Neutral Citation: 2001 ONFSCDRS 98
FSCO A00-001015
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
GINETTE LACROIX
Applicant
and
HALIFAX INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before:
John Wilson
Heard:
February 29, 2001, by written submissions
Appearances:
Ronald Bélec for Ms. Lacroix
Debbie Orth for Halifax Insurance Company
Issues:
The Applicant, Ginette Lacroix, was injured in a motor vehicle accident on August 20, 1997. She applied for statutory accident benefits from Halifax Insurance Company ("Halifax"), payable under the Schedule.1
The preliminary issue is:
Is Ms. Lacroix precluded from proceeding to arbitration because her application for arbitration was filed beyond the two-year limitation period set out in subsection 281(5) of the Insurance Act, R.S.O. 1990, c.I.8, as amended?
Did the mediation undertaken from May 13 to June 29, 1998 constitute a mediation of income replacement benefits as required by subsection 281(2) of the Insurance Act?
Result:
Ms. Lacroix is not precluded from proceeding to arbitration.
The issue of income replacement benefits was mediated.
EVIDENCE AND ANALYSIS:
Ms. Lacroix is a francophone who lives and works in Ottawa. At the time of her motor vehicle accident, she was employed by the federal government.
The issues at this preliminary issue hearing arise from the application of subsections 281(2) and (5) of the Insurance Act, which set mediation as a pre-condition to arbitration or the bringing of an action, and create a time limit of two years from "the Insurer's refusal to pay the benefit claimed" for the institution of an arbitration or an action.
The hard copy of Ms. Lacroix's arbitration application was filed with the Commission on September 27, 2000. A fax copy in the Commission's file is date-marked September 22, 2000. Attached to the application was a Report of Mediator dated June 29, 1998.
The Insurer, in its materials, has alleged that its refusal to pay benefits was communicated by letter to Ms. Lacroix on September 14, 1998, and that Ms. Lacroix's application for arbitration was filed on September 29, 2000. If the Insurer is correct in its assertions, then subsection 281(5) of the Insurance Act could effectively bar Ms. Lacroix from commencing an arbitration.
The law on limitations, as it relates to applications for statutory accident benefits, was re-stated succinctly by Arbitrator Bayefsky in his decision Jakovljevic and Commercial Union Assurance Company (FSCO A98-001163, July 26, 1999):
Arbitration decisions have established a number of principles as to the manner in which the limitation periods under the legislation are to be applied. The principles most relevant to the case at hand are that the two-year period begins to run from the date the applicant receives a clear and unequivocal refusal of the benefits he or she has claimed, and that the insurer bears the onus of establishing both that the applicant received such a refusal and the date of receipt.
In this matter, it is incumbent upon Halifax to prove that Ms. Lacroix received a clear and unequivocal refusal of benefits, for the time limits to begin to run against her.
Halifax submitted the affidavit of Adriana I. Cargnello in support of its motion. Ms. Cargnello, an articling student in the office of Lang Michener at Ottawa, deposed:
By letter dated September 14, 1998, the insured was informed that her Income Replacement Benefits would be terminated on September 24, 1998, and was advised her (sic) of right to mediate the decision.
Attached to the affidavit as exhibits are numerous letters from Halifax to Ms. Lacroix indicating that income replacement benefits had ceased on September 24, 1998, and that Ms. Lacroix had the option of proceeding to mediation.
Ms. Cargnello's affidavit is illustrative of some of the problems arising out of the use of affidavit evidence in situations where important facts are at issue. Although Ms. Cargnello does not say so, the contents of her affidavit are clearly information and belief. As an articling student with Lang Michener, she is highly unlikely to have been present or personally involved with the adjustment of the claims file for Ms. Lacroix.
Subrule 39.01 (4) of the Rules of Civil Procedure provides that affidavits of information and belief may only be used "if the source of the information and the fact of the belief are specified in the affidavit."
While the Dispute Resolution Practice Code at the Commission does not deal specifically with the content of affidavits, the rules of evidence suggest that they should at least meet the basic requirements outlined by White J. in Henry & Co. (Trustee of) v. Thorne Ridell [1984] O.J. No. 532, H.C.J., that the deponent state the basic facts from which the reader of the affidavit can find support for the belief, or the opinion, of the maker of the affidavit
I find that, although Ms. Cargnello puts forward the theories and the submissions of the Insurer in her affidavit, she does not provide an evidentiary foundation for her assertions.
