Recently, in Aviva Canada Inc. v. Sidhu et al (2018 ONSC 6506), the Divisional Court heard an Application for judicial review by Aviva from a 2017 Financial Services Commission of Ontario (FSCO) appeal. The appeal had upheld a preliminary ruling by the Arbitrator that the claimant, Mr. Sidhu’s income replacement benefits (IRBs) claim was not statute-barred under the Limitations Act.
Remarkably, the collision that led to the dispute occurred in early 1996. Sidhu received IRBs until they were terminated following an assessment by Aviva. Avia sent letters in August and September 1996 to Mr. Sidhu stating that he was not "disabled" and therefore was not entitled to further IRBs. The September letter also enclosed a copy of the relevant section of the Statutory Accident Benefits Schedule (SABS) in force at that time.
There was no further contact between the parties for 18 years.
In June 2014, Mr. Sidhu applied to mediate the termination of his IRBs. After mediation failed to resolve the dispute, he applied for arbitration at FSCO.
Aviva brought a preliminary issue motion arguing that Mr. Sidhu’s claim expired 2 years after the September 1996 letter at the latest, and that he was barred from proceeding. The arbitrator rejected this argument because Aviva’s notice to Mr. Sidhu did not meet the Supreme Court’s requirements in Smith v. Co-operators: the insurer must inform the insured of the dispute resolution process and the applicable time limits in straightforward and clear language. Since Aviva had not done so, the limitation to commence arbitration did not start to run.
Aviva appealed the decision, which was upheld by Director’s Delegate Rogers.
On this judicial review, Aviva acknowledged that its notices did not meet the Smith test. Instead, it argued that subsequent decisions including Golic v. ING (2009 ONCA 836) before the Ontario Court of Appeal had softened the test, and that contextual factors should be considered. It claimed that this approach would lead to a conclusion that Mr. Sidhu was aware of the time limits and failed to act on them.
The Court rejected Aviva’s arguments. The Smith test is driven by the principle of consumer protection, and the "bright line" between proper and defective notice is required to support this principle. While the Golic Court was presented with contextual factors that suggested the claimant was aware of his rights and obligations, these factors did not determine the outcome of the case. The Assistant Chief Justice explicitly confirmed the Smith test as the correct approach, and found that ING’s notice met the test.
As a result, the Divisional Court dismissed Aviva’s application with costs to Mr. Sidhu. If he succeeds on the merits of his IRB claim, the accrued interest could easily exceed the amounts in dispute.
Insurance companies have lost many similar disputes over the years. More recently, they have mostly standardized their notices of denial and termination to protect against ongoing claims of this nature. However, as this decision shows, even a 20-year-old claim can be revived if improper notice was given.
If your benefits have been terminated, even several years ago, and you have questions regarding the notice you were given, or if you have other questions regarding your accident benefits claim, please contact us for a free consultation. At Campisi LLP, "Clients First, Excellence Always" is the heart of our practice. Put us to work for you.