Court File and Parties
COURT FILE NO.: 16-59246
DATE: 2018-03-06
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Morgan Stegenga, plaintiff
AND: Economical Mutual Insurance Company, defendant
BEFORE: Mr Justice Ramsay
COUNSEL: J. Patrick Brown and Selina Andrello for plaintiff, responding; Lisa Armstrong and Julianne Brimfield for defendant, moving party
HEARD: March 5, 2018 at Hamilton
ENDORSEMENT
[1] The defendant insurer moves under Rule 21 for an order to strike the statement of claim on the ground that it discloses no reasonable cause of action, and for determination of a question of law, to wit: whether the plaintiff’s claim is within the exclusive jurisdiction of the Licence Appeal Tribunal.
[2] The plaintiff pleads:
a. that she was injured in a car accident,
b. that the defendant is liable to pay her Statutory Accident Benefits, and
c. that it has shown bad faith, negligence and fraud in administering her claim.
[3] As a result she claims damages for mental distress and aggravated and punitive damages.
[4] The defendant submits that the claim is barred by s.280 of the Insurance Act, SO 2014, c. 9, Sched. 3, s.14. The plaintiff says that the legislation prevents her from suing for accident benefits, but does not bar her independent claims for bad faith in the administration of accident benefits.
[5] Section 280 of the Insurance Act provides:
280 (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. 2014, c. 9, Sched. 3, s. 14.
(2) The insured person or the insurer may apply to the Licence Appeal Tribunal to resolve a dispute described in subsection (1). 2014, c. 9, Sched. 3, s. 14.
(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. 2014, c. 9, Sched. 3, s. 14.
(4) The dispute shall be resolved in accordance with the Statutory Accident Benefits Schedule. 2014, c. 9, Sched. 3, s. 14.
(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. 2014, c. 9, Sched. 3, s. 14.
(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. 2014, c. 9, Sched. 3, s. 14.
[6] Section 10 of RRO 1990, Reg. 664 provides:
- 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. O. Reg. 43/16, s. 4.
[7] The question before me is whether a dispute “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” includes a claim for administration of accident benefits fraudulently, negligently or in bad faith. The words of a statute are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme and object of the Act and the intention of Parliament.
[8] The ordinary meaning of the words “in respect of” imports a connection in a very broad sense. The phrase “in respect of” is probably the widest of any expression intended to convey some connection between two related subject-matters: Nowegijick v. the Queen, 1983 CanLII 18 (SCC), [1983] 1 SCR 29. In connection with accident benefits, a previous version of this part of the Act has been held to establish a “comprehensive alternative process to the courts” that governs “all” disputes concerning entitlement to SABs: Ayr Farmers Mutual Insurance Company v. Wright, 2016 ONCA 789.
[9] As its title suggests, the Fighting Fraud and Reducing Insurance Rates Act, SO 2014 c. 9, Sched. 3, is designed to provide a cost efficient and fair mechanism for resolving disputes between insurers and insured in respect of Accident Benefits. It does this by mandating that disputes be heard at first instance by a tribunal and limiting the involvement of the court to appeals and review. Formerly, claimants could not go to court or arbitration until they had attempted mediation. Under the present legislation, claimants cannot go to court at all at first instance. Instead they go before a tribunal. The tribunal cannot make an award for bad faith, but it can award an additional 50% of benefits if the insurer has denied benefits unreasonably. In addition, a punitive rate of pre-judgment interest is payable by insurance companies that unsuccessfully contest benefits disputes, whether they have acted unreasonably or not. The exclusive jurisdiction of the tribunal is essential to the goal of reducing the cost of litigation. If the tribunal’s exclusive jurisdiction can be defeated by the sort of clever pleading to which McLachlin C.J.C. referred (in a different context) in Weber v. Ontario Hydro, 1995 CanLII 108 (SCC), [1995] 2 SCR 929, paragraph 49, the object of the legislation will be defeated at least in part.
[10] In interpreting the impact of legislation on the jurisdiction of courts and the tribunals, I am bound by Weber to look “not to the legal characterization of the wrong, but to the facts giving rise to the dispute.”
