Executive Summary: Key Legal and Evidentiary Issues

• Whether the Licence Appeal Tribunal erred in deciding the preliminary issue of “insured person” status under s. 3(1) of the SABS while a related priority dispute arbitration on the same dependency issue was pending.
• Interaction between the statutory “pay now, dispute later” priority scheme in s. 268(2) of the Insurance Act and O. Reg. 283/95 (DBI regulation) and the LAT’s jurisdiction to determine entitlement.
• Alleged abuse of process and procedural unfairness where the insurer pursued a LAT preliminary ruling on dependency while simultaneously arbitrating priority with the Motor Vehicle Accident Claims Fund.
• Application of the remedial, consumer-protection purpose of the SABS, especially in the context of a catastrophically impaired claimant who had already received close to $500,000 in benefits.
• The consequence of the LAT’s finding that the claimant was not an “insured person,” resulting in dismissal of all benefits claims despite ongoing dispute over which insurer (Security National or the Fund) had priority.
• Appropriate appellate/judicial review standards (correctness for questions of law, reasonableness for mixed fact and law, and no deference on procedural fairness) in assessing the LAT decisions.

Background and facts of the case

Mahmoud Abu-Ain was 20 years old when he was seriously injured in a motor vehicle accident on Highway 401 on August 2, 2021. He was a passenger in a car that rolled and struck the guardrail, causing him very significant injuries, later categorized as a catastrophic impairment. He did not own a vehicle and carried no automobile insurance of his own.

In November 2021, Mr. Abu-Ain applied for statutory accident benefits under his aunt’s automobile insurance policy issued by Security National Insurance Company, claiming he was financially dependent on his aunt and uncle. Security National accepted the claim at the outset, adjusted it, and began paying benefits. Over approximately three years, the insurer paid well over $400,000 and close to $500,000 in statutory accident benefits to Mr. Abu-Ain in respect of his injuries.

At the same time, Security National initiated a “priority dispute” with the Motor Vehicle Accident Claims Fund (the publicly funded last-resort payor), asserting that the Fund, rather than Security National, was the proper insurer to pay Mr. Abu-Ain’s benefits. That arbitration was ongoing and unresolved when the Licence Appeal Tribunal proceedings at issue took place.

In January 2024, Security National denied a series of benefits that Mr. Abu-Ain had claimed, based on treatment plans submitted in 2022 and 2023. The denied items included income replacement benefits and multiple medical, rehabilitation, attendant care, case management, and related treatment expenses. In response, Mr. Abu-Ain applied to the Licence Appeal Tribunal seeking payment of those benefits and an award for unreasonable withholding or delay of payments.

The statutory and regulatory framework

The case sits within Ontario’s statutory accident benefits regime under the Insurance Act and the Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10 (SABS). Under s. 280 of the Insurance Act, an insured person or an insurer can apply to the Licence Appeal Tribunal to resolve disputes about entitlement to statutory accident benefits or their amount.

Section 2(4) of the SABS provides that benefits payable in respect of an insured person “shall be paid by the insurer that is liable to pay under subsection 268(2)” of the Insurance Act, which contains the priority provisions governing which insurer is responsible. The SABS also defines “insured person” in s. 3(1); that definition and, in particular, the dependency aspect of it were central to the dispute.

The Divisional Court emphasized that the SABS is remedial, consumer protection legislation, designed to reduce the economic dislocation and hardship suffered by motor vehicle accident victims, especially those with catastrophic impairments. The court drew on the Court of Appeal’s reasoning in Tomec v. Economical Mutual Insurance Company to underline that the SABS must be interpreted in a way that furthers its public policy objectives of maximizing benefits for severely injured accident victims and ensuring continuity of support.

Parallel to the SABS entitlement framework is the “dispute between insurers” regime under s. 268(2) of the Insurance Act and O. Reg. 283/95 (DBI regulation), which governs how insurers resolve priority disputes between themselves. The DBI regulation requires that:

• An injured person submit a completed accident benefits application to only one insurer.
• The first insurer to receive a completed application must commence paying benefits “in accordance with the Schedule” pending resolution of any priority dispute.
• Insurers must “pay now, dispute later,” with any contest about which insurer has ultimate responsibility being addressed through arbitration to which the injured person is not a party.

