CITATION: McDonald v. Aviva Insurance Company, 2024 ONSC 6030
DIVISIONAL COURT FILE NO.: 713/23 DATE: 2024-11-13
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Sachs, Matheson and Jarvis JJ.
BETWEEN:
Keyan McDonald Appellant
– and –
Aviva Insurance Company Respondent
COUNSEL: Doug Wright and Aryeh Samuel, for the Appellant Noella Thompson, Kimberly Tye and Hussein Pirani, for the Respondent
HEARD at Toronto: October 30, 2024
REASONS FOR JUDGMENT
Matheson J.
[1] The Appellant Keyan McDonald sustained a catastrophic impairment as a result of a motor vehicle accident in 2021. After a dispute with his insurer – the Respondent Aviva Insurance Company – the Respondent agreed to pay the claimed benefits The Respondent did so shortly before the Licence Appeal Tribunal (“LAT”) hearing about the disputed benefits. The Appellant then sought an additional award under s. 10 of Regulation 664 under the Insurance Act, R.S.O. 1990, c. I.8 (known as a special award).
[2] The LAT Adjudicator agreed that the Appellant should receive a special award because the Respondent had unreasonably withheld or delayed payments that the Appellant was entitled to under the Statutory Accident Benefits Schedule, O. Reg. 34/10 (“SABS”). The Adjudicator found that the Respondent’s handling of this matter stemmed from behaviour that was excessive, imprudent, stubborn, inflexible and unyielding. The Adjudicator found that the Respondent had blatantly failed to adjust the file with due diligence, was indifferent to the vulnerability of the Appellant and failed to afford the Appellant the consideration and dignity that he deserved. The Adjudicator found the need for a strong message of deterrence.
[3] Although a special award was granted on some benefits, it was not granted on all of the benefits. Despite the Respondent’s agreement to pay the amount claimed, the Adjudicator found that an additional report regarding the amount of the housing benefits was needed before an award on that amount could be made.
[4] The Appellant therefore appeals that part of the decision of the LAT dated June 23, 2023, and the reconsideration decision dated November 14, 2023, denying a special award on those housing benefits. The Appellant submits that the Adjudicator erred in law in interpreting s. 10.
[5] I would grant the appeal, set aside that part of the LAT decisions that denied a special award on the housing benefits, and remit the matter back to the LAT to decide on the special award on the housing benefits in accordance with these reasons for judgment. In my view, the Adjudicator erred in law in her interpretation of s. 10, as set out below. Section 10 does not require that the amount of the benefit be adjudicated under the SABS when the Respondent has agreed to pay the claimed amount.
Background
[6] The Appellant was catastrophically impaired in a motor vehicle accident in 2021. He is immobile, non-verbal, and dependent for all the acts of daily living including bladder and bowel care. A lift must be used to transfer him from a bed to a wheelchair and he cannot sit without support. He requires 24-hour care.
[7] The Appellant was in hospital for over a year after the accident. In January 2022, prior to his discharge from hospital, a treatment and assessment plan (OCF-18) was submitted to the Respondent. The plan totaled $924,671, which primarily included up to $770,000 for the cost of a new home, renovations of $29,000, and up to $100,000 for a wheelchair accessible vehicle. Ultimately, the Respondent agreed to pay these amounts just before the LAT hearing.
[8] Prior to the accident, the Appellant had been living with four other family members in a three bedroom apartment. Given the Respondent’s conduct in handling his claim for housing benefits, he continued to live there afterward for a lengthy period of time, in conditions of substantial indignity.
[9] The Respondent denied the above treatment plan immediately after receiving it. In the explanation of benefits, the Respondent wrongly gave, as a reason for its denial, that the treatment plan exceeded the policy limits. It did not. The Appellant had an insurance policy that included optional benefits. As a result, as a catastrophically injured person, he was entitled to insurance coverage for benefits of up to $3 million.
[10] In denying the treatment plan, the Respondent also relied on s. 16(4)(c) of the SABS, which provided as follows:
..the insurer is not liable to pay …for the purchase of a new home in excess of the value of the renovations to the insured person’s existing home that would be required to accommodate the insured person’s needs.
[11] This was the subsection the Adjudicator later relied on in denying the special award on the housing benefits, since no report on that value had been submitted at the LAT hearing.
