



COURT OF APPEAL FOR ONTARIO

CITATION: Pucci v. The Wawanesa Mutual
    Insurance Company, 2020 ONCA 265

DATE: 20200424

DOCKET: C66835

Doherty, Brown and Thorburn
    JJ.A.

BETWEEN

Brittany Pucci

Plaintiff (Respondent)

and

The Wawanesa Mutual Insurance
    Company

Defendant (Appellant)

Katy Commisso and David Scott, for the
    appellant

Timothy Gindi and Anthony J. Potestio,
    for the respondent

Heard: February 14, 2020

On appeal from the judgment of Justice H.M.
    Pierce of the Superior Court of Justice, dated March 15, 2019, reported at 2019
    ONSC 1706.

Doherty J.A.:



I



overview

[1]

This appeal raises a narrow question. Did the
    trial judge err in holding that the respondent (Ms. Pucci) was entitled to payment
    of household and attendant care expenses for the time period prior to judgment,
    even if Ms. Pucci had not actually incurred those expenses?

[2]

I would allow the appeal. With respect, the
    trial judge erred in holding the expenses had been incurred. She made that
    finding without regard to the definition of incurred in s. 3(7)(e) of the
Statutory
    Accident Benefit Schedule
, O. Reg 34/10

(
SABS-2010
). The
    trial judge further erred in holding, in any event, those expenses should be
    deemed to have been incurred under s. 3(8) of the
SABS
-2010
. In
    making that finding, the trial judge misapprehended material evidence and
    failed to consider a significant body of evidence relevant to the
    reasonableness inquiry mandated by s. 3(8).

[3]

I am also satisfied this court cannot make the
    factual findings necessary to determine whether the payment of the expenses was
    unreasonably withheld by Wawanesa. I would order a new trial.


II



the evidence

[4]

Ms. Pucci was in a motor vehicle accident on
    June 16, 2013. She was 22 years old. A vehicle improperly entered the
    intersection and broadsided Ms. Puccis car. Her car was totally destroyed.

[5]

Ms. Pucci went to the hospital. She had back,
    neck, and left thumb pain. She was unsure whether she had briefly lost
    consciousness at the time of the accident. A CAT scan was negative. Ms. Pucci
    was released from hospital on the same day.

[6]

In the days, weeks, and months after the
    accident, Ms. Puccis condition worsened dramatically. Her physical symptoms
    continued. New symptoms suggestive of some kind of brain trauma appeared. For
    example, she temporarily lost vision in one eye. Most significantly, Ms. Pucci
    began to experience severe, debilitating, emotional and behavioural problems.
    Her speech, and then her behaviour, regressed to that of a young child. Her speech
    slowed noticeably and her thought processes became obviously impaired. Ms.
    Pucci had difficulty controlling her emotions and sometimes was oblivious to
    her surroundings. She also had trouble remembering things and often could not
    make even the most basic personal decisions.

[7]

Ms. Pucci became unable to work or go to school.
    She could not look after her basic needs without help.

[8]

There is no suggestion that Ms. Pucci was
    fabricating or exaggerating her conditions and symptoms. The two psychiatrists who
    testified at trial agreed Ms. Puccis symptoms met the criteria for conversion
    and somatic disorders, both major mental disorders. They also agreed Ms.
    Puccis condition related more to her psychiatric and emotional problems than
    to the physical sequela of the accident. Finally, the two experts agreed Ms.
    Pucci was unable to work or look after herself.

[9]

The two experts disagreed about the connection,
    if any, between Ms. Puccis catastrophic impairment and her accident. Ms. Pucci
    had struggled, with intermittent success, to overcome several longstanding psychiatric
    and emotional problems pre-existing the car accident for many years. Dr.
    Feinstein, the expert called by Ms. Pucci, described the effect of those
    pre-accident conditions on Ms. Puccis post-accident condition:

And here, pre-accident psychological factors
    loom large. Ms. Puccis psychiatric history during her teenage years is a
    troubled one characterized by significant emotional trauma, related symptomatology,
    problematic relationships, severe substance abuse necessitating the use of methadone
    and extensive contact with mental health specialists. This history suggests she
    was highly vulnerable from a psychological perspective when the accident of
    June 16, 2013 occurred. This premorbid vulnerability should therefore be viewed
    as a key factor in understanding why her post-accident reactions had been so
    maladaptive and regressed. While Ms. Puccis pre-accident psychiatric history
    alone cannot explain her current presentation, it has nevertheless contributed
    to it.

[10]

In his report and testimony, Dr. Feinstein
    indicated Ms. Puccis treatment team had incorrectly diagnosed her condition as
    attributable primarily to physical brain trauma suffered in the accident. He
    believed Ms. Puccis condition flowed primarily from a pre-existing cycle of psychopathology,
    properly described as somatic and conversion disorder. Dr. Feinstein also testified
    Ms. Puccis pre-accident condition was exacerbated by the significant chronic
    pain and emotional turmoil directly associated with the accident and the physical
    injuries suffered in the accident. In Dr. Feinsteins opinion, Ms. Puccis
    treatment program should move from one centered on treating disabling cerebral 
    trauma to one focusing on the major underlying psychiatric issues.

