



COURT OF APPEAL FOR ONTARIO

CITATION: Stegenga v. Economical Mutual Insurance Company,
2019 ONCA 615

DATE: 20190719

DOCKET: C65180

Brown, Roberts and Zarnett JJ.A.

BETWEEN

Morgan Stegenga

Plaintiff
(Appellant)

and

Economical Mutual Insurance Company

Defendant
(Respondent)

J. Patrick Brown and Michael Warfe, for the appellant

Lisa Armstrong, Julianne Brimfield and Mark A. Gelowitz,
for the respondent

Heard: April 26, 2019

On appeal from the judgment of Justice James A. Ramsay of
the Superior Court of Justice, dated March 6, 2018, with reasons reported at
2018 ONSC 1512.

Zarnett J.A.:

[1]

The Statutory Accident Benefits
(SABs)
dispute resolution provisions of s. 280 of the
Insurance
Act
, R.S.O. 1990, c.
I. 8, which came into force
on April 1, 2016, give the Licence Appeal Tribunal (LAT) jurisdiction to
resolve certain disputes and prohibit bringing proceedings in respect of those disputes
in court.
[1]
This appeal raises the question of whether claims for an insurers bad faith
conduct fall outside of those provisions.
[2]

[2]

The appellant, Morgan Stegenga, was seriously injured in a motor
vehicle accident. She claimed SABs from her insurer, the respondent Economical
Mutual Insurance Company. In light of the way Economical Mutual handled her claim,
she brought an action against it alleging bad faith and claiming punitive and
exemplary damages, among other things.

[3]

Economical Mutual successfully moved to
strike out
Ms. Stegengas statement of claim and obtained a determination, as a matter of
law, that the LAT has exclusive jurisdiction to decide Ms. Stegengas claim at
first instance.

[4]

The motion judge held that Ms. Stegengas claim fell
within the SABs dispute resolution provisions because it was in respect of an
insured persons entitlement to statutory accident benefits or in respect of
the amount of statutory accident benefits to which an insured person is
entitled: s. 280(1). It was therefore a claim over which the LAT has exclusive
jurisdiction and one which may not be brought in court: ss. 280(2), (3). In the
motion judges view, both s. 280 of the Act and this courts decisions under
the prior version of the Acts dispute resolution provisions required that
conclusion, even though Ms. Stegengas lawsuit asserted and sought damages
for bad faith stemming from Economical Mutuals administration of her SABs
claim.

[5]

Ms. Stegenga appeals. She argues that this is
the first case to consider whether an action for bad faith administration of a
SABs claim comes within the current s. 280, amended since the cases the motion
judge relied on were decided. She argues that the principles of statutory
interpretation, case law that has emphasized the standalone nature of a cause
of action for bad faith, the nature of the relief claimed, and sensible policy
considerations, all lead to the conclusion that s. 280 does not apply.

[6]

For the following reasons, I conclude that s.
280 does apply. Interpreted in light of the principles of statutory
interpretation, s. 280 grants the LAT jurisdiction over Ms. Stegengas claim,
and prohibits the claim from proceeding as an action in court, notwithstanding
that the action alleges bad faith and the remedies the LAT can grant are
different from those a court could. This result is a consequence of the policy
choice the legislature made in enacting s. 280. I would therefore dismiss the
appeal.

The Facts

[7]

Economical Mutual brought its motion under Rule
21.01(1)(a) of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194.

On such a motion, the facts alleged in Ms. Stegengas statement of
claim are taken to be true. The facts set out below come from that statement of
claim.

[8]

In November 2011, when she was fifteen years
old, Ms. Stegenga was a passenger in a motor vehicle that was involved in a
serious collision. She suffered significant injuries, including a head injury with
a Glasgow Coma Scale (GCS) score of 6, necessitating a period of intubation
and treatment in a Pediatric Critical Care Unit. She also suffered multiple rib
fractures, pulmonary contusions, fractures to her right clavicle, scapula and
pelvic rami, as well as other injuries. These injuries were accompanied by,
among other things: a loss of cognitive ability; personality, behaviour and psychological
changes; and anxiety, depression and chronic pain. As a result, Ms. Stegenga
experienced a decline in her academic performance. She has struggled to
maintain her grades, focus on school work and complete assignments.

[9]

Ms. Stegenga was insured by Economical Mutual under
an automobile insurance policy it issued to her father.

[10]

In January 2012, Ms. Stegengas mother applied
on her behalf to the respondent for SABs. Pertinent medical information was provided
by Ms. Stegengas pediatrician.

