Neutral Citation: 1994 ONICDRG 100
File No. A-003633
ONTARIO INSURANCE COMMISSION
BETWEEN:
SATYA PAL
Applicant
and
GUARDIAN INSURANCE COMPANY OF CANADA
Insurer
DECISION ON PRELIMINARY ISSUE
Background:
The Applicant, Satya Pal, was injured in a motor vehicle accident on August 12, 1992. He applied for and received statutory accident benefits from the Insurer, payable under Ontario Regulation 6721. The Insurer and Mr. Pal did not agree on the amount of weekly income benefits he is entitled to receive. Mr. Pal applied for mediation of the dispute under section 280(1) of the Insurance Act, R.S.O. 1990, c.I.8., as amended ("the Act"). Mediation was concluded on February 17, 1993.
On January 4, 1994, Mr. Pal filed an Application for Appointment of an Arbitrator under section 281(1) of the Act, seeking a determination of the amount of his weekly income benefits. In its response, the Insurer claimed that this issue was settled at mediation, and argued that the Applicant is precluded from referring the matter to arbitration. The Applicant denied this, contending that mediation had failed.
Section 281(2) of the Act defines the jurisdiction of the arbitrator by stating that no person may refer a matter to arbitration unless mediation has first been sought and has failed. As a result, the following preliminary issue arose:
Is the Applicant precluded from referring the issue of the amount of his weekly income benefits to arbitration because it was settled at mediation, pursuant to section 281(2) of the Insurance Act?
Result:
By letter dated June 7, 1994, I advised the parties of the decision I reached in this matter. I found that the Applicant is precluded from referring the issue of the amount of his weekly income benefits to arbitration because it was settled at mediation, pursuant to section 281(2) of the Insurance Act.
On June 15, 1994 and June 20, 1994, I received written submissions from the Applicant and the Insurer, respectively, regarding expenses incurred in this arbitration.
Hearing:
The hearing on the preliminary issue was held in Toronto, Ontario, on May 30, 1994, before me, Asfaw Seife, arbitrator.
Present at the Hearing:
Applicant:
Mr. Satya Pal
Applicant's
Mr. Thomas Bean
Representative:
Insurer's
Mr. Stephen Macaulay
Representative:
Insurer's
Mr. Roger Potts
Officer:
Witnesses:
Ms. Patricia Kennedy, Claims Adjuster;
Mr. Leslie West, a retired Senior Claims Adjuster;
Mr. Satya Pal.
The exhibits in this case are listed in Appendix A.
Evidence and Findings:
There was no dispute regarding the following facts:
A mediator was appointed by the Ontario Insurance Commission to attempt to settle the dispute between the parties. Mediation was conducted by means of a face-to-face meeting held on February 17, 1993. Mr. Pal, Mr. West and Ms. Kennedy, representing the Insurer, and the mediator participated. Mr. Pal was not represented.
After the conclusion of mediation, the mediator issued a Report of Mediator, dated March 3, 1993 (Exhibit 5).
Under "Issues Settled", the Report of Mediator states:
Issue:
Weekly Income
Details:
The insured disputes the amount per week the insurer has been paying to him.
The insurer was paying the insured approximately $404.05 per week.
The parties at mediation reviewed the information presented and agreed that from the date of the face-to-face mediation (February 17, 1993) the amount per week that the insured would be entitled to would be $300.00 per week. The insurer will continue to pay this amount for so long as the insured qualifies pursuant to the no-fault benefits schedule.
The insurer agreed that they would not attempt to collect from the insured any weekly income benefit amounts that they had paid to the Insured prior to the date of the face-to-face mediation.
The above was acceptable to both parties.
