ACCIDENT BENEFITS NEWSLETTER - SEPTEMBER 2003

- Catherine Zingg

Insurance Act- Section 282(11) - Expenses

In a decision dated September 13, 2002, an arbitrator had ordered Mr. Volfson, a paralegal associated with Universal Injury Rehabilitation Centre Inc., to pay the Shuster’s and Royal & SunAlliance’s arbitration expenses because he was the party who commenced the proceeding (p.5). Mr. Volfson’s appeal of the decision was allowed (Volfson v. Shuster and Royal & SunAlliance Insurance Company of Canada, P02-00028, August 7, 2003). Director’s Delegate Makepeace found that the arbitrator had exceeded her authority in ordering Mr. Volfson to pay arbitration expenses. It was found that the Insurance Act and the SPPA do not authorize arbitrators to order a representative to pay arbitration expenses. Given that Mr. Volfson did not have the authority in his own right to commence an arbitration, pursuant to s. 281(1) of the Insurance Act, it was found that the arbitrator did not have authority to order him to pay expenses. The  Director’s Delegate found that Mr. Volfson’s refusal to take responsibility for his conduct was appalling. She concluded, however, that whether the parties had a civil remedy was a question beyond her jurisdiction.

Section 46(2) - Interest

In Amoa Williams v. Allstate, P01-00052, July 17, 2003, the insurer appealed from an arbitration decision which had ordered it to pay interest pursuant to s. 46(2) on the amount of rehabilitation expenses awarded to the applicant from 14 days after the release of the medical rehabilitation DAC assessment. Director’s Delegate McMahon allowed the appeal, finding that the arbitrator had erred in making the order. In his reasons he stated:

For all of these reasons, I am satisfied that if the insurer refers a dispute over medical benefits to a DAC, which delivers a negative report, but a judge or arbitrator later finds that the treatment is reasonable and necessary, the insurer will be responsible for payment of the treatment, but will not be responsible for the payment of interest pursuant to s. 46(2), prior to adjudication because the amount awarded was not overdue before that time (p.13).

See also Glinka v. Dufferin Mutual Insurance Company, P01-00002; Khaledi v. Allstate Insurance Company of Canada, P01-00046; and Langdon v. Pafco Insurance Company Limited, P02-00017.

SABS - 1996

Section 30 - Exclusions

In King v. Dominion of Canada General Insurance Company, A02-001163, August 27, 2003, the applicant was excluded from receiving income replacement benefits because he was driving a Freightliner truck which weighed more than 11,000 kilograms at the time of the accident, when he possessed only a valid G2 class Ontario driver’s license. A minimum of a D class license is required to operate a vehicle that has a weight exceeding 11,000 kilograms gross weight or registered gross weight. This phrase “valid driver’s license” is not defined in the SABS 1996. It is defined in Ontario Reg. 340/94 made under the Highway Traffic Act, which states:

1.(1)In this Regulation... “valid driver’s license” means a driver’s license that is not expired, cancelled or under suspension.

Mr. King argued that as he was in possession of a valid driver’s license at the time of the accident, namely his G2 license, he should be entitled to receive income replacement benefits. Under the SABS 1990 and SABS 1994, the test was whether the driver was “authorized to drive the automobile”, but under Bill 59 the test is “whether the driver was driving the automobile without a valid driver’s license”. In denying the applicant’s claim, Arbitrator Kominar, stated:

To interpret the phrase ‘driving the automobile without a valid driver’s license’ to mean that being in possession of ‘any’ sort of valid license suffices would lead to a carnival of absurdities that would be inconsistent with the general role of exclusion clauses, i.e. to deny certain benefits to drivers who engage in specified unauthorized and often dangerous actions. There is no interpretive ambiguity here open to be resolved in Mr. King’s favour (p.12).