[11]

For a period of about three years, Economical
Mutual did not advise Ms. Stegenga or her parents that her injuries could
qualify as a catastrophic impairment or inform them of the benefits that could
be available for such an impairment. Economical Mutual also did not:

·

provide them with the application form required
to make a determination about catastrophic impairment;

·

take steps to interview Ms. Stegenga or her
parents regarding the nature and extent of her injuries or their effect on her
daily life;

·

arrange to have her assessed by a health
practitioner;

·

assign a case manager to assist with her care
and rehabilitation, or advise her that she was entitled to a case manager;

·

obtain her hospital and clinical records for
over two years, or respond appropriately to such records when eventually provided
to them;

·

respond to requests to authorize a neurologic
psychoeducational assessment; and,

·

provide accurate Benefit Statements to Ms.
Stegenga and her parents (those provided misrepresented both the nature of her injuries
as non-catastrophic and the applicable policy limits available to her).

[12]

In February 2015, Economical Mutual advised that
based on Ms. Stegengas GCS score, it now accepted that she had suffered a
catastrophic impairment as a result of the collision. However, over the next
year, Economical Mutual continued to provide Benefit Statements that described
her injuries as non-catastrophic.

[13]

Ms. Stegenga alleges that Economical Mutual breached
the duties it owed to her because it acted wilfully and negligently in breach
of its contract with her and in breach of its duty of good faith. The claim
recites 56 particulars of Economical Mutuals alleged breaches, which may be
grouped into several categories:

·

failing to inform Ms. Stegenga and her family of her rights and entitlements
to benefits under the
Statutory Accident Benefits Schedule


Effective September 1, 2010, O. Reg 34/10 (the SABs Schedule);

·

while it knew or ought to have known that Ms. Stegenga suffered a
catastrophic injury, failing to ensure she had the proper information, forms, examinations,
assessments, treatment, care, and a case manager;

·

failing to take steps to investigate Ms. Stegengas medical
condition and her entitlement to benefits, and not properly considering
information provided to it on those topics;

·

preventing Ms. Stegenga from accessing benefits and withholding,
delaying or denying benefits based on inaccurate and irrelevant considerations;

·

sending Ms. Stegenga and her family confusing, misleading and
contradictory correspondence about her entitlement to benefits, misrepresenting
her benefits, withholding information and failing to make disclosure, knowing
that Ms. Stegenga would not receive the treatment, care and benefits she
required and to which she was entitled; and,

·

failing to follow reasonable standards for the handling of Ms. Stegengas
claim for benefits.

[14]

As noted, t
he statement of claim refers to Ms.
Stegengas entitlement to SABs and to the fact that SABs were not, or were
inadequately, provided. It states that, because of Economical Mutuals conduct,
and reliance on its misleading representations, she did not receive the care,
treatment, and benefits to which she was entitled and should have received. Ms.
Stegenga also
pleads that although
she provided all forms, information and medical documentation requested by Economical
Mutual, Economical Mutual did not provide the benefits to which [Ms. Stegenga]
was legally entitled.

[15]

The statement of claim alleges that Economical
Mutuals conduct prolonged Ms. Stegengas suffering, and caused new
difficulties and impairments she would not otherwise have experienced, as well
as emotional, psychological and financial distress. Damages, including punitive,
aggravated and exemplary damages, are claimed.

The Motion Judges Decision

[16]

Economical Mutual moved under r. 21 to strike
the statement of claim, seeking the determination of a question of law: whether
the appellants claim is barred by ss. 280(1) and (3) of the
Insurance
Act
. The motion judge defined the question as whether a
claim for negligent, fraudulent or bad faith administration of accident
benefits is a claim falling within s. 280(1), that is,

whether it is a dispute in respect of an insured persons entitlement
to statutory accident benefits or in respect of the amount of statutory
accident benefits to which an insured person is entitled
.

[17]

The motion judge reasoned that the words in
respect of in s. 280(1) import a connection in a very broad sense. He
considered the dispute resolution provisions to be designed to provide a cost-efficient
and fair mechanism for resolving disputes between insurers and insureds in
respect of SABs, by mandating that disputes be heard at first instance by the
LAT. To determine whether the dispute fell within the LATs jurisdiction and therefore
outside that of the courts, the motion judge instructed himself to look to the
facts giving rise to the dispute rather than the legal characterization of the
wrong, citing
Weber v. Ontario Hydro
,

[1995] 2 S.C.R. 929, at para.
49. He cited this courts decision in
Arsenault v. Dumfries Mutual
Insurance Co.
(2002),

57 O.R. (3d) 625 (C.A.), which was decided under the dispute
resolution provisions of the Act before the 2016 amendments, as standing for the
proposition that those provisions apply if a refusal of accident benefits is an
essential part of a claim, regardless of whether bad faith in administering a
claim may be an independent tort in the context of accident benefits. He
concluded that s. 280 is intended to deprive a claimant of resort to the court
at first instance whenever the claim is based on denial of accident benefits,
no matter how the denial is characterized in legal terms.

