Neutral Citation: 2000 ONFSCDRS 211

FSCO A98-001309

BETWEEN:

TUAN HUYNH

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Judith Killoran

Heard:

September 18, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto

Appearances:

Andrew Suboch for Mr. Huynh

Grant R. Dow for Allstate Insurance Company of Canada

The Applicant, Tuan Huynh, was injured in a motor vehicle accident on May 28, 1996. He applied for and received some statutory accident benefits from Allstate Insurance Company of Canada ("Allstate"), payable under the Schedule.¹ However, Allstate refused to pay the entire amount of the benefits which Mr. Huynh claimed. The parties were unable to resolve their disputes through mediation, and Mr. Huynh applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

Is Mr. Huynh precluded from proceeding to arbitration because his application for arbitration was filed beyond the two-year limitation period set out in subsection 281(5) of the Act and subsection 72(1) of the Schedule?

Mr. Huynh is not precluded from proceeding to arbitration.

Limitation Period:

The limitation period which is being relied on in this case is set out in subsection 281(5) of the Act as extended by section 72 of the Schedule. Subsection 281(5) of the Act states:

A proceeding in a court or an arbitration proceeding in respect of statutory accident benefits must be commenced within two years after the insurer's refusal to pay the benefit claimed or within such longer period as may be provided in the Statutory Accident Benefits Schedule.

However, Section 72 of the Schedule specifies that:

(1) A mediation proceeding under section 280 of the Insurance Act or an arbitration or court proceeding under section 281 of the Act in respect of a benefit under this Regulation shall be commenced within two years of the insurer's refusal to pay the amount claimed or, if the person has engaged in an employment as permitted by section 14 or has returned to elementary, secondary or post-secondary education as permitted by section 17, within two years of the insurer's refusal to pay further benefits.

(2) Despite subsection (1), an arbitration or court proceeding under section 281 of the Insurance Act may be commenced within ninety days, after the mediator reports to the parties under subsection 280(8) of the Act.

Background:

Mr. Huynh was involved in a motor vehicle accident on May 28, 1996. Allstate refused to pay to Mr. Huynh the amount claimed of 10,356.15 for his account at Back Care and Sports Injury Rehabilitation Centre. Instead, Allstate paid $2,805.10 for rehabilitation benefits. Allstate refused payment by Explanation of Assessment, together with an attached letter, dated October 9, 1996. Both parties agreed that October 9, 1996 was the date of refusal. After Allstate's refusal, Mr. Huynh applied for mediation. Mr. Harvey Consky represented Mr. Huynh at the mediation.

Mr. Harvey Consky was called as a witness for the Applicant. Mr. Consky has been practising law since 1983. He is familiar with the procedure at the Financial Services Commission of Ontario as he has appeared at the Commission since its creation in 1990. Mr. Consky was given Mr. Huynh’s file by Mr. Philip Young of Royce Young, the firm which was then representing Mr. Huynh. Mr. Consky was asked, one-half hour prior to the mediation, to represent Mr. Huynh on behalf of the firm. The Report of Mediator dated January 21, 1998, noted that the mediation failed between the parties.

Mr. Consky did not open a file for Mr. Huynh but instead, forwarded his copy of the Report of Mediator to Royce Young, the firm which asked him to attend the mediation on its behalf.

On October 9, 1998, Mr. Consky received a letter from the Commission². The letter informed him that the Application for Arbitration, which was filed on behalf of Mr. Huynh on October 8, 1998, could not be processed because the wrong form had been completed. The original application was enclosed together with a new application to be completed and forwarded to the Commission. The letter stated that, pursuant to Rules 25.4(b) and 25.5 of the Dispute Resolution Practice Code (the "Code"), Mr. Huynh's Application for Arbitration would be held in abeyance for 20 days from the date of notice. If the deficiencies in the application were not rectified within the 20 days provided, the Commission could reject the application. If the application was rejected, the letter explained that the applicant might lose the benefit of the extension of the time limits found under section 11 of the Code and subsections 72(1) and (2) of the Schedule, with the result that the application might be out of time if submitted at a later date.

Mr. Consky testified that on the same day that he received the correspondence from the Commission, he telephoned the case administrator at the Commission. He left a message that he was not Mr. Huynh's counsel and had not filed for arbitration on his behalf. At the time, Mr. Consky did not link this correspondence from the Commission with the earlier mediation in which he had participated on behalf of Mr. Huynh. Although Mr. Consky claimed that he asked his assistant to send the Commission a letter which reflected what he said in his telephone message to the case administrator, he could not find a record of such a letter being forwarded from his office to the Commission.

On January 11, 1999, a subsequent letter was forwarded from the Commission to Mr. Consky informing him that as the Commission had received no response to its letter of October 19, 1998, it was closing the file.³ Mr. Consky claimed that he did not recall receiving that letter and had no recollection of doing anything in response. Further, Mr. Consky testified that he did not have Mr. Huynh's telephone number and could not contact him. In hindsight, he acknowledged that he should have made more of an effort to contact the Commission and confirm that his telephone message was received and understood by the case administrator.

