Neutral Citation: 1992 ONICDRG 16

File No. P-000626

ONTARIO INSURANCE COMMISSION

OFFICE OF THE DIRECTOR OF ARBITRATIONS

BETWEEN:

CANADIAN HOME ASSURANCE COMPANY

Insurer (Appellant)

and

VINCENZO SCAVUZZO

Applicant (Respondent)

Before:

M.P. Richardson Director’s Delegate

Counsel:

H.B. Brown (for Appellant; Insurer)

L. Bisgould (for Respondent; Applicant)

ORDER

I. NATURE OF PROCEEDING

By Notice of Appeal filed March 31, 1992, the Insurer, Canadian Home Assurance Company (Appellant), appeals from the Order of Susan Naylor, Arbitrator, dated March 18, 1992. The Order found the insured person, Vincenzo Scavuzzo (Respondent), who was injured in an automobile accident on June 27, 1991, entitled to weekly benefits of $600.00 under section 12(7) of Regulation 273/90 (the “No-Fault Benefits Schedule”), enacted under the Ontario Insurance Act, R.S.O. 1990, c. I.8. The appeal is scheduled to be heard on May 25, 1992.

The Appellant seeks an Order under section 283(6) of the Insurance Act staying the Order of the Arbitrator pending disposition of the appeal. Except for the period February 4, 1992 to April 30, 1992, the Appellant has paid benefits at the rate of $304.53 a week. An amount representing the difference between the Respondent’s weekly entitlement of $600.00, as found by the Arbitrator, and the weekly rate of $304.53 was paid by the Appellant to the Respondent for the period February 4, 1992 to April 30, 1992 as a lump sum. The application for a stay was argued before me on May 15, 1992.

II. ARGUMENT AND FINDINGS

Section 283(6) of the Insurance Act is the provision governing the stay of an arbitral order pending appeal. The subsection provides:

283.-(6) An appeal does not stay the order of the arbitrator unless the Director decides otherwise.

The substance of this provision is reproduced in section 29.3 of the Dispute Resolution Practice Code, issued by the Ontario Insurance Commission.

Significantly, the default position under section 283(6) of the Insurance Act differs from the position normally applicable in proceedings to which the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, applies, and in proceedings governed by the Ontario Rules of Civil Procedure. Section 25(1) of the Statutory Powers Procedures Act provides:

25.-(1) Unless it is expressly provided to the contrary in the Act under which the proceeding arises, an appeal from a decision of a tribunal to a court or other appellate tribunal operates as a stay in the matter except where the tribunal or the court or other body to which the appeal is taken otherwise orders.

Similarly, under Rule 63.01(1) of the Rules of Civil Procedure, unless a judge orders otherwise under subrule (3), the delivery of a notice of appeal from an interlocutory or final order operates as an automatic stay of any provision for the payment of money, other than a provision that awards support or enforces a support order.

I conclude, from the wording of section 283(6) of the Insurance Act, and from the fact that the provision departs from the situation normally applicable pending the disposition of an appeal, that the decision of an Arbitrator is intended to be binding pending an appeal. It is also clear that the person seeking a stay bears the burden of establishing why the situation should be otherwise.

The Appellant conceded that, under section 283(6) of the Insurance Act, the applicant for a stay bears the onus of establishing why a stay should be granted. In the present case it was argued that, in the event of a successful appeal, it would be difficult as a practical matter to recoup any overpayment made in compliance with the Arbitrator’s Order, as the Respondent has moved to Edmonton, Alberta. Counsel for the Appellant referred to the fact that section 282(14) of the Insurance Act, dealing with the enforcement of an arbitral decision by filing a copy of the arbitrator’s order in the Ontario Court (General Division), is not available to an insurer: the subsection provides that the Director shall file the order “[a]t the request of the insured person”. Accordingly, in order to recoup any overpayment, it would be necessary for the Appellant to commence an action in Alberta.

It was submitted also that a stay would not prejudice the Respondent, as the Appellant would be responsible for interest on all amounts owing upon the disposition of the appeal.

Counsel for the Respondent argued that the Appellant had not discharged the onus under section 283(6) of the Insurance Act. Section 27(1) of the No-Fault Benefits Schedule provides for repayment to an insurer of benefits paid in error. No evidence had been adduced suggesting either that the Respondent would not repay any overpayment following an appeal, or that an order for repayment could not be enforced in Alberta. Moveover, the payment of interest by the Appellant in the event of an unsuccessful appeal would not assist the Respondent in his present circumstances.

As no cases were cited in argument, I did not have the benefit of a full exposition of the relevant case law. As this is the first decision of the Director in which section 283(6) of the Insurance Act has been considered, I referred to counsel for comment a number of decisions in which factors relevant to the granting or lifting of a stay pending appeal have been discussed. I have received and considered counsel’s comments on these decisions.

The factors to be considered on an application to stay execution of an order in the nature of mandamus were considered in Re Great Northern Capital Corporation et al. and City of Toronto et al. (1973), 1973 CanLII 762 (ON HCJ), 1 O.R. (2d) 160 (H.C.). The relevant Rule provided:

506. If the judgment appealed from awards a mandamus ..., execution thereof shall not be stayed upon an appeal being set down, unless it shall be otherwise ordered by the judge appealed from or by a judge of the appellate court. In all other cases unless otherwise ordered by a judge of the appellate court, upon an appeal being set down, execution of the judgment appealed from shall be stayed pending the disposition of the appeal.

In Re Great Northern Capital Corporation, Van Camp J. stated (at 162):

The factors to be considered on an application for stay are the bona fides of the appeal; the substance of the grounds for appeal and the hardship to the respective parties if such a stay were granted or refused.

