COURT FILE NO.: 665/03

DATE:

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

GREER, CHAPNIK, LAX JJ.

APPLICATION UNDER Section 2(1) of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1, as amended

B E T W E E N:

ZURICH INSURANCE COMPANY Applicant

• and –

FINANCIAL SERVICES COMMISSION OF ONTARIO and MICHAEL TOTEDA Respondents

COUNSEL: James V. Leone, for the Applicant Stephen Scharbach, for the Respondent, Financial Services Commission of Ontario Stanley C. Tessis, for the Respondent, Michael Toteda

HEARD: September 16, 2005

BY THE COURT

ENDORSEMENT

1The applicant, Zurich Insurance Company, seeks judicial review of the decision of the Financial Services Commission of Ontario dated September 4, 2003. The Director's Delegate granted the respondent, Michael Toteda, an extension of time to appeal the April 17, 2000 decision of Arbitrator Shari Novick. The Arbitrator had dismissed the applicant's claim for income replacement benefits (IRBs) finding his claim to be statute-barred. Zurich seeks an order in the nature of certiorari quashing the decision of the Director's Delegate.

Background

2Mr. Toteda was involved in a motor vehicle accident on July 27, 1996. He applied for and received statutory no-fault accident benefits, including, but not limited to, IRBs from his no-fault insurer (Zurich) under the Statutory Accident Benefits Schedule – Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulations 776/93, as amended (the "Schedule").

3In June 1997, Zurich determined that Mr. Toteda was capable of returning to his pre-accident employment and terminated his IRBs. Mr. Toteda disputed the termination and filed an Application for Mediation with the Commission. Having been unsuccessful in resolving his dispute through mediation, Mr. Toteda applied for arbitration.

4Zurich took the position that the arbitration was precluded by section 281(5) and section 72 of the Schedule because Mr. Toteda's application for arbitration was not made within two years of Zurich's decision to refuse to pay further benefits.

5On April 17, 2001, Arbitrator Novick found that Mr. Toteda was precluded from proceeding to arbitration with respect to his claim for IRBs by reason of the limitation period contained in Section 72(1) of the Schedule.

6On July 8, 2003, Mr. Toteda filed a Notice of Appeal from the decision of Arbitrator Novick. The Notice of Appeal acknowledged that the appeal was brought outside the time limit in Rule 52.1 of the Dispute Resolution Practice Code (the "Code").

7In the appeal before Director's Delegate, Nancy Makepeace, Mr. Toteda relied upon the decision of the Supreme Court of Canada in Smith v. Co-operators General Insurance Company, 2002 SCC 30, [2002] 2 S.C.R. 129, which was released on March 28, 2002. This decision held: (1) the two-year limitation period under section 281(5) of the Insurance Act, R.S.O. 1990, c. I.8 as amended, does not begin to run until the Insurer gives a valid notice of refusal in accordance with section 71; and (2) section 71 requires the Insurer to advise the insured person of the consequences of failing to apply for mediation and arbitration within the statutory limitation period.

8In response, Zurich largely relied upon FSCO's decision in Wayne Clipperton and Zurich Insurance Company, OIC PO 100009 dated August 24, 2001, in which Director's Delegate Makepeace noted that "a change in the law is not necessarily a compelling reason (to extend the time for appeal) as this could undermine certainty and finality in the dispute resolution system."

9In reaching her decision to extend the time for the appeal in this case, the Director's Delegate noted several factors which supported Zurich's position, including the fact that the length of the delay was significant, that Mr. Toteda's explanation for the delay was not compelling, that Mr. Toteda did not display any intention to appeal before July 2003, and that a change in the law is not necessarily good reason to extend the time limit to appeal.

10Nevertheless, she exercised her discretion and extended the time for the appeal, stating:

"However, the appeal raises a novel issue of broad significance. In addition, the parties' positions in the appeal are bound up with their positions on extending the time for appeal. If Mr. Toteda succeeds in his argument that Smith has retroactive application, this provides compelling reason to extend the time for appeal of affected decisions. On the other hand, if the appeal is unsuccessful, the prejudice to Zurich can be remedied through appeal expenses."

11Zurich then commenced an application for variation/revocation requesting the Director of Arbitrations to vary or revoke the decision of the Director's Delegate. The Director rejected the application advising that if Zurich wanted to challenge the legal basis for the decision, this should be done through an application for judicial review.

12On consent of the parties, the appeal was stayed pending the outcome of the application for judicial review.

Analysis

13The relevant legislative provisions in section 283(1) of the Insurance Act and Rule 52.2 of the Dispute Resolution Practice Code, permit the Director to extend the time to appeal an arbitration order beyond 30 days where the Director is satisfied there are "reasonable grounds" to do so and on such terms as are considered appropriate. The Director has a broad discretion in making a decision to extend the time to appeal an Arbitrator's decision.

14There is no issue that the Director's Delegate was acting within the scope of her authority when she exercised her discretion to extend the time for appeal. The parties also concede and it is well-settled law that the standard of review is that of patent unreasonableness.

15A patently unreasonable decision has been described as "clearly irrational" or "evidently not in accordance with reason." A decision that is patently unreasonable is said to be "so flawed that no amount of curial deference can justify letting it stand." A comprehensive discussion of these principles can be found in Ryan v. Law Society (New Brunswick), 2003 SCC 20, [2003], 1 S.C.R. 247 (S.C.C.) and cases cited therein.

16We have considered all of the appellant's arguments and are not persuaded that the decision of Director's Delegate Makepeace is patently unreasonable. While a change in the law may not necessarily provide compelling reason to grant an extension of time to appeal, there may well be circumstances where it does. In this case, Ms. Makepeace was of the view that the appeal raises "a novel issue of broad significance." She, therefore, exercised her discretion and allowed the extension of time on the condition that Mr. Toteda pay Zurich's appeal expenses, as agreed or assessed, if the appeal is unsuccessful.

17The Commission took no position on this application, but raised the issue of prematurity. We have reviewed the authorities provided by the Commission on this issue and find they are not relevant to the issues raised by the applicant. They generally deal with matters that are clearly interlocutory in nature and thus, cause the proceedings to become fragmented by the appeal process. This does not reflect the situation before us and we accept the submission of the applicant in that regard.

Conclusion

18We are of the view that the decision of the Director's Delegate cannot be characterized as unreasonable, let alone patently unreasonable. Accordingly, Zurich's application is dismissed. Costs are awarded to the respondent, Michael Toteda, in the sum of $3,500, including disbursements and GST. As FSCO has made no claim for costs, we order none.