Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2003 ONFSCDRS 100

Variation/Revocation P02-00033

OFFICE OF THE DIRECTOR OF ARBITRATIONS

LORRAINE LANCTOT

Appellant

and

ZURICH INSURANCE COMPANY

Respondent

Before:

David R. Draper

Representatives:

Michael J. Gillen for Ms. Lanctot

Donna M. Crabtree for Zurich

Motion Date:

June 18, 2003

VARIATION/REVOCATION ORDER ON MOTION

Under section 284 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The motion is dismissed.
Expenses will be considered as part of the application for variation/revocation.

June 26, 2003

David R. Draper Director of Arbitrations

Date

REASONS FOR DECISION

I. NATURE OF THE MOTION

Ms. Lanctot brings this motion, seeking the following relief:

An order restoring her appeal to the list of appeals to be heard;
In the alternative, an order extending the time for filing an appeal from the arbitration decision dated January 18, 1999;
An order for the payment of interim expenses, namely the cost of obtaining a transcript of the arbitration hearing, estimated at $2,400.

For reasons that follow, the motion is denied.

II. BACKGROUND

The request for relief is highly dependent on the procedural history of the case. Therefore, I will review the background in some detail.

Ms. Lanctot was injured in an automobile accident on February 25, 1993. She applied to Zurich Insurance Company ("Zurich") for accident benefits. Zurich paid benefits, including weekly income benefits under s. 12(1) of the SABS-1990¹ for 156 weeks. However, it rejected her claim for weekly income benefits after February 25, 1996, under the stricter, post-156 week test in s. 12(5)(b).

The issue went to arbitration in June 1998. Ms. Lanctot was represented by Mr. Douglas D.G. Stel of the firm Goss, McCorriston, Stel; Zurich was represented by Peter G. Hagen of the firm Solway, Wright. Both parties filed exhibits. Ms. Lanctot testified and called three other witnesses: David Lanctot (her husband), Dr. O.G. Marengere (her family doctor); and Dr. U. Buenger (a specialist in physical medicine and rehabilitation). Zurich did not call any witnesses.

The Arbitrator released her decision on January 18, 1999. She held that Ms. Lanctot did not meet the test at the 156-week mark. Therefore, she denied the claim for weekly income benefits, except for a six-week period starting March 21, 1996 (approximately one month after the 156-week mark), when Ms. Lanctot had ear surgery. The Arbitrator summarized her conclusions as follows:

I find that Ms. Lanctot was capable of a gradual return to sedentary work by December 1995. I find that work as a sales clerk, secretary, receptionist (with a telephone assistance device), or bank teller (with a stool) is suitable, having regard to Ms. Lanctot's past work experience. Had Ms. Lanctot begun a gradual return to work trial in December 1995, as recommended by Dr. Morrison and Dr. MacGregor, I find that she would likely have been capable of returning to full time employment by February 25, 1996, the third year anniversary of the accident. Ms. Lanctot unreasonably refused to participate in a pain management clinic in late 1994/early 1995. She did not attempt any return to work after 1994. I find her failure to return to work after February 1996 is more likely related to her own lack of efforts in rehabilitating herself rather than due to her injuries from the accident. Thus, the Applicant has failed to establish on a balance of probabilities that her injuries from the accident continuously prevented her from engaging in any occupation or employment for which she is reasonably suited by education, training or experience, after February 26, 1996.

However, on March 21, 1996 the Applicant underwent further ear surgery to repair the damage caused by the motor vehicle accident. Assuming a normal recovery from surgery of six weeks, I find that Ms. Lanctot would have been unable to engage in any employment for six weeks after the surgery of March 21, 1996, and is therefore entitled to weekly income benefits for those six weeks. [pp. 20-21]

Both parties appealed. Ms. Lanctot's Notice of Appeal was signed by her new representative, Mr. Michael D. Pantalony of the firm Garay & Associates. She challenged the Arbitrator's conclusion that she did not meet the post-156 week test. Zurich objected to the Arbitrator's order that it pay benefits for the six-week period following the surgery.