These factors were considered recently by the Divisional Court in Gaudet v. Ontario Securities Commission (1990), 38 O.A.C. 216. The case involved an application under section 9(2) of the

Securities Act for a stay, pending the hearing of an appeal, of an order of the Ontario Securities Commission that certain statements filed in proceedings before the Commission should be made public. Section 9(2) provided:

9.-(2) Stay -- Notwithstanding that an appeal is taken under this section, the decision appealed from takes effect immediately, but the Commission or the Divisional Court may grant a stay with disposition of the appeal.

It will be observed that in both Re Great Northern Capital Corporation and Gaudet, as under section 283(6) of the Insurance Act, the applicant for a stay bore the onus of establishing why a stay should be granted.

The Divisional Court in Gaudet adopted and applied the three factors identified by Van Camp J. in Re Great Northern Capital Corporation. The case was decided on the basis of the only factor in dispute -- that of hardship to the parties. As refusal of the application would have had the effect of rendering the appeal nugatory, a stay of the order under appeal was granted.

In the present case, although the question was not addressed, there would appear to be no issue as to the bona fides of the appeal. Nor would it appear that the application should be dismissed on the basis of the substance of the grounds of appeal. The appeal involves a matter of statutory interpretation, in respect of which the Appellant appears to have a reasonably arguable case. The application, therefore, falls to be determined on the basis of hardship to the parties.

At my request, counsel for the parties made inquiries concerning the present financial circumstances of the Respondent. Counsel for the Appellant was advised by telephone by an investigator that the Respondent remains unemployed, but that his wife is working and has purchased a home. Counsel for the Respondent telephoned her client, who confirmed that he is not now employed, and has not been employed since the accident occurred in June, 1991. He is, however, feeling stronger and is ready to seek employment. Counsel was advised by the Respondent that his wife has not worked since November, 1991. The Respondent, his wife and their seven year old daughter live in a mortgaged home in Edmonton, purchased in 1983 during an earlier period of residence in that city. The family relies on loans from a friend and from relatives of the family to cover expenses.

The only hardship to the Appellant suggested on this application is the possibility that it will be unable to obtain repayment of amounts paid pursuant to the arbitral decision, should that decision not be sustained on appeal.

The issue of repayment was considered in Digiammatteo v. Leblanc (1989), 1989 CanLII 4076 (ON CA), 71 O.R. (2d) 130 (C.A.). In that case, a money judgment was obtained, and an appeal was taken from the judgment. The respondent applied for an order under Rule 61.03(3) lifting the automatic stay pending appeal. As in the present case, the appellants conceded that the only prejudice was the possibility that they would be unable to obtain repayment of any overpayment. On the facts of the case, Finlayson J.A. observed that it was not impractical to assume that the respondent could repay, and continued (at 132):

In any event, there is always a risk of non-recovery in any litigation, even when successful, and I can see no reason why all of that risk should fall on the respondent in this case.

Finlayson J.A. referred to a number of decisions of the Saskatchewan Court of Appeal in which litigants who were successful at trial applied for orders lifting the automatic stay pending appeal. In one of these cases, Clemens v. Clemens Estate (1986), 1986 CanLII 3214 (SK CA), 50 Sask R. 132, the Court partially lifted the stay after weighing the hardship to the litigant, who was in financial distress, against the prospect that she would be unable to repay monies paid pursuant to the trial judgment. Concerning the suggestion that a stay should not be lifted with respect to the portion of a judgment in dispute on appeal, Finlayson J.A. stated (at 135):

To summarize, then, these cases tend to show that other courts, when faced with applications by successful litigants for a partial lift of a stay, have not been concerned by the suggestion raised by counsel for the appellants in this case that, by making part of the trial judgment available for execution, the motions judge restricts the appellate court in its ability to lower the trial judgment below that amount. On the contrary, this prospect seems not to have been thought of, and instead motions judges have apparently proceeded on the assumption that the amount made available for execution pending appeal would be subject to a potential order by the appellate court for repayment.

In the present case, it is necessary to balance the hardship to the Respondent in being denied weekly income benefits in the amount ordered by the Arbitrator against the possibility that the Appellant may be unable to recoup any overpayment following a successful appeal. The information before me suggests that the Respondent is in difficult financial circumstances. There is little information concerning the prospects of repayment. Apart from the suggestion that certain difficulties exist in relation to the enforcement in Alberta of an order made in Ontario, no evidence was put forward by the Appellant concerning the likelihood of the Respondent’s repaying any overpayments.

The Appellant has urged that, because the appeal will be heard on May 25, 1992, I should “weigh the disadvantage to the insurer of possibly losing these monies as opposed to the one week delay to the insured person in having the appeal heard”, especially where the insured would be compensated by interest under the Insurance Act. While it may be some time following the hearing of the appeal before a decision is rendered, there is some force in this argument. In the event of a successful appeal, the Respondent will have had the use of the money for a relatively brief period and will have to repay it with interest. If the appeal is unsuccessful, the Respondent will have been deprived of the use of the money for a similarly brief period, and will be compensated with interest. On balance, I have concluded that while the Respondent should not be denied the $600.00 weekly benefits while the appeal is being determined, a stay should be granted with respect to the amount owing to February 4, 1992. As indicated, I understand that the disputed portion of weekly benefits for the period February 4, 1992 to April 30, 1992 was prepaid to the Respondent in February as a lump sum. For the period commencing May 1, 1992, until the disposition of the appeal, the Respondent should be paid income benefits in the amount of $600.00 a week.

May , 1992

M.P. Richardson

Director’s Delegate

Date