[11]

Dr. Ozersky, Wawanesas expert, opined that Ms.
    Puccis symptomatology reflected her underlying psychiatric problems and were
    not the product of injury caused by the accident. In his report, Dr. Ozersky
    acknowledged the significant deterioration in Ms. Puccis condition
    post-accident, but said:

I find it hard to imagine that an accident of
    this nature could be responsible for this womans psychological regression,
    neither do I believe there is any head injury involved of any significance.

[12]

Nowhere in the report does Dr. Ozersky explain
    what he meant when he said the accident was not responsible for Ms. Puccis psychiatric
    condition. In his testimony, he explained his understanding of causation:

My test is on the
    balance of probabilities, was the accident responsible for her conversion
    disorder
? And my answer would be no, it was not
    responsible. Her pre-existing history of sexual assault, drug abuse,
    depressions thats what, working, those factors working together created the
    circumstance for a conversion disorder.
The accident may
    have been the a trigger but in itself it would not be sufficient to cause a
    conversion disorder
. [Emphasis added.]

[13]

As I understand Dr. Ozerskys evidence, he believed
    the accident was not responsible for Mr. Puccis subsequent psychiatric
    disorders for two reasons. First, he believed Ms. Puccis pre-accident condition
    put her on the edge of total emotional disintegration such that the slightest event
    could push her into the psychiatric disorders she developed post-accident. Consequently,
    because she was so close to disintegration, the accident could not be said to
    be responsible for her condition, even though it triggered the development of
    that condition. Second, Dr. Ozersky explained that the accident was not
    responsible for Ms. Puccis condition because the accident alone could not have
    caused that condition.

[14]

The trial judge, after reviewing the evidence of
    the two experts, accepted Dr. Feinsteins opinion that Ms. Puccis conversion
    disorder was triggered by the motor vehicle accident. The trial judge, at para.
    83, referred to the accident as the tipping point in the plaintiffs ability
    to function on a day-to-day basis. She said, at para. 84:

I conclude that, but for the collision, Ms.
    Pucci would not have suffered the conversion disorder described by her
    physicians. This disorder catastrophically impairs her ability to function from
    a mental or behavioural perspective.

[15]

Wawanesa does not challenge the trial judges
    finding that, for the purposes of determining Ms. Puccis entitlements under
    the
SABS-2010
, the accident was the direct cause of her subsequent
    condition,
[1]
or that the condition renders her catastrophically impaired.


III



ms. puccis accident benefits claim

[16]

At the time of the accident, Ms. Pucci was insured
    under a motor vehicle policy issued by Wawanesa. A representative of Wawanesa
    visited Ms. Pucci within days of the accident to provide information about her
    coverage. Ms. Puccis doctor submitted a disability certificate to Wawanesa,
    describing the nature of Ms. Puccis injuries and explaining that she could not
    work. Wawanesa immediately provided income replacement at the rate required
    under the
SABS-2010
, as of the date of the accident.

[17]

Based on information provided from time-to-time
    by Ms. Puccis doctors, assessments done for Wawanesa, and treatment plans
    provided to Wawanesa, Wawanesa classified Ms. Pucci as eligible for the maximum
    household expenses and attendant care benefits available under the
SABS-2010
to persons who had not been characterized as catastrophically injured. Under
    the
SABS-2010
, attendant care costs for persons not catastrophically
    injured were available for two years post-accident (104 weeks). Over that time,
    Wawanesa paid the benefits required under the
SABS-2010
. The amounts
    paid by Wawanesa approached closely the total amounts available under the
    scheme.

[18]

Ms. Puccis lawyer advised Wawanesa in March
    2015 that Ms. Pucci would apply under s. 45 of the
SABS-2010
for a determination
    that her condition amounted to a catastrophic impairment. Under that
    designation, she would be entitled to recover certain expenses incurred more
    than two years post-accident.

[19]

Wawanesa received Mrs. Puccis application in
    early May 2015. In July 2015, Wawanesa advised Ms. Pucci that it would not pay
    attendant care costs beyond the two years. Wawanesa also exercised its right to
    have Ms. Pucci assessed. That assessment involved a series of examinations
    performed by different experts appointed by Wawanesa.

[20]

Ms. Pucci and her parents travelled to Toronto
    for the examinations in May and July of 2015. Unfortunately, Ms. Pucci became
    very tired during the July examinations and she could not finish the testing. The
    parties agreed the assessment would be completed six weeks later in Thunder Bay
    where Ms. Pucci lived. On the morning that the assessors were to fly to Thunder
    Bay, one of them suffered a medical condition, necessitating the cancellation
    of the trip. The examinations were completed about eight weeks later in October
    2015. Wawanesa received the reports generated by the examinations in February 2016,
    and  immediately forwarded those reports to Ms. Puccis lawyer.

