



COURT OF APPEAL FOR ONTARIO

CITATION:
Tomec v.
    Economical Mutual Insurance Company, 2019 ONCA 882

DATE:
    20191108

DOCKET:
    C66763

Hourigan, Benotto and Fairburn JJ.A.

BETWEEN

Sotira Tomec

Applicant
    (Appellant)

and

Economical Mutual Insurance Company

Respondent
    (Respondent)

John Adair, William Keele, Michele Valentini, and Joseph
    Cescon, for the appellant

Philippa Samworth, Lisa Armstrong and Shalini Thomas, for
    the respondent

Trevor Guy and Kathryn Chung, for the Licence Appeal
    Tribunal

Steven Rastin, Alexander Voudouris and Stanley Pasternak, for
    the intervener Ontario Trial Lawyers Association

Heard:
    October 16, 2019

On appeal from the
    order of Divisional Court (Regional Senior Judge Morawetz, Justices Whitten and
    Gray), dated October 2, 2018, with reasons reported at 2018 ONSC 5664, affirming
    a decision of the Licence Appeal Tribunal, dated September 7, 2017.

Hourigan J.A.:

I.        Overview

[1]

The primary issue for determination on this
    appeal is whether the two-year limitation period in both s. 281.1(1) of the
Insurance
    Act
, R.S.O. 1990, c. I.8 and s. 51(1) of the
Statutory Accident Benefits Schedule - Accidents On or
    After November 1, 1996
, O. Reg. 403/96

(
SABS
), is
    subject to discoverability.

[2]

The Licence Appeal Tribunal (LAT) and the Divisional
    Court concluded that discoverability did not apply to these sections. Instead, they
    found that the limitation period was a hard limitation period that proscribed
    the appellant from asserting her claim for certain statutory accident benefits
    before she was legally entitled to make that claim.

[3]

After the Divisional Courts decision in this
    case, the Supreme Court released
Pioneer Corporation v. Godfrey
, 2019 SCC 42,
    26 B.C.L.R. (6th) 1, which provided guidance regarding when a limitation period
    should be construed as a hard limitation. Applying
Pioneer
and well
    established rules of statutory construction to this case make clear that the
    LATs and Divisional Courts orders cannot stand. I would therefore allow the
    appeal.

II.       Background

[4]

The appellant was a pedestrian and was struck by
    a motor vehicle on September 12, 2008. She was hospitalized and required
    surgery. The appellant applied to her insurer, the respondent, Economical
    Insurance Corporation, and received statutory accident benefits for: (i)
    attendant care benefits, pursuant to s. 18 of the
SABS
; and (ii)
    housekeeping benefits pursuant to s. 22 of the
SABS
.

[5]

These benefits are payable for 104 weeks
    following an accident, unless the beneficiary sustains a Catastrophic
    Impairment (CAT) and is designated as such. In CAT cases, the 104-week time
    limit does not apply:
SABS
,

ss. 18(3) and 22(4).

[6]

On August 26, 2010, Economical provided a letter
    to the appellant wherein it purported to advise her that she would no longer qualify
    for housekeeping or attendant care benefits past September 12, 2010. It is
    common ground that as of August 2010, the appellants injuries did not rise to
    the level of CAT. Her physician did not, at that time, apply for such a
    designation, and the appellant did not appeal the termination of benefits to
    the LAT.

[7]

Over the next five years, the appellant
    underwent various medical tests under the
SABS
scheme and submitted her
    test results to Economical. The appellants condition worsened over time. On
    May 13, 2015, her doctor opined that she now met the definition of CAT, and
    that her condition was result of the September 12, 2008 car accident.

[8]

On November 4, 2015, Economical accepted that
    the appellant was CAT and provided various elevated statutory accident benefits
    on that basis. It refused, however, to provide further attendant care and
    housekeeping benefits, either for the intervening period between September 2010
    and November 2015, or at any point going forward. Economical took the position
    that it had denied the benefits in its August 26, 2010 letter, and the
    appellant was out of time.

[9]

The appellant appealed Economicals decision to
    the LAT. Economical relied on s. 281.1(1) of the
Insurance Act
and s.
    51(1) of the
SABS
. Both sections provided that any dispute over
    benefits must be brought within two years of the insurers refusal to pay the
    benefits.

