COURT FILE NO.: CV-20-74047
DATE: 2021/05/25
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Tracy Yaromich and Andrew Botbyl, Applicants
AND:
Heartland Farm Mutual Inc., Respondent
BEFORE: Turnbull, J.
COUNSEL: Peter Cho, Counsel, for the Applicants
Jonathan Schwartzman, Counsel, for the Respondent
HEARD: May 21, 2021
ENDORSEMENT
[1] The legal issue to be addressed on this application is whether the applicants, Andrew Botbyl and Tracy Yaromich, ought to be granted relief from forfeiture and may thereby claim optional accident benefits under their insurance policy, number 61180A0, with Heartland Farm Mutual Inc. (“Heartland”).
Overview of the Facts:
[2] The Applicants, Mr. Botbyl and Ms. Yaromich, sustained serious injuries when they were involved in a motor vehicle accident (“MVA”) on June 26, 2020, while riding their motorcycle. They were struck by another driver who turned left in front of them and who was charged with careless driving.
[3] Mr. Botbyl suffered a skull fracture, nasal bone fracture, brain injury, lumbar spine fracture, several skin lacerations, and bruising of his legs and face. Ms. Yaromich suffered a brain injury, rib fractures, a thoracic spine fracture, and a fractured right tibia.
[4] At the time of the collision on June 26, 2020, the Applicants had two automobile insurance policies, one with Heartland and one with Economical Insurance “Economical.” The Applicants’ automobiles are listed under the Heartland policy and the motorcycle was insured under the Economical policy as Heartland does not insure motorcycles.
[5] The Heartland policy contains increased statutory accident benefits identified as “optional benefits”[^1], including up to $1,000,000.00 in medical, rehabilitation and attendant care benefits and up to $800.00 per week in income replacement benefits. The Applicants had paid their premiums in full on the Heartland policy at the time of the collision.
[6] The motorcycle on which they were travelling was covered under the Economical policy at the time of the accident. It provided “basic” statutory accident benefits coverage including $65,000.00 in medical, rehabilitation and attendant care benefits and up to $400.00 per week in income replacement benefits.
Timeline of Events:
[7] In their very helpful factums and submissions, counsel provided the court with a timeline of events with respect to the efforts of the applicants to access accident benefits.
[8] Because the applicants were hospitalized for their injuries immediately after the accident, Jasmine Yaromich, daughter of the applicants, assisted them in contacting their insurance broker, Meester Insurance (“Meester”) to report the collision and to begin the process of accessing accident benefits. An employee of Meester advised her that since the motorcycle was not covered under the policy with Heartland, the Applicants should apply to the insurer that covered the motorcycle, namely Economical. [^2]
[9] Accordingly, Jasmine contacted Economical to report the claim. She informed them about her parents’ “add-on” benefits with Heartland. In response, Economical advised Jasmine that the Applicants should still apply through Economical and that they would be able to access their “add-on” benefits through Heartland later on. [^3]
[10] After Jasmine’s initial conversation with someone from Economical, she thereafter spoke with an Economical claims adjuster, Ms. Lisa Rath. Jasmine has sworn that after explaining her parents’ situation, Ms. Rath allegedly repeated that her parents could still access these “add-on” benefits from Heartland.
[11] On July 1, 2020 an occupational assessment was undertaken on Mr. Botbyl. A report was produced on July 5, 2020 and it was received by Economical on July 8, 2020.
[12] On July 1, 2020, two treatment and assessment plans were done for Mr. Botbyl and Ms.Yaromich and submitted to Economical.
[13] On July 2, 2020, a representative of the law firm ultimately retained by the applicants interviewed Mr. Botbyl.
[14] On July 3, 2020, Ms. Yaromich signed an OCF 3 Disability Certificate which had an Economical policy and claim number on it. The medical practitioner part of the form had been completed earlier. The entire document was submitted to Economical on July 13, 2020.
[15] On July 5, 2020, an occupational therapy report was completed on Mr. Botyl.
[16] On July 6, 2020, Economical sent each of the applicants an email with the Accident Benefits Application package attached.
[17] The applicants retained their lawyers on July 7, 2020. During cross examinations, the applicants refused to produce their broker’s file. The Economical file produced did not include the log notes of Lisa Rath who was the adjuster and no name was provided for the broker. The respondent did not bring a motion to compel answers and production.
