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Insurance - Auto - SABS - General. Derenzis v. Ontario
In Derenzis v. Ontario (Ont CA, 2025) the Ontario Court of Appeal partially allowed an appeal, this brought against a number of different R21 striking pleading grounds in an MVA tort context.
The court considers the contractual 'duty of good faith', insofar as the SABS rules form part of the insurance contract:4. Did the motion judge err in striking Derenzis’ claim for breach of good faith?
[26] The motion judge struck the breach of good faith claims for three reasons: (1) the appellants do not claim damages for breach of contract, and since breach of good faith is not “a freestanding cause of action,” it is “untethered” and cannot proceed; (2) the SABS do not form part of the contract of insurance; and (3) there was no contractual relationship pleaded between the appellants and the respondent Gore employees.
[27] While the motion judge correctly noted that there was no contractual relationship between the appellants and the employees of Gore, she erred when she found that the appellants had not claimed that there were breaches of contract by Gore. Although lacking particulars, the alleged breaches of contract are contained in the amended statement of claim. It is pleaded that there was a contract of automobile insurance with Gore with various terms, including the requirement to provide payments pursuant to the SABS. It is pleaded that Gore breached its contractual obligations to provide medical records to the assessors (para. 33), that it altered reports (paras. 36-37), and that it “breached its contractual and good faith obligation to provide assessors all relevant information and documentation” (para. 38). The obligation to provide relevant information to assessors is set out in s. 44(9)(1) of the SABS.
[28] Further, it is pleaded that when Gore received the appellant Derenzis’ application for a determination of catastrophic impairment, it breached its good faith obligation to comply with the SABS and instead, arranged further examinations (paras. 81, 82). The appellants specifically claim damages for breaching the SABS, inducing breaches of contractual terms and for breaching their duty of good faith obligations to reasonably adjust benefit claims (para. 117).
[29] The motion judge erred when she determined that the appellant Derenzis is not claiming damages for breach of contract. While the particulars are lacking at times, read generously in favour of the plaintiff with allowances for drafting deficiencies, it is clear that the appellants are claiming breaches of the contract of insurance: see McCreight v. Canada (Attorney General), 2013 ONCA 483, 116 O.R. (3d) 429, at para. 39. The motion judge’s conclusion that the breach of good faith allegations could not stand in the absence of claims for breach of contract was therefore incorrect. Furthermore, an insurer has an independent contractual obligation to deal with all claims in good faith: Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30, [2006] 2 S.C.R. 3, at para. 63; Stegenga v. Economical Mutual Insurance Co., 2019 ONCA 615, 147 O.R. (3d) 65, at para. 55. The pleading, if amended to include particulars, would be sufficient to ground the claims against Gore rooted in alleged breaches of good faith.
[30] The motion judge’s error was compounded by her finding that the SABS do not form part of the contract of insurance. That is incorrect in law: see Insurance Act, s. 268(1); Warwick v. Gore Mutual Insurance Co. (1997), 1997 CanLII 1732 (ON CA), 32 O.R. (3d) 76 (C.A.) at pp. 80-83. The motion judge relied on Yang v. Co-operators General Insurance Company, 2021 ONSC 1540, aff’d 2022 ONCA 178, leave to appeal refused, [2022] S.C.C.A. No. 141, for the proposition that the SABS do not form part of the contract of insurance. Without deciding the question of which portions of the SABS form part of the insurance contract — an issue not adequately addressed or argued by the parties — it is clear that every motor vehicle liability policy is deemed to provide for the benefits included in the SABS, per s. 268 of the Insurance Act; see also Yang, at para. 29. To the extent Derenzis’ claims arise from a breach of the contractual obligation to provide those benefits, the motion judge erred in relying on Yang to strike that part of the claim. Moreover, the facts of Yang were very different because in that case, the plaintiff had settled her claims with the defendant insurer and was pursuing other individuals with whom she had no contractual relationship. There was therefore no claim against the insurer for alleged breaches of the duty of good faith. Ordinarily, claims for breach of the SABS including claims for breach of the duty of good faith would lie within the LAT’s exclusive jurisdiction: Stegenga, at para. 54. Since the constitutional challenge to s. 280 of the Insurance Act was not struck, however, it is not plain and obvious that these claims are doomed to fail. Derenzis should be granted leave to amend to properly plead her breach of contract and breach of good faith claims against Gore. . Thiruchelvam v. RBC General Insurance Company
