Neutral Citation: 2005 ONFSCDRS 40
FSCO A00-000717
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
FARIDA GOVANI and SADRUDDIN GOVANI
Applicants
and
MOTOR VEHICLE ACCIDENT CLAIMS FUND
Insurer
REASONS FOR DECISION
Before:
Suesan Alves
Heard:
By written submissions received by July 26, 2004
Appearances:
Henry Goldentuler for Mr. and Mrs. Govani
Susan Bromley for Motor Vehicle Accident Claims Fund
Issue:
Mr. and Mrs. Govani are Ontario residents who were injured in a motor vehicle accident on July 27, 1999, in California, U.S.A. They commenced an arbitration in which they alleged that the Motor Vehicle Accident Claims Fund ("The Fund") was obliged to pay their statutory accident benefits, pursuant to the Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996 (the "Schedule"). The Fund disputed any such obligation.
The Applicants then sought to withdraw their arbitration application and proposed that each party should bear its own expenses. The Fund initially opposed and then agreed that Mr. and Mrs. Govani should be permitted to withdraw, but submitted that the Applicants should pay a portion of its expenses of the arbitration. For the reasons which follow, I permit the Applicants to withdraw the arbitration application based on the consent of the parties. I conclude that each party should bear its own expenses.
The issue is:
Are the Applicants permitted to withdraw the arbitration application?
Which party is liable to pay the other's expenses in respect of the arbitration under section 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?
Result:
The Applicants are permitted to withdraw the arbitration application.
Each party shall bear its own expenses.
EVIDENCE AND ANALYSIS:
Background
Mr. and Mrs. Govani sustained injuries when the vehicle in which they were passengers was involved in a collision in California, U.S.A. on July 27, 1999. The Applicants alleged that they were uninsured residents of Ontario, and claimed statutory accident benefits from the Fund. The Fund submitted that it had no authority to pay statutory accident benefits in relation to an accident which took place outside of Canada under section 6 of the Motor Vehicle Accident Claims Act. The Applicants submitted that there was no exclusion in the legislation to this effect, and sought a ruling that they were entitled to statutory accident benefits under section 57 of the Schedule.
The Applicants relied on the case of Young v. Ontario (Minister of Finance) (2002), 2002 CanLII 49414 (ON SC), 58 O.R. (3d) 284 (S.C.J.). In that case, an Ontario resident was injured in a motor vehicle accident in the U.S.A. and claimed accident benefits from the Fund. At first instance, the court held that the plaintiff was entitled to statutory accident benefits from the Fund, because there was a "clear intention of the drafters of the legislation to include policies issued in the United States and claims arising from accidents in the United States, and no intention to exclude such coverage." That decision was reversed on appeal by the Ontario Court of Appeal. Leave to appeal to the Supreme Court of Canada was denied.1
At the time the Applicants commenced the arbitration, there was caselaw which supported their position. The case law changed during the arbitration process. Mr. and Mrs. Govani then sought to withdraw their arbitration application, and proposed that each party bear its own expenses.
Initially, The Fund opposed the withdrawal and requested a decision. I advised the parties that the decision of the Court of Appeal was binding on me, the issue was now moot, and the matter should therefore be dealt with as a question of terms of withdrawal.
The Fund then advised that it agreed to the withdrawal and submitted that the Applicants should be required to pay the Fund's expenses of obtaining medical and coverage related productions up to the date of the anticipated decision on the preliminary