Juri Karl Lees v. Pilot Insurance Company, 2003 ONFSCDRS 103

Neutral Citation: 2003 ONFSCDRS 103

FSCO A03-000421

BETWEEN:

JURI KARL LEES

Applicant

and

PILOT INSURANCE COMPANY

Insurer

PRE-HEARING DECISION

Before: Lawrence Blackman

Heard: By telephone conference call on June 26, 2003.

Appearances:

Rodney D. Dale for Mr. Lees

Grant Black and Kevin Griffiths for Pilot Insurance Company

Issues:

The Applicant, Juri Karl Lees, resides near London, Ontario. He was injured in a motor vehicle accident on January 15, 1999. Mr. Lees applied for statutory accident benefits from Pilot Insurance Company ("Pilot"), payable under the Schedule.¹ A dispute arose as to Mr. Lees' entitlement to weekly income replacement benefits for any period longer than 104 weeks of disability. Mediation held on November 26, 2002 failed to resolve the disputed issue. Mr. Lees, therefore, applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended, by Application received March 13, 2003 by the Commission. A Notice of Pre-Hearing Discussion, dated May 9, 2003, was sent to the parties setting a pre-hearing discussion by telephone conference for June 18, 2003.

The June 18, 2003 pre-hearing discussion commenced before Arbitrator Killoran. The Applicant participated, as did his counsel, Mr. Dale. The Insurer was represented by its counsel, Mr. Griffiths. No one from Pilot itself participated in the telephone conference. Arbitrator Killoran rescheduled the pre-hearing discussion for June 26, 2003. The resumption was held before me. Mr. Lees again participated, represented by Mr. Dale. Ms. Anna Smith participated on behalf of Pilot, which was represented by Mr. Griffiths and Mr. Black.

At the pre-hearing resumption, the Applicant raised the following issue:

Is Mr. Lees entitled to payment of $125 for his expenses thrown away for the initial pre-hearing discussion held on June 18, 2003?

Result:

Pilot shall pay Mr. Lees the sum of $125, inclusive of GST, forthwith, in any event of the cause, in respect of his legal expenses for his counsel's participation in the pre-hearing discussion held June 18, 2003.

SUBMISSIONS:

The Applicant states that he is presently working, albeit in a modified fashion. He submits that he took a day off work in order to participate in the June 18, 2003 telephone pre-hearing conference set up by the Commission. Taking off a day from work meant that he lost $125 in wages. Mr. Lees submits that the initial pre-hearing discussion was thwarted by the absence of an adjuster from Pilot. Accordingly, the pre-hearing discussion was rescheduled to June 26, 2003, which meant that in order to participate he was required to lose another day's pay of $125. He seeks $125 for his expenses thrown away.

Pilot submitted that Mr. Griffiths, as Pilot's counsel at the first pre-hearing discussion, had full authority to deal with the pre-hearing discussion. It submits that Mr. Griffiths' law firm handles hundreds of such files, and that rarely is the participation of a Pilot adjuster actually required.

There was disagreement between the parties as to the extent of Mr. Griffiths' authority to bind the Insurer. There was also disagreement as to whether the impetus for adjourning the first pre-hearing came from the Arbitrator or from the Applicant.

DECISION:

The pre-hearing discussion is a procedural step in the arbitration process subsequent to the exchange of pleadings and prior to the arbitration hearing itself. It is mandated by Rule 33 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001) (the "Code"). It is normally intended to last two to three hours. It has many purposes. It is part pre-trial conference. It is part motions court. It is part informal examination-for-discovery. It is part neutral evaluation. It is part case management conference. It is part mediation. It is crucial in ultimately ensuring an efficiently run hearing. It is flexible in meeting the legitimate needs of the parties. It is an extremely impressive instrument in the arsenal of dispute resolution.

Often participating at pre-hearing discussions are very experienced and knowledgeable counsel and other legal representatives who have great expertise in the area of benefit entitlement under the Schedule. Sometimes, although it is very much the exception, such individuals do in fact have complete authority to bind their principal. Succinctly, binding authority means, as set out in Practice Note 3 of the Code, never having to say "I'll have to check that with my client."

Notwithstanding the tremendous input that counsel routinely bring to pre-hearing discussions, there are fundamental benefits which the principals themselves bring to, and obtain from, the pre-hearing discussion. These include:

being able to provide first-hand information known only, or known best to the principals themselves, such as details of the claims or the handling of the file;
being often able, with the consent of their legal representative, of stating their position and their concerns in a personal manner sometimes far more effectively than the greatest eloquence that advocacy allows;
being able to hear, first hand, the position and the concerns of the other party;
hearing (and if possible seeing) first hand the legal process and having an opportunity to be part of that process; and,
being present to immediately provide any necessary instructions regarding procedural matters or settlement opportunities.

Not requiring the principals themselves to be involved in the pre-hearing discussion lessens the value of the pre-hearing discussion. It also lessens the worth of the meeting in the eyes of the participants. Not requiring both principals to participate in the pre-hearing discussion can imply an institutional bias, an assumption that one party's time is more valuable than that of the other.

Hence, Practice Note 7 of the Code provides that with regard to the Arbitration Pre-Hearing Discussion:

Whether the discussion is in person or by telephone, both the applicant and the representative from the insurance company should take part. Arbitrators have noted that the absence of parties from the pre-hearing frequently impedes settlement discussions - even when the parties are represented by legal counsel who participate in the pre-hearing on their behalf.

Clients who cannot participate in person are expected to be available to participate in the pre-hearing discussion by phone.

[emphasis in the original]

The importance and necessity of the personal involvement of principals is reiterated in the Notice of Pre-Hearing Discussion. The same was repeated in the Notice in this case, which was sent to both Mr. Lees and Pilot's ADR Co-ordinator, as well as their respective legal counsel. The May 9, 2003 Notice stated (as did the Notice for the rescheduled discussion) that:

The arbitration pre-hearing is designed for the direct involvement of both parties. Clients are expected to be available and to participate in the telephone conference call [which was the manner of pre-hearing arranged in this proceeding].

I find that reasonable notice was given to both parties of the requirement that both principals participate in the pre-hearing discussion. No explanation was provided as to why a representative of Pilot itself could not participate at the June 18, 2003 pre-hearing discussion. I find that the absence of such a representative frustrated the general intention of the pre-hearing discussion as set out above, and specifically in this case hindered the pre-hearing process as evidenced by the fact that none of the intended purposes of the pre-hearing discussion enumerated in the May 9, 2003 Notice were accomplished on June 18, 2003, and that the pre-hearing arbitrator rescheduled the pre-hearing discussion to June 26, 2003.

As I indicated to the parties during submissions, I do not see that I have authority to award a party's lost wages. I did indicate to the parties, however, my authority to make an interim award of legal expenses, pursuant to subsection 282(11.1) of the Insurance Act. The Applicant reiterated his request for $125.

I note the criterion under Rule 75 of the Code that conduct that "tended to prolong, obstruct or hinder the proceeding" is a consideration in awarding expenses. I also note that Rule 78 allows an award of legal expenses to an Applicant up to $150 an hour. Having regard to these provisions, I am persuaded that the Applicant is entitled to the sum of $125, inclusive of GST, as legal expenses with regard to Mr. Dale's participation at the pre-hearing discussion held June 18, 2003, payable forthwith, in any event of the cause.

The question of the legal expenses of the June 26, 2003 pre-hearing discussion shall be dealt with by the hearing arbitrator, subject to any further or other arbitral order.

July 7, 2003

Lawrence Blackman Arbitrator

Date