Charway v. TD General Insurance Company et al., 2017 ONSC 4593
CITATION: Charway v. TD General Insurance Company et al., 2017 ONSC 4593
COURT FILE NO.: CV-14-511937
MOTION HEARD: 11042017
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Jessica Charway, Plaintiff/Moving Party
AND:
TD General Insurance Company and Economical Mutual Insuranc Company, Defendants/Responding Party
BEFORE: Master P. T. Sugunasiri
COUNSEL: McLeod, M., Counsel for the Plaintiff/Moving Party Crljenica, T., Counsel for Perth Insurance Company/Responding Party
HEARD: April 11, 2017
REASONS FOR DECISION
Overview and Brief Conclusion:
[1] On April 1, 2016, the Insurance Act was amended to remove the Superior Court’s jurisdiction to adjudicate disputes for accident benefits that were not already the subject of an action before the Court.
[2] The Plaintiff brings this motion to amend her Statement of Claim (“Claim”) seeking recovery of statutory accident benefits (SABs) arising from injuries sustained in two motor vehicle accidents that occurred in 2009 and 2011 and claiming aggravated and punitive damages arising from Perth’s[^1] conduct in the handling of the SABs.
[3] This action is caught in the transition provisions of the Insurance Act that moved the adjudication of all new SABs and related damages to the Licence Appeal Tribunal (“LAT”). The issue before this Court is whether the amendments are a continuation of the pre-transition action before the Superior Court or whether it is a new claim that must be adjudicated by LAT. For the reasons that follow, the Plaintiff may amend her claim in the form of the Fresh as Amended Statement of Claim attached to the Amended Notice of Motion.
Facts:
[4] The Plaintiff was involved in two motor vehicle accidents on February 22, 2009 and June 24, 2011. For the purposes of the present motion, only the June 24, 2011 accident is relevant. At the time of the accident, the Plaintiff was insured by the Defendant, Perth Insurance.
[5] The Plaintiff made SABs claims to the Defendant, some of which were disputed. As a result, the Plaintiff and the Defendant participated in two mediations with the Financial Services Commission of Ontario (“FSCO”). The first occurred on June 17, 2014 and the second occurred on November 24, 2015.
[6] The first mediation addressed, but failed to resolve the Plaintiff’s claim for the following accident benefits:
a. Income replacement benefits of $272.83 per week from one week post-accident and ongoing less amounts paid by Perth;
b. $4,280.00 for massage therapy submitted on October 20, 2011;
c. $3,370.66 for massage therapy submitted on October 16, 2012;
d. $1,525.08 for massage therapy submitted on October 17, 2013;
e. $405.00 for counselling submitted on December 27, 2013; and
f. Interest on all overdue amounts.
[7] Following the completion of this mediation, the Plaintiff issued the Claim on September 10, 2014 seeking:
a. Caregiver benefits in the sum of $250.00 per week from February 22, 2009 to the date of trial, less amounts paid by the Defendant;
b. Income replacement benefits in the sum of up to $400.00 per week from June 24, 2011 to the date of trial, less amounts paid by the Defendant;
c. A declaration that the Plaintiff is entitled to caregiver and income replacement benefits from the date of trial ongoing…
d. Medical and rehabilitation benefits and costs of examinations in the amount of one million dollars ($1,000,000.00);
e. Housekeeping and home maintenance benefits in the amount of two hundred thousand dollars ($200,000.00);
f. Attendant care benefits in the amount of one million dollars ($1,000,000.00);
g. Payment of caregiver, income replacement, attendant care, housekeeping and or home maintenance, medical and rehabilitation benefits and all other benefits payable under the policy; and
h. Interest.
[8] The Claim also alleged that the Plaintiff had suffered catastrophic impairment, a categorization that would entitle her to the highest level of coverage under the SABs scheme (attendant care, income replacement and housekeeping services).
[9] The Defendant delivered a Statement of Defence which not only supported the refusal of coverage but challenged the proceeding on the basis that the Plaintiff had not mediated some of the issues raised in the Claim as required by the SABS regime. In particular the Defendant objected to the claims for catastrophic impairment, and housekeeping and home maintenance expenses. The Defendant also raised the Limitations Act, 2002 as one of the reasons for the refusal of the SABs.
[10] A second mediation took place on November 24, 2015. At the end of the mediation, four issues remained in dispute:
a. Medical benefits of $3,373.85 for OT Services as per a Treatment and Assessment Plan date January 14, 2015;
b. Entitlement to a determination of catastrophic impairment pursuant to section 45 of the Statutory Accident Benefits Schedule (SABS);
c. Medical benefits in the amount of $5,620.00 as per a Treatment and Assessment Plan dated March 3, 2014; and
d. Interest on overdue payments.
[11] Following the second mediation, the Plaintiff did not amend her Claim or commence a new one.
[12] The Plaintiff then changed counsel on August 17, 2016 as noted in the case history of the file.