III.      Decisions Below

[10]

In dismissing the appeal, the LAT Vice-Chair
    determined that the August 26, 2010 letter to the appellant was a clear and
    unequivocal denial of her
SABS
benefits. In addition, the Vice-Chair found that Economicals
    denial of benefits triggered the commencement of the limitation period and that
    the doctrine of discoverability did not apply.

[11]

On further appeal to the Divisional Court, the
    court framed the issues as follows: (i) whether there was a refusal to pay the
    benefit claimed, thus triggering the applicable limitations period; and (ii) whether
    a proceeding must be commenced within two years after the refusal, regardless
    of whether the claimant qualifies for payment of the benefit at the time of the
    refusal.

[12]

With respect to the first issue, whether Economical
    s letter was a clear and unequivocal denial, the court determined that the
    standard of review was reasonableness. The court further found that the
    Vice-Chair considered and applied the governing test from
Smith v. Co-Operators General Insurance Co.
, 2002 SCC 30, [2002] 2 S.C.R. 129, analyzed the evidence, and came
    to a reasonable conclusion.

[13]

With respect to the issue of discoverability,
    the court stated that the standard of review was less clear. The court
    ultimately found that it was not necessary to decide the issue, as the LAT
    decision would stand on either a correctness or reasonableness standard of
    review.

[14]

The Divisional Court recognized that, as a
    general proposition, a limitation period did not arise until the claimant discovers
    that he or she has a claim:
Kamloops v. Nielson
, [1984] 2 S.C.R. 2, 10
    D.L.R. (4th) 641, at p. 40 and
Peixeiro v. Haberman
, [1997] 3 S.C.R. 549, 151
    D.L.R. (4th) 429, at para. 39. However, the court noted that there is
    nevertheless a category of hard limitation periods, which are triggered by a
    fixed and known event, and where it is possible for a claim to be barred even
    before the claimant is aware that she has a claim.

[15]

The court cited this courts recent decision in
Levesque v. Crampton Estate
, 2017 ONCA 455, 136 O.R. (3d) 161 as an example of a hard
    limitation period. That case involved a limitation period in the
Trustee
    Act
, R.S.O. 1990, c. T.23, for claims against an estate. The limitation period
    under that statute expires on the two-year anniversary of the deceaseds death.

[16]

The Divisional Court found that the legislature,
    in enacting the limitation period in issue in this case, had similarly tied the
    commencement of the limitation period to a fixed event  the insurers refusal to
    pay the benefit claimed. According to the court, it is irrelevant that the
    insured did not qualify for the benefit at the time of the refusal, or indeed
    at any time prior to the limitation periods expiration.

[17]

The court recognized that this is a harsh result
    for the appellant. However, it reasoned that, as with any hard limitation
    period, there are policy considerations on both sides. It noted that the
    insurer has no control over when an insured applies for a CAT designation. The
    court inferred that the legislature thought it important to provide for a
    reasonable period, after which the insurers obligation would be discharged, regardless
    of whether meritorious claims may be discovered later.

IV.     Issues

[18]

The appellant focused on two issues in her
    submissions before this court. First, she argued that Economicals letter was
    not a clear and unequivocal denial of benefits that would trigger the running
    of the limitation period. Second, she submitted that the LAT and Divisional
    Court erred in determining that discoverability did not apply to the limitation
    period in the
Insurance Act
and
SABS
.

[19]

I am of the view that the LAT and Divisional
    Courts decisions on the second issue cannot stand. Consequently, it is
    unnecessary to consider the first issue. Nothing in these reasons should be
    construed as an endorsement of the sufficiency of the notice in Economicals
    letter.

V.      Analysis

(a)

Standard of Review

[20]

Before turning to an analysis of the limitation
    period, consideration must be given to the standard of review on this issue.
    The appellant submits that the standard of review is correctness, while
    Economical and the LAT argue that the standard of review is reasonableness
[1]
.

