Neutral Citation: 1996 ONICDRG 160

OIC A-009079

ONTARIO INSURANCE COMMISSION

BETWEEN:

PHILLIPA A. BARTHOLOMEW

Applicant

and

MAPLEX GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Issue:

The Applicant, Phillipa A. Bartholomew, claims she was injured in a motor vehicle accident on April 6, 1993. She applied for and received statutory accident benefits from Maplex General Insurance Company ("Maplex"), payable under Ontario Regulation 672.¹ Weekly income benefits were terminated by Maplex on February 28, 1994. The parties were unable to resolve their dispute through mediation and Ms. Bartholomew applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended. A pre-hearing discussion was held at the Commission on September 21, 1994. At that meeting the issues in dispute were identified, exchange of documents arranged and a hearing date was set for April 1995. Subsequently, the parties negotiated through their solicitors, including a telephone conversation on February 24, 1995. The Applicant claims that at that time, a resolution of the issues in dispute in the arbitration occurred.

The issue in this hearing on a preliminary issue is:

1. Were the issues in dispute in this arbitration settled by an agreement reached in a telephone conversation on February 24, 1995 between the lawyers for the parties? What were the terms of the agreement? Was it adhered to? What order can be granted to enforce the agreement?

Ms. Bartholomew also claims her expenses incurred in the hearing of the preliminary issue.

Result:

1. The issues in dispute in this arbitration were settled on February 24, 1995. As a result of its agreement, Maplex will pay Ms. Bartholomew weekly income benefits at $235.00 per week, from March 1, 1994 ongoing, plus interest under section 24(4) of the Schedule to March 21, 1995, less payments already made on account in August 1995.

2. Maplex will pay Ms. Bartholomew's supplementary medical and rehabilitation expenses arising from the motor vehicle accident of April 6, 1993.

3. Maplex will pay Ms. Bartholomew a special award of $500.00.

4. Maplex will pay Ms. Bartholomew her rateable share of interest available for distribution, if any, in the same proportion as her claim, at September 30, 1996, bears to all claims against the corpus of the Maplex estate, as ascertained at September 30, 1996. Thereafter, Maplex will pay Ms. Bartholomew's weekly income benefits in a timely fashion, as set out in section 24 of the Schedule.

Hearing:

The hearing on the preliminary issue was held in North York, on July 31 and August 20, 1996, before me, K. Julaine Palmer, arbitrator.

Present at the Hearing:

Applicant:

Phillipa A. Bartholomew

Ms. Bartholomew's

James Simpson

Representative:

Barrister and Solicitor

Maplex's

Edmund W. J. Kent

Representative:

Barrister and Solicitor

Witnesses:

David Wilson, Barrister and Solicitor

Phillipa A. Bartholomew, Applicant

Sue Dickinson-Kleinert, Claims Examiner

Brian Atherton, Barrister and Solicitor

The parties filed a document brief and 14 other exhibits.

Evidence and Findings:

The Applicant says that the issues in dispute in this arbitration were settled during negotiations between two lawyers by telephone on February 24, 1995. The Insurer says that some agreements were reached during that conversation, but disagrees that the issues in dispute in this arbitration were settled.

The Insurer involved in this arbitration, Maplex General Insurance Company, went into liquidation on March 9, 1995 and was ordered wound up by the Ontario Court (General Division) on March 21, 1995. The court appointed the Superintendent of Insurance for Ontario provisional liquidator of the company. The Superintendent of Insurance, in turn, appointed Deloitte & Touche Inc. as its agent. Maplex's counsel submitted that the winding-up of the Insurer by the court frustrated any agreement reached in the February 24, 1995 telephone conversation.

Four witnesses testified at this hearing on a preliminary issue: the original lawyer for the Applicant, the Applicant herself, the original lawyer for Maplex, and the Maplex claims examiner hired by Deloitte Touche in April 1995 to deal with accident benefit claims. The two most important witnesses were the two lawyers who spoke on the telephone on February 24, 1995.