The Appellants Position

[18]

Although the statement of claim seeks damages for breach of
contract, negligence, misrepresentation and infliction of mental distress, Ms. Stegengas
argument on appeal focuses on her action as one for bad faith relating to the administration
of her SABs claim. She argues that an insurers duty of good faith is
independent of and in addition to its duty to pay the benefits to which an
insured person is entitled, a point she argues follows from the Supreme Courts
decision in
Whiten v. Pilot Insurance Co.
, 2002
SCC 18, [2002] 1 S.C.R. 595, at para. 79. A breach of the duty of good faith
gives rise to a standalone action for bad faith in which aggravated, exemplary
and punitive damages are available.

[19]

Ms.
Stegenga
submits that nothing in the
Insurance Act
deprives the Superior Court of jurisdiction to deal with such a
claim or confers jurisdiction on the LAT to do so, for interrelated reasons. Her
standalone bad faith claim is not for benefits entitlement, and the LAT cannot
award aggravated, exemplary or punitive damages. The cases by which the motion
judge considered himself bound, including
Arsenault,
are distinguishable because they did not involve true bad faith
claims: they were claims for indemnity under the insurance contract and dealt
with entitlement issues. The motion judges conclusion that the LAT has
exclusive jurisdiction over Ms. Stegengas claim effectively insulates insurers
from claims involving a breach of their duty of good faith in relation to
claims for SABs, a result she contends should be avoided.

Analysis

[20]

This appeal requires me to consider three issues:

1.

What is the breadth of the SABs dispute resolution provisions in the
Insurance Act
that prohibit recourse to the court and empower the LAT
to resolve disputes?

2.

Does a bad faith claim against an insurer, seeking relief such as
punitive damages, fall outside the scope of the dispute resolution provisions?

3.

What effect do the conclusions under issues 1 and 2 have on Ms. Stegengas
claim?



[21]

As I explain, the SABs dispute resolution provisions
capture a broad range of disputes, including disputes about how an insurer
handled a SABs claim. The purpose of the provisions, the expansive language
used and the extent of the powers given to the LAT all support this
interpretation.

[22]

Neither the legal characterization of the cause
of action asserted against the insurer nor the relief claimed determines
whether a claim falls within the scope of the dispute resolution provisions. If
the dispute relates to the insurers compliance with obligations to the insured
concerning SABs, the timeliness of performance of those obligations and/or the
manner in which they were administered, it falls within the broad reach of the
dispute resolution provisions, and within the jurisdiction of the LAT. The
prohibition on court proceedings will apply.

[23]

In this case, these conclusions apply to bar Ms.
Stegengas action.

The Statutory Scheme

[24]

Subsection 280
(1) of
the
Insurance Act

describes the disputes to which the dispute resolution process it
mandates applies. It provides:

This section applies with respect to
the resolution of disputes in respect of an insured persons entitlement to
statutory accident benefits or in respect of the amount of statutory accident
benefits to which an insured person is entitled.

[25]

Subsection 280(2) goes on to confer jurisdiction on the LAT to resolve the
disputes described in s. 280(1):

(2) The insured person or the insurer
may apply to the Licence Appeal Tribunal to resolve a dispute described in
subsection (1).

[26]

Subsection 280(3) then places a limit on what proceedings may be
brought in court, prohibiting proceedings at first instance if they are with respect
to a dispute described in s. 280(1), that is, a dispute that falls within the
jurisdiction of the LAT:

(3) No person may bring a proceeding in
any court with respect to a dispute described in subsection (1), other than an
appeal from a decision of the Licence Appeal Tribunal or an application for
judicial review.

[27]

Further guidance on what falls within the jurisdiction of the LAT and
therefore outside that of the court at first instance is contained in the
balance of s. 280 and the relevant regulations.

[28]

Subsection 280(4) provides that a dispute shall be resolved in
accordance with the SABs Schedule. Subsections (5) and (6) provide that the powers
of the LAT and the orders it may make may be provided for by regulation, and
may include the power to make orders to pay amounts even if those amounts are
not costs or amounts to which a party is entitled under the [SABs Schedule]: s.
280(6)2.

[29]

Both the SABs Schedule and the regulations envisaged by the Act contemplate
the LAT making determinations about how an insurer has handled a claim and granting
relief beyond the payment of SABs when payments have been unreasonably
withheld or delayed. Section 3(8) of the SABs Schedule provides:

If in a dispute described in subsection
280 (1) of the Act, the Licence Appeal Tribunal finds that an expense was not
incurred
because the insurer unreasonably withheld
or delayed payment of a benefit in respect of an expense
,
the Licence Appeal Tribunal may, for the purpose of determining an insured
persons entitlement to the benefit, deem the expense to have been incurred.
[Emphasis added.]

[30]

And section 10 of
Automobile Insurance
, R.R.O.
1990, Reg. 664, provides:

If the Licence Appeal Tribunal
finds that an insurer has unreasonably withheld or delayed payments
, the Licence Appeal Tribunal, in addition to awarding the benefits and
interest to which an insured person is entitled under the Statutory Accident
Benefits Schedule,
may award a lump sum of up to
50 per cent of the amount to which the person was entitled at the time of the
award
together with interest on all amounts then owing to
the insured (including unpaid interest) at the rate of 2 per cent per month,
compounded monthly, from the time the benefits first became payable under the
Schedule. [Emphasis added.]

