Krista Alexander v. Zurich Insurance Company, 2001 ONFSCDRS 163

FINANCIAL SERVICES COMMISSION OF ONTARIO

Neutral Citation: 2001 ONFSCDRS 163 FSCO A00–000535

BETWEEN:

KRISTA ALEXANDER Applicant

and

ZURICH INSURANCE COMPANY Insurer

DECISION on a REQUEST to WITHDRAW

Before: Shari Novick

Heard: March 13 and 14 and October 24 and 25, 2001, at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions were received on October 29 and 30, 2001.

Appearances: Rod Hare and Mark Rowe for Ms. Alexander Darrell P. March for Zurich Insurance Company

Issues:

The Applicant, Krista Alexander, was injured in a motor vehicle accident on December 21, 1999. She applied for various statutory accident benefits from Zurich Insurance Company ("Zurich"), payable under the Schedule.¹ This application addresses Zurich's liability to pay for the cost of two in-home assessments conducted on Ms. Alexander by Profile Evaluations ("Profile"). The Applicant seeks payment under section 24 of the Schedule for the reports generated as a result of the assessments, in the total amount of $1,350.

The parties were unable to resolve their dispute through mediation, and Ms. Alexander applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

In the midst of the arbitration hearing that followed, Ms. Alexander's representatives advised that they wished to withdraw her application for arbitration.

The issues in this hearing are:

1. Is the Applicant permitted to withdraw her Application for Arbitration?

2. If the Applicant is permitted to withdraw, what conditions, if any, should apply?

Result:

1. The Applicant may not withdraw her application at this stage. The hearing shall be completed in the near future on days that are mutually convenient to the parties.

Background:

The arbitration hearing on this matter commenced on March 13, 2001. Ms. Alexander was represented by Rod Hare, the Director of Profile Evaluations. Most of the morning was spent discussing issues raised by the parties regarding witnesses to be called and documents they intended to file into evidence. I also heard the parties' opening statements. Mr. Hare then called Ms. Alexander as a witness, and the rest of that day was spent hearing her evidence. Due to scheduling problems with the other witnesses, no evidence was called on the second day of hearing, but some procedural matters were addressed with the parties by telephone. It was agreed that the hearing would reconvene on October 24 and 25, 2001, and that the evidence and submissions would be completed at that time.

The hearing resumed on October 24, as scheduled. After some time was spent discussing further procedural issues, Mr. Hare called Kathryn McCrae Hill as a witness. Ms. McCrae Hill was the Applicant's legal representative at the relevant time, and was instrumental in arranging the assessments conducted by Profile. Her evidence took the balance of that day to complete.

At the end of the day, I asked Mr. Hare if he planned to call any other witnesses or file any further evidence. He stated that he intended to file 11 accounts paid by Zurich for similar assessments conducted by Profile in other cases. He submitted that these were relevant to the issue in dispute, as the Insurer was challenging the reasonableness of the fees charged by Profile for the assessments conducted on Ms. Alexander.

Counsel for Zurich strenuously objected to the admission of these 11 accounts. He claimed that if they were admitted into evidence he would require the full reports of the assessments they pertained to, the relevant material from the files, as well as the author of the reports to testify about the circumstances so that a determination of whether they were in any way relevant to the matters in issue could be made.

During the course of our discussions on this issue, it became clear that the parties disagreed on whether Mr. March had indicated at the outset of the hearing that he would be challenging the amounts charged for the assessments. The transcript of the earlier proceedings had not been ordered by either party, and was not available to verify what was said on the issue. My notes confirmed my recollection that Mr. March had indicated that the Insurer was not prepared to concede that part of the argument, but I acknowledged that the words he used and I had noted were somewhat vague and could be construed in different ways.

I was then advised that Mr. Hare had written to Mr. March a few weeks prior to the resumption of the hearing requesting him to clarify whether or not he would be arguing that the amounts charged were not reasonable. I was advised that Mr. March replied that he would indeed be contesting the quantum claimed. His written reply was sent on October 4, almost three weeks prior to the hearing resuming. Consequently, whether or not the Insurer's position regarding the quantum of the accounts claimed was made clear at the outset of the hearing, this exchange of correspondence in the interim period clarifies Zurich's position three weeks prior to the hearing resuming and well before the Applicant finished calling her evidence.

