Heather Lee Byle v. Allianz Insurance Company of Canada, 1996 ONICDRG 49

Ontario Insurance Commission / Commission des assurances de l’Ontario

Neutral Citation: 1996 ONICDRG 49

Appeal P96-000030

OFFICE OF THE DIRECTOR OF ARBITRATIONS

HEATHER LEE BYLE Appellant

and

ALLIANZ INSURANCE COMPANY OF CANADA Respondent

Before: David R. Draper

Counsel: Tim Tucci Noélla M. R. Thompson

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The appeal is dismissed and the arbitration order, dated February 1, 1996, is confirmed.

2. Ms. Byle is not entitled to her appeal expenses.

3. Ms. Byle is not required to pay Allianz an amount under section 282(11.2) of the Insurance Act, as applied by section 283(7).

April 1, 1996

David R. Draper Director’s Delegate

REASONS FOR DECISION

I. NATURE OF THE APPEAL

In a decision dated February 1, 1996, the arbitrator ordered Heather Lee Byle to pay $2,000 to Allianz Insurance Company of Canada ("Allianz") on the basis that her arbitration application and subsequent withdrawal of that application were an abuse of process. Ms. Byle appeals this order, asking that it be rescinded. In addition, she is seeking an order that Allianz is the insurer responsible for paying her accident benefits, a hearing with respect to her entitlement to accident benefits, and her appeal expenses.

II. THE FACTS

The history of this matter is set out in the arbitration decision in considerable detail. Although Ms. Byle provided some additional information with her appeal, there is no suggestion that any of the arbitrator's factual findings are wrong.

Ms. Byle was injured in an automobile accident on August 6, 1994. She applied for accident benefits from Allianz, the insurer of the other vehicle involved in the accident. Allianz refused coverage because according to the police report, Ms. Byle's automobile was insured by Allstate. Ms. Byle applied for mediation with Allianz, claiming that Allstate did not insure her vehicle at the time of the accident. According to the Report of Mediator, the parties were unable to resolve the insurance coverage issue, or Ms. Byle's claims for weekly income benefits, supplementary medical benefits and interest.

Ms. Byle then applied for arbitration. Her application states that her claim for weekly income replacement benefits is based on a job that she was due to start shortly after the date of the accident at an annual salary of $40,000.

On September 12, 1995, notice was sent to the parties and their lawyers advising them that a pre-hearing conference would take place on October 30, 1995. On October 26, 1995, Ms. Byle's lawyers learned that the job offer was fabricated. They faxed a letter to the Commission, dated October 27, 1995, stating as follows:

We have received instructions from our client to not proceed this matter [sic]. Accordingly we ask that this matter be marked abandoned and withdrawn at this time.

Please further note that we have advised the solicitor for Allianz that we would not proceed or attend the pre-hearing scheduled for October 30, 1995.

More importantly, we have had difficulty obtaining accurate documentation to substantiate our client's claim. As such, we have informed our client and have been told to discontinue our services.

Kindly reimburse Allianz Insurance Company for their application fee accordingly.

The Commission has a written policy limiting the return of assessment fees to situations where the matter is resolved before the insurer's Response is due, or where the arbitrator determines that there is no jurisdiction to proceed with the case. In this case, Allianz' assessment fee was not reimbursed.

The pre-hearing took place, as scheduled, on October 30, 1995. A lawyer participated on behalf of Allianz, but Ms. Byle did not attend personally or by representative. Allianz opposed the withdrawal and asked for an order that Ms. Byle be required to pay $2,000, the amount of its assessment, based on either section 66.3 or 72.1 of the Dispute Resolution Practice Code, which provide:

66.3 Where a party does not agree to the withdrawal, the adjudicator may:

(a) permit the applicant to withdraw on such terms as the adjudicator considers appropriate;

(b) where the applicant is the insured person, require the applicant to pay the insurer an amount not more than the amount the insurer is required to pay the Commission to participate in the hearing, if the adjudicator decides that the withdrawal is an abuse of process.