[18] The occupational therapy report for Mr. Botbyl was faxed to Economical on July 8, 2020.
[19] On July 9, 2020, Meester notified Heartland of the accident involving Mr. Botbyl and Ms. Yaromich. Elizabeth from Meester informed Heartland that the vehicle involved in the accident was a motorcycle insured with Economical and that this was being reported to Heartland because its policy had both Mr. Botbyl and Ms. Yaromich as listed policyholders and the policy had enhanced “optional” accident benefits. [^4]
[20] After Heartland was notified of the accident, Ms. Mimi Fennell, an Accident Benefits Claims Assistant at Heartland, attempted to call Mr. Botbyl on July 9, 2020, and reached him on July 10, 2020. Ms. Fennell conducted an Accident Benefits Callout interview by telephone with Mr. Botbyl. During this call, Ms. Fennell was advised by Mr. Botbyl that he had optional benefits with Heartland and an automobile policy with Economical. [^5]
[21] At the time of their conversation on July 10, 2020, Ms. Fennell was not familiar with the OPCF 47, or the requirement for Mr. Botbyl to submit his accident benefits package to Heartland instead of Economical. Ms. Fennell did not explain to Mr. Botbyl where to apply for his accident benefits or that he must apply to Heartland instead of Economical, or he would be denied the increased optional benefits. [^6]
[22] The information relating to the potential claim was communicated shortly thereafter to Shirley Breig, a Senior Accident Benefits Specialist at Heartland. She made the following journal entry in the file log notes at 1:20pm on Friday July 10, 2020:
Priority is with Heartland as Clm is a named insured on our policy, we have optional coverages on our policy and he has not applied to another insurer for benefits.
Priority needs to be reviewed as the motorcycle they were operating is insured with Economical Insurance. We will need a copy of their Dec page to show the vehicles insured and the coverages they have on their policy to confirm they have no optional coverage through them. Once the OCF-1 has been received we need to put Economical on notice for priority.
If optional benefits were not available under our policy, priority would be with Economical as Clm was on the motorcycle at the time of the mva. Since they are only coming to us for the optional benefit coverage, we can claim the basic AB coverage back from Economical. This would also apply if Clm is deemed CAT at some point. This means that we would currently get the $65,000 M/R/AC plus IRB. If CAT Economical will need to responsible for $1,000,000 M/R/AC plus the IRB/HK. IRB and HK will be reimbursable at the full amount we pay as they are not considered an optional coverage. This will also include visitation, clothing.
[23] I find on the basis of that journal entry that as of July 10, 2020, Heartland was on notice of the claim which would be forthcoming from the applicants.
[24] On July 13, 2020, at approximately 1:42 p.m., an Application for Accident Benefits was faxed by the applicants’ lawyer to Economical to access medical, rehabilitation and attendant care benefits. [^7]
[25] On July 13, 2020, Ms. Breig’s file journal notes indicate that she phoned Mr. Botbyl at 3:28pm. In their conversation. Botbyl inquired about getting a police report. Ms. Breig informed him that Economical would be ordering the report. Mr. Botbyl also indicated to her that “he is coming to Heartland for his AB because he has optional benefits”. He informed Ms. Breig that she should contact his lawyer. He gave the lawyer’s name and contact information to Ms. Breig.[^8]
[26] On July 13, 2020, at approximately 3:34 p.m., less than two hours after the application for accident benefits was faxed to Economical, Ms. Breig attempted to contact the applicants’ lawyer to discuss this matter but was unable to reach her. [^9]This was the first attempt by Heartland to contact their lawyer. However, the Application for Accident Benefits had already been submitted to Economical.
[27] On July 13, 2020, Economical approved the treatment plan dated July 1, 2020 for Mr. Botbyl .
[28] On July 16, 2020, at approximately 3:34 p.m., Ms. Breig called the applicants’ lawyer again, and spoke with her directly. Her file note indicates that they had been playing “phone tag”. The applicants’ lawyer informed Ms. Breig that the Application for Accident Benefits was already faxed to Economical and asked whether she should send the same paperwork to Heartland. Ms. Breig advised her that there was “no sense” since the application has been submitted to Economical. Ms. Brieg’s journal log notes state:
I said that Clm had optional benefits, however, since they applied to Economical they could not access the optional benefits with Heartland as per Jevco and Chieftan decision of 2016.[^10] Donna was not aware of this decision and said that in the past it has not been an issue. I explained that there may be insurance companies out there that are not aware of this decision. Donna will be looking into this further.
