Ontario's Statutory Accident Benefits Schedule (SABS) provides for prescribed time limits under various sections of its regulations. A failure to comply does not necessarily disentitle claimants to benefits in the event that they can establish a reasonable explanation or a reasonable excuse for their failure to do so. Relief from forfeiture is available under s.129 of the Insurance Act where there has been imperfect compliance with a statutory condition, but it is a discretionary remedy.
The Ontario Court of Appeal recently examined the interplay between these two pieces of legislation in Cervo v. State Farm, [2006] O.J. No. 4378. The plaintiff had been crushed against the rear of a van by a forklift in 1994. Within 30 days of the accident, the plaintiff retained counsel. However, the plaintiff's counsel did not file an application for benefits within the 30 days prescribed by s. 59(1) of the SABS. The plaintiff's counsel then retained another law firm to give an opinion on the availability of the SABS, which was provided more than one-and-a-half years after the accident. Notice to State Farm was not formally provided until almost two years post-accident.
State Farm rejected the claim for accident benefits as it was not notified within 30 days after the accident. Justice Low allowed the application brought by State Farm and found that the claimant did not have a "reasonable excuse" pursuant to s. 59(4) of the SABS, and concluded that Cervo should not be granted relief from forfeiture.
The matter was appealed to the Ontario Court of Appeal. In a split decision, the majority concluded that the plaintiff did not have a reasonable excuse for his failure to notify State Farm, and furthermore declined to find that this was an appropriate case for relief from forfeiture. The court found there was no evidence of any limitation between the client and the solicitor with respect to the extent of the retainer, and therefore the solicitor's actions bound the client.
Secondly, the court was not persuaded that there was any confusion in the case law in 1994 that would have given any doubt as to whether the plaintiff was in an automobile accident entitling him to no-fault benefits. As well, there was no explanation as to why the second opinion was not obtained immediately after the accident. There was no disadvantage to the plaintiff in applying for accident benefits earlier.
The only other avenue available to the plaintiff was relief from forfeiture under s. 129 of the Insurance Act. The Court of Appeal was unified on the issue that s. 59(4) of the SABS does not "occupy the field" of relief from forfeiture. There is nothing in the language of s. 59 that suggests that it somehow replaces the more general relief offered in s. 129.
The burden is upon the insured to establish that the insurer has suffered no prejudice. Cervo had not filed any evidence of either hardship to himself or lack of prejudice to State Farm. There is little doubt that the Court of Appeal was mindful of the likelihood of success in the claim against the former solicitor and found that there was no significant hardship to the claimant. As well, the court was of the view that there was prejudice to State Farm by the failure to give timely notice. In particular, prejudice was established by the failure to be able to speak to witnesses and to evaluate the claim at an early stage. Furthermore, there was a loss of opportunity to assist the claimant in his recovery.
The outcome of this case is an important one for insurers and establishes in simplistic terms that the timelines available under the SABS will be respected.
It is also quite clear upon a review of the case law in this area that each case is decided on its own facts. In the event that there had not been a viable alternative action available against the former solicitor, it is more likely that there would have been a careful analysis of the plaintiff's physical and emotional condition, as well as other practical circumstances which may have explained the failure to provide notice.
There is also no question that in order to establish a persuasive argument that s.129 of the Insurance Act ought to be applied, that evidence of both hardship to the plaintiff and lack of prejudice to the insurer must be advanced.
Stacey Cronyn is a partner at Nelligan O'Brien Payne LLP in Ottawa and practises in the areas of insurance law, personal injury and civil litigation.
[This article is reprinted with permission and first appeared in the June 2007 issue of The Lawyers Weekly.]