Issue 1: The Broad Scope of the SABs Dispute Resolution
Provisions

[31]

The breadth of s. 280 of the
Insurance

Act
is a question of statutory interpretation
.
The modern approach to statutory interpretation requires the court
to consider the words of a statute in their entire context and in their
grammatical and ordinary sense harmoniously with the scheme of the Act, the
object of the Act, and the intention of Parliament:
Belwood Lake
Cottagers Association Inc. v. Ontario (Environment and Climate Change)
,
2019 ONCA 70, at para. 39, citing
Montréal
(City) v. 2952-1366 Québec Inc.
, 2005 SCC 62, [2005] 3
S.C.R. 141, at paras. 9-12, and
Rizzo & Rizzo Shoes Ltd. (Re)
,
[1998] 1 S.C.R. 27, at
para. 21. Reading a statutory provision in its entire context requires the
court to consider the history of the provision and its place in the overall
scheme of the act, among other things:
Belwood
,
at para. 41.

[32]

More specific principles of interpretation apply in some cases. Ms.
Stegenga argues that as the Superior Court is a court of general jurisdiction,
it has jurisdiction over all matters of substantive law in civil claims unless
that jurisdiction is taken away by clear and unequivocal legislative language
:
TeleZone Inc. v. Attorney General (Canada)
, 2008 ONCA 892, affd 2010 SCC 62, [2010] 3 S.C.R. 585, at paras. 3,
6.

[33]

It is conceded that the
Act
does, by clear and unequivocal language, take away some jurisdiction
from the court and confer it on the LAT. The Acts express directions that [n]o
person may bring a proceeding in any court with respect to a dispute (s. 280(3))
and that [t]he insured person or the insurer may apply to the [LAT] to resolve
a dispute (s. 280(2)) leave no doubt about that. The issue is the breadth of
the subject matter carved out of the courts jurisdiction and given to the LAT to
resolve.


[34]

Ms. Stegenga essentially argues that the words disputes in respect of
an insured persons entitlement to statutory accident benefitsor in respect of
the amount of statutory accident benefits to which an insured person is
entitled only capture disputes about whether or not a benefit should be paid,
that is, claims for a benefit itself, or disputes about whether a benefit was paid
in an incorrect amount, that is, claims for the further amount that should be
paid or for the excess amount that should not have been paid. She argues that the
legislature used the terms entitlement and amount to limit the scope of s.
280(1). Had the legislature drafted the provision to cover any dispute in
respect of statutory accident benefits, for example, its reach would be
broader.

[35]

In my view this argument reads the section too narrowly. Several indicators
of legislative meaning, which I outline below, lead to the conclusion that a
dispute in respect of an insured persons entitlement to SABs or the amount of an
insured persons SABs entitlement embraces more than a claim for the payment of
a benefit not paid or paid in an incorrect amount, and extends to the way the
claim was handled.

(i)

Legislative Purpose

[36]

The current version of s. 280 of the
Act
came into force on
April 1, 2016. The previous version provided for mandatory mediation of disputes
in respect of any entitlement to or the amount of an entitlement to SABs, and
gave an insured person an option of then proceeding to court or arbitration for
the resolution of such a dispute if mediation failed, but within a two-year
limitation period:
Insurance Act
, R.S.O. 1990,
c.
I.8
, ss. 279-283 as they appeared on March 31, 2016.
[3]


[37]

The pre-April 2016 provisions were described as a mandatory scheme
and complete code for
dealing with disputes between an insured person
and an insurer concerning SABs issues (emphasis omitted)
:
Ayr
Farmers Mutual Insurance Company v. Wright
,
2016 ONCA 789, at paras. 4, 16, 34. The amendments
enacted in April 2016  giving the LAT jurisdiction (subject to appeal or
judicial review) over the same disputes that were previously subject to
mandatory mediation, and prohibiting proceedings in court  do not detract from
the legislatures intention that the provisions continue to constitute a
complete code for the resolution of disputes in respect of an insured persons
entitlement to SABs or in respect of the amount of SABs to which an insured
person is entitled.

[38]

The purpose of the amendments that led to the current s. 280 has been
described as reducing both insurance rates and insurance fraud, and speeding up
dispute resolution, in large part by providing an efficient, fair and
accessible mechanism for resolving disputes: Fighting Fraud and Reducing
Automobile Insurance Rates Act, 2014, 1st reading, Ontario, Legislative
Assembly,
Official Report of Debates (Hansard)
,
41st Parl., 1st Sess., No. 8 (15 July 2014) at 1510 (Hon. Charles Sousa); see
also 2014 Ontario Automobile Insurance Dispute Resolution System Review,
Final
Report
, by The Hon. J. Douglas Cunningham (Toronto: 25
February 2014) at pp. 2-3, 13, 31-33, the report that formed the basis for the
amendments to the dispute resolution provisions. The amendments removing
disputes from the courts and empowering the LAT to deal with them are among the
cornerstones of the legislation passed to effect the above purpose
: Hon.
Charles Sousa, at 1510
.