The Insurer did not provide copies of postal receipts or other evidence that might support the conclusion that Ms. Lacroix received the September 14 letter referred to in Ms. Cargnello's affidavit.
In a letter from Ms. Maddelena Panetta, a claims representative, dated January 10, 2000, Halifax reiterated that "the two-year limitation to apply for mediation is September 24, 2000, which is the date your disability benefits were terminated."
Leaving aside the potential issue of the language of the correspondence from the Insurer, I find that Ms. Lacroix probably received proper notice of the termination, as outlined in the jurisprudence at the Commission, at some point in autumn 1998. This is apparent from the tenor of the Insurer's correspondence, as well as the action taken by Ms. Lacroix in applying for mediation.
Mr. Ronald Bélec, on behalf of Ms. Lacroix, conceded in the response to the Insurer's motion:
À tout événement, l'indemnité versée à la requérante par la Compagnie d'Assurance Halifax, s'étant terminée le 24 septembre 1998, Mme Ginette Lacroix avait deux (2) ans à compter de cette date pour soumettre sa demande d'arbitrage à la Commission des services financiers de l'Ontario, ce qu'elle a fait le 22 septembre 2000.
It is clear that at some point Ms. Lacroix realized that the Insurer would not pay further benefits. Given the stoppage of benefits, Ms. Panetta's letter confirming the September 24 date, and the actions taken by Ms. Lacroix and her lawyer in treating September 24 as the effective date for the stoppage of benefits, I conclude that September 24, 2000 is the appropriate time limit for an application for mediation and arbitration on behalf of Ms. Lacroix.
Likewise, the date of the application for arbitration is also in question.
Ms. Cargnello's affidavit states at paragraph 17:
The insured filed an Application for Arbitration claiming Income Replacement Benefits past the 104 weeks, caregiver benefits and medical benefits on September 29, 2000. Attached and marked as Exhibit "M" to this my affidavit is a copy of the Application for Arbitration.
Exhibit "M", which is a copy of an application for arbitration in the name of Ms. Lacroix contains several dates. One date, which is circled, is apparently a fax identification indicating "September 22 '00 12:07." The date of September 29, 2000 appears to come from another fax identification and reads "SEP 29 '00 10:50 FR 3426 DISPUTE RES GROUP 416+590+8462." This, in turn, appears to override yet another fax identification number, which is not decipherable.
The original, hard copy of the application in the Commission files is date-stamped September 27, 2000. It is preceded by a fax copy dated both September 22, 2000 and also bearing the transmittal date of September 29, 2000 with the same notation as Exhibit "M" in the Insurer's brief. Yet another faxed copy in the file is date-stamped December 25, 2000 by the Commission. It also contains the fax transmission date of September 25 from "STC-AGRICULTURE DIV."
In this motion, the onus is on the Insurer to prove, on the balance of probabilities, that the application was filed after the two-year mark. The only evidence in support of this is Ms. Cargnello's affidavit which states that the application was filed on September 29, 2000.
Clearly, whenever it was filed, it was not on September 29. September 29 appears most likely to be the date that the Dispute Resolution Group faxed a copy of the application to someone, possibly the lawyers for the Insurer. I find that neither the Applicant of Ms. Cargnello nor the application for arbitration filed by the Insurer as part of its affidavit lends support to the Insurer's allegation that the application was filed on September 29.
The copy of the application for arbitration submitted as an exhibit to Ms. Cargnello's affidavit leaves open the possibility that the document was filed in time, on September 22.
Since the onus is on the Insurer to prove its assertion that the application was out of time, and since the application itself is ambiguous as to the date of filing, I find that the Insurer has not proven its assertion that Ms. Lacroix filed her application for arbitration on September 29, 2000.
The Insurer has raised a second, potentially more fundamental, bar to this arbitration. Subsection 281(2) of the Insurance Act provides:
No person may bring a proceeding in any court, refer the issues in dispute to an arbitrator under section 282 or agree to submit an issue for arbitration in accordance with the Arbitration Act, 1991 unless mediation was sought, mediation failed and, if the issues in dispute were referred for an evaluation under section 280.1, the report of the person who performed the evaluation has been given to the parties.
Halifax, in its notice of motion, alleges that "the issues in dispute have not been mediated."
