Those insurers frustrated by the delay in having an “accident” determination adjudicated under the dispute resolution process should take heed of the recent decision of Mr. Justice Sweeny in Ayr Farmers Mutual Insurance Company v. Wright, 2015 ONSC 6219. Mr. Justice Sweeny was asked to address a pre-emptive Application under Rule 14 for a determination of “accident” based on a three line description contained in the OCF-1. The insurer refused to attend or participate in a FSCO mediation and unilaterally attempted to seek adjudication of the “accident” issue outside the parameters of the dispute resolution process.
In justifying their approach, the insurer argued that there were many instances where decisions were made on Application by the insurer to the courts for a determination of the matter. Mr. Justice Sweeny acknowledged this to be the case (and would not preclude such Application in the appropriate circumstances) but noted that Ayr Farmers was proceeding on a unilateral basis in this instance. Further, Ayr Farmers argued that the dispute resolution process would not be engaged unless it was first determined that an accident had occurred. Without such determination, Mr. Wright was not an “insured person” who could initiate mediation.
Mr. Wright, for his part, submitted that the dispute resolution process applies to a determination of accident and that is where the jurisdiction for such determination resided. Furthermore, as the insurer’s Application did not proceed on agreed facts, there were factual issues in dispute. As such, the Application went beyond the scope of pure contractual/statutory interpretation and could not be properly adjudicated under Rule 14.
Not surprisingly, the judge agreed with Mr. Wright on all points, confirming that the dispute resolution process set out in the Insurance Act (the “Act”) was the process to be applied with respect to such determinations. Entitlement to benefits includes, on a plain reading, whether or not a person was involved in an accident. The definition of “insured person” should not be read so narrowly as to exclude a person seeking a determination of whether or not an accident had occurred.
In a tip of the hat to the soon-to-be abolished mediation process, Mr. Justice Sweeny noted that the process allows for an opportunity for an exchange of positions and had been designed with an unrepresented insured in mind. For an insurer to simply issue an Application in Superior Court without the benefit of the mediation process would expose their insured to potential cost consequences and result in “upsetting the delicate balance struck by the legislature”. To allow an insurer to move unilaterally for a determination of an insured person’s rights would not be consistent with the principles of the Act and the regulation. Accordingly, the dispute resolution process was the process to be used for such determination.
Furthermore, Mr. Justice Sweeny noted on the materials before him that there was no Agreed Statement of Fact, there was no sworn evidence from the insured, and there was only limited information before the court on which to make a determination. Absent agreed facts, a determination of whether an incident was an accident would require an examination of the surrounding circumstances, such that a Rule 14 Application was not the appropriate tool for such determination.
Of note, Mr. Justice Sweeny’s decision does not prohibit the use of the Rule 14 Application process in the appropriate circumstances. In fact, as acknowledged by Mr. Justice Sweeny, this process has been used on a number of occasions to the benefit of both the insured and the insurer when seeking an expeditious determination. In this regard, such an Application could have been brought on the basis of a contractual/statutory interpretation in order to determine the rights of the parties, including whether or not an accident had occurred, supported with either agreed facts or sufficient evidence in the Application and Responding Records to allow for such a determination. Presumably, both parties would be in agreement that the Application process would be sufficient for such determination. Absent those factors, it is unlikely that a court would be inclined to entertain the matter for the very reasons articulated by Mr. Justice Sweeny. (Recourse to the courts for such determinations will be precluded with the implementation of Bill 15.)
The decision also reinforces the concept that disputes concerning entitlement to benefits include a determination of the statutory pre-conditions, including whether or not an accident occurred, and those determinations dependent on status such as whether the injury was a minor injury as defined and whether or not an impairment is a catastrophic impairment. The reasons for judgment are set out below: