Why this address misrepresentation ruling was set aside

Ontario’s Licence Appeal Tribunal (LAT) erred in law when ruling it had to rely solely on the Statutory Accident Benefits Schedule (SABS) and had no jurisdiction to award equitable remedies under the Insurance Act, a provincial court has found.

In October 2017, driver Bukola Akinyimide was involved in a car accident and claimed income replacement benefits (IRBs). Her insurer, Economical Mutual Insurance Company, denied the accident benefits claim based on address misrepresentation. However, Economical had also increased her premiums in December 2017 retroactive to July 2017, when she changed addresses.

In Akinyimide v. Economical Mutual Insurance Company, Ontario’s Superior Court of Justice found the LAT adjudicator made no error in law by arguing Economical was not bound to pay IRBs if the insured made a “material misrepresentation” of her address.

But the court said the tribunal erred in a reconsideration decision made by the same LAT member. That latter decision argued SABS constituted a “complete code for resolving disputes between insurers and insureds” and that LAT had no jurisdiction to award equitable remedies.

The Superior Court set aside the LAT decisions and remitted the matter back to the tribunal for a new hearing by a different member.

Akinyimide obtained her auto insurance policy in February 2016, telling Economical she resided in Windsor, Ont. but was going to move to Toronto for work. Her broker advised her this address change would increase her premium, so Akinyimide said she would continue to reside in Windsor and take a bus to Toronto for work, the Superior Court decision read.

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On the day of the accident, Akinyimide was driving her vehicle in Toronto to attend work. She later admitted she lived in Toronto from Monday to Friday, and her driver’s licence and other documentation listed her residence in Toronto.

In December 2017, Economical sent Akinyimide a letter increasing her premium to reflect her Toronto residence, from a monthly rate of $188.38 to $347.34. The insurer also sought and received a retroactive payment of more than $1,000, “apparently reflecting her move to Toronto as of July 2017,” Justice Paul Schabas wrote in the unanimous Sept. 20, 2023 Superior Court ruling.

LAT ruled that Akinyimide materially misrepresented her address. She was made aware of the importance of providing her correct address to her broker but did not do so, the tribunal said. “The LAT held that Akinyimide’s misrepresentation induced Economical to enter into an insurance contract at a lower rate than [Akinyimide] would have been eligible for had she provided her correct address,” Schabas wrote.

LAT also claimed it had no jurisdiction to award equitable remedies under s. 131 of the Insurance Act.

In material part, that section says:

131 (1) The obligation of an insured to comply with a requirement under a contract is excused to the extent that, …

(b) the insurer’s conduct reasonably causes the insured to believe that the insured’s compliance with the requirement is excused in whole or in part, and the insured acts on that belief to the insured’s detriment.

“In my view, the LAT erred in law in finding that it could not apply s. 131 of the Act,” Schabas ruled. “The issue, therefore, is not whether judge-made equitable relieve can be awarded by the LAT, but whether the LAT can apply s. 131 of the Act, which is statutory relief.

“The analysis in the preliminary decision, which focused on whether the LAT had jurisdiction to award equitable relief, therefore, does not address the right question and the LAT erred in law in finding that because it does not have jurisdiction to award equitable remedies, it could not apply s. 131.”

In its original Aug. 19, 2020 decision, LAT refused to apply s. 131. The tribunal rejected Akinyimide’s argument that Economical had waived its right to rely on address misrepresentation and was prevented from denying IRBs after it had charged her higher premiums retroactively.

‘Complete code’

The same adjudicator said in the May 4, 2021 reconsideration decision SABS is a “complete code” and repeated LAT’s earlier finding it had no jurisdiction to award equitable remedies. But it made no mention of s. 131.

“The reconsideration decision implicitly recognizes the weakness of the analysis in the preliminary decision and gives an alternative justification, asserting that the SABS is a ‘complete code’ preventing the LAT from applying s. 131 of the Act…,” Schabas wrote.

To do this, LAT relied on s. 280(4) of the Insurance Act, which states that disputes over entitlement to IRBs “shall be resolved in accordance with” SABS. “But this too is an error of law by the LAT,” Schabas found, saying there is nothing in s. 280 that prevents LAT from considering other sections of the Act, as long as LAT’s decision is “in accordance” with SABS.

Schabas went on to say that if LAT cannot apply s. 131, the purpose of this section is unclear.