The Ontario Court of Appeal has ruled that relief from forfeiture under s. 129 of the Insurance Act is available to claimants seeking statutory accident benefits.
“Cervo v. [Raimondo] represents the first time Ontario’s highest court has clarified the matter,” says D’Arcy McGoey of Cassels Brock & Blackwell LLP, who represented State Farm, a co-defendant in the case with lawyer Joseph Raimondo.
Section 129 states a court may provide relief from forfeiture if there’s been “imperfect compliance with a statutory condition as to the proof of loss to be given by the insured or other matter or thing required to be done or omitted by the insured with respect to the loss and a consequent forfeiture or avoidance of the insurance in whole or in part.”
Although the court was unanimous in ruling on the availability of the relief, it split on the issue of whether that relief should be extended in this case. Justices Jean-Marc Labrosse and Marc Rosenberg upheld the decision of the motions judge denying relief to the plaintiff, Gerardo Cervo. Justice James MacPherson dissented.
In December 1994, Cervo was injured when struck by a forklift while checking a light at the rear of his companion’s van. Within a week, Cervo retained Joseph Raimondo of Toronto to represent him.
Raimondo did not obtain particulars of State Farm’s covering policy until December 1995, more than a year after the accident. One month later, Raimondo retained Thomson Rogers to provide him with an opinion.
Thomson Rogers took until September 1996 to give its opinion, clarifying it further two months later. No explanation was given for the delay in seeking the opinion or the delay in delivering it.
State Farm was first notified of the accident two days before the two-year limitation expired. The insurer rejected the claim, citing s. 59 of the Statutory Accident Benefits Schedule (SABS).
Section 59 provides that claimants must give notice to the insurer within 30 days “after the circumstances arose that gave rise to the entitlement to benefits, or as soon as practicable thereafter.” Under s. 59(4), failure to comply did not disentitle insureds who had “a reasonable excuse.”
Cervo sued State Farm for accident benefits. He also sued the operator of the forklift in tort and Raimondo in negligence for failure to give notice to State Farm in a timely fashion.
In response to State Farm’s allegations that Cervo had not complied with s. 59, his lawyer, Jadranka Cavrak of Toronto’s Howie Sacks & Henry LLP, submitted that a reasonable excuse existed because her client had relied on Raimondo, it was not clear whether the forklift was an automobile under the Insurance Act, and the complexity involved in distinguishing the torts claims from Cervo’s SABS rights required a second opinion.
The motions judge ruled that Raimondo was Cervo’s agent and his actions bound his client. Labrosse, who wrote the majority opinion, agreed.
“I agree with the motion judge that mere reliance on the solicitor was not a reasonable excuse,” he stated.
Labrosse also rejected the argument regarding the status of the forklift. Regardless of its status, he noted, the van was clearly an automobile, thereby invoking SABS.
Nor was the complexity of the matter a reasonable excuse for the delay in giving notice.
“I have difficulty accepting that, when a solicitor is in doubt regarding the validity of his client’s claim and thus seeks the opinion of another, this should constitute a reasonable excuse for the delay involved,” Labrosse wrote.
“More importantly in this case, no opinion was sought until January of 1996, long after an opinion could have been sought and obtained had Cervo and/or his solicitor acted with reasonable diligence. There is no explanation why the second opinion was not and could not have been sought shortly after the accident.”
“[The excuses relating to the forklift and to the complexity of the case] lose all merit in light of the evidence that there was no disadvantage to Cervo in applying for the benefits immediately after the accident took place.”
The following factors also militated against the reasonableness of the excuses proffered:
• Raimondo did not obtain the particulars of insurance until more than a year after the accident although retained within a week thereof;
• Raimondo did not seek a second opinion until 15 months after the accident;
• Thomson Rogers took nine months to provide the second opinion;
• Raimondo did not inquire about Thomson Rogers’ delay in providing the opinion; and
• State Farm was not advised of the accident until two days before the limitation period for suing expired.
“This questionable behaviour was carried out in the face of a clear statutory requirement to notify the insurer within 30 days of the accident and each piece of conduct - or lack thereof - is inexcusable,” Labrosse concluded.
And while the motions judge had been correct that s. 129 was available to SABS claimants, Labrosse would not interfere with her refusal to grant relief from forfeiture.
“As [MacPherson] did, I would reject the submission of State Farm in terms of s. 59(4) ‘occupying the field’ of relief from forfeiture,” Labrosse wrote.
“I agree with my colleague that there is nothing in the language of s. 59 to suggest that it was intended to render nugatory the more general relief from forfeiture provided in s. 129. Had that been the intention of the legislature, it could easily have done so.
“Moreover, as noted by my colleague, the fundamental different in focus of the two sections leads to the conclusion that this was not the legislature’s intention.”
In refusing relief from forfeiture, the motions judge noted that even if Cervo was precluded from claiming no-fault accident benefits, he still had remedies in tort and against Raimondo.
But Philippa Samworth of Toronto’s Dutton Brock LLP, who represents Raimondo, says the case against her client is not clear cut.
“It’s not a slam-dunk case against the solicitor and if the kid is unsuccessful in his allegations of negligence, he’s out of luck on accident benefits,” she told Law Times.
The motions judge also found that State Farm was prejudiced by the delay in giving notice because the insurer had not been able to speak to witnesses and evaluate the claim at an early stage and perhaps assist Cervo with treatment.
“The motions judge weighed both sides and did exactly what she was supposed to do: she properly addressed the relevant considerations and exercised her discretion not to relieve from forfeiture; she did not fail to take into consideration a major element of the case; she did not disregard, misapprehend or fail to appreciate relevant evidence, or make a finding not reasonably supported by the evidence, or draw an unreasonable inference from the evidence,” Labrosse wrote.
In these circumstances, an appellate court should intervene only where the motions judge had acted on a wrong principle of law or made a clear error.
“It is not the role of an appellate court to replace the exercise of discretion by the motion judge,” Labrosse