I declined to admit the accounts in question into evidence. While I acknowledged that they could potentially form part of an argument that the amounts charged by Profile in this case were reasonable, it would have been prejudicial to the Insurer to have them admitted into evidence in the absence of other material and/or testimony to establish the circumstances surrounding the reports. The mere fact that the assessments were conducted and that Zurich paid the accounts submitted without dispute does not assist the Applicant in this case. The details of the injuries suffered by the other insured persons, the nature of the accidents they were involved in, the timing of the assessments, the nature and timing of the referrals to Profile, the existing medical evidence, if any, and the communication that transpired between the insured person's representatives and Zurich prior to the assessments would all have had to be explored, in order to consider the reports and corresponding payments in their proper context.

Given that the Applicant sought to file eleven reports and invoices, the evidence pertaining to them would likely have taken several days to complete. Based on the relatively slow pace at which the hearing had proceeded to that point, I estimated that this evidence could have extended the hearing by an additional five to ten days. Given the narrow issue in dispute and the relatively modest amount at stake, I was of the view that a hearing of this length was simply not justified.

While I acknowledge the importance of this issue to the parties, to permit this hearing to continue for 10 days or more would be contrary to the Commission's mandate of providing a quick and relatively inexpensive manner of resolving disputes under the Schedule. Balancing the Applicant's desire to file all potentially relevant documents into evidence against the interests of maintaining a reasonably efficient, expeditious and cost-effective arbitration system, I concluded that in the circumstances, the interests of efficiency and expediency should prevail. The hearing then adjourned for the day.

The following morning, prior to the hearing resuming, Mr. Hare advised that as a result of my ruling on the above issue he had decided to withdraw the Applicant's claims. I explained the process regarding withdrawals at the Commission and read out Rule 67 of the Dispute Resolution Practice Code - Third edition (April 15, 1997), which addresses the issue. Mr. Hare confirmed that he understood the consequences of making this decision and wished to do so.

After seeking instructions, Mr. March advised that Zurich did not consent to the Applicant's withdrawal.

Given this unexpected turn of events, it was agreed that the parties would be permitted to make written submissions in support of the Applicant's request to withdraw. The Insurer filed its submissions on October 29, 2001, and the Applicant filed hers the following day.

SUBMISSIONS AND ANALYSIS:

The Dispute Resolution Practice Code - Third edition (April 15, 1997) permits a party to withdraw "all or part of a dispute" during a pre-hearing discussion or at a hearing.² An Arbitrator must permit a party to withdraw if the other parties agree.³ Rule 67.3 sets out the options facing an arbitrator if a party does not agree to the withdrawal, as is the case here. It states:

67.3 Where a party does not agree to the withdrawal, an adjudicator may:

(a) permit the withdrawal on such terms and conditions as the adjudicator considers appropriate;

(b) award expenses to either party as permitted by Rules 73 and following, and the Expense Regulation under Section F of the Code;

(c) award an amount to the insurer, up to the amount the insurer is required to pay to participate in the hearing, if the adjudicator decides an abuse of process has occurred or the proceeding is frivolous or vexatious.

Applicant's submissions:

The submissions filed by the Applicant touch on a variety of issues. They contain many statements regarding what transpired at the hearing leading up to the request to withdraw which are, in my view, inaccurate. There is repeated reference to the application of "judicial estoppel," and a ruling I allegedly made with respect to this. I am not familiar with this term, nor was it raised by the Applicant at the hearing. I am certain that I did not make a ruling regarding "judicial estoppel" or any other form of estoppel, for that matter.

The Applicant also included an excerpt from a Supreme Court of Canada decision in which the court found that a breach of the rules of natural justice had occurred when a labour arbitrator presiding over a dismissal hearing decided to exclude key evidence tendered by the employer. I am puzzled by this aspect of the submissions. The Applicant has clearly chosen not to appeal my evidentiary ruling, or to complete the hearing and later file an appeal. Instead, she asks that her application be withdrawn, and consequently, that is the only issue that must now be decided.

