Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2003 ONFSCDRS 71

Appeal P02-00008

OFFICE OF THE DIRECTOR OF ARBITRATIONS

PIUS BONIFACE

Appellant

and

LIBERTY MUTUAL INSURANCE COMPANY

Respondent

Before:

David R. Draper

Representatives:

David S. Wilson for Mr. Boniface

Pamela Brownlee for Liberty Mutual

Hearing Date:

February 28, 2003

APPEAL ORDER*

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

The appeal is dismissed and the arbitration order, dated March 12, 2002, is confirmed.
The parties will bear their own appeal expenses.

May 9, 2003

David R. Draper Director of Arbitrations

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This appeal involves the transition from income replacement benefits ("IRBs") to loss of earning capacity benefits ("LECBs") in circumstances where the insured person is involved in more than one accident. Mr. Boniface submits that the Arbitrator erred in concluding that he is not entitled to separate LECB offers for each of his three accidents. He also claims the Arbitrator — Arbitrator Joyce Miller — was involved in pre-hearing settlement discussions and, therefore, should not have presided at the hearing. For reasons that follow, I am not persuaded there is sufficient reason to overturn the decision.

II. BACKGROUND

This dispute has a lengthy history that is outlined in arbitration decisions dated June 15, 2000, December 22, 2000 and March 12, 2002. The last is the decision under appeal. The issues raised in the appeal are best understood in context and, therefore, I will review the background in some detail.

Mr. Boniface was involved in three automobile accidents in just under two years — June 30,

1995, April 12, 1996 and September 15, 1996. He was insured by Liberty Mutual Insurance Company ("Liberty Mutual") at the time of all three accidents. Therefore, it is responsible for paying accident benefits under the SABS-1994,¹ the legislation that applies to all three accidents.

Following the first accident, Mr. Boniface retained a lawyer, Mr. Louis Mostyn, and applied to Liberty Mutual for accident benefits, including IRBs. The test for IRBs is found in s. 7(1)1: "The insured person was employed at the time of the accident and, as a result of and within two years of the accident, suffers a substantial inability to perform the essential tasks of that employment." Liberty Mutual accepted that Mr. Boniface was disabled, and paid IRBs at $313.77 per week.

Mr. Boniface was still receiving IRBs when the second accident occurred. He submitted another application for accident benefits. This was appropriate. Each accident gives rise to a fresh set of benefits, although the legislation includes deduction provisions designed to prevent double recovery.² Establishing entitlement to benefits in respect of a later accident can have important practical consequences. For example, the insured person could recover from the injuries from the first accident, but remain disabled as a result of the second accident. Also, as illustrated by this case, entitlement decisions can affect the timing of the transition from IRBs to LECBs.

Typically, where someone is entitled to IRBs for 104 weeks, the insurer is obliged to make an LECB offer.³ This is subject to s. 21(9), which provides as follows:

— (9) If an insured person suffers an impairment as a result of an accident that occurs after the accident in respect of which an offer would, in the absence of this subsection, be given under subsection (1), and the latter accident results in a disability in respect of which weekly benefits are payable under Part II, section 15, Part IV or Part V, the operation of subsection (1) is delayed until 104 weeks after the latter accident.

The parties agree that if the insured person is involved in a second accident before the LECB provisions are triggered, and he or she suffers an impairment sufficient to establish entitlement to weekly benefits, the insurer's obligation to make an LECB offer is postponed until 104 weeks after the second accident. The dispute, discussed in more detail below, is whether s. 21(9) also means the insured person is only entitled to one LECB offer, as Liberty Mutual claims, or separate LECB offers for each accident, as Mr. Boniface contends.

In this case, Liberty Mutual denied Mr. Boniface's application for IRBs arising out of the second accident. It concluded that this accident only exacerbated his previous injuries and, therefore, continued paying IRBs based on the first accident, not the second. Because this was a refusal, Liberty Mutual advised Mr. Boniface of his right to apply for mediation. He did not do so at the time, although, as discussed below, he raised the issue later in the proceedings.

Because Liberty Mutual denied Mr. Boniface's claim for IRBs from the second accident, the 104-week period described in s. 21(1)(1) continued to run from the first accident. If he remained entitled to IRBs until June 30, 1997, Liberty Mutual would have been required to make an LECB offer. However, on August 16, 1996, well before the 104-week mark, Liberty Mutual advised Mr. Boniface of its intention to stop paying IRBs effective September 14, 1996, unless he requested an assessment by a Designated Assessment Centre ("DAC"). This notice was sent according to the stoppage provisions in s. 64 of the SABS-1994.