[21]

Based on the opinion advanced by Dr. Ozersky in
    his report, Wawanesa took the position that Ms. Puccis admittedly catastrophic
    impairment was not directly caused by the accident. Wawanesa declined to
    provide Ms. Pucci with the benefits available to persons found to have suffered
    a catastrophic impairment as a result of an accident. Wawanesa acknowledged it
    was required, under the relevant SABS, to pay any attendant care and
    housekeeping benefits incurred by Ms. Pucci prior to Wawanesas notification to
    her in February 2016 that it had concluded she had not suffered a catastrophic
    impairment as a direct result of the car accident.

[22]

Ms. Pucci was entitled to challenge Wawanesas
    determination and to seek mediation through the Financial Services Commission
    of Ontario (FSCO). The parties, however, agreed the mediation should be
    treated as failed without actually attempting mediation. This allowed Ms. Pucci
    to commence the action in the Superior Court which she did in late March 2016.
    The judgment was released some three years later.
[2]


IV



the trial judgment

[23]

The trial judges reasons focused primarily on
    causation. Was Ms. Puccis admittedly catastrophic impairment the direct result
    of her car accident? The trial judge found the necessary causal link and made a
    declaration to that effect in para. 1 of the trial judgment. That paragraph is
    not challenged on appeal.

[24]

In para. 2 of the trial judgment, the trial
    judge made an order with respect to payments for income replacement. That
    paragraph of the judgment is not challenged on appeal.

[25]

In paras. 3 and 4 of the judgment, the trial
    judge made orders pertaining to housekeeping (para. 3) and attendant care
    (para. 4) benefits. She declared Ms. Pucci was entitled to housekeeping
    expenses, fixed at the rate of $100 per week, and attendant care benefits at
    the rate of $6,000 per month. These are the maximum rates available under the
    SABS. The trial judge further provided these benefits were to run from June 14,
    2015 (104 weeks post-accident) to the date of judgment and thereafter as
    incurred. Wawanesa appeals from the orders made in paras. 3 and 4 of the
    judgment.


V



wawanesas position

[26]

Wawanesa accepts Ms. Pucci is entitled to the
    housekeeping and attendant care benefits flowing from the determination that
    she had suffered a catastrophic injury as a result of her car accident.
    Wawanesa argues, however, that while the trial judge properly limited payments for
    housekeeping and attendant care post-judgment to expenses incurred, she erred
    in failing to place the same limitation on any amounts owed in reference to
    those benefits for the pre-judgment period from February 2016 to March 2019.
    Wawanesa submits Ms. Pucci is entitled to expenses for that period only to the
    extent she actually incurred those expenses. The Agreed Statement of Facts
    filed at trial states that Ms. Pucci paid about $29,000 for attendant care in
    2018. There is no evidence of any payments made by Ms. Pucci for
    housekeeping-related expenses in the time period prior to judgment.

[27]

Wawanesa submits if the trial judge found the
    pre-judgment expenses had been incurred, she erred in law in failing to apply
    the definition of incurred in s. 3(7)(e) of the
SABS-2010
.
    Alternatively, Wawanesa submits, if the trial judge did not find the expenses
    were incurred, but rather deemed the expenses to have been incurred under s.
    3(8) of the
SABS-2010
on the basis of Wawanesas delay in providing
    its reports, she acted on a material misapprehension of the relevant evidence.


VI



analysis

(i)

Overview

[28]

Pursuant to the declarations in paras. 3 and 4
    of the trial judgment, Wawanesa was required to pay Ms. Pucci about $18,000 for
    housekeeping-related benefits and about $270,000 for attendant care benefits for
    the period prior to judgment (June 2015  March 2019), regardless of what
    amount, if any, Ms. Pucci had spent in respect of either housekeeping or
    attendant care costs, and regardless of whether she had actually received any
    housekeeping or attendant care services.

[29]

The
SABS-2010
requires an insurer to
    pay expenses referable to benefits provided under the policy, if those expenses
    have been incurred. Section 3(7)(e) identifies when an expense will be said
    to have been incurred:

3(7) For the purposes of this regulation,

(e) subject to
    subsection (8), an expense in respect of goods or services referred to in this
    Regulation is not incurred by an insured person unless,

(i) the insured
    person has received the goods or services to which the expense relates,

(ii) the insured
    person has paid the expense, has promised to pay the expense or is otherwise
    legally obligated to pay the expense, and

(iii) the person who
    provided the goods or services,

(A) did so in the
    course of the employment, occupation or profession in which he or she would
    ordinarily have been engaged, but for the accident, or

(B) sustained an economic loss as a result
    of providing the goods or services to the insured person.

