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Court slices and dices Occupier’s waiver of liability

 Jan 27, 2017 1:00 PM
by Samis + Company

Can an occupier, who is also a "supplier" under the Consumer Protection Act, defeat an Occupiers Liability Act claim by relying on a liability waiver that might violate the CPA?

In the very recent case of Schnarr v Blue Mountain Resorts Limited, the Plaintiff purchased a ski pass from a resort, on the internet. To purchase the pass, he had to execute a comprehensive waiver/release of liability, which he did online. The waiver specifically barred the Plaintiff from pursuing any legal action against the resort whatsoever, including negligence, breach of contract or breach of any statutory or other duty of care.

One day, the plaintiff decided to utilize his ski pass, and headed out on the slopes at the defendant’s ski resort.  Unfortunately, the plaintiff was injured while skiing.

The Plaintiff issued a lawsuit against the resort, where he pled breach of deemed warranty pursuant to terms of the Consumer Protection Act (CPA) and negligence under the Occupiers Liability Act (OLA). Section 9(1) of the CPA states: “The supplier is deemed to warrant that the services supplied under a consumer agreement are of a reasonably acceptable quality.”  Section 7(1) of the CPA states that: “The substantive and procedural rights given under this Act apply despite any agreement or waiver to the contrary”.  The plaintiff argued that, because of sections 9(1) and 7(1) of the CPA, the defendant could not obtain a waiver of its obligations under the CPA to provide services of a “reasonably acceptable quality”.

The plaintiff brought a motion for a finding that section 7(1) of the CPA applied to to vitiate the waiver in its entirety, with the further result that the plaintiff might restore his full rights to sue and to claim damages in negligence for the injuries that he suffered.

The Court delved into the interplay between the OLA and CPA, and the purpose and scope of each statute.  The Court noted that on their face, the statutes take different approaches to waivers. This is so because they have very different legislative purposes. Waivers in the OLA are designed to shield occupiers. The rejection of waivers in the CPA is designed to shield consumers. A conflict in the application of both statutes arises when consumers clash with suppliers who are also occupiers.

The Court held that where a waiver is limited in scope to the four corners of what the OLA intended to protect, such waivers would not be impacted by anything in the CPA and would apply with full force. The Court then went on to hold that where a waiver goes beyond the parameters permitted by the OLA and, in particular, includes terms that touch on the deemed warranty anticipated by the CPA, the waiver exceeds the objectives of the OLA and presents with a defect.  

Ultimately, the Court cured the defect in the waiver by  “reading down” waiver to sever and exclude from its ambit claims that involved the protection of rights under the CPA; the remainder of the waiver remained enforceable, preserving all aspects of the defendant’s waiver that were not affected by the prohibition contained in section 7(1) of the CPA.   

This approach allowed the plaintiff to pursue two distinct causes of action: (1) the negligence claim and (2) the breach of warranty. The plaintiff’s negligence claim would be subject to the defendant’s waiver. Consistent with the terms of the CPA, the plaintiff’s breach of warranty claim would not be subject to any waiver.

In sum, the Court took a rather measured approach to the intersection between the OLA and CPA, in the context of an occupier’s liability waiver, by carving into, and chopping up a very broad waiver.

See David Schnarr v Blue Mountain Resorts Limited, 2017 ONSC 114 (CanLII)


Exclusion Confusion

 Jan 27, 2017 11:00 AM
by Samis + Company

The issue of whether an excluded driver, by virtue of having executed a standard OPCF-28A excluded driver form, is legally also considered to be “any person specified in the policy as a driver of the insured automobile” for the purpose of statutory accident benefits coverage has plagued insurers and lead to numerous priority disputes with little consensus amongst insurers, lawyers or private arbitrators in the industry.

Insurers were provided some guidance when, in early 2016, Justice Wright released her judgment in Dominion of Canada General Insurance Company v. State Farm Mutual Automobile Insurance Company (Unreported, October 2015). According to Justice Wright, the claimant, who was an excluded driver upon his parents’ policy, was “clearly not a driver of an insured automobile and thereby not entitled to coverage”. Justice Wright overturned the underlying award of Arbitrator Bialkowski and created the short-lived precedent that an excluded driver is not equivalent to a “person specified in the policy as a driver of the insured automobile” for the purpose of accident benefits coverage.

