S.36 of the Statutory Accident Benefits Schedule mandates insurers follow certain procedural guidelines when responding to and denying a benefit. However, errors in procedure do not necessarily lead to substantive entitlement for the insured, as set out in Stranges v Allstate Insurance Company of Canada, 2010 ONCA 457 [Stranges], where the insurer’s letter to the insured advising the termination of her income replacement benefit failed to hit all the necessary procedural notes. Despite this the Court of Appeal found that procedural failings did not automatically entitle the insured to the benefit. She still had to prove substantive entitlement.
Stranges continues to be relevant nearly a decade later. In FJ vs Aviva Insurance Canada, 2020 ONLAT 18-010144/AABS [FJ], the Applicant disputed her entitlement to non-earner benefits. She argued that the insurer’s letters denying the NEB did not comply with s.36(4) of the Schedule. Adjudicator Jeffrey Shapiro reiterated the principle from Stranges that technical deficiencies do not lead to substantive entitlement. Despite the denial being imperfect, Stranges settled that a defective notice would not automatically entitle the insured to the benefit. Adjudicator Shapiro went further by implying that only the initial response was subject to the requirements of s.36(4) of the Schedule. In a footnote to the decision, Adjudicator Shapiro implied that if the insured could prove that she had relied on the defective response, it was possible that the insurer would be bound by it. However, this would have to be a case where Stranges was not applicable. Most likely, this exception to Stranges would only apply to a narrow set of cases involving limitation issues.
In sum, the Ontario Court of Appeal’s decision in Stranges continues to lessen the impact of procedural mishaps. FJ is an example of this. This leads to the question of when s.36(6) of the Schedule would take effect and actually punish the insurer for disregarding procedural rules. What remains certain is that, for now, the substantive dominates the procedural and insureds cannot rely on technical mistakes to prove their substantive entitlement.