Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2001 ONFSCDRS 112

Appeal Order P01-00031

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ALLSTATE INSURANCE COMPANY OF CANADA

Appellant

and

PROGRESSIVE CASUALTY INSURANCE COMPANY OF CANADA

and

FARAJ SALIBA

Respondent

Before:

Stewart M. McMahon, Director’s Delegate

Counsel:

Meredith Jackson Donohue (for Allstate)

Pamela A. Brownlee (for Progressive)

David Hayward (for Mr. Saliba)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The Notice of Appeal filed by Allstate Insurance Company of Canada on March 28, 2001, is rejected.

July 24, 2001

Stewart M. McMahon Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE ISSUE

Allstate Insurance Company of Canada (Allstate) seeks to appeal from comments found in the body of an arbitration decision, but not encompassed within the formal order. At issue is whether or not Allstate has any right to appeal from these comments.

II. BACKGROUND

Mr. Saliba was injured in two motor vehicle accidents. In respect of the first accident, which occurred on January 28, 1992, Mr. Saliba was insured by Allstate. In respect of the second accident which occurred on May 3, 1992, he was insured by Progressive Casualty Insurance Company of Canada (Progressive). Mr. Saliba was rendered a partial quadriplegic following spinal surgery in 1997.

Mr. Saliba was unable to reach an agreement with the Insurers concerning his housing expenses, and the matter proceeded to an arbitration hearing in January 2001. The issue for arbitration is set out in the decision in the following terms:

Is Mr. Saliba entitled to the cost of a new home and renovations to that home to meet his own needs and those of his family, claimed pursuant to paragraph 6(1)(e) of the Schedule?¹

Section 6 (1)(e) provides for a benefit in relation to “home renovations to accommodate the needs of the insured person.”

The resolution of the issue at the arbitration hearing was principally concerned with the capital costs associated with the purchase and renovation of a single family dwelling. The arbitrator concluded that Mr. Saliba was not entitled to be reimbursed the initial purchase price of the home, but was entitled to the cost of most of the proposed renovations.

The order reads in part:

Allstate Insurance Company of Canada and Progressive Casualty Insurance Company of Canada shall pay to Faraj Saliba $153,410 for home renovations, plus GST on all non-exempt goods and services, less any monies already advanced on this account.

However, towards the end of her reasons, the arbitrator included a comment about what I refer to as the additional “carrying costs” associated with the renovated residence. This paragraph, which gives rise to the present issue concerning the rights of appeal, reads as follows:

There are extra costs ongoing annually, from municipal property taxes to utilities required to support this additional bedroom, accessible bathroom, elevator and exercise/therapy room. These are “goods” or “services” reasonably required because of the accidents. I do not have the information necessary to calculate what the Insurers should pay in that regard. In my view, the calculation should be made in a similar way, based on the square footage of the rooms and estimated or actual operating costs.

I take the mention of “goods” or “services” to be a reference to section 6(1)(f) which is a “catch-all” provision at the end of the enumerated supplementary medical and rehabilitation benefits section. It provides for the payment of “other goods and services... which the insured person requires because of the accident.”

None of the parties have sought to appeal the order concerning the capital costs. However, Allstate² has filed a Notice of Appeal with respect to the paragraph concerning the carry costs.

III. ARGUMENT AND ANALYSIS

The Insurers note that there has been no formal application for benefits in relation to these carrying costs, and they were not in issue at the hearing. They note further, that the arbitrator’s conclusion that such costs are goods or services recoverable under the Schedule, was made without inviting submissions. They state emphatically that if such submissions had been invited, they would have taken the position such costs are not recoverable. They complain that even if the comments are not formally part of the order, they will be under considerable pressure to pay the benefits unless they seek to appeal the arbitrator’s conclusions. Finally, the Insurers express concern about the precedent set by the comments. They argue that such a novel point should be subject to appellate review.

Without expressing any comment on the soundness of the Insurers= objections to the arbitrator’s reasoning, I can sympathise with the position they find themselves in. However, I do not believe that they are entitled to appeal from the arbitrator’s comments, which are in the nature of obiter dicta.

The right of appeal is founded in the Insurance Act, R.S.O. 1990 ch. I.8, as amended, which provides in section 283(1) that “A party to an arbitration under section 282 may appeal the order of the arbitrator to the Director on a question of law” [emphasis added]. Beyond the statutory linkage of the right of appeal to the “order,” there is a long standing principle that an appeal is taken from the order of the adjudicator, not from her reasons. In that regard, I quote with approval the following passage from Sopinka and Gelowitz, The Conduct of an Appeal, 2nd ed. (Toronto: Butterworths), at p.6.

It is a fundamental premise in the law of appellate review that an appeal is taken against the formal judgement or order, as issued and entered in the court appealed from, and not against the reasons expressed by the court for granting the judgement or order. Although the appellate court will frequently discover in the reasons for judgement errors of law that ultimately ground the reversal of the judgment or order, it is the correctness of the judgment or order that is in issue in the appeal, and not the correctness of the reasons.

As the comments concerning the carrying costs do not relate to the matters disposed off in the order, there is no right of appeal from them. The parties considered the possibility of asking the arbitrator to reopen the hearing to deal with this issue, but were unable to reach an agreement. In the circumstances, if the Insurers believe that the carrying costs are not recoverable, their option is to deny the anticipated claim, and to proceed to a hearing where they will undoubtably have a full opportunity to espouse their position.