ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 12-35011
DATE: 2013-12-31
B E T W E E N:
Daniel Sagan
Jessica Harrison, for the Respondent/Plaintiff
Plaintiff
- and -
Dominion of Canada General Insurance Company
Joyce Tam, for the Applicant/Defendant
Defendant
HEARD: in Hamilton December 3, 2013
The Honourable Mr. Justice T. R. Lofchik
[1] The Dominion of Canada General Insurance Company brings this motion for summary judgment. They argue that the plaintiff’s May 22, 2012 claim for non-earner benefits is statutorily barred on the basis of a two year limitation period from the date of insurer’s refusal to pay non-earner benefits and that there is no evidence to support the claims for damages for mental distress or extra-contractual damages.
Facts
[2] The plaintiff was involved in a motor vehicle accident on March 1, 2008.
[3] After being advised of the accident, Dominion of Canada General Insurance Company (hereinafter referred to as “Dominion”) sent the plaintiff a Statutory Accident Benefits (“SABS") application package on March 14, 2008. This package enclosed an Application for Accident Benefits (OCF-1) and outlined the benefits that may have been available to the plaintiff under the terms of his automobile insurance policy.
[4] On April 7, 2008, Dominion received the plaintiff’s completed OCF-1 which indicated that he was employed and working at the time of the accident and that he had returned to work on modified duties on March 4, 2008.
[5] On April 15, 2008, Dominion sent the plaintiff an Explanation of Benefits (OCF-9) advising him that he was not eligible for the non-earner benefit because he was employed at the time of the accident and would therefore qualify for an income replacement benefit. He was denied the income replacement benefit because he had returned to work within 7 days of the accident.
[6] On February 18, 2011, counsel for the plaintiff, Lou Ferro, wrote to Dominion and advised that he believed that non-earner benefits had not been refused and, accordingly, there was no limitation period issue. Mr. Ferro asked the Dominion to take his letter as the plaintiff’s application for non-earner benefits and advised that the plaintiff intended to apply for mediation with respect to the benefit.
[7] On March 24, 2011, Dominion wrote to Mr. Ferro and provided him with a copy of the April 15, 2008, OCF-9 denying the non-earner benefit. Dominion advised Mr. Ferro that the benefit had been refused and that the 2 year limitation period had expired.
[8] On April 26, 2011, Mr. Ferro wrote to Dominion and advised that he believed that Dominion had prematurely denied and failed to properly administer the non-earner benefit. Mr. Ferro again advised that he intended to apply for mediation with respect to the benefit.
[9] On August 24, 2011, the Financial Services Commission of Ontario (“FSCO”) received the plaintiff’s application for mediation which sought to mediate the plaintiff’s initial entitlement to non-earner benefits at the rate of $185 per week from 26 weeks post-accident to date.
[10] On April 23, 2012, Mediator Anita Idemudiea issued a Report of Mediation indicating that the plaintiff’s initial entitlement to non-earner benefits remained in dispute. On May 22, 2012 the plaintiff issued his statement of claim.
Issues
[11] Is the plaintiff’s claim for non-earner benefits barred as it was not commenced within two years of the denial on May 7, 2008?
[12] Dominion argues that the plaintiff has not provided any evidence to substantiate his claims for damages for mental distress or extra contractual damages. They argue there is no evidence that Dominion has inflicted mental distress on the plaintiff or treated the plaintiff in bad faith.
[13] Dominion submits that these discreet and focused issues can be determined based on the evidence on this motion.
Law
[14] Rule 20 of the Rules of Civil Procedure allows the court to dispose of all or part of a claim on the merits where the interest of justice does not require a trial. It allows the court to cull plainly unmeritorious claims.
Rules of Civil Procedure, Rule 20
[15] In Combined Air Mechanical Services Inc. v. Flesch, the Ontario Court of Appeal noted that, “…the vehicle of a motion for summary judgment is intended to provide a means for resolving litigation expeditiously and with comparatively less cost than is associated with a conventional trial.”
Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764
[16] Rule 20 provides that the court shall grant summary judgment if it is satisfied that there is no genuine issue requiring a trial and allows a motion judge to weigh evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence unless it is in the interest of justice for such powers to be exercised only at trial.
Rules of Civil Procedure, 20.04(1) and 20.04(2.1)
[17] In Combined Air Mechanical Services Inc. v. Flesch the court held that the “full appreciation” test should be used in deciding whether or not a trial is required in the interest of justice. In applying the test the court asks itself, “can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?”
Combined Air Mechanical Services Inc. v. Flesch, supra, at paras. 50 and 51.
[18] In response to evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings but must set out in affidavit material or other evidence specific facts showing that there is a genuine issue requiring a trial.
Rules of Civil Procedure, Rule 20.02(2)
[19] Each party has an evidentiary obligation to “put its best foot forward” or risk losing. A party is not “entitled to sit back and rely on the possibility that more favourable facts may develop at trial”.
[20] Section 35(6)(d) of the Statutory Accident Benefits Schedule reads:
(6) An insurer may make a determination that an insured person is not entitled to a specified benefit if, …
(d) The insured person is not entitled to the specified benefit for reasons unrelated to whether the insured person has an impairment that entitled to the insured person to the specified benefit.
[21] Section 281.1 of the Insurance Act sets out the two year limitation period that is repeated in the Statutory Accident Benefits Schedule. It reads:
(1) A mediation proceeding or valuation under Section 280 or 280.1 or a court proceeding or arbitration under Section 281 shall not be commenced within two years after the insurer’s refusal to pay the benefit claimed.
