Neutral Citation: 1995 ONICDRG 131

File No.: A-951153

ONTARIO INSURANCE COMMISSION

BETWEEN:

ANNE-MARIE BARRETT

Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY

Insurer

DECISION on PRELIMINARY ISSUE

Issues:

The Applicant, Anne-Marie Barrett, was injured in a motor vehicle accident on January 23, 1993. She applied for and received statutory accident benefits from the Insurer, payable under Ontario Regulation 672.¹ Weekly benefits were terminated by the Insurer on April 18, 1994. Between April 27 and July 6, 1994 the parties participated in a mediation, which was partially successful in resolving the issues in dispute.

On September 7, 1994 the Applicant began an action in the Ontario Court of Justice (General Division) claiming special damages in the amount of $100,000 from the Insurer, interest, and costs. A Statement of Defence and Counterclaim was delivered in that action and a Reply and

Defence to Counterclaim followed. An examination for discovery of the Insurer in the action was held on December 20, 1994. An similar examination of Ms. Barrett had been scheduled for December 14, 1994, but did not proceed, as a result of the failure of a court reporter to attend.

In the spring of 1995, the Applicant commenced a second mediation, this time involving both this Insurer and another insurer (which insured two other vehicles involved in the accident). This mediation considered which insurer was responsible for payment of benefits to Ms. Barrett. Economical participated in that mediation with reluctance, claiming that the issues against it had already been mediated the year before. That mediation failed to resolve the issues in dispute between the parties. The Applicant then filed three Applications for Appointment of an Arbitrator, received by the Commission on May 26, 1995, against both insurers, under the provisions of the Insurance Act, R.S.O. 1990, c.I.8, as amended.

This hearing on a preliminary issue was held on September 6, 1995 to determine whether the Commission has the jurisdiction to proceed with this arbitration. The Applicant asserts that she has paid the proper fee for this service and seeks a determination from the Commission as to which insurer should pay her benefits. This Insurer, on the other hand, contends that Ms. Barrett chose to proceed against it before the courts and that it should not be put to the expense and inconvenience of defending itself in both a court action and an arbitration. The second insurer was not invited to participate in the hearing of this preliminary issue.

The issue in this hearing on a preliminary issue is:

1. Is Ms. Barrett entitled to proceed to arbitration on the issue of whether she is an "insured person" under the policy of automobile insurance with Economical Mutual?

Ms. Barrett also claims her expenses incurred in the hearing.

Result:

1. Ms. Barrett's Application for Appointment of an Arbitrator, OIC file no. A-951153, is dismissed.

2. Ms. Barrett is entitled to her expenses of the arbitration.

Hearing:

The hearing was held in North York on September 6, 1995 before me, K. Julaine Palmer , Arbitrator.

Present at the Hearing:

Applicant's

Michael F. Boland

Representative:

Barrister and Solicitor

Insurer's

William J. McCorriston

Representative:

Barrister and Solicitor

Insurer's

Milton Jagannath

Officer:

Accident Benefits Supervisor

Evidence and Findings:

Ms. Barrett was injured in a motor vehicle accident on January 23, 1993. I understand that she was a pedestrian at the time. Economical issued a policy of insurance to a Mr. Paul W. Zurosky, covering a 1984 Dodge Aries, which was the car from which Ms. Barrett had alighted, just before the accident occurred. Ms. Barrett claims she is insured by that policy. She has sued the Insurer in court to require it to pay her damages. Economical paid statutory accident benefits to Ms. Barrett for about 15 months after the accident, but it now claims those benefits were paid to her in error and seeks repayment of those benefits under the provisions of section 27 of the Schedule, in a counterclaim to the court action.

The Applicant's counsel asserts that the issue of whether Ms. Barrett was an "insured person" under the policy with Economical never arose in the first mediation, and consequently, according to the provisions of section 281(2) of the Insurance Act, the issue had to be mediated before it could be dealt with by either the court or in an arbitration. Once the issue has been mediated, the Applicant is entitled to commence an arbitration, go to court, or do nothing. The Insurer's counsel contends, on the other hand, that whether the Applicant was an insured person is an implicit question in any adjudication of entitlement to benefits.