[21]

This case concerns an administrative
    decision-maker interpreting a statute closely related to its function. The
    presumption of reasonableness review applies to such cases:
Edmonton (City)
    v. Edmonton East (Capilano) Shopping Centres Ltd.
, 2016 SCC 47, [2016] 2
    S.C.R. 293, at para. 22. Here, the LAT is determining whether discoverability
    applies to a limitation period contained in the
Insurance Act

and
SABS
, which the LAT must apply frequently to resolve compensation
    disputes.

[22]

In my view, the presumption of reasonableness
    review is not rebutted. This case does not clearly concern a question of law of
    central importance to the legal system and outside the adjudicators
    specialized area of expertise, which would attract correctness review:

Dunsmuir v. New Brunswick
, 2008 SCC 9, [2008] 1 S.C.R. 190, at para. 55.
The
    Supreme Court has found this correctness category to apply in only two cases:
Alberta
    (Information and Privacy Commissioner) v. University of Calgary
, 2016 SCC
    53, [2016] 2 S.C.R. 55; and
Mouvement laique Quebecois v. Saguenay (City)
,
    2015 SCC 16, [2015] 2 S.C.R. 3.

[23]

The discoverability issue in this case is
    confined to the accident benefits context in Ontario. It is difficult to
    analogize to the scope of the states duty of religious neutrality as in
Saguenay
,
    or the question of what statutory language is sufficient to set aside
    solicitor-client privilege, as in
Alberta
. Limitation periods are 
generally
of central importance to the fair administration of justice, but it does not
    follow that 
this
limitation period must be reviewed for correctness (emphasis
    in original):
McLean v. British Columbia (Securities Commission)
, 2013
    SCC 67, [2013] 3 S.C.R. 895, at para. 28.

[24]

Reasonableness is a more deferential standard of
    review than correctness. Having said that, reasonableness also takes its
    colour from the context and must be assessed in the context of the particular
    type of decision making involved and all relevant factors:
Catalyst Paper
    Corp. v, North Cowichan (District)
, 2012 SCC 2, [2012] 1 S.C.R. 5, at.
    para. 18. Here, we are concerned with a question of law  whether a common law
    doctrine applies to a statutory provision. This differs, for instance, from a
    highly discretionary ministerial decision, which would likely result in a much
    wider range of reasonable outcomes.

[25]

In fact,
McLean
acknowledged the
    possibility that where the ordinary tools of statutory interpretation lead to
    a single reasonable interpretation and the administrative decision maker adopts
    a different interpretation, its interpretation will necessarily be unreasonable
     no degree of deference can justify its acceptance: at para. 38.

[26]

In my view, as will be discussed below, the LATs
    decision was unreasonable.

(b)

Limitation Periods

[27]

Our courts have recognized that the rule of
    discoverability may apply to limitation periods. Discoverability generally
    provides that a limitation period will not begin to run until the material
    facts on which the cause of action is based are known to the plaintiff or ought
    to have been known through the exercise of reasonable diligence. It is not a
    universal rule applicable to all limitation periods but a rule of construction
    to aid in interpreting limitation periods:
Pioneer
, at paras. 31  32.

[28]

Both the LAT and the Divisional Court concluded
    that the applicable limitation period is a hard limitation period, i.e. a
    limitation to which the rule of discoverability does not apply.

[29]

Section 281.1(1) of the
Insurance Act
,
    which has since been repealed, reads as follows: 
A
    mediation proceeding or evaluation under section 280 or 280.1 or a court
    proceeding or arbitration under section 281 shall be commenced within two years
    after the insurers refusal to pay the benefit claimed.

[30]

At the material time,
    s. 51(1) of the
SABS
provided: A mediation proceeding or evaluation under
    section 280 or 280.1 of the
Insurance Act
or a court proceeding or arbitration under
    clause 281 (1) (a) or (b) of the Act in respect of a benefit under this
    Regulation shall be commenced within two years after the insurers refusal to
    pay the amount claimed.
[2]


(c)

Application of
Pioneer

[31]

In
Pioneer
, which the Divisional Court
    did not have the benefit of, the Supreme Court provided guidance for
    determining when a limitation period is subject to the rule of discoverability
    and when it is a hard limitation period.
Pioneer
analyzed the cause of
    action found in s. 36 of the
Competition Act
, R.S.C. 1985, c. C-34. In
    that analysis, Brown J. made the following comments, at paras. 34-35:

First, where the running of a limitation
    period is contingent upon the accrual of a cause of action or some other event
    that can occur only when the plaintiff has knowledge of his or her injury, the
    discoverability principle applies in order to ensure that the plaintiff had
    knowledge of the existence of his or her legal rights before such rights
    expire.

