Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2000 ONFSCDRS 155

Appeal P99-00040

OFFICE OF THE DIRECTOR OF ARBITRATIONS

JANICE MARK

Appellant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY

Respondent

Before:

Susan Naylor, Director's Delegate

Counsel:

David S. Wilson (for Ms. Mark)

Claire E. Walker (for Dominion of Canada)

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 arbitrator's order dated June 30, 1999, in respect of expenses, is confirmed.

August 25, 2000

Susan Naylor Director's Delegate

REASONS FOR DECISION

I. NATURE OF APPEAL

This appeal concerns the arbitrator's exercise of discretion in declining to award Janice Mark her arbitration expenses. Ms. Mark's application for arbitration was largely unsuccessful. She does not appeal the disposition of her claims on the merits.

II. BACKGROUND

Ms. Mark and Dominion of Canada General Insurance Company ("Dominion") were parties to a 16 day arbitration hearing. The hearing involved the payment of death benefits arising out of the death of Ms. Mark's long-time common law spouse, Tik Wan Kwan, ("the deceased") in March 1995.

There were several issues but the one taking up most of the time at the hearing was whether Ms. Mark was entitled to the full death benefit, as claimed, or whether, as Dominion argued, a second person qualified as a spouse of the deceased, with whom the payment must be split.¹ The issue revolved around whether the deceased and Chi Wah Tang Kwan, who had lived together between 1941 and 1976, and had seven children, had entered into a legal marriage on November 15, 1941 in a ceremony conducted in accordance with Chinese traditions and custom.

The arbitrator concluded that the deceased and Ms. Kwan had entered into a valid marriage in 1941, and were still validly married. Therefore, Ms. Mark was entitled to only one-half of the death benefit.

In her decision released on January 27, 1999, the arbitrator reviewed the evidence at length. This included various documents, including Canadian immigration records and records of Hong Kong authorities, in which Ms. Kwan was identified as the deceased's wife. There were documents appearing to be from persons in China acting in an official or public capacity, confirming that a marriage ceremony had taken place.² In addition to Ms. Kwan's own testimony, the arbitrator heard testimony from two former villagers who recollected the marriage ceremony, and from an academic expert as to Chinese customs. Statutory declarations and an affidavit were provided from the villagers and the expert, respectively.

Ms. Mark aggressively challenged the evidence, but presented little evidence to the contrary. The arbitrator found Ms. Mark's testimony as to what her spouse had told her about the relationship to be contradictory. The arbitrator also rejected, as unreliable and improbable, unsworn statements apparently from two sisters of the deceased, downplaying the relationship between Ms. Kwan and the deceased.

Ms. Mark was also unsuccessful in her claim to an additional death benefit as a dependant of the deceased.³ There was also an issue of interest. Ms. Mark initially was paid half of the minimum death benefit, but was entitled to a benefit at a higher rate. Dominion paid the balance, but there was a dispute over the interest owing. Ms. Mark's claim for payment of additional interest was allowed.

The arbitrator issued a separate decision with respect to expenses on June 30, 1999, after receiving lengthy submissions from the parties. The arbitrator reviewed the case law with respect to expenses, concluding that, in the circumstances of the particular case, it was not appropriate to award Ms. Mark her expenses. She gave lengthy reasons in a nine page decision, including the following findings and considerations:

• Ms. Mark's claim that she was the sole spouse of the deceased was without merit.

• Ms. Mark proceeded with the arbitration of this issue in the face of overwhelming evidence, provided to her in advance, that a ceremony of marriage had taken place followed by a period of lengthy cohabitation between the deceased and Ms. Kwan, during which time they had seven children.

• Given the overwhelming evidence of marriage and the clarity of law applicable in the case, it was not reasonable for Ms. Mark to require the matter to go to a full hearing.

• The conduct of Ms. Mark and that of her counsel unreasonably prolonged the hearing. The arbitrator cited unduly repetitive objections made by Ms. Mark's counsel despite numerous rulings, prolonging and hindering the proceeding. She also referred to Ms. Mark's late provision of documentation, specifically, tax returns, relevant to her dependency claim and her lack of co-operation in regards to the insurer's efforts to obtain evidence in regard to her net worth.

• While Ms. Mark was successful in respect of the issue of interest, little time was spent on this aspect; the other issues, particularly the spousal issue, occupying the bulk of the hearing.

• Dominion could not claim and recover its expenses⁴ resulting from the unreasonable conduct of Ms. Mark and her counsel.

Despite her findings, the arbitrator did not conclude that Ms. Mark should pay a penalty under s. 282(11.2) of the Insurance Act. The arbitrator was not willing to characterise the arbitration as frivolous, vexation or an abuse of process, because the issue of interest had to be adjudicated.

III. CONCLUSION

Section 282(11) of the Insurance Act, as amended, confers a broad discretion on an arbitrator to award an applicant his or her arbitration expenses. Because the arbitration in this case was started before November 1, 1996, the provision under consideration does not include the revisions enacted under the Automobile Insurance Rate Stability Act, 1996, S.O. 1996, c. 21. No statutory criteria govern the exercise of the discretion and there is no power to award expenses in favour of an insurer.

