in its decision, such that the [appellant] was denied procedural fairness pursuant to Rule 18.2(a).

[25] I disagree. Discoverability and prematurity of a denial were addressed in the decision. For instance, paragraph 34 outlines the applicant’s arguments with respect to pre-emptive denial, and paragraph 35 goes on to outline my position on premature benefit claims:

…there is a considerable body of case law that deals with premature benefit claims that are denied pre-emptively by an insurer. I find that a benefit can be denied by an insurer pre-emptively and that the use of the phrase “you do not qualify” would be found to be acceptable under the Schedule.

[16] There was no other discussion of Tomec. The appellant submits that the adjudicator erred in law in failing to follow Tomec, which addressed a like situation. In Tomec, the Court of Appeal held that a limitation period, without discoverability, created an absurd result because it effectively barred the appellant in that case from claiming benefits before the appellant was eligible for those benefits. The Court of Appeal underscored the purpose of the SABS, to maximize benefits for victims of motor vehicle accidents, and concluded that the limitation period was subject to discoverability.

[17] The respondent insurer argues that the unequivocal denial of May 2016 began the limitation period with respect to the subsequent claim for income replacement benefits even though the appellant had gone back to work the day after the accident. The respondent insurer relies on part of the initial request to the insurer, where the appellant claimed that he had a substantial inability to work. The respondent insurer submits that the appellant having so claimed, the denial of income replacement benefits in May 2016 created the dispute that had to be addressed in two years.

[18] I disagree with the respondent’s position. The appellant did not qualify for income replacement in May 2016 and did not apply for it. I cannot distinguish this case from Tomec. The appellant was not required to apply for income replacement benefits before he was eligible for them. The adjudicator erred in law by failing to apply the doctrine of discoverability.

Estoppel and extension of limitation period

[19] Given our decision on the discoverability issue, we do not need to decide the effect, if any, of the adjudicator’s omission to refer to s.131 of the Insurance Act. Nor do we need to comment on the adjudicator’s discretionary decision not to extend the limitation period.

Appeal order

[20] The appeal is allowed, the decision of the Tribunal is set aside, and the matter is remitted to the Tribunal for a new hearing, with costs to the appellant payable by the respondent insurer in the agreed amount of $7,500 all inclusive. No costs for or against the Licence Appeal Tribunal.

J.A. Ramsay J.

I agree _______________________________

McWatt A.C.J.S.C.

I agree _______________________________

Matheson J.

Released: October 13, 2023