Testimony of Mr. Wilson, the Applicant's Lawyer and Mr. Atherton, Maplex's Lawyer

The Applicant's lawyer, David Wilson, testified that he was retained by Ms. Bartholomew in November 1993 as a result of her April 6, 1993 accident. He spent several months dealing with the Insurer's adjuster with respect to statutory accident benefits owing. After Maplex terminated Ms. Bartholomew's weekly income benefits as of February 24, 1994, Mr. Wilson commenced a mediation on her behalf. The mediation occurred on April 29, 1994. Subsequently, Mr. Wilson applied for arbitration and a pre-hearing was arranged for September 21, 1994. Both the Report of the Mediator and the pre-hearing arbitrator's letter were before me at the hearing on the preliminary issue.

At the pre-hearing conference, hearing dates for the arbitration of April 4, 5, and 6, 1995 were set. Mr. Wilson testified that after the pre-hearing, Mr. Atherton, the lawyer for Maplex, continued to discuss with him the attendance of Ms. Bartholomew for two Insurer's Medical Examinations. Mr. Wilson testified that at the pre-hearing he had taken the position that Ms. Bartholomew was not obliged to attend these examinations. Subsequently, Maplex brought a motion before the pre-hearing arbitrator to compel Ms. Bartholomew to attend the examinations. The pre-hearing arbitrator denied the Insurer's request. In a letter of February 6, 1995 (filed as exhibit 1.7), Maplex's lawyer asked Mr. Wilson to reconsider his position and confirmed he had scheduled two medical examinations for March 2 and March 6, 1995. He also asked Mr. Wilson to put forward a settlement proposal.

Mr. Wilson put a settlement proposal to Maplex in a letter dated February 7, 1995, which was date-stamped as received at Mr. Atherton's office on February 14, 1995. Subsequently, around February 15, 1995, when Mr. Wilson and Mr. Atherton spoke on the telephone, Mr. Atherton proposed a final settlement of Ms. Bartholomew's claims for a lump-sum amount. Sometime between February 16 and 24, 1995, Mr. Wilson spoke with Mr. Atherton and told him the lump-sum offer was rejected.

Both lawyers testified about the telephone conversation of February 24, 1995. Mr. Atherton testified second and was not present while Mr. Wilson testified. Their testimony about the conversation was substantially the same. Mr. Atherton recounted, by way of background, that he and Maplex were most concerned that medical examinations of the Applicant be arranged. He was also concerned that this claim be resolved and not stretch into the future with potential appeals of arbitral decisions. He testified that in order to protect his client's interest, he had recommended that Maplex reinstate Ms. Bartholomew's benefits and pay any arrears. In his view, this would give Maplex the undeniable right to an Insurer's Medical Examination under the Schedule. Mr. Atherton testified that his principal told him Maplex would issue the cheques immediately.

Mr. Atherton testified that he recalled his conversation of February 24, 1995 with Mr. Wilson very clearly, because it was important for the Insurer. He testified he told Mr. Wilson that the company was going to bring Ms. Bartholomew's benefits up to date, with accrued interest. He testified he told him, "We're going to reinstate your client's benefits." Mr. Atherton felt Mr. Wilson was somewhat surprised; he asked if all outstanding claims and costs would be paid and Mr. Atherton testified that he told him, that would be correct. On cross-examination, Mr. Atherton testified that the reinstatement of benefits was not conditional on Ms. Bartholomew attending the medical examinations. He deliberately did not refer to a condition, he testified, so that Mr. Wilson could find no possible reason to refuse his client's attendance. It was merely an expectation that Maplex had, that once benefits were reinstated, Ms. Bartholomew had no right to refuse the Insurer's request for the examinations.

Mr. Atherton testified that it was his understanding that all outstanding issues with Ms. Bartholomew would be resolved to remove any argument on Mr. Wilson's part that would prevent his client from attending the medical examinations. Maplex intended to be guided in its position with respect to a future termination of benefits by the reports of the examining doctors.

Mr. Atherton testified that he and Mr. Wilson discussed what to do with the arbitration hearing: Mr. Wilson was not sure about his position and Mr. Atherton urged him to withdraw the application, because there were no longer any issues in dispute.

Mr. Wilson confirmed the telephone conversation of February 24, 1995 in a letter dated February 27, 1995 (the Monday following the Friday telephone conversation), which was sent by facsimile transmission. The text of the letter reads as follows:

I confirm our telephone conversation of February 24, 1995, during which time you advised me that your client had advised you that it was prepared to bring all payments up to date. On that basis, it expected Ms. Bartholomew to attend for the medical appointments.