A copy of the Report of Mediator was sent to each of the parties, along with a Confirmation of Settlement Form to be signed by the parties and returned to the Commission. Neither party returned a signed copy of this form. Mr. Pal claims he did not sign this form because he did not settle his claim. Mr. West testified that the form he received with the Report of Mediator related to another matter, and upon discovering this error, he sent it back to the mediator with a covering letter (Exhibit 6) stating: "These are returned and we await the correct forms". He testified that if he had received the correct form, he would have signed it. It appears that the correct form was never sent to the Insurer.
The Insurer claims that the Report of Mediator accurately reflects what occurred at mediation and maintains that mediation was successful in resolving the issue of the amount of weekly income benefits. In contrast, Mr. Pal claims that mediation failed and that at the conclusion of the mediation, there was no agreement between the parties as to the amount of his weekly income benefits. He claims that the Report of Mediator is completely erroneous in saying that there was agreement.
In my view, the burden of proof that an issue was settled at mediation rests on the party who alleges this fact. In the circumstances of this case, in order to be successful in its motion, the Insurer must establish, on a balance of probabilities, that the issue of the amount of weekly income benefits was settled at mediation.
In the hope of supporting its version of the facts, counsel for the Insurer sought to obtain the consent of the Commissioner pursuant to section 11 (3) of the Act, allowing the mediator to testify about what occurred during mediation. The Commissioner withheld his consent, and the mediator did not testify in this arbitration.
I note that during the hearing, I heard evidence from both Mr. Pal and the Insurer's witnesses about discussions amongst the parties and the mediator during the mediation. Neither party objected to this line of testimony; however, my decision in this case does not turn on this evidence. Rather, my findings are based on the testimony of the parties, about what occurred at mediation, and their conduct subsequent to the mediation. In any event, in the absence of the mediator's testimony, the testimony of the parties as to what the mediator said to each of them during the meeting is hearsay and therefore carries little weight.
The Report of Mediator itself is not conclusive of the question of whether mediation failed or succeeded; however, it is a record prepared contemporaneously by a neutral third party in the ordinary course of discharging a statutory responsibility. In my view, if the report is clear and unambiguous, it should be accorded substantial probative value in the determination of the question. In this case, the Report of Mediator clearly and unambiguously states that the issue of the amount of Mr. Pal's weekly benefit was settled at mediation.
In Nikolaos Mouriopoulos and The Citadel General Assurance Company, March 23, 1993, OIC File No. A-002166 (preliminary decision), Senior Arbitrator Susan Naylor stated that the best objective indication of the existence, or otherwise, of an agreement is reflected in the actions of the parties immediately following the alleged event in issue. I agree.
Ms. Kennedy and Mr. West testified that the initial decision to pay Mr. Pal weekly income benefits at the rate of $404.05 was based on information Mr. Pal supplied in his application for accident benefits. During the mediation, Mr. West recalculated Mr. Pal's gross weekly income using GST figures obtained from Revenue Canada during the meeting. Mr. West and Ms. Kennedy both testified that there was considerable negotiation between Mr. Pal and Mr. West about the amount of Mr. Pal's weekly income benefits and the Insurer's claim that it had overpaid him. They testified that at the conclusion of the discussions, they had no doubt that both parties agreed that the amount of weekly income benefits should be $300.00 per week, starting from the date of mediation. The Insurer agreed not to pursue its claim of overpayment.
Immediately after the mediation, the Insurer reduced the weekly income benefits to $300.00, and since February 17, 1993, Mr. Pal has been paid at this rate.
Mr. West left the Insurer's employ within a few weeks of the mediation and has had no contact with Mr. Pal after this. Ms. Kennedy testified that her first contact with Mr. Pal after the mediation was in July 1993, some five months later, when he wrote her a letter regarding certain supplementary medical and rehabilitation expenses (Exhibit 1). Mr. Pal did not refer to his weekly income benefits or the purported settlement in this letter.