Mr. Huynh filed a letter dated October 7, 1998 from Mr. Andrew Suboch advising Mr. Bill Gold of Allstate that he had been retained to represent Mr. Huynh. Mr. Suboch had enclosed a copy of the Application for Arbitration with his letter.⁴ Also, Mr. Suboch forwarded correspondence to the Commission dated October 8, 1998, confirming that Mr. Huynh had retained him as counsel, enclosing the Application for Arbitration and his firm's cheque for the filing fee.⁵

On January 4, 1999, Mr. Suboch forwarded a letter to Mr. Gold at Allstate rejecting an Offer to Settle and asking that Mr. Gold file a response to the Application for Arbitration.⁶ On January 11, 1999, Mr. Gold acknowledged receipt of the letter and informed Mr. Suboch that the Commission had not sent a notice that an Application for Arbitration had been filed and as such Allstate was not required to file a Response. Mr. Gold stated in his letter that an Application for Arbitration must be filed with the Commission within two years after Mr. Huynh's claim was denied. As the time limit had expired, the file had been closed.⁷

On March 17, 1999 and May 26, 1999, Mr. Suboch wrote to the Commission copying it on his earlier correspondence of October 8, 1998, which included a copy of an Application for Arbitration together with a firm cheque for the filing fee. In his letters, Mr. Suboch enquired about developments on the file and stated that he had not received any information about the progress of the claim, other than Allstate's advice that no notice had been received from the Commission that an Application for Arbitration had been filed. Mr. Suboch asked for confirmation that the Commission had received the application, his firm cheque and an Affidavit of Service which was forwarded on October 14, 1998.⁸

On June 3, 1999, the Commission responded to Mr. Suboch's letter by informing him that the Application for Arbitration had been returned to Mr. Consky.⁹ The Commission advised that it would hold the application in abeyance for 20 days so that Mr. Suboch could remedy the defect. On June 9, 1999, Mr. Suboch forwarded a new Application for Arbitration. On June 16, 1999, Mr. Suboch forwarded a new Application for Arbitration and a firm cheque for the filing fee, as the earlier cheque had been returned to Mr. Consky by mistake.¹⁰

ANALYSIS AND CONCLUSION:

Allstate submitted that, on the basis of the evidence, the Application for Arbitration was not issued in time. Although Allstate issued its denial on October 9, 1996, the new Application for Arbitration was not issued until June 9, 1999.¹¹ Even if section 72 were applied and the limitation period expired as of 90 days of the Report of Mediator, that date would be 90 days from January 21, 1998.

I can place no weight on Mr. Huynh's testimony which was confusing at best. Although Mr. Huynh had the benefit of a Cantonese interpreter, his testimony did not assist me with my deliberations. Although Mr. Huynh testified that he thought he might have received the October 19, 1998 letter which was sent to Mr. Consky and copied to him, he claimed not to have understood what it meant. However, he also claimed to remember receiving the pre-hearing letter of April 28, 2000, from the Commission which was copied to him. Yet the letter was returned to the Commission and marked "undeliverable."¹² In any case, his counsel, Mr. Andrew Suboch, did not receive the Commission's letter of October 19, 1998 advising of the defect in the Application for Arbitration.

Rule 11.1 of the Code specifies that the arbitration process must be "started" no later than two years from the date the Insurer refused to pay an amount claimed. Mr. Huynh started the arbitration process within the limitation period. Therefore, Allstate was put on notice and was aware of the Applicant's intention. Subsection 281(5) of the Insurance Act requires that the issues in dispute must be referred to an arbitrator within two years after the Insurer's refusal. Under section 282, "starting the process" is defined as filing an application for the appointment of an arbitrator by the Commission. In this case, the Commission had receipt of the Application for Arbitration, which was copied to the Insurer, within the two-year limitation period.

The Application for Arbitration¹³ has a notation that it was received by the Commission on October 8, 1998. As well, on June 3, 1999 a letter from the Commission to Mr. Suboch confirms receipt of the application on October 8, 1998.¹⁴ The issue is whether Mr. Huynh's right to proceed to arbitration is extinguished as a result of the Commission's mistake in notifying Mr. Consky of the defect in the application and not Mr. Suboch, the counsel for Mr. Huynh identified in the Application for Arbitration.

I agree with Arbitrator Allen's ruling in Lopez and Commercial Union Assurance Company¹⁵that arbitrators have no jurisdiction to extend the two-year limitation period or grant an Applicant relief from forfeiture.¹⁶ Although Allstate relied on Brauen and Personal Insurance Company¹⁷where Arbitrator Evans found that the Applicant was barred from proceeding to arbitration because her Application for Arbitration was not filed in time, this case can be distinguished from both Lopez and Brauen. In both of these earlier cases, there was a dispute about whether an Application for Arbitration was sent to the Commission and no evidence that it had been filed before the expiration of the limitation period.

The difference in this case is that an Application for Arbitration was filed within the two-year limitation period. However, the application in question was completed on an earlier form which had been replaced by the Commission. It was through an error on the part of the Commission that counsel for Mr. Huynh was not contacted about the defect in form. Rule 1.3 of the Code states: "A defect in form or other technical breach will not make a proceeding invalid." I find that the defect in form relating to Mr. Huynh's original Application for Arbitration is not sufficient to invalidate the process, particularly as Mr. Huynh had no opportunity to remedy the defect prior to the expiration of the limitation period. Therefore, I find that Mr. Huynh can proceed to arbitration.

EXPENSES:

I leave the issue of expenses to the discretion of the hearing arbitrator.

November 21, 2000

Judith Killoran Arbitrator

Date