On March 18, 1999, one month after the appeals were filed, Mr. Pantalony wrote to Mr. Hagen, proposing that both parties withdraw their appeals. Ms. Donna M. Crabtree, also of the firm Solway, Wright, responded the next day, stating that she did not have instructions to withdraw Zurich's appeal, but was prepared to extend the time for Ms. Lanctot to respond.

On May 10, 1999, Mr. William Garay wrote to Mr. Hagen, again suggesting that both parties abandon their appeals. Mr. Garay wrote to the Financial Services Commission of Ontario ("FSCO") on June 2, 1999, stating that:

Further to your telephone conversation with my secretary, Bev. Houghtby, on June 1, 1999 may we confirm that Mr. Hagen and I have agreed to place the "Appeal" of this claim "in abeyance" pending our attempts to settle the matter within the next month.

Ms. Jas Mahal, FSCO's Appeals Administrator, responded on June 8, 1999, confirming that the matter would be held in abeyance until July 9, 1999. On June 28, 1999, Mr. Garay wrote to Mr. Hagen. After discussing Ms. Lanctot's ongoing claims for medical and rehabilitation expenses, he stated as follows:

With respect to our Appeal, we are advising Ms. Jas Mahal that we are withdrawing same. This is not to say that we will not proceed with whatever other remedies may be available.

With respect to your Appeal, please proceed if you wish to do so or, in the alternative, forward a cheque payable to our firm, in trust, for the amount of the award.

That same day — June 28, 1999 — Mr. Garay wrote to Ms. Mahal, stating: "We now advise that we have instructions to withdraw our Appeal. Counsel for the insurer may, however, wish to proceed with his Cross-Appeal."

Mr. Hagan responded to Mr. Garay on July 2, 1999. His letter states as follows:

We have received instructions to pursue the Appeal of the OIC decision notwithstanding the fact that Lorraine Lanctot is abandoning her Appeal.

We have also received instructions to pay the costs in the amount requested by Mr. Stel notwithstanding the fact that we are continuing with our Appeal.

I am advised that two claims for further benefits have been made by Lorraine Lanctot. I am further advised that the first claim was denied with an "Explanation of Benefits" being sent to Lorraine Lanctot requesting additional supporting documentation. I am advised that the second claim that you refer to in your correspondence has not yet been received; however, upon receipt it will be processed in the ordinary course.

On July 8, 1999, Ms. Mahal wrote to Mr. Hagen and Mr. Garay, confirming that Zurich was proceeding with its cross-appeal, and that the next step was for Ms. Lanctot to file a response to the appeal. Mr. Garay responded on July 26, 1999, stating that "we are awaiting instructions from Ms. Lanctot as to whether or not she wishes to contest the Appeal."

Nothing further happened until September 2, 1999, when Mr. Hagen asked that Zurich's appeal be scheduled. In a letter to Mr. Hagen and Mr. Garay dated September 14, 1999, I agreed that the matter should proceed. My letter states:

. . . Mr. Garay has advised that Ms. Lanctot is not proceeding with her appeal, leaving only the appeal filed by Zurich. Ms. Lanctot has not filed a Response to Appeal. If she does not do so by Friday, September 24, 1999, the appeal will proceed without her participation . . .

Consistent with the practice in appeals at FSCO, this letter was sent only to the representatives, leaving it to them to communicate with their clients as they saw fit. When nothing was received by September 24th, the appeal hearing was scheduled, with the Notice of Hearing going only to Mr. Hagen.

The appeal was conducted by telephone on October 18, 1999. Mr. Hagen argued on behalf of Zurich that the Arbitrator erred in ordering any weekly income benefits beyond 156 weeks because:

the evidence did not support the Arbitrator's finding that Ms. Lanctot's ear surgery was to repair damage caused by the accident; and
the order was inconsistent with the Arbitrator's conclusion that Ms. Lanctot failed to establish that, after February 26, 1996, her accident-related injuries continuously prevented her from engaging in any suitable occupation or employment.