The Applicant states at various points in her submissions that she does not "possess the resources to further continue this process and wishes to now consider a simpler and more cost effective resolution through the courts." Many of the withdrawal cases that have been decided by the Commission arise because the applicants involved choose, for a variety of reasons, to pursue their claims for statutory accident benefits in court after filing applications for arbitration. These requests are usually made at the pre-hearing stage, or prior to the start of a hearing. The key distinction in this case is that the Applicant's representatives have requested to withdraw the claim after three days of hearing have been completed, and two witnesses have testified at length.

The other point worth noting is that the Applicant's representatives have also made clear that the request to withdraw was made in response to an evidentiary ruling that they perceive to be unfavourable to their position.

Insurer's submissions:

The Insurer submitted that the Applicant should not be permitted to withdraw her application at this stage in the process. Counsel claimed that Zurich is "ready, willing and able to complete the arbitration process," and that if the withdrawal were permitted, the parties would be denied an immediate resolution to the dispute and would incur additional costs in responding to any further claims filed in court regarding the same issue. Counsel also characterized the request to withdraw as a calculated attempt at "forum shopping."

Alternatively, the Insurer submits that the withdrawal be permitted "with prejudice," and that the hearing be deemed completed and the Application for Arbitration dismissed. Zurich also argues that it should be awarded all of the expenses it has incurred in defending this application, as well as the $3,000 assessment fee levied. Counsel attached a Bill of Costs comprising legal fees, disbursements and the assessment fee totalling over $12,000.

ANALYSIS AND DECISION:

Under the Insurance Act, an applicant has the right to either apply for arbitration at the Commission, commence a court action or submit a dispute to a private arbitrator with respect to any benefits that she claims to be entitled to under the Schedule.⁴ As has been noted in previous decisions, there is no absolute right to withdraw an application for arbitration once the process has been commenced.⁵ An arbitrator has the discretion to decide whether or not a withdrawal should be permitted, and may impose terms and conditions that she or he considers appropriate in allowing a withdrawal. Elements of fairness to both parties, as well as concern for the integrity of the dispute resolution process must inform the decision.

In all of the other cases in which an applicant has requested to withdraw from the arbitration process, the arbitration hearing had not yet begun. In a few cases, the request to withdraw was made as late as the morning of the scheduled hearing, prior to it commencing. The general view among arbitrators has been that parties should not be forced to proceed when they have indicated the desire to withdraw from the arbitration process. However, arbitrators have recognised the fact that in many cases the insurer has incurred expenses in preparing for the hearing that they would not have incurred if advised of the withdrawal earlier, and have in many cases ordered the applicants to pay these expenses.⁶

As well, many arbitrators have determined that a request to withdraw an application for arbitration late in the process in favour of pursuing an action in court constitutes an abuse of the Commission's process. They have accordingly ordered the applicant to pay the insurer an amount equivalent to its' assessment fee, as provided for in subsection 282(11.2) of the Insurance Act and Rule 67.3(c) of the Practice Code.⁷ In many cases, an applicant has been ordered to pay both expenses and the equivalent of the assessment fee to the insurer for its costs "thrown away."

While these orders for compensation provide a measure of fairness to a party inconvenienced by the other party's decision to change forums once they have initiated the arbitration process, other issues are raised when a party wishes to withdraw from the process to proceed in court once the arbitration hearing has already begun. Although the Commission's process is designed to encourage the early exchange of documents and the names of witnesses providing evidence upon which the parties intend to rely, a party may only become aware of the essence of the case it has to meet at the commencement of the hearing, after opening statements have been made and preliminary matters sorted out. Evidence is then called and witnesses are cross-examined; documents are filed and the issues take shape as the hearing unfolds. Unexpected objections by a party may lead to arbitral rulings excluding evidence that the other party may not have anticipated.

Given the fluid nature of the hearing process and the uncertainty inherent in tendering oral evidence, a party may find itself in a different position than it expected prior to commencing the hearing.That risk will always exist in this type of process. While I can understand the temptation of abandoning a process that is not unfolding according to plan, the interests of the other party must be considered. Granting permission to withdraw from a process after witnesses have completed their testimony, as has occurred here, can result in real unfairness.

