Volume. 9 Issue. 26 – August 13, 2025
Tribunal Has Discretion for Relief from Forfeiture
In an earlier decision, the Tribunal found that there was capacity for providing relief from forfeiture. This is an equitable remedy that allows a court or tribunal to prevent a party from losing a right due to a technical breach. It allows for a person to ask the court to forgive their mistake and let them keep their insurance or other right, even though they technically broke the rules despite having failed to comply with a formal requirement, where the failure is not willful and the forfeiture would be disproportionate or unjust. In this case, it pertained to the insureds’ attempt to submit an OCF-1 application to a second insurer, with whom they had access to optional accident benefits, after initially submitting the OCF-1 to the insurer of the motorcycle involved in the motor vehicle accident, which only provided standard benefits.
The Tribunal originally held that, although the insureds had not submitted the OCF-1 to the correct insurer in the first instance, relief from forfeiture could apply to preserve their entitlement to optional benefits from the second insurer.
However, upon reconsideration, the Tribunal overturned its initial decision, determining that relief from forfeiture was not available in these circumstances. As a result, the insureds sought to appeal the reconsideration decision to the court.
The court makes a number of key points, including the observation that the discrete issue at hand is not directly addressed in the SABS. It also emphasizes that the OPCF 47 endorsement should not be interpreted in a way that produces a harsh or unfair result. Earlier we highlighted a case wherein the possibility of a legislative “blind spot” was suggested.
In both cases, there is a shared concern about the fairness of rigidly applying the statutory and policy framework in a manner that may not reflect the insureds’ actual entitlements or intentions. The court’s approach in the current case underscores this same interpretive caution and highlights the ongoing tension between legislative silence and the equitable exercise of judicial discretion.
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Legislative “Blind Spot” Confirmed – In Botbyl v Heartland Farm Mutual, the Applicants appealed a reconsideration decision of the Tribunal that overturned the decision of the Tribunal that granted them relief from forfeiture of their insurance policy. The two insureds, Botbyl and Tracey Yaromich had two automobile insurance policies at the time of the collision: the motorcycle was insured under a standard policy with Economical Insurance (“Economical”), and their other vehicles were insured under a policy with Heartland Farm Mutual Inc. (“Heartland”) which included enhanced benefits. Heartland’s policy provides significantly greater coverage for the Insureds, covering up to $1 million in medical, rehabilitation and attendant care benefits over their lifetimes and up to $800 per week in income replacement benefits. Their standard mandatory insurance coverage under Economical provides a much smaller amount — up to $65,000 in total in medical rehabilitation, and attendant care and $400 per week in income replacement.
Optional Benefits Insurer Denial Rationale
They submitted their initial application to the insurer of the motorcycle, that was involved in the June 2020 MVA to Economical, having been advised by their broker that they would be able to access their “add-on” benefits through Heartland later. Heartland had notice of the collision and of the Insured’s intention to pursue accident benefits with them prior to the OCF-1 being sent to Economical but did not advise the Insureds that they must apply to Heartland and only them instead of Economical or Heartland would refuse to pay the optional benefits. After the OCF-1 was sent to Economical, Heartland denied the claim on the basis that a particular endorsement that applies to all insurance contracts that include optional benefits (“OPCF-47”) prevented Heartland from providing optional benefits to an insured who has already applied for accident benefits with another insurer.
Initial Appeal to the Court
As a result, the Insureds brought an application to the Superior Court seeking relief from forfeiture and entitlement to claim the optional accident benefits under the Heartland policy. In May 2021, Turnbull J. denied the application after concluding that jurisdiction lay with the LAT under S. 280 of the Insurance Act. Turnbull J. also stated that if he was wrong, he would have no hesitation granting the relief, given the circumstances of the case. Specifically, the court noted that the application was dismissed without costs. The court found that “In my view, the conduct of Heartland in refusing to allow the applicants the right (for which they paid premiums to Heartland) to withdraw their application to Economical and to reapply to Heartland was unreasonable and unfair. As an insurer, it has a duty of fair dealing with its insured. While its conduct is technically legal (subject to a ruling by LAT in the event the matter is pursued there), it is not commendable and should not be rewarded with a costs order despite its success on this application.”