[30]

Under the definition in s. 3(7)(e), the expense
    for goods or services is incurred only if the insured has received the goods or
    service and has either paid for the goods or services or assumed an obligation
    to do so. Further, the expenses related to the goods or service is incurred
    only if the person supplying the goods or service does so in its ordinary
    course of business or has sustained an economic loss as a result of providing
    the goods or services.

[31]

Section 3(8) of the
SABS-2010
provides
    an exception to the requirement that expenses must be incurred before they are
    payable by the insurer. At the relevant time, that section read:

If in a dispute to which sections 279 to 293
    of the Act apply, a Court or arbitrator finds that an expense was not incurred
    because the insurer unreasonably withheld or delayed payment of a benefit in
    respect of the expense, the Court or arbitrator may, for the purpose of
    determining an insured persons entitlement to the benefit, deem the expense to
    have been incurred.

[32]

The exception created by s. 3(8) requires three
    things:

·

payment for the benefit in issue must be payable
    under the SABS;

·

the insurer must have withheld or delayed
    payment; and,

·

the withholding or delaying of payment must have
    been unreasonable.

[33]

The focus of s. 3(8) is primarily on the actions
    of the insurer. An insureds need for the services or benefits, or her
    inability to pay for those services or benefits on her own, cannot justify the
    deeming of the expense to have occurred under s. 3(8):
Stegenga v.
    Economical Mutual Insurance Company
, 2019 ONCA 615, 147 O.R. (3d) 65 at
    para. 47;
Veley v. Motor Vehicle Accident Claims Fund
, 2014
    CarswellOnt. 6405, at para. 25 (Ont. F.S.C.), revd on other grounds 2015
    CarswellOnt. 6752 (Ont. F.S.C. App. Div.).

(ii)

Were the expenses incurred?

[34]

The trial judge did not refer to s. 3(7)(e) in
    her reasons. Apart from the payments for attendant care in 2018, set out in the
    Agreed Statement of Facts, there was no evidence that any of the payments
    ordered in paras. 3 and 4 of the judgment, as it related to the time period
    before judgment, were payments for expenses incurred within the meaning of s.
    3(7)(e) of the
SABS-2010
.

[35]

Although the trial judge did not refer to the
    definition of incurred in s. 3(7)(e), she did refer, at paras. 102-106, to a
    line of cases interpreting the word incurred as used in the SABS prior to the
    enactment of s. 3(7)(e):
[3]

e.g.
,

see
Monks v. ING Insurance Company of Canada
, 2008
    ONCA 269, 90 O.R. (3d) 689 at paras.
46-52;
McMichael
    v. Belair Insurance Co.
(2007), 86 O.R. (3d) 68 (Ont. Div. Ct.).
Under those authorities, expenses were said to be incurred as long
    as there was a reasonable necessity for the service or item in issue and the costs
    of that service or item could be determined, with certainty, within a designated
    period. On that approach, expenses for goods and services could be incurred,
    even when those goods or services had not been provided or obtained. There was
    also no requirement that the insured have paid for, or assumed the obligation
    to pay for, the services or goods.

[36]

The judge-made definition of incurred, adopted
    in
Monks
and
McMichael
, is clearly much broader than the legislative
    definition found in s. 3(7)(e). The broader meaning found in the case law has
    been overtaken by the more precise language of s. 3(7)(e).

[37]

Although it is not entirely clear, I take the trial
    judge to have relied on the broad meaning of incurred advanced in the earlier
    caselaw to hold that the expenses she had ordered paid in paras. 3 and 4 of the
    judgment had been incurred by Ms. Pucci. The trial judge, at para. 106, referred
    to
McMichael
and related cases as on point with this case.

[38]

The trial judge was obliged to apply s. 3(7)(e)
    to determine whether Ms. Pucci had incurred the relevant household and
    attendant care expenses. She erred in law in applying the broader meaning found
    in the earlier case law. On the definition of incurred in s. 3(7)(e), there
    was no evidence of any incurred expenses, apart from the payments for attendant
    care in 2018. Setting aside the possible application of the exception in s.
    3(8) for the moment, the declarations in paras. 3 and 4 of the judgment,
    requiring Wawanesa to pay household and attendant care expenses for the period prior
    to judgment (March 2019) should have required payment only of expenses
    incurred by Ms. Pucci within the meaning of s. 3(7)(e) of the
SABS-2010
.

(iii)

The application of s. 3(8) of
SABS-2010

[39]

At trial, counsel for Ms. Pucci argued Wawanesa
    had acted unreasonably in withholding payments based exclusively on Dr.
    Ozerskys causation opinion. Counsel highlighted certain alleged shortcomings
    in the report and in Dr. Ozerskys approach to his task. Counsel also
    emphasized Dr. Ozerskys causation opinion conflicted with the opinion of other
    experts, some of whom had been retained by Wawanesa in the course of its
    management of Ms. Puccis benefits claim. Counsel submitted Wawanesa acted
    unreasonably in accepting, apparently without question, Dr. Ozerskys opinion when
    his opinion was inconsistent with the position Wawanesa had taken in the first
    two years of its management of Ms. Puccis benefits claim.

