SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 11-31604
DATE: 2012-05-04
RE: Cynthia Joy Risebrough, Plaintiff
AND:
Co-operators General Insurance Company, Defendant
BEFORE: The Honourable Robert B. Reid
COUNSEL:
N. Tischler, Counsel, for the Plaintiff
C. Flynn, Counsel, for the Defendant
HEARD: May 1, 2012
ENDORSEMENT
[1] This is a motion by the defendant to strike out the statement of claim on the grounds that it discloses no reasonable cause of action or in the alternative to dismiss the claim on the basis that the action is frivolous, vexatious or otherwise an abuse of the court's process.
Background facts:
[2] The plaintiff was involved in a motor vehicle accident on May 25, 2011. She was the named insured on a policy of automobile insurance with the defendant.
[3] The plaintiff made an application for accident benefits to the defendant in June 2011 and has received payments including weekly income replacement benefits in the amount of $400 per week. The payments have been made based on the defendant being satisfied that the plaintiff met the disability test applicable in the first 104 weeks post-accident and that she was therefore entitled to benefits in accordance with the Statutory Accident Benefits Schedule [1] (“ SABS ”). There has been no interruption in those payments to date.
[4] The plaintiff issued a statement of claim against the defendant on November 23, 2011, seeking a declaration that she meets the disability test for receipt of income replacement benefits under the SABS as a result of her injuries suffered in the motor vehicle accident.
Positions of the parties:
[5] The defendant submits that there is no dispute as between the parties since the plaintiff’s disability has been accepted by the defendant and payments are being made. If there is no dispute, there should be no litigation.
[6] As an alternative, if there is a dispute between the parties, the defendant submits that the dispute must be processed through the statutory provisions of the Insurance Act [2] which require mediation in advance of either litigation or arbitration. It is common ground that no request for mediation has been made. Although the case law contains some exceptions to the mediation prerequisite, the facts of this case do not fit any exception.
[7] The plaintiff argues that the claim is properly characterized as a request for declaratory relief which is separate and distinct from litigation involving a dispute between parties. There are precedents in which courts have granted declarations which coexist with the statutory dispute resolution mechanism contained in the SABS .
[8] In the plaintiff’s submission, the only “issues in dispute” which must be litigated through the SABS mechanism are those involving entitlement to or the amount of benefits. Neither of those issues is contained in the claim for a declaration. If the definition of “issues in dispute” is ambiguous, that ambiguity should be construed in favor of the consumer.
[9] Finally, the plaintiff submits that it would be prejudicial to the plaintiff for the claim to be dismissed since the claims adjuster for the defendant has indirectly put the plaintiff on notice that he is categorizing the plaintiff's injuries as minor and it is likely that a dispute over entitlement or amount of benefits will arise in the future.
[10] In response, the defendant submits that declaratory relief may only be given subsequent to the denial of benefits by an insurer and that to allow claims of this nature would be to open the floodgates to preemptive litigation, removing claims adjusting from insurance companies to the courts. If declaratory relief is given, the parties would need to return to court when circumstances change for a new declaration to be made.
[11] The plaintiff seeks “peace of mind” from a declaratory court order. However, the defendant argues that every person injured in a motor vehicle accident may be apprehensive about whether or not their insurance company will make or continue making payments. That apprehension is not a sufficient basis for litigation.
[12] The defendant states that declaratory relief can never be a standalone remedy but rather it will always be inextricably connected to one's entitlement to benefits which then requires use of the mandatory procedure under the Insurance Act .
Legislative framework:
[13] Sections 279 - 281 of the Insurance Act provide in part:
(1) Disputes in respect of any 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 shall be resolved in accordance with sections 280 to 283 and the Statutory Accident Benefits Schedule .
(1) Either the insured person or the insurer may refer to a mediator any issue in dispute in respect of the insured person’s entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which the insured person is entitled.
(1) Subject to subsection (2),
(a) the insured person may bring a proceeding in a court of competent jurisdiction;
(b) the insured person may refer the issues in dispute to an arbitrator under section 282; or
(c) the insurer and the insured person may agree to submit any issue in dispute to any person for arbitration in accordance with the Arbitration Act, 1991 .
(2) No person may bring a proceeding in any court, refer the issues in dispute to an arbitrator under section 282 or agree to submit an issue for arbitration in accordance with the Arbitration Act, 1991 unless mediation was sought, mediation failed and, if the issues in dispute were referred for an evaluation under section 280.1, the report of the person who performed the evaluation has been given to the parties.