[29] I find this to be sharp conduct by Heartland’s adjuster Ms. Breig. She and Heartland were on notice of the position of the applicants as of July 10, 2020. She knew that if the applicants mistakenly applied for benefits to Economical, they potentially would not be able to access thousands of dollars of accident benefits for which they had paid additional premiums to Heartland. She did not instruct Ms. Fennell to make a call to Mr. Botbyl to warn him of this pitfall. She did not attempt to notify either of the applicants by phone or email on July 10th and waited to late in the day on July 13th to speak to Mr. Botbyl. Even in that conversation, she did not put him on notice that the applicants should apply to Heartland for their accident benefits. I recognize that Ms. Breig has a duty to her employer and indirectly to the shareholders of Heartland, but there is a concurrent duty of good faith on an insurer when dealing with its insured.
[30] On July 17, 2020, Economical emailed the applicants to inform them that they did not have optional benefits with Economical, under policy number 500328284, but that optional benefits were available with Heartland, under policy number 61180A01. [^11]
[31] On July 30, 2020, Heartland confirmed that the applicant, Andrew Botbyl, had optional benefits with Heartland. However, Heartland denied responsibility for those benefits because the applicants applied to Economical first. According to Heartland, the OPCF 47 endorsement within the insurance contract prevents Heartland from providing the optional benefits to an insured who has already applied for any accident benefits. [^12]
The Applicants’ Lost Benefits
[32] In his submissions, Mr. Cho outlined some of the losses the applicants suffer if they are not able to access their optional benefits. Under the Economical policy, Mr. Botbyl’s entitlement to income replacement benefit (“IRB”) has been limited to $400.00 per week. IRBs compensate injured accident victims up to 70% of their pre-motor vehicle accident income. However, under his policy with Heartland, Mr. Botbyl would have received IRBs of $800.00 per week. As such, Mr. Botbyl has only received half of the amount of IRBs as a result of Heartland’s denial of his application. [^13]
[33] Without optional benefits, Ms. Yaromich’s entitlement to IRBs has also been limited to $400.00 per week. Based on her pre-accident income, Economical calculated Ms. Yaromich’s entitlement to IRBs as $411.57 per week. However, under her policy with Heartland, she would have been entitled to up to $800.00 per week. As such, Ms. Yaromich has suffered and continues to suffer income losses as a result of Heartland’s denial of her application. [^14]
[34] With respect to attendant care benefits, Economical conducted a Form 1 Attendant Care Needs assessment with an occupational therapist who determined that Tracy Yaromich requires attendant care benefits of $10,353.38 per month. However, under the Economical policy, Ms. Yaromich may only receive up to $3,000.00 plus H.S.T. per month. With optional benefits, Ms. Yaromich would be entitled to $6,000.00 per month, plus H.S.T. As such, Ms. Yaromich potentially may suffer losses of $3,000.00 per month for attendant care services. [^15]
[35] However, in his able submissions, Mr. Schwartzman noted that as of February 2021, Ms. Yaromich had not accessed any of the attendant care benefits to which she might be eligible under the Economical policy.
[36] The Applicants seek relief from forfeiting these optional benefits under their Heartland policy that they paid for in good faith because they inadvertently applied to Economical Insurance on the advice of their insurance broker and Economical Insurance and their lawyers.
Issues:
[37] There are two questions before this court:
(i) Does this court have jurisdiction on the facts of this case to grant the applicants relief against forfeiture under S. 98 of the Courts of Justice Act[^16] or under s. 129 of the Insurance Act [^17]?
(ii) If the answer to (1) is yes, should the court grant the applicants relief against forfeiture under S. 98 of the Courts of Justice Act or under s. 129 of the Insurance Act?
Position of the Applicants:
Issue #1:
[38] Mr. Cho submitted for the purposes of this hearing that the Ontario Licence Appeal Tribunal (LAT) does not have jurisdiction to order equitable relief. In that respect, he referred the court to four LAT cases where different Arbitrators made comments to that effect. He also referred the court to another LAT decision in which the Arbitrator expressed uncertainty whether equitable relief could be granted.