Secondly (and
    conversely), where a statutory limitation period runs from an event unrelated
    to the accrual of the cause of action or which does not require the plaintiffs
    knowledge of his or her injury, the rule of discoverability will not apply.
    [Citations omitted.]

[32]

Thus, the analysis is not focused on whether a
    limitation period is tied to a fixed event, as the Divisional Court opined.
    Rather, the question is whether the limitation period is related to the cause
    of action or the plaintiffs knowledge.

[33]

In
Pioneer
, Brown J. made this point by
    distinguishing
Ryan v. Moore
, 2005 SCC 38,
    [2005] 2 S.C.R. 53, where the court considered the limitation period in the
Survival
    of Actions Act
, R.S.N.L., 1990, c. S-32, for a
    claim against an estate. That limitation period expires two years after the
    death of a potential defendant. Justice Brown stated that
discoverability
    did not apply in
Ryan
,
because the action was complete in all
    its elements before the operation of the event triggering the limitation
    period:
Pioneer
, at para. 39. The limitation period was not dependent
    upon the accrual of the cause of action.
[3]
However, the court noted that had the event triggering the
    limitation period been an
element
of the cause of action, or had it
    been required to occur before the cause of action could accrue, discoverability
could
apply (emphasis in original):
Pioneer
, at para. 40.

[34]

Economical submits that the refusal to pay a
    benefit referenced in s. 281.1(1) of the
Insurance Act
and s. 51(1) of
    the
SABS
is a specific event that is not tied to a cause of action. In
    support of this argument, counsel notes that in previous iterations of the
Insurance
    Act
, the limitation period ran from the date on which the cause of action
    arose.

[35]

I would not give effect to this argument. It is
    contrary to the admonition from the Supreme Court in
Pioneer
at para.
    36 that:

In determining
    whether a limitation period runs from the accrual of a cause of action or
    knowledge of the injury, such that discoverability applies, substance, not
    form, is to prevail: even where the statute does not explicitly state that the
    limitation period runs from the accrual of the cause of action,
    discoverability will apply if it is evident that the operation of a limitation
    period is, in substance, conditioned upon accrual of a cause of action or
    knowledge of an injury.

[36]

The refusal to pay a benefit is clearly tied to the
    appellants cause of action. Absent a refusal to pay the benefit sought, there
    cannot be a claim made for mediation or an evaluation. Thus, the refusal to pay
    a benefit and the ability to make a claim are inextricably intertwined in the
    cause of action. The refusal cannot be stripped out of the cause of action and
    treated as if it is independent from it.

[37]

This distinguishes the case at bar from the
    situations in
Ryan
and
Levesque
. In both those cases, the
    courts were considering limitation periods that were wholly independent from
    the cause of action. The commencement of the limitation period was tied to the
    date of the deceaseds death. In contrast, the applicable limitation period in
    this case is tied to the accrual of the cause of action.

[38]

Economical submits that this case is
    distinguishable from
Pioneer
because of s. 19 of the
Limitations
    Act
, 2002, S.O. c. 24, Sched. B. That section specifically exempts s.
    281.1(1) of the
Insurance Act
, among other limitation periods, from
    the operation of the
Limitations Act
, which codifies discoverability.
    Economical argues that s. 19 of the
Limitations Act

demonstrates
    that the legislature intended to exclude discoverability from applying to s.
    281.1 of the
Insurance Act
.

[39]

I am not persuaded by this submission. It is
    open to a legislature to exempt a limitation period from the discoverability
    rule. However, it must do so with clear legislative language: see
Pioneer
,
    at paras. 32 and 36. There is no such clear statutory text in the
Limitations
    Act
. Economicals argument is premised entirely on an inference that
    counsel invites this court to draw. That does not meet the test of clear
    legislative intent.