Mr. Boniface asked for a DAC assessment. Therefore, Liberty Mutual made a referral to the Mississauga Physical Rehabilitation Centre, the closest DAC, and continued paying IRBs pending the results. Before the assessment was done, Mr. Boniface was involved in a third accident, on September 15, 1996. He filed another application for benefits, but the assessment proceeded before Liberty Mutual responded to this application.

The DAC was asked to assess Mr. Boniface's disability in respect of the first accident,⁴ but was given information about the other two accidents. The two assessors, a chiropractor and a psychologist, prepared separate reports in November and December 1996. They also prepared a summary, dated December 10, 1996, stating: "Claimant has a number of psychological impairments that pre date this MVA. Objective physical findings do not correlate with subjective complaints. Opinion: Claimant is not substantially disabled." Although Liberty Mutual received the summary in a timely manner, the parties did not receive the reports until much later. The reasons for the delay are not clear.⁵

On December 19, 1996, Liberty Mutual denied Mr. Boniface's claim for IRBs in respect of the third accident. Similar to its response to the second accident, Liberty Mutual concluded that the third accident exacerbated Mr. Boniface's previous injuries, but did not create any new entitlement. However, because it had not yet received the formal DAC report, Liberty Mutual agreed to continue paying IRBs based on the first accident.

Relying on the DAC summary, Liberty Mutual terminated IRBs effective March 16, 1997. Mr. Boniface then applied for mediation. When mediation failed, he applied for arbitration, filing a separate application for each accident. In each application, he claimed that his IRBs should continue beyond March 16, 1997.

A pre-hearing was held before Arbitrator Eban Bayefsky on June 1, 1998. The main issues were identified as whether Mr. Boniface sustained an impairment in the accidents and, if so, whether he remained entitled to IRBs beyond March 17, 1997. The arbitration hearing was scheduled for August 16 - 19, 1999.

In early August 1999, Ms. Pamela Brownlee, counsel for Liberty Mutual, asked for an adjournment due to missing productions. Mr. Boniface did not oppose this request. In a letter dated August 12, 1999, Arbitrator Anne Sone adjourned the hearing to January 17 - 20, 2000.

The parties agree that on August 10, 1999, there was a meeting at the Financial Services Commission of Ontario ("FSCO"). Unfortunately, neither their records nor FSCO's definitively establish what happened on this date. Mr. Boniface's assertion that Arbitrator Miller met with the parties and their lawyers, and discussed settlement, is the subject of disagreement in this appeal, an issue I will return to later.

In November 1999, Mr. Boniface changed lawyers. His new lawyer, Mr. David Wilson, asked for an adjournment of the January hearing. Liberty Mutual did not oppose this request. On December 14, 1999, Arbitrator David Evans adjourned the hearing to June 19 - 22, 2000, peremptory to Mr. Boniface.

In mid-January 2000, Mr. Wilson asked for a resumption of the pre-hearing to deal with some production issues. He also questioned whether the termination of Mr. Boniface's IRBs had been done properly, and asked for a date to argue a motion for interim benefits.

The pre-hearing was resumed by telephone conference on February 11, 2000. Arbitrator Lawrence Blackman, who conducted the pre-hearing, made some production orders and confirmed that the four-day arbitration hearing was to commence on June 19, 2000. In addition, he set a motion date for April 6, 2000, to deal with Mr. Boniface's claims for interim benefits and a special award.

The motion was heard by Arbitrator Judith Killoran on April 6, 2000, as scheduled, with written submissions filed later that month. On June 15, 2000, she made the following order, with reasons to follow:

Liberty Mutual shall pay Mr. Boniface interim benefits in the amount of $313.77 per week from March 16, 1997 ongoing, subject to future compliance with section 64 or any order of an arbitrator.
Liberty Mutual shall pay interest on any outstanding income replacement benefits, in accordance with section 68 of the Schedule.
The issues of a special award and arbitration expenses are reserved to the arbitrator hearing the merits of the application.

The next day, Liberty Mutual advised FSCO that it was no longer contesting Mr. Boniface's entitlement to IRBs. It reinstated benefits at the properly indexed rate and agreed to pay his arbitration expenses up to June 16, 2000.

This did not end the matter. On June 19, 2000, the date set for the start of the hearing, the matter came before Arbitrator Nancy Makepeace. The parties agreed they could not proceed with the remaining issues — special award and the amount of the arbitration expenses — until Arbitrator Killoran provided her reasons. As well, Mr. Boniface raised some new issues. First, he wanted a determination of which accidents materially contributed to his disability and, consequently, what LECB offer or offers he was entitled to receive. Second, he claimed IRBs at a higher rate due to additional pre-accident income from a second job as a newspaper carrier, an issue he did not raise until the eve of the hearing. Third, he indicated that indexation might be an issue. Arbitrator Makepeace scheduled a telephone conference for July 28, 2000, to clarify the outstanding issues, and rescheduled the hearing for December 11 - 14, 2000.

