Neutral Citation: 1999 ONFSCDRS 46

FSCO A98-000234

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

DAVID KING

Applicant

and

ROYAL INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION ON A PRELIMINARY ISSUE

Before:

Eban Bayefsky

Heard:

By way of written submissions, completed on December 17, 1998. Order issued February 17, 1999.

Counsel:

Michelle E. Gill for Mr. King

John J. Aikins for Royal Insurance Company of Canada

Issues:

The Applicant, David King, was injured in a motor vehicle accident on November 25, 1992. He applied for and received statutory accident benefits from Royal Insurance Company of Canada ("Royal"), payable under the Schedule.¹ Royal terminated weekly income benefits on February 13, 1996. The parties were unable to resolve their disputes through mediation, and Mr. King applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. I issued an order on the preliminary issues in this matter on February 17, 1999, indicating that written reasons would follow. I now provide those reasons.

The preliminary issues are:

1. Is Mr. King precluded from proceeding to arbitration because he has commenced a civil action against the same Insurer and involving the same issues as those in this arbitration?

2. If the answer to the first issue is "yes," is Mr. King required to pay the Insurer its $3,000 assessment fee, pursuant to section 282(11.2) of the Insurance Act, based on an abuse of process?

3. Is Mr. King entitled to his expenses of the preliminary issue hearing?

Result:

1. Mr. King is entitled to proceed with the arbitration, except on the issue of insurance on his van.

2. Mr. King is not required to pay the Insurer its $3,000 assessment fee.

3. I remain seized on the issue of expenses, should the parties be unable to reach an agreement.

EVIDENCE AND ANALYSIS:

Background

Mr. King was seriously injured in a motor vehicle accident on November 25, 1992. He received weekly income benefits from the Insurer until February 13, 1996, pursuant to section 12 of the Schedule. On September 13, 1994 (while Mr. King was still being paid weekly income benefits), the parties mediated the issue of Mr. King's entitlement to a van modified to accommodate his disability, pursuant to section 6 of the Schedule. On November 16, 1994 (following the failed mediation), Mr. King issued a Statement of Claim in respect of his entitlement to various medical and rehabilitation benefits, including the cost of the modified van. On December 12, 1994, the Insurer filed a Statement of Defence, in which the Insurer maintained that the only issue properly before the court was that of Mr. King's entitlement to a modified van, the other issues having neither been denied by the Insurer nor mediated before the Commission. Examinations for Discovery solely on the issue of the modified van took place in November 1995.

A year later, the Insurer purchased the modified van for Mr. King. After the delivery of the van, Mr. King confirmed earlier advice to the Insurer that he felt himself entitled to the costs of insurance and monthly parking for the van. By correspondence dated May 7, 1997, Mr. King advised that the lawsuit would continue unless a "positive reply" was provided in connection with certain outstanding matters, including insurance on the modified van. By correspondence dated August 8, 1997, Mr. King then advised that the outstanding issues in the lawsuit were pre-judgment interest and costs. He also indicated that he would mediate the issue of insurance before the Commission. This issue, as well as those of weekly income benefits and interest, were unsuccessfully mediated on January 21, 1998. On February 12, 1998, Mr. King filed an Application for Arbitration in respect of these three issues. The Insurer responded, in part, that Mr. King was not entitled to insurance for his modified van under the terms of the Schedule.

A pre-hearing conference was held on October 5, 1998. The following were noted as the principal issues for arbitration: Mr. King's entitlement to weekly income benefits from February 14, 1996 onward, pursuant to section 12 of the Schedule; the quantum of any benefits owing, pursuant to section 12(4) of the Schedule, including the deductibility of Canada Pension Plan and Long Term Disability benefits (leading potentially to an overpayment); and Mr. King's entitlement to insurance for his van, pursuant to section 6(1)(f) of the Schedule. The Insurer maintained that Mr. King's arbitration was an abuse of process given his concurrent civil action and submitted that it was entitled to be repaid its $3,000 assessment fee pursuant to section 282(11.2) of the Insurance Act. The issue before me is whether Mr. King has abused the Commission's process and is precluded from proceeding with this arbitration.

Law

Section 281(1) of the Act provides, in part, that if mediation fails, the insured person may bring a proceeding in a court of competent jurisdiction or may refer the issues in dispute to an arbitrator. Arbitration decisions² have established a number of principles governing the question of whether a person is precluded from proceeding before both a court and the Commission, the most basic of which being that an insured may not pursue a dispute in more than one forum, but is not required to pursue all of his or her disputes in only one forum. The remaining principles may be summarized as follows:

1. Does the arbitration involve issues substantially similar to those in the civil action?

2. How far along has the civil action proceeded (for example, have discoveries taken place on the issues before the court)?