[40]

I note as well, that
this court has
    stated that discoverability applies to the limitation period in the
Libel and Slander Act
,
R.S.O. 1990, c. L12, s. 6:
Shtaif v. Toronto Life Publishing Co. Ltd.
, 2013
    ONCA 405, 306 O.A.C. 155, at para. 42. This limitation period

is also
    exempted by s. 19 of the
Limitations Act
. Therefore,
    inclusion under s. 19 of the
Limitations Act

does not automatically mean the rule of discoverability does
    not apply.

(d)

Purposes of the
SABS

[41]

In
Pioneer
, after analyzing the law
    regarding discoverability and hard limitation periods, the court undertook a
    detailed analysis of the
Competition Act
. This included considering
    the statutes purpose. A similar analysis of the
SABS
is instructive
    in understanding whether the limitation period in issue is intended to operate
    as a hard limitation period.

[42]

Unlike the situation in
Ryan

and
Levesque
,
the
SABS
contains both the limitation period
    and the statutory mechanisms designed to provide no-fault benefits. In
Arts
    (Litigation Guardian of) v. State Farm Insurance Co.
, (2008) 91 O.R. (3d)
    394 (S.C.), MacKinnon J. provided a compelling analysis of the
SABS

    purposes and offered guidance regarding the interpretation of the
SABS
,
    at paras. 14 and 16:

The legislature's definition of
    "catastrophic impairment" is intended to foster fairness for victims
    of motor vehicle collisions by ensuring that accident victims with most health
    needs have access to expanded medical and rehabilitation benefits. That
    definition is intended to be remedial and inclusive, not restrictive.



The SABS are
    remedial and constitute consumer protection legislation. As such, it is to be
    read in its entire context and in their ordinary sense harmoniously with the
    scheme of the Act, the object of the Act, and the intention of the legislature.
    The goal of the legislation is to reduce the economic dislocation and hardship
    of motor vehicle accident victims and as such, assumes an importance which is
    both pressing and substantial.

[43]

The decisions below and Economicals narrow interpretation
    of the limitation are incongruous with the
SABS
consumer protection
    purposes. The appellant falls within a small category of victims who suffer
    from lasting and very serious health impacts as result of a motor vehicle
    accident. The
SABS
is supposed to maximize benefits for that class of
    victims. A hard limitation period prevents the appellant from making a claim for
    the benefits the
SABS
are intended to provide. I do not see how such a
    result could be consistent with consumer protection legislation designed to
    provide fair compensation and minimize economic disruption in the lives of
    accident victims.

[44]

The
SABS
is unlike the statutory
    regimes in
Ryan

and
Levesque
, which are aimed at
    creating finality in the context of claims against an estate. A hard limitation
    period is consistent with such regimes.

[45]

Given the choice of a statutory interpretation
    that furthers the public policy objectives underlying the
SABS
and one
    that undermines it, the only reasonable decision is to side with the former.

(e)

Absurd Result

[46]

Statutes are to be interpreted in a manner that
    does not lead to absurd results. An interpretation is absurd if it leads to
    ridiculous or frivolous consequences, if it is extremely unreasonable or
    inequitable, if it is illogical or incoherent, or if it is incompatible with
    other provisions or with the object of the legislative enactment:
Rizzo
    & Rizzo Shoes Ltd. (Re)
,
[1998] 1 S.C.R. 27, 36 O.R. (3d) 418,
    at para. 27.

[47]

Here, the decisions below thrust the appellant
    into a Kafkaesque regulatory regime. A hard limitation period would bar the
    appellant from claiming enhanced benefits, before she was even eligible for
    those benefits. However, if the appellant had not claimed
any
benefits
    until she obtained CAT status in 2015, she would not be caught by the
    limitation period:

Machaj v. RBC
    General Insurance Company
, 2016 ONCA 257, at para. 6
.
Alternatively, if
    the appellant had coincidentally obtained CAT status before 2012, the hard
    limitation period would not bar her claim for enhanced benefits.

[48]

This outcome is absurd. There is no principled reason
    for barring the appellants claim for enhanced benefits in the first scenario but
    allowing the claim in the second and third scenario. To do so would effectively
    penalize the appellant for accessing benefits she is statutorily entitled to, or
    for developing CAT status too late.