[13] The Plaintiff wishes to amend her claim now in the form of a Fresh As Amended Statement of Claim (“Fresh Claim”). The proposed prayer for relief seeks the following:
a. Income replacement benefits in the amount of $272.83 per week for the period of June 24, 2011 to date…
b. Payment or reimbursement of costs of housekeeping and home maintenance expenses in the amount of $100.00 per week less amounts paid for the period of June 24, 2011 to date, and ongoing;
c. A determination of catastrophic impairment pursuant to section 45 of the Statutory Accident Benefits Schedule (“SABS”);
d. A declaration that the Plaintiff is entitled to income replacement benefits from the date of trial ongoing;
e. Medical benefits pursuant to s. 2(2) of s. 15 of the SABS;
f. Attendant care benefits pursuant to s. 19 of the SABS;
g. Payment or reimbursement for costs of examinations required…
h. Interest on all overdue payments; and
i. Punitive, aggravated and exemplary damages of $500,000.00.
Law and Analysis:
[14] Rule 26.01 governs amendments to pleadings. Generally, the Court will grant an amendment unless there is prejudice that cannot be compensated by costs or an adjournment. The Court will refuse to allow an amendment where the amendment raises an untenable claim.
[15] In the present case, the Defendant argues that the proposed amendments are untenable for two reasons: First, the Superior Court no longer has jurisdiction over the accident benefits sought because the Fresh Claim is brought after April 1, 2016 when all SABs matters are to be determined by LAT. In particular the Defendant takes issue with the claim for a declaration of catastrophic impairment and punitive damages. To this the Plaintiff states that the relief sought in the Fresh Claim is not new but rather a particularization and re-drafting of what was already there.
[16] Second, the Defendant submits that the amounts claimed including the aggravated and punitive damages were not mediated prior to the original Claim being issued and therefore could not properly be the subject of the original Claim. The Plaintiff regards this as a defect that should be cured due to the deleterious effect of bifurcation.
[17] In order to address these submissions, I must review the SABs dispute resolution scheme before and after the amendments.
The Dispute Resolution Regime
[18] On April 1, 2016, the accident benefit dispute resolution sections of the Insurance Act were amended to remove the Superior Court’s jurisdiction to hear new disputes related to accident benefits.
Legislation before April 1, 2016
279.(1) Dispute resolution, procedure to be followed — 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.
280.(1) Mediation — 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.
281 (1) Litigation or arbitration — 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) Limitation — 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.
Legislation as of April 1, 2016 (transition date)
[19] By proclamation on April 1, 2016, Schedule 3 of the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, S.O. 2014, c. 9, came into effect. The legislation, specifically Ontario Regulation 664, allowed for the claims commenced before the transition date (April 1, 2016) to continue:
21(1) A proceeding described in subsection (2) that was commenced but not completed before the transition date is continued after that date.
(2) The proceedings referred to in subsection (1) are the following:
A mediation under section 280 of the pre-transition date Act.
A proceeding in a court of competent jurisdiction brought in accordance with clause 281(1)(a) of the pre-transition date Act.
An arbitration under section 282 of the pre-transition date Act.
An appeal under section 283 of the pre-transition date Act.
An application for a variation or revocation of an order under subsection 284 of the pre-transition date Act.
(6) For greater certainty, if mediation fails, a court proceeding or arbitration may not be commenced on or after the transition date but the insured person or the insurer may apply to the Licence Appeal Tribunal under subsection 280(2) of the Act.
[20] Sections 280(1) and (2) of the Insurance Act now direct that all disputes initiated after the transition date must proceed to the Licence Appeal Tribunal:
280(1) Resolution of disputes — 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) Application to Tribunal — The insured person or the insurer may apply to the Licence Appeal Tribunal to resolve a dispute described in subsection (1).
(3) Limit on court proceedings — 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.
The Fresh Claim is a Particularization and Re-Drafting of the Original Claim and is Tenable
[21] Based on the legislation described above, a proceeding that was commenced but not completed before April 1, 2016 is permitted to continue (Section 21(1) – OReg 664). In the present case, a proceeding with respect to SABs claimed for the June 24, 2011 accident was commenced prior to April 1, 2016 but is not complete. The Plaintiff now seeks to amend that Claim. In my view, the Fresh Claim is a restatement and redrafting of the Original Claim, but for the declaration of catastrophic impairment and punitive damages. It is, in other words, not the commencement of a new claim.
[22] Despite its absence in the prayer for relief in the original Claim, I find that catastrophic impairment is a part of it. In paragraph 5 of the original Claim, the Plaintiff pleads “The Plaintiff states that she sustained a catastrophic impairment as a result of both MVA1 and MVA2”. The Defendant pleads against it in its defence. Further, the original Claim seeks $1,000,000.00 in attendant care. Both counsel agreed that under the SABS regime, this amount could only be recovered if there is a finding of catastrophic impairment. In this regard, I distinguish this case from Lucas-Logan v. Certas Direct Insurance Company, 2017 ONSC 828. In Lucas-Logan, there was no finding by Justice Thomas that the proposed claim was a reformulation and redrafting of existing claims.