281.1 (1) A mediation proceeding or evaluation under section 280 or 280.1 or a court proceeding or arbitration under section 281 shall be commenced within two years after the insurer’s refusal to pay the benefit claimed.
[14] There is no dispute that, pursuant to section 97 of the Courts of Justice Act [3] , the court “may make binding declarations of right, whether or not any consequential relief is or could be claimed.”
Analysis and conclusion:
[15] It is true that courts have made declaratory orders regarding future accident benefits payments. For example, in Coombe v. Constitution Insurance Co . [4] , the plaintiff sued his insurer for failure to pay no-fault benefits and the trial judge concluded that the plaintiff was entitled to benefits. The judge issued a declaration that the plaintiff was entitled to recover weekly benefits “continuing for such period during which the plaintiff is permanently and totally disabled from engaging in any occupation or employment for which he is reasonably suited by education, training or experience.” [5] Similarly, in Monks v. ING Insurance Co. of Canada [6] , the plaintiff sought unpaid accident benefits from the insurer and the trial judge awarded past benefits and made declarations concerning the provision of ongoing benefits. On appeal, the Ontario Court of Appeal noted at par. 40 that there was “no suggestion that the disputed ongoing benefits were or would be paid without the intervention of the court.” In both of those cases, the declaratory relief was only awarded after a termination of benefits by the insurer, followed by litigation and a decision of the court in respect of the past entitlement. Further, there was no suggestion that in bringing the matter to court, the plaintiffs had failed to avail themselves of any dispute resolution mechanism that may have been contained in the Insurance Act .
[16] As a practical matter, it is obvious that the requirements of the Insurance Act that make mediation mandatory are designed to assist in the efficient, speedy and just resolution of disputes. Since consumers typically have fewer resources available for litigation than insurance companies, it is reasonable to imply a consumer protection purpose in the mandatory mediation provisions.
[17] A declaration is in essence a statement from the court as to the rights and duties between parties and does not in and of itself grant a remedy. However, in the context of this case a successful claim for a declaration can have no other result than to create or continue an obligation on the defendant to pay statutory accident benefits. In my view, it is not possible to isolate the claim for a declaration in this context from a dispute between the parties over matters set out in section 279 of the Insurance Act .
[18] In addition, it is well-established that the court will only entertain a claim for a declaration where “the case before the court is genuine, not moot or hypothetical and the declaration must be capable of having some practical effect in resolving the issues the case raises”. [7] Here, it is not clear that there ever will be a dispute between the parties on the issue of entitlement to or the amount of benefits to be paid. The correspondence from the defendant is certainly not definitive on that point and at best suggests the possibility of a dispute in the future. The claim is designed to be pre-emptive but is in fact premature.
[19] I am satisfied that, for the reasons noted above, it is inappropriate for there to be a claim for a declaration in advance of the mandatory mediation provisions contained in the Insurance Act . Further, and quite apart from those requirements, it is premature to seek a declaration when there is no existing disagreement between the parties.
[20] Rule 21.01(1)(b) of the Rules of Civil Procedure allows a party to move to strike out a pleading on the ground that it discloses no reasonable cause of action. For that remedy to be granted, it must be “plain and obvious” or “beyond reasonable doubt” that no reasonable cause of action is disclosed [8] . I am satisfied that this is such a case, and as a result, the motion is granted and the statement of claim is struck out.
[21] If the parties are unable to resolve the issue of costs consensually, I am prepared to receive written submissions according to the following timetable: the defendant is to provide to the plaintiff a bill of costs together with brief written submissions within two weeks of this date. The plaintiff is then to provide her submissions to the defendant within a further two weeks. The submissions of both parties are then to be filed with the court together with any reply submissions by the defendant by no later than five weeks from this date.
Reid J.
Date: May 4, 2012
[1] O Reg 403/96
[2] RSO 1990, c I.8
[3] RSO 1990, c C.43
[4] [1978] I.L.R. 1-1034 (Ont. H.C.)
[5] Ibid ., at par 2
[6] (2007), 2008 ONCA 269 , 90 O.R. (3d) 689
[7] Ibid . at par. 38
[8] Hunt v. Carey Canada Inc ., 1990 SCC 90 , [1990] 2 S.C.R. 959