[12] In March 2022, the Appellant submitted another OCF-18 to the Respondent. The OCF-18 sought $26,000 for the difference in apartment rental to provide more appropriate housing. The Respondent denied this treatment plan as well. On the difference in monthly rent, the Respondent took the position that its responsibility would be for a two-bedroom apartment only. The Respondent also continued to advance the objections it made to the first OCF-18. The Respondent continued to rely on the erroneous position that the proposed amounts exceeded policy limits and on the need for a home assessment to determine the value of renovations needed to the existing apartment to accommodate the Appellant’s needs under s. 16(4)(c) of the SABS.
[13] In May 2022, the Respondent notified the Appellant that it was arranging a home modification assessment to be done on the Appellant’s apartment. Despite this notice, the Respondent never took steps to do the home assessment.
[14] The Respondent also required an independent medical assessment, again basing this on the above reasons including the erroneous position regarding policy limits.
[15] Given the dispute about benefits, LAT proceedings were commenced on behalf of the Appellant. In July 2022, the LAT gave notice that there would be a four-day hearing regarding the disputed benefits commencing January 16, 2023.
[16] On December 7, 2022, the Respondent, after the long delay, decided to fund a difference in rent and some other small claims. The Respondent again denied the house purchase and renovation and the wheelchair accessible vehicle.
[17] In its December 7, 2022 letter, the Respondent again relied on s. 16(4)(c) of the SABS and said it was “awaiting the construction report to determine these costs” even though it had done nothing to schedule the assessment. The Respondent also said that due to the prospect that the Appellant may continue to recover, his “long term needs may change so at this time, a house with renovations and a wheelchair accessible vehicle are not reasonable or necessary.”
[18] Then, by letter dated December 19, 2022, and with the LAT hearing scheduled to begin in January 2023, the Respondent wrote that it had “reconsidered” its position. It approved the entire treatment plan for $924,671. The Respondent’s letter to the Appellant expressly stated that it “agreed to fund” the amounts claimed for house purchase, renovations and a wheelchair accessible vehicle. It restated the specific amounts claimed in the OCF-18 from January 2022. It dropped any reference to s. 16(4)(c) of the SABS.
[19] The Respondent’s letter agreeing to pay gave no explanation for its reconsideration. At the LAT hearing in January 2023, the Respondent’s insurance adjuster testified that the treatment plan was ultimately approved on the advice of counsel and the Respondent claimed privilege over the related notes.
LAT decisions
[20] There was therefore no issue about the claimed benefits as of the commencement of the LAT hearing in January 2023. The outstanding benefits claims had been agreed to by the Respondent. The claim for a special award under s. 10 was added as an issue in dispute and became the main issue at the LAT hearing.
[21] As set out in the reasons for decision, the LAT Adjudicator noted that a special award is not granted simply because an insurer has made an error. She cited the case that both sides relied on, Plowright v. Wellington, 1993 ONICDRG 66, providing that a special award arises because the delay or withholding of benefits by the insurer stems from behaviour that is excessive, imprudent, stubborn, inflexible, unyielding or immoderate.
[22] The Adjudicator concluded that the high threshold for a special award under s. 10 was met. Among other things, the Adjudicator found as follows:
(i) that the adjuster’s handling of the treatment plan was imprudent from the start and the adjuster apparently did not know or review the Appellant’s file;
(ii) that the adjuster was unaware that the Appellant had optional coverage when she denied the treatment plan based upon (wrong) coverage limits;
(iii) that when the Appellant’s discharge from the hospital was imminent, it was clear that the Appellant needed a new dwelling and the Respondent should have understood that the Appellant’s need to secure a new living arrangement was urgent;
(iv) that the Respondent took an unyielding approach to the severity of the Appellant’s injuries, and that the approach and content of the explanations of benefits was lacking, stubborn and insensitive;
(v) that it was not reasonable to ask the Appellant to choose between moving into the living room of the family’s inaccessible apartment or relocating into a 2-bedroom apartment and the Respondent’s unwillingness to work with the Appellant toward a viable solution was harsh, excessive and stubborn;
(vi) that the Appellant had to experience the unnecessary indignity of toileting in his family’s living room during the delay;
(vii) that rather than working with this highly vulnerable person to seek a reasonable resolution, the Respondent’s behaviour stalled the Appellant from accessing the housing benefit or understanding how to move forward: and,
(viii) that the Respondent unreasonably withheld and delayed the payment of benefits and its unyielding and stubborn interpretation delayed the Appellant moving into an accessible location that would have afforded him the dignity that he deserved.
[23] None of the above findings is now in dispute.
[24] The Adjudicator noted the one mitigating factor – that the Respondent chose to settle all issues in dispute before the hearing. However, she found that approval shortly before the hearing did not undo the blameworthiness of the Respondent’s past conduct.
