CITATION: Keulen v. Allstate Insurance Co., 2024 ONSC 2033
DIVISIONAL COURT FILE NO.: 062/23
DATE: 20240408
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
D.L. Corbett, Sproat and O’Brien JJ.
BETWEEN:
TAYLOR KEULEN
Gus Triantafillopoulos and Shannon Kelly,
for the Appellant
Appellant
– and –
ALLSTATE INSURANCE COMPANY
Jennifer J. Griffiths and Nathan Fabiano,
and LICENCE APPEAL TRIBUNAL
for the Respondent Allstate
Respondents
Valerie Crystal and Douglas Lee, for the
Licence Appeal Tribunal
HEARD at Toronto: October 3, 2023
REASONS FOR DECISION
D.L. Corbett J.
[1] The Appellant appeals the Licence Appeal Tribunal’s decision (Keulen v. Allstate, 2023 ONLAT 21-005262/AABS – M) that it lacks jurisdiction to award punitive damages in respect to an insured’s claims under the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the “SABS Schedule”).
[2] The Appellant’s arguments are foreclosed by the applicable statutory language and binding authority from the Ontario Court of Appeal. The Appellant’s alternative argument, that s. 280 of the Insurance Act is unconstitutional, lacks merit. For the reasons that follow, the appeal is dismissed.
Background
[3] On January 20, 2021, the Appellant applied to the LAT claiming entitlement to various statutory accident benefits arising from an accident that took place on April 10, 2015. Among these claims was a claim for a “special award” under s. 10 of the SABS Schedule because Allstate delayed making certain payments and delayed providing the Appellant with catastrophic injury assessment reports.
[4] On September 1, 2022, the Appellant brought a motion seeking to add a claim for punitive damages as an issue to be decided at the hearing, which was already scheduled for three days in late September.
[5] At a settlement conference on September 13, 2022, the parties resolved all of the Appellant’s claims except in respect to punitive damages. The parties agreed and the LAT directed that the Appellant’s motion to add a claim for punitive damages would be heard during the hearing time scheduled later in September. The motion was argued before Vice-Chair Moore on September 27, 2022. By decision dated January 12, 2023, the Vice-Chair found that the LAT does not have jurisdiction to adjudicate a claim for punitive damages.
Jurisdiction and Standard of Review
[6] An appeal lies to this court from a final order of the LAT on a question of law alone: Licence Appeal Tribunal Act, 1999, SO 1999, c. 12, Sch. G. On appeal, questions of law, including constitutional legal questions, are reviewed on a correctness standard: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, paras. 36-38 and 55.
The Statutory Scheme
[7] The LAT is an administrative tribunal. It has the jurisdiction conferred upon it by statute. It does not have inherent jurisdiction: Dunsmuir v. New Brunswick, 2008 SCC 9, paras. 27 – 29.
[8] Section 3(1) of the LAT Act states:
The Tribunal shall hold the hearings and perform the other duties that are assigned to it by or under any Act or regulation.
[9] Section 280 of the Insurance Act states:
(1) This section applies with respect to the resolution of disputes in respect of an insured person’s entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled.
(2) The insured person or the insurer may apply to the Licence Appeal Tribunal to resolve a dispute described in subsection (1).
(3) No person may bring a proceeding in any court with respect to a dispute described in subsection (1), other than an appeal from a decision of the Licence Appeal Tribunal or an application for judicial review.
(4) The dispute shall be resolved in accordance with the Statutory Accident Benefits Schedule.
(5) The regulations may provide for and govern the orders and interim orders that the Licence Appeal Tribunal may make and may provide for and govern the powers and duties that the Licence Appeal Tribunal shall have for the purposes of conducting the proceeding.
(6) Without limiting what else the regulations may provide for and govern, the regulations may provide for and govern the following:
Orders, including interim orders, to pay costs, including orders requiring a person representing a party to pay costs personally.
Orders, including interim orders, to pay amounts even if those amounts are not costs or amounts to which a party is entitled under the Statutory Accident Benefits Schedule.
Thus, resolution of disputes under the SABS Schedule has been assigned to the LAT. The courts have no jurisdiction over these disputes, other than by way of appeal or judicial review of decisions of the LAT. LAT is to resolve disputes in accordance with the SABS Schedule and regulations made pursuant to subsections (5) and (6). Orders to pay money must be authorized under the SABS Schedule or the regulations.
The LAT’s Decision
[10] The LAT rejected the Appellant’s argument that because common law principles, such as res judicata, are applied by the LAT, common law claims, such as claims for punitive damages, are remedies available to the LAT. The LAT reasoned that res judicata is a “doctrine or principle” and that punitive damages are a “tort claim for financial compensation” (Decision, para. 13).
