Neutral Citation: 2002 ONFSCDRS 125
FSCO A01-001298
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
MORRIS SARDO
Applicant
and
ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA
Insurer
DECISION ON A MOTION
Before:
Catherine Skinner
Heard:
By written hearing
Written submissions were received on June 21, 2002, July 22, 2002 and August 7, 2002.
Appearances:
Reno M. Berlingieri for Mr. Sardo
Peter Trueman for Royal & SunAlliance Insurance Company of Canada
Issues:
The Applicant, Morris Sardo, was injured in a motor vehicle accident on May 28, 1997. He applied for statutory accident benefits from Royal & SunAlliance Insurance Company of Canada ("Royal"), payable under the Schedule.1 Royal denied payment of certain benefits. The parties were unable to resolve their disputes through mediation, and Mr. Sardo applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
A pre-hearing discussion of this case was held on May 21, 2002, by telephone conference call. During the scheduling of the arbitration hearing, counsel for Mr. Sardo indicated that he was unavailable for an arbitration hearing until March 3, 2003. An arbitration hearing has been scheduled for March 3, 4, 5 and 6, 2003. During the pre-hearing discussion, Royal moved for an order suspending interest payments on any outstanding benefits from September 11, 2002 to the hearing date, in consideration of the delay between the date of the pre-hearing conference and the date of the arbitration hearing. Royal filed written submissions in support of its motion on June 21, 2002, and Mr. Sardo filed written submissions in response on July 22, 2002.
The issue is:
- Should there be an order suspending interest payments issued at the pre-arbitration stage of the proceeding?
Result:
- There should not be an order suspending interest payments issued at the pre-arbitration stage of the proceeding.
ANALYSIS:
The Insurer's obligation to pay interest on overdue amounts is set out in Section 46 of the Schedule as follows:
- (1) An amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under this Part.
(2) If payment of a benefit under this Regulation is overdue, the insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue at the rate of 2 percent per month compounded monthly.
An award of interest in an arbitration order flows from a finding that the Applicant is entitled to benefits and that the payment of those benefits is overdue.
The Insurer brought this motion for an order suspending interest because of the delay in bringing this case to an arbitration hearing. Counsel for the applicant was unavailable for an arbitration hearing until March 2003. The Insurer was prepared to participate in an arbitration hearing earlier than March 2003 and submits that it should not be obliged to pay interest on any amounts owing during the delay caused by Mr. Sardo's counsel. Mr. Sardo does not agree to an order suspending interest payments on overdue amounts.
In support of its motion, the Insurer relies on Rule 65.7 of the Dispute Resolution Practice Code, Fourth Edition, which provides as follows:
An adjudicator may make such orders or give such directions as he or she considers proper to prevent an abuse of process.
Royal submits that it represents an abuse of process for Mr. Sardo to delay the arbitration hearing and to subsequently be permitted to collect interest for the period of the delay.
In response to Royal's motion, Mr. Sardo referred me to Arbitrator Evans's decision in Carrière and MVAC FUND and Royal Insurance (FSCO-A98-000772, April 21, 1999). In that case, the pre-hearing arbitrator was asked to order that transcripts from examinations for discovery in the tort action be admitted at the arbitration hearing in lieu of viva voce evidence. The pre-hearing arbitrator reviewed the relative functions of the pre-hearing arbitrator and the hearing arbitrator and declined to make the order sought. Arbitrator Evans found that the relief being sought in that case went to the "very heart of the hearing arbitrator's function," and could therefore not properly be ordered by the pre-hearing arbitrator.
I agree with Arbitrator Evans's reasoning in Carriére. In this case, I find that the relief Royal seeks falls directly within the function of the hearing arbitrator. A determination that interest is payable or not payable results from the hearing arbitrator's findings with respect to the merits of the applicant's case. Entitlement to interest on overdue payment of benefits under the Schedule has been recognized as a substantive rather than a procedural right: Blake and Jevco Insurance Co. (FSCO A98-000102, April 12, 2001). The applicant's entitlement to interest can only be determined after a full hearing of the merits of the case. I am not persuaded that there are special or unique circumstances in this case which would render it appropriate for the pre-hearing arbitrator to make a determination as to entitlement to interest on overdue amounts.
Royal also relies on Section 130 of the Courts of Justice Act as a demonstration of the relationship between an award of interest and the conduct of the litigants. Section 130 of the Courts of Justice Act provides the court with discretion to disallow interest or to allow interest at higher or lower than the prescribed rates, taking into account, amongst other factors, the circumstances of the case and the conduct of any party. Royal's submission in this regard does not assist me as I find no comparable discretion for FSCO arbitrators in the Schedule, the Insurance Act or the Statutory Powers Procedure Act.
Even if I found that it was appropriate for a pre-hearing arbitrator to order the relief sought in this case, I do not find that the circumstances warrant an order suspending the payment of interest on overdue amounts. Royal submits that Mr. Sardo's conduct in connection with the scheduling of the arbitration hearing constitutes an abuse of process. Mr. Sardo's counsel was unavailable for an arbitration hearing until March 2003. Although the delay in bringing this matter to arbitration is due to the unavailability of Mr. Sardo's counsel, this does not on its own constitute an abuse of process. Royal did not adduce any evidence to suggest that Mr. Sardo or his counsel intentionally made themselves unavailable for the purpose of subverting the dispute resolution process or to inconvenience Royal. I do not infer any such intention from the circumstances of this case. Based on the parties' submissions, I do not find that Mr. Sardo's conduct in relation to the scheduling of the arbitration hearing constitutes an abuse of process. The hearing arbitrator may choose to consider the reasonableness of the delay and the parties' conduct in the scheduling of the arbitration hearing in determining the merits of the case and awarding expenses.
Considering the nature of the relief sought and the relative functions of the pre-hearing arbitrator and the hearing arbitrator in arbitration proceedings, I find that it would not be proper for me to order the suspension of interest on any overdue amounts. Royal's motion is denied.
EXPENSES:
I exercise my discretion to award Mr. Sardo his expenses in relation to this motion hearing.
August 16, 2002
Catherine Skinner
Arbitrator
Date
Neutral Citation: 2002 ONFSCDRS 125
FSCO A01-001298
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
MORRIS SARDO
Applicant
and
ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Royal's motion for an order suspending interest payments on overdue amounts from September 11, 2002 to the date of the arbitration hearing is denied.
Royal will pay Mr. Sardo his expenses in relation to this motion hearing.
August 16, 2002
Catherine Skinner
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, 303/98 and 114/00, and 482/01.