The Ontario Divisional Court has overturned a Licence Appeal Tribunal decision after finding that the LAT proceeded in a way that amounted to an abuse of process and resulted in manifest unfairness to an injured claimant. The Court held that the Tribunal should not have determined the claimant’s status as an insured person while a related priority dispute was still being arbitrated.
In Abu-Ain v. Security National Insurance Company et al., 2026 ONSC 1494, the accident occurred on Highway 401 on August 2, 2021, when a vehicle lost control, rolled, and struck the guardrail. The appellant was a passenger and suffered very serious injuries. He did not own a vehicle and had no automobile insurance of his own.
In November 2021, the appellant applied for accident benefits under his aunt’s policy with Security National Insurance Company, stating that he depended on his aunt and uncle for financial support. Security National began paying benefits and ultimately paid more than $400,000 in statutory accident benefits over time. The insurer later commenced a priority dispute against the publicly funded Motor Vehicle Accident Insurance Fund, taking the position that the Fund was the proper benefits payer.
Security National eventually determined in June 2022 that the appellant met the catastrophic impairment criteria, but it later denied a separate benefits application filed in January 2024. When the parties appeared before the LAT, Security National asked for a preliminary ruling on whether the appellant was an insured person under the Statutory Accident Benefits Schedule – Effective September 1, 2010. The appellant asked that the matter be adjourned until the priority arbitration was completed, but the LAT refused.
In January 2025, the LAT dismissed the appellant’s benefits claims, finding that he was not an insured person within the meaning of section 3(1) of the SABS. A May 2025 reconsideration decision confirmed that result. The appellant then appealed and sought judicial review, arguing procedural unfairness, abuse of process, legal error, and errors in applying the dependency analysis.
Court Criticizes LAT’s Approach
The Divisional Court allowed the appeal and held that the LAT’s decision to move forward with the preliminary insured-person issue, despite knowing that the same question sat at the heart of the pending priority arbitration, was improper. The Court found that this approach:
- amounted to an error in the circumstances
- constituted an abuse of process
- created manifest unfairness
- undermined the statutory priority scheme
- brought the accident benefits system into disrepute
The Court concluded that the LAT failed to appreciate the context in which the insured-person question arose, and did not properly consider how that issue intersected with the priority dispute. Instead, it accepted Security National’s position that the two matters were entirely separate. The Court found that this missed the point of the statutory framework, which is designed to prevent an injured person from losing access to benefits when insurers dispute who should pay.
Justice Lisa Brownstone wrote that the result was especially stark here, given that the appellant was catastrophically impaired and had already received close to $500,000 in benefits during the early years after the accident. The Court also noted that, during the appeal, the Fund accepted priority and began reimbursing Security National.
Remittance and Costs
The Court returned the substantive benefits claim to the LAT for hearing, with the Fund to participate as the responding party if it continued to dispute entitlement or quantum. The Court also ordered Security National to pay the appellant $2,500 in costs, inclusive of disbursements and HST.
Why It Matters
This decision is an important reminder that accident benefits disputes must be managed with close attention to the structure and purpose of Ontario’s statutory scheme. Where a priority dispute is already underway, a tribunal should be cautious about issuing rulings that could distort the allocation process or unfairly cut off an injured claimant’s access to benefits.
At Flaherty McCarthy LLP, we advise insurers on accident benefits, coverage, and priority issues with a focus on practical litigation strategy and procedural discipline. Our team monitors developments in LAT and appellate jurisprudence to help clients navigate complex disputes efficiently and effectively.