72.1 If an insured person commences a proceeding that is, in the opinion of the adjudicator, frivolous, vexatious, or an abuse of process, the adjudicator may order the insured person to pay the insurer up to the amount the insurer is required to pay the Commission to participate in the proceeding.

A hearing was scheduled for January 17, 1996 to deal with Ms. Byle's request to withdraw her application for arbitration. A Notice of the Hearing, dated November 21, 1995, was sent to the parties, including Ms. Byle. A copy also went to her lawyers even though they had indicated that they were no longer representing her. Ms. Byle did not contact the Commission or appear at the hearing.

The hearing proceeded in Ms. Byle's absence, as authorized by the Dispute Resolution Practice Code and the Statutory Powers Procedure Act. The arbitrator received 17 exhibits and heard submissions from Allianz. Her order, dated February 1, 1996, requires Ms. Byle to pay Allianz $2,000.

III. ANALYSIS AND CONCLUSIONS

Section 283(1) of the Insurance Act states as follows:

283.--(1) A party to an arbitration may appeal the order of the arbitrator to the Director.

The only issue before the arbitrator was Ms. Byle's request to withdraw her application for arbitration. As I interpret the arbitration decision, Ms. Byle was allowed to withdraw her application without any conditions under section 66.3(a), but was ordered to pay Allianz the full amount of its assessment ($2,000) under section 66.3(b). Ms. Byle can appeal this order, but she is also asking me to determine the very issues she withdrew. In my view, it would be quite inappropriate for me to determine either the accident benefits to which she is entitled, or which insurer is responsible for paying them. I find nothing in the arbitration order, however, to prevent Ms. Byle from reapplying for arbitration on any issue that has been mediated, but not resolved.

Although Ms. Byle's lawyers discontinued their services prior to the arbitration pre-hearing, they filed this appeal on her behalf. They submit that neither her applications for arbitration nor her subsequent withdrawal were an abuse of process. Although Ms. Byle provided false information about the job offer, they maintain that she has a legitimate claim for accident benefits. They argue that the main dispute in the case has been over insurance coverage, not the amount of her entitlement, and an arbitration hearing was needed to resolve this issue. She withdrew her application, her lawyers submit, because they were no longer in a position to represent her, not to gain some tactical advantage. It is submitted that the pre-hearing should not have proceeded because Ms. Byle was not in a position to arrange for other counsel or to attend herself. In the alternative, a further pre-hearing should have been scheduled to allow her to participate.

The Dispute Resolution Practice Code makes it clear that an applicant for arbitration does not have an absolute right to withdraw without penalty. Allianz was entitled to object to the withdrawal and to have its objections heard. The problem with Ms. Byle's position is that she did not ask for an adjournment of either the pre-hearing or the hearing, and still has not explained why she was unable to attend, at least to explain why the matter should not proceed. The suggestion seems to be that she needed time to retain new counsel. Five months later, however, there is no indication that she has done so.

Ms. Byle may have a legitimate claim for accident benefits. The arbitrator found, however, that her request to withdraw her application for arbitration resulted from Allianz discovering that her claim for weekly income benefits was based on a fictitious job offer. In my opinion, this provided the arbitrator with a reasonable basis for exercising her discretion to order Ms. Byle to pay Allianz the full amount of its assessment under section 66.3 of the Dispute Resolution Practice Code. Therefore, I am not prepared to interfere.

III. EXPENSES

In my view, this appeal had little merit. Therefore, I am not prepared to order Allianz to pay Ms. Byle's appeal expenses.

Allianz has asked that Ms. Byle be ordered to pay $500, the amount of its assessment, on the basis that the appeal was frivolous, vexatious and an abuse of process. Although I accept that the appeal may have been misconceived, I am not persuaded that Ms. Byle should be ordered to pay an additional amount. I am willing to believe that her lawyers were attempting to get the matter back on track. If Ms. Byle proceeds with her claim for benefits, I would hope that the parties can cooperate in resolving the insurance coverage issue.

April 1, 1996

David R. Draper Director’s Delegate