Arbitrator Killoran released her reasons on July 6, 2000. She based her interim order on two grounds. First, she found defects in the DAC process. More specifically, she pointed to serious flaws in the DAC reports and, as well, noted that Liberty Mutual stopped paying IRBs before it received the reports, contrary to s. 64 of the SABS-1994. Second, she found that although there was some disagreement about the nature and extent of Mr. Boniface's disability, he had established a strong prima facie case for entitlement and an urgent need for funds.

The telephone conference went ahead on July 28, 2000, before Arbitrator Makepeace. She held that the quantum issue could be added, along with the outstanding issues of special award and expenses. However, she held that the LECB issues, including the determination of which accident or accidents materially contributed to Mr. Boniface's condition, were premature, as no LECB offer had yet been made.

In August 2000, Mr. Boniface applied for mediation, claiming he was entitled to LECB offers in respect of each of the three accidents. These issues were not resolved, although Liberty Mutual agreed to make an LECB offer in respect of the first accident, which it did in early December 2000. The offer was for $101.68 per week, based on a pre-accident earning capacity ("PEC") of $504.15 per week and a residual earning capacity ("REC") of $391.17 per week.

This case is somewhat unusual in that Mr. Boniface's PEC is higher than his IRBs. He was able to take advantage of s. 29(4) of the SABS-1994, which provides that the PEC can be based on the best 52 consecutive weeks in the 156 weeks before the first accident. The REC was based on Liberty Mutual's view that Mr. Boniface was capable of working as a "dispatcher and radio operator. " Mr. Boniface rejected this offer.

On December 1, 2000, Arbitrator Makepeace held another telephone conference. The parties agreed to use the hearing dates, starting December 11, 2000, to deal with three issues: the amount of the IRBs; special award and arbitration expenses. They also agreed to use some of that time for a pre-hearing to discuss the various LECB issues, which would then be scheduled in the new year.

At the outset of the hearing on December 11, 2000, the parties advised Arbitrator Makepeace that most of the issues had been settled. Liberty Mutual agreed to pay IRBs at a higher rate, including arrears and interest, amend its LECB offer to reflect a higher PEC, pay Mr. Boniface's legal expenses up to June 16, 2000, and pay a special award in the sum of $25,000.⁶ However, the hearing went ahead on two issues — indexation and arbitration expenses from June 16, 2000 to December 11, 2000. Arbitrator Makepeace's decision is dated December 22, 2000. She held that Mr. Boniface was only entitled to indexation back to January 1997, not before, and ordered Liberty Mutual to pay his arbitration expenses.

Also on December 11, 2000, the parties discussed what issues remained in dispute. Arbitrator Makepeace identified a number of issues, including Mr. Boniface's entitlement to IRBs for the second and third accidents, his entitlement to more than one LECB offer, and his claim for a special award, that remained in dispute, but could not be heard that day. These issues were scheduled for hearing on July 16 - 19, 2001.

As part of the agreement reached in December 2000, Liberty Mutual made a revised LECB offer that included Mr. Boniface's pre-accident income as a newspaper carrier. This increased the PEC to $560.55, making the offer $169.38 per week. Because Mr. Boniface rejected this offer, he was referred to WorkAble Centres Inc., the closest DAC, for an assessment of his REC. Mr. Boniface underwent a medical evaluation, a partial physiotherapy evaluation, a psycho-vocational assessment, and an "orientation" with an occupational therapist. Although the assessments were scheduled to take place over a two-week period, the assessors stopped after one week because they had determined Mr. Boniface was disabled from a psychological perspective. This is reflected in their report, dated March 30, 2001, concluding that the REC was nil due to an ongoing psychological impairment. As a result of this assessment, Liberty Mutual began paying LECBs at $560.55 per week, effective April 12, 2001 [$560.55 (PEC) - 0 (REC) = $560.55].

The arbitration hearing took place on July 16, 2001, before Arbitrator Miller, with written submissions completed in early October 2001. The Arbitrator released her decision on March 12, 2002. She did not accept Mr. Boniface's claims. First, she held that he did not qualify for IRBs in respect of the second or third accident. Second, she concluded that even if he did, he would not be entitled to separate LECB offers for each accident. Third, she agreed with Liberty Mutual that LECBs were payable from April 12, 2001 (14 days after the DAC report), not the earlier dates argued by Mr. Boniface.⁷

Mr. Boniface challenges all three aspects of the Arbitrator's decision. In addition, he claims the decision cannot stand because Arbitrator Miller was involved in settlement discussions on August 10, 1999 and, according to the Dispute Resolution Practice Code ("the Practice Code"), should not have presided at the arbitration hearing.

III. ANALYSIS

A. Did the Arbitrator err in concluding that Mr. Boniface was not entitled to IRBs in respect of the second and third accidents?