However, in the recent judgment of Belairdirect Insurance v. Dominion of Canada General Insurance Company (2017 ONSC 367, January 2017) Justice Akbarali agreed with the analysis of Arbitrator Cooper in his underlying award. Arbitrator Cooper had performed an analysis and concluded that an excluded driver was a “person specified in the policy as a driver of the insured automobile” (or a “listed” driver), which would otherwise have supported Belair’s position. However, he went on to state that he was bound by Justice Wright’s decision and, therefore, found for Dominion. Justice Akbarali stated that she was not so bound. She went on to agree with Arbitrator Cooper’s analysis and stated that an excluded driver was, in fact, an “insured person” and also a “listed driver” for the purpose of accident benefits coverage.

One of the major differences between the ratios of the two Judges appears to be the standard of review applied. Justice Wright applied a standard of correctness, whereas Justice Akbarali applied a standard of reasonableness, further to a decision rendered by the Court of Appeal in the intervening period, namely Intact Insurance Company v. Allstate Insurance Company of Canada (2016 ONCA 609, August 2016).

The judgment of Justice Wright is in the process of being appealed to the Court of Appeal, with a hearing date scheduled in March 2017. Therefore, it is expected that the Court of Appeal will shortly provide the industry with much needed guidance in this area and dispel the current state of confusion.

See Belairdirect Insurance v Dominion of Canada General Insurance Company, 2017 ONSC 367 (CanLII)


Coming soon: Auto Insurance Coverage Law in Ontario

 Jan 20, 2017 4:15 PM
by Samis + Company

Samis+Company lawyers Daniel Strigberger and Andrew Mercer author Auto Insurance Coverage Law in Ontario. 

Auto insurance coverage issues can be very obvious – or very discreet. Auto Insurance Coverage Law in Ontario deals with the challenges of addressing the myriad possible issues that can arise in the context of an auto insurance dispute. 

Published by LexisNexis, this book is structured to provide a general introduction to insurance coverage and law under the standard Ontario Automobile Policy (OAP 1). The expert authors provide a basic overview of the coverage provided under the OAP 1 as well as an analysis of some of the most common issues encountered, such as determining the scope of coverage and who is covered under the policy.

A detailed perspective

Written in an accessible, easy-to-understand manner, Auto Insurance Coverage Law in Ontario offers a comprehensive guide to insurance coverage principles and Ontario's auto insurance system. Seasoned lawyers and non-legal professionals alike will gain a clear understanding of auto insurance law basics and will benefit from: 

  • An in-depth discussion of what constitutes an automobile under Part IV of the Insurance Act, an issue that can have a significant impact on various coverages under the policy
  • A summary of the statutory conditions and general exclusions that are found in a typical auto insurance policy as well as some common issues pertaining to those provisions and the circumstances in which they do – and do not – apply
  • Chapters dedicated to the standard mandatory coverages contained in all motor vehicle liability policies in Ontario and the most common issues related to each of them: accident benefits coverage, third party liability, uninsured automobile coverage and direct compensation for property damage
  • An examination of the various ways an auto insurance policy can be terminated and the precise procedure for termination depending on the circumstance
  • A chapter devoted to claims adjusting including some of the potential issues that may arise such as the process by which an insurer receives a claim, conducts investigations and makes a determination on coverage
  • Case commentaries that discuss the implications of decisions and provide insight that will enable readers to better advise clients and stakeholders

A handy reference

Auto Insurance Coverage Law in Ontario is sure to be a useful resource for anyone providing advice and guidance in this often-complex area of the law, including:

  • Insurance and personal injury lawyers
  • In-house counsel for insurance companies
  • Non-legal professionals such as claims managers, insurance executives, insurance agents, and brokers
  • Paralegals and law clerks 

The book is expected to be available in mid-February 2017. Pre-orders are available from LexisNexis here.


LTD Carriers Embrace Hryniak

 Jan 20, 2017 4:00 PM
by Samis + Company

On January 23, 2014, the Supreme Court of Canada released their decision on Hryniak v. Mauldin, 2014 SCC 7, and with it an invitation to the legal profession to utilize summary judgment motions to reduce court costs and promote the efficient resolution of disputes. It certainly seems like long term disability carriers have taken this invitation to heart.