In this regard, please note that weekly disability benefits are payable at the rate of $235.00 weekly from February 28, 1994, together with an appropriate amount on account of interest.

In addition to the above, the following remains owing:

1. All items as referred to in our letter of November 9, 1994, except for items 8 and 9 which have now been paid.

2. Housekeeping and babysitting for months of September, November and December 1994 and January and February 1995 -$1,500.00. I am enclosing copies of the receipts for all months except February which has not yet been received.

3. Janice Walcott outstanding account dated February 17, 1995 -$2,400.00

4. Dr. Gayah outstanding account - $98.30

5. Azkhad Naturo Enterprises Inc. outstanding account February 23, 1995 - $630.00

Interest would be owing with respect to the above-noted items.

Mr. Wilson testified that he "fully expected these items" outlined in the letter would be paid. He also testified he told Mr. Atherton he would ask Ms. Bartholomew to attend the medical appointments. After the telephone conversation with Mr. Atherton, Mr. Wilson spoke with his client. He testified that he was away from the office at the beginning of March 1995 and, on his return, he was advised by his secretary that Mr. Atherton's office had contacted her to instruct Ms. Bartholomew not to attend the second medical appointment on March 6, 1995.

Mr. Atherton testified that in anticipation of Ms. Bartholomew attending for the medical examinations he wrote a letter to Dr. Mascarenhas filed as exhibit 9:

Pursuant to our conversation of March 1st, 1995 I am enclosing all updated medical documentation in our possession.

After our telephone call I spoke with Mr. Wilson's Secretary and was advised that her client was instructed to attend at your office. I presume by the time you receive this correspondence you will have completed your examination of her. I presume you will wish to review the enclosed material prior to submitting your report.

As you may have gathered from previous examinations Ms. Bartholomew maintains that she is still substantially disabled from performing her essential tasks of daily living. We are arranging to have Mrs. Bartholomew seen by Dr. Monte Bail, a psychiatrist, on March 6th, 1995. Therefore I would like you to provide us your report commenting on the physical findings, your diagnosis and prognosis.

Mr. Atherton's information is that Ms. Bartholomew did not attend the March 2, 1995 appointment with Dr. Mascarenhas. He stated that his office was billed for Ms. Bartholomew's appointment with Dr. Bail on March 6, 1995 and he understood she did not attend that examination either. He vaguely recalled a conversation with someone from Mr. Wilson's office regarding the examinations, but did not remember the particulars of the conversation.

No written communications were received from Mr. Atherton's office in the next few weeks, but by March 17, 1995, Mr. Wilson had spoken with Mr. Atherton by telephone. His version of what transpired is set out in a letter dated March 17, 1995:

I confirm our telephone conversation earlier this week with respect to the status of this matter. You indicated that you had not yet received any instructions from your client and were uncertain as to what payments, if any, were going to be made by Maplex.

So that there can be no misunderstanding as to what occurred herein, you advised me on February 24 that Maplex has instructed you to advise me that it was prepared to bring all payments up-to-date. On that basis, we expected Ms. Bartholomew to attend for the medical appointment.

I understand that she attended for the first attendance scheduled for March 2, however you apparently called my secretary and advised her that she was not to attend for the psychiatric appointment which was scheduled for March 2 [sic]. On that basis, Ms. Bartholomew did not attend for that appointment.

In preparation for the arbitration, I had arranged for my client to attend with Dr. Chow and Dr. Lacroix for an up-date. Under the circumstances, I was reluctant to cancel these appointments, and accordingly, the same took place on March 8 and February 20 respectively. I am enclosing the report of Dr. Chow dated March 8, 1995 and report of Dr. Lacroix dated March 7, 1995.

I am, however, taking the position that this matter has been resolved and look forward to hearing from you immediately with respect to when the payments will be made which are set out in my letter of February 27 last.

It seems to me that the only matters to be worked out are the question of interest and costs.

Mr. Atherton testified that he was aware of the troubled financial status of Maplex at this time. Approximately the day before the March 9, 1995 liquidation, he learned from one of his partners that Maplex was likely to go into receivership any day. He testified that, thereafter, he believes he advised Mr. Wilson that all proceedings involving Maplex were automatically stayed by the court order of March 21, 1995. He stated that he could get no instructions from Maplex.