The Divisional Court stressed that this structure is designed to prevent interruption of benefits while insurers sort out their relative obligations, and that the Motor Vehicle Accident Claims Fund functions as the payor of last resort if no private insurer is otherwise available.

Proceedings before the Licence Appeal Tribunal

A case conference was held at the LAT in July 2024 to manage Mr. Abu-Ain’s application for the denied benefits. Security National asked that the LAT first determine, as a preliminary issue, whether Mr. Abu-Ain met the definition of “insured person” under s. 3(1) of the SABS, focusing on the dependency test.

Mr. Abu-Ain opposed this procedural approach and requested an adjournment of the preliminary issue hearing until the priority arbitration between Security National and the Fund was decided. He argued that the priority arbitration turned on the same dependency issue—namely whether he was a dependent of a named insured—so that allowing Security National to litigate dependency at the LAT while arbitrating it in the priority proceeding was unfair and functionally a collateral attack or circumvention of the “pay now, dispute later” regime. He also sought production of documents from the priority arbitration, which request was denied.

The LAT granted Security National’s request for a preliminary issue hearing on “insured person” status and ordered that, if the application was disposed of at that preliminary stage, the Tribunal would dismiss the application and close the file; any substantive entitlement hearing would then be vacated. The preliminary issue was set to proceed in writing.

In his written submissions, Mr. Abu-Ain again argued that the preliminary hearing should not proceed because it was unfair in light of the DBI regulation and the ongoing priority dispute. He emphasized that the “crux” of the priority dispute—his dependency status—was the same factual and legal issue Security National was asking the LAT to decide, and contended that the insurer was attempting to sidestep the statutory “pay first, dispute later” obligations.

Security National maintained that accident benefits disputes before the LAT and priority disputes between insurers are distinct regimes, and that nothing prevented the LAT from deciding whether Mr. Abu-Ain was a dependent and therefore an “insured person” under the SABS.

On January 13, 2025, the LAT issued its preliminary decision. It rejected Mr. Abu-Ain’s request to delay the hearing pending the priority arbitration, stating that the priority dispute was “not before the Tribunal” and that its outcome had “no impact” on whether the applicant met the definition of “insured person” under s. 3(1) of the SABS. Proceeding to the merits of the preliminary issue, the LAT applied the dependency test and concluded that Mr. Abu-Ain was not an “insured person.” On that basis, the LAT dismissed his entire application for benefits.

Reconsideration decision at the LAT

Mr. Abu-Ain sought reconsideration, again arguing that it was unfair and improper to determine the insured-person/dependency issue at the LAT while the priority dispute between Security National and the Fund—founded on the same issue—was pending. He characterized Security National’s approach as re-litigation or a collateral attack on the priority process and argued that the Tribunal should not allow its procedures to be used in that way.

In its May 6, 2025 reconsideration decision, the LAT dismissed his request. The Vice-Chair noted that no authority had been provided showing that the Tribunal had jurisdiction over priority disputes or that the outcome of the priority arbitration would affect the narrow preliminary insured-person question before it. The Tribunal reiterated that under s. 268 of the Insurance Act, the first insurer to receive a completed application is obligated to pay benefits but that this did not bar the insurer from raising a preliminary issue before the LAT, nor did it prevent the LAT from deciding such an issue when properly raised. The Vice-Chair concluded that the applicant’s arguments had already been addressed in the original decision.

Appeal and application for judicial review to the Divisional Court

Mr. Abu-Ain appealed and also sought judicial review of both the initial LAT decision and the reconsideration decision. He advanced grounds based on:

• Procedural fairness and abuse of process.
• Errors of law.
• Errors of mixed fact and law in the application of the dependency test.

Under the Licence Appeal Tribunal Act, 1999, he had a statutory right of appeal on questions of law only, while broader issues (such as procedural fairness and reasonableness of factual or mixed findings) could be raised on judicial review. The Divisional Court noted the applicable review standards: correctness on questions of law, reasonableness on questions of fact and mixed fact and law, and no deference on procedural fairness matters, drawing on authorities including Yatar v. TD Insurance Meloche Monnex and Canada (Minister of Citizenship and Immigration) v. Vavilov.