The Supreme Court instructed that summary judgment must be granted where there is no genuine issue requiring a trial. There will be no genuine issue for trial where the motions judge is able to reach a fair and just determination on the merits. Where there is a genuine issue requiring a trial, the judge may invoke new fact finding powers in an effort to come to a just resolution without needing to advance to trial.

In the three years prior to Hyrniak, there were two reported summary judgment motions relating to long term disability claims. In the three years since Hryniak, there have been nine reported summary judgment motions relating specifically to long term disability claims.[1]

With the advent of the Supreme Court’s decision, it is clear that many issues that are presented by LTD claims are amenable to summary judgment motions. It is certainly useful where questions of limitation periods arise. A summary judgment motion allows for these preliminary matters to be addressed without the need of an expensive trial. Of the nine summary judgment motions, seven dealt with the issue of limitation periods. The following three cases demonstrate that the Courts are more than willing to address issues of limitations and policy obligations in a summary manner.

Todd v. Felton Brushes Ltd., 2016 ONSC 5252, was an interesting decision where the Plaintiff was injured in a car accident in 2005 and approved for short term benefits up to a maximum of 17 weeks. The Plaintiff was then subsequently approved for LTD benefits. Eventually, the Plaintiff returned to work on a full time basis. Her LTD carrier informed her they had closed her file. She did not contest this. The Policy was subsequently changed so that only employees working 35 hours per week would receive coverage going forward. At some point after this change the Plaintiff reduced her shifts to 20 hours per week. She was advised in 2007 that she was no longer covered for LTD benefits under the policy. The claimant ceased working for her employer in 2008. She never submitted a subsequent LTD claim. In 2011 she commenced a claim against her LTD carrier and third party administrator for a declaration she was disabled and for damages.

Lofchik J. granted the summary judgment motion and dismissed the Plaintiff’s claim in its entirety. The Plaintiff’s own evidence indicated that her claim was discoverable by March, 2007 at the latest. The Plaintiff was out of time.

Usanovic v. Capitale Life Insurance Co., 2016 ONSC 4624 was a decision of Broad J. dismissing a Plaintiff’s LTD claim as statute barred by a limitation period. The plaintiff was injured in a fall in September 2007 and made a claim for disability benefits. He was approved by the LTD carrier and benefits were paid for a number of years. In early 2012, the LTD carrier made a determination that the Plaintiff no longer met the “any occupation” test based on medical and surveillance evidence. He was given 60 days to appeal the decision and provide new medical evidence. The Plaintiff did not commence an appeal, or subsequent claim, until early 2015. The policy contained a 1 year limitation period on all claims.

Broad J., found that the LTD carrier’s letter of January 12, 2012, was unequivocal and commenced the two year limitation period and therefore the Plaintiff was out of time to bring his claim. More importantly, Broad J. found that there was no obligation in law on the LTD carrier to advise the plaintiff of the applicable limitation period in the Limitations Act. While the LTD carrier has a positive obligation to inform its insured of the nature of the benefits available under the policy, there was a marked difference in advising of the application of law external to the policy such as the Limitations Act.

Although summary judgment motions have proven effective for Insurers to proactively address an otherwise protracted litigation process, they have not been uniformly successful. In Nguyen v. SSQ Life Insurance Co., 2014 ONSC 6405 an Insurer’s summary judgment motion to dismiss the Plaintiff’s action as falling outside various policy or statutory limitation periods was dismissed. The Plaintiff in this case was a Vietnamese man who was largely illiterate and injured in an MVA in late 2009. He was employed at the time of the accident but claimed to be unaware that he had access to a group LTD plan. Perrell J., found that the record supported that Plaintiff was unaware of his entitlement to benefits until 2013 when his lawyer undertook to investigate the availability of an LTD policy through his employer. Given that the Plaintiff was illiterate and his employer had failed to provide the relevant documentation to him as per the Policy, Perrell J. found his claim was not untimely according to his interpretation of Policy. In the event that his claim was untimely, Perrell J. saw fit to grant relief from forfeiture. The motion was dismissed and the issue of the Plaintiff’s substantive entitlement was directed to trial.

