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Statutory Notices

. Jajo v. Ontario (Transportation)

In Jajo v. Ontario (Transportation) (Div Ct, 2021) the Divisional Court was faced with a series of administrative foul-ups started initially by failure to follow statutory [HTA Regs] notice requirements when purporting to revoke a driving instructor's license. The case is mostly fact-based but is an example of how serious (and here, near-comical) the implications can be of failure to give proper notice. The court characterized the situation as a rare abuse of process and granted the license-holder's judicial review application.

. Atlas (Brampton) Limited Partnership v. Canada Grace Park Ltd.

In Atlas (Brampton) Limited Partnership v. Canada Grace Park Ltd. (Ont CA, 2021) the Court of Appeal considers whether notice requirements under PPSA Part V had been satisfied (here, notice of intention to retain collateral) [para 80-95].

. Higashi v. Western Assurance Company

In Higashi v. Western Assurance Company (Div Ct, 2020) the Divisional Court considered when a time limit under the SABS auto insurance regime started to run. The issue was whether a default in the duty to deliver "independent assessment reports" influenced the starting of running of time or not. The court held that, after an analysis of the statutory context of the relevant provisions, time started from notice of the decision, despite the default:
[14] I agree with the Tribunal that the breach of the obligation in s.37(5) to give a copy of all the independent assessment reports to the appellant’s practitioner was not fatal to the running of the limitation period.

[15] The starting point on this issue is the decision of the Supreme Court in Smith v. Co-operators General Insurance Co., 2002 SCC 30, which dealt with the adequacy of notice of a denial of benefits. In that case the insurer did not fulfil its duty under s.71 of the Schedule as it then read to inform the insured of the process for challenging the refusal of benefits. The Supreme Court held that the refusal did not operate to start the limitation period because it did not convey the information that the legislature intended should be conveyed to the insured.

[16] Here, the Tribunal found that the notice provided by the respondent to the appellant was proper and in accordance with the Schedule and the Smith decision.

[17] The appellant cites Klimitz v. Allstate Insurance Company of Canada, 2014 ONSC 7108, aff’d 2015 ONCA 698, leave to appeal refused 2016 CanLII 21913 (SCC), and submits that omission to comply with the requirements of s.37(5) of the Schedule prevents the limitation period from running. I do not agree that Klimitz stands for that proposition.

[18] In Klimitz, the insurer denied benefits and gave reasons that referred to the reports of two independent assessors. It gave the insured a copy of one report but not the other. Two years later it gave the insured a copy of the second assessor’s report. Within two days the insured applied to an arbitrator to decide the dispute.

[19] At the time s.37(1) of the Schedule provided, “the insurer shall give the person notice of its determination, with reasons”. Subsection 37(5) required the insurer to give a copy of independent assessments to the insured and the practitioner who had issued the certificate of disability within 5 days of receipt. The arbitrator held that the omission to provide copies of the second assessor’s reports did not invalidate the refusal for the purposes of the limitation period.

[20] The delegate of the Director of the Financial Services Commission of Ontario reversed the arbitrator’s decision on appeal. The delegate held that the limitation period did not begin to run until the insured received the second assessor’s reports. He held that s.37(5) was not linked to the limitation period, but the obligation to give reasons for the refusal in s.37(1) required the insured to have a copy of the assessments on which the insurer relied so that she could decide whether to apply for relief. On judicial review, the Divisional Court held that the delegate’s decision was reasonable and upheld it. On appeal from the Divisional Court, the Court of Appeal agreed. The court said, “The Director’s Delegate was entitled to deference in the interpretation of his home statute.”

[21] The decision had nothing to do with the obligation to give a copy of the assessment to the insured person’s practitioner. It had to do with the requirement to give a copy to the insured, and the effect of non-compliance on the adequacy of the reasons for the refusal. It also had to do with the reasonableness of the delegate’s decision, not its correctness.

[22] In Beric v. The Guarantee Company of North America, 2020 ONLAT 18-009494/AABS the adjudicator held that failure to give a copy of the independent assessment reports to the doctor who completed the OCF-3 invalidated the refusal for the purposes of the limitation period. The adjudicator said,
The applicant had a right for her physician to be fully informed and provided with critical information that formed the very basis of the denial. Without this critical step, M.B.'s ability to decide whether or not to challenge the cancellation was seriously compromised and placed her at a clear disadvantage.
[23] I disagree. As long as the insured has a copy of the reports, she can show them to her doctor if she wants his views on entitlement to benefits, which is essentially a legal question. I do not think that the legislature had in mind that the doctor would be involved in the decision to challenge a refusal of benefits.

[24] It is s.37(4) of the Schedule that deals with the sufficiency of the reasons for refusing benefits:
(4) If the insurer determines that an insured person is not entitled or is no longer entitled to receive a specified benefit on any one or more grounds set out in subsection (2), the insurer shall advise the insured person of its determination and the medical and any other reasons for its determination. O. Reg. 34/10, s. 37 (4).
[25] The purpose of the requirement to give reasons is to permit the insured to decide whether or not to challenge the cancellation: Turner v. State Farm Mutual Automobile Insurance Co. (2005), 2005 CanLII 2551 (ON CA), 195 O.A.C. 61, paragraph 8. The reasons need not be legally correct: Sietzema v. Economical Mutual Insurance Company, 2014 ONCA 111.