3. Is the civil action broader in scope than the arbitration, both in terms of the issues involved and the relief sought?

4. Is there any serious impediment to having the issues in the arbitration dealt with in the court proceeding?

5. Would permitting the Applicant to proceed with the arbitration unduly duplicate proceedings, leading to greater costs and delays and raising the spectre of inconsistent results?

I adopt these principles for the purposes of the preliminary issue in this case.

Analysis

Regarding the first question on the nature of the issues in the arbitration and civil action, I find that, in general, the two proceedings involve substantially different sets of questions. The arbitration is concerned primarily with Mr. King's entitlement to weekly income benefits and the quantum of those benefits. The tort action is concerned primarily with Mr. King's entitlement to medical and rehabilitation benefits. While the body of Mr. King's Statement of Claim refers in passing to the fact that Mr. King "became entitled to accident benefits," and that the accident rendered him unable to perform his pre-accident occupation or a suitable alternative, the specific claim pursued does not refer to weekly income benefits. Further, while Mr. King's correspondence refers to the ongoing civil action in an attempt to persuade the Insurer to resolve the matter, there is no suggestion that the civil action involves more than medical and rehabilitation benefits and associated litigation costs. Mr. King's material as a whole also appears to distinguish between "accident benefits" (as referring to medical and rehabilitation benefits) and "weekly benefits" (as referring to weekly income benefits). In any event, in its Statement of Defence, the Insurer itself maintains that the only issue properly before the court is Mr. King's entitlement to a modified van, a medical and rehabilitation expense. I, therefore, find that, in general, the issues in the two proceedings are substantially different.

The only issue in common is that of insurance on the van. This issue only appears to have been explicitly raised (and mediated) by Mr. King after the Statement of Claim was issued. In the context of this preliminary issue hearing, Mr. King submitted that he was precluded from proceeding in court on the issue of insurance since the matter was not mediated until January 1998. However, while Mr. King had advised the Insurer that the only issues outstanding in the tort action were prejudgment interest and costs, he had also stated that he intended to pursue the matter in court, as part of the claim for medical and rehabilitation benefits, if the Insurer was not prepared to resolve the overall claim to his satisfaction. Therefore, without deciding any issues as to whether the issue of insurance is properly before the court, I do not find Mr. King's current submission regarding when he mediated the issue of insurance as determinative of his ability to pursue the matter in his civil proceeding. I find that the issue of insurance was initially raised in the context of the tort action and remains a viable element of the medical and rehabilitation benefits claimed in that proceeding.

Similarly, the Insurer's Statement of Defence (which maintained that Mr. King was estopped from litigating medical and rehabilitation matters other than his entitlement to a modified van) was filed before Mr. King raised the issue of insurance on the van. I, therefore, find the Statement of Defence inconclusive as to whether the Insurer felt that the issue of insurance could not be raised in the court proceedings. The Insurer, of course, has since maintained that the issue of insurance is already part of the civil suit.

The tort action in respect of the medical and rehabilitation benefits is still very much alive. While not explicitly raised in the Statement of Claim, I find that the issue of insurance on the van was initially raised, and is currently at issue, in the court proceedings and (for the reasons set out below) should not be duplicated in the context of the arbitration proceedings.

The Insurer attempted to argue that a determination of the issue of weekly benefits in the arbitration proceeding would involve the same issues as the question of medical and rehabilitation benefits in the court proceeding (namely, did an accident occur, did the insured suffer injuries as a result of the accident, and did an impairment occur as a result of the injuries sustained in the accident). While the two proceedings will inevitably raise these issues, this is only the beginning of the inquiry. A whole variety of issues will need to be addressed in the two proceedings, issues which are significantly different from each other. For example, is insurance on the van an expense contemplated by the terms of the Schedule? Assuming the Schedule provides for such a benefit, is it a reasonable and necessary expense having regard to the nature and extent of Mr. King's injuries and his need for a van in the first instance? The issue of weekly benefits will, of course, address a variety of questions concerning the impact of Mr. King's injuries on his ability to return to gainful employment. In my view, while there will inevitably be some overlap between the two proceedings, they will lead to significantly different lines of inquiry.