Relief from Forfeiture Confirmed
The insureds then applied to the LAT for the same relief, and the Tribunal “granted relief from forfeiture under s. 129 of the Insurance Act. He found that the factors to consider when deliberating on whether to grant relief from forfeiture all weighed in favour of granting the relief requested. While he noted that s. 129 uses the term “court”, he found that it would be unfair and inconsistent with the consumer protection mandate of the statutory accident benefits regime to exclude the LAT from this definition as it has exclusive jurisdiction to adjudicate these disputes.”
Reconsideration Overturns Decision
Heartland applied for a reconsideration of the Decision. Vice-Chair Johal granted this request on the basis that Adjudicator Norris made four errors, including in finding that the term “court” in s. 129 of the Insurance Act applied to the LAT. The Reconsideration Decision rescinded the Decision and found that the Insureds were not entitled to relief from forfeiture. The insureds appealed this decision, with the court noting that “Fundamental to our decision is the fact that the SABS is consumer protection legislation, which must be interpreted in a manner consistent with its objective—to reduce economic dislocation and hardship for victims of motor vehicle accidents.”
Basis for Denial
The court described in detail the exchanges that the insureds had with their various insurance representatives. It was ultimately found that they had been ill advised as to the ramifications of any decisions to be had concerning the standard and enhanced policy provisions, and the implications involved in submitting their application(s). However, Heartland denied entitlement on the basis that the Insureds sent the OCF-1 to Economical first, and the OPCF 47 endorsement within the insurance contract prevented Heartland from providing the optional benefits to an insured who has already applied for any accident benefits with another insurer. Counsel for the Insureds wrote to Heartland and demanded that it accept their claims. The letter explained that they had been misinformed and had inadvertently applied for benefits from Economical. Heartland, however, maintained its position and denied their claim for enhanced benefits.
An Extraordinary Situation
In the original decision of the Tribunal, it was “found that the Tribunal had the jurisdiction to provide equitable relief in this “extraordinary situation” given that the Schedule “does not prohibit such a remedy.” The Tribunal relied upon the “Ontario Court of Appeal’s obiter remarks in Continental Casualty Company v. Chubb where it stated that “the potential unfairness arising from an insured’s errors when applying for SABS may, in some cases, be corrected by invoking relief from forfeiture as happened in this case.” The Tribunal referenced that fact that this was nothing more than an “innocent mistake”, and that less than four weeks later they requested that Heartland reconsider and accept the claim. Further, that the “gravity of the breach also weighs in favour of the Insureds. Permitting Heartland to avoid paying accident benefits due to the Insureds’ error would provide a windfall for Heartland—it collected premium benefits without having to uphold the contractual obligation relative to those payments. Whereas, permitting the Insureds to rescind their claim with Economical and file a fresh claim with Heartland, causes no additional harm as Heartland would otherwise have been liable for the claim, but for the Insureds’ innocent error.” Finally, that the disparity between the value forfeited and the damage caused also weighed in favour of the Insureds.”
Four Errors in Initial Decision
However upon reconsideration the Tribunal determined that the original decision was wrongly decided, predicated upon four errors on the part of the adjudicator. The Tribunal ruled that “the Tribunal erred in establishing jurisdiction based on its view that the Schedule did not prohibit it. This was a clear attempt to fill a gap in the legislation, which is impermissible as the Tribunal is a creature of statute. Second, insofar as it relied on obiter comments from Continental Casualty and third, Turnbull J. ‘s Endorsement, this was also an error. Obiter remarks are not essential to a given holding and neither decision, particularly Continental, bore on the immediate issues before the LAT. Finally, it found that the term “court” in s. 129 of the Insurance Act has repeatedly been found not to include the LAT or other tribunals. Adjudicator Norris erred in concluding otherwise.”
Consumer Protection Legislation
The court an appeal firstly noted that “The SABS are remedial and constitute consumer protection legislation. As such, it is to be read in its entire context and in their ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of the legislature. The goal of the legislation is to reduce the economic dislocation and hardship of motor vehicle accident victims and, as such, assumes an importance which is both pressing and substantial. (emphasis added).
Tomec also states that faced with a choice between an interpretation of the statute “that furthers the public policy objectives underlying the SABS and one that undermines it, the only reasonable decision is to side with the former”.