Ms. Kennedy's next contact with Mr. Pal was through his letter of August 16, 1993 (Exhibit 2). In this letter, Mr. Pal requested that the Insurer increase his weekly income benefits because of a change in his income from leasing of the taxi plate. Once again, in this letter Mr. Pal does not refer to the purported settlement or suggest that he disagreed with the Report of Mediator. In response to Mr. Pal's August 16, 1993 letter, Ms. Kennedy wrote to Mr. Pal (Exhibit 3), reminding him that the amount of his weekly income benefits was settled at mediation and was not open for negotiation. The letter stated, in part,
We also note that a mediation hearing was held at the Ontario Insurance Commission on the 17th of February, 1993. At the time, you accepted a weekly benefit under Section 2.22 of the policy of $300.00. The mediator, ... advised you at that time that this would be a final amount and not open to any mediation or arbitration hearings in the future. At the time you agreed to these conditions.
Mr. Pal did not reply to this letter, in writing or otherwise.
Ms. Kennedy testified that the Insurer received no letter from Mr. Pal or anyone acting on his behalf, suggesting that mediation had failed.
Mr. Pal's testimony is diametrically opposed to that of the Insurer's witnesses. While he agreed that his gross weekly income was recalculated at mediation, he categorically denied that the Insurer offered to pay any specific amount. He testified that throughout the meeting he maintained that he was entitled to be paid "more than $404.05". He denied discussing a $300.00 amount with the Insurer's representatives. As far as he was concerned, he left the meeting without having reached any agreement about the level of his weekly income benefit. Before leaving the meeting, he claims he requested that the mediator send him an Application for Appointment of an Arbitrator form.
Mr. Pal claimed that he first learned about the purported settlement when he read the Report of Mediator, which he received in the mail some 15 days after the mediation.
Mr. Pal testified that on February 18, 1993, the day after the mediation, he went to see his lawyer, Mr. Baksh. He explained that the purpose of this visit was to instruct his lawyer to contact the mediator and to commence arbitration proceedings because mediation had failed. On cross-examination, when asked why he needed to speak to a lawyer the day after mediation, Mr. Pal stated: "it was important for me to see my lawyer immediately". His lawyer told him he would apply for arbitration as soon as he received the "papers".
Mr. Pal denied counsel for the Insurer's suggestion that the real reason he contacted his lawyer immediately after mediation was because he had changed his mind about the settlement and needed legal advice.
Mr. Pal testified that two days after he saw his lawyer, he contacted the mediator by phone. He stated that the purpose of this call was to provide the mediator with the name of his lawyer, and to tell him that he had not received the application form to commence arbitration. When he spoke to the mediator, Mr. Pal said he did not actually provide the mediator with his lawyer's name, instead he requested him to send the forms to his (Mr. Pal's) address. Mr. Pal stated that he never received the forms from the mediator. Mr. Pal did not explain why he felt he had to call the mediator himself when just two days earlier he had retained counsel and asked him to contact the mediator and file an application for arbitration.
Mr. Pal denied counsel for the Insurer's suggestion that the real reason he phoned the mediator was because he had changed his mind about the settlement and wanted to discuss it with the mediator.
Mr. Pal was adamant that the reason for contacting his lawyer and the mediator within three days of the mediation was for the sole purpose of filing an application for arbitration.
He testified that when he actually received the Report of Mediator and read its contents, he was "totally disappointed". He did not sign the Confirmation of Settlement form, instead, he took the report to his lawyer and asked him to apply for arbitration. At this time he said he also attempted to contact Ms. Kennedy by telephone but he was "never able to reach her". He did not write to her, or anyone else in the Insurer's employ, regarding the Report of Mediator.
Mr. Pal stated that following his receipt of the Report of Mediator, he also attempted to contact the mediator by phone several times, however, the mediator was not available and did not return the phone calls. On cross-examination, Mr. Pal stated that he did in fact contact the mediator to advise him that he disagreed with his report. The mediator did not send him a revised report. Mr. Pal introduced into evidence a letter purportedly written by his lawyer, Mr. Baksh, to the mediator on March 10, 1993 (Exhibit 10). This is the only piece of evidence that was produced by Mr. Pal in support of his contention that the issue of the amount of benefits was not settled at mediation. The Insurer's counsel objected to the introduction of this letter on the basis that Mr. Pal had produced no evidence that the letter was ever sent to or received by the Commission, and because its author was not called to testify as to its contents. I ruled that the letter was relevant and admissible, despite its hearsay nature.