[39] In the face of the lack of LAT cases specifying that equitable relief can be granted before that tribunal, Mr. Cho urged this court to apply its inherent jurisdiction to grant the relief sought.
Issue #2:
[40] Mr. Cho argued that based on the facts of this case, the court should have no difficulty in granting relief against forfeiture. In that respect he relied on the three part test articulated by the Supreme Court of Canada in 1994.[^18] The elements of that test are:
a. The court must determine if the applicants’ conduct was reasonable.
b. The gravity of the breach.
c. The disparity between the value forfeited by the applicants and the damage caused by the breach.
Position of the Respondent
Issue #1:
[41] Mr. Schwartzman argued forcefully that this court has absolutely no jurisdiction over this issue as all such disputes relating to statutory benefits are within the exclusive jurisdiction of the LAT. Heartland submits that the language in s. 280 of the Insurance Act and the recent decision of the Court of Appeal in Stegenga v. Economical Mutual Insurance Company, 2019 ONCA 615 which has been applied by this court in Dorman v Economical Mutual Insurance Company, 2020 ONSC 4004, make clear that the motion for relief from forfeiture must be stayed or dismissed.
Issue #2:
[42] Mr. Schwartzman submitted that if the court rejects his argument on Issue #1, this nevertheless is not an appropriate case for the court to grant relief against forfeiture based on the facts before the court. He relied on the Court of Appeal decision in Kozel v. The Personal Insurance Company 2014 ONCA 130 where the court emphasized that the remedy of relief from forfeiture is equitable in nature and purely discretionary. At paragraph 31 of that decision, the Court of Appeal reiterated the three factors to be applied in exercising that discretion in accordance with those prescribed by the Supreme Court of Canada in the Saskatchewan River case (supra).
Analysis
Issue #1: Does this court have jurisdiction to provide relief against forfeiture?
[43] The short answer is “no”. Given the nature of the claims against the respondent, this court does not have jurisdiction to grant the remedy sought by the applicants.
[44] Sections 280(1) to (4) of the Insurance Act provide as follows:
Resolution of disputes
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.
Application to Tribunal
(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.
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. 2014, c. 9, Sched. 3, s. 14.
Resolution in accordance with Schedule
(3)The dispute shall be resolved in accordance with the Statutory Accident Benefits Schedule. 2014, c. 9, Sched. 3, s. 14.
[45] At their core, the facts alleged by the plaintiffs raise exactly the issues specified in S. 280(1) of the Insurance Act: “the resolution of 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”.
[46] The Court of Appeal in Stegenga, supra, repeated several times, using different terminology but carrying the same message, that the jurisdiction of the courts with respect to issues involving entitlement to accident benefits has been eliminated. For example:
a. At paragraph 39, the Court of Appeal wrote:
“The legislature must be taken to have considered the importance of its objectives of efficiency and cost reduction to outweigh the loss of insured individuals’ access to the courts and to the full range of remedies available there..”
b. At paragraph 40, the Court wrote:
“Second, while the legislature’s intention that the dispute resolution provisions continue to be a complete code does not, on its own, determine which disputes fall within it, it does suggest that the legislature did not intend the same, similar, or overlapping issues to be adjudicated in more than one forum.”
c. At paragraph 52, the Court stated:
“the legislature must be taken to have armed LAT with the remedial powers it considered appropriate to deal with improper insurer behaviour, knowing these remedial powers were different from the court’s.”
[47] Belobaba J. of this court considered the availability of a court remedy to members of a class action in Dorman v Economical Mutual Insurance Company, 2020 ONSC 4004. There he quoted from Campisi v. Ontario, 2017 ONSC 2884, aff’d 2018 ONCA 869, leave to appeal refused [2019] S.C.C.A. No. 52: “The court option was eliminated”
[48] In my view, this matter should be heard and decided by the Licence Appeal Tribunal.