Ultimately, he was instructed by Deloitte Touche to take no further steps on his Maplex files. Mr. Atherton recalled receiving a letter from the Registrar of the Dispute Resolution Group dated March 24, 1995 which confirmed telephone conversations with both himself and Mr. Wilson earlier that week about the upcoming arbitration, scheduled for early April.

Mr. Atherton testified he learned later from someone at Maplex that the OIC had to approve a plan for payments and settlements. He believes he passed this information on to Mr. Wilson. Ultimately, he was contacted by Sue Dickenson-Kleinert, a new claims examiner at Maplex. (The previous claims examiner had left shortly after the commencement of the receivership.) He testified that he advised Ms. Dickenson-Kleinert of the agreement concerning arrears and reinstatement of benefits. Thereafter, he stated his only role with this claim was to fulfill a request from Ms. Dickenson-Kleinert in September 1995 to review Mr. Wilson's claim for fees and disbursements for reasonableness.

Mr. Atherton testified that the spring and summer of 1995 was a very confusing time at Maplex. He left messages for Ms. Dickenson-Kleinert and, in turn, she left messages for him. They discussed arrangements for medical examinations and because she was dealing directly with Mr. Wilson, Mr. Atherton was under the impression that Maplex would arrange these itself. He had no further involvement as counsel for Maplex after sometime in September 1995.

Testimony of the Maplex Claims Examiner

Sue Dickinson-Kleinert testified that she began to work as an accident benefits adjuster on the Maplex files on April 17, 1995 when she was hired by Deloitte Touche. She testified that payments on files began in late July or early August 1995 and that getting weekly income benefits up to date was the first priority.

She reviewed the previous adjuster's calculations with respect to Ms. Bartholomew's claim and interpreted the agreement of February 1995 as being to bring those benefits up to date, in order to get cooperation with attendance at some medical examinations. However, she did not interpret the agreement as a reinstatement or restoration of ongoing benefits by Maplex. She testified she recalled speaking to Mr. Wilson in August 1995 and explaining about the forms which had to be completed before the liquidator could release a cheque. She denied that she acknowledged any entitlement on Ms. Bartholomew's part to benefits or that Maplex would pay ongoing benefits. She testified she did not discuss medical examinations with Mr. Wilson.

Ms. Dickenson-Kleinert stated that she was trying to get back to the position "after the mediation in February 1995." She wrote a letter to Mr. Atherton on August 14, 1995:

Please be advised the writer has been assigned carriage of the above-noted file.

We are presently processing [weekly income] benefits for Ms. Bartholomew up to and including August 15, 1995. This cheque will be forwarded via your office.

With this in mind, are we now able to proceed with the arrangement of an independent medical examination?

Ms. Dickenson-Kleinert testified that by September 26, 1995 she had not looked into the medical and rehabilitation benefits relating to Ms. Bartholomew's claim and had not processed any further weekly income benefits after August 15, 1995. In her view, there was no agreement to pay ongoing weekly income benefits. On November 24, 1995 her manager took over the direct handling of the file.

Testimony of the Applicant

Ms. Bartholomew testified briefly. She stated she attended the March 2, 1995 appointment with Dr. Mascarenhas. She did not attend the second medical appointment, scheduled for March 6, 1995, because she received a telephone call on Friday, March 3rd, 1995 from Mr. Wilson's office telling her not to attend. On cross-examination, Ms. Bartholomew stated that she arrived late (at 10:30 a.m.) for her 10:00 a.m. appointment with Dr. Mascarenhas. She remembered speaking with him. She recalled that she was pregnant at the time and could not take medication because of the pregnancy. She did not believe Dr. Mascarenhas conducted a physical examination of her that day. She remembered that she had been examined by Dr. Mascarenhas on an earlier occasion.