[22] Section 51(1) of the Statutory Accident Benefits Schedule reads:
51(1) A mediation proceeding or a valuation under Section 280 or 280.1 of the Insurance Act or a court proceeding or arbitration under clause 281(1)(a) or (b) of the Act in respect of a benefit under this Regulation shall be commenced within two years after the insurers refusal to pay the amount claimed.
Analysis
[23] In my view the determination with respect to the applicability of a limitation period falls within the purview of Rule 20, particularly where there is no issue of discoverability. It is clear to me that the insurer made a determination in the OCF-9, delivered April 15, 2008 to Mr. Sagan that he was not entitled to a non-earner benefit. They told him that and explained why they took this position in the OCF-9 document.
[24] In that document they included an explanation of all benefits available to an insured and set out the steps that could be taken if the insured disagreed with their decision.
[25] It has become apparent since the Court of Appeal decision in Galdamez v. Allstate Insurance Company of Canada that the explanation for denial of non-earner benefits provided by the insurer in the case before me is no longer correct. In Galdamez the Ontario Court of Appeal held that there may be rare occasions in which a person who was employed at the time of the accident could qualify for non-earner benefits but not income replacement benefits. I note that Galdamez did not deal with limitation periods initially and the Court of Appeal specifically refused to deal with that issue on appeal.
Galdamez v. Allstate Insurance Company of Canada, 2012 ONCA 508
[26] The Court of Appeal decision in Turner v. State Farm specifically deals with a situation where an insurer has given their insured the wrong reason for denial. It is stated in that case that:
Section 24(8) of the Statutory Accident Benefits Scheme obliges the insurer to give the insured “the reasons for the refusal”. It does not provide that the reasons must be legally correct. The purpose of the requirement to give reasons is to permit the insured to decide whether or not to challenge the cancellation. If the reasons given are legally wrong the insured will succeed in that challenge. Requiring that the reasons be legally correct goes beyond both the requirement in the relevant regulation, and the purpose of such a notice.
Turner v. State Farm Automobile Insurance Co., 2005 2551 (ONCA)
[27] While the plaintiff would cast the insured’s basis for denial as nefarious, I do not find it to be so. The denial by Dominion reflected the understanding of the law prior to the 2012 decision of Galdamez. While clearly erroneous now, it was understood to be the law in 2008. As set out above Turner specifically says that, “Requiring the response to be legally correct goes beyond both the requirement in the relevant regulation and the purpose of such notice.”
[28] In the case before me the denial was made, an explanation was given in clear and straightforward language and dispute mechanisms and timeframes were provided. The requirements of the Statutory Accident Benefits Schedule were met.
[29] As set out above, the provisions of both the Insurance Act and the Statutory Accident Benefits Schedule make the limitation period at two years from the date of denial of benefits.
[30] There has been no adequate explanation as to why a claim or mediation regarding this denial of non-earner benefits was not commenced within the two year limitation period.
[31] The change in the understanding of the law brought about by Galdamez v. Allstate Insurance Company of Canada does not vitiate Dominion’s denial of benefits. Prior to Galdamez the jurisprudence accepted the proposition that a person was ineligible for non-earner benefits if they were employed at the time of the accident. In Sutherland v. Singh, the Ontario Court of Appeal wrote that, “Because Mr. Sutherland was employed at the time of the accident, he was not eligible for a non-earner benefit.”
Sutherland v. Singh, 2011 ONCA 470
[32] By way of alternative relief the plaintiff seeks to plead the tort of negligent misrepresentation if I find against him in relation to the limitation period argument.
[33] The denial of benefits by Dominion was, at the time, in accordance with the accepted understanding of the law pre Galdamez. Dominion denied the plaintiff’s initial entitlement to non-earner benefits on the basis of the understanding of the law at the time. I find that there was no negligent misrepresentation by Dominion in its denial of benefits and that any negligence claim against Dominion would inevitably fail. Therefore the request to amend the statement of claim is denied.
[34] An order will issue dismissing the plaintiff’s claims set out in the statement of claim based on the denial of non-earner benefits.
[35] It necessarily follows that the claims for damages for mental distress and bad faith arising from the denial of the non-earner benefits are also dismissed.
[36] It is not clear from the statement of claim whether the plaintiff is claiming damages for denial of any other benefits, and if so, which benefits.
[37] The plaintiff also claimed, at mediation, payments for chiropractic and physiotherapy treatments totaling approximately $7,000 together with interest on the unpaid amounts. The specifics of any mental distress or bad faith damages arising from these non-payments are not set out in the statement of claim. The degree of mental suffering caused by any breach with respect to these non-payments sufficient to warrant compensation has not been set out in the statement of claim. The statement of claim is merely a blanket claim for distress for damages for mental distress and bad faith and as such cannot survive a motion for summary judgment.
[38] The balance of the statement of claim is therefore struck out with leave to the plaintiff to deliver a fresh as amended statement of claim setting out specifically what benefits are being claimed and the specifics of how non-payment of these claims has given rise to mental distress or bad faith damages.
[39] The defendant is entitled to its costs of the motion. Submissions with respect to quantum of costs to be delivered by the defendant within two weeks of the release of these reasons and submissions from the plaintiff within two weeks of receipt of the defendant’s submissions or the due date for the defendant’s submissions.
Released: December 31, 2013
LOFCHIK J.
COURT FILE NO.: 12-35011
DATE: 2013-12-31
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Daniel Sagan
Plaintiff
- and –
Dominion of Canada General Insurance Company
Defendant
REASONS FOR JUDGMENT
Lofchik J.
TRL:mg
Released: December 31, 2013