Mr. Boniface challenges the Arbitrator's conclusion that he failed to establish his entitlement to IRBs in respect of the second or third accidents. He agrees with her formulation of the test — the accident does not need to be the sole cause of the disability, as long as it makes a material or significant contribution — but claims she misdirected herself on the meaning of "material or significant." Mr. Boniface submits that any contribution that is not de minimis is material. He also contends that the Arbitrator made clear and identifiable errors of fact with respect to the medical evidence that amount to an error of law.

Dealing first with the test of entitlement to IRBs, it is important to go back to s. 7(1)1 of the SABS-1994. The question is not simply whether the second and third accidents affected Mr. Boniface's condition. The focus is on his functional ability. Did each accident result in an impairment that substantially prevented him from performing the essential tasks of his pre-accident employment? While the accident need not be the sole cause of his disability, it must make a material contribution. In other words, the impact of the accident on the insured person's functional abilities must be sufficient to result in him or her meeting the test in s. 7(1)1.

The Arbitrator followed this approach which, in my opinion, is consistent with a long line of arbitration and appeal decisions, as well as important court decisions such as Athey and Leonati, 1996 CanLII 183 (SCC), [1996] 3 S.C.R. 458. She asked whether Mr. Boniface had established that he suffered impairments in the second and third accidents that materially contributed to his inability to perform the essential tasks of his pre-accident employment, and concluded he had not. I find no error in the test she applied.

Mr. Boniface also attacks the Arbitrator's factual findings. He claims she ignored or misstated important evidence, amounting to an error of law. In particular, he challenges the following findings:

Succinctly, Dr. Kirsh's opinion is that neither the second nor the third accident materially contributed to Mr. Boniface's present condition. [p. 9]
All of these medical practitioners [Dr. Janice Walcott, Dr. M. Mamelak, Dr. R. Miller and Dr. A. Kaminska] concluded that Mr. Boniface was substantially disabled from performing the essential tasks of his employment. Unlike Dr. Kirsh's report they do not clearly state whether the first, second and/or third accidents caused Mr. Boniface's disability. [p. 10]
Although Mr. Boniface developed depression and increased sleep disorder after the second accident, there is nothing in the medical evidence to show that this was a significant and material addition to his debilitating chronic pain disorder from the first accident. [p. 11]
Prior to the third accident, there was no significant change in Mr. Boniface's condition. [p. 11]

Mr. Boniface's strongest argument, in my view, relates to the evidence of Dr. Kirsh. The decision includes excerpts from pages 9 and 10 of Dr. Kirsh's report, dated March 6, 2000, that support the Arbitrator's conclusion that neither the second nor third accident materially contributed to Mr. Boniface's ongoing condition. He says that "[i]t would seem that this accident [the second] did not contribute to his present state," and that "while this accident [the third] appeared traumatic to the patient, it is my opinion that it is unlikely that he would be better today had it not happened." However, on page 2 of his report, Dr. Kirsh states as follows:

Because of his medical and psychiatric illness, Mr. Boniface is totally and permanently disabled. The accident of June 30, 1995 materially contributed to this disability. The accident of April 12, 1996 likely did not contribute significantly. The accident of September 15, 1996 materially contributed as well to his present state of health. [emphasis added]

This excerpt complicates the interpretation of Dr. Kirsh's report. While the decision would have been strengthened by a discussion of this apparent contradiction, I am not persuaded that its absence is fatal. Decisions always distill and summarize the evidence. In this case, I am satisfied that Dr. Kirsh's report, read as a whole, supports the Arbitrator's finding that it was the first accident, not the second or third, that resulted in an impairment, namely a chronic pain disorder, that prevented Mr. Boniface from returning to work.

Similarly, I am satisfied there was evidence to support the Arbitrator's other findings. Despite Mr. Wilson's detailed and forceful arguments on these points, I find no error of law. Responsibility for assessing the evidence rests with the Arbitrator. She performed this function, setting out her ultimate finding on page 11 of the decision. In essence, she found that while the second and third accidents may have affected or exacerbated Mr. Boniface's condition to some extent, neither made a material or significant contribution to his disability. In my opinion, there was evidence to support this conclusion and, as discussed above, it addresses the proper test.

Finally, given the Arbitrator's conclusions on other issues, which I accept for reasons set out below, it is not obvious whether Mr. Boniface's entitlement to IRBs in respect of the second and third accident has any practical significance. His concern seems to be that unless he establishes entitlement, he will not be able to rely on the impairments arising from these accidents on any review of his LECBs, particularly depression and sleep problems. However, I see no indication that the Arbitrator treated these as completely new problems, unrelated to the first accident. On the contrary, she relied on a DAC report that focused on Mr. Boniface's psychological problems. This is consistent with her finding that he suffered impairments in the first accident that were aggravated by the second and third accidents, but without any significant impact on his ability to return to work.

