Neutral Citation: 1997 ONICDRG 66

OIC A96-001065

ONTARIO INSURANCE COMMISSION

BETWEEN:

SYLVIETTE R. BROWN

Applicant

and

FARMERS' MUTUAL INSURANCE COMPANY

Insurer

DECISION ON PRELIMINARY ISSUE

The Applicant, Sylviette R. Brown, was injured in a motor vehicle accident on January 22, 1994. She applied for statutory accident benefits from Farmers' Mutual Insurance Company ("Farmers'"), payable under the Schedule.¹ The parties were unable to resolve certain disputes through mediation and on July 3, 1996, the Applicant applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended. The matter was set down for pre-hearing conference on November 27, 1996. On November 25, 1996, the Applicant faxed a letter to the Commission in which she gave notice that she wished to withdraw her application for arbitration in order to commence a civil proceeding for statutory accident benefits. The Insurer, by letter faxed on November 26, 1996, stated that it was agreeable to the withdrawal on the following terms: that the Applicant pay the Insurer its $2,000 assessment fee within 40 days, and that the Applicant not be permitted to reapply for arbitration on the issues set out in the July 3, 1996 application.

I heard the submissions of the parties on November 27, 1996. The Applicant attended, representing herself, and assisted by her husband, Mr. Murray Brown. Ms. Pat Sage, the Insurer's Officer, participated by telephone, as did Mr. Harry Brown, Barrister and Solicitor, the Insurer's counsel.

During the pre-hearing conference, I became concerned that the Applicant appeared unsure whether she wished to withdraw her application for arbitration or continue with it while seeking a remedy for her procedural concerns. Accordingly, I reserved my ruling on the Applicant's motion to withdraw, and indicated that I would receive written submissions on the matter for one week, until Wednesday, December 4, 1996.

In her letter of December 3, 1996, Mrs. Brown stated that "the imposed and agreed to time-frame is too short. Hindsight dictates two to three weeks would have been a more realistic time frame." I do not accept the Applicant's submission that more time should have been given. It would not have been inappropriate or unreasonable for me to have decided the issue at the pre-hearing conference, and I extended the time for submissions as a matter of courtesy to the Applicant because she was not represented by counsel. In any event, none of the letters received in the four months since the pre-hearing set out any substantially new submissions. In her most recent letter, dated April 7, 1997, the Applicant reaffirmed her wish to withdraw from the arbitration proceeding.

The Law

Sections 66.1 and 66.2 of the Dispute Resolution Practice Code provide that the Applicant "may seek permission to withdraw all or part of an application" and the Arbitrator "may permit an applicant to withdraw all or part of an application if the other parties agree." Section 66.3 is as follows:

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.

Positions of the parties

The Applicant objected to comments made by Mr. Harry Brown, the Insurer's counsel, in letters addressed to or copied to the Commission. She claimed these letters contained inaccurate and prejudicial statements. The Applicant submitted that the letters taint the arbitration proceeding and prejudice her case. At the pre-hearing, in order to accommodate the Applicant's concern, I suggested that if the Applicant chose to continue with the arbitration, the correspondence file could be sealed pending an Arbitrator's order to re-open it. I declined her request that I order the Insurer's counsel to cease corresponding with the Commission. The Applicant's subsequent letters indicate that sealing the correspondence file will not resolve her concerns. She submitted that the Insurer would not be prejudiced by her withdrawal because the pre-hearing has not taken place.

The Insurer relied on the decision, Sacco et al. and Wawanesa Mutual Insurance Company (October 1, 1996), OIC A95-000349, in which Arbitrator Palmer made the order requested by the Insurer in this case.

Reasons and Conclusion

Section 281(1) of the Act provides that if mediation fails "the insured person may bring a proceeding in a court of competent jurisdiction or may refer the matter to an arbitrator." Although the insurer may commence a court proceeding, the Act gives the insured person the exclusive right to commence an arbitration proceeding. Nothing in the Act prevents an insured person from withdrawing her application for arbitration, and I am aware of no authority that would allow me to refuse the Applicant's motion to withdraw in the absence of statutory provision.

In any event, I heard no evidence that the Applicant commenced this arbitration proceeding for frivolous reasons or that her application constituted an abuse of process. Nor is this a case where the Applicant has commenced both an arbitration and a civil proceeding simply in order to reserve her options. I find that the Applicant has decided not to pursue arbitration mainly because of her bona fide belief that the Insurer's letters are prejudicial to her interests in this process, whereas they would not prejudice her in the court process. She is entitled to make that choice. Accordingly, the Applicant's motion to withdraw is granted.

However, I agree with the Director's comment in Chapman and State Farm Insurance Company and Mutual Automobile Insurance Company (April 22, 1994), OIC A-001897/98.

The Commission tribunals have an inherent power to control their own processes, and as such, are not bound to accept a withdrawal as putting an end to a case without further orders or consequences.

