Rosa DeCicco v. State Farm Mutual Automobile Insurance Company, 1992 ONICDRG 6

ONTARIO INSURANCE COMMISSION OFFICE OF THE DIRECTOR OF ARBITRATIONS

Neutral Citation: 1992 ONICDRG 6

File No. P-000277

BETWEEN:

ROSA DECICCO

Applicant (Respondent)

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer (Appellant)

Before:

E. Sachs, Director of Arbitrations

Attendance:

H.P. Brown (for Appellant, insurer)

R. DeCicco (Respondent, in person)

A. Shields (on preliminary issue only)

APPEAL DECISION

I. NATURE OF PROCEEDING

By Notice of Appeal filed January 10, 1992 the insurer, State Farm Mutual Automobile Insurance Company (the appellant) appeals from an interim order of Susan Naylor, Arbitrator, dated December 10, 1991 which determined the parameters of the within arbitration proceeding, and defined the arbitrator's jurisdiction once an insured person has chosen to proceed by way of arbitration under the Insurance Act, R.S.O. 1990, c.I-8 (formerly The Insurance Statute Law Amendment Act, 1990, S.O. 1990 c.2).

The appeal is somewhat unusual as it is from a preliminary or interim order of an arbitrator respecting the conduct of an arbitration. The appeal was heard on the basis that if it were allowed, the jurisdiction of the arbitrator to determine the dispute between the parties would be enlarged and only one arbitral hearing take place. If the appeal were not heard now, a second arbitral hearing might have been necessary. This is because a successful appeal would enlarge the scope of the arbitration.

The order sought by the appellant is that under s.281(1) and following of the Act (formerly s.242(c) and following) the arbitrator has jurisdiction to hear and determine all disputes relating to the No-fault Benefits Schedule (O.Reg. 273/90) between the insured person and the insurer which have been mediated, even though only an insured person may refer "the matter" to an arbitrator.

II. PRELIMINARY ISSUE

Counsel for both parties were invited to make oral submissions. An oral hearing was scheduled for February 13, 1992. The insured person appeared in person. She stated she was no longer represented by counsel, (who had filed written submissions) and was seeking an adjournment to engage new counsel. This request was opposed, albeit not vigorously, by the appellant, believing the written submissions were sufficient in the circumstances. Former counsel for the respondent appeared and offered himself as a "friend of the court" or, more appropriately, as is provided for by s.283(8) of the Act as intervenor to make submissions on issues of law arising in this appeal.

An adjournment was granted, preemptory to the insured person, to February 20, 1992. Former counsel was provided with forms to apply for intervenor status. It is to be noted requests for intervention by a non party are in the discretion of the Director and appearances so granted are not as of right.

On consent, the appellant and respondent appeared before me February 17, 1992 for oral argument. The respondent was not represented and stated no further submission, other than the written one already part of the record, would be made. Mr. Shields did not apply for intervenor status. The appeal proceeded on the Record, consisting of the Arbitral Order, Notice of Appeal, written submissions of the appellant received January 29, 1992, written submissions of the respondent received February 6, 1992 and brief oral argument.

For the purpose of the appeal, it was agreed that all disputes between the appellant and the respondent are considered to have been mediated, and no settlement reached.

III. ANALYSIS & FINDINGS

Arbitrator Naylor, at page 4 of her Decision, outlined the arguments presented at the motion, and carried forward in appeal. Sections 281 and 282 of the Act dealing with arbitration proceedings, were subject to differing interpretations. In addition, regard was had to the mediation provisions at s.280 of the Act.

The appellant also submitted the following:

1. Section 281(1) while permitting only the insured person to have the option to proceed to litigation generally, uses the expression "the matter" as constituting what may be referred to an arbitrator;

2. There is no objection to the finding that the word "matter" and its ordinary, logical meaning is broad, being the thing in dispute, whereas the term "issues", refers to the specific questions of fact or law that form the basis of the dispute;

3. Having so used the word "matter" the legislature intended this term to include all of the issues in dispute between the insured person and the insurer and this interpretation is in accord with the Insurance Act as remedial legislation, requiring liberal interpretation to provide a speedy and inexpensive proceeding for both parties;

4. The flaw in the arbitrator's decision is in determining the scope of "the matter" in the singular, as being the only item in dispute. The appellant takes the position that the term "the matter" is all items, all issues and all areas of dispute between the parties;

5. The jurisdiction of the arbitrator so defined can be equated to a "cause of action" as outlined in Cahoon v. Franks, 1967 CanLII 77 (SCC), [1967] S.C.R. 455 which held there is only one cause of action advanced by a plaintiff (with different aspects to the claim) arising out of a single motor vehicle accident, similar to "the matter" having several "issues" in dispute;

6. To not adopt the "cause of action" analysis will result in separate proceedings, one in a court and one before the arbitrator, on the same set of facts potentially leading to different conclusions on similar disputes which is undesirable both from the statutory interpretation and policy view point. Had the legislature intended only one issue at a time (as determined by the insured person) to be referred to arbitration, the legislature would have used a more specific word and, it was suggested, the word "issue" would have been used throughout the sections. This is a more symmetrical view of the Act and is beneficial to both parties, in cost, efficiency and fairness.