The central focus of the court’s reasons, however, was the alleged abuse of process arising from the LAT’s decision to proceed with the preliminary insured-person issue while the priority arbitration was ongoing and closely connected, both legally and factually, to the same dependency determination.

Abuse of process and failure to respect the “pay now, dispute later” scheme

The Divisional Court located the dispute within the broader statutory scheme governing accident benefits and priority disputes. It reiterated that the DBI regulation requires the first insurer receiving a completed application to commence and continue paying benefits pending the resolution of any priority dispute between insurers. The injured person is directed to deal with a single insurer and is not made a party to the priority arbitration.

In assessing abuse of process in the administrative law context, the court applied the Supreme Court of Canada’s articulation of the doctrine as a question of procedural fairness. The doctrine is a flexible tool allowing courts and tribunals to prevent misuse of their procedures in a manner that is manifestly unfair to a party or that would bring the administration of justice into disrepute.

The court accepted Mr. Abu-Ain’s submission that allowing Security National to litigate the dependency issue before the LAT at the same time it was arbitrating the same core issue in the priority dispute amounted to an abuse of process. By doing so, the insurer effectively sought an “end run” around the statutory priority scheme.

The Divisional Court held that the LAT failed to properly consider the broader statutory context and the interplay between its own insured-person determination and the ongoing priority dispute. Simply declaring that the priority dispute was “not before” the Tribunal and had “no impact” on the insured-person issue was insufficient. The LAT did not grapple with the real-world consequence of its decision: by finding that Mr. Abu-Ain was not an insured person of Security National and dismissing his claim, it created exactly the situation the statutory regime was designed to avoid—an injured person being left without benefits while insurers disputed priority.

The unfairness was particularly acute because Mr. Abu-Ain was catastrophically impaired and had previously received close to $500,000 in benefits from Security National, underscoring his need for continued support. The court emphasized that continuity of benefits during inter-insurer disputes is a cornerstone of the legislative scheme and is integral to the consumer-protection purpose of the SABS.

In the court’s view, the proper course for Security National, if it wished to stop paying benefits, was to ensure that the priority arbitration against the Fund proceeded expeditiously so that the ultimate payor could be identified within the statutory framework. Instead, the LAT proceedings were used in a way that undermined the “pay now, dispute later” design and exposed a vulnerable accident victim to a gap in coverage, which the court found to be manifestly unfair and damaging to the integrity of the statutory accident benefits regime.

Outcome and disposition of the case

Having found that the LAT’s approach and resulting decisions amounted to an abuse of process and a failure to respect the statutory scheme, the Divisional Court allowed Mr. Abu-Ain’s appeal on that ground and found it unnecessary to decide the remaining issues.

By the time of the hearing, the Motor Vehicle Accident Claims Fund had accepted priority and begun reimbursing Security National for amounts paid, although the Fund had not yet contacted Mr. Abu-Ain regarding his ongoing benefits. In light of this development, the court set aside the LAT’s dismissal of Mr. Abu-Ain’s claim on the basis that he was not an insured person. It remitted the substantive accident benefits claim to the LAT for a full hearing with the proper responding party—apparently now the Fund—if the parties cannot otherwise agree on entitlement and amounts payable.

In terms of monetary relief, the Divisional Court did not itself determine or order any specific amount of statutory accident benefits or damages in favour of Mr. Abu-Ain; those questions were left to be resolved either by agreement between him and the Fund or by the LAT on the rehearing. The only quantified financial order made by the court was a costs award, in accordance with the parties’ agreement, directing Security National Insurance Company to pay $2,500 (inclusive of disbursements and HST) to Mr. Abu-Ain. Other than this $2,500 in costs, no fixed total monetary award, damages figure, or quantified benefits entitlement was determined in the decision, and the ultimate amount of benefits payable in Mr. Abu-Ain’s favour cannot yet be determined from this judgment alone.