Section 282(11.2) states:

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.

In this case, the Insurer paid an assessment of $2,000, which it seeks to recover from the Applicant.

I do not accept that an insured person's decision to withdraw her application for arbitration is necessarily an abuse of process calling for an award under section 282(11.2).

The Applicant has represented herself since late October 1996. Legal representation would have been helpful for her. Accordingly, I advised her to retain new counsel, as had her former counsel and indeed Mr. Harry Brown, the Insurer's counsel. In a letter written two days after the pre-hearing conference, Mr. Brown stated that the Applicant's problem was that she refused to follow her counsel's advice. In her letter of December 3, 1996, the Applicant stated that she had been unable to obtain competent counsel to advise her in this matter.

The Commission's dispute resolution process is intended to provide relatively inexpensive, speedy, and informal adjudication to which insured persons can have access without retaining counsel. I do not find it appropriate to penalize the Applicant for choosing to proceed without counsel, whatever her reasons for doing so.

The Applicant objected to letters in which Mr. Harry Brown set out the Insurer's position and requested production of certain documents from the Applicant.² I do not find it improper for counsel to set out the particulars of his client's position in pre-hearing correspondence. In fact, this practice assists the parties and the Arbitrator to identify the issues in dispute, narrow or resolve the issues, and conduct an expeditious hearing. In addition, the Commission's Practice Note # 4 - "Exchange of Documents for an Arbitration Hearing" - encourages parties to agree on document exchange as soon as possible, before the pre-hearing. Early exchange of documents facilitates settlement and allows the pre-hearing arbitrator to focus his or her efforts on contentious issues. Experienced counsel have developed the practice of writing to opposing counsel before the pre-hearing, setting out the documents requested and the documents available for production. This practice is strongly encouraged by the Commission.

However, there is no need for counsel to copy the Commission with every letter passing between the parties. Nor is it necessary for counsel to write the Commission about potential disputes (about document exchange, for example) before any real dispute has arisen. Finally, although experienced counsel and Arbitrators are well able to recognize submissions and have no difficulty separating them from evidence, counsel should temper correspondence addressed to or copied to the Commission in view of the fact that it will be seen by the Arbitrator who finally decides the matter. In this case, where an unrepresented applicant faced an insurer represented by an experienced lawyer, a less adversarial approach to pre-hearing issues on the part of the Insurer and its counsel might have facilitated better communication.

For these reasons, I am not satisfied that this proceeding was frivolous, vexatious, or an abuse of process. Accordingly, the Insurer is not entitled to an award under section 282(11.2) of the Act.

I agree with Arbitrator Palmer's comment that "the election to go to court should be a final one." However, I found no abuse of process in this case, which distinguishes it from the situation in Sacco(s). In addition, as this matter did not proceed to pre-hearing, the parties have not definitively identified the issues in dispute. I also heard no evidence about the status or nature of any civil proceeding the Applicant may have initiated. In these circumstances, I do not find it appropriate to order that the Applicant may not reapply for arbitration on the issues set out in her application for arbitration. The Insurer may renew its motion for such an order in the event the Applicant reapplies.

Referral to Divisional Court

In her letters of December 3, 1996, December 6, 1996 and April 7, 1997 the Applicant requested that a question be referred on a stated case to the Divisional Court under section 285 of the Insurance Act as to whether the Insurer's conduct amounts to an abuse of process. Section 285 is as follows:

(1) The Director may state a case in writing for the opinion of the Divisional Court upon any question that, in his or her opinion, is a question of law.

(2) The Divisional Court shall hear and determine the stated case.

As an Arbitrator, I do not have power to state a case for the Divisional Court. If the Applicant wishes to pursue this remedy, she should direct her request to the Direction of Arbitrations.

Another Pre-Hearing

In her letter of February 25, 1997, the Applicant suggested, as an alternative to stating a case, beginning the pre-hearing conference again with the Insurer's representative and the Applicant's former counsel present in person. The Applicant advised the Commission by letter of October 22, 1996 that she was no longer represented by her former counsel, and his firm confirmed this by letter of October 23, 1996. I have received no further correspondence indicating that the Applicant has retained new counsel. Nor I am persuaded that the matter would have proceeded differently if Mr. Brown and Ms. Sage had been present in person. Accordingly another pre-hearing conference would serve no purpose.

Order:

1. The Applicant's motion to withdraw her Application for Appointment of an Arbitrator is granted. The file will be closed forthwith.

April 17, 1997

Nancy Makepeace

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after January 1, 1994, called "the Schedule" in this decision. The Schedule is Ontario Regulation 776/93, as amended by Ontario Regulation 635/94.
2. 2Mr. Harry's Brown's letters of August 12, 1996, October 9, 1996, October 28, 1996 and November 29, 1996.