Attached to Ms. Lacroix's Application for Arbitration is a Report Of Mediator issued by the mediator on June 29, 1998. Under the heading "Issues remaining in dispute" the mediator lists "Medical Benefit." Under the heading "The following issues have been resolved," she lists "Income Replacement Benefit - Part II." The principal issue in this arbitration is that of eligibility for ongoing income replacement benefits.
The application for mediation, which is included as Exhibit "B" to the Insurer's affidavit, has the box for "Weekly Benefits - Income Replacement" checked off under the question "which benefits are you disputing?". In addition, an attached sheet, referred to in the main application, lists the following comments relative to income replacement benefits:
Since the accident appended (sic) in Québec my insurance just inform me I was entitled to an indemnity payable from the second week of the accident and for the duration of my disability. I have not received any of that money or interest yet. I should have been told before. Some of the major reasons why I am not back at work are my eyes/double vision (I work with computer and number) my back, neck, left leg (I still can not sit for long.)
Clearly, Ms. Lacroix believed that income replacement benefits formed an issue in dispute with the Insurer, and wanted that issue addressed at mediation.
Halifax takes the position that, because the mediator listed income replacement benefits as "resolved," the mediation did not fail and, therefore, Ms. Lacroix was obliged to proceed to mediation again, on the same issue, before filing her application for arbitration.
It has long been decided at the Commission that a report of a mediator is not conclusive. As Arbitrator Mackintosh found in Bailey and CAA Insurance Company (OIC A-001139, October 29, 1992):
Either party to a mediation must retain the right to challenge the conclusions reached in the Report of Mediator. This is especially so when participation in mediation is mandated.
Under the heading: "The following issues have been resolved," the mediator made the following observations concerning income replacement benefits:
While technically this issue was not in dispute since payments were being made at the time of this mediation, Ms. Lacroix and Halifax agreed that Halifax would consider payment of Income Replacement Benefit, if warranted, at the appropriate rate, up to Ms. Lacroix's completion of a work hardening program at CBI.
It is clear from the mediator's report that both parties agreed that the issue of income replacement benefits would be part of the mediation. I find that, having willingly agreed to the mediation of an issue, the Insurer is estopped from raising the validity of its inclusion in the mediation.
In an attachment to her application for mediation, Ms. Lacroix claimed an income replacement benefit for the duration of her disability.
The resolution of an issue implies that both parties came to an agreement on the same issue. The issue from the viewpoint of Ms. Lacroix was the payment of benefits until such time as she was ready to return to work.
Paragraph 20.2 of the Code provides:
A settlement is subject to legal requirements, as applicable, including those governing final settlements. See the Settlement Regulation found in Section E of the Code.
Section E of the Code provides that the insurer must provide written notice to the insured person informing him or her of any rights under the insurance contract and the consequences of any settlement, before a settlement is finalized.
The Insurer has not provided any documentary evidence of an agreement on the issue of income replacement benefits or of its compliance with the requirements of the Code and the settlement regulations.
I find that, without proof of compliance with the requirements of the Code, the Insurer is precluded from raising the supposed settlement as an obstacle to an arbitration application.
Arbitrators have stated, since the inception of the statutory accident benefits scheme, that one of the purposes of arbitration was to provide a simple, cost-effective dispute resolution option. As the introduction to the current Practice Code states:
The advantages of arbitration are that it is quicker, less expensive and less formal than court. The arbitrator will listen to the witnesses called by each side, review all the evidence and make a binding order.
Ms. Lacroix brought her application for mediation on the issue of income replacement benefits in good faith. At that time she had not received any payments from the Insurer for income replacement benefits. It would be an abuse of process and against the intent of the law if an insurer can derail the mediation process by paying the arrears of any payments just prior to the mediation, with the intention of stopping payment shortly thereafter.
A technical argument, such as that raised by the Insurer, does not sit comfortably with a process which is supposed to offer quicker and less formal access to adjudication. In the absence of some fundamental error in the application for arbitration, or a clear violation of the law or the rules of procedure, Ms. Lacroix has the right to insist on a hearing on the merits of her case.
As Arbitrator Blackman stated in Robertson and Co-operators General Insurance Company (OIC A96-001940, September 15, 1997):
The clear purpose of mediation under the Act is to facilitate dispute resolution. It is not the purpose of mediation to impede dispute resolution by adding pro forma steps to address technical minutia.