The respondent disputes the above, and submitted:

1. Section 281(1), referring to "the matter" refers only to a single item, which having been mediated unsuccessfully, is chosen by the insured person to be referred to an arbitrator. The insurer has no right to refer anything to an arbitrator - the choice of forum and selection of dispute is that of the insured person only;

2. The insurer has the right to take any matter or issue to court if it so desires. The legislation does not prevent this.

3. Whether or not such court proceedings duplicate the arbitration process (for example, in findings of fact) is not relevant - the statute speaks for itself and the exercise of determining the precise meanings of the words "the matter", "a matter", "any matter" as opposed to "issues" is merely academic when the Act is seen as a whole.

The Respondent does not, however, address the finding of the arbitrator, at page 9 of her Decision, which states as follows:

"The authority of the arbitrator extends to anything that reasonably and consequentially flows from the issues that are before her. In my view, this includes an applicant's liability to repay any benefits found to have been overpaid in light of the arbitrator's findings."

As neither party appeals from this aspect of the decision, it is not necessary to comment further upon it.

I find the question in this appeal is whether the Act, using the wording in s.281 and 282, equates any reference to an arbitrator by an insured person to a court proceeding. In other words, can the insurer thereafter advance any other disputed claims or benefits it may have paid (or is refusing to pay) as if these were in the nature of a counterclaim or setoff? That is the Cahoon v. Franks situation - the accident which gave rise to several heads of damage is the single cause of action in a proceeding between parties and all damages, whether personal, property or otherwise necessarily are part of that one cause of action.

Having reviewed the case carefully, I am of the view it does not materially assist in the interpretation of the Insurance Act and the No-fault Benefits Schedule.

Following the general rules of construction (see generally E.A. Driedger, The Construction of Statutes, 1974) a statute should be read and interpreted to avoid disharmony, without importation of words or meanings that are not there, as a whole with every provision given meaning and, where passed as remedial legislation, given a liberal interpretation. However, such interpretations should not offend specific rules such as ejusdem generis. The rule (which is not a rule of law) may be summarized as providing that general words, such as "the matter" may be restricted by specific words, such as "issues in dispute" and by the context or the subject matter of the Act. The question to be asked (and asked last) is whether the context or object of the Act determines the scope of the general word. Various terms are used to describe this process, such as "common feature", "class" and so on. In this case, the word "matter" must be related to the word "issue", in the overall scheme.

There are three ways of looking at the Insurance Act in this context:

Open - Following the Cahoon v. Franks analysis, and the argument that symmetry is vital to rights and obligations in the Act, the word "matter" encompasses all issues, all items in dispute between the parties. Consequently, when an insured person opts for arbitration, the process itself necessarily permits the insurer to import counterclaims or a setoff in that proceeding, as if it were a court action utilizing the Rules of Civil Procedure. The words "matter" and "issue" are used interchangeably and have no specific meaning that can be modified or enhanced by using the rules of construction. Rather, it is the context and scope of the Act, being remedial in nature, that determines this open concept.

Flow or Consequential - This approach brings in another consideration: that there is more than one "matter" between the parties. Looking at the Act as a whole involves reviewing the mediation provisions (s.280), finding meaning for the words "any matter in dispute" as to entitlement or quantum and carrying forward this terminology to the arbitration process. There the words "the matter" and "a matter" are used (s.281). Finally s.282(3) provides the arbitrator "shall determine all issues in dispute and such other issues as the parties may agree". It is said for the appellant this position brings in other matters as opposed to simple sub-issues of a global matter. From the respondent's perspective in this case, it is the proposition that once the matter is in arbitration, those issues which may affect the matter directly might be consequentially brought in. If this were not so, the legislature would not have permitted the parties to agree on "other issues". That provision must, of necessity, refer to the matter that was originally, by s.281, referred to the arbitrator. This view also permits the arbitrator to define the matter and hence, his or her own jurisdiction. There may be many matters each of which has issues in dispute, but only certain matters are referred to arbitration by the insured person.