Given the proliferation of summary judgment motions since Hryniak, it seems apparent that insurers have been provided an exceptionally useful tool where there are discrete issues that can dispose of an entire claim. Although as Nguyen demonstrates, judges may still be wary to rule in favour of the insurer where there is a sympathetic plaintiff involved and this can have cost consequences. However, overall Insurers have been successful in these motions. While there are risks associated with any motion, Insurers who properly prepare and advance a summary judgment motion will often be rewarded with the resolution of a claim at an early stage without a long and costly trial on all the issues.

[1] There are significantly more if you include employment law disputes that may involve an LTD component.


How about them Apples? NEBs deductible from LTD payments

 Jan 18, 2017 10:00 PM
by Samis + Company

Depending on the wording of the policy, the Ontario Court of Appeal has affirmed that Long Term Disability Benefit carriers can receive a deduction for any Non-Earner Benefits received by an Insured.

In the decision of Hamblin v. Standard Life Assurance Co. of Canada, released on November 14, 2016, the Court of Appeal dismissed an Insured’s appeal seeking to overturn a determination that her Non-Earner Benefits could be deducted from her weekly LTD payments.

The Appellant, Ms. Hamblin, was involved in two motor vehicle accidents. After the first, she began to receive Long Term Disability payments through her insurer, Standard Life. The Appellant was then involved in a second accident. As she was not working at the time, she elected to receive Non-Earner Benefits through her automobile policy. She also continued to receive her LTD payments from Standard Life.

For reasons that were never explained, the Accident Benefits Insurer never deducted any of the LTD payments from the weekly $185.00 Non-Earner Benefit, despite s. 12(2) of the Statutory Accident Benefits Schedule 2010 which allowed for a deduction in the weekly benefit, “[in] the total of all other income replacement assistance, if any, for the same week.”

Standard Life, upon being notified the Insured was receiving a Non-Earner Benefit, began to reduce their monthly benefit by a corresponding amount. Standard Life relied on a term of the Insured’s policy that allowed the carrier to reduce the monthly LTD payments “by any disability or retirement benefit…payable…under…a provincial auto insurance law.”

Standard Life took the position that they could do this, as long as the automobile Insurer did not deduct the LTD payments from the Non-Earner Benefit first.

The Insured’s counsel claimed that the Court’s decision in Bannon prohibited this sort of deduction. Bannon has stood for the principle that when assessing the deductibility of benefits paid by other compensation schemes, Courts must only deduct like benefits from like, or “apples to apples”. The Insured’s counsel maintained this was not a case of “apples to apples.” Case law had established that Non-Earner benefits were not “income replacement” benefits similar to LTD benefits and therefore could not be deducted from the LTD benefits.

The Court disagreed. They found that unlike the statutorily mandated deductions discussed in Bannon, the wording in the Insured’s policy was clear and unambiguous. The policy allowed for a deduction of any disability payments under an automobile insurance law and was not restricted to income replacement payments. As Non-Earner Benefits were granted where an Insured suffered a complete inability to carry on a normal life resulting from an accident related impairment, they were correctly a disability benefit payable under a provincial auto insurance law.

The Court found the Application judge’s decision was correct, and dismissed the Appellant’s appeal.

Although a bit of an oddity, this case is an important lesson for both AB and LTD insurers. For Accident Benefit carriers it’s a good reminder that temporary disability benefits being received by the insured person in respect an impairment that occurred before the accident are deductible from IRBs and NEBs. For LTD insurer’s, there is now Court of Appeal support that disability payments under ad automobile insurance law includes non-earner benefits. In both cases, a fulsome investigation into an Insured’s other sources of income will avoid double dipping.  

See Hamblin v. Standard Life Assurance Co. of Canada, 2016 ONCA 854


How to Possess a Great Dane

 Jan 15, 2017 10:15 PM
by Daniel Strigberger

Can the definition of “owner” under the Dog Owners’ Liability Act include someone who does not have dominion and control over the dog? The Court of Appeal for Ontario says “yes”.

Take a Bite of the Dog Owners’ Liability Act

By way of background, section 2 of the DOLA imposes strict liability upon an “owner” of a dog that bites or attacks another person or domestic animal:

Liability of owner

2.  (1)  The owner of a dog is liable for damages resulting from a bite or attack by the dog on another person or domestic animal. R.S.O. 1990, c. D.16, s. 2 (1).