This approach to the mediation process has been applied by the courts as well. Both Woodman v. State Farm Mutual Insurance [1999] O.J. No. 521 and Pilon v. Zurich [1998] O.J. No. 333 (Gen. Div.) take a liberal approach to the mediation prerequisite in subsection 281(2) of the Insurance Act.
Charbonneau J. in Woodman v. State Farm (supra) listed as one of the factors that militated in favour of a liberal approach was that: "There had been a failed mediation involving the same accident."
In Pilon v. Zurich (supra), Cunningham J. was "satisfied that the plaintiff has acted within the spirit of the procedures set out in the Insurance Act and has done everything in his power to resolve the matters in issue."
In the Bajic appeal (Bajic and Pafco Insurance Company Limited and Zurich Insurance Company, FSCO P00-00050, June 5, 2001), the Director of Arbitrations made the following comments:
Mandatory mediation is meant to ensure that disputes do not go to arbitration or court without an initial effort to resolve them by agreement. It is not intended to impede legitimate actions.
I find that there was a failed mediation involving the same accident and that accident benefits were at issue in that mediation. Ms. Lacroix clearly acted "within the spirit of the procedures set out in the Insurance Act." I find, therefore, that the precondition of mediation pursuant to subsection 281(2) of the Insurance Act was met by Ms. Lacroix.
Even if the failed mediation of medical benefits did not meet the criteria of subsection 281(2), I would be prepared to find that the issue of weekly benefits was brought to mediation by Ms. Lacroix, and that the issue should have been treated by the mediator as remaining in dispute, due to the failure of the Commission to deliver a mediator's report in the time frame provided for in the Code.
Subsection 21.1 of the Code, under the heading "Failure of Mediation" provides:
Mediation has failed on an issue when:
(a) the mediator is of the opinion that mediation will fail and notifies the parties; or
(b) the time limit for mediation, including any extension, has expired and no settlement has been reached.
Ms. Lacroix's application for mediation is stamped with the notation "French File."
Since the passage of the French Language Services Act, R.S.O. 1990, c. F32, parties have enjoyed a right to participate in the the dispute resolution process in either French or English. The Code underlines the Commission's undertaking to offer French-language services.
The preamble to the Code provides that: "Mediation services are available in both English and French." Likewise, subsection 70.1 provides that: "A person has the right to communicate in French, and to receive services in French from the Commission as provided in the French Language Services Act. "
I cannot imagine that Halifax, after having communicated with Ms. Lacroix, could be unaware that she was a francophone. However, Halifax sent the forms to her in English. At the very least, the application for mediation provided by Halifax, and the communications between Ms. Lacroix and the Commission, should have been in French.
Rule 19 of the Code provides for a time limit of 60 days for a mediation. The time limit expired without the delivery of a report in French. Pursuant to subsection 21.1 (a) of the Code, I would characterise the mediation from May 13, 1998 to June 29, 1998 as a failed mediation.
Ms. Lacroix is clearly neither fluent in English, nor necessarily capable of understanding the subtleties of the English language mediator's report.
Rule 23 of the Code permits a party to write to a mediator within ten days following the receipt of the report "if a party believes that the Report of Mediator is not accurate."
If the report had been provided in French, Ms. Lacroix would have been able to address any mistakes without delay, and without running the risk of being precluded from commencing an arbitration. Given Ms. Lacroix's imperfect English, she was put to a grave disadvantage by the failure of the Commission to deliver the report in French, as required.
I find, therefore that, notwithstanding the comments in the Report of Mediator, the issue of income replacement benefits was mediated, and failed, and, as such, the requirements of subsection 281(2) of the Insurance Act were met.
For all the reasons listed above, I dismiss Halifax's motion on a preliminary issue and find that Ms. Lacroix may proceed to arbitration.
EXPENSES:
I exercise my discretion to award Ms. Lacroix her expenses incurred in this preliminary issue hearing.
June 29, 2001
John Wilson
Arbitrator
Date
Neutral Citation: 2001 ONFSCDRS 98
FSCO A00-001015
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
GINETTE LACROIX
Applicant
and
HALIFAX 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:
Ms. Lacroix may proceed to arbitration.
Ms. Lacroix shall be paid her expenses incurred in this preliminary issue hearing.
June 29, 2001
John Wilson
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96 and 303/98.