Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2002 ONFSCDRS 60

Appeal P01-00020

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ENRIQUE TORRES

Appellant

and

PAFCO INSURANCE COMPANY LIMITED

Respondent

Before:

Stewart M. McMahon, Director’s Delegate

Appearances:

G Jonathan Frank (for Mr. Torres)

William M. Sproull (for Pafco)

APPEAL ORDER

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

1. The appeal is dismissed.

2. The Appellant shall pay the Respondent’s expenses of the appeal, fixed at $1,000.

May 8, 2002

Stewart M. McMahon Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

The arbitration hearing in this matter was scheduled to commence on January 8, 2001. Mr. Torres did not attend, nor did a lawyer or representative appear on his behalf. Mr. Torres’s claim was dismissed because no evidence was submitted on his behalf. Pafco Insurance Company Limited (“Pafco”) was awarded its legal expenses.

Mr. Torres seeks to set aside the order on two grounds. One, he submits the issues to be arbitrated had been settled, and consequently, the arbitrator did not have jurisdiction to deal with the matter. Two, Mr. Torres submits that neither he nor his representative, Mr. Franko, were given adequate notice of the hearing, or sufficient time to prepare.

I see no merit in either of these submissions. As I advised the parties at the conclusion of oral argument, the appeal is dismissed. Mr. Torres shall pay Pafco’s expenses fixed at $1,000.

II. ARGUMENT AND ANALYSIS

Were the issues to be arbitrated settled in advance of the hearing?

Mr. Torres submits that the issues to be arbitrated were settled on the morning of the hearing, when his representative accepted an offer by Pafco to pay $10,000.

Mr. Torres relies on a letter faxed by Mr. Franko to Mr. Sproull, Pafco’s counsel, at 8:24 on the morning of the hearing. Mr. Torres submits that Pafco had earlier offered to pay $10,000 to satisfy the outstanding claims, and that his representative’s letter was an acceptance of that offer, thereby disposing of the issues to be arbitrated. However, nothing in the record reveals the existence of such an offer. I see no basis for the submission that the arbitrator lacked jurisdiction to dispose of the matter.

To explain the basis for this conclusion I need to review the quite protracted history of these proceedings.

Mr. Torres was injured in a motor vehicle accident on October 24, 1997. He submitted his disputes over statutory accident benefits to arbitration. A pre-hearing was conducted on February 14, 2000. Mr. Torres did not attend, but was represented by Mr. Franko, a paralegal. The pre-hearing letter notes that the issues included income replacement benefits, supplementary medical and rehabilitation benefits, and assessment expenses claimed pursuant to s. 24 of the SABS-1996.¹ The arbitration hearing was scheduled to commence on July 31, 2000.

On July 24, 2000, one week before the hearing, Mr. Sproull faxed Mr. Franko an offer to pay $20,000 to settle all of the benefits in dispute. The offer indicated on its face that it expired one minute after the commencement of the hearing, including any request for an adjournment.

Mr. Suboch, a lawyer, contacted Mr. Sproull on July 25th to indicate he was now acting for Mr. Torres. Mr. Sproull and Mr. Suboch participated in a settlement conference on July 26th that resulted in an offer by Pafco to pay $25,000, all inclusive. The letter setting out the terms of Pafco’s offer made it clear the offer would expire if not accepted by noon the following day. Mr. Sproull faxed another letter to Mr. Suboch early on the 26th, extending the offer to 5:00 p.m. The letter also indicated that if this deadline was not met, the July 24th offer of $20,000 would remain open for acceptance until the start of the hearing. Mr. Suboch advised Mr. Sproull later in the day that no settlement was possible, and that Mr. Torres planned to ask for an adjournment. Mr. Franko attended at the hearing with Mr. Torres to ask for the adjournment. He told the arbitrator that Mr. Torres intended to hire a new lawyer.

Arbitrator Leitch allowed the adjournment on certain conditions. He ordered Mr. Torres to advise Mr. Sproull and FSCO of the identity of his new counsel within one month, failing which he would fix the date for the hearing after consulting only with Mr. Sproull. The new date was peremptory to Mr. Torres.

Mr. Torres did not identify a new representative and accordingly the date was set after consulting with Mr. Sproull. The Notice of Hearing, which advised that the hearing would commence on January 8, 2001, was mailed to Mr. Torres on September 11, 2000. Mr. Torres later decided to continue using Mr. Franko’s services, but he did not advise FSCO of this decision.

Mr. Franko and Pafco’s adjuster entered into settlement discussions toward the end of September, that resulted in a payment of $15,000 in settlement of all Mr. Torres’s claims, exclusive of the accounts rendered by the treatment and assessment centres. The parties agreed that if these two latter issues could not be settled, they would be dealt with at the upcoming arbitration.

The next record of contact between the parties is on December 29, 2000, approximately 10 days before the hearing. Mr. Sproull wrote to Mr. Franko enclosing various documents. The letter noted that the hearing was scheduled to commence on January 8, 2001, and that it was peremptory to Mr. Torres.

