In State Farm Automobile Insurance Co. v. Kulaveerasingam, released on November 6, 2017, the Divisional Court of Ontario judicially reviewed the decision of Director`s Delegate Lawrence Blackman.
Kulaveerasingam, the Respondent, was injured in a motor vehicle accident that occurred on October 29, 2010. She brought an arbitration to deal with the issue of whether the amendments to the Statutory Accident Benefits Schedule made effective September 1, 2010, could alter her vested rights. In a decision dated February 6, 2015, Arbitrator Deborah Pressman said that the new reduced interest rates applied to all existing policies and not just to those renewed after September 1, 2010.
The issue before the Director`s Delegate was whether the arbitrator erred when she held that s. 51 of the Insurance Act: O. Reg. 34/10 Statutory Accident Benefits Schedule Effective September 1, 2010 (the “New Regulation”) governed the payment of interest on overdue benefits to the Respondent. The Delegate, in overturning the arbitrator, concluded that the Respondent had a vested right to an interest rate of 2% per month on overdue payments as soon as she entered into her contract of insurance. Since she had entered into the contract before September 1, 2010, the Delegate found that the higher 2% per month interest rate found in the Insurance Act: O. Reg. 403/96, Statutory Accident Benefits Schedule – Accidents on or After November 1, 1996 (the “Old Regulation”), applied.
On judicial review, the issue before the Divisional Court panel of Lederman J, Swinton J and Rady J, was the reasonableness of the Delegate`s interpretation of the SABS regulations, particularly the New Regulation. On a plain reading of s. 2(1) of the New Regulation, the Court found that it applied to accidents after September 1, 2010, which encompassed the Respondent`s situation. The Court went further to also read the New Regulation in context. The Court applied the Supreme Court of Canada`s principal in Dikrainian v. Québec (Procureur général), that there is a presumption that the legislature does not intend to interfere with vested rights, absent a clear indication to the contrary in the legislation. The Court in this case found that the language of the New Regulation rebuts the presumption against interference with vested rights.
Importantly, the Court found that,
“It is clear from the wording of s. 2(1) of the New Regulation that the Legislature intended it to apply to all accidents on and after September 1, 2010, even if the insured was covered by a policy entered into before that date” (emphasis added).
The Court opined, that this was evidenced most clearly by the transitional provisions in s. 68 of the New Regulation, which deals explicitly with transitional policies and optional benefits. The Legislature had turned its mind to the optional benefits and any benefit not included was intended to be determined in accordance with the New Regulation.
The Divisional Court held that Delegate Blackman’s interpretation was unreasonable because it failed to consider the clear wording of s. 3(1.4) of the Old Regulation and para. 2(2)2 of the New Regulation in their total context. The Respondent was not entitled to benefits under the Old Regulation, given that her accident occurred after September 1, 2010. Accordingly, the Respondent was entitled to an interest rate of only 1% per month, as s. 51 of the New Regulation stipulates.