I do not have to decide whether the Applicant required a second mediation with this Insurer. I have only to decide whether she can properly continue this arbitration, given the outstanding court action.

Several cases at the Commission have considered similar questions.² The courts have also dealt with such cases.³ In her decision in Citadel General Assurance Company v. Gogna [1992] O.J. No. 1996, Justice E. Macdonald stayed an arbitration and wrote:

It is fundamental that multiplicity of proceedings is to be avoided, wherever possible.

I am guided by the considerations set out in Victoria Property and Investment Co. (Canada) Ltd. et al. v. Vatznau Management Ltd. et al. (1978), 1978 CanLII 1286 (ON HCJ), 8 C.P.C. 38 at 41.

(1) which action began first;

(2) who has the chief burden of proof;

(3) which is the most comprehensive in scope.

On the basis of the above principle and considerations, I find Ms. Barrett's court action should proceed and her arbitration should be dismissed. The issue of whether the Applicant is an insured person under the Economical policy will, of necessity, be decided in the court proceeding. Ms. Barrett began that action first. It is well under way. The court action is more comprehensive in scope than the arbitration.

Expenses:

The Applicant seeks an award of the expenses she has incurred in this arbitration. An award for expenses may be made under section 282(11) of the Insurance Act, which provides as follows:

The arbitrator may award to the insured person such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations to the maximum set out in the regulations.

The prescribed expenses and amounts are set out in Schedule F of the Dispute Resolution Practice Code and in Ontario Regulation 664, R.R.O. 1990, Dispute Resolution Expenses. In the Ralph McCormick and Economical Mutual Insurance Company case, October 2, 1991, OIC File No. A-000139, Senior Arbitrator Susan Naylor made the following comments about expenses, with which I agree:

The discretion to award expenses should be exercised, having regard to the intent and purpose of the legislative scheme. 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 discretion to award expenses should be exercised in accordance with this objective, having regard to the individual circumstances of each case.

Accordingly, it is appropriate to award an applicant his or her expenses, unless, in the circumstances of the particular case, it is determined that the application for appointment of an arbitrator was manifestly frivolous or vexatious, or that the applicant's conduct unreasonably prolonged the proceedings.

The Director of Arbitrations approved this statement of the principles guiding an award of expenses in the appeal decision in Vito Luigi Calogero and The Co-Operators General Insurance Company, February 13, 1992, OIC File No. P-000251.

I appreciate that the Applicant wished to avail herself of the relatively informal and speedy service offered by this Commission in the arbitration process to determine what she believes to be a discrete issue. The application was not a frivolous one. For these reasons I find the Applicant is entitled to her expenses as set out in Section F of the Dispute Resolution Practice Code. In the event that the parties cannot agree as to the total amount of expenses, a party may apply to the Registrar for assessment of the expenses.

Order:

1. The Application for Appointment of an Arbitrator, OIC File no. A-951153, is dismissed.

2. The Applicant is entitled to her expenses of the arbitration.

September 21, 1995

K. Julaine Palmer

Arbitrator

Date

Schedule A

Errol C. Barrow and Guardian Insurance Company, December 23, 1993, OIC File No. A-006082;

Abdul Bapoo and Cooperators General Insurance Company, October 3, 1994, OIC File No. A-006212;

John Gouliaeff and Commercial Union Assurance Company, July 24, 1995, OIC File No. A-003996;

Ana Oliveira and Markel Insurance Company of Canada, February 9, 1995, OIC File No. A-006434;

Stamatios Togias and Cooperators General Insurance Company, May 4, 1995, OIC File No. A-013485;

Citadel General Assurance Company v. Gogna, [1992] O.J. No. 1996

International Managed Health Care Inc. And Dich Quang Le v. Toronto Transit Commission, [1995]

Footnotes

1. 1Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule —Accidents Before January 1, 1994. In this decision, the term 'Schedule" will be used to refer to Regulation 672.
2. 2For a list of these cases, see Schedule A to this decision.
3. 3For a list of court cases, see Schedule A as well.