In Thiruchelvam v. RBC General Insurance Company (Div Ct, 2022) the Divisional Court characterizes the Insurance Act's MVA SABS regime:[1] The Statutory Accident Benefit Schedule (colloquially “SABS”) represents what by now has to be recognized as a long-standing effort to respond expeditiously to those injured in accidents involving motor vehicles. It is part of a continuing effort by the government of Ontario to balance the value of statutory benefits (no fault benefits) and the right to sue in tort while accounting for the ability of the insurance industry to supply the required or appropriate policies at an acceptable cost. The scheme recognizes that there will be circumstances where individuals are so seriously injured that more than the regularly recognized benefits should be made available. People who find themselves in this unfortunate position are identified as being “catastrophically impaired”. The SABS demonstrates the basis upon which an injured party may be recognized as being catastrophically impaired and qualifying for any additional benefits that are or may be available. . Warren v. Licence Appeal Tribunal
In Warren v. Licence Appeal Tribunal (Div Court, 2022) the Divisional Court reviews some of the MVA SABS Insurance Act regime:[5] The SABS dispute resolution system was significantly redesigned effective April 1, 2016. The Insurance Act was amended to provide the LAT with exclusive jurisdiction at first instance over the resolution of disputes about an insured person’s entitlement to or amount of statutory accident benefits: Insurance Act, section 280. The amendments streamlined the statutory accident benefit claim and payment process by, among other things, eliminating Financial Services Commission of Ontario mandatory mediations and the ability to bring court actions. . Aviva Insurance Company of Canada v. Danay Suarez
In Aviva Insurance Company of Canada v. Danay Suarez (Div Ct, 2021) the Divisional Court set out some basics of the MVA SABS insurance system:Purpose, Intent, and Function of Accident Benefits Legislation
[25] As noted by MacKinnon, J. in Arts v. State Farm Insurance Company, 2008 CanLII 25055 (ON SC):The SABS is remedial and constitutes consumer protection legislation. As such, it is to be read in its entire context and in their ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of the legislature. The goal of the legislation is to reduce the economic dislocation and hardship of motor vehicle accident victims and, as such, assumes an importance which is both pressing and substantial. (para. 16) [26] In 2016, the LAT was delegated the exclusive jurisdiction to resolve Accident Benefits disputes between insurers and claimants. The Court of Appeal in Stegenga v. Economical Mutual Insurance Company 2019 ONCA 615 (CanLII) noted that the purpose of assigning Accident Benefits disputes to the LAT was to, “[speed] up dispute resolution, in large part by providing an efficient, fair and accessible mechanism for resolving disputes” (para. 38).
[27] The LAT has broad remedial powers to address Accident Benefit disputes. As the court in Stegenga noted:Taken together, the words of s. 280(1) cover a wide array of disagreements connected in some way to the SABs to which an insured person was or is entitled. Viewed in the context of the purpose and history of the dispute resolution provisions, those words include disagreements about when the insurer’s obligation to provide SABs should be or should have been performed, and how the obligation to provide them should be or should have been performed. (para. 45) [28] In executing its dispute resolution functions, the LAT, “has all the powers that are necessary or expedient for carrying out its duties” (Licence Appeal Tribunal Act, 1999, s. 3(2)).
[29] In interpreting and applying legislation, the court must also be mindful of the remedial purpose of legislation. Pursuant to s. 10 of the Interpretation Act, R.S.O. 1990, c.I.11:Every Act shall be deemed to be remedial, whether its immediate purport is to direct the doing of any thing that the Legislature deems to be for the public good or to prevent or punish the doing of any thing that it deems to be contrary to the public good, and shall accordingly receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit. . Continental Casualty Company v. Chubb Insurance Company of Canada
In Continental Casualty Company v. Chubb Insurance Company of Canada (Ont CA, 2022) the Court of Appeal summarized the SABS regime for purposes of the case:B. The SABS Regime
[21] To provide context for the issues on appeal, I will briefly review the SABS coverage regime and the s. 268 priority rules and related regulations. I will set out other relevant regulatory and contractual provisions when addressing the specific issues to which they relate.
(i) SABS Coverage
[22] Subsection 268(1) of the Act states that all motor vehicle liability insurance policies are deemed to provide for the SABS set out in the SABS Schedule:268(1) Every contract evidenced by a motor vehicle liability policy … shall be deemed to provide for the statutory accident benefits set out in the [Statutory Accident Benefits] Schedule….[4] [23] Under the SABS Schedule, all insurance policies must provide stipulated basic mandatory SABS coverage and all insurers must offer stipulated optional enhanced SABS coverage: s. 2(1) and s. 28(1) of the SABS Schedule.
