Sabadash v. State Farm et al. 2019 ONSC 1121

Full Decision

Counsel for the Applicant:                               Gregory Gilhooly

Counsel for the Respondent State Farm:       Todd McCarthy

Counsel for the Respondent FSCO:                  Martina Aswani

Heard by:                                                             Justice Julie A. Thorburn
Justice Katherine E. Swinton
Justice Jill M. Copeland
Justice Jill M. Copeland

This was a judicial review of the decision of Director’s Delegate Evans with respect to an entitlement to Income Replacement Benefits. The Applicant Daniel Sabadash was involved in a collision on March 3, 2011. Mr. Sabadash had a number of pre-existing conditions including anxiety, depression, and diabetes. Following the collision there was evidence the Applicant had suffered a mild traumatic brain injury causing headaches, vision issues, tinnitus, dizziness, and issues with focus and memory. There was also evidence that other unrelated causes contributed to the persistence and severity of these symptoms.

The Applicant was unable to return to his employment as a tool supply and repair shop manager and applied for IRBs. The Applicant’s AB insurer State Farm sent the Applicant for several Insurer Examinations, the results of which led State Farm to deny entitlement to the benefit.

At a subsequent FSCO arbitration, causation was a central issue in dispute between the parties. Arbitrator Smith ultimately found that the Applicant was entitled to IRBs and rejected State Farm’s submission that the correct causation test for accident benefit disputes was the “but for” test. The Arbitrator held that the subject accident was a material significant factor beyond the de minimis range and the Applicant was therefore entitled to the benefit.

State Farm appealed this decision. The appeal was heard by Director’s Delegate Evans who held that Arbitrator Smith had applied the incorrect test for causation and that the “but for” test was the correct test to apply in these circumstances. A new hearing was ordered before a different Arbitrator.

The Applicant then sought judicial review of the Director’s Delegate’s decision.

Before the Divisional Court, both parties sought an articulation of the causation analysis to be applied in an accident benefit claim.

In his submissions, the Applicant argued that though the Arbitrator mistakenly referred to the material contribution test instead of the “but for” test, it was clear from his analysis that the “but for” standard was nevertheless satisfied. The Applicant also argued that the Director’s Delegate misinterpreted the test to be applied and incorrectly held that the injury arising from the accident must be enough to directly cause the impairment. The Applicant noted that the case law sets out that the accident must only be a “necessary” cause of the injury, rather than the cause of the injury.

The Respondents (State Farm and FSCO) submitted that the Director’s Delegate was correct in finding that the Arbitrator applied the incorrect test for causation and that a new arbitration should be ordered.

The Divisional Court, citing the Court of Appeal’s decision in Monks v. ING, reiterated that the “but for” test remains the appropriate test for causation in accident benefit disputes. However, the Court found that both the Arbitrator and the Director’s Delegate erred in their decisions.

With respect to Arbitrator Smith, the Divisional Court held that the Arbitrator should have applied the “but for” test as set out by the Supreme Court of Canada in Clements v. Clements and that this mistake constituted a mistake in law.

With respect to Director’s Delegate Evans, the Divisional Court held that while he was correct in his application of the “but for” test, he was incorrect in his finding that, in the accident benefit context, a “sufficient cause” means that the injury arising from the accident must be enough to directly cause the impairment. The Divisional Court held that this was inconsistent with the language of the SABS which sets out that the collision only need be a necessary cause. The Divisional Court concluded that to the extent to which the Director’s Delegate suggested that the plaintiff must prove on a balance of probabilities that accident alone could have caused the impairment, he was incorrect.

The Court went on to note that the Director’s Delegate was also incorrect in his suggestion that, even where it is appropriate to apply the material contribution test, the plaintiff must still pass the “but for” test. The Divisional Court held that in light of paras. 13-15 of Clements, “but for” need not be proven in a “material contribution to risk” case.

Given the mixed results, no costs were awarded and a new arbitration before a different Arbitrator was ordered.

Nick Smith
Written by

Nick first joined Oatley Vigmond as a law student, and later an articling student, prior to joining the team as an associate lawyer. He has a Law Degree from the University of Kent, a Master of Laws from Osgoode Hall Law School, as well as an undergraduate degree in Political Studies from Queen’s University.

Nick is interested in ensuring that clients are provided with the support and advice they require during the litigation process. People who have suffered through the trauma of a serious personal injury are already in a position of vulnerability, and Nick is committed to helping them through this difficult process. Specifically, Nick seeks to help right the balance in an insurance system that is becoming increasingly antagonistic toward injured individuals.