[25] Having found that the threshold for a special award had been met, the Adjudicator then considered the quantum of the award. Under s. 10, she could award up to 50 per cent of the benefits in question. The Adjudicator considered the relevant factors, including the blameworthiness of the Respondent’s conduct, the amount withheld, the length of the delay, any prejudice to the Appellant, any mitigating factors, the need for deterrence and the vulnerability and potential harm to the Appellant.
[26] The Adjudicator decided to award the maximum of 50 per cent. In doing so, she found the blameworthiness of the Respondent’s conduct was apparent. She found as follows:
(i) that the Appellant was particularly vulnerable, which, alone, should have persuaded the Respondent to act promptly and with the utmost care and due diligence in handling his file;
(ii) that the Respondent failed to afford the Appellant the consideration and dignity that he deserved and that the Respondent’s indifference to the vulnerability of the Appellant was a significant aggravating factor;
(iii) that the Appellant was significantly and negatively impacted by the compounding effect of the errors made by the Respondent’s adjusters, including the failure to make timely payments after approving benefits meaning that the Respondent’s mother had to borrow money to pay for food and rent, and for saying it was waiting for a construction report that was never actually commissioned;
(iv) that the Appellant and his mother/guardian were treated more like adversaries than clients who pay a premium for insurance coverage;
(v) that it was unreasonable, given the Appellant’s medical condition, to wait to see if he would improve so much that his need for accessible housing and a wheelchair accessible vehicle would no longer be warranted;
(vi) that the Respondent blatantly failed in its responsibility to adjust the Appellant’s file with due diligence and its handling of the file added unnecessary strife to an already devastating situation; and,
(vii) that the Respondent’s position in its defence of its course of conduct showed the need for a strong message of deterrence in this case.
[27] None of the above findings is now in dispute.
[28] The Adjudicator applied the 50 per cent to all the benefits except for the housing benefits of a new home and related renovations. The Adjudicator agreed with the Respondent’s submission that s. 16(4)(c) of the SABS continued to limit the amount of the housing benefit for the purpose of s. 10, even though the amount of the benefits had been agreed on. There was no report submitted at the hearing that gave the value of the renovations to the insured’s existing apartment that would be required to accommodate his needs. The Respondent submitted that, without that report, the amount of the housing benefit could not be determined.
[29] The Adjudicator’s reasons for decision do not include an analysis of s. 10 to support this conclusion. The reasons are the following: “I agree with the respondent’s submissions that I have not been provided with the cost to modify the [Appellant’s] pre-accident home.”
[30] The Appellant sought reconsideration on this issue. The Adjudicator denied the request for reconsideration. The Adjudicator recognized that her prior decision “could have been more fulsome” but indicated that she did consider the submissions of both parties and the reconsideration process did not permit the consideration of new arguments. The Adjudicator acknowledged that the Respondent did not request a renovation report from the Appellant or commission one on its own. The Adjudicator also noted that the Respondent, in its denial letter, had failed to communicate that the cost of renovating the Appellant’s existing home determined the amount of the housing benefit that he was entitled to receive. However, under the heading, “The quantum of the [Appellant]’s housing benefit remains unknown”, the Adjudicator concluded as follows:
[24] I find no error of law or fact in pointing out that the amount of the benefit was not submitted into evidence. Neither party commissioned nor presented a housing renovation report. Yet both parties assert I made an error of law or fact. The applicant asserts I erred in not granted an award on the new home. The respondent argues, in its responding submissions on reconsideration, that I made an error of law by stating the onus to submit a housing renovation report rested with the respondent. The respondent did not file its own request reconsideration on this point, and I do not address its argument in this reconsideration decision. [Emphasis added.]
[31] Although the Respondent continues to submit that the Adjudicator erred in placing any onus on it, it has not appealed.
Issue and Standard of Review
[32] The issue on this appeal is whether the Adjudicator erred in law in interpreting s. 10 of the Act to require a housing renovation report to determine the “amount” of the benefits in the circumstances of this case. An issue was also raised about who bore the onus to provide a home renovation report, but that issue need not be addressed due to the decision on the first issue.
[33] The standard of review is correctness: Canada (Minister of Citizenship of Immigration) v. Vavilov, 2019 SCC 65. When applying the correctness standard, the reviewing court may choose either to uphold the administrative decisionmaker’s determination or substitute its own view. While it should take the administrative decision maker’s reasoning into account, the court is empowered to come to its own conclusion: Vavilov, at para. 54.