Moreover, the impact that this would have on the arbitration process generally must be considered. In my view, granting a request to withdraw in the middle of a hearing to enable an applicant to pursue her claim anew in court would be detrimental to the integrity of the process. Aside from the waste of limited resources that would have been expended, allowing a party to begin a hearing and then withdraw to proceed in court on the same issue would fly in the face of the stated mandate of the dispute resolution process to determine disputes between insured persons and their insurers in a quick and relatively inexpensive manner.

The Applicant's representatives in this case have made clear that the reason for wanting to withdraw from this arbitration was a ruling that they perceive to be against their interest. To allow them to do so in order to pursue the same matter in court would be to sanction a clear attempt at "forum shopping."

The fact that arbitrators at the Commission and the court share concurrent jurisdiction for these matters cannot mean that parties have the right to initiate a proceeding in one place, and if they are not satisfied with how their case is unfolding, back out and start again in the other venue. In my view, this would offend the principles of procedural fairness and could not have been intended by the drafters of the legislation. If a party feels that a ruling made during the course of a hearing is wrong or unfair, the proper route to follow is to appeal the arbitrator's decision once the matter is completed and a decision is rendered.

As a final matter, I must consider the possible prejudice to the Applicant. In the circumstances of this case, I can see no real prejudice in requiring Ms. Alexander to continue with the arbitration hearing. This is not a case in which an applicant has commenced a court action seeking payment of other benefits under the Schedule, and in the interest of efficiency and cost-effectiveness wishes to consolidate her claims in one venue. Neither does she seek a remedy that an arbitrator cannot give, such as the relief against forfeiture in the context of a missed limitation period. Declining Ms. Alexander's representatives' request to withdraw will result in her claim being determined in a quicker and less expensive way than if the withdrawal was permitted and the matter proceeded de novo in court.

I share the reluctance expressed by other arbitrators in previous cases to force parties to proceed through an arbitration hearing when they would rather not do so. I find, however, that fairness dictates that this hearing continue until it is completed and a finding on the merits of the claim is made. In my view, permitting the Applicant to withdraw her application in these circumstances, would, after three days of hearing have been completed, result in unfairness to the Insurer and would be detrimental to the arbitration process at the Commission.

As a result, the Applicant's request to withdraw her application for arbitration is denied. The parties will be contacted shortly so that dates for the resumption of the hearing can be scheduled.

EXPENSES:

I exercise my discretion to award the Insurer its costs associated with this request to withdraw, which I fix at $350.

November 14, 2001

Shari L. Novick Arbitrator

Date

Neutral Citation: 2001 ONFSCDRS 163 FSCO A00–000535

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

KRISTA ALEXANDER Applicant

and

ZURICH INSURANCE COMPANY Insurer

ARBITRATION ORDER

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

1. The Applicant's request to withdraw her Application for Arbitration is denied. The parties will be contacted shortly in order to schedule further days for the resumption of the hearing.

November 14, 2001

Shari L. Novick Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 2, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96 and 303/98.
2. 2Rule 67.1(b)
3. 3Rule 67.2
4. 4Subsection 281(2) requires that prior to doing so, an insured person must have sought mediation at the Commission and the mediation has failed.
5. 5Chapman and Allstate Insurance Company of Canada and Wellington Insurance Company (OIC P-001897 & P-001898, October 6, 1994), Gawronski and Allstate Insurance Company of Canada (OIC P98-00004, May 13, 1998)
6. 6See for example Thambirajah and Zurich Insurance Company (OIC A97-001863, April 24, 1998), Richard and Lombard General Insurance Company of Canada (OIC A97-001526, April 29, 1998), Dinkha and Guardian Insurance Company of Canada (FSCO A98-000635, November 27, 1998), Loya and Coseco Insurance Company(HB Group) (FSCO A99-000726, October 2, 2000)
7. 7See for example Adams and Guardian Insurance Company of Canada (OIC A-013070, December 13, 1995), Sacco and Wawanesa Mutual Insurance Company (OIC A95-000349, October 1, 1996), and Saini and CIBC General Insurance Company Ltd. (OIC A96-001752, July 8, 1997)