Where more than one owner

(2)  Where there is more than one owner of a dog, they are jointly and severally liable under this section. R.S.O. 1990, c. D.16, s. 2 (2).

Extent of liability

(3)  The liability of the owner does not depend upon knowledge of the propensity of the dog or fault or negligence on the part of the owner, but the court shall reduce the damages awarded in proportion to the degree, if any, to which the fault or negligence of the plaintiff caused or contributed to the damages. R.S.O. 1990, c. D.16, s. 2 (3).

Contribution by person at fault

(4)  An owner who is liable to pay damages under this section is entitled to recover contribution and indemnity from any other person in proportion to the degree to which the other person’s fault or negligence caused or contributed to the damages. 

Section 1 of the Act defines “owner”:

1.  (1)  In this Act,

“owner”, when used in relation to a dog, includes a person who possesses or harbours the dog and, where the owner is a minor, the person responsible for the custody of the minor; [emphasis added]

Zeus Slips Down the Mountain

In Wilk v. Arbour, Mr. Arbour owned a Great Dane named Zeus. At all material times, Arbour was in a romantic relationship with Ms. Wilk. On December 28, 2013, Wilk offered to take Zeus for a walk and Arbour accepted her offer.

During their walk, Zeus, who was on a leash attached to his collar, suffered a seizure and became unconscious. When he regained consciousness, he backed up, came out of his collar, slipped on ice and fell down an embankment into a ditch. Wilk tried to retrieve Zeus, but also slipped into the ditch. She collided with Zeus and Zeus bit her thumb, causing her to lose her thumb above the joint.

Wilk Bites Arbour 

Wilk sued Arbour for her injuries. She claimed he was liable under section 2 the DOLA. She also sued him in negligence.

Arbour brought a summary judgment motion, arguing among other things, that Wilk was an “owner” at the time of the accident and therefore she could not sustain a claim under the Act as an “owner”. Arbour also argued that Wilk’s injuries were not reasonably foreseeable and sought to have her action in negligence dismissed against him as well.

Summary Judgement Motion Barks at Arbour and Wilk

The motions judge found that Wilk was not an “owner” under the DOLA and held that she could maintain those claims against Arbour. He also found that Zeus was not in her “possession”. However, he dismissed her action for negligence, finding that the injury suffered by Wilk was not a reasonably foreseeable consequence of Arbour’s actions.

The end result was that Wilk's action against Arbour under the DOLA could proceed to a trial on the damages issue.

Arbour appealed.

Wilk cross appealed.

Court of Appeal Tosses Arbour a Bone

The DOLA claims turned on whether Wilk was an “owner” of Zeus at the time of the incident. Returning to the definition of “owner” under the Act, the issue turned on whether Wilk was a “person who possesses…the dog”. [emphasis added]

The motions judge held that the word “possesses” under the definition of “owner” means the “exercise of dominion and control similar and in substitution for that which ordinarily would be exerted by its owner (namely the person to whom the dog belongs) over the dog.”

The Court of Appeal disagreed and found that the motions judge went too far by requiring the person in question to have “dominion and control” similar to the owner:

Thus, the weight of Canadian jurisprudence respecting harbouring requires “some degree of control” in the specific situation of providing shelter to a dog; it does not use the phrase “dominion and control” as does the American jurisprudence relating to the keeper of a dog. The word,” dominion” is defined in The Shorter Oxford Dictionary, Thumb Index Edition (1993) as follows: “Sovereign authority” and “control”. Reading in the word, “dominion” in addition to control, in order for a person to possess a dog, as did the motion judge, imports a requirement that the person who physically has the dog has the right to exercise sovereign authority or the highest measure of control over the dog and stands in the shoes of the owner.

Accordingly, the Court held that the word “possesses” in the definition of “owner” under the DOLA includes a person – such as Wilk – who is in physical possession and control over a dog just before it bites or attacks another person or animal.

As an aside, the Court of Appeal also found that the motions judge made a palpable and overriding error when he held that Zeus was not in Wilk’s possession at the time of the incident. The Court held that the critical time to determine possession was the time just before the incident. As Wilk was the person exercising actual control of the dog just prior to the incident, and she was best placed to prevent the bite that occurred, Zeus was in her possession.