[39]

The purpose of the current s. 280 has two important implications.
First, the purpose of reducing insurance rates by providing for efficient dispute
resolution through the LAT would not be served by an overly restrictive reading
of the LATs jurisdiction and the corresponding limit on the courts jurisdiction.
The legislature must be taken to have considered the importance of its
objectives of efficiency and cost reduction to outweigh the loss of insured
individuals access to the courts and to the full range of remedies available
there.

[40]

Second, while the legislatures intention that the dispute resolution
provisions continue to be a complete code does not, on its own, determine which
disputes fall within it, it does suggest that the legislature did not intend the
same, similar, or overlapping issues to be adjudicated in more than one forum.

(ii)

The Use of Expansive Language in s. 280(1)

[41]

The entry point to the SABs dispute resolution provisions is s.
280(1), which contains expansive language.

[42]

As the motion judge correctly noted, the phrase in respect of connotes
the broadest possible connection between two subject matters:

Arsenault
, at para. 16, citing
Nowegijick
v. The Queen
, [1983] 1 S.C.R. 29, at p. 39. In s. 280(1),
that phrase connects dispute to entitlement to statutory accident benefits
or their amount.

[43]

The ordinary meaning of the noun dispute is broad. It has been
described as a conflict or controversy, a disagreement or argument and a
controversy; a debate:
Blacks Law Dictionary
, 11th
ed.;
Concise Oxford English Dictionary
, 12th ed;
Canadian
Oxford Dictionary
, 2d ed
.

[44]


Entitlement is a term
of wide meaning, referring to a right to do or receive something:
Concise
Oxford English Dictionary
, 12th ed.
It embraces
the content of the insureds right to receive SABs (i.e. what SABs an insured
person has a right to receive), when they have a right to receive those SABs, and
the manner of performance by the insurer they have a right to receive.

[45]

Taken together, the words of s. 280(1) cover a wide array of
disagreements connected in some way to the SABs to which an insured person was
or is entitled. Viewed in the context of the purpose and history of the dispute
resolution provisions, those words include disagreements about when the insurers
obligation to provide SABs should be or should have been performed, and how the
obligation to provide them should be or should have been performed.

(iii)

The LATs Jurisdiction

[46]

The balance of s. 280 informs the proper interpretation of the s.
280(1) reference to disputes in respect of entitlement to SABs or their amount.
These provisions elaborate on the jurisdiction given to the LAT, and therefore
on what falls within s. 280(1). The jurisdiction given to the LAT over those
disputes is co-extensive with that removed from the court: ss. 280(2), (3).

[47]

The jurisdiction given to the LAT includes making determinations about
the manner in which an insurer has administered a claim for SABs. Subsection
280(4) states that the LAT shall resolve disputes in accordance with the SABs
Schedule. The SABs Schedule gives the LAT the power, for the purpose of making
an award of benefits, to deem an expense to have been incurred if that expense
was not incurred because an insurer unreasonably withheld or delayed payment of
benefits in respect of the expense: s. 3(8). Determining whether a benefit was
unreasonably withheld or delayed necessarily involves determining both what
benefits were due and when, and whether the insurers conduct that led to it
not providing the benefit or providing it later than it should have was
unreasonable.

[48]

Similarly, ss. 280(5) and (6) of the Act contemplate the LAT exercising
power under other regulations. Subsection 280(6)2 allows the regulations to authorize
the LAT to award amounts beyond those for which the SABs Schedule provides. The
regulations in turn allow the LAT to make, in addition to an award of the
benefits and interest to which the insured is entitled under the SABs Schedule,
an award (known as a special award) of up to 50 percent of the benefits to
which the insured is otherwise entitled, and interest at a higher rate, if it
finds the insurer unreasonably withheld or delayed the payment of benefits:
Automobile
Insurance
, s. 10. The LATs powers contemplate an enquiry
into and determination of what and when benefits should have been paid, and
into whether any delay or failure to pay was reasonable, that is, into the
manner in which the insurer has dealt with the claim and performed its SABs-related
obligations.

[49]

The LATs jurisprudence shows that it enters into such enquiries and
makes such determinations. In
17-006757 v. Aviva Insurance Canada
, 2018 CanLII 81949 (Ont. L.A.T.), the LAT found the insurer to have
unreasonably delayed payment of benefits: at para. 32. In making a special award,
the LAT considered the insureds entitlement to the benefits claimed, the
insurers delay in approving payments without apparent explanation, its near
total disregard of the correspondence from the insureds legal representatives
and medical practitioners, its failure to reassess the claim when new
information became available, its ignoring the claim for a period of time and its
imprudent, stubborn, inflexible and unyielding stance with respect to the benefits
claimed: at paras. 36-37.