Analysis
[34] Section 10 provides as follows:
If the Licence Appeal Tribunal finds that an insurer has unreasonably withheld or delayed payments, the Licence Appeal Tribunal, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, may award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule. [Emphasis added.]
[35] The Appellant submits that the Adjudicator erred in interpreting s. 10 to require evidence under s. 16(4)(c) of the SABS in order to decide the amount of the entitlement in a case where the insurer had already agreed to pay the full amount of the benefits claim. The Appellant submits that the “amount” that the Appellant was entitled to was the agreed-on amount for the new house and renovations. Nothing more was needed. The Respondent disagrees, submitting that there still needed to be an adjudication of the amount because of the limit in s. 16(4)(c) of the SABS, even though it had agreed to pay the full amount claimed. The Respondent then submits that the onus was on the Appellant to provide the report and he did not do so.
[36] The Adjudicator’s reasons for decision include a discussion of the interpretation of other phases in s. 10, but not on this issue. On this issue, there is a single sentence in the first decision that assumes that the amount of the benefit must be adjudicated because of s. 16(4)(c). In the reconsideration decision, there is a somewhat expanded discussion that proceeds on the same assumption.
[37] I conclude that the Adjudicator erred in her interpretation of s. 10. Once the amount of the benefit was agreed on that amount did not need to be adjudicated in order to grant a special award. The “amount” the Appellant was entitled to under s. 10 was the amount agreed on. It was an error in law to bring s. 16(4)(c) into the s. 10 analysis in this case.
[38] There is no issue about the overarching principles of statutory interpretation. They are well-established. The words of a statute must be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of the Legislature: Vavilov, at para. 177, citing Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27, at para. 21, and Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26.
[39] These principles apply for both courts and tribunals: Vavilov, at para. 118. The rules governing statutory interpretation apply equally to regulations. A regulation must be read in the context of the enabling Act, having regard to the purpose of the enabling provisions: Ayr Farmers Mutual Insurance Company v. Wright, 2016 ONCA 789, at para. 27.
[40] There is also no issue that the Insurance Act and regulations are consumer protection legislation, with the goal to reduce the economic dislocation and hardship of motor vehicle accident victims and as such, assumes an importance which is both pressing and substantial: Tomec v. Economical Mutual Insurance Company, 2019 ONCA 882, at paras. 42-43; Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, at para. 11.
[41] Section 10 provides for a special award when an insurance company unreasonably withholds or delays payments, as it did in this case. The nature of the legislation as consumer protection legislation is particularly important because a special award is intended to address and deter this poor behaviour by insurers. Section 10 special awards only arise when an insurer has behaved so unreasonably as to justify the payment of an amount in addition to the SABS benefits.
[42] We have not been provided with any LAT decision that focuses on the reference to the “amount” in s. 10 that is at issue here. However, we have been given this related case: 17-006757 v. Aviva Insurance Canada, 2018 81949.
[43] In 17-006757, the issue was timing, not the quantification of the amount. The insurer argued that the phrase in s. 10 – “at the time of the award” – meant that there was no jurisdiction to make a special award if the benefits had been settled before the LAT hearing. In the case before us, the objection is not based on the timing and, again, the settlement of the benefits took place before the hearing. Indeed, in the case before this Court there is no issue about the special award on the amount for the wheelchair accessible vehicle, which was based upon the amount the Respondent agreed to pay before the hearing. However, the reasons for decision in 17-006757 provide a helpful interpretative analysis of s. 10 that is missing from the LAT decisions at issue here.
[44] In 17-006757, the LAT interpreted s. 10 and concluded that there was jurisdiction to make a special award on the amounts that the insurer had previously agreed to pay. In doing so, the LAT discussed the general principles that inform the interpretation of s. 10. The LAT interpreted s. 10 having regard for the consumer protection purpose of the legislation and provisions of the Legislation Act, 2006, S.O. 2006, c. 21, Sched. F, which makes it clear that the Insurance Act and the regulations made under the Act are remedial legislation. As a result, it is to be “given such fair, large and liberal interpretation as best ensures the attainment of its objects”: Legislation Act, 2006, s. 64(1). The LAT found it unlikely that the Legislature intended to deny consumers the protection of s. 10 by allowing insurers to avoid it by settling before the hearing.
[45] The interpretative discussion in 17-006757 applies here as well. At para. 21, the LAT reasoned that the Insurance Act is “consumer protection legislation and provides protection against insurers who unreasonably deny claims. …The literal meaning of a few words in s. 10 should not run counter to both the consumer protection mandate and the goal of providing accident benefits to injured persons in a timely manner. This would be unreasonable, inequitable and defeat the purpose of the statute.”
