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Insurance - Auto - Coverage Denial [SABS 31]. Akinyimide v. Economical Mutual Insurance Company
In Akinyimide v. Economical Mutual Insurance Company (Div Court, 2023) the Divisional Court considered a SABS appeal from the LAT, here where the insurer accused the insured of a "'material misrepresentation' in failing to disclose her correct address". The insurer charged different rates depending on where insurers lived, so when they learned of the correct address they charged the insurer a catch-up increase, which she paid. When she filed an insurance claim the insurer denied on the basis of SABS s.31 ['Circumstances in which certain benefits not payable']:[1] The appellant, Bukola Akinyimide (“Akinyimide”)[1], had a car accident in October, 2017. Her insurer, the respondent Economical Mutual Insurance Company (“Economical”), denied her claim for income replacement benefits (“IRBs”) under the Statutory Accident Benefits Schedule O. Reg. 34/10 (“SABS”) on the basis that she had made a “material misrepresentation” in failing to disclose her correct address.
[2] At the time Akinyimide obtained the policy, in February 2016, she informed Economical that she resided in Windsor but was going to move to Toronto for work. The broker advised Akinyimide that this change of address would increase her premium, and Akinyimide then stated that she would continue to reside in Windsor and take a bus to Toronto for work.
[3] On the date of the accident Akinyimide was driving her vehicle in Toronto to attend work. She later admitted that she lived in Toronto from Monday to Friday, and her driver’s licence and other documentation listed her residence as being in Toronto.
[4] 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. Economical also sought a retroactive payment of over $1,000, apparently reflecting her move to Toronto as of July 2017. The appellant made these payments.
[5] Upon being denied IRBs by Economical, Akinyimide sought relief from the Licence Appeal Tribunal (“LAT”). In a Preliminary Issue Decision dated August 19, 2020, the LAT upheld Economical’s decision, applying s. 31(1)(b) of the SABS which provides:(1) The insurer is not required to pay an income replacement benefit, a non-earner benefit or a benefit under section 21, 22 or 23, …
(b) in respect of any person who has made, or who knows of, a material misrepresentation that induced the insurer to enter into the contract of automobile insurance or who intentionally failed to notify the insurer of a change in a risk material to the contract. [6] The LAT found that Akinyimide made a material misrepresentation by failing to disclose her correct address for the purposes of obtaining an insurance policy. Akinyimide was made aware of the importance of providing her correct address to her insurance broker but did not do so. The LAT held that Akinyimide’s misrepresentation induced Economical to enter into an insurance contract at a lower rate than the Appellant would have been eligible for had she provided her correct address.
[7] The Tribunal rejected Akinyimide’s “alternative argument” that Economical had waived its right to rely on her misrepresentation and was estopped from denying her IRBs after it had charged her a higher premium retroactive to July 2017. The LAT refused to apply s. 131 of the Insurance Act, R.S.O. 1990, c. I.8, (the “Act”) holding that the LAT has no jurisdiction to award equitable remedies. Section 131 provides, in material part: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. [8] Akinyimide applied for reconsideration which was dismissed by the same LAT adjudicator on May 4, 2021. The adjudicator confirmed his findings respecting s. 31 of the SABS. He stated that s. 131 of the Act did not apply as the SABS constitute a “complete code” for resolving disputes before it, and confirmed his previous finding that the LAT has no equitable jurisdiction. The LAT also rejected an argument that Akinyimide was denied procedural fairness.
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Application of s. 31 of the SABS
[11] In my view the LAT made no error of law in its interpretation and application of s. 31(1)(b) of the SABS. The section provides that the insurer is not bound to pay IRBs if the insured has “made a material misrepresentation that induced the insurer to enter into the contract.” The adjudicator found, quite reasonably, that Akinyimide had done exactly that by misrepresenting her address.
[12] Section 31(1)(b) also provides that the insurer is not required to pay IRBs if the insured “intentionally failed to notify the insurer of a change in a risk material to the contract.” Much of the argument was focused on the mens rea required for this provision, perhaps because in parts of its decisions the LAT referred to this section as well, conflating the two tests in s. 31(1). Nothing turns on this, however, as the LAT made no error in its application of the first branch of the test, concluding at paras. 25 and 41 that Akinyimide made a material misrepresentation about her address which caused Economical to issue a policy at a reduced rate, a conclusion that is well-supported by the evidence.
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