[40]

The trial judge did set out the text of s. 3(8)
    of the
SABS-2010
in the part of her reasons that addressed Ms. Puccis
    entitlement to the various benefits. The trial judge did not, however, address
    Ms. Puccis submission that reliance on Dr. Ozerskys opinion constituted an
    unreasonable withholding or delaying of payment of a benefit in all of the
    circumstances. Instead, as I read her reasons, the trial judge focused on two
    things in determining that Wawanesa had unreasonably withheld payments.

[41]

First, at paras. 107-108, the trial judge
    referred to what she described as the unfairness in reimbursing only insured
    persons who were able to fund their own expenses while the dispute with their
    insurer over their entitlement to benefits was ongoing. Second, the trial judge
    referred specifically to the delay in providing the defence catastrophic
    impairment assessments. She said, at para. 108:

While an insurer is entitled to seek its own
    opinions to determine liability under a policy, a delay of nine months to
    produce the report is not reasonable.

[42]

In my view, the trial judges assessment of the fairness
    of the scheme for payment of expenses established under the
SABS-2010
is irrelevant to whether the insurer acted unreasonably in withholding or
    delaying payments. The scheme is predicated on the repayment of expenses incurred
    within the very specific definition provided in s. 3(7)(e). The scheme does not
    create entitlement to payment based on need or a damages-like assessment of the
    insureds entitlements. Whatever the merits of the policy reflected in the current
    scheme, the operation of that policy in a given case does not assist in
    determining whether an insurer acted unreasonably in withholding payments.

[43]

I turn next to the trial judges finding that
    the nine-month delay in producing the reports was not reasonable. She made no
    reference to the evidence in making this finding. Nor had counsel for Ms. Pucci
    argued that any delay in providing the reports made the refusal to pay the
    benefits unreasonable.

[44]

I have reviewed the relevant evidence above (see
    para. 20). The examinations began in May 2015 but did not end until late
    October 2015. The completion of the examinations took some time, first, because
    Ms. Pucci was physically unable to complete the assessments in July, and
    second, because one of the testers retained by Wawanesa fell ill on the day he
    was scheduled to fly to Thunder Bay to complete those tests and could not fly
    to Thunder Bay.

[45]

The delay in completing the assessments between
    May 2015 and October 2015 cannot be attributed to any inappropriate,
    unnecessary, or unreasonable conduct by Wawanesa. One might argue that it took
    longer than it should have to prepare the reports after the assessments were
    completed (end of October 2015 to early February 2016). There was no evidence
    on this point. However, even if the reports should have been prepared somewhat
    more quickly, there is no basis in the evidence for the trial judges finding that
    a nine-month delay was unreasonable.

[46]

Counsel for Ms. Pucci submits that the trial
    judge relied on factors other than the delay in obtaining the necessary reports
    in finding that Wawanesas conduct amounted to an unreasonable withholding of
    the benefits. Counsel refers to the trial judges summary of various parts of
    the evidence in the course of her detailed reasons.

[47]

I cannot accept this submission. Although the
    trial judge did summarize some of the evidence relevant to various issues in
    the trial, she did not relate that evidence to the fundamental question raised
    by s. 3(8)  did Wawanesa act unreasonably in not paying the benefits?

[48]

I also reject counsel for Ms. Puccis submission
    that the meaning of incur in the case law prior to the enactment of s.
    3(7)(e) can assist in assessing the reasonableness of Wawanesas conduct for
    the purposes of s. 3(8). The overtaken case law provided a broad definition of
    incurred. Under that definition, expenses could be incurred, even though they
    were not paid for or received. Section 3(8) applies only where expenses were
    not incurred and looks to the reasonableness of the insurers conduct. Case law
    which provided a meaning of incurred in the absence of a statutory meaning had
    no relevance to whether an insurer acted reasonably in withholding payment of
    certain expenses.

[49]

The trial judge materially misapprehended the
    evidence in concluding that there had been a nine-month delay in producing the
    reports. She also made that finding without considering Ms. Puccis argument
    that the insurer acted unreasonably in relying on Dr. Ozerskys opinion.

(iv)

Ms. Puccis alternative arguments

[50]

Counsel for Ms. Pucci submits that even if the
    trial judge erred in finding that Wawanesa was obliged to pay the household and
    attendant care expenses, either because they were incurred, or because
    Wawanesa acted unreasonably in withholding them, Wawanesa could not raise
    causation for the first time in response to Ms. Puccis request for a
    determination that she had suffered a catastrophic injury.

