ACCIDENT BENEFITS NEWSLETTER -MAY 2003

- Catherine Zingg

Dispute Resolution Practice Code - Rule 52.2 -

Time for Appeal

In Welsh and Economical, P02-00024, April 23, 2003, Director's Delegate McMahon considered whether the insured should be permitted to amend his Notice of Appeal, approximately four months after it had been filed. Mr. Welsh was a self-employed contractor when he was injured in a motor vehicle accident on February 8, 1998. He incurred additional labour costs to replace the tasks that were too difficult for him and claimed that he had to scale back his operation, thereby suffering a loss of opportunity (p.1). The Arbitrator's dismissal of Mr. Welsh's argument with respect to additional labour costs and his lost opportunity theory were not challenged. On appeal, however, Mr. Welsh wished to add the issue that the Arbitrator had erred in concluding that the provision for an increase in the level of IRBs, to account for post-accident losses, is subject to the $400.00 cap (p.2).

The parties each argued that the Notice of Appeal was governed by Rule 52.2 which states that the Director of Arbitrations may extend the time for requesting an appeal if he is satisfied that there are reasonable grounds for granting the extension (p.3). Director's Delegate McMahon, however, found that since Mr. Welsh had met the initial requirement of filing his Notice of Appeal within 30 days, he did not have to rely on Rule 52.2 (p.3). The parties did not cite any jurisprudence from the Commission.  Decisions are difficult to obtain because the parties are usually informed of procedural decisions by “letter decisions” which are not circulated.

Director's Delegate McMahon referred to Rules 61.04 and 61.08 of the Rules of Civil Procedure. He found that the major factor to be considered is the existence or absence of prejudice, following the reasoning in DaCosta v. DaCosta (1992), 89 D.L.R. (4^th) 491, Ontario Court of Appeal.  He further clarified that by prejudice he meant that which could not be addressed by expenses or other relief. Other criteria considered were as follows:

Beyond the question of potential prejudice, the substance of the proposed amendments should be examined to ensure that it raises a question of law. The length of the delay may also be a factor, together with any excuse for the delay, although I would not weigh these as heavily as the existence or absence of prejudice. Frequently these factors will overlap. For example, the longer the delay, the more likely the prejudice. In my view, all the factors should be weighed together. Finally, the overriding principle set out in Rule 1.1 of the Code should be kept in mind - “These Rules will be broadly interpreted to produce the most just, quickest and least expensive resolution of the dispute” (p.4).

Ultimately, Mr. Welsh was permitted to amend the appeal. It was noted, however, that the prejudice was real and was to be addressed by concessions and undertakings given on behalf of Mr. Welsh by his counsel. It was agreed that if the amendment was allowed, he would limit his claim to the date of the amendment to a maximum of $400.00 per week. Secondly, it was agreed that if Economical demanded higher levels of proof regarding his expenses, he would not refuse to proffer such proof on the grounds that it was more than Economical's accountant had asked for in their meetings following the release of the arbitration decision (p.5). Finally, Mr. Welsh gave an undertaking that if the amount of his IRB was litigated or arbitrated, he would not seek to discredit the accountant on the basis that the level of proof he had demanded had shifted from what he sought in the meetings following the release of the Arbitrator's decision (p.5).

Mr. Welsh was ordered to pay $600.00 to Economical for expenses thrown away. Proof of payment was to be  filed with the Amended Notice of Appeal by May 8, 2003, failing which the amendment was to be disallowed.

SABS 1996 -  Section 2 - Accident

In Umer and Non-Marine Underwriters, Mbrs. Of Lloyds, A02-000721, April 2, 2003, the insured took his taxi to a garage for repairs. He was standing in the repair bay, where customers were not permitted, when a flash fire broke out (p.3). There was a large explosion and Mr. Umer was burned in the ensuing fire. Arbitrator Sapin accepted that Mr. Umer's injuries were directly caused by the sequence of events that began with the repair of his vehicle. The Arbitrator referred to Chisholm v. Liberty Mutual Group (2002), 60 O.R. 3d 776, Ontario Court of Appeal, which found that “an intervening act may not absolve an insurer of liability for no-fault benefits if it can fairly be considered a normal incident of the risk created by the use or operation of the car - if it is “part of the ordinary course of things” (p.7). Mr. Umer's submission that the presence of fire hazards such as sources of sparks or open flame, normally found in a garage, such as electrical outlets and equipment, blow torches, or trouble lights and light switches, are definitely part of the normal risk involved in the repair of motor vehicles in garages (p.7). It was held that negligence is not of itself a new and independent act that would operate to break the chain of causation that began with the repair of the vehicle.

Section 4 and 5(2)(b) - Income Replacement Benefits

In Downey and State Farm Mutual Automobile Insurance Company, A01-001603, April 4, 2003, the insured was injured in an accident on May 29, 2001 and received income replacement benefits until September 18, 2001. An adjournment of the hearing was granted and commenced in January 2003.  The hearing was to be continued in September 2003, as it could not be completed in the days allotted.  The Arbitrator then asked the parties to consider what period of entitlement to income replacement benefits he was to consider and what the appropriate disability test or tests were to be applied. After 104 weeks of disability, the test changes as set out in s.5(2)(b), which requires the Arbitrator to consider whether the insured suffers a complete inability to engage in any employment for which he or she is reasonably suited by education, training or experience (p.4). The insurer argued that the only period of entitlement before the Arbitrator was the pre-104 week period. Arbitrator Blackman rejected this submission and found that he had jurisdiction to deal with ongoing IRB entitlement, including potential entitlement after 104 weeks of disability (p.5). He found that the pre-hearing letter noted that Ms. Downey would be seeking benefits for the post-104 week period as well. Rule 23.1 of the Practice Code states that if a party believes that a Report of Mediator is not accurate, the party must notify the Mediator and the other parties in writing within 10 days of receiving the report. The Arbitrator found that the same rule should be adapted to apply to pre-hearing letters and there was no correspondence in the FSCO file to register any objection to Ms. Downey's inclusion of her post-104 week entitlement. Arbitrator Blackman also found that the issue of post-104 week IRB entitlement flows naturally and consequentially from the pre-104 week inquiry, and, when both time periods are in dispute, they should preferably both be heard by the same Arbitrator in the same proceeding, in part to avoid a multiplicity of proceedings with the accompanying unfortunate consequences of delay, increased expense, and the possibility of inconsistent results (p.6). He confirmed that the appropriate test to be applied to the post-104 week entitlement was found in s. 5(2)(b).

Section 13 - Caregiver Benefits

In Owusu and Non-Marine Underwriters, Mbrs of Lloyds, A02-000499, April 2, 2003, the insured's claim for caregiver benefits was denied. Arbitrator Miller found that the applicant had not presented any credible, plausible, reliable, objective evidence to support her claim that she incurred caregiving expenses as a result of her car accident on May 25, 2001 (p.22). The Arbitrator noted that Mrs. Owusu's testimony about her family history and life before the accident varied quite significantly from the history she told her treating psychologist Dr. Van der Spuy and the history she gave to Dr. Isabelle Cote, a forensic psychiatrist who examined her on behalf of Lloyds' underwriters (p.11). Also, Ms. Owusu claimed to have a phobia of all forms of motorized transportation and yet admitted to buying a new car after the accident (p.14).