Testimony of Dr. L. Mascarenhas

An affidavit sworn by Dr. Lyndon Mascarenhas on August 19, 1996 was filed as an exhibit. In that affidavit, Dr. Mascarenhas swore that Ms. Bartholomew had not attended at his office on March 2, 1995. He stated that he was in his office for the entire day on March 2, 1995 and he would have been notified by his staff if she had attended for the appointment. He stated that he had previously conducted an independent medical evaluation of Ms. Bartholomew on November 9, 1993. Dr. Mascarenhas was cross-examined by Ms. Bartholomew's representative. The doctor insisted that he had a personal recollection that Ms. Bartholomew did not attend on the examination on March 2, 1995. He had also referred to his appointment book for that date, his file on Ms. Bartholomew, and had discussed the matter with his secretary. The appropriate page of the appointment book was marked as an exhibit. Dr. Mascarenhas stated that he had not billed Maplex with a "no-show" or cancellation fee, and further stated that such a practice was variable in his office.

Analysis and Conclusion

In my view, the issues in dispute in this arbitration were substantially settled during a telephone conversation on February 24, 1995 between Mr. Wilson, the Applicant's lawyer, and Mr. Atherton, the Insurer's lawyer. Maplex agreed to reinstate or restore Ms. Bartholomew's weekly income benefits of $235.00, that is, bring them up to date and continue them. Maplex agreed to pay Ms. Bartholomew interest on late payments. Maplex also agreed to reinstate payment of Ms. Bartholomew's supplementary medical and other expenses— that is, to bring them up to date and continue them.

The exact amount of the outstanding expenses was unknown to both Mr. Wilson and Mr. Atherton during the conversation. However, the amount was easily ascertainable. Maplex already had information about Ms. Bartholomew's treatment and other expenses, based on past dealings with her, the issues at the mediation meeting, and Mr. Wilson's letters of November 9, 1994 and February 7, 1995. To clarify the outstanding expenses Mr. Wilson wrote to Mr. Atherton on February 27, 1995 the letter reproduced at page 7, above.

From my perspective, combining the letters indicates $300 per month in housekeeping and babysitting expense from June 1994 to February 1995 inclusive, a treatment account with J.Walcott of $2,400, an account of Dr. Gayah for $98.30, an account from the naturopath for $630, $146 in transportation expense and $600 for a psychological report. Nothing illegal or unconscionable was requested by the Applicant.

Maplex's counsel submitted that it would not be a reasonable interpretation of the agreement of February 24, 1995 to state that it was open-ended and carte blanche with respect to supplementary medical and rehabilitation expenses. With respect, I disagree. In my view, that was exactly the sort of agreement entered into by Maplex on that date. Maplex had a good idea of the nature and cost of the expenses Ms. Bartholomew was incurring on an on-going basis. It wanted her to attend a medical examination and it chose to pay those expenses, whatever they might be, in order to pave the way for her attendance before two physicians of their choice. Maplex wanted those medical reports for evidence at the upcoming arbitration, if it was not withdrawn, and to use in determining whether a continuation or termination of weekly income and other benefits was warranted. In my view, this was not a situation where parties only agreed to agree and left important aspects of an agreement to be determined at a later date. The terms were settled that day. Nothing of much significance was left for negotiation.²

Maplex agreed to pay appropriate interest and costs. Neither solicitor anticipated a problem in resolving these subsidiary, peripheral matters which were left somewhat vague, although the interest provisions are set out in the Schedule. Mr. Wilson also agreed to tell his client to attend the medical examinations which Mr. Atherton had previously arranged.

In the normal course, Ms. Bartholomew would have received, reasonably promptly, the agreed benefits from Maplex and the peripheral items of interest and costs would have been resolved. The arbitration would have been withdrawn or would have proceeded with two, new medical reports. However, the liquidation of Maplex intervened.

I do not agree with Maplex's submission that attendance at the medical examinations arranged by Mr. Atherton was a condition of the payment of the benefits agreed to in the telephone conversation of February 24, 1995. Indeed, Maplex's own witness, the very solicitor who took part in that telephone conversation, stated flatly that it was intentionally not a condition.

Accordingly, whether Ms. Bartholomew attended or not at Dr. Mascarenhas's office is of no relevance. I make no finding in that regard. Based on the evidence of the Applicant, Mr. Wilson and the vague recollection of Mr. Atherton, I am satisfied that Mr. Atherton's office cancelled the attendance at Dr. Bail's office, but whether for the reason of Maplex's impending liquidation or because Ms. Bartholomew had not re-attended on Dr. Mascarenhas, or for some unknown reason, is not clear. In any event, that is also irrelevant.

