This week we take a look at some interesting cases involving Accident Benefits.

Topics covered include:

  • The definition of “accident”
  • A very late application for accident benefits
  • Whether or not a benefits stoppage letter complied with legislative requirements
  • What happens when an applicant misses 3 case conferences
  • Contingency fee agreements

Definition of Accident

Al Khazreji v RSA Insurance, 2023 CanLII 15064 (ON LAT)

In Al Khazreji v. RSA Insurance, the LAT considered whether an assaulted taxi driver was involved in an “accident” as defined by s.3(1) of the SABS such as to entitle him to accident benefits.

The applicant was a taxi driver who drove a passenger home. After the passenger exited the vehicle, he assaulted the applicant through an open window. The applicant sustained a concussion and facial injuries as a result.

The LAT considered the two-part test set out by the Court of Appeal of Ontario in Greenlaugh v ING:

1. Purpose test: did the incident arise out of the use or operation of an automobile?

2. Causation test: did the use or operation of an automobile directly cause the impairment?

The LAT held that the purpose test was met because the incident arose out of the ordinary and well-known activities for which automobiles are used.

Specifically, picking up and dropping off a passenger as well as securing payment from a passenger at the end of a trip are both part of the ordinary use and operation of a taxi.

However, the LAT determined that the causation test was not met for two reasons.

First, the applicant’s injuries were not directly caused by the use or operation of the automobile. Rather, they were caused by an intervening act, namely, the assault by the passenger.

Second, the use or operation of the automobile was not the dominant feature of the applicant’s injuries.

As a result, the insurer was successful in the hearing. The applicant was not entitled to statutory accident benefits.

Read the full decision here:

A VERY Late Application…

Younes v Liberty Mutual Insurance Company, 2023 CanLII 4443 (ON LAT)

In Younes v Liberty Mutual, Ontario’s Licence Appeal Tribunal (LAT) denied an application for accident benefits from a woman injured in a motor vehicle accident because she missed the 30-day window to notify her insurance company — by more than 20 years.

The motor vehicle accident occurred on March 21, 1999. Siham Younes did not file her application for accident benefits with the LAT until May 30, 2020. She was seeking lost educational expenses, a car loan and a student loan, a catastrophic impairment determination and interest.

Younes’ auto policy with Liberty Mutual Insurance Company expired in October 1998.

Liberty first became aware of the claim on July 23, 2020, when it received a notice of case conference from the LAT. Liberty’s counsel wrote to Younes in February 2021 to advise that Liberty had ceased operations in Canada. The correspondence included a link about accident benefits in Ontario and an application form. Counsel also requested a copy of the OCF-1 application for accident benefits, which the LAT decision confirmed the insurer did not receive.

The SABS allows for an exception to the mandatory 30-day notification period if there is a reasonable explanation for the delay. In this case, although the LAT recognized that Younes had been through some difficult circumstances, they did not find any reasonable excuse for the two-decade delay in notifying the insurer about the accident.

Read the full decision here:

Medical OR Other Reason Sufficient

Varriano v. Allstate Insurance Company of Canada, 2023 ONCA 78

In Varriano v. Allstate, the Court of Appeal of Ontario (ONCA) concluded that the insurer’s stoppage letter complied with the legislative requirements under s.37(4) of the SABS, and the insurer was not required to provide a medical reason for the stoppage of the claimant’s benefits.

Allstate, paid the claimant income replacement benefits (IRBs) from October 7, 2015 until December 2, 2015, when he returned to work. On December 30, 2015, Allstate provided the claimant with an Explanation of Benefits stating that his IRBs had been stopped effective December 2, 2015 as he had returned to work full-time and that no further IRBs would be paid after this date.

The claimant continued working until July 1, 2018 and filed an application with the LAT. Allstate denied his claim for further IRBs on the basis that his application was time-barred having been filed more than 2 years after the initial denial. The LAT adjudicator held that Allstate’s termination of IRBs was proper and it was not required to provide medical reasons. It was further held that the limitation period had expired for the claimant to pursue IRBs.

The Divisional Court overturned the LAT decision finding that the correct interpretation of section 37(4) of the SABS requires insurers to provide both medical and other reasons to discontinue IRBs. The court held that the word “and” in the phrase “medical and any other reasons” was to be read conjunctively. It further found that this requirement met the purpose of the notice provisions of the SABS and was consistent with the requirement that insurance coverage provisions be interpreted broadly.