On November 9, 1999, I allowed Zurich's appeal. While I found no error in the Arbitrator's conclusion that Ms. Lanctot's ear injury resulted from the accident, I concluded that she erred in ordering post-156 week benefits for a temporary disability. As a result, I reversed the Arbitrator's order on this issue and ordered that if any weekly income benefits had already been paid pursuant to the Arbitrator's order, Ms. Lanctot was obliged to repay them. The decision was sent to Mr. Hagen and posted on FSCO's website. It was not sent to Mr. Garay or Ms. Lanctot.

In an affidavit sworn on March 23, 2003, Ms. Lanctot states that after the release of the appeal decision, Mr. Garay continued to act on her behalf. He obtained reports based on her instructions to apply for variation/revocation "as and when it was appropriate to do so." However, in November 2001, two years after the appeal decision, he advised Ms. Lanctot that he could no longer represent her. According to her affidavit, Ms. Lanctot tried to find other counsel, eventually retaining a paralegal, Ms. Sandra Clark, in the Spring of 2002. Ms. Clark obtained the medical file from Mr. Garay and, after reviewing it, wrote a lengthy letter to Zurich, dated June 12, 2002, proposing a global settlement.

According to the affidavit, Ms. Clark advised Ms. Lanctot in July 2002 that she was moving to British Columbia and could no longer provide representation. Ms. Lanctot then asked her physiatrist, Dr. Martin Gillen, to recommend another representative. Dr. Gillen suggested his brother, Mr. Michael Gillen. Ms. Clark and Mr. Gillen first met in late July 2002. After reviewing the file, Mr. Gillen wrote to Zurich, asking for information. When he did not receive the information he wanted, Ms. Lanctot formally retained him "to commence an Application to Vary and/or an Appeal of the decision of Arbitrator Joachim."

Mr. Gillen contacted FSCO to review the file. It took a couple of months, until November 2002, for FSCO to get the file back from storage, and for Mr. Gillen to find time in his schedule to come in and review it. On December 11, 2002 — more than six years after Ms. Lanctot's weekly income benefits were terminated, and more than three years after the appeal was withdrawn — Mr. Gillen filed an Application for Variation/Revocation under s. 284 of the Insurance Act.

Along with the application, Mr. Gillen filed a lengthy memorandum outlining Ms. Lanctot's arguments. The framing of the issues is somewhat unusual. Ms. Lanctot claims there is new evidence that casts doubt on the Arbitrator's decision, as upheld on appeal. Consequently, she seeks an order varying or revoking the two orders. However, she also seeks to re-open the appeal. She claims that she never instructed Mr. Garay to withdraw the appeal, and was not aware that he had done so until much later.

I conducted a pre-hearing conference in this matter on February 3, 2003. During the discussions, the hearing was scheduled for July 7, 2003, with Mr. Gillen to file any additional material by the end of March. Mr. Gillen also agreed to write again to Mr. Garay, requesting a response to the assertion that he withdrew the appeal without instructions from Ms. Lanctot.

III. THE MOTION

Prior to the hearing, Mr. Gillen brought forward some issues by way of motion. As he explained, Ms. Lanctot can only challenge the Arbitrator's decision on questions of law if she is allowed to re-open her appeal. Therefore, she seeks a determination of that issue first. In addition, she asks for interim expenses to obtain a transcript of the arbitration hearing, which she claims is needed for both the appeal and application for variation/revocation.

A. Re-opening the Appeal — Appeal Withdrawn Without Authority

Ms. Lanctot claims that she retained Mr. Garay to appeal the Arbitrator's decision, which he did, but never gave him instructions or authority to withdraw it.² She also instructed him, "if possible, to Apply to Vary or Revoke the decision of Arbitrator Joachim as and when it was appropriate to do so."³ According to her most recent affidavit, "at all times," she was "under the impression that Mr. Garay was proceeding with an Appeal and/or an Application to Vary/Revoke the decision of Arbitrator Joachim."⁴

Even accepting that Ms. Lanctot did not know or understand that her appeal had been withdrawn, the law is squarely against her position. The courts have consistently held that counsel acting within the apparent scope of his authority binds his client.⁵ While arbitration is a more flexible process, the concern is the same — FSCO and opposing parties must be able to rely on the authority of representatives to take steps on behalf of their clients.