[50]

This is consistent with the approach taken to special awards under the prior
version of the Act. Jurisdiction to make a special award was vested in an
arbitrator of the Financial Services Commission of Ontario:
Insurance
Act
, R.S.O. 1990, c.
I.8
, s. 282(10)
as it appeared on March 31, 2016
. The operative language
permitting such an award was nearly identical to the regulation now empowering
the LAT to do so; that is, it required the insurer to have unreasonably withheld
or delayed the payment of benefits. The approach to making special awards under
the prior version of the Act required the arbitrator to determine the benefits
owing to the insured person, and whether the insurer unreasonably withheld or
delayed payments. Factors relevant to fixing the amount of a special award
included the amount of benefits unreasonably withheld or delayed, the length of
the delay and any failure to respect procedural and other protections for the
insured. Bad faith was not required but was relevant if shown, as was the
vulnerability of the insured if known to the insurer:
Personal
Insurance Company v. Hoang
,

2014 ONSC 81 (Div. Ct.), at

paras. 64-65.

(iv)

Differences in Remedial Powers Do Not Affect the
Result

[51]

The appellant points out that the remedies the LAT can grant, such as a
special award, are different from what a court may award. For example, even if
the LAT finds a delay or withholding of benefits that was unreasonable, and in
making that determination finds conduct that would at common law amount to bad
faith, it could not grant consequential or punitive damages as a court might.
[4]
The appellant submits that finding
that s. 280 bars Ms. Stegengas claim effectively insulates insurers from claims
involving the breach of the duty of good faith in the SABs context, and from the
punitive and deterrent effect of the courts remedial powers.

[52]

In my view this remedial difference does not bear on the issue of what
types of disputes are captured by the grant of authority to the LAT and the
parallel prohibition on court proceedings. The legislature made a choice as to
what disputes would be within the exclusive jurisdiction of the LAT, and what
remedial powers the LAT would have. That was a policy choice it was entitled to
make. The
Insurance Act

and its regulations form a
comprehensive scheme for the regulation of insurers and insurance. The legislature
must be taken to have armed the LAT with the remedial powers it considered
appropriate to deal with improper insurer behaviour, knowing those remedial
powers were different from the courts.

(v)

Conclusion on the Meaning of the Dispute Resolution
Provisions

[53]

Disagreements between an insurer and insured about the SABs the insured
should receive, their amount, the timeliness of their provision, and the
conduct and process of the insurer in providing them (that is, the handling or
administration of the claim) constitute disputes in respect of the insured
persons entitlement to SABs or their amount.
Put in terms
applicable here, an insured person could properly be said to have a dispute falling
within s. 280(1) if a benefit the insured considers ought to have been paid or
provided was not, or if it was paid or provided but only well after the insured
considers it should have been because of what the insured considers to have
been the insurers inappropriate handling of the claim.
These
are matters the legislature has empowered the LAT to decide, and has taken away
from the court.

Issue 2: A Bad Faith Claim Does Not Automatically Fall
Outside the Reach of s. 280

[54]

The appellant argues that since bad faith is a standalone cause of
action, her claim falls beyond the reach of s. 280. I agree that bad faith can
be characterized as a cause of action which is available to a person insured by
an insurance contract but is independent of and distinct from a claim for
payment or indemnity under the insurance contract. However, it does not follow
that this automatically takes the subject matter of a claim, even when
characterized as one for bad faith, outside of s. 280.

[55]

The following descriptions of the nature of an action for bad faith
(all from cases that do not deal with SABs) are useful to analyse the appellants
submission:

a)

An insurer is under a duty of good faith and fair dealing. A breach of
the duty of good faith is independent of and in addition to the breach of a
contractual duty to pay the insureds loss. It is an actionable wrong, which
can support a claim for punitive damages
:
Whiten
, at paras. 79.

b)

A breach of the duty to act fairly and in good faith gives rise to a
separate cause of action that is distinct from the cause of action founded on
the express terms of the policy and that is not restricted by the limits in the
policy. Hence it may result in an award of consequential damages distinct from
the proceeds payable under the policy
:
Ferme Gérald Laplante & Fils Ltée v. Grenville Patron Mutual Fire Insurance
Co.
(2002)
, 61
O.R. (3d) 481 (C.A.), at para. 78.

c)

Statutory conditions in an insurance contract imposing limitation
periods for a claim under [this] contract or an action under this contractin
respect of the loss or damage to person or property do not apply to a bad
faith claim. A bad faith claim is not a claim for indemnity under the contract
:
Dundas v. Zurich Canada,
2012 ONCA 181, 109 O.R. (3d) 521, at
paras. 46-49.