Accordingly, Arbour’s appeal was allowed.

Court of Appeal Puts Wilk in the Doghouse

The Court of Appeal held that to establish liability for animals in negligence, special circumstances must exist. The owner of an animal cannot be negligent if the animal acts in an unexpected way and injures someone.

The Court of Appeal agreed with the motions judge that Wilk had failed to prove that Arbour, as Zeus’s owner, could have reasonably foreseen the danger that could result in Wilk’s damages. The Court held that Wilk’s decision to leave the safety of the path, and proceed down the icy slope to retrieve the dog, interrupted the alleged chain of causation and was an intervening act: “Given this voluntary, intervening act, Mr. Arbour’s alleged negligence was not the proximate cause of Ms. Wilk’s injury.”

Accordingly, Wilk’s cross appeal was dismissed.

Final Fetch

Following this case, I am now trying to talk my 11-year old out of her aspirations to start a neighbourhood dog-walking business.

See Wilk v. Arbour, 2017 ONCA 21.

Courts, Dog Owners' Liability Act, Legislation / Regulation, Torts  

Plaintiff Loses by Roughly Half a Loonie

 Jan 11, 2017 8:45 PM
by Neil Colville-Reeves

The obligation of a Municipality to maintain a sidewalk and the Provincial Minimum Maintenance Standards were at the heart of a recent decision out of the Ontario Superior Court of Justice, Barbeau v. City of Kitchener.

In Barbeau, the plaintiff tripped on uneven adjacent concrete sidewalk slabs. Through unscientific means, the plaintiff argued that the height differential between the two slabs was at least 26mm, more than the acceptable tolerance of 20mm in accordance with the Provincial Minimum Maintenance Standards. Through slightly more scientific means, the City measured the offset between the two horizontal plains of concrete slabs at anywhere between 11 and 19mm.

Significant evidence was led by the Municipality about the operational systems in place to inspect and repair imperfections in sidewalks that posed a danger to public health and safety. The City was able to establish that they expended large sums of money annually to investigate and repair imperfections in the sidewalks under their jurisdiction through a surprisingly thoughtful and comprehensive system.

The court ultimately ruled against the plaintiff on the basis that her unscientific method of measuring the height differential between the horizontal planes of the adjacent sidewalk slabs – specifically by taking a photograph of a 26mm loonie coin placed upright on the lower slab to demonstrate that the height differential was at least 26mm. The defendant, on the other hand, used a carpenter’s square placed on the lower slab at a right angle with the side of the ruler against the rise of the higher slab. The court preferred the Municipality’s methodology of measuring the imperfection and the plaintiff’s claim failed as a result.

The court noted that the Provincial standards in this instance were ‘reasonable’, being in the context of a ‘small residential street’ and noted no comment was being offered on the reasonableness of that standard in other contexts. It is worth noting that in this case, even though there was an imperfection in the sidewalk that was right on the cusp of the tolerance allowed by minimum maintenance standards, the court found no liability on the municipality and suggested that there is an obligation on pedestrians “to pay reasonable attention to see upcoming height differentials on the sidewalk surface”.

See Barbeau v City of Kitchener, 2017 ONSC 24 (CanLII)

Neil Colville-Reeves

Neil is a Partner of Samis+Company. Neil focuses exclusively on insurance-related litigation. He has handled a broad range of matters before the Ontario Superior Court of Justice and the Financial Services Commission of Ontario, as well as advocating on behalf of his clients in private arbitrations.

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Courts, Legislation / Regulation, Municipal Act, Torts  

Overpayments – Recovery, Timing and Notice

 Jan 6, 2017 6:35 PM
by Kerry O'Connor

The year 2016 was not all that bad: The Superior Court finally provided some much needed guidance on whether an insurer can recover an overpayment made to an insured under the SABS. Justice Perell in Intact Insurance Company v. Marianayam shed some light on this ambiguous area of law.

Overpayments commonly occur when an insured person is paid an income replacement benefit and subsequently receives Long Term Disability benefits (LTD) or Canada Pension Plan benefits (CPP), which are deductible under the SABS.