Restrictive - This position is the opposite of the first, or open interpretation. It requires the arbitrator to deal only with a single matter at a time. Nothing can be imported into arbitration except what the insured person may define as the matter and its consequent issues, be they of entitlement or quantum. The effects of a determination on entitlement, i.e. the possibility of repayment, can only be brought in on consent. The result of such a view is that if the insured person comes to arbitration on entitlement to no-fault accident benefits, is found not to be entitled to them and yet has received benefits, the insurer is left with the option of claiming the overpayments in court and cannot do so in the context of the arbitration hearing. Overpayment would therefore be seen as a "matter" as opposed to an issue in dispute from the insurer's point of view. From the insured person's point of view, it may be an "issue" but not one of those which the parties agreed, pursuant to s.282(3), to determine in the hearing. This is an attractive view because it makes sense of s.282(3) as to what issues, if any, might the parties agree upon to bring into arbitration if, in the first place, the arbitration is restricted to the matter raised by the applicant. Of no assistance here are the words "settlement of issues" found in the marginal notes to the Act which, as the appellant conceded, have to be disregarded no matter what interpretation is chosen.

I agree with the statements made, and referred to me by the appellant, in the Arbitral Decision Moxon and State Farm Insurance (July 18, 1991) at page 20:

"The Insurance Act as amended, has provided for arbitration hearings as a relatively speedy and cost efficient alternative to the court process...

Therefore it is my responsibility as arbitrator, to safeguard the integrity of the arbitration process by ensuring that hearings are heard in an expeditious manner, and are not unreasonably protracted by procedural and technical delays."

I also agree with the statement made in the Arbitral Decision McCormick and Economical Mutual Insurance Company (October 2, 1991) at page 23:

"The arbitration process has been established under the Insurance Act, as amended, in order to facilitate applicants' access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits."

The concerns raised in this appeal do not qualify those statements. The basic issue in this appeal is not merely a technical one. It goes to access of parties to the arbitral system. There is no need to determine any integration or equivalency with the court processes or procedures. Arbitration is a different process and does not lose its integrity, fairness or ability to do justice between the parties on the basis that it does not mirror court proceedings.

I see no mischief, to use the old terminology, in the possibility of parallel proceedings. The statute could not be clearer in providing that only an insured person may opt for arbitration. Surely the choice has to mean something. If the insurer were able to import into the arbitration process any and all matters or issues, whatever they are called, then it would have made no difference as to who can refer cases to arbitration. The section would have permitted "persons" or "a party" to choose arbitration. Consequently, I find the open argument as outlined not to be persuasive.

If then there is some restrictive aspect to access to the system, how closed is it? Having regard to the purpose and context or, as could be said, the object of the Act and using a general principle of construction, it must be assumed the Act is meant to do justice between the parties no matter who may bring the arbitral process into play. I therefore find that the restrictive view which would limit the arbitrator's jurisdiction to a single question, a single matter or a single issue could not have been the purpose of using the word "the matter" in s.281. That would also render s.282(3) meaningless. The words "all issues in dispute" in s.282(3) must be referenced to "the matter" and there must be a natural, or consequential, flow from the general to the specific.

This structure, general to specific, is reflected in the mediation section (see 280(4) referring to issues after "any matter" is in mediation) and carried forward into the arbitration sections. I note it is further carried forward into the appeal sections when the words "all of the issues before the arbitrator" are used in s.283(4) to describe the nature of a hearing before the Director. Further, s.283(8), dealing with interventions, makes it clear that submissions can be on "issues of law" only, a further restrictive meaning on the otherwise more open use of the word "issues".

Where an arbitrator is called upon to determine "the matter" referred to him or her, the arbitrator must define that matter and, in each case, determine the scope of the arbitration. In this case, Arbitrator Naylor determined that the issue of the insured person's entitlement to care benefits, and the amount of such benefits were properly an "issue in dispute" and using the natural or consequential flow position, so was any liability to repay care benefits an "issue in dispute" of "the matter" the applicant had referred to arbitration. The insurer's concerns over the entitlement of the applicant to transportation or rehabilitation expenses, not forming part of the matter of entitlement to care benefits could not properly be an "issue in dispute" unless it was agreed to be such by the applicant. The claim of the insurer, was in fact, another "matter" which the applicant had not put before the arbitrator. Whether or not it may be more expeditious for the parties to deal with all of these items in one hearing is not a relevant consideration given the structure and scheme of the Act as a whole and given the necessity of having each section, general or specific, carry with it a coherent and logical meaning.

IV. DISPOSITION & ORDER

The appeal from the third part of the interim order of Arbitrator Naylor which reads:

"The issues of the applicant's entitlement to transportation or rehabilitation expenses, and the amount of such benefits, are not properly "issues in dispute" in these proceedings under s.242d(3), and therefore fall outside the jurisdiction of the arbitrator."

is dismissed.

No expenses are claimed by the respondent in this appeal and the appellant is not entitled to expenses under the legislation. No order as to expenses is made.

February 21, 1992

Elisabeth Sachs

Director of Arbitrations

Date