Turner v. State Farm Automobile Insurance Company

Turner v. State Farm Automobile Insurance Company Collection Decisions of the Court of Appeal Date 2005-02-07 Docket numbers C42007 Judges Goudge, Stephen Thomas; Lang, Susan Elizabeth; Juriansz, Russell G. Subject Civil Decision Content DATE: 20050207 DOCKET: C42007 COURT OF APPEAL FOR ONTARIO GOUDGE, LANG AND JURIANSZ JJ.A. B E T W E E N : DEBORAH TURNER Applicant (Respondent) Robert S. Franklin for the appellant - and - STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and THE FINANCIAL SERVICES COMMISSION OF ONTARIO Respondents (State Farm Appellant) (FSCO Respondent) Jamie R. Pollack for the respondent Turner Joe Nemet for the respondent Financial Services Commission Heard: January 31, 2005 On appeal from the order of the Divisional Court (Justice Jean MacFarland, Justice Paul Forestell and Justice Janet Wilson) dated February 25, 2004. BY THE COURT: [1] This appeal raises two issues. [2] The first is whether the Divisional Court erred in finding that the Director’s Delegate applied a less demanding test than the law requires in assessing the adequacy of the notice given by the insurer in cancelling the weekly income benefits of the insured. [3] The second is whether the Divisional Court erred in requiring that the notice provide reasons for cancellation that are legally correct. [4] The Divisional Court read the reasons of the Director’s Delegate as requiring only that the notice be “substantially” clear and unequivocal. All parties agree that in order to terminate the weekly income benefit in this case and trigger the two-year limitation period for the insured to contest that cancellation the insurer must, as a matter of law, give notice that is “clear and unequivocal”. [5] In our view, the reasons of the Director’s Delegate read as a whole make clear that she applied the proper legal test of “clear and unequivocal”. From the beginning she was alive to this as the proper test. As the reasons proceed, she indicates that the insured did not succeed in undermining the clear and unequivocal message contained in the notice and that she was not convinced that the notice was anything less than clear and unequivocal. The reasons conclude with her clear finding that there was no error in the arbitrator’s conclusion that the insurer gave clear and unequivocal notice. The legal test she applied is in our view unmistakeable. [6] On the two occasions where the Director’s Delegate does attach “substantially” to this test, she is referring to technical defects in the notice which, in the end, she finds do not compromise its clear and unequivocal nature. While adjectives like “substantially” ought to be avoided, to eliminate any possible inference that the test is being diluted, we conclude that read in its entirety the reasons of the Director’s Delegate leave no doubt that she applied the correct test. [7] That being so, there is no need for us to deal with the proper standard of review to be applied in this case because, even on a correctness standard, there is no error. [8] We also conclude that the Divisional Court erred in requiring that the reasons for cancelling the benefit must be legally correct. Section 24(8) of the Statutory Accident Benefits Scheme obliges the insurer to give the insured “the reasons for the refusal”. It does not provide that the reasons must be legally correct. The purpose of the requirement to give reasons is to permit the insured to decide whether or not to challenge the cancellation. If the reasons given are legally wrong the insured will succeed in that challenge. Requiring that the reasons be legally correct goes beyond both the requirement in the relevant regulation, and the purpose of such a notice. [9] The respondent argues that the notice is defective because it wrongly addresses the benefit that was never claimed. We do not agree. The notice clearly terminates the weekly benefit that the insured was receiving. While it offers as a reason that the legal test for another benefit is not met, that error neither renders the notice of termination less than clear and unequivocal nor breaches the obligation to give reasons. It simply gives a reason which the insured could, in a timely way, contest. [10] In summary, we conclude that the Divisional Court erred in not finding that the notice here was sufficient to trigger the limitation period. We would therefore allow the appeal, set aside the order of the Divisional Court and substitute an order dismissing the application for judicial review. [11] Costs to the appellant payable by the respondent here and below each in the amount of $4,000.00. No costs to the respondent Financial Services Commission. Released: February 7, 2005 “STG” “S.T. Goudge J.A.” “S.E. Lang J.A.” “R.G. Juriansz J.A.”