There is no record of any further contact between the parties until the morning of the hearing. As noted at the start of these reasons, Mr. Franko faxed a letter to Mr. Sproull at 8:24 a.m. on January 8, 2001. The first paragraph of the letter reads as follows:

The purpose of this communication is to advise you that I am instructed to inform you that our clients are in agreement to finalize the balance of this matter, and in the amount of $10,000 in exchange for a Full and Final Release from our clients.

Mr. Franko took no steps to call Mr. Sproull to discuss the matter. He did not bother to contact FSCO, nor did he attend at the Commission’s offices for the hearing. Mr. Torres did not attend either.

The transcript of the proceeding indicates that Mr. Sproull brought Mr. Franko’s letter, which he characterized as an offer to settle by Mr. Torres, to the arbitrator’s attention. He also provided her with a copy of the offer, with the amount blanked out. The arbitrator stood the matter down for half an hour and tried to contact Mr. Torres and Mr. Franko, but was unable to reach either of them. When no one appeared by 11:00 a.m. she proceeded with the hearing.

The transcript reveals that Mr. Sproull reviewed the history of the proceeding, including the partial settlement, and then asked the arbitrator to dismiss Mr. Torres’s arbitration on the basis that no evidence had been tendered in support of the claim. The arbitrator acceded to this request and the arbitration was dismissed with expenses payable to Pafco.

Mr. Torres’s submission that the arbitrator had no jurisdiction to deal with the matter is premised on the remaining issues having been settled by way of Mr. Franko’s fax on the morning of the hearing. This in turn is premised on the existence of an offer by Pafco that was open for acceptance.

Mr. Franko referred repeatedly to the offer made by Pafco on the eve of the first hearing, to pay $25,000 in exchange for a full and final release. He submitted that the subsequent settlement of Mr. Torres’s “personal” claims on payment of $15,000, meant there remained an outstanding offer of $10,000 to settle the treatment and assessment centres’ accounts. This submission ignores the fact the $25,000 offer was time limited and was only open for acceptance for roughly 24 hours. After that, Pafco’s position reverted to the original offer to settle for $20,000, but even that offer expired when Mr. Torres asked for an adjournment at the time of the first hearing. There is no evidence that after paying $15,000 to settle Mr. Torres’s “personal claims,” Pafco held out an offer to pay a further $10,000 in settlement of the remaining claims.

Mr. Franko attempted during oral submissions to give evidence concerning his discussions with Pafco’s adjuster that led to the settlement of Mr. Torres’s personal claims. Mr. Franko appeared to be trying to intimate that the adjuster had held out an offer of a further $10,000 to settle the treatment and assessment centres’ accounts. I refused to allow Mr. Franko to continue with this attempt to give evidence.

As a general rule, appeals proceed on the basis of the record before the arbitrator. However, in this case, it was evident the parties would need to provide direct evidence of the events preceding the hearing. To that end, I convened two pre-hearing discussions to review what evidence the parties intended to rely on, and what form the evidence would take. The possibility of an affidavit from Mr. Franko was canvassed, but ultimately he decided against filing one.

If there had been evidence that Pafco’s adjuster had held out a promise to pay a further $10,000, the outcome of this proceeding might have been different. However, in light of Mr. Franko’s decision not to file an affidavit, I have no choice but to limit my deliberations to the letters and settlement documents, and the transcript of the hearing. As stated already, there is nothing in these materials that reveals the existence of an outstanding offer.

I have some sympathy for Mr. Franko’s predicament, but ultimately he is the author of his own misfortune. It is possible that this whole matter could have been avoided if he had taken steps to attend at the hearing, or at the very least to have spoken to Mr. Sproull.

The second issue can be disposed of very briefly.

Did Mr Torres and his representative receive adequate notice of the hearing?

The Notice of Hearing was sent to Mr. Torres’s address and there is nothing in the materials to suggest he did not receive it. It provided almost four month’s notice of the pending hearing. This disposes of the submission that Mr. Torres did not receive adequate notice.

The Notice was not sent to Mr. Franko, but this is consistent with the fact that he told the arbitrator he was only attending to help Mr. Torres obtain the adjournment. It was Mr. Torres’s obligation to advise his representative of the date for the new hearing, and he is not in a position to complain if his representative was not aware of the date. In addition, I am satisfied that Mr. Franko was well aware of the hearing. The Notice of Appeal which he drafted indicates that his letter of January 8th was the result of last minute instructions. In addition, Mr. Sproull’s letter of December 29th to Mr. Franko notes that the hearing was scheduled to commence in a week’s time and reminds Mr. Franko that the date is peremptory to Mr. Torres. This disposes of the argument that Mr. Franko was not given notice of the hearing.

III. EXPENSES

Pafco has asked for its expenses of the appeal and suggests the figure of $2,000. The appeal had little chance of success given the way it was pursued. However, I have some sympathy for the Appellant’s position. In the circumstances, Mr. Torres shall pay Pafco’s expenses fixed at $1,000.

May 8, 2002

Stewart M. McMahon Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.