[11] The LAT found that its jurisdiction arises from s. 280 of the Insurance Act, and that it is evident that the Legislature clearly intended that the LAT “does not have the authority to award punitive damages for accident benefit disputes” (Decision, para. 14). The LAT followed prior LAT decisions in A.J. v. Security National, 2021 35586 (ON LAT), reconsideration denied 2021 104418 (ON LAT) and Jarrett v. Aviva Insurance Co. of Canada, 2022 2762 (ON LAT), which both “found that the legislature did not include punitive damages as a remedial tool available to the Tribunal” (Decision, para. 16).
[12] The LAT held that the Court of Appeal decision in Stegenga v. Economical Mutual Insurance Company, 2019 ONCA 615, “confirms the types of remedies the Tribunal has jurisdiction to award” and noted that the decision “is binding as far as what the Tribunal can and cannot do” (Decision, para. 17). The LAT further noted that the Court of Appeal held that where “an insurer has unreasonably withheld or delayed payment of a benefit, the Tribunal may deem the benefit incurred pursuant to s.3(8) of the Schedule. Furthermore, Regulation 664 provides the Tribunal with the power to grant an award of up to 50% of the benefits as well as interest on all amounts owing” (Decision, para. 17). The LAT then went on to quote from para. 6 of Stegenga as follows:
Interpreted in light of the principles of statutory interpretation, s.280 grants the LAT jurisdiction over Ms. Stegenga’s claim and prohibits the claim from proceeding as an action in court, notwithstanding that the action alleges bad faith and the remedies the LAT can grant are different from those a court could. This result is a consequence of a policy choice the legislature made in enacting s. 280.
Issues on Appeal
[13] The Appellant raises two issues on appeal:
(1) Whether the LAT has jurisdiction to award punitive damages in respect to claims for statutory accident benefits; and in the alternative,
(2) Whether s. 280 of the Insurance Act is unconstitutional to the extent that it eliminates claims for punitive damages in respect to claims for statutory accident benefits.
Issue #1 – LAT Has No Jurisdiction to Award Punitive Damages Related to SABS Claims
[14] The Appellants essentially repeats the arguments made to the LAT on this issue. I would reject those arguments, substantially for the reasons given by the LAT, with the following additional observations.
[15] First, the language of the Court of Appeal in Stegenga is clear. The LAT’s jurisdiction is circumscribed by statute. The statute provides that the LAT will decide claims in accordance with the SABS Schedule and applicable regulations. None of those instruments authorize an award of punitive damages. They do, however, authorize the Tribunal to deem benefits incurred, to make a special award of 50% of benefits, and to award interest and costs, all as potential responses to unreasonable conduct by an insurer. These are “different remedies” than an award of punitive damages, a “policy choice” made the Legislature. I conclude that the LAT was correct in finding that Stegenga is binding authority establishing that the LAT has no jurisdiction to award punitive damages in SABS cases. Stegenga is likewise binding on this court.
[16] The Appellant argues that the Court of Appeal held that the jurisdiction given to the LAT is “co-extensive with that removed from the court” (Factum, para. 37), from which, the Appellant argues, the LAT has all the jurisdiction that had been removed from the court. That is a mis-reading of the Court of Appeal’s analysis. LAT has exclusive original jurisdiction over SABS claims. All of the jurisdiction that the court used to have has been removed and given to the LAT. But the claims available are limited to those prescribed in the Insurance Act, the SABS and the regulations.
[17] The Appellant also argues that the Court of Appeal’s dicta, quoted above, is obiter dicta and was made per incuriam (Factum, paras. 38-41). I do not agree that the passage is obiter dicta – it is an aspect of the court’s reasoning to its conclusion. But even if it was obiter dicta, it is considered language, stating a clear principle, and under the principle in Sellars v. The Queen, 1980 166 (SCC), [1980] 1 SCR 527, I would consider this court bound by it.
[18] Second, the LAT was correct to reject an analogy between principles such as res judicata, and substantive heads of claim, such as punitive damages. The LAT has jurisdiction to control its own process, and the extent of that authority has nothing to do with the legislature’s decision to eliminate punitive damages and to replace them with a different regime for controlling unreasonable insurer behaviour.
[19] Third, the LAT was correct in finding that its jurisdiction must be found in statute – and to further find that s. 280 of the Insurance Act, the SABS Schedule and the regulations, do not authorize an award of punitive damages.