This letter acknowledges receipt of the Report of Mediator and asks the mediator to "regards [sic] this letter as a formal request for a Report of Mediator indicating that mediation has failed", and advises that Mr. Pal will be filing an Application for the Appointment of an Arbitrator. There is no indication that the Insurer was copied this letter.
In view of Mr. Pal's contention that there was no agreement about his weekly income benefits, I find it surprising that this letter did not challenge the mediator's opinion that settlement was achieved, but merely requested that a second report failing mediation be issued. In my view, the vague language of this letter leaves the question open as to whether the lawyer was communicating to the mediator that Mr. Pal had a change of mind about the purported settlement, or whether he was indicating that settlement was never achieved in the first place.
Mr. Pal continued to cash the weekly income benefit cheques of $300.00 immediately after the mediation on February 17, 1993. There is no evidence that Mr. Pal or his lawyer contacted the Insurer at any time, in writing or otherwise, disputing the purported settlement. When Mr. Pal wrote to the Insurer some five months after the mediation, any reference to his disagreement with the purported settlement was conspicuously absent. When questioned why he did not refer to the purported settlement in these letters, Mr. Pal stated that he was under the impression that his lawyer was taking care of this matter for him, and did not feel he had to do or say anything himself.
Mr. Pal testified that he later discovered that his lawyer was not looking after his case properly, so he discharged him from the case, apparently after Mr. Baksh filed the Application for Appointment of Arbitrator on his behalf, in December 1993. He said Mr. Baksh continued to handle other matters for him.
Mr. Baksh was not called to testify at this hearing.
At the time of the accident, Mr. Pal was a self-employed taxi-driver and owner. He is a 58 year-old man with considerable business experience and educational background. He has a diploma in tool and die designing and is very fluent in the English language. He came to Canada from Germany in 1964 to work as a tool and die designer. He made his living initially as an encyclopedia salesman, until he found a job as a machinist. Before getting into the taxi business, Mr. Pal sold disability and car insurance for seven years. Mr. Pal agreed with counsel for the Insurer's description of him as a "shrewd man".
Given his experience and educational background, I find it difficult to believe that Mr. Pal was unable to contact the Insurer by telephone or in writing to address his concerns immediately. Mr. Pal impressed me as a person who would not hesitate to ask a question or to take action to protect his interests. Considering that the purported settlement has resulted in a substantial reduction of his weekly income benefits from their pre-mediation level, I find it highly implausible that he would not ensure that immediate action be taken to correct the situation, if indeed he believed that the issue had not been settled. Mr. Pal attributes this lack of action to his lawyer, yet he did not call his lawyer to give evidence on his behalf.
Mr. Pal claims that he only became aware of the purported settlement two weeks after the mediation. However, I find his actions immediately after the mediation are more consistent with those of a person who has entered into an agreement which he later regrets.
I found Mr. Pal's testimony and demeanour on the witness stand to be evasive. He was unduly argumentative in responding to simple, straightforward questions by counsel for the Insurer. I do not accept his evidence about what happened at mediation.
In contrast, I found both Mr. West and Ms. Kennedy to be credible witnesses. Their testimony was forthright and consistent. I find their actions after mediation are in accord with their claim that the issue of the amount of Mr. Pal's weekly income benefits was settled at mediation. Their version of the events is also supported by the Report of Mediator.
Having considered all the evidence in this case, I conclude that the issue of the amount of Mr. Pal's weekly income benefit was settled in mediation. Accordingly, Mr. Pal may not refer this issue to arbitration.