There is no question that Ms. Lanctot retained Mr. Garay's firm to represent her in the appeal, with no apparent limitations on that retainer. Nor is there any doubt that Mr. Garay withdrew the appeal in June 1999. His letter is clear and unambiguous, and FSCO and Zurich reasonably relied on it. In these circumstances, I find that Ms. Lanctot is bound by the withdrawal. She cannot, more than two years later, have the appeal re-opened on the basis that she just discovered what Mr. Garay did. Her belated discovery is not, in my view, "evidence not available on the arbitration or appeal," within the meaning of s. 284(3) of the Insurance Act.

Although not essential to the decision, I also have reservations about Ms. Lanctot's factual assertions. First, they directly contradict Mr. Garay's letter. He did not simply withdraw the appeal. Instead, he specifically advised FSCO and Zurich that he had received instructions to do so. Second, Mr. Garay did not withdraw the appeal and walk away. He continued to represent Ms. Lanctot for more than two years. As she states in her affidavit, he obtained reports "with a view to determining whether there was fresh evidence to justify an Application to Vary."⁶ In July and October 2001, he wrote to Zurich, providing a report from Dr. Gillen and asking if they were prepared to reconsider Ms. Lanctot's entitlement to weekly income benefits. Shortly thereafter, he told Ms. Lanctot that he was no longer able to represent her, although she has not provided any details of his reasons.

If Ms. Lanctot had remained committed to appealing the arbitration decision, it seems likely that she would have raised the topic at some point during this lengthy period. Despite this, there is no suggestion that Mr. Garay actively misled her about the status of the appeal. In this context, I find it significant that Ms. Lanctot did not provide any reporting letters from Mr. Garay, and that Mr. Gillen did not provide confirmation that he contacted Mr. Garay, as agreed at the pre-hearing conference in February 2003.

B. Re-opening the Appeal — Appeal Never Properly Withdrawn

Ms. Lanctot also claims that the appeal was not withdrawn according to the rules set out in the Dispute Resolution Practice Code (the "Code"). The implication, she contends, is that the appeal is still pending and should be scheduled for hearing.

The third edition of the Code, which was in effect in 1999, included the following rules about withdrawals:

67.1 A party may seek permission to withdraw all or part of a dispute:

(a) in writing by serving on the parties a request to withdraw and by filing the request to withdraw together with a Statement of Service in Form E; or

(b) orally during a neutral evaluation, pre-hearing discussion, a preliminary conference or at a hearing.

67.2 The Commission or an adjudicator, as the case may be, will permit a party to withdraw if the other parties agree.

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 Rule 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 abuse of process has occurred or the proceeding is frivolous or vexatious.

In Ms. Lanctot's submission, there is no evidence that Zurich consented to the withdrawal. In the absence of consent, she argues there should have been a formal ruling on whether or not the withdrawal was allowed and, if so, on what conditions.

I find no merit in this argument. Mr. Garay clearly communicated his intention to withdraw Ms. Lanctot's appeal on her behalf. Zurich did not demand any further information, contest the withdrawal, or seek any conditions. The subsequent letters to Mr. Garay leave no doubt that the withdrawal was permitted, without conditions, and that the hearing of Zurich's appeal was proceeding.

C. Extending the Time for Appeal

Ms. Lanctot submits that, as an alternative to re-opening the appeal, the 30-day time limit should be extended to allow her to file a fresh appeal now. Obviously, this would involve a lengthy extension — well over three years.

According to s. 283(3) of the Insurance Act, the appeal period can be extended, before or after it expires, if there are "reasonable grounds for granting the extension." This is a broad discretion that should be exercised in the particular circumstances of the case. However, I accept that the following considerations, identified by the parties, are relevant:

Was there an intention to appeal within the time limit, and an ongoing intention to appeal thereafter?
Is there a reasonable explanation for the delay?
Has the delay prejudiced the respondent and, if so, can that prejudice be compensated through conditions or expenses?
What is the apparent strength of the appeal?