Section 129 of the Insurance Act
The court noted that “the focus of this appeal is s. 129 of the Insurance Act and whether the LAT can apply it to remedy the unfairness that has occurred in this case. We pause here to note that Heartland essentially conceded in oral submissions that the result of the Reconsideration Decision may well be regarded as harsh and unfair. The Insureds, who are severely impaired as a result of the accident which is the basis of their entitlement to the benefits at issue in this proceeding, sought and followed the advice of their insurer as to how to proceed and are now unable to access millions of dollars in benefits.”
Heartland further alleged that, even if the LAT had jurisdiction to apply s. 129, it is not available to the Insureds. In doing so, it relies on the Court of Appeal’s decision in Williams v. York Fire. The court concluded in Williams that “Section 129 does not give judges a broad discretion to “grant relief from forfeiture” generally where the conditions of an insurance policy are breached. To do so would grant the court the power to alter the terms of a policy or conditions of coverage; this power was never envisioned by s. 129.” The court in Williams further noted that “The court’s power under s. 129 is only in relation to things or matters required to be done, in relation to the loss, that is, after a loss has occurred. The discretion a court has under s. 129 is a narrow one pertaining only to those policy conditions – statutory or contractual – that relate to proof of loss. It does not apply to all policy conditions.”
For the within matter, the court found that “The Insureds in this case did not breach a policy condition in the way that Mr. Williams did. They did nothing before the loss to jeopardize their coverage for the benefits at issue. The actions giving rise to the denial of coverage in this case are actions that occurred after the loss occurred and involved negotiating the technical requirements relating to making a claim for a loss where the insured has two insurance policies — one with enhanced benefits and one without. This is precisely the kind of situation s. 129 is meant to cover.”
The LAT has jurisdiction to apply sections of the Insurance Act that are not part of the SABS and that codify equitable remedies.
The court referenced Akinyimide v. Economical regarding whether the LAT had jurisdiction to apply s. 131 of the Insurance Act, which codifies the equitable doctrines of waiver and estoppel. In the original decision, “the LAT had found that it could not apply s. 131 as the SABS are a complete code for resolving disputes between insureds and insurers, s. 131 is not part of the SABS and the LAT lacks the jurisdiction to award equitable remedies. The Divisional Court disagreed, finding that s. 280 of the Insurance Act did not oust the LAT’s jurisdiction to apply other sections of the Insurance Act such as s. 131. It also found that while the LAT had no inherent jurisdiction to award equitable relief, it could do so if that jurisdiction was granted to it by statute. Section 131 granted the LAT the jurisdiction to apply the equitable doctrines of estoppel and waiver.”
The court herein found that “Akinyimide is a complete answer to the suggestion that s. 129 cannot be applied by the LAT because it does not appear in the SABS and because it codifies an equitable remedy. Section 129, like s. 131, appears in Part III of the Insurance Act, and s. 122 of the Insurance Act provides that Part III applies to every contract of insurance in Ontario, subject to three exceptions, none of which are automobile insurance policies under Part VI. If the legislature had intended to exempt policies under Part VI from the application of Part III, it would have said so explicitly.”
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The Word “Court” in s. 129 Does Include the LAT
The court found that “interpreting s. 129 in a manner that grants the LAT the authority to grant relief from forfeiture would further the public policy objectives underlying the SABS. This case is a stark illustration of how not doing so would undermine that objective.” It was noted that “The English word “court” is also capable of a broad interpretation even on a plain and literal reading of that word. For instance, the Chambers English Dictionary (7th ed. 1988) defines a “court” as “any body of persons assembled to decide causes” and the Concise Oxford Dictionary (8th ed. 1990) defines it as an “assembly of judges or other persons acting as a tribunal”. Thus a “court” in its ordinary sense is broad enough to encompass a tribunal.”
The court found that the Tribunal on reconsideration erred in finding that the word “court” in s.129 did not include the LAT. Agreeing with Heartland that the word “court” in s. 280(3) does not include the LAT, the court however disagreed that the presumption of consistent expression, where a word or phrase is presumed to bear the same meaning throughout a text, would dictate that the word “court” in s. 129 must also be interpreted in the same way.” The court indicated a preference “to give weight to the presumption in favour of fostering a primary goal of the SABS [relieving hardship to the victims of motor vehicle accidents] than to the presumption of consistent expression.”