Generally, the discretion, as exercised, will only be disturbed on appeal where the arbitrator is shown to have committed a serious error, such as adopting an incorrect approach, basing the decision on immaterial considerations or failing to look at the individual merits of the case and inappropriately fettering the discretion.

The principle that applicants with legitimate claims, conducted reasonably, can expect to recover their allowable expenses, whether or not they were successful at the arbitration, has developed as the basic ground rule.⁵

The principal objective underlying this approach is to facilitate consumer access to the dispute resolution system, in keeping with the legislative policy. However, the cases recognise that, while the discretion to award applicants their expenses should not be applied restrictively, if the system's goals of achieving a speedy, cost-efficient and simplified resolution process are to be realised, some balance must be brought to bear with a relatively mild deterrent against undeserving claims and undesirable conduct.

Ms. Mark argues, citing examples of Commission decisions, that she is only to be denied her expenses if she is found to have advanced a case that is entirely without merit, and/or known to her to be without merit, or if she has engaged in highly egregious conduct such as fraud or dishonesty.

With respect, Ms. Mark falls into the error I cautioned against in Allison and Markel Insurance Company of Canada.⁶ Commission cases are not to be viewed as imposing rigid criteria, thereby fettering the exercise of the discretion conferred by the legislation, nor should the language used in such decisions be interpreted as if a form of legislation. Although this caution was specifically directed towards reliance on the language used in McCormick and Economical Mutual Insurance Company, (November 10, 1991, OIC A-000139), the comments have wider application. The exercise of the discretion must be based on the merits of the particular case.

Ms. Mark lists a number of specific errors the arbitrator is said to have made, including the following:

• finding that it was unreasonable for Ms. Mark to proceed to a hearing at all, whereas she was entitled to insist upon the insurer being put to the obligation of proving its case through sworn evidence, and given the uncertain source of some of the documents.

• taking into account irrelevant considerations in expressing the view that the hearing, which the arbitrator described as pitting mother against children, involved testimony that was "painful, embarrassing and distressing for [Ms. Kwan] and it was sad to watch." (this was in regards to Ms. Mark's calling of several of Ms. Kwan's children to testify against her).⁷

• failing to determine, or provide an estimate of, the extent to which the conduct of Ms. Mark and her counsel actually lengthened or delayed the hearing.

• penalising Ms. Mark for the conduct of her counsel.

• failing to warn counsel that he was being repetitive or the implications of such conduct.

• criticising the insured for not providing documents in proof of her dependency claim, when such documents had not been requested by Dominion through the pre-hearing production process.

• taking into account the fact that the insurer could not recover its expenses.

I do not find it necessary to address Ms. Mark's extensive submissions on a point-by-point basis. The arbitrator who conducted the hearing was in a far better position to evaluate the merits of the parties' positions and how they handled the proceeding. I am doubly disadvantaged because the hearing was not transcribed. Furthermore, not surprisingly given that the appeal was heard close to three and a half years after the start of the arbitration hearing, counsel had difficulty recalling the specifics of what had transpired. I am not prepared to assume that, because the arbitrator may not have mentioned particular things in her decision, they did not take place in the course of the hearing, or, alternatively, that she did not consider things she should have considered.

Depending on the particular circumstances, where a meritorious claim has been conducted unreasonably, it may be appropriate to reduce an expenses award, rather than reject it entirely.

Here, however, there were problems in the case from start to finish. The arbitrator found that not only was Ms. Mark's position weak, but it was advanced in a way that resulted in an unnecessarily and inordinately protracted hearing.

Ms. Mark argues that the arbitrator took into account irrelevant considerations in viewing some aspects of the hearing as distressing for Ms. Kwan and "sad to watch." She argues that she was entitled to challenge Ms. Kwan's credibility. The arbitrator's comments should be seen in the overall context of her view as to the strength of Ms. Mark's position and the entire manner in which Ms. Mark proceeded. It is not obvious to me that the arbitrator's comments were unwarranted, but in any event, she took into account a number of factors in refusing to allow Ms. Mark her expenses, this being, if at all, only one of them.

The arbitrator has a broad based discretion with respect to expenses. She issued lengthy reasons for her decision, reflecting a thoughtful and thorough approach to the evidence and the arguments before her. Her discretion was exercised based on her cumulative overview of the entire case. It should be judged as such, not on piecemeal aspects of it. When her decision is viewed in its entirety, I am satisfied that she did not err in the exercise of her discretion.

The appeal is dismissed. If the parties wish to address me on appeal expenses, they should do so in writing within 10 days of the receipt of this decision.

August 25, 2000

Susan Naylor Director's Delegate

Date

Footnotes

1. 1For the applicable rules, see the Statutory Accident Benefits Schedule - Accidents after December 31, 1993 and before November 1, 1996, O. Reg. 776/93, as amended, ("SABS-1994"), ss. 1, 51(1) and s. 51(7).
2. 2For a description of the nature and content of these documents, and testimony relevant to such documents see the arbitrator's decision dated January 27, 1999, p. 9-10.
3. 3SABS-1994, s. 51(4).
4. 4The arbitrator used the words "costs for economic loss" by which she clearly meant expenses.
5. 5See Allison and Markel Insurance Company of Canada, (August 21, 1996, OIC P-001231), and the decisions cited therein.
6. 6For citation, see note 5.
7. 7See the arbitrator's decision, p. 6.