[26] Subsection 37(5) on the other hand is not linked to refusal of benefits in particular. It obliges the insurer to give a copy of the independent assessment to the insured and to the practitioner who completed the disability certificate whether benefits are to be continued or not. The independent assessment would be useful to the practitioner with respect to the care of the insured whether benefits are continued or not.

[27] I think that the ordinary meaning of the words of the section in the context of the Act and considering its purposes leads to the conclusion at which the adjudicator arrived. The failure to give copies of some of the reports to the appellant’s doctor did not invalidate the refusal of benefits for the purpose of the limitation period.

[28] On July 2, 2015 the appellant had what she needed to know that the respondent had made an unequivocal determination to discontinue her benefits and the medical reasons therefor. She had copies of the independent assessments upon which the determination was based. She was given enough information to know whether or not to challenge the cancellation of benefits. There is no reason why the limitation period should not have started to run.
. 2352392 Ontario Inc. v. Msi

In 2352392 Ontario Inc. v. Msi (Ont CA, 2020) the Court of Appeal considered when a statutory notice provision [under s.6(3) of the Arthur Wishart Act (Franchise Disclosure), 2000], normally interpreted to be required outside of litigation, was satisfied by effective notice within a statement of claim:

[10] In effect, the notice of rescission and the claim for rescission were brought contemporaneously in this case. Is there a reason to interpret the Act in a way that requires a separate notice, and does not allow the third party claim, issued within two years after entering into the franchise agreement as required by s. 6(2), to constitute the required notice? In my view, there is not.

[11] As the Arthur Wishart Act is remedial legislation, it should be interpreted in a generous manner to redress the imbalance of power in franchising relationships, while also balancing the rights of both franchisees and franchisors: Mendoza v. Active Tire & Auto Inc., 2017 ONCA 471, 139 O.R. (3d) 230, at para. 13, leave to appeal refused, [2017] S.C.C.A. No. 405; Salah v. Timothy’s Coffees of the World Inc., 2010 ONCA 673, 268 O.A.C. 279, at para. 26; 4287975 Canada Inc. v. Imvescor Restaurants Inc. et al., 2009 ONCA 308, 98 O.R. (3d) 187, at para. 40, leave to appeal refused, [2009] S.C.C.A. No. 244. [12] Under s. 6(2) of the Act, a franchisee has the right to rescind the franchise agreement within two years if the franchisor did not provide the statutory disclosure document. To do so, the franchisee must provide written notice of rescission. The purpose of the notice is to advise the franchisor that the franchisee is rescinding. Its purpose is not as a precondition to litigation. In fact, a review of the Hansard debate at the time the Act was introduced confirms that s. 6 was intended to allow the parties to extricate themselves from the agreement without litigation if the franchisor accepts the notice of rescission and complies with all the requirements in s. 6(6) within 60 days of receiving the notice: see Ontario, Legislative Assembly, Standing Committee on Regulations and Private Bills, Subcommittee Report: Franchise Disclosure Act, 1999, Bill 33, 37-1, (19 April 2000) at 11:10 (Joseph Hoffman, Director, Policy and Agency Relations Branch, Ministry of Consumer and Commercial Relations).[13] Under s. 6(3), the only requirements for the notice are that it be in writing and delivered to the franchisor. Although it is fair to say that the Act appears to contemplate that notice will be given outside the context of litigation, a pleading can comply with the Act’s requirements. It did in this case. Moreover, it was not the respondents’ position that the language of the third party claim was too imprecise to give notice to the franchisor, as was the case in 779975 Ontario Ltd. v. Mmmuffins Canada Corp. (2009), 62 B.L.R. (4th) 137 (Ont. S.C.). This was not a case in which the franchisor was somehow prejudiced by the manner in which notice was given, nor did the respondents submit otherwise. Their position was that no pleading could constitute the required notice under the Act.

[14] The issue identified by the motion judge is that the pleading itself may be premature, particularly to the extent that it claims the damages and payments provided in s. 6(6) before the 60 days have gone by. However, the prematurity of the pleadings is a procedural matter that may have to be addressed by the parties, depending what positions they take. In this case, as in the Ahmed case, the pleading served only as notice and the parties subsequently issued new statements of claim. Although this procedure is anomalous, and certainly not the ideal or recommended approach, I see no basis to find that the third party claim could not constitute the written notice required under s. 6(3) of the Act – a finding that would have the effect of denying the franchisee’s right to rescind.

[15] To conclude, although a written notice of rescission delivered by the franchisee to the franchisor before commencing litigation is the normal and preferable procedure, to preclude a franchisee from using a pleading to provide notice of rescission to a franchisor and to find that such a notice cannot comply with the Act when there is no such prohibition in the Act itself, would be to favour form over substance and create a barrier to enforcement of the rights of franchisees under the Act.


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