Power of Attorney and Undertaking (PAU)

SABS - 1990

Section 12 - Income Replacement Benefits

Mr. Griffiths, a Colorado resident, went to visit his friend, Mr. Packer, in Ontario. Together they decided to go to New York State where they were involved in a motor vehicle accident on November 11, 1990. Mr. Griffiths did not own a vehicle nor was he a named insured on another automobile insurance policy, nor was he a spouse or dependant of any other named insured under any other automobile policy (p.4). State Farm paid $50,000.00 U.S. in New York State no-fault benefits. However, Mr. Griffiths also claimed that he was entitled to receive Ontario accident benefits as a result of the Power of Attorney and Undertaking filed by State Farm with the Superintendent of Insurance for British Columbia. In concluding that Mr. Griffiths was not entitled to receive Ontario accident benefits, Arbitrator Killoran stated:

The PAU ensures that any insurer who files with the Superintendent in British Columbia is liable to pay accident benefits that meet the minimum standards of the provinces or territories in which a motor vehicle accident occurs. The PAU cannot be extended to apply to accidents which occur outside a province or territory. In this case, the effect of the PAU operates on any State Farm policy issued outside of Canada when an insured under that policy travels to a province or territory. If that insured is involved in a motor vehicle accident, the policy provides coverage in accordance with the PAU.

I find that the Power of Attorney and Undertaking is one document which must be read and interpreted as a whole. Consequently, it only applies to circumstances where a vehicle, insured elsewhere, is involved in an accident in any of the provinces, including Ontario. Consequently, I find that Mr. Griffiths, as someone involved in an accident outside of Ontario, is not entitled to Ontario Statutory Accident Benefits as a result of the Power of Attorney and Undertaking filed by State Farm Mutual Automobile Insurance Company. Griffiths and State Farm Mutual Automobile Insurance Company, A97-00035, August 8, 2003.

Dispute Resolution Practice Code

Rule 10 - Party Under Disability

In Bye v. Aviva Canada Inc. (formerly CGU Group), A03-000439, August 6, 2003, the applicant brought an application for arbitration while he was still a minor. As a preliminary issue, Arbitrator Wilson was asked to determine whether the application was void and a nullity. It was held that the application for arbitration was not void and Mr. Bye was given under September 12, 2003 to ratify the application for arbitration made in his name, otherwise the arbitration was to be stayed. Mr. Bye was to turn 18 on September 5, 2003. The arbitrator reviewed case law dealing with the issue of minors signing contracts. In contrast to cases where mental incapacity is an issue, a contract with a minor is not treated as prima facie void (p.3). Where the contract related to the supply of necessities, the minor had the power to contract (p.3). In addition, a minor always had the option to ratify or repudiate a contract upon reaching majority (p.3). As Mr. Bye had made no indication of an intention to repudiate the solicitor/client relationship, it was found that the retainer of Ms. Hillier and the subsequent application for arbitration was voidable at the instance of Mr. Bye, but not void ab initio (p.5). The arbitrator also found that the failure to comply with Rule 10 did not invalidate the claim, because Rule 1.3 could be applied, which recognizes that a defect in form or other technical breach will not make a proceeding invalid (p.9). However, the arbitrator cautioned that the Rules are not to be ignored and found that the deficiency had to be addressed in some way.

Insurance Act - Section 279(4.1)

Interim Order

In Thiruchelvan v. Axa Insurance (Canada), A03-000056, August 26, 2003, the insurer was ordered to pay interim weekly benefits of $400.00 from August 24 to December 20, 2002. The applicant was not entitled to an order for interim housekeeping benefits. A number of expert medical reports were presented to Arbitrator Blackman on the motion. Prior to the accident, Mr. Thiruchelvan had worked as a full-time scheduler and planner, a job that required him to frequently lift up to 20 pounds and on occasion 50 pounds. The arbitrator was critical of the reports from AssessMed, finding that it had taken on the role of advocate (p.10). It was found that AssessMed’s extrapolation to a finding that the applicant was capable of at least medium strength tasks was based on a false finding of lack of full effort based on heart rate testing (p.10).

At the time of the motion the family was relying on the net weekly amount of $410.00 being earned by the applicant’s wife (p.11). In the circumstances, the arbitrator found that financial urgency had been established (p.11). He expressed reservations, however, as to how and why the applicant and his wife were paying $350.00 per week for child care and housekeeping services. The applicant requested that benefits should be paid from the date of termination to any further or other order of an arbitrator (p.11). Benefits had been terminated on August 24, 2002. The pre-hearing took place on April 23, 2003 at which point the applicant’s counsel indicated that his earliest “real” dates for an arbitration hearing were in April 2004. Dates were set in December 2003, contingent on the availability of the applicant’s counsel (p.12). Given that the Commission’s guidelines state that dates for arbitration hearings will be available within four to six months after the pre-hearing and dates were available, the arbitrator found it appropriate to order interim weekly benefits for 17 weeks to cover the period August 24, 2002 to December 20, 2002, 17 weeks being at the lower end of the published guideline of available hearing dates (p.12).