For these reasons, I find no error in the Arbitrator's conclusion that Mr. Boniface failed to establish entitlement to IRBs in respect of the second or third accidents.

B. Did the Arbitrator err in concluding that Mr. Boniface was not entitled to multiple LECB offers?

The above conclusion disposes of the multiple LECB issue on a factual basis. However, like the Arbitrator, I will address the legal issue for the sake of completeness. In my view, it is not as complicated as Mr. Boniface suggests. Many of his arguments, while interesting, have little bearing on the benefits payable in the circumstances presented here.

The general rule is that the LECB provisions are triggered 104 weeks after the onset of an accident-related disability. At that point, the impairment is treated as permanent and its impact on the insured person's earning capacity is measured. Subsection 21(9) creates an exception. If, before the LECB provisions come into effect, the insured person is involved in another automobile accident and suffers an impairment that results in entitlement to IRBs (or other weekly benefits), the operation of the LECB provisions is delayed until 104 weeks after the later accident. At that point, the impact of the accidents — not each accident separately — is determined. Any doubt about this approach is answered by s. 27(4) of the SABS-1994, which establishes the rules for determining the insured person's REC:

27.— (4) The centre [DAC] shall designate the type of employment that best satisfies the criteria set out in subsection 30 (2), without considering any impairment that,

(a) if the operation of subsection 21 (1) was not delayed under subsection 21 (9), occurred after the accident and did not result from the accident; or

(b) if the operation of subsection 21 (1) was delayed under subsection 21 (9), occurred after the first accident, unless the impairment resulted from an accident.

In my opinion, the use of "an accident" in s. 27(4)(b) makes it clear that where the LECB provisions are delayed by the operation of s. 21(9), the insured person's REC is based on the cumulative effect of the accidents. This not only tracks the plain meaning of the sections, but makes sense within the legislative scheme. LECBs are permanent weekly benefits, subject to limited, periodic reviews. They come into play when the long-term impact of the insured person's impairment can be evaluated. In most cases, this is 104 weeks after onset. However, where there is a new accident-related impairment, s. 21(9) means that the insured person continues to receive IRBs until his or her long-term condition can be evaluated with more certainty. Because IRBs are generally higher than LECBs, this tends to work to the insured person's advantage, although not always.

Like the Arbitrator, I am also influenced by the fact that the SABS-1994 does not include any provisions dealing with multiple LECBs. This could result in overcompensation that, in my view, is inconsistent with the general approach of the legislation. As a result, I find no error in the Arbitrator's conclusion that only one LECB is contemplated in these circumstances.

Mr. Boniface makes much of the possibility that different insurers could be involved. I accept that this is a possibility and would present some interesting legal and practical questions. However, I am not convinced that the Arbitrator's approach is unworkable in that situation. More immediately, I am not persuaded she should have abandoned a straightforward application of the legislation in this case to deal with potential complications not before her.

For these reasons, I conclude that Mr. Boniface was only entitled to one LECB offer.

B. Did the Arbitrator err in concluding that LECBs were payable from April 12, 2001?

As noted above, Liberty Mutual started paying LECBs at $560.55 effective April 12, 2001, following the DAC assessment of Mr. Boniface's REC. The amount exceeded his IRBs, which were paid at $443.30 per week. Mr. Boniface argues that Liberty Mutual was obligated to make an LECB offer on June 30, 1997 (104 weeks after the first accident) and, therefore, he should be entitled to LECBs from that date, or no later than October 30, 1997 (adding four months for the DAC process to be completed).

This argument is difficult to reconcile with Mr. Boniface's position that he is entitled to IRBs in respect of all three accidents. If the Arbitrator had agreed with him, s. 21(9) of the SABS-1994 would have delayed any LECB offer until September 1998 — 104 weeks after the third accident. More importantly, Mr. Boniface's entitlement to IRBs was already in dispute by June 1997. As he concedes, there is ample authority that the LECB provisions are not triggered until the entitlement issue is determined. Consequently, there is no basis for claiming that Liberty Mutual should have made an LECB offer in June 1997.

Mr. Boniface's more substantial point is that the timing of the LECB offer does not necessarily determine the date from which they are payable. Put differently, he contends that even if the obligation to make an LECB offer was delayed until the IRB dispute was resolved, he should not be prejudiced by Liberty Mutual's refusal to pay IRBs. Although this argument has some initial attraction, I conclude it cannot succeed.