[56]

In my view the nature of a bad faith cause of action does not
automatically take a claim so denominated outside the reach of s. 280. Section
280 is not limited to claims for breach of a contractual duty to pay SABs, nor
to claims
under

an insurance
contract. As explained above, s. 280 also embraces disputes about the manner in
which a claim was handled or administered.

[57]

Alleging bad faith did not automatically take a claim out of the ambit
of the pre-April 2016 SABs dispute resolution provisions. In
Arsenault
, Abella J.A. (as she then was) held that a claim alleging bad faith in
the termination of benefits was still subject to the limitation period in
former s. 281(5), for two reasons. First, assuming that bad faith could form an
independent basis for a claim (as was subsequently confirmed in
Whiten
), Abella J.A. reasoned that the claim fell within the subject matter
of the SABs dispute resolution code in the
Act
, including its limitation period, because
the claim required a determination as to whether the insurers termination of
benefits was improper:
Arsenault
, at para. 18.
Second, looking at the substance of the claim, rather than its pleaded legal characterization,
Abella J.A. also reasoned that the claim was for a determination that the
insurer ought not to have terminated benefits when it did. On that basis it
also fell with the dispute resolution code: at para. 19.

[58]

This court reached a similar result in
Mader v. South
Easthope Mutual Insurance Company
, 2014 ONCA 714, 123 O.R.
(3d) 120. The insured in that case framed her claims for income replacement
benefits and damages as flowing not only from a breach of contract, but also from
a breach of the duty of good faith and a conspiracy, and argued that the latter
claims were not subject to the mandatory mediation requirement in the previous
s. 281(2) of the Act. However, Hourigan J.A. concluded that the claim still fell
within the Acts previous dispute resolution code, because [t]he claims
asserted by the appellant all flow from the denial of benefits and essentially
amount to nothing more than a claim that the appellant was wrongly denied
benefits to which she believes that she is entitled to receive: at para. 49.
This was precisely the type of claim contemplated for resolution by the Acts former
SABs dispute resolution procedure.

[59]

I do not accept Ms. Stegengas submission that the reasoning in these
cases is inconsistent with or displaced by the decision in
Dundas
.

The bad faith
claim in
Dundas

was not covered by the statutory
condition imposing a time limit on claims because the condition applied only to
claims
under
the policy.
[5]
As noted, s. 280 is not
similarly limited.

[60]

In my view the amendments to the Act following
Arsenault
and
Mader

do not affect their continued
applicability. The language considered in those cases, [d]isputes in respect
of any insured persons entitlement to statutory accident benefits or in
respect of the amount of statutory accident benefits to which an insured person
is entitled, remains virtually the same.
[6]
The legislature preserved that language in the face of the broad interpretation
the courts had given to it, of which the legislature is presumed to have been
aware:
ATCO Gas & Pipelines Ltd. v. Alberta (Energy &
Utilities Board)
, 2006 SCC 4, [2006] 1 S.C.R. 140, at para. 59;
Ruth Sullivan,
Sullivan on the Construction of Statutes
, 6th
ed. (Toronto: LexisNexis, 2014) at p. 205
. Only the consequences
of a dispute coming within that definition have changed. Court proceedings were
previously available following mandatory mediation, and within a certain
limitation period; now they are not. That consideration does not prevail over the
fact that the operative language remains the same.
Arsenault
and
Mader

continue to be applicable to
the current s. 280(1).

[61]

It is not the type of legal claim, whether bad faith or otherwise,
which determines whether s.280 applies. As I explain below, it is the nature
and subject matter of the dispute, assessed on the basis of the facts that give
rise to it, that are determinative.

Issue 3: Application to the Appellants Claim

[62]

The approach taken by the Supreme Court in
Weber v. Ontario
Hydro
,

[1995] 2 S.C.R. 929, applies
to determine
whether the Act has removed a dispute from the courts jurisdiction in favour
of the LATs jurisdiction. In
Weber
,
McLachlin J. (as she then was) held that
the
facts giving rise to a dispute, rather than the legal characterization of a
dispute, determined whether that dispute had been removed from the courts
jurisdiction by the mandatory arbitration clause in s. 45(1) of the former
Labour
Relations Act
,
R.S.O. 1990, c. L.2
: at
para. 49. If the legal characterization of the claim were determinative, clever
pleading could defeat the object of the legislatures prohibition on parallel court
proceedings: at para. 49.

[63]

As in
Weber
, the wording of the
Insurance
Act
removing jurisdiction from the court and conferring it
on the LAT indicates that the facts giving rise to the dispute determine which
forum has jurisdiction over the dispute. In
Weber
,
McLachlin J. noted that the mandatory arbitration provision in the
Labour
Relations Act

refers to all
differences
between the parties arising from the interpretation, application,
administration or alleged violation of the agreement: at para. 45. She
reasoned that the word differences denoted the
dispute
between the parties, rather than the type of legal claim one party might be
able to bring against another. The legislature intended to exclude all
proceedings arising from disputes of a certain character between the parties,
however those proceedings may be framed: at para. 45.
The same
reasoning applies here: s. 280 of the
Insurance Act

is not framed in terms of legal characterizations, but refers directly
to disputes.

