Ontario Insurance Commission
Commission des assurances de l’Ontario
Neutral Citation: 1997 ONICDRG 39 Appeal P-002389 OFFICE OF THE DIRECTOR OF ARBITRATIONS
BEN BENNETT Appellant
and
ALLSTATE INSURANCE COMPANY OF CANADA Respondent
Before: Elisabeth Sachs
Counsel: Altor Shields (for Ben Bennett) James M. Flaherty (for Allstate Insurance)
APPEAL ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- The appeal is dismissed, and the arbitration decision dated October 19, 1993 is confirmed.
- No appeal expenses are payable.
March 5, 1997
Elisabeth Sachs Director of Arbitrations
REASONS FOR DECISION
I. BACKGROUND
Ben Bennett was injured in a motor vehicle accident on July 30, 1990. He received weekly income benefits from Allstate Insurance Company of Canada ("Allstate") under O. Reg. 672, Statutory Accident Benefits Schedule - Accidents Before January 1, 1994 (the Schedule) until December 22, 1990 when they were initially terminated.
On January 30, 1991, an Allstate representative, Mr. Meyer, met with Mr. Bennett at his home. During the meeting, Mr. Bennett signed a document entitled "Release of All Claims" and received an envelope containing a cheque for $2,500.42 from Mr. Meyer.
Almost eighteen months later, in July 1992, Mr. Bennett applied for mediation on the basis that Allstate "refuses to pay benefits after January 31, 1991". As no resolution was reached, Mr. Bennett applied for arbitration seeking weekly income benefits from January 31 to September 22, 1991.
II. NATURE OF APPEAL
An arbitration pre-hearing took place on March 24, 1993 at which both parties were represented by counsel. A letter summarizing the discussions was issued by the pre-hearing arbitrator the next day, identifying a preliminary issue as follows:
Is Mr. Bennett prevented from claiming further weekly benefits because he signed a release on or about January 30, 1991?
(Emphasis added)
A hearing on the preliminary issue was held over two days, at which twelve exhibits were filed. Mr. Bennett, Mr. Meyer and three other witnesses testified. When the arbitrator released the decision, she framed the issue before her in these terms:
Did the parties complete a binding agreement in which the Applicant released all further claims for weekly income benefits against the Insurer?
Mr. Bennett contends the arbitrator exceeded her jurisdiction by casting the preliminary issue beyond whether the release was valid, to consider whether a binding agreement was reached.1 He argues that once the arbitrator determined "the parties were not "ad idem" (of one mind) at the January 30, 1991 meeting", as set out on page 11, the decision should have ended there as the question posed at the pre-hearing was answered. Mr. Bennett contends the arbitrator did not have any "equitable" jurisdiction to expand the issue to one of settlement generally after finding the release was not binding on him. He submits that her finding on the preliminary question as posed in the pre-hearing letter necessitates a second hearing to determine his eligibility for benefits.
The Report of Mediator records in paragraph 6 that Mr. Bennett was claiming weekly income benefits, while Allstate considered the signed release valid and was not prepared to pay further benefits. In his initiating document for arbitration, Mr. Bennett wrote he was applying because Allstate "refuses to pay benefits". Allstate, in its Response by Insurer, put its opposition differently than noted in the mediator's report, indicating:
Medical reports confirmed the insured was able to return to work in February 1991, payment was made and a final release obtained.
Allstate submits this is a defence of settlement, in response to a claim for benefits. The pre-hearing letter identifies but one element of a settlement. It argues that the " pleadings" used in the arbitration process set out the parameters of the dispute in a general way. The pre-hearing letter, it submits, sets out both an evidentiary issue (was the release valid) and the general issue of Mr. Bennett being precluded from proceeding further. The first, it submits, it a sub-issue of the second, and to stop the inquiry after dealing with the release would be to split the hearing process and ignore the evidence that the claim was settled.
III. ISSUE AND ANALYSIS
In dispute was Mr. Bennett's claim for weekly income benefits for a period of eight months following January 31, 1991. Allstate's response was two-pronged: either he had settled his claim, or alternatively, he did not meet the test for entitlement. What the arbitrator had to determine first was the legal consequence of the parties' actions at their meeting including the circumstances around signing the "Release of All Claims". To do so, she was required to hear evidence about what led to the meeting, the exchange of documents, and the parties' subsequent dealings with one another.
The arbitrator had before her the release as well as medical reports. She heard argument not only about Allstate's failure to provide background calculations on the amount of the cheque Mr. Bennett received, but whether the terms of the agreement were fair, if certain procedures were not followed, and what led to Mr. Bennett signing a document he had not read beforehand.2 The parties led evidence on the global issue of what the meeting was about, as well as the specific issue of the effect of Mr. Bennett's release. The evidence was directed to their actions leading up to the signing of the release and what the parties did thereafter.
While I agree the question the arbitrator answered was not in the precise terms set out in the pre-hearing letter, I disagree with the proposition that arbitrators are to determine issues between the parties by reference to pre-hearing letters alone. The arbitrator was not bound by how the issue was stated in the pre-hearing letter - the arbitrator's jurisdiction included determining the real issue before her. The scope of an arbitration may be wider or narrower than a pre-hearing letter indicates. That is for the arbitrator to determine, subject only to not straying so far from the issues in dispute that the parties are caught by surprise, or unprepared to address them with appropriate evidence.
Mr. Bennett's application was for weekly income benefits. Allstate's response was he was not entitled to those benefits. The preliminary issue set out in the pre-hearing letter was whether Mr. Bennett was prevented from claiming benefits because he signed a release, which at its highest constitutes evidence about a potential settlement the parties may have reached. Finding the release invalid and not binding was the arbitrator's rejection of a piece of evidence about the larger issue of whether a final settlement was reached. The issue for both parties was whether Mr. Bennett was precluded from claiming benefits, notwithstanding the document he signed as it did not operate as a release. To suggest the process must be bifurcated, with the release document's validity forming the question for a single hearing, and then deciding whether the parties settled the benefits claim in a second hearing, undermines the nature of arbitration itself. The process is designed to be efficient, accessible and expeditious, yet fair. Neither party was surprised by the evidence each led, and for what reason. Although the witnesses were asked to address what happened the evening Mr. Meyer met with Mr. Bennett, the totality of the evidence as recorded by the arbitrator (and not challenged by the parties) and many of the exhibits were directed to determining if a final settlement took place. The legal consequences of the parties' actions, during the meeting and thereafter were placed before the arbitrator. Although she found the release deficient, she was entitled to find Mr. Bennett was precluded from continuing with the arbitration from the evidence led.
IV. EXPENSES
The appeal is unsuccessful and based on a technical objection to an arbitrator's basic duty, as noted in a number of appeal cases, to define the issues before him or her.3 It was not, however, frivolous or completely unwarranted. Accordingly, no appeal expenses are payable
March 5, 1997
Elisabeth Sachs Director of Arbitrations
Footnotes
- The arbitration was heard and determined before the coming into force of O. Reg. 780/93 on January 1, 1994 dealing with documentary and other requirements for settlement of statutory accident benefits.
- The arbitrator found as a fact that Mr. Bennett neither bothered to read the release document nor open the envelope containing the cheque while Mr. Meyer was there "because he knew they were both delivered to him (as) the final settlement of his claim" (Decision, p. 10).
- For example, see Decicco and State Farm Mutual Automobile Insurance Company, (February 21, 1992, OIC P-000277) and subsequent cases discussing this principle.