As I held in Gray and Zurich Insurance Company, (FSCO P98-00047, June 11, 1999), the SABS-1994 "is directed at the prompt and regular payment of accident benefits, not abstract determinations of entitlement." It includes detailed rules about how weekly benefits are terminated and what benefits, if any, are payable during any dispute. It also includes specific rules about when LECBs are triggered and what benefits are payable during the determination of the amount. In Zehr and Canadian General Insurance Group, (FSCO P99-00010, June 11, 1999), I considered the transition from weekly benefits and LECBs in circumstances quite similar to those presented here, concluding as follows:

For reasons detailed in Gray, I conclude that the LECB provisions are not triggered if the insurer stops paying weekly benefits before the 104-week mark. The insured person's remedy is to dispute the stoppage, which Mr. Zehr did. The insurer is not obliged to make an LECB offer in case it erred in terminating benefits.

The insured person's protection is found in s.64(13) of the SABS-1994. If it is determined that payment of the benefits should not have been stopped, the insurer is required to resume payment of the benefits and pay the benefits that were not paid. In my opinion, this suggests that up to the determination of entitlement, the insured person is to be compensated through weekly benefits. If the arbitrator eventually finds that the insured person continued to qualify for weekly benefits at the critical time, this would trigger the LECB provisions, but only prospectively. In other words, the insurer would then have to make an offer based on the insured person's current situation, followed by the DAC process, if necessary.

It might be suggested that insurers could try to avoid paying LECBs by terminating weekly benefits and hoping that the insured person's condition improves before they are committed to paying LECBs. Given that weekly benefits are often payable at a higher rate, it is not obvious that this would be a sensible strategy. It is clear, however, that this kind of tactic would offend the insurer's obligation to act in good faith, leaving it open to a special award or an investigation for unfair business practices under sections 282(10) and 288 of the Insurance Act.

This analysis has been applied in later cases, notably by Director's Delegate Naylor in Rocca and GAN Canada Insurance Company, (FSCO P99-00003, July 20, 1999). However, as Mr. Boniface points out, Director's Delegate Naylor subsequently held that the triggering of the LECB provisions and the date from which they are payable are different issues. In my opinion, this later decision — Williams and General Accident Assurance Company of Canada, (FSCO P00-00004, December 29, 2000) — responds to the peculiar facts of the case, and is not applicable here.

In Williams, the insurer terminated IRBs shortly before the 104-week mark. After a lengthy delay, but within the two-year limitation period, Ms. Williams disputed the insurer's decision by applying for mediation. When the dispute was not resolved, she applied for arbitration. The only issue at the hearing held in July 1999 was whether Ms. Williams was entitled to IRBs after April 27, 1996. The arbitrator held that she was entitled to IRBs for an additional 13 months, to June 1, 1997. He said nothing about LECBs, as that issue was not argued. On appeal, Ms. Williams sought an order that she was entitled to an LECB offer, and IRBs pending the determination of the amount of her LECBs.

Director's Delegate Naylor held that because the Arbitrator's order established Ms. Williams' entitlement to IRBs at the 104-week mark, the insurer was obliged to make an LECB offer. She concluded, however, that its obligation to pay IRBs only continued as long as Ms. Williams met the disability test. This resulted in a gap. Her IRBs ended in June 1997, but LECBs did not come into play until the decision was released. In these circumstances, Director's Delegate Naylor held that the LECBs should pick up where the IRBs ended. As she described it, this was "a reasonable compromise." The decision does not stand for the general proposition that LECBs date back to the point at which they would have been payable if the insurer had not contested the insured person's entitlement to IRBs. If that had been the operating principle, the Director's Delegate presumably would have ordered LECBs back to the 104-week mark, not just to cover the gap after IRBs ended.

In this case, there is no similar gap. Mr. Boniface received IRBs until the LECB provisions were triggered. That did not occur until June 2000, when Liberty Mutual stopped contesting Mr. Boniface's entitlement to IRBs. I agree with the Arbitrator that LECBs are not payable before this date, consistent with the approach taken in Gray, Zehr and Rocca. Nor am I prepared to interfere with her factual finding that Liberty Mutual did not deliberately or unreasonably delay making an offer or arranging a DAC assessment when the offer was refused. As provided in s. 23(5), Liberty Mutual was not entitled to switch to LECBs until 14 days after it received the DAC report. In the circumstances, I find no error in the Arbitrator's conclusion that LECBs are payable from April 12, 2001, 14 days after the date of the DAC report.

As Liberty Mutual observes, and Mr. Boniface acknowledges, the approach taken in this case will generally work in favour of insured persons because IRBs are typically higher than LECBs. While I accept that one of the main objectives of insurance law is consumer protection,⁸ this does not mean that the legislation can be interpreted differently on a case-by-case basis to maximize the benefits payable.⁹

As a result, this aspect of the appeal is dismissed.

C. Should Liberty Mutual be ordered to pay a special award?

Given the conclusions set out above, there is no basis for a special award.