[23] With respect to aggravated and punitive damages, the Plaintiff alleges that the Defendant breached it duty of care of utmost good faith when processing the Plaintiff’s various accident benefit claims that form the subject matter of the litigation. In my view, this issue is inextricably tied to the accident benefits that are the subject matter of the original Claim. The requested damages are to compensate the Plaintiff for an alleged breach of a duty of good faith in resolving the SAB claims. The plea in the original Claim that payment has been refused is part and parcel of assessing good faith, which is part and parcel of the claim for punitive damages.
[24] I further rely on section 64(1) of the Legislation Act, 2006, S.O. 2006, c. 21, Sched. F:
“An Act shall be interpreted as being remedial and shall be given such fair, large and liberal interpretation as best ensures the attainment of its objects.”
Taking a fair and liberal approach sometimes involves applying a measure of common sense and having sensitivity to the overriding goal of achieving the just and fair resolution of disputes. One goal of the legislation is self-evident – it is to remove the adjudication of SABS from the Superior Court to a specialized tribunal who like many tribunals, will develop the required expertise to deliver just and expeditious resolutions for these litigants.
It cannot be that the purpose of the amendments is to bifurcate matters that were caught in the transition period such that for the same accident and the same benefits, the Plaintiff must go to one Court to resolve her entitlement to the benefits, and go to another to determine if there has been catastrophic impairment and insurer conduct that warrants punitive damages (this is assuming that LAT can even award such damages which I do not need to determine for the purposes of this motion). The entitlement to certain benefits will depend on if there is catastrophic impairment, and the appropriateness of the Defendant’s refusal to pay will impact the punitive damages analysis. In my view, the Plaintiff’s claim for SABs ought to be adjudicated by the same judicial body to avoid duplication and wasted judicial resources. In this case, that judicial body is the Superior Court of Justice because the original Claim was commenced there. At the very least, it is not in interests of justice in the facts of this particular case to allow for bifurcation.
The Issue of Mediating Before Commencing a Claim is an Issue for Trial
[25] Even if the Fresh Claim is a particularization and reformulation of the original Claim including catastrophic impairment, the Defendant argues that catastrophic impairment, for example, cannot be added as an amendment to the original Claim because it was not mediated BEFORE the Claim was commenced. The Claim was commenced on September 10, 2014. The mediation that addressed catastrophic impairment occurred on November 24, 2015. There are other heads of relief in the original Claim and the Fresh Claim that also do not conform exactly to the issues addressed at mediation. Catastrophic impairment is the most significant one as it can lead to the highest award.
[26] I agree with the Defendant that section 281(2) of the Insurance Act seems to require mediation to take place on the particular benefits claimed prior to commencing a proceeding, regardless of whether that proceeding is in the Superior Court or LAT. This has been confirmed by our Court of Appeal in Younis v. State Farm Mutual Automobile Insurance Co., (2012), 2012 ONCA 836, 113 OR (3d) 344 at paras. 12-13. However, in this particular case, it is premature for this Court to resolve that issue. The Defendant has raised the issue in its Statement of Defence and has put it in issue in the larger litigation (see for example, para. 11 of Statement of Defence regarding catastrophic impairment). As such, it is not for me to determine in this motion if the Plaintiff should be permitted to pursue catastrophic impairment or any other issue in the litigation that was not subject to prior mediation. This is a dispute to be resolved by the trial judge and not a basis to deny the amendments at this juncture. It may be the subject of summary judgment or other motion at a later date.
No Prejudice to the Defendant
[27] Having found that the Fresh Claim is legally tenable, I turn to the issue of prejudice. I see no prejudice to the Defendant in having to defend the Fresh Claim in Superior Court that cannot be compensated by costs or an adjournment. To the extent that the Defendant is concerned about the Plaintiff’s purported failure to meet the pre-condition of mediation, the Defendant has already pleaded that and can plead it further with respect to any of the amendments. To the extent that the Defendant takes issue with any limitation periods, something that was not robustly argued in this motion but already raised in the existing defence, it can so plead in an amended defence.
Conclusion:
[28] Given the foregoing, the Plaintiff is permitted to amend her Claim in the form of the Fresh as Amended Statement of Claim attached to the Amended Notice of Motion. The Defendant may deliver an Amended Defence within 30 days of the date of this order. If the parties cannot agree on costs, any party seeking costs may file by August 14, 2017, written submissions of no more than two pages, double-spaced, along with a costs outline. The submissions and outline may be filed at the Masters’ Administration, or sent by email to my Assistant Trial Coordinator, Jacqui Soutar.
“Master P. T. Sugunasiri”
Date: July 28, 2017
[^1]: While the Claim names Economical as the insurer, it appears that the insurer was in fact Perth Insurance Company. TD General Insurance Company did not participate in the motion and appears to no longer be a defendant in the proposed Fresh as Amended Statement of Claim.