[46] At paras. 23-24, the LAT held that it “would be patently unfair that an insurer be allowed to circumvent the mandatory requirements of s. 10 through a non-contextual interpretation in situations where they have unreasonably withheld or delayed payments to then settle the benefits in dispute, perhaps on the eve of a hearing… It offends all sense of fairness and is not in keeping with the policy objective that accident victims promptly receive the benefits to which they are entitled under the Act to avoid injustice or hardship.”
[47] We have also been provided with Ross v. Aviva General Insurance, in which the LAT reiterated that the special award is a stand-alone issue that is not dependent on the Tribunal deciding the issue of entitlement to any other benefit. The LAT relied on 17-006757 and on JM v. Certas Direct Insurance Company, 2019 94016 (ONLAT), in which the LAT also found that “[a]n insurer that unreasonably withholds or delays payments and waits to pay the benefits after an application is initiated at LAT may risk an award [under s. 10]”: at para. 29.
[48] I agree with the reasoning in the above decisions. The wording of s. 10 allows for an interpretation that serves the consumer protection mandate of the legislation and related principles. Beginning with the plain language, s. 10 refers to the “amount” to which the person was entitled at the time of the award. The ordinary meaning of this very general word does not mandate an adjudication under the SABS where the amount had been agreed on. Reading it in context, in its grammatical and ordinary sense, harmoniously with the scheme of the Act and the intention of the Legislature, does not support such a narrow, technical and inefficient interpretation.
[49] If the amount was in dispute at the LAT hearing, there is no question that there would need to be an adjudication of the amount. Under the SABS, the Adjudicator would be required to apply s. 16(4)(c) of the SABS to limit the award ultimately granted at the LAT hearing. The Respondent has provided us with a number of cases that are examples of that adjudication in a disputed context. However, the wording of s. 10, read in context and in accordance with the principles of statutory interpretation, does not require importing the limit in s. 16(4)(c) into s. 10 where the amount had been agreed on.
[50] The interpretation of the “amount” to which the insured person was entitled at the time of the award under s. 10 calls for a broad interpretation, permitting not only an adjudicated amount but also an amount that the insurance company had agreed to pay. To do otherwise would be not only inefficient but also place another hurdle in the way of a special award beyond those contemplated by the words of the section, contrary to the principles of statutory interpretation. As put in 17-006757, this would be unreasonable, inequitable and defeat the purpose of the statute.
[51] The conduct of the Respondent in this case illustrates the potential for abuse. The Respondent relied on the limit in s. 16(4)(c) repeatedly, and in May 2022, it notified the Appellant that it was arranging for a home modification report. But the Respondent did not actually do so. And as late as December 2022, the Respondent was still relying on s. 16(4)(c) and holding out that it was “awaiting the construction report to determine these costs” even though it had not taken steps to obtain one. When the Respondent reconsidered a few weeks later and agreed to pay the full amount claimed, it dropped its reliance on s. 16(4)(c), yet, at the hearing, it sought to avoid a special award because the report was not done.
[52] I conclude that s. 10, properly interpreted, does not require that an Appellant prove the amount of his entitlement where the Respondent has agreed to pay the amount, nor does it require that s. 16(4)(c), from the SABS, be imported into s. 10. The “amount” of the entitlement under s. 10, should not be interpreted to require more where there is an agreement to pay a specific amount. The “amount” may arise either from an agreement (as it did here) or an adjudicated amount where there is no agreement. The Adjudicator therefore erred in law in importing a requirement to adjudicate, including s. 16(4)(c), into s. 10 in this case.
Disposition
[53] I would therefore grant this appeal with costs to the Appellant fixed at the agreed amount of $15,000, all inclusive. I would set aside that part of the LAT decisions that denied a special award on the housing benefits and remit the matter back to the LAT to determine the special award on those housing benefits in accordance with these reasons for judgment based upon the agreed amounts.
_______________________ Matheson J.
I agree
Sachs J.
I agree
Jarvis J.
Date: November 13, 2024
CITATION: McDonald v. Aviva Insurance Company, 2024 ONSC 6030
DIVISIONAL COURT FILE NO.: 713/23 DATE: 2024-11-13
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Sachs, Matheson and Jarvis JJ.
BETWEEN:
Keyan McDonald Appellant
– and –
Aviva Insurance Company Respondent
REASONS FOR JUDGMENT
Matheson J.
Date of Release: November 13, 2024