D. Did the Arbitrator participate in settlement discussions and, if so, can her decision stand?

The third edition of the Practice Code, which applies to this case,¹⁰ includes the following rule:

33.5 The arbitrator who presides at the pre-hearing discussion at which the parties attempt to settle issues shall not preside at the hearing without the parties' consent.

Mr. Boniface claims that Arbitrator Miller acted contrary to this rule by presiding at the hearing despite conducting settlement discussions on August 10, 1999. Liberty Mutual contests this point on both factual and legal grounds.

First, Liberty Mutual raises a technical argument. It concedes that a meeting of some sort took place at FSCO on August 10, 1999, but argues there is no suggestion it was a pre-hearing. On the contrary, it notes that Mr. Boniface and his former lawyer, Mr. Mostyn, both refer to it as "settlement discussions." In Liberty Mutual's submission, the fourth edition of the Practice Code prohibits an arbitrator who "facilitates a settlement conference" from presiding at the hearing without the parties' consent [Rule 35.5], but the third edition provides no such prohibition.

I find no strength in this argument. It suggests a distinction without any meaningful difference. The purpose behind both rules is to encourage the parties to engage in frank, non-binding settlement discussions in advance of the hearing. One of the goals of the pre-hearing, as set out in both the third and fourth editions of the Practice Code, is to resolve the issues in dispute. In addition, both versions contemplate "one or more pre-hearing discussions." While the fourth edition establishes a more specific type of pre-hearing discussion — the settlement conference — I see no reason why a settlement discussion conducted by an arbitrator prior to the hearing would not qualify as a pre-hearing within the meaning of the third edition.

As an alternative argument, Liberty Mutual submits that even if Arbitrator Miller was involved in settlement discussions in August 1999, she was not precluded from presiding at the hearing in July 2001 because the issues in dispute had changed. I accept that Rule 33.5 does not prevent an arbitrator who discusses settlement from ever adjudicating in respect of those parties. It only prevents him or her from presiding at "the hearing" that follows from the pre-hearing. However, I am not inclined to read this Rule narrowly. While the issues in dispute in this case changed from 1999 to 2001, I am not persuaded there was a sufficient disconnection to make Rule 33.5 irrelevant.

The next question is factual: Was Arbitrator Miller involved in discussions at FSCO on August 10, 1999, at which the parties to this dispute attempted to settle issues? Unfortunately, the evidence is far from definitive. At Mr. Wilson's request, Senior Arbitrator Braund examined FSCO's records. He found that the paper scheduling records for August 1999 had been destroyed and the electronic scheduler was not yet in place. However, he was able to provide counsel with an "adjournment record apparently completed by Arbitrator Sone." Although he felt these notes were "inconclusive," he noted that Arbitrator Sone also conducted a settlement discussion in another case at 3:00 p.m. that same day by telephone, and that it "would be unusual for parties to appear in person for an adjournment request."

Arbitrator Sone's notes strongly suggest that she convened a meeting on this file at 4:15 p.m. on August 10, 1999. The nature of the meeting is less clear. Mr. Mostyn, Ms. Brownlee and Tina Maasland from Liberty Mutual are listed in the notes, apparently as participants. Mr. Boniface is not mentioned, although his name appears as part of the title of proceedings. The notes do not clearly specify whether the meeting was in person or by telephone, but "FSCO" appears on the page, giving some support to an in-person meeting.

Arbitrator Sone recorded the business of the meeting in two lines. As I read them, Liberty Mutual asked for a resumption of the pre-hearing to deal with outstanding productions. This request was initially opposed, but the hearing was adjourned from August 16 - 19, 1999 to January 17 - 20, 2000. This is consistent with Arbitrator Sone's letter, dated August 12, 1999, confirming the adjournment.

Ms. Brownlee frankly concedes that her dockets reflect an attendance at FSCO for a settlement meeting on August 10, 1999, but not who presided or the nature of the discussions. In submissions, she suggests that Arbitrator Sone's notes could explain her docket entry, and that Mr. Boniface and Mr. Mostyn may have confused Arbitrator Sone and Arbitrator Miller.