[24] Sections 4-27 of the SABS Schedule set out the specified basic mandatory benefits that must be provided, including, for example, a maximum income replacement benefit of $400 per week: s. 7(1) of the SABS Schedule.
[25] Section 28(1) of the SABS Schedule requires that every insurer offer specified optional enhanced SABS benefits. For example, s. 28(1)(1.) requires that the following optional enhanced benefit be offered:1. An optional income replacement benefit that increases the maximum weekly amount of $400 referred to in the definition of “B” in subsection 7 (1) to $600, $800 or $1,000, as selected by the named insured under the policy. [26] Under s. 28(2) of the SABS Schedule, the optional benefits referred to in s. 28(1) are “applicable” only to: the named insured, the spouse of the named insured, their dependants and persons specified in the policy as drivers of the insured automobile.
[27] Put another way, even if the s. 268 priority rules afford recourse against an insurer to a SABS claimant with no connection to the policy (for example, a pedestrian struck by the insured automobile where the pedestrian has no automobile insurance), any optional enhanced SABS coverage available under the policy would not be “applicable” to that claimant.
(ii) The Section 268 Priority Rules and Related Regulations
[28] Subsections 268(2)-(5.2)[5] of the Act set out the rules for determining the insurer against which a person has recourse for SABS and for determining the insurer liable to pay SABS.
[29] Whether an occupant or non-occupant of an automobile at the time of an accident, a SABS claimant’s first avenue of recourse is against the insurer of an automobile in respect of which the person is an insured: s. 268(2)(1.)(i) and (2)(2.)(i) of the Act. As Mr. Ekstein was a pedestrian (“non-occupant”) when he was injured, s. 268(2)(2.) therefore applies:268(2) The following rules apply for determining who is liable to pay statutory accident benefits:
...
2. In respect of non-occupants,
i. the non-occupant has recourse against the insurer of an automobile in respect of which the non-occupant is an insured,
ii. if recovery is unavailable under subparagraph i, the non-occupant has recourse against the insurer of the automobile that struck the non-occupant,
iii. if recovery is unavailable under subparagraph i or ii, the non-occupant has recourse against the insurer of any automobile involved in the incident from which entitlement to statutory accident benefits arose,
iv. if recovery is unavailable under subparagraph i, ii or iii, the non-occupant has recourse against the Motor Vehicle Accident Claims Fund. [Emphasis added.] [30] Where a person has recourse against more than one insurer under subparagraphs (i) or (iii) under paragraphs (1.) or (2.) of s. 268(2), the person may decide the insurer from which the person will claim benefits: s. 268(4) of the Act.
[31] Despite s. 268(4), if a person is a named insured under a policy, the person must seek recourse for SABS under that policy: s. 268(5) of the Act.
[32] However, subject to s. 268(5.2), if a person is a named insured under more than one policy providing SABS coverage, the person may choose the insurer against which the person will seek recourse: s. 268(5.1) of the Act.[6]
[33] As noted, s. 3(7)(f) of the SABS Schedule expands the notion of a named insured if a SABS claimant can establish regular use of a company vehicle. It provides:3(7)(f) an individual who is living and ordinarily present in Ontario is deemed to be the named insured under the policy insuring an automobile at the time of an accident if, at the time of the accident,
(i) the insured automobile is being made available for the individual's regular use by a corporation…. [Emphasis added.] [34] Section 268(3) of the Act stipulates that the insurer against whom a person has recourse for SABS is liable to pay SABS:268(3) An insurer against whom a person has recourse for the payment of statutory accident benefits is liable to pay the benefits. [Emphasis added.] [35] Further, s. 2(4) of the SABS Schedule states:2(4) Benefits payable under this Regulation in respect of an insured person shall be paid by the insurer that is liable to pay under s. 268(2) of the Act. [36] Section 2.1(6) of O. Reg. 283/95 (Disputes Between Insurers) requires the first insurer that receives an application for SABS to pay SABS pending the resolution of any dispute as to which insurer is required to pay the benefits. This provision ensures SABS payments are not delayed by priority disputes between insurers. If the insurers cannot agree as to which insurer is required to pay benefits, the dispute must be resolved through an arbitration under the Arbitration Act, 1991, S.O. 1991, c. 17: s. 7(1), O. Reg. 283/95.
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