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Statutory Interpretation - "And". Varriano v. Allstate Insurance Company of Canada
In Varriano v. Allstate Insurance Company of Canada (Ont CA, 2023) the Court of Appeal considered the adequacy of a SABS auto insurance discontinuation notice letter, and in the process engaged in a statutory interpretation of the word "and":[3] The Divisional Court overturned the decision of the LAT adjudicator, finding that Mr. Varriano’s application was not time-barred because Allstate’s Benefits Letter did not meet the legislative requirements under s. 37(4) of the SABS. The Divisional Court held that s. 37(4) required Allstate to provide medical reasons in the Benefits Letter for the stoppage of benefits.
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[11] If the insurer determines that it will discontinue paying a benefit because an insured is ineligible on any one or more grounds, the insurer, pursuant to s. 37(4) is required to provide a notice to the insured containing the reasons for their determination:37(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. [Emphasis added.] ....
[17] The Divisional Court held that Adjudicator Boyce erred in his interpretation of s. 37(4) of the SABS. That court concluded that a plain reading of s. 37(4) supported the interpretation of the word “and” in the phrase “medical and any other reasons” as bearing a conjunctive meaning. ...
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A. The Divisional Court’s Interpretation Does Not Accord with the Modern Principle of Statutory Interpretation
[23] I begin with the observation that the modern approach to statutory interpretation requires that statutes “are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27, at para. 26. A statute must not be interpreted in a manner that would result in absurd consequences. An interpretation will be absurd where it leads to “ridiculous or frivolous consequences, if it is extremely unreasonable or inequitable, if it is illogical or incoherent, or if it is incompatible with other provisions or with the object of the legislative enactment”: Rizzo, at para. 27. The modern principle of interpretation applies with equal force to regulations: Beaudin v. Travelers Insurance Company of Canada, 2022 ONCA 806, at para. 36.
[24] In my view, in giving a conjunctive meaning to the word “and” in the phrase “medical and any other reason” in s. 37(4), the Divisional Court failed to properly apply the modern principle of statutory interpretation. That interpretation failed to acknowledge that the grammatical and ordinary usage of the word “and” can include both the joint sense and the several sense. When the phrase “medical and any other reason” in s. 37(4) is read contextually, it becomes clear that the ordinary meaning of the word “and” was intended in its several sense. Nor does the Divisional Court’s interpretation accord with the purpose of the notice provision.
(1) The grammatical and contextual meaning of “medical and any other reason”
[25] Presuming that the plain meaning of the word “and” is conjunctive reflects an incomplete appreciation of the grammatical use of the word in ordinary language. As Ruth Sullivan points out in The Construction of Statutes, 7th ed. (Markham: LexisNexis Canada Inc., 2022) at § 4.05, “and” is sometimes used in the joint and several sense (A and B jointly or severally) and in other circumstances is used only in the joint sense (A and B jointly, but not severally).
[26] Considering the use of “and” in a statutory provision contextually assists in determining when it should be interpreted in the joint sense as opposed to the joint and several sense: R. v. Yadegari, 2011 ONCA 287, 286 C.C.C. (3d) 320, at para. 62. In my view, the requirement to provide reasons in s. 37(4) is inextricably tied to the grounds for discontinuance of benefits stipulated in s. 37(2). Contextually, when the two provisions are read properly together, it is clear that the word “and” in the phrase “medical and any other reason” was intended in the joint and several sense.
[27] These two sections read together simply require the insurer to determine the basis for disqualifying the insured person under s. 37(2) from receiving specified benefits and to communicate the basis for that determination to the insured. Some of the grounds under s. 37(2) are medical and some are not. For example, ss. 37(2)(a), (d), (f) and (g) provide for non-medical grounds to terminate benefits.
[28] Importantly, s. 37(4) states that the insurer may rely on “any one or more grounds set out in [s. 37(2)]” (emphasis added) in terminating benefits. By explicitly including those words, s. 37(4) recognizes that an insurer may rely on a single non-medical reason for termination of benefits, even though the insured might be otherwise medically entitled to the benefit. In such case, a medical ground is not a “reason” for the insurer’s determination under s. 37(4). Yet, the Divisional Court’s interpretation requires the insurer to state its position on the person’s medical eligibility even if that is not the basis for its determination. Put differently, interpreting “and” in the joint sense conflicts with the joint and several nature of the grounds for termination.
[29] Such an interpretation is not a harmonious reading of the two sections particularly in light of s. 37(2)(g) which specifically contemplates that the disentitlement need not relate to an impairment. This subsection permits termination if the insurer determines that the insured person is not entitled to a specified benefit “for a reason unrelated to whether [the insured] has an impairment that entitles the insured person to receive the benefit” (emphasis added). The Divisional Court’s interpretation would require the insurer to state its position on the insured’s impairment even though it has no bearing on the insurer’s determination.
[30] In support of its interpretation that s. 37(4) requires an insurer to provide its position on an insured’s medical eligibility, the Divisional Court relies upon the fact that the SABS was amended in 2010 to specifically add the language “medical and any other reasons”. However, as the Divisional Court recognizes, prior to that, the SABS did not require insurers to provide any reasons for their determination. In my view, the addition of language of the 2010 amendment does not indicate that the legislature intended to mandate the provision of medical reasons in all cases, as the Divisional Court suggests. It merely codified the requirement to provide a sufficient reason or reasons for the insurer’s decision, by directly tying the reasons to the actual grounds for termination of benefits in s. 37(2).
[31] Accordingly, s. 37(4) requires provision of the insurer’s actual reasons for determination. If the insurer relies on a medical and a non-medical reason to deny benefits, the insurer must advise the insured person of both. However, if the insurer is relying on a non-medical ground under s. 37(2), the provision requires only that the insurer provide notice of the cancellation of the benefits and to provide the insured with the non-medical reason for that determination.
(2) The purpose of the notice provision
[32] This interpretation of the 2010 amendment accords with the purpose underlying the notice provision. In Smith, Gonthier J. concluded that insurance notice provisions serve a consumer protection purpose by requiring insurers to completely and clearly provide insured persons with the information they need in straightforward and understandable language to enable them to challenge a refusal to pay or a reduction of payments: at paras. 11-14. In Turner v. State Farm Mutual Automobile Insurance Co., (2005) 2005 CanLII 2551 (ON CA), 195 O.A.C. 61 (Ont. C.A.), this court also concluded that: “[t]he purpose of the requirement to give reasons is to permit the insured to decide whether or not to challenge the cancellation.” at para. 8.
[33] Accordingly, Smith and Turner support the argument that s. 37(4) should be interpreted with this policy goal in mind. That policy goal requires reasons to be sufficiently explanatory to permit the insured to decide whether to challenge the denial of benefits.
[34] Although these cases were decided before the Legislature’s 2010 amendments to the SABS, those amendments did not alter that underlying purpose. Rather, those amendments enhance and reinforce that purpose by codifying the requirement to provide a sufficient reason or reasons for the insurer’s decision. However, the amendments also acknowledge that the sufficiency of the content of those reasons is determined by the grounds for termination of benefits. Where the insurer relies solely on a single non-medical ground for denying benefits, requiring the addition of a line stating, “there are no medical reasons for this denial”, would not further assist an insured in deciding whether to challenge the denial of benefits.
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