[51]

Counsel makes three arguments. First, counsel contends
    that by paying the expenses in the first two years post-accident, Wawanesa
    waived any right to assert that the accident was not a direct cause of Ms.
    Puccis admittedly catastrophic condition. Second, counsel submits Wawanesa, by
    paying the benefits for the first 104 weeks, is estopped from challenging causation
    at the catastrophic impairment stage of the process. Third, counsel relies on
    the language of s. 45 of the
SABS-2010
:

An insured person who sustains an impairment
    as a result of an accident may apply to the insurer for a determination of
    whether the impairment is a catastrophic impairment.

[52]

Counsel contends that s. 45 precludes any
    causation inquiry at the catastrophic impairment inquiry. On counsels
    interpretation, only the nature and extent of the impairment can be addressed
    at that point in the SABS process.

[53]

I begin with s. 45. I do not read the section as
    requiring the insurer, at the catastrophic injury phase of the process, to
    accept the impairment in issue was caused by the accident. I read the opening
    language of the section, which requires the insured to have sustained an
    impairment as a result of an accident, as setting down a precondition to the
    bringing of an application for the determination that the insured has suffered
    a catastrophic impairment. Under the generally applicable principles of proof,
    it falls to the insured, as the party seeking the determination of catastrophic
    impairment, to demonstrate the existence of the pre-condition.

[54]

Apart from the language of s. 45, there could be
    significant harm to the fair and efficient operation of the SABS benefit scheme
    if payments of benefits post-accident by the insurer were to be taken as
    foreclosing any causation-based argument at some later point in the process. Were
    that interpretation of s. 45 to prevail, I would think it would strongly disincentivize
    the timely payment of benefits in the immediate aftermath of accidents. Prudent
    insurers, before making any payments for expenses referable to benefits claimed,
    would first fully explore any potential causation-related issues. Resolving
    those issues can require significant input from experts. That exercise takes
    time.

[55]

The waiver and estoppel arguments must also
    fail. This court recently considered both doctrines in the context of the
    insured/insurer relationship:
Bradfield v. Royal Sun Alliance Insurance
    Company of Canada
, 2019 ONCA 800, 148 O.R. (3d) 161. I need not repeat the
    principles summarized in
Bradfield
.

[56]

Waiver has no application. There is no evidence that
    Wawanesa knew, or had reason to believe, that Ms. Puccis condition was not the
    result of her accident, but chose to waive any reliance on the absence of a
    causal connection and make payments according to the policy. Ms. Puccis
    position at trial was not that Wawanesa waived any right it had under the
    policy, but that the causal connection was clearly established and accepted by
    Wawanesa from the outset. The trial judge ultimately accepted her position.

[57]

I would also reject the estoppel argument.
    Estoppel is essentially an evidence-based claim. Estoppel requires reliance. There
    is no basis in the evidence to suggest that Ms. Pucci relied, to her detriment,
    on anything done by Wawanesa. To the contrary, at the appropriate time in the
    process, she initiated the catastrophic impairment determination. In doing so,
    she advanced a full and ultimately convincing case for a finding that her
    condition was the direct result of the accident. She was not prejudiced by
    anything done by Wawanesa in advancing that position.

[58]

The waiver and estoppel arguments also fail for
    another reason. On the appeal, Wawanesa accepts Ms. Pucci was catastrophically
    injured as a result of the car accident. To the extent that estoppel or waiver
    might have application, they would foreclose Wawanesa from arguing that the
    causal connection was not established. Wawanesa does not make that argument on
    appeal.

[59]

The factual issue on which this appeal turns  did
    Wawanesa act unreasonably in denying payment of the expenses  cannot be
    answered by resort to the doctrines of waiver or estoppel. Wawanesas conduct
    is relevant to the question before the court, not as a waiver or an estoppel,
    but as one of the factors to be considered in determining whether Wawanesa
    acted unreasonably in withholding payment of the benefits.


VII



the appropriate order

[60]

The errors outlined above do not necessarily
    compel the quashing of paras. 3 and 4 of the judgment. Section 134(4)(a) of the
Courts of Justice Act
allows this court to draw inferences of fact
    from the evidence, as long as those inferences are not inconsistent with any
    finding made by the trial judge that has not been set aside by this court. In
    this appeal, the court could first set aside the trial judges finding that
    Wawanesa acted unreasonably in withholding the benefits because that finding
    was based on a material misapprehension of the evidence and a failure to
    consider relevant evidence, and then, on its own review of the evidentiary
    record, make a finding that Wawanesa did act unreasonably. If the court exercised
    its limited fact-finding power and made that finding, it would dismiss the
    appeal. Paragraphs 3 and 4 of the trial judgment would stand.

[61]

Appellate courts do not routinely exercise
    fact-finding powers. For example, appellate courts will not make findings of
    fact if credibility assessments are required, or if the evidentiary basis
    required for the drawing of the necessary inferences is inadequately developed in
    the trial record: see,
Cook v. Joyce
, 2017 ONCA 49, at para. 82;
Weyerhaeuser
    Company Limited v. Ontario (Attorney General)
,
2017 ONCA 1007, at
    para. 166.

