Aviva v. McKeown, 2016 ONSC 6017, September 26, 2016 – Sufficiency of reasons for an EUO: Is it better to give than it is to receive?

October 11, 2016 | Talaal Bond

A test application was brought before the court on the issue of “whether a justification is required” to compel a person (in this case, six claimants from five accidents, all represented by the same counsel) to attend an Examination under Oath pursuant to s. 33(2) of the SABS. The insurer also sought to compel the attendance of the claimants. The core of the issue was s. 33(4) requiring that insurers give advance notice including “a reason or reasons” for the examination.

The evidence in support of the application was a lawyer’s affidavit which simply stated that the insurer determined that it required an EUO, without providing a reason. In five of the six cases, (it was conceded in one that the Notice was insufficient) boilerplate reasons (with some minor variance) including “evaluation your potential entitlement” were used, referencing essentially all benefits including Death and Funeral Benefits even though they were not applicable. Counsel objected stating that specific reasons were required. The argument at the Application, though, was that a standard form was all that was required and that specific reasons do not need to be given or indeed ought to be given for tactical reasons when fraud may be at play. In short, Aviva argued that it has a right to an EUO and the notice requirement was merely a matter of form rather than substance.

The court disagreed with Aviva. Matheson J. noted that EUOs were introduced in 2003  in the White Paper, “Automobile Insurance Affordability Plan for Ontario: Next Steps”. This was to balance providing benefits for legitimate claims while reducing red tape, abuse and fraud. the judge felt that EUOs were not given much prominence in the process and indeed cited the rationale “where there is a reasonable concern about accident circumstances”.

A review of section 33 highlighting 33(2),(4) and (5):

33 (2) If requested by the insurer, an applicant shall submit to an examination under oath…

33 (4) The insurer…shall give the applicant reasonable advance notice of the following:

3. The reason or reasons for the examination.

33 (5) The insurer shall limit the scope of the examination under oath to matters that are relevant to the applicant’s entitlement to benefits described in this Regulation.

The argument that only general references or generic reasons for the notice are required was supported by Kivell v. State Farm Mutual Automobile Insurance Co., [2016] O.F.S.C.D. No. 119 and Aviva v. Balvers, 2007 CarswellOnt 3117. However proper notice was conceded by the claimant in the Balvers case and the issues related to scope of examinations. In McKeown the notice was the key issue.

The respondent relied on State Farm Mutual Automobile Insurance Company v. Aslan 2016 ONSC 2725, a similar test case. In that case, the court disagreed with Kivell. Matheson J. quoted from Aslan, noting the Legislature sought to achieve a balance between an insurer’s right to determine eligibility with the insured’s rights “…a right to be told in advance of the reasons for the examination…”. The court agreed that the notice requirements must be something more than giving notice of the scope of the examination. The notice requirement is a mandatory statutory requirement.

Reasons must be “meaningful”. The court then referred statements of defence in tort actions. However, the judge did not address the fact that pleadings are almost always boiler plate in nature since facts are generally not yet discovered, which is analogous to the rationale in boilerplate EUO notice letters.

The court acknowledged that sufficiency of reasons could be an issue. However, it was held that the insurer ought not to be relieved of its statutory obligation. Similarly a claimant cannot postpone an examination by quarrelling over the sufficiency of reasons, so long as the insurer has a good faith reason for the examination. Again, the court did not provide any assistance or direction as to how this ought to be articulated.

Rather, the decision seems to be “whatever meaningful reasons are, these are not them”. Ironically, the rationale of the judgment is essentially the same as the criticism levelled against the insurer. Without any clear definition as to what “meaningful” is, insurers should now expect to have to litigate sufficiency of reasons. The decision is also problematic since it also suggests that while precision in the notice is required, the scope of the examination can be broad, as confirmed by cases such as Balvers. This approach is somewhat contradictory.

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