[49] In the Jevco Insurance Company and Chieftain Insurance Company decision, Arbitrator Samworth was faced with almost the identical fact situation as before this court. Though Mr. McNeilly (the insured) had purchased the optional benefits provided under OPCF-47, he did not apply to that insurer. Arbitrator Samworth, while clearly aware of the unfairness of the situation, found that there was no right to “re-elect” under the SABS or the Insurance Act. She noted that this situation might require regulatory amendment but felt constrained to interpret the legislation and regulations as she found them.[^19]
[50] While it is not an issue I must decide on this application and it was not argued in detail before me, I must say that I am not convinced of the correctness of the Jevco and Chieftain decision. That decision dealt with a priority dispute between two insurers. The case at bar is a dispute between two insured and their insurer. During submissions, counsel were unable to point me to any legislative provision which says anything more than an insured shall use the application provided by the insurer and shall send the completed application to only one insurer. The purpose is clear. An insured cannot be claiming accident benefits from two insurers. The legislation does not state that only one application for benefits can be filed. If a party chooses to withdraw the completed application for a valid reason such as having filed it by mistake with the wrong insurer, I have been not provided with any legislative provision in the SABS or in the Insurance Act which says the insured is unable to then send the completed application to the second insurer (Heartland in this case) as the insured has at that point only sent the completed application to only one insurer. In my view, that does not require legislative amendment.
[51] If I am incorrect and legislative amendment is required, the provincial government should enact the required legislative enactment as soon as possible to prevent this unfortunate situation befalling other innocent people.
Issue #2: If the answer to (1) is yes, should the court grant the applicants relief against forfeiture under S. 98 of the Courts of Justice Act or under s. 129 of the Insurance Act?
[52] Because I have answered Issue #1 in the negative, the court does not have residual jurisdiction to provide relief from forfeiture under S. 98 of the Courts of Justice Act or under s. 129 of the Insurance Act. I do add that based on the facts before this court, if I had jurisdiction, I would have no hesitation in granting relief against forfeiture.
Conclusion:
[53] The application is dismissed without costs. In my view, the conduct of Heartland in refusing to allow the applicants the right (for which they paid premiums to Heartland) to withdraw their application to Economical and to reapply to Heartland was unreasonable and unfair. As an insurer, it has a duty of fair dealing with its insured. While its conduct is technically legal (subject to a ruling by LAT in the event the matter is pursued there), it is not commendable and should not be rewarded with a costs order despite its success on this application.
Turnbull, J. (signed electronically)
Turnbull, J.
Date: May 25, 2021
[^1]: OPCF-47 Endorsement. [^2]: Affidavit of Jasmine Yaromich sworn November 5, 2020, para 5 found at, tab 5 of the Applicant’s Application Record. [^3]: Affidavit of Jasmine Yaromich, sworn November 5, 2020, para 5. [^4]: Affidavit of Shirley Breig, sworn December 2, 2020 at para 3, Tab 6 of the Applicant’s Application Record. See also page B-1-22 of Respondent’s Application Record. [^5]: Affidavit of Shirley Breig, sworn December 2, 2020, at para. 5. [^6]: Answers to the Undertakings 9 and 10 from the Cross Examination of Shirley Breig, found at page B-1-6 of the Respondent’s Application Record. [^7]: Affidavit of Andrew Botbyl sworn November 30, 2020 at para. 7, Tab 3 of the Applicant’s Application Record. [^8]: Affidavit of Shirley Breig sworn December 2, 2020 at para. 8. See also page B-1-12 of Respondent’s Application Record. [^9]: Phone logs from file journal of Shirley Breig, Tab 8 of the Application Record. [^10]: Jevco Insurance Company and Chieftain Insurance Company, private arbitration decision of Arbitrator Samworth, dated March 11, 2016. [^11]: Affidavit of Christopher Jackson sworn September 29, 2020, para. 8, found at Tab 2 of the Applicants’ Application Record. [^12]: Exhibit F to the affidavit of Christopher Jackson sworn September 29, 2020 found at Tab2 F of the Applicants’ Application Record. [^13]: Calculation of Economical Insurance found at Tab 9, of the Applicants’ Application Record. [^14]: Calculation of Economical Insurance found at Tab 10 of the Applicants Application Record. [^15]: Economical Insurance Company’s assessment of Attendant Care Costs dated August 1, 2020 at Tab 11, p. 20 of the Applicants’ Application Record. [^16]: R.S.O. 1990, Chap. C.43. [^17]: R.S.O. 1990 Chap. I.8 [^18]: Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 100 (SCC), [1994] 2 SCR 490 at p. 492. [^19]: Jevco and Chieftain, supra, at p.8.