[62]

Appellate fact-finding can, however, promote
    finality and efficiency in the civil justice process. In civil proceedings, appellate
    courts should avoid ordering a new trial if, in light of the nature of the
    factual issues, and the state of the trial record, the appellate court can
    confidently make the necessary factual findings without working any unfairness
    to either party:
Cook
, at para. 78-80.

[63]

Ms. Pucci argued at trial Wawanesa acted
    unreasonably by relying on the opinion of Dr. Ozersky to effectively deny
    payment of benefits over a three-year period. The trial judge did not address
    that argument in her reasons.

[64]

Can this court, on the basis of the trial
    record, make a finding that Wawanesa acted unreasonably in relying on Dr.
    Ozerskys opinion?

[65]

Wawanesa, as Ms. Puccis insurer, owed her a
    duty of good faith. In
702535 Ontario Inc. v. Non-Marine Underwriters,
    Lloyds London England
(2002) 184 D.L.R. (4th) 687, at paras. 27-29, OConnor
    J.A. described the scope of the insurers duty of good faith in the context of
    a claim for damages based on an allegation of bad faith against the insurer.
[4]
His observations are, however,
    apposite here:

The relationship between an insurer and an
    insured is contractual in nature. The contract is one of utmost good faith

The duty of good faith also requires an
    insurer to deal with its insureds claim fairly. The duty to act fairly applies
    both to the manner in which the insurer investigates and assesses the claim and
    to the decision whether or not to pay the claim. In making a decision whether
    to refuse payment of a claim from its insured, an insurer must assess the
    merits of the claim in a balanced and reasonable manner. It must not deny
    coverage or delay payment in order to take advantage of the insureds economic
    vulnerability or to gain bargaining leverage in negotiating a settlement. A
    decision by an insurer to refuse payment should be based on a reasonable
    interpretation of its obligations under the policy. This duty of fairness,
    however, does not require an insurer necessarily to be correct in making a
    decision to dispute its obligation to pay a claim. Mere denial of a claim that
    ultimately succeeds is not, in itself, an act of bad faith.

[66]

Wawanesas duty of good faith required it to fully
    and fairly assess Ms. Puccis claim that she had been catastrophically impaired
    as a result of the car accident. Wawanesa could not simply treat Ms. Pucci as though
    she were a tort claimant and, armed with an experts opinion, put her to the
    proof of her claim: see, for example,
Personal Insurance Company v. Hoang
,
    2014 ONSC 81, 319 O.A.C. 90 at para. 55 (Div. Ct.);
17001681 v. Motor
    Vehicle Accident Claims Fund
, 2018 CarswellOnt 19835, at para.
85 (Ont. Licence App. Tribunal); 16
-004073 v. TD Insurance
    Company
, 2017 CarswellOnt 14273, at paras. 26-29 (Ont. Licence App.
    Tribunal).
[5]

[67]

The steps an insurer must take to fulfil its
    good faith obligations will depend on the specific circumstances. Here,
    Wawanesa knew that Dr. Ozerskys causation opinion contradicted the position
    Wawanesa had taken for two years. Wawanesa also knew that Dr. Ozerskys opinion
    stood alone. Finally, Wawanesa appreciated Ms. Puccis vulnerability. She was
    catastrophically impaired and very much in need of the household and attendant
    care services she claimed. She could not fund those services on her own. These
    facts dictated that Wawanesa take a long careful look at Dr. Ozerskys
    causation opinion before relying on it to deny benefits.

[68]

There is merit in Ms. Puccis submission that
    Dr. Ozerskys opinion on causation would not have withstood a critical analysis
    by Wawanesa. As counsel points out, Dr. Ozerskys concession in cross-examination,
    that the car accident triggered Ms. Puccis condition seems entirely
    inconsistent with the assertion that the car accident did not cause her
    condition. The trial judge specifically referred to Dr. Ozerskys concession in
    cross-examination in finding that the accident was the immediate cause of Ms.
    Puccis condition.

[69]

There is an additional problem with Dr.
    Ozerskys opinion, that may also assist in determining whether Wawanesa acted
    reasonably in relying on that opinion. In his report, Dr. Ozersky indicated
    that the accident was not responsible for Ms. Puccis condition. He provided little,
    if any, insight into the analysis that led to that conclusion.

[70]

In his testimony, particularly his
    cross-examination, Dr. Ozersky elaborated on what he meant when he opined in
    his report that the accident was not responsible for Ms. Puccis condition. I
    have reviewed Dr. Ozerskys evidence relating to causation earlier in these
    reasons (see paras. 11-13). As summarized, he offered two reasons for his
    opinion that the accident was not responsible for Ms. Puccis condition.
    After acknowledging that the accident triggered the condition, he went on to
    assert that the accident, while a trigger, was not a cause because the
    accident, on its own, would not have caused the conversion disorder. Second,
    Dr. Ozersky testified that the accident was not responsible for Ms. Puccis
    condition because, given her tenuous psychiatric state, had the accident not
    triggered her condition, some other event, even a minor one, would have
    triggered the condition.

