Overview:
The recent Divisional Court decision in Vivekanantham v. Certas Direct Insurance Company, 2024 ONSC 6198 provides important clarification regarding special awards and the interpretation of s. 10 of the Statutory Accident Benefits Schedule, O. Reg. 34/10 (“SABS”). Further, Vivekanantham confirmed that the proper approach is to exclude expert evidence where the right to cross-examine that expert has been denied.
The Special Award Power:
Section 10 of Regulation 664 under the Insurance Act provides that if the License Appeal Tribunal (“LAT”) finds that an insurer has unreasonably withheld or delayed payments, then the LAT may award a lump sum amount which the person was entitled to at the time of the award. The special award power is in addition to the exclusive jurisdiction of the LAT to make an award of benefits and interest to which the person was entitled under the SABS.
In this case, the delay of payments arose from the Appellant’s Income Replacement Benefits (“IRBs”) being reinstated over three and a half years after they were terminated, and the Appellant being removed from the Minor Injury Guideline (“MIG”) classification four years after the accident.
The LAT adjudicator found that there was no basis for the special award, without providing further reasons. The reconsideration decision found no error in the initial decision, given that the issues of MIG and IRB entitlement were not before the Tribunal at the hearing.
On appeal, the Divisional Court found that the LAT erred in refusing to address the special award claim. In reaching this conclusion , the Divisional Court undertook statutory interpretation of the text as well as the context and purpose of the phrase “at the time of the award”.
A plain language reading of the phrase “at the time of the award” excludes a s. 10 award for any benefit settled prior to the date of the award. However, the court held that this interpretation of s. 10 runs contrary to:
- The qualification of the Insurance Act as both remedial in nature and as consumer protection legislation protecting against bad faith conduct of insurance companies (see 17-006757 v. Aviva Insurance Canada, 2018 CanLII 81949 at paragraphs 13-24; and Stegenga v. Economical Insurance Company, 2019 ONCA 615); and
- The observation of the special award as a stand-alone (see Ross v. Aviva General Insurance, 2023 CanLII 19823 at paragraph 8; and Stegenga v. Economical Insurance Company, 2019 ONCA 615 at paragraph 22).
Given this discrepancy, the latter interpretation was determined to prevail. Thus, on this issue, the Divisional Court concluded that the LAT erred when it found that it did not have jurisdiction to make a special award.
The Expert Evidence Issue:
The major issue before the LAT was the determination of catastrophic impairment. Both parties relied upon psychiatric expert evidence to assist the LAT in making this determination. While the Appellant’s expert attended and was cross-examined at the hearing, the Respondent’s expert failed to attend the hearing even though they acknowledged receipt of a Summons to Witness that had been properly served. They also failed to deliver an Acknowledgement of Expert’s Duty.
While the LAT adjudicator at first instance indicated that they would weigh the Respondent’s expert report in oral reasons, the decision that was ultimately rendered explicitly relied on that evidence without weighing it. Further, the reconsideration decision found no concern with the initial LAT adjudicator’s process in this respect.
Relying on Shahin v. Intact Insurance Company, 2024 ONSC 2059, the Divisional Court found that even though the LAT did not rely on the expert’s evidence to support its conclusion, the LAT’s reliance on the report infected the Tribunal’s conclusions. Given this, the Divisional Court concluded that the LAT’s decision must be set aside due to the denial of procedural fairness to the Applicant, and remitted the case to the LAT for a new hearing.
Why it Matters
This case provides important guidance for insurance companies and echoes the warning in J.M. v Certas Direct Insurance Company, 2019 CanLII 94016 (ON LAT) that “[a]n insurer that unreasonably withholds or delays payments and waits to pay the benefits after an application is initiated at LAT may risk an award.” Further, this case provides direction to the LAT with respect to situations in which expert evidence should properly be excluded if such evidence cannot be subjected to cross-examination.
Sawarn Benning is an articling student at the firm and author of this blog. If you have a question about this decision or a similar file, please reach out to Sawarn at [email protected].
