By Julia Cohen and Eric Grossman

The appellant, Ridi Filippo, was catastrophically impaired as a result of a motor vehicle accident which took place on March 21, 2014. Due to his injuries, the appellant became eligible for attendant care benefits from his insurance company. As described in the decision, “he claimed and was awarded, the maximum benefit for attendant care provided in section 19 of the SABS that is $6,000 a month with a total maximum payout of $1,000,000.” The respondent, The Dominion of Canada General Insurance Company, was the insurer responsible for paying the attendant care benefits in question.

The appellant argued that he was entitled to $6,000 per month, up to a cumulative total of $1,000,000 lifetime for his attendant care services, plus the amount of HST owing for those services. Conversely, the respondent submitted that HST paid to attendants was included in the monthly $6,000 monthly maximum and the $1,000,000 maximum policy limit. The appellant disagreed and applied to the License Appeal Tribunal for an order that HST is payable in addition to the section 19 maximum limits.

On February 14, 2020, in a decision bearing file number 18-002185/AABS, LAT Adjudicator Paul Gosio determined that HST is not a “reasonable and necessary” expense, and therefore, was not subject to the $6,000 monthly limit in section 19(3) the SABS or the policy limit of $1,000,000. So therefore, the insurer had to pay HST as a tax (which was distinct from the payment of accident benefits). The Tribunal rejected the insurer’s application for reconsideration in a decision by Adjudicator Jesse A. Boyce, dated May 29, 2020. From there, the respondent insurer successfully appealed to the Divisional Court.

In a unanimous decision by a three judge panel consisting of Associate Chief Justice McWatt, and Justices Sachs and Ramsay, on May 20, 2021, the Divisional Court held that the Adjudicator’s decision was incorrect, as section 19 of the SABS is clear and unambiguous. The appellant appealed this decision to the Ontario Court of Appeal, which appeal was heard by Justices Benotto, Zarnett, and Thoburn.

To summarize, the issue on appeal was whether “harmonized sales tax (“HST”) paid or payable on the goods and services supplied to the appellant for his attendant care, is included in the computation of the maximum amounts of attendant care benefits payable by the respondent.”

Given that the appellant’s argument, in part, was founded on the basis that the wording of section 19 was ambiguous, the determination of this issue turned on the phrase “ambiguous,” and what it means for something to be ambiguous. It was determined that “to be ambiguous, there must be two plausible interpretations.”

In a unified decision authored “By the Court”, it was held that “the words in section 19 are not reasonably capable of supporting more than one meaning. The only meaning supportable is the one advanced by the respondent insurer… that HST is an ‘attendant care benefit’ within the meaning of sections 14 and 19, as it is a ‘reasonable and necessary expense,’ and as with any other reasonable and necessary expense comprising attendant care benefits it is included in the total that is subject to the $6,000 and $1,000,000 maximum limits specified in section 19(3).”

For the reasoning outlined above, the Ontario Court of Appeal upheld the decision of the Divisional Court which decided that the $6,000 and $10,000 limits for attendant care are inclusive of HST.

It is hoped that this will bring to an end the controversy surrounding whether HST is or is not subsumed within the SABS policy limits.  Much has been argued, including in various class action law suits (which themselves have failed by reason of the exclusive jurisdiction of the LAT to address SABS related issues) about HST being payable above policy limits.  This, despite the fact that many of the underlying claims do not attract HST in the first place, where private family members performing attendant care do not charge HST even where they have proven an economic loss, and many health care providers who charge for their professional services to which the SABS respond, are exempt from HST in the first place.   While much has been made about the HST controversy in a SABS context, it is noteworthy that from a general insurance perspective, no one has or likely would successfully challenge that a policy limit is precisely that: a limit.   When a house burns down to the ground and is covered for $5,000,000, and the cost to rebuild is $5,000,000 plus HST no one would begin to argue that HST should be paid above those policy limits.  Yet, for some reason, people seem to want to suspend general insurance concepts when the SABS are discussed.  The Court of Appeal has grounded this discussion in reality in this case.

Julia Cohen is a summer student at ZTGH and author of this blog alongside Eric Grossman. If you have a question about this blog or a similar decision, please contact Eric Grossman at [email protected] or 416.777.5222.