The recovery of overpayments is governed by section 52 of the SABS-2010 (see section 47 of the SABS-1996). It provides that an insurer may recover benefits that were paid to an insured in error or if the insured was disqualified from receiving benefits. This is, of course, only if the overpayment is not a result of willful misrepresentation or fraud. One of the most controversial aspects of this law is subsection 52(3) of the SABS-2010 (section 47(3) of the SABS-1996), which requires the insurer to give notice of the amount that is required to be repaid.

The notice requirement was introduced in the 1996 amendments to the SABS. Subsequently, a body of case law has developed around the timing and content of this notice.

With respect to timing of notice, the Superior Court in Marianayam has helped clarify this area of law by upholding the Director’s Delegate decision in Pries v. Economical Mutual Insurance Company2, and confirming that an insurer can only recover an overpayment made within 12 months of giving notice. In Pries, Economical took issue with the term “payment” in s.47 (3) of the SABS, and with the phrase, “within the 12-months after the payment was made”. Economical argued that they should be able to recover the full amount of the overpayment. However, Directors Delegate Evans was not persuaded and ultimately held that an insurer can only recover an overpayment made within 12-months of giving notice and awarded Economical 12 of the 16 months of overpayments. To put it another way, the amount of the repayment is capped at one year before the demand and there is no recovery for any payment made more than 12 months before the repayment notice was made.

The Superior Court in Marianayam also weighed in on what constitutes proper notice under the SABS. In doing so, Justice Perell upheld the controversial decision of Knechtel v. Royal SunAlliance, where Arbitrator Sampliner held a valid notice letter must contain:

  1. The name of the specific benefit(s) the insurer claims has overpaid;
  2. A statement of the appropriate weekly/monthly or lump sum amount sought;
  3. The payment date of applicable time span of the specific benefit(s) it has paid and seeks repaid; and
  4. Calculation of the total repayment claim;

Justice Perell stated that the amount claimed in the insurer’s notice letter “need not be perfectly correct but should be substantially correct.” While this may sound simple enough, Justice Perell determined that Intact’s first two notice letters failed comply with the Knechtel requirements. 

In Marianayam, Intact claimed reimbursement for overpayments made to the Claimant between 2007 to 2015 as a result of the Claimant’s receipt of retroactive LTD benefits and CPP benefits.

Intact’s first letter sought $69,000 or 170 weeks of IRBs although the applicable statute provided for repayment of only 12 months (52 weeks). Justice Perell stated that Intact should have only indicated in their letter a demand for 12 months of payments. As a result, Justice Perell found the amount requested was not substantially correct; it was grossly incorrect. Therefore, the first notice was not considered proper notice and could not be relied upon.

Intact’s second letter indicated its legal position and advised that an accountant had been retained to calculate the quantum of the repayment. Justice Perell found that this letter also failed to satisfy the notice requirement, as the amount of the repayment was left undetermined.

Finally, Justice Perell accepted a subsequent letter that enclosed Intact’s accounting report as a proper notice. Justice Perell accepted the letter and report as notice, since it came close to calculating the correct amount of the overpayment and only erred by making a claim for 14-months of overpayments rather the limit of 12-months.

Interestingly, Justice Perell did not order repayment of CPP amounts. Intact’s accounting report included the CPP benefits in its overpayment calculation; however, Intact’s letter did not specifically request repayment of CPP benefits. Therefore, Justice Perell found Intact was not entitled to the CPP payments.

Given that Justice Perell did not define “perfectly correct” and “substantially correct”, we are left guessing when a particular notice falls on the spectrum between perfect and substantially correct. Nevertheless, it is fair to say that the evolving jurisprudence regarding overpayments has made it more difficult for insurers to recover overpayments.  However, the Marianayam decision has provided much needed guidance on how to recover overpayments successfully.  When faced with an overpayment situation, insurers must act quickly to identify and provide notice of any overpayment within 12 months or they may lose the right of recovery. Insurers must also ensure their notice contains the Knechtel requirements and the amount sought must comply with the statute.

See Intact Insurance Company v. Marianayam, 2016 ONSC 1479

[2] Pries v. Economical Mutual Insurance Company, FSCO A11-002004, September 21, 2012; Economical Mutual Insurance Company v. Pries, FSCO Appeal P12-00036, July 8, 2013 

Accident Benefits, Courts, Legislation / Regulation  


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