In this case, there clearly was an initial intention to appeal. The existence of an ongoing intention is more problematic. While Ms. Lanctot claims that she never wavered in her intention to proceed with the appeal, her lawyer withdrew the appeal. This raises the same issue, discussed above, of whether Ms. Lanctot is bound by the actions of Mr. Garay. However, even if I accept that Ms. Lanctot had an ongoing intention to appeal, I am not persuaded that the appeal period should be extended based on the other criteria.

In my view, the most significant problem is the passage of time. Appeal periods are established to bring closure to the adjudication process.⁷ They also help ensure that the issues do not become stale. The delay in this case would significantly change the nature of the dispute. In June 1998, when the arbitration hearing took place, the issue was Ms. Lanctot's entitlement to weekly income benefits after February 25, 1996. A successful appeal would require a decision on entitlement looking back more than seven years, and would have to deal with entitlement for a period extending more than four years beyond the date of the arbitration decision. Despite Mr. Gillen's submissions to the contrary, this would clearly prejudice Zurich's position.

After reviewing the material before me, I am not persuaded that Ms. Lanctot's explanation for the delay is sufficient to justify allowing an appeal so long after the appeal period expired. Nor am I persuaded that her grounds for appeal are so strong that she should be allowed to proceed. Although Mr. Gillen has carefully framed the grounds as questions of law, the decision turns on the Arbitrator's assessment of the evidence. If, as Ms. Lanctot claims, there is new evidence that casts doubt on the Arbitrator's findings, the appropriate course is to proceed with the application for variation/revocation, currently scheduled to be heard on July 7, 2003.

In reaching this conclusion, I acknowledge that Ms. Lanctot has also raised some procedural objections. For example, she claims that she was excluded from parts of the hearing, affecting her ability to instruct counsel on some critical evidence. However, these objections were not included in her original appeal, filed by Mr. Garay's firm. In my opinion, it is too late to raise them now.

For these reasons, Ms. Lanctot's request to re-open the appeal is denied.

D. Interim Expenses - Arbitration Transcript

Ms. Lanctot asks for an interim award of expenses to obtain a transcript of the arbitration hearing, which she claims is essential and beyond her means. The estimated cost is $2,400.

In Malabanan and Canadian General Insurance Company, (FSCO P96-00073, February 4, 1998), I dealt with a similar request in the context of an appeal, as follows:

The filing of a transcript has never been a formal requirement in the appeal process. While it may be useful in some appeals, the decision whether to obtain and file a transcript has been left to the parties.

I agree with Canadian General's submission that interim expenses are not to be ordered on a routine basis. That follows from the decisions on appeal expenses. Unlike the practice at the arbitration level, appeal expenses are often denied to unsuccessful applicants where the appeal focuses on the arbitrator's assessment of the evidence, or raises no significant or novel issue. In this case, the transcript is most relevant to the parts of the appeal dealing with the arbitrator's factual findings. However, those are precisely the kind of appeals that are often unsuccessful and where expenses are not awarded. I am not persuaded by the material before me that the appeal is sufficiently strong that interim expenses should be ordered. (p. 2)

This approach has been followed in later appeal decisions.⁸ Although the variation/revocation is a different process from appeal, the considerations are similar. Transcripts are not formally required, but can be helpful in some cases. The real question is who should pay for them. As I understand it, Ms. Lanctot wants the transcript to establish what evidence was before the Arbitrator. She provides more details, although in respect of her appeal grounds, at paragraph 21 of her affidavit, sworn March 23, 2003, and paragraphs 13-16 of her Notice of Motion. It appears to me that Mr. Gillen wants the transcript to investigate the strength of his client's recollections and the grounds for challenging the decision. While this may be understandable, I am not persuaded that Zurich should be required to pay the bill at this stage. Of course, if Ms. Lanctot obtains a transcript at her own expense, she can seek to recover the amount as part of her litigation expenses.

Therefore, Ms. Lanctot's request for interim expenses is denied.

IV. EXPENSES

The parties did not address the question of expenses. In any event, the issue can be decided as part of the decision on the application for variation/revocation.