What is the legal effect of the intervening liquidation and winding up of Maplex?

Maplex's counsel made very brief submissions that the liquidation or winding-up of Maplex frustrated the agreement reached between the parties on February 24, 1995. He submitted that the Winding-Up Act prevents Maplex from making any payments and merely gives the liquidator the right to carry on the business of the Insurer. He submitted it was impossible for the agreement to be performed. Maplex's submissions were not amplified by direct reference to the legislation, by reference to any case law, textbook, journal article or the provisions of the actual winding-up order issued March 21, 1995. Ms. Bartholomew's counsel made no submissions at all with respect to the legal effect of the winding-up of Maplex on the agreement of February 24, 1995 except to submit that the agreement was not frustrated.

With respect to the payment of interest, Maplex's counsel submitted that in the case of a company wound up under the Winding-Up Act (Canada), R.S.C. 1985, c. W-11, as amended, all interest ceases with the commencement of the winding-up, unless a surplus of assets is found in the estate of the company. He submitted that, accordingly, creditors whose debts bear interest are entitled only to interest up to the time of the liquidation. In support of this proposition, Maplex cited an 1869 English Chancery appeal case, In re Humber Ironworks and Shipbuilding, [1869] 4 L.R.643.

In my opinion, Maplex's submission that the agreement reached on February 25, 1995 was frustrated by its subsequent liquidation is unsustainable. It smacks of the discredited notion of "self-induced impossibility."³ Neither was this an agreement made "in contemplation of insolvency."⁴ No one argued before me that the agreement constituted an "unjust preference." The liquidator was empowered by the court order of March 21, 1995 to carry on the business of Maplex so far as it is necessary or incidental to the winding-up of the company. The liquidator was empowered to pay debts of the company. According to the terms of the Schedule and the Insurance Act, Maplex and Ms. Bartholomew had certain continuing obligations toward each other, arising out of a contract of insurance and a motor vehicle accident. At the time of the February 24, 1995 telephone conversation, Maplex may have been in serious breach of its obligations. An arbitration was imminent. Maplex needed evidence in order to support its position, but was dealing with a canny solicitor, who would not agree to sending his client for an insurer's medical examination while the Insurer was in default of its obligations as he saw them. The reinstatement agreement of February 24, 1995 was made in the performance of the obligations under the Schedule and the Insurance Act, in good faith, reached prior to the liquidation and negotiated in the ordinary course of business of the Insurer. It should be upheld. Unfortunately, in August 1995, the terms of that agreement were misinterpreted by the new Maplex claims examiner. Weekly benefits were not paid as had been agreed and Maplex totally failed to deal with the supplementary medical and rehabilitation claims, interest and costs. The all-important medical examinations were never rescheduled.

In my opinion, if subsequent to February 24, 1995 Maplex wished to terminate Ms. Bartholomew's weekly income or supplementary medical benefits, it should have followed the procedures of the Schedule at section 24(8) by giving her written notice and reasons.

Unfortunately, I have insufficient evidence as to the amount of supplementary medical and rehabilitation expenses claimed by Ms. Bartholomew to order a precise amount to be paid.

Issues for Arbitration Hearing

In the pre-hearing letter of September 21, 1994, the issues in dispute were identified as follows:

1. Weekly benefits and child care benefits: Section 13(1) and 13(4) benefits were paid until February 28, 1994. The Applicant claims these benefits from that date.

2. Supplementary medical and rehabilitation benefits: Maplex has paid some of the claimed expenses further to subsection 6(7), and seeks repayment.

There are some questions about whether certain expenses are in dispute.

Entitlement to an orthopaedic mattress appears not to have been mediated. If the issue cannot be resolved before the hearing, Maplex consents to having it dealt with in this arbitration, without referring it back to mediation.

Insurer's counsel will confirm whether the Insurer has paid Janice Woolcott's bill.

3. Special Award: The Applicant seeks a special award.

The Applicant also claims interest on overdue benefits, and her arbitration expenses.

