Fridays With Rogers Partners

At our weekly meeting, Chris MacDonald discussed the Court of Appeal’s decision in Dorman v. Economical Mutual Insurance Company, 2021 ONCA 314. The case involves an appeal by the plaintiffs of proposed class actions from the dismissal of their claims for lack of jurisdiction, and the refusal to approve settlement agreements entered into by two respondent insurers.

The Crown appealed from the decision not to dismiss the claims against the Financial Services Commission of Ontario (“FSCO”). The respondent insurers sought leave to appeal the costs order made in their favour by the motion judge.

The Court of Appeal dismissed both the plaintiffs’ and the Crown’s appeals, and refused to grant leave to appeal the costs order.

Facts

The plaintiff appellants filed proposed class actions against 15 auto insurers and the Financial Services Commission of Ontario (“FSCO”), alleging that the insurers had improperly reduced their statutory accident benefits (“SABs”) by deducting HST, and that FSCO wrongfully failed to investigate the practices of the insurers after receiving complaints, and also failed to enforce its own guidelines on HST and SABs.

Two of the respondent insurers entered into tentative settlements agreements, on the condition that the proceedings being certified as class proceedings, and court approval of the settlements.

FSCO and several respondent insurers brought parallel motions under Rule 21.01 of the Rules of Civil Procedure to stay or dismiss the proposed class actions, maintaining that the Superior Court lacked jurisdiction and that the License Appeal Tribunal (“LAT”) has exclusive jurisdiction over all SABs disputes.

The plaintiffs sought a determination that the Superior Court had jurisdiction to certify the proceedings as class proceedings and to approve the proposed settlements.  

Decision of the Motion Judge

The motion judge found that the Superior Court did not have jurisdiction to certify the proceedings as class proceedings pursuant to section 280 of the Insurance Act. Section 280 gives the Licence Appeal Tribunal (“LAT”) exclusive jurisdiction over an insured’s entitlement to, and the amount of, SABs. The motion judge therefore granted the motions to dismiss the proposed class actions and declined to approve the settlement agreements.

The motion judge dismissed the Crown’s motions, finding that it was not plain and obvious that the proposed class actions against FSCO were barred by section 280, as the allegations were not concerned with SAB entitlements or amounts, but with FSCO’s misconduct.

Although the respondent insurers collectively sought over $600,000 in costs on the motion, the motion judge awarded the respondent insurers $15,000 in costs to be shared amongst them, and a further $1,000 to each insurer as costs of the action, for a total of $28,000.

Issues on Appeal

1. Did the motion judge err in dismissing the proposed class actions and in finding that the LAT had jurisdiction by virtue of s. 280 of the Insurance Act?
2. Did the motion judge err in not dismissing the claims against FSCO?
3. Should leave to appeal costs be granted?

Analysis

Issue 1: Did the motion judge err in dismissing the proposed class actions and in finding that the LAT had jurisdiction by virtue of s. 280 of the Insurance Act?

The Court of Appeal saw no error in the motion judge’s analysis on this issue, and concluded that section 280 of the Insurance Act clearly provides that no court actions are permitted with respect to disputes about entitlement to SABs or the amount of SABs. The Court held that it could not be said that a dispute about HST is not a dispute about the amount of benefits to which a person is entitled.

The Court rejected the plaintiff appellants’ argument that the exclusive jurisdiction of the LAT undermines the purpose of the Insurance Act or hinders access to justice, finding that the LAT has exclusive jurisdiction over such disputes and the Act is clear.

Finally, the Court held that the settlements cannot be approved unless a proposed class action is certified, and certification in this case was impossible because the action was barred by s. 280(3).

Issue 2: Did the motion judge err in not dismissing the claims against FSCO?

The Court of Appeal upheld the motion judge’s finding that the plaintiffs were entitled to advance claims against FSCO, as nothing in section 280 deprives the Superior Court of its jurisdiction over such tort claims.

Issue 3: Should leave to appeal costs be granted?

The Court of Appeal upheld the motion judge’s costs order and rejected the respondent insurer’s arguments that the motion judge erred by ignoring and misapplying relevant factors, undervaluing the result of the motion and the importance of the issues at stake, and by considering irrelevant and improper factors.

The Court recognized that costs are within the discretion of the motion judge and should not be interfered with unless there is an error in principle, or they are plainly wrong. It was open to the motion judge to conclude that this was a straightforward motion on a jurisdictional question and that the costs incurred were excessive in the circumstances.