[71]

It appears to me that the two explanations
    offered by Dr. Ozersky for his conclusion that the accident was not
    responsible for the condition are not medical opinions but are, instead,
    legal opinions about the meaning of causation under s. 3(1) of the
SABS-2010
.
    Dr. Ozersky was, of course, not qualified to advance legal opinions. Additionally,
    his evidence suggests an understanding of causation that is at odds with the
    meaning given to causation under s. 3(1) in a series of decisions from this
    court:
Greenhalgh v. ING Halifax Insurance Company
(2014), 243 D.L.R. 
    (4th) 635, at paras. 10-12, 36;
Martin v. 2064324 Ontario Inc. (Freeze
    Night Club)
, 2013 ONCA 19, 113 O.R. (3d) 561 at para. 37;
Chisholm v.
    Liberty Mutual
(2002), 217 D.L.R.
    (4th) 145
, at paras. 24-31. Nothing in those cases supports the
    proposition that the proverbial thin skulled driver, who has an accident that
    precipitates or triggers consequences that are particularly dire because of the
    drivers prior medical vulnerability, is not covered under her motor vehicle
    insurance policy.

[72]

My difficulty in making a finding of fact as to
    the reasonableness of Wawanesas refusal to pay the benefits lies in the
    paucity of evidence permitting informed inferences about the steps, if any, Wawanesa
    took to critically review Dr. Ozerskys report, and the steps, if any, counsel
    for Ms. Pucci took to bring the inadequacies in Dr. Ozerskys report to the
    attention of Wawanesa. While the trial judge ultimately rejected Dr. Ozerskys
    opinion, and for good reason, one must bear in mind that he was an admittedly
    qualified expert to whom Wawanesa could legitimately look for a medical opinion
    in respect of causation. Ms. Puccis condition was far from straightforward or
    a common result of a relatively minor accident. Even Dr. Feinstein took a
    significantly different position with respect to the nature of Ms. Puccis
    condition than had earlier experts retained on her behalf.

[73]

Neither Ms. Pucci nor Wawanesa chose to proceed
    with mediation once Wawanesa had given the reports to Ms. Pucci. There is
    nothing in the record about any interaction between the parties after Wawanesa
    sent its reports in February 2016. It would appear that both sides simply chose
    to proceed to trial once the conflicting opinions had been exchanged. Ms. Pucci
    did not plead s. 3(8) of the
SABS-2010
in her statement of claim.

[74]

In my view, the record does not permit a finding
    of fact in this court about the reasonableness of Wawanesas denial of
    coverage. The question attracted little attention in the development of the
    evidence at trial. Any attempt to draw the necessary inferences from this
    record would quickly slip into speculation.

[75]

The trial record provides ample basis to
    question the reasonableness of Wawanesas reliance on Dr. Ozerskys opinion. It
    does not, however, speak with sufficient clarity and force to justify this
    courts exercising of its fact-finding function. There must be a new trial.


VIII



conclusion

[76]

I would allow the appeal, set aside paras. 3 and
    4 of the trial judges order, and direct a new trial on those issues.

[77]

Wawanesa
    is entitled to its costs on the appeal, fixed at $15,000, inclusive of taxes
    and disbursements.

Released:  DD APR 24 2020

Doherty
    J.A.

I
    agree David Brown J.A.

I
    agree Thorburn J.A.





[1]

The test for causation is found in s. 3(1) of the
SABS-2010
, which provides:

Accident
    means an incident in which the use or operation of an automobile directly
    causes an impairment



[2]

The legislative scheme governing disputes relating to
    entitlement under the
SABS-2010
has changed (effective April 1, 2016).
    Under the present legislation, the Licence Appeal Tribunal has exclusive
    jurisdiction to resolve disputes over entitlement to benefits under the SABS:
    see
Stegenga v. Economical Mutual Insurance Co.
,
    2019 ONCA 615. The amendments were motivated, in part, by efforts to speed up
    adjudication of these disputes.



[3]
A new
Statutory Accident Benefit Schedule
became effective
    September 1, 2010. This amendment narrowed the prior definition of incurred
    under s. 3(7)(e).



[4]
Ms. Pucci alleged bad faith against Wawanesa in her statement of claim,
    but did not pursue that claim at trial.



[5]

Hoang
is concerned with the making of a lump sum
    payment under s. 282(10) of the
Insurance Act
(now found in Automobile Insurance, O. Reg. 664, s. 10). That special award is,
    however, predicated on the insurer acting unreasonably in delaying or withhold
    payment. Cases decided under that provision clearly have relevance to the
    assessment required under s. 3(8) of the
SABS-2010
.