The ONCA disagreed with the Divisional Court ruling and reinstated the LAT ruling. They held that the Divisional Court’s ruling did not accord with the modern principle of statutory interpretation and that the grammatical and ordinary usage of the word “and” can include both the joint sense and the several sense. When the phrase “medical and any other reason” in s. 37(4) is read contextually, it becomes clear that the ordinary meaning of the word “and” was intended in its several sense. This interpretation was found to be harmonious with sections 37(2) and 37(4) of the SABS.

The ONCA also found that s. 37(4) was not an insurance coverage provision.

In summary, the ONCA held that a medical OR other reason can be sufficient to meet the purpose of the notice provisions. The claimant’s LAT application disputing the decision to terminate his IRB’s was held to be time-barred since it was filed more than 2 years after the stoppage letter.

Read the full decision here:

Three Strikes and the Applicant’s Not Out?

Ratnarajah v Belair Insurance, 2023 CanLII 23580 (ON LAT)

In Ratnarajah v. Belair, Ontario’s Licence Appeal Tribunal (LAT) held that an application was not dismissed as abandoned, despite the applicant’s failure to attend three case conferences.

The applicant submitted that he had no intention of abandoning his application and that he could provide reasonable explanations for missing all three case conferences.

He missed the first two case conferences due to a family emergency and an internal issue with his legal firm’s server, respectively.

He missed the third case conference due to a medical emergency, as a result of which he attended a walk-in clinic and obtained a medical note.

The LAT expressed concerns regarding the lack of detail in the medical note. There was no explanation as to why the applicant visited the walk-in clinic on the day of the case conference, or details as to the time of day that he attended.

The LAT also considered that, if the application were to be dismissed, the applicant would be prohibited from disputing his entitlement to benefits as the two year limitation period had lapsed. As such, a dismissal would go against the spirit and purpose of the SABS as consumer protection legislation.

Notably, the LAT did not consider the respondent’s submissions as they were submitted improperly and extremely late.

The LAT ordered that the applicant’s attendance at the next case conference was preemptory.

Read the full decision here:

Contingency Fees Must be Justified

Halimi v. Certas Home and Auto Insurance Company, 2023 ONSC 432

In Halimi v. Certas, the Ontario Superior Court ruled that a contingency fee agreement that would have paid the Plaintiff’s personal injury lawyer more than one-third of the proposed $900,000 accident benefits settlement was unfair and substituted it for a lower fee.

The Ontario Court of Appeal has made it clear that a contingency fee agreement must be both fair and reasonable. The factors relevant to a consideration of the reasonableness of a contingency fee agreement are:

1) The legal complexity of the matter;
2) The results achieved;
3) The risk assumed by the solicitor; and
4) The time expended by the lawyer.

In this case, the applicant, Ali Halimi, was born on May 7, 1996. He was injured in a car accident on March 11, 2017 and was subsequently designated catastrophically impaired.

Although Halimi had had issues surrounding his mental health prior to the accident, it was agreed there that his mental health declined after the accident.

In a report dated September 29, 2019, a capacity assessor found that Halimi could not manage his financial affairs and property. As a result, his sister was appointed Litigation Guardian.

Halimi had signed a contingency fee agreement that provided for fees calculated at 33.3% of any settlement in both the accident benefits claim and the tort action. After Halimi was found to lack capacity, his sister signed the same retainer agreement.

In addressing the factors relevant to the reasonableness of the contingency fee agreement in question, the court noted:

1) Legal Complexity: This was not a complex matter, but rather a straightforward claim where the accident benefits insurer had conceded the applicant’s entitlement to benefits and the catastrophic designation. There were no items in dispute with the insurer.

2) Results Achieved: The applicant had been receiving benefits and the main question to be determined was the proper amount to settle his entitlement into the future.

3) Risk Assumed: This was not a case that was fraught with risk for the solicitor.

4) Time Expended: There was nothing in the court record to indicate what steps were necessary to settle the case. The solicitor had “multiple meetings” with the applicant and his sister, who both wished to resolve the claim without taking further steps. There was no reference to having to mediate any of the issues or having to attend a LAT hearing.

The Court stated that just because a contingency fee agreement provides that a certain percentage of the settlement be designated towards fees, this does not mean that it is the proper fee to be charged.

In the circumstances of this case, the Court did not find a fee based on 33.3% of recovery “fair or reasonable” and declined to approve it.

The Court found that, in accident benefits cases where there is little dispute, and where a settlement offer is made which counsel recommends and the Plaintiff accepts without further steps being taken, a fee in the range of 10-15% is fair and reasonable.

Read the full decision here:

Stay tuned for our next blog post where we revisit the topic of procedural issues.

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