[11] That is what the Court of Appeal did in Arsenault v. Dumfries, 2002 CanLII 23580 (ON CA), [2002] O.J. No. 4 (CA), another case that is binding on me. In Arsenault, the insurer terminated the plaintiff’s accident benefits. The plaintiff took the insurer to mediation, unsuccessfully. She filed an action for bad faith in administering the claim after the limitation period in the Insurance Act had expired (two years), but before the six-year general limitation period had expired. The motion judge granted a motion under Rule 21 to strike the claim. The Court of Appeal dismissed the appeal. Abella J.A. said:
16 In Nowegijick v. The Queen et al. (1983), 1983 CanLII 18 (SCC), 144 D.L.R. (3d) 193 at 200 (S.C.C.), Dickson J. attributed the "widest possible scope" to the words "in respect of":
The phrase "in respect of" is probably the widest of any expression intended to convey some connection between two related subject-matters.
17 Although Justice Dickson was dealing with language in the Income Tax Act, in my view, his observation is generic and equally applicable to the relevant Insurance Act provisions in this case. That means that any and all disputes about an insurer's refusal to pay no-fault benefits, including disputes which allege the insurer's bad faith in connection with that refusal, must be brought within two years of the refusal.
18 I am prepared to assume, without deciding, that there can be an independent claim for bad faith conduct in respect of the insurer's refusal to pay or continue to pay no-fault benefits. In order to establish such a claim, the appellant would first have to establish that the insurer's termination of her benefits was improper. Such a claim must comply with the requirements outlined in ss. 280-283 of the Insurance Act, one of which is the two year limitation period for the institution of proceedings to determine this question. The appellant cannot, by the device of a claim for bad faith damages, extend threefold the length of that termination period.
19 If I am wrong in concluding that bad faith claims in connection with no-fault benefits refusals are subject to the procedures and time limits set out in ss. 280 to 283 of the Insurance Act, I am nonetheless of the view, based on the pleadings, that this appellant's claim is not an independent, actionable wrong, but is in fact exactly the kind of dispute over no-fault benefits entitlements contemplated by the dispute resolution scheme in the Insurance Act. The allegation is that the insurer ought not to have terminated Ms. Arsenault's benefits when it did. This is the issue she attempted, unsuccessfully, to resolve through mediation. She then had the choice of either starting a court action or filing an application for the appointment of an arbitrator under s. 282 of the Insurance Act. Moreover, had the dispute been arbitrated, it was open to the arbitrator under s. 282(10), if it was found that the insurer had "unreasonably withheld or delayed payments", to award an additional lump sum.4
20 Rather than proceeding with either court action or arbitration, Ms. Arsenault took no further steps for a number of years. When she did, she brought an action that was, on its face, clearly "in respect of" the insurer's refusal of further no-fault benefits. It was therefore an action that, under s. 281(5), had to be started no later than two years after that refusal.
21 Ms. Arsenault's characterization of the insurer's refusal as bad faith conduct is merely an attempt to circumvent the mandatory requirements of the dispute resolution scheme in the Insurance Act through the guise of linguistic reformulation. Her allegations, distilled, are that the refusal was inappropriate in the circumstances, the very issue contemplated for resolution under the scheme, and a claim that is clearly subject to the two year limitation period set out in s. 281(5).
[12] Counsel for the plaintiff submits that Arsenault is limited to the case in which a claim in bad faith is made on the sole basis that accident benefits were not paid. That is not how I read Arsenault. I think Arsenault stands for the proposition that the Insurance Act applies if a refusal of accident benefits is an essential part of the claim, whether or not bad faith in administering a claim still exists as an independent tort in the context of accident benefits.
[13] I have been referred to three cases from this court in which Arsenault was distinguished. In my view, if I were to follow the same approach in the present circumstances, I would be ignoring the binding authority represented by both Arsenault and Mader v. South Easthope Mutual Insurance Company, 2014 ONCA 714.
[14] The legislature is presumed have known about Weber. There is no reason to doubt that the legislature, in enacting the present s.280 of the Insurance Act, intended to deprive a claimant of resort to the court at first instance whenever the claim is based on denial of accident benefits, no matter how the denial is characterized in legal terms.
[15] Accordingly I order that the statement of claim be struck without leave to amend, and I determine as a matter of law that the Licence Appeal Tribunal has exclusive jurisdiction to decide the claim at first instance.
[16] The parties agree that the successful party should be awarded costs fixed at $3,500. Accordingly I order the plaintiff to pay that amount to the defendant.
J.A. Ramsay J.
Date: 2018-03-06