Why LAT’s first catastrophic impairment case must be re-heard

The Ontario Licence Appeal Tribunal [LAT]’s first ruling on a disputed catastrophic impairment claim is now officially quashed, the province’s appeal court confirmed in a decision released Friday. As it stands, the disputed claim now has to go before a different LAT adjudicator.

Mary Shuttleworth, who was insured by Peel Mutual, was injured in a collision in 2012. She and Peel Mutual could not agree on whether Shuttleworth was catastrophically impaired, meaning her accident benefits coverage would be $1 million or more. A LAT adjudicator had sided with Peel in 2017.

But after the adjudicator had issued the decision, Shuttleworth’s lawyer received an anonymous note in 2017 alleging that the adjudicator’s initial draft ruling had been changed by the executive chair of Safety, Licensing Appeals and Standards Ontario (SLASTO). In addition to the LAT, SLASTO also operates the province’s Animal Care Review Board, Fire Safety Commission, civilian police commission and parole board.

The Shuttleworth case was the first in which LAT was asked to determine whether someone suffered a catastrophic impairment in an auto insurance accident benefits claim. Before 2016, accident benefits claims disputes were heard by arbitrators working for the Financial Services Commission of Ontario.

Shuttleworth went to Divisional Court arguing she had a “reasonable apprehension” that the first LAT adjudicator was not truly independent.

As a result of a request made under the Freedom of Information Act request, Shuttleworth received e-mails indicating the LAT adjudicator made changes to her ruling after it was reviewed by the executive chair of SLASTO, who, in essence, is the adjudicator’s boss.

Shuttleworth asked the Divisional Court to do one of two things. One would be to quash the decision and order a rehearing or reconsideration. The other would be to allow her lawyer to examine both the LAT adjudicator and executive chair under oath.

The court ruled in Shuttleworth’s favour, quashing the original LAT  decision and order a re-hearing, in Shuttleworth v. Ontario (Safety, Licensing Appeals and Standards Tribunals), released on June 20, 2018.

Both the LAT and Peel Mutual appealed, without success. The Court of Appeal for Ontario ruling upholding the Divisional Court ruling was released June 21, 2019.

The Divisional Court found that the LAT’s “peer review” process – in Shuttleworth’s case – did not adequately protect adjudicative independence.

After the 2018 Divisional Court ruling, LAT told Canadian Underwriter it plans to put in writing that “all comments generated through the review process are for the author’s consideration only” and that those comments are non-binding.

The Divisional Court cited several court rulings in which the rulings of quasi-judicial organizations, including the National Energy Board and Ontario Labour Relations Board, were disputed in court. In essence, the principal of judicial independence requires that decision makers at quasi-judicial organizations (such as the LAT) cannot be forced to adopt positions with which they do not agree.

The Divisional Court did not say the LAT arbitrator who heard Shuttleworth’s case was actually forced to change her position. Rather, the problem was the “reasonable apprehension of bias.”

On appeal, the LAT argued the Divisional Court made an error in articulating and applying the legal test for reasonable apprehension of bias.

The Court of Appeal for Ontario disagreed, ruling the Divisional Court was correct to cite previous Supreme Court of Canada rulings, including Justice and Liberty v. National Energy Board, released in 1976 and Ellis-Don Ltd. v. Ontario (Labour Relations Board), released in 2001.

“It should be recalled that the executive chair undertakes any reconsideration of the LAT adjudicators’ decisions and holds power over the reappointment of individual adjudicators,” Justice William Hourigan of the Court of Appeal for Ontario wrote in its unanimous ruling released this past Friday.

The LAT argued there is a code of conduct stipulating that adjudicators’ decisions should be independent. LAT lawyers argued further that the purpose of the review process is not to question facts or evidence, but to offer suggestions to improve clarity, reasoning, readability, and ensure the correct legal test has been applied.

However, the LAT rules at the time of Shuttleworth’s hearing did not say an adjudicator has the right to refuse a review by the executive chair of SLASTO, Justice Hourigan noted.

“Consultation cannot be imposed by a superior level of authority within the administrative hierarchy, but can only be requested by the adjudicator herself.  This breach creates a reasonable apprehension of lack of independence,” Justice Alexandra Thorburn of the divisional court wrote in 2018.

In addition to auto insurance accident benefits claims disputes, LAT handles appeals related to vehicle impoundments, driver’s licence suspensions liquor licences and claims involving new home warranty provider Tarion.