Regarding the second issue of the status of the civil action, at this stage, it only involves the issue of medical and rehabilitation benefits, and discoveries have only taken place on the issue of Mr. King's entitlement to a van (something that has since been provided to him). No steps have occurred with respect to litigating the issue of weekly income benefits. There is, therefore, no impediment to allowing this matter to proceed to arbitration.

Thirdly, the tort action is likely narrower in scope than the arbitration proceeding. The substantive issues are different and the inquiry in the arbitration (concerning the impact of Mr. King's injuries on his employability) will likely be broader than that in the court proceeding (which deals with the narrower question of Mr. King's entitlement to medical and rehabilitation assistance, and particularly if it only involves the issue of insurance on the van and related litigation expenses). The weekly income arbitration could give rise to significant ongoing payments to Mr. King while the civil action may only give rise to payment for the insurance on Mr. King's van and his legal costs. To this extent, it can be said that the relief sought in the court proceeding is narrower in scope than that in the arbitration.

Conversely, the tort action (at least as it is currently worded in the Statement of Claim) is broader with respect to the issue of medical and rehabilitation benefits than the arbitration, which only deals with the discrete matter of insurance on the van. Therefore, all medical and rehabilitation issues (including the question of insurance on the van) should continue to be pursued within the court proceeding.

Fourthly, given the significantly different nature and scope of the arbitration proceedings, it would be very cumbersome to require Mr. King to shift the issues in that forum to the civil case. In this regard, I agree with counsel for Mr. King that discoveries would first have to take place on the weekly benefits issue and that only then could the matter be set down for trial. Completing the full trial process in this way would likely take much longer than the arbitration process. Regarding the issue of insurance on the van, while it does not appear that discoveries took place on this particular question, it would likely be a simple matter to address this issue in the context of the civil matter.

Finally, given the various substantive and procedural differences in the two proceedings, allowing the arbitration to proceed as structured would not unduly duplicate the court proceedings. In fact, greater costs and delays would likely result from forcing Mr. King to shift his entire dispute to the tort action. Inconsistent results would only be a possibility if the issue of insurance on the van were dealt with both in court and at the arbitration. While some of the determinations in the two proceedings may be on the same issues, the general outcomes will relate to different questions. Therefore, the only arbitration issue that should be decided in the context of the court proceeding is Mr. King's entitlement to insurance on his van.

On the basis of the above, I find that Mr. King has not abused the Commission's process by commencing a proceeding in respect of weekly income benefits. He is entitled to proceed on that issue, as well as the related issues of quantum and interest. However, I find that Mr. King had already commenced an action in court in relation to the issue of insurance on a modified van and that he should be required to continue with that proceeding. Given the ongoing dispute between the parties and the larger questions of weekly income benefits and quantum, I am not prepared to find that mediating and filing for arbitration on the issue of van insurance was an abuse of the Commission's process. Nevertheless, for the reasons noted above, I find that that question should remain within the context of the ongoing civil proceeding.

Expenses:

The parties did not make submissions on the question of expenses. I may be spoken to, should counsel be unable to agree on this aspect of the case.

March 24, 1999

Eban Bayefsky Arbitrator

Date

Neutral Citation: 1999 ONFSCDRS 46

FSCO A98-000234

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

DAVID KING

Applicant

and

ROYAL INSURANCE COMPANY OF CANADA

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. King is entitled to proceed with the arbitration, except on the issue of insurance on his van.

2. Mr. King is not required to pay the Insurer its $3,000 assessment fee.

3. I may be spoken to on the issue of expenses.

March 23, 1999

Eban Bayefsky Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents On or Between June 22, 1990 and December 31, 1993, Regulation 672 of R.R.O. 1990, as amended by Ontario Regulations 660/93 and 779/93.
2. 2In particular, Barrow and Guardian Insurance Company of Canada (OIC A-006082, December 23, 1993), Bapoo and Co-Operators General Insurance Company (OIC A-006212, October 3, 1994), Oliveira and Markel Insurance Co. of Canada (OIC A-006434, February 9, 1995), Barrett and Economical Mutual Insurance Company (OIC A-951153, September 21, 1995), Tambolini and Jevco Insurance Company (OIC A96-000142, September 24, 1996), Harris and Royal Insurance Company (OIC A95-000267, January 23, 1997), Scott and (Ontario) Motor Vehicle Accident Claims Fund (OIC A96-001515, February 28, 1997), and Andreeski and Pilot Insurance Company (OIC A96-000714, March 26, 1997).