[49]

The impossible position a hard limitation places
    the appellant is best illustrated by having regard to Economicals counsels oral
    submissions. Counsel denied that the appellant was put in a lose-lose situation.
    She argued that the appellant could have applied to the LAT before the expiry
    of the limitation period for a declaration that, in the future, she would be
    entitled to extended benefits if she were subsequently found to be CAT.

[50]

I start by noting that courts must be cognizant
    of the
significant disparity in resources
    between large insurance companies and their insureds, who do not have unlimited
    resources to bring multiple proceedings, including prophylactic claims based on
    a future contingency: see
MacDonald v. Chicago Title Insurance
    Company of Canada
, 2015 ONCA 842, 127 O.R.
    (3d) 663, at para. 88, leave to appeal refused, [2016] S.C.C.A. No. 39.

[51]

In any event, if such a
    proceeding were commenced for a declaration, it is difficult to imagine how it could
    succeed. At best, the appellant could only lead speculative evidence that she
    might be CAT at some unknown point in the future. Faced with that evidentiary
    record, the LAT would likely decline to make the requested declaration.

[52]

In my view, the hard limitation
    period puts the appellant in an impossible situation, where the time for
    claiming a benefit commences when she is ineligible to make such a claim. This
    is an absurd result. To choose it, as the LAT did, is unreasonable.

(f)

Policy Rationales for Limitation Periods

[53]

Finally, it is worth considering the three
    policy rationales that underlie limitation periods to determine whether they
    support the finding of a hard limitation period. Those rationales are that
    limitation periods: (i) foster certainty; (ii) are intended to help prevent
    evidence from going stale; and (iii) encourage plaintiffs to be diligent in
    pursuing their claims:
Pioneer
at para. 47.

[54]

None of those rationales support a finding of a
    hard limitation period in this case. There is little certainty achieved, since there
    is no limitation period for initially bringing benefits claims resulting from
    CAT status:

Machaj
,
at para. 6
.
There is no risk of evidence going stale. To the contrary, a hard
    limitation period bars potentially meritorious claims based on current
    evidence. A hard limitation period will also not ensure the insureds diligence
    in pursuing a claim, because the insured has no claim to pursue until a CAT
    designation is made.

(g)

Unreasonable Decision

[55]

In summary, it is
    unreasonable to construe the relevant limitation period as a hard limitation.
There is a single reasonable interpretation of s. 281.1(1) of the
Insurance
    Act
and s. 51(1) of the
SABS
. The limitation period contained in
    those sections is subject to the rule of discoverability because
it is directly tied to the cause of action that an insured
    can assert when denied benefits. A hard limitation period is contrary to the
    purposes of the
SABS
and the Supreme
    Courts guidance in
Pioneer
. In
    addition, a hard limitation period in these circumstances would lead to absurd
    results and is not consistent with the policy rationales that underlie
    limitation periods.

VI.     Disposition

[56]

For the foregoing reasons, I would allow the
    appeal and set aside the orders of the Divisional Court and the LAT.

[57]

I would make an order declaring that the
    limitation period regarding the appellants entitlement to attendant care
    benefits, and housekeeping and home maintenance benefits has not expired, and
    that accordingly, the appellant is entitled to proceed with her application for
    those benefits.

[58]

I would further order that Economical pay the
    appellant her costs of the appeal fixed in the agreed upon, all-inclusive, sum
    of $10,000.

Released: C.W.H. November 8, 2019

C.W. Hourigan J.A.

I agree. M.L. Benotto J.A.

I agree. Fairburn J.A.





[1]
In
Pioneer
at para. 30, the court stated the standard of
    review regarding whether discoverability applies to a limitation period is
    correctness. However, that case considered an appeal from a court ruling, not a
    ruling from an administrative tribunal.



[2]
Section 51(1) of the
SABS
was revoked and replaced with
    slightly different wording in April 2016. This analysis is confined to the
    legislation as it read when Economical purported to deny the appellant benefits
    (i.e. in August 2010).



[3]
For a similar result see
Levesque
, which considered a
    comparable provision in the
Trustee Act
.