Result
Accordingly, the court found that the appeal is allowed, the Reconsideration Decision is set aside, and the Decision of Adjudicator Norris dated August 2, 2023 is restored. In accordance with the agreement of the parties, the Insureds are entitled to their costs of this appeal, fixed in the amount of $6,000.00”.
Concurring Opinion
In a concurring opinion, the court further considered essential aspects of the matter. The court found that, while agreeing that the LAT has jurisdiction to grant relief from forfeiture, there was in fact “no forfeiture from which the insureds required relief. They committed no breach of contract and the OPCF 47 upon which Heartland relies does not provide for forfeiture. Heartland cannot effect a forfeiture by refusing to accept an insured’s application. In my view, when it was explained to the insureds that their application for both standard and optional benefits should have been submitted to Heartland, they were entitled to withdraw the application submitted to Economical, and to submit a new application to Heartland.”
It was noted that in oral argument, “when asked why the insureds were not entitled to withdraw their application to Economical and submit an application to Heartland, Heartland’s counsel said that it was because there is nothing in the SABS providing for the insured to do so, and she confirmed that to be the only basis upon which Heartland argues that the insureds were precluded from applying to Heartland. The difficulty with that argument is that there is also nothing in the SABS that would preclude the insureds from withdrawing the Economical application and applying to Heartland. The SABS simply do not address the issue.”
The court noted that the reconsideration decision itself supported the argument that an applicant may withdraw an application for accident benefits. The vice-chair referenced the earlier May 2021 court (Turnbull) confirming that “it was not pointed to any section of the legislation that prevents the applicant from withdrawing their first application and proceeding with their second as long as only one application proceeds at a time.”
OPCF 47 does not provide for forfeiture
The court further found that the insureds did not breach the insurance contract, noting that “In the absence of a breach of contract by the insureds or a provision of the contract providing for forfeiture in the circumstances of this case, there could be no forfeiture. The OPCF 47 endorsement contains no provision for forfeiture of the accident benefits to which an insured would otherwise be entitled. It does not say that if an insured mistakenly applies to the wrong insurer, they will lose their right to receive the optional benefits for which they have paid.”
Noted as well was the fact that the endorsement allows one to opt for the policy with the optional benefits, as long as they agreed not to claim under another policy. The court found that “There is no reason why the insureds could not agree not to make a claim under another policy, after withdrawing the Economical application and submitting an application to Heartland. The insureds in this case had no intention of claiming benefits under more than one policy nor does Heartland suggest that they did. Rather, they advance the purely technical argument that if an insured “first” applies under another policy, they disentitle themselves from claiming under the policy which includes optional benefits. The insureds did not breach the insurance contract. They sent their application to the wrong insurer. Had they done so with the intention of obtaining double recovery, it might be argued that doing so was a breach. But that is not what happened. They made a mistake. All that they needed to do to fix the mistake was to withdraw the application and re-apply to Heartland.”
OPCF 47 should not be interpreted to provide for a harsh result
The court quoted Rizzo & Rizzo Shoes Ltd, that confirmed “it is a well-established principle of statutory interpretation that the legislature does not intend to produce absurd consequences”, and that an “interpretation can be considered absurd … if it is extremely unreasonable or inequitable … or if it is incompatible with … the object of the legislative enactment”. Further, that to “interpret the OPCF 47 in the way that Heartland argues would be incompatible with that purpose and would be to treat it as a trap upon which insurers can rely in denying benefits to insureds unfamiliar with the effect of the endorsement. This would be an extremely inequitable and therefore absurd interpretation of the OPCF 47. It would also be to ignore the fact that the SABS are intended to be remedial and constitute consumer protection legislation.”
Duty of good faith in contractual performance
The court also found that Heartland’s actions following the MVA were clearly lacking in good faith. Reference was made to a senior accident benefit specialist, who failed to tell the insureds that they should apply to Heartland, and not to Economical, to claim optional benefits, which Turnbull J. had earlier framed as her being “guilty of “sharp conduct”. It was found that “Allowing Heartland to rely on the innocent error which occurred in this case would be to deny the good faith which underlaid their insurance obligation. Heartland also failed to provide information as required under s.32(2) of the Schedule. Information to assist in applying for benefits. Specifically herein, to whom the application ought to be directed.
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