Expenses:
Mr. Pal has asked that his expenses be paid by the Insurer. The Insurer submits that it would be inappropriate to award expenses to Mr. Pal because the hearing on the preliminary issue was unnecessary, and Mr. Pal's conduct and his application for arbitration were contrary to the intent and purpose of the legislative scheme.
The Insurer has asked for an award of expenses, under Section 282 of the Insurance Act, R.S.O. 1990, c.I.8., as amended by section 33 of the Insurance Statute Law Amendment Act, S.O. 1993, c.10, which provides:
282.-(11.2) If an insured person commences an arbitration that, in the opinion of the arbitrator, is frivolous, vexatious or an abuse of process, the arbitrator may award an amount to be paid by the insured person to the insurer that does not exceed the amount assessed against the insurer in respect of the arbitration under section 14.
Under section 282(11) of the Act, the arbitrator has discretion to award to an insured person his or her expenses incurred in respect of an arbitration proceeding. The arbitrator's discretion is exercised taking into account the individual circumstances of each case, and having regard to the intent and purpose of the dispute resolution scheme of the Act.
The dispute resolution scheme is designed to facilitate the applicant's access to relatively inexpensive, speedy and informal adjudication of disputes. Mediation is an important and mandatory part of this process. It is designed to promote settlement and discourage litigation, by allowing the parties to conduct frank negotiations and resolve their disputes freely, in the manner they see fit. In my view, the parties are entitled to expect that disputes resolved in this manner will not be opened up at the whim of one party.
I have found Mr. Pal's claim to be entirely without merit. It is clear to me that he attempted to utilize the arbitration process to revive an issue which was settled at mediation. The only evidence of any credible questioning of the purported settlement is the filing for arbitration, almost one year after the fact. Mr. Pal has dragged the Insurer into an arbitration to defend a claim which it legitimately considered settled. I find this conduct almost tantamount to an abuse of process on Mr. Pal's part. Accordingly, I have exercised my discretion not to award Mr. Pal his costs incurred in the arbitration.
With respect to the Insurer's claim for an assessment against Mr. Pal to pay its costs, I do not find that the requirements of section 282(11.2) apply in the circumstances of this case. While I feel that Mr. Pal's conduct borders on "frivolous, vexatious, or an abuse of process", I am not prepared to go as far as saying that it is so in this case. Therefore, I make no order for awarding the Insurer an assessment against Mr. Pal.
In addition, the Insurer has requested that I order the return of the $1,000.00 arbitration fee it paid because the Applicant is precluded from referring the matter to arbitration. I have no authority to make such an order. The Insurer is at liberty to apply to the Registrar's Office for the refund to be processed in accordance with Commission policy on such matters.
Order:
Mr. Pal is not entitled to refer to arbitration the issue of the amount of his weekly income benefits due to settlement of the issue on February 17, 1993.
Mr. Pal is not entitled to his expenses incurred in the arbitration.
I make no order of an assessment to be paid by Mr. Pal to the Insurer under section 282(11.2) of the Act.
I make no order relative to the refund of the $1,000.00 assessment fee paid by the Insurer in respect of this arbitration.
October 24, 1994
Asfaw Seife
Arbitrator
Date
APPENDIX A
Letter from Satya Pal to Patti Kennedy, dated July 12, 1993
Letter from Satya Pal to Roger Potts, dated August 16, 1993
Letter from Patti Kennedy to Satya Pal, dated September 1, 1993
Letter from Satya Pal to Roger Potts, dated November 23, 1992
Letter from Robert Flynn to Les West with Report of Mediator, dated March 3, 1993, attached
Letter from Les West to Robert Flynn, dated March 8, 1993
Letter from Les West to Satya Pal, dated January 8, 1993
Assessment of Claim by Insurer, dated January 19, 1993
Letter from Robert Flynn to Satya Pal with Report of Mediator, dated March 3, 1993, attached
Letter from Khalid I. Baksh to Robert Flynn, dated March 10, 1993