[20] I appreciate that the Appellant and their counsel feel strongly that the policy choice made by the legislature is an unwise one. But, with respect, the issue has been settled by the Court of Appeal and is apparent from a plain reading of the Insurance Act, the SABS Schedule and the applicable regulations.
Issue #2 – Elimination of Punitive Damages Is Not Unconstitutional
[21] The Appellant’s argument on this point is as follows:
(a) the Supreme Court of Canada has found that punitive damages are available at common law;
(b) the Supreme Court of Canada has found that the legislature must use clear language to remove traditional jurisdiction from the Superior Court of Justice to an administrative tribunal: Chrysler v. Competition Bureau, 1992 68 (SCC), [1992] 2 SCR 394; Idziak v. Canada, 1992 51 (SCC), [1992] 3 SCR 631;
(c) the legislature of Ontario has not used clear language to remove claims for punitive damages from the jurisdiction of the Superior Court of Justice, and therefore the laws of Ontario that have this effect are unconstitutional.
[22] With the greatest of respect, this argument obviously lacks merit. The first two propositions are unremarkable. The third argument is incorrect in its premise, and in error in its conclusion in any event.
[23] First, punitive damages are a remedy, not a right of action. Punitive damages are available at common law. The legislature may vary the common law – indeed, legislation governing rights, obligations and remedies is, by its nature, amendment to or enactment of the common law. The status of a legal principle as arising from common law does not, by that fact, insulate it from legislative amendment.
[24] Second, the legislature used clear language removing jurisdiction over claims arising in respect to statutory accident benefits from the Superior Court of Justice and placed that jurisdiction in the LAT: this is set out, in clear language, in s. 280 of the Insurance Act, cited above. Particular remedies available to the LAT – whether awards of benefits, interest, costs, or special awards, are aspects of the exclusive jurisdiction that the LAT has over these claims.
[25] Third, the LAT has the authority to adjudicate SABS claims in accordance with the SABS Schedule and the governing legislation and regulations. That regime does not include authority to award punitive damages. Prior to April 1, 2016, the Financial Services Commission of Ontario (“FSCO”) and the Ontario Superior Court had parallel, concurrent jurisdiction over statutory accident benefits claims. Thereafter, this jurisdiction was conferred exclusively upon the LAT as a result of amendments to the Insurance Act: Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, SO 2014, c. 9, Sch. 3, s. 14. Under the former regime, the Superior Court had jurisdiction to award punitive damages and the FSCO did not. The legislature opted not to authorize the LAT to award punitive damages in the same manner that FSCO did not have that authority: as found by the Court of Appeal in Stegenga, this was a policy choice made by the legislature.
[26] Fourth, if the legislature had failed to remove jurisdiction from the Superior Court of Justice over SABS claims, the remedy would not be a finding of unconstitutionality, but rather, that the Superior Court still retains jurisdiction.
[27] I decline to undertake a “deep[er] dive” into a constitutional question that is so obviously misconceived. The Appellant’s first two arguments are trite law. The third argument has no basis in law and no authority in support of it. For decades, governments have wrestled with balancing compensation for accident victims with the overall cost of insurance. The SABS Schedule limits compensation available to claimants. Punitive damages are a non-compensatory award: Whiten v. Pilot Insurance Company, 2002 SCC 18, para. 79. The legislature has not eliminated non-compensatory awards for claims arising under the SABS Schedule, but rather it has limited them. I see no basis for the Appellant’s arguments that such limitations are constitutionally infirm.
Conclusion and Disposition
[28] In my view, the LAT was bound to find as it did by the Court of Appeal decision in Stegenga, and this court is likewise bound. The Appellant argued that this result deprives the LAT of a necessary tool to control unreasonable conduct by insurers. As presented in this appeal, this argument is rhetorical. There is no record before us that supports the argument that the tools available to the LAT to police insurer conduct are inadequate. Should such a record be developed, the place to take it is the legislature.
[29] I would dismiss the appeal, with costs payable by the Appellant to the Respondent insurer of $5,000.00, inclusive; there shall be no costs to or from the LAT.
______________________________________ D. L. Corbett, J
_______________________________ Sproat, J
_______________________________ O’Brien J
Date of Release: April 8, 2024
CITATION: Keulen v. Allstate Insurance Co., 2024 ONSC 2033
DIVISIONAL COURT FILE NO.: 062/23
DATE: 20240408
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D.L. Corbett, Sproat and O’Brien JJ.
BETWEEN:
Taylor Keulen
Appellant
– and –
Allstate Insurance Company and Licence Appeal Tribunal
Respondents
REASONS FOR DECISION
D.L. Corbett J.
Date of Release: April 8, 2024