[64]

At their core, the facts alleged in Ms. Stegengas statement of claim
are about the insurers failure to provide the benefits to which Ms. Stegenga
was entitled; the insurers delay in providing benefits, its withholding of
benefits, and the circumstances in which that occurred; and the insurers
conduct and process in handling the claim for benefits and dealing with Ms.
Stegenga and her family, all of which caused or contributed to Ms. Stegenga not
receiving the care, treatment, and benefits to which she was entitled and
should have received. These facts demonstrate that Ms. Stegengas action,
viewed with an eye to its essential character, is a dispute 
in
respect of her entitlement to SABs and their amount:
Weber
, at para.
67.
It falls within s. 280.

[65]

Ms. Stegengas entitlement to benefits and the insurers non-provision
of benefits recurs as a theme in her pleading. If the court action were allowed
to proceed, the benefits to which Ms. Stegenga was entitled, their amount, and
when they ought to have been provided would have to be determined as a
predicate to determining whether the insurers withholding or delay in
providing benefits  its handling of the claim  gave rise to an actionable
wrong such as bad faith. Those same determinations would have to be made in
order to decide whether the insurer made actionable misleading statements. But
those predicate determinations are within the LATs jurisdiction. In intending
to enact a cost-effective and efficient dispute resolution scheme, the
legislature did not intend both the LAT and the court to determine the same
questions on the path to granting different relief.

[66]

It does not matter that the LAT would look at the facts through the
lens of unreasonableness, while a court would do so through the lens of bad
faith. It is not the legal characterization of the claim but the facts giving
rise to the dispute that are determinative.

[67]

The facts giving rise to Ms. Stegengas dispute with the insurer relate
to her entitlement to benefits or to the amount of her entitlement, as those
terms are used in s. 280(1): they are connected to the category of SABs to
which she was entitled, and to the proper amount of her entitlement, and they relate
to the insurers handling of the claim. Because these matters are covered by
the broad language in s. 280(1), they are within the LATs jurisdiction under
s. 280(2), and are thus within the ambit of the s. 280(3) prohibition on court
proceedings. The LAT is specifically empowered to grant relief for claims like
Ms. Stegengas; the court is barred from doing so.

Conclusion

[68]

In my view the motion judge reached the correct conclusion. Ms. Stegengas
action is barred by the dispute resolution provisions of the
Insurance
Act
. I would dismiss the appeal.

[69]

The respondent is entitled to the costs of the appeal in the sum of
$7500, inclusive of disbursements and applicable taxes.

Released: B.Z. July 19, 2019



B. Zarnett J.A.
I agree.
David Brown J.A.
I agree. L.B. Roberts J.A.











[1]

Appeals from or applications for judicial review of LAT
decisions can be brought in court: s. 280(3).



[2]
Whether claims for extracontractual damages such as punitive damages fall
outside of those provisions was the subject of some commentary shortly after
they came into force: see Philippa G. Samworth, AABS and SABS: The Evolving
World of Ontario Statutory Accident Benefits in 2016 (2017) 46 Advoc. Q.



[3]
The prior version of s. 280(1), defining the scope of the dispute resolution
provisions application, read as follows: Disputes in respect of any insured
persons entitlement to statutory accident benefits or in respect of the amount
of statutory accident benefits to which an insured person is entitled shall be
resolved in accordance with sections 280 to 283 and the
Statutory
Accident Benefits Schedule
:
Insurance Act
, R.S.O. 1990, c.
I.8
, s. 279(1) as it
appeared on March 31, 2016.



[4]

Prior to the 2016 amendments, a court hearing a SABs
entitlement dispute could also grant damages for mental distress to the SABs
claimant:
McQueen v. Echelon
General Insurance Company
, 2011 ONCA 649,
107
O.R. (3d) 780,
at paras. 19, 65, 75.



[5]
Ms. Stegenga relies on three other cases that are similarly distinguishable:
L'Espérance
v. Economical Mutual Insurance Group
, 2014 ONSC 6293;
Johnston v. Wawanesa Mutual Insurance Co.
,

2006 CarswellOnt
4528 (Sup. Ct.); and
St. Denis v. TD Insurance Home and Auto Liberty
Insurance Co. of Canada
(2005), 80 O.R. (3d) 706 (Sup. Ct.). They are not
SABs claims. Further, like
Dundas
, they involve limitation periods that
are only applicable to claims under or under or by virtue of the relevant
insurance policy:
L'Espérance
, at paras. 14, 25;
Johnston
, at paras. 2,
32;
St. Denis
, at para. 17
.



[6]

The word any has been changed to an: see
Insurance Act
, R.S.O. 1990, c.
I.8
, s. 279(1) as it appeared on March 31, 2016.