Mr. Boniface and Mr. Mostyn maintain that it was Arbitrator Miller who was involved in the meeting at FSCO on August 10, 1999, and that she encouraged settlement. However, various aspects of their evidence, provided three years after the event, make me question its reliability:¹¹

Neither Mr. Boniface nor Mr. Mostyn remembers any discussions with Arbitrator Sone on August 10, 1999.
Mr. Boniface and Mr. Mostyn suggest that by the time of the settlement meeting with Arbitrator Miller, arrangements had already been made to adjourn the hearing scheduled for the following week. This is difficult to reconcile with Arbitrator Sone's notes, indicating that at the meeting at 4:30 p.m. on August 10, 1999, Liberty Mutual's adjournment request was initially opposed.
Although Mr. Mostyn claimed to know Arbitrator Miller, and have a specific recollection of her being in the same room as him and his client, his evidence is less than persuasive. At one point in the cross-examination, he even referred to the arbitrator as "Ann Miller."
Mr. Boniface and Mr. Mostyn described the meeting with Arbitrator Miller differently. Mr. Mostyn only remembers Arbitrator Miller meeting with himself and his client. In his affidavit, he states his belief that she "was also engaged in discussions with counsel for the Respondent." During cross-examination, he confused matters with the following responses:

A. I have a specific memory of - - on that day of Joyce Miller, my client and myself in the same room.

Q. Was I [Ms. Brownlee] involved in that?

A. Not at that meeting. This was after the settlement meeting had been - - I believe this is after the settlement meeting had been completed. Then we were also in a separate room where I was with my client and she was also again with us.

In contrast, Mr. Boniface describes a settlement discussion where he was represented by Mr. Mostyn and Liberty Mutual was represented by Ms. Brownlee. During cross-examination, he testified that the four of them met together, although there was at least one point where Arbitrator Miller met with him and Mr. Mostyn, without Ms. Brownlee.

Mr. Mostyn relied heavily on the fact that "Joyce Miller" was written on the top of the fifth page of his notes, but was inconsistent on when that notation was made. On cross-examination, he initially testified that he made his notes, including the arbitrator's name, during the meeting. Later, he said that "Joyce Miller" was written "afterwards for sure." On re-examination, he went back to his original position, stating that page 5 of his notes would have been made during the meeting, not afterwards.
Mr. Boniface does not seem to recall significant steps taken in this matter between August 1999 and the arbitration hearing in July 2001. Most notably, he does not mention appearing before Arbitrator Makepeace in June 2000 and December 2000 for a combination of hearing and pre-hearing meetings, during which time the dispute over IRBs was settled.

Mr. Boniface and Mr. Mostyn also provide little evidence about the nature of any settlement discussions on August 10, 1999. Although they both state that Arbitrator Miller encouraged settlement, and Mr. Boniface says she criticized him for "apparently not taking the advice of my solicitor," neither were able to recall whether either party made any settlement proposals.

Most importantly, Mr. Boniface did not raise this issue at the arbitration hearing. While his explanation is plausible, parties are responsible for raising procedural objections in a timely manner. This is particularly true where, as here, the concern would not have been obvious to others. Even if I accept that Arbitrator Miller was involved in the August 1999 meeting, there is no evidence that anyone other than Mr. Boniface was aware of the situation when the hearing started: his lawyer, Mr. Wilson, was not retained until after August 1999, and did not have Mr. Mostyn's notes; Mr. Boniface, through his lawyer, accepts that Ms. Brownlee had no recollection; and there is no suggestion that Arbitrator Miller remembered. On the last point, I find it extremely unlikely that Arbitrator Miller would have proceeded without raising the issue if she had been aware that she was involved in earlier settlement discussions. Arbitrators know about Rule 33.5, and have no interest in ignoring it.

Therefore, taken at its highest, the evidence establishes that Arbitrator Miller encouraged Mr. Boniface to consider settling his claim for IRBs and two years later, without any recollection of her prior involvement, presided at an arbitration hearing dealing with Mr. Boniface's entitlement to LECBs. In my opinion, this is not sufficient to invalidate the decision. Arbitration rules are meant to be flexible, fostering efficiency and fairness. Having failed to raise the issue at the hearing, however innocently, Mr. Boniface cannot rely on a bare contravention of the Rule to invalidate the decision at this late date. He must show some real prejudice or unfairness, or that he has a reasonable apprehension of bias. As he specifically declined to advance any such claim, his appeal fails.

Finally, it is not obvious that a new hearing would serve any practical purpose in any event. Given my conclusions on the multiple LECB issue and the start date, it is difficult to see what issues remain in dispute. Mr. Boniface's entitlement to LECBs has already been determined and the start date for payments determines when they are to be reviewed.

For all these reasons, the appeal is dismissed.

IV. APPEAL EXPENSES

At the appeal hearing, Mr. Boniface claimed his arbitration expenses. Liberty Mutual did not claim its expenses, but submitted that it should only be ordered to pay Mr. Boniface's expenses if he was successful.

The criteria to be considered in awarding expenses are set out in s. 12(2) of O. Reg. 464/96, and repeated in the Practice Code. They include each party's degree of success, the complexity, novelty and significance of the issues, and the conduct of either party in facilitating or impeding the process. While Mr. Boniface raised some legitimate issues, I am not persuaded that Liberty Mutual should be required to fund his unsuccessful appeal. Consequently, the parties will bear their own expenses.