This hearing on a preliminary issue disposes of the claims under issues 1. and 2. above. I have determined that Maplex agreed to pay accident benefits to Ms. Bartholomew. Maplex retained the right to subsequently terminate these benefits for appropriate reasons. The issue of a special award, at first glance, remains outstanding. However, since after payments have been made under my order, nothing is owed to Ms. Bartholomew by Maplex, an arbitrator would have no basis to make a special award.⁵

Ms. Bartholomew's counsel submitted that I should deal with the claim for a special award. The Insurer's counsel submitted that there was no evidence before me that the agreement of February 24, 1995 included payment by Maplex of a special award.

It is clear to me after hearing the evidence that the original lawyers for these parties agreed to certain payments and a course of conduct in their conversation of February 24, 1995. Maplex, after the liquidation, repudiated the agreement by insisting on an interpretation of it that was contrary even to the understanding of its own former counsel, who negotiated the deal. It persisted in this interpretation at this hearing on the preliminary issue. In my view, this was unreasonable conduct on the part of the Insurer, even taking into account the chaotic atmosphere of the liquidation process. The provisions of section 282(10) of the Insurance Act oblige me to award a lump sum to the Applicant where I find that an insurer has unreasonably withheld or delayed payments. That award can be as high as 50 per cent of the amount to which the person is entitled together with interest. I order Maplex to pay a special award of $500.00 to Ms. Bartholomew.

With respect to the claims of Ms. Bartholomew for interest, in order to preserve the relative position of different classes of creditors at the date of the winding-up order and not permit the passage of time to skew the result, I am persuaded that the usual provisions of section 24(4) of the Schedule should not be invoked.⁶ However, in the event that the liquidator has invested the proceeds of the estate of Maplex for the benefit of all its creditors, I order that Maplex pay Ms. Bartholomew her rateable share of "interest available for distribution" in the same proportion as her claim, at September 30, 1996, bears to all claims against the corpus of the Maplex estate, as ascertained at September 30, 1996.⁷ Thereafter, I would expect Ms. Bartholomew's weekly income benefits to be paid in a timely fashion, as set out in section 24 of the Schedule.

Expenses

I exercise my jurisdiction under section 282(11) of the Insurance Act to order that Ms. Bartholomew's expenses of this arbitration should be paid by Maplex. If the parties are unable to agree on the amount of expenses, they may apply to the Commission for an assessment.

Order

1. The issues in dispute in this arbitration were settled on February 24, 1995. As a result of its agreement, Maplex will pay Ms. Bartholomew weekly income benefits at $235.00 per week, from March 1, 1994 ongoing, plus interest under section 24(4) of the Schedule to March 21, 1995, less payments already made on account in August 1995.

2. Maplex will pay Ms. Bartholomew's supplementary medical and rehabilitation expenses arising from the motor vehicle accident of April 6, 1993.

3. Maplex will pay Ms. Bartholomew a special award of $500.00.

4. Maplex will pay Ms. Bartholomew her rateable share of interest available for distribution, if any, in the same proportion as her claim, at September 30, 1996, bears to all claims against the corpus of the Maplex estate, as ascertained at September 30, 1996. Thereafter, Maplex will pay Ms. Bartholomew's weekly income benefits in a timely fashion, as set out in section 24 of the Schedule.

5. The arbitration hearing scheduled for October 7-10, 1996 is cancelled.

6. Maplex will pay Ms. Bartholomew her expenses incurred in respect of the arbitration, as agreed or assessed.

September 24, 1996

K. Julaine Palmer Arbitrator

Date

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. 2see G.H.L. Fridman, The Law of Contract in Canada, Toronto: Carswell, 3rd edition, 1994, at pages 19-22.
3. 3G.H.L. Fridman, op.cit., p. 642.
4. 4see section 96 of the Winding-Up Act, R.S.C. 1985, c. W.11, as amended.
5. 5See Carlos Ferreyra and Blanca Ferreyra and Royal Insurance Company of Canada (OIC A-000301 et al.), July 9, 1992 and other cases following in the same vein.
6. 6See Canada Deposit Insurance Corp. v. Canadian Commercial Bank, [1993]A.J. No. 512 (Alta. Queen's Bench) at para 21 and para 24. See also Principal Savings and Trust Company v. Ernst & Young, [1993]A.J. No. 845 (Alta. C.A.).
7. 7in the manner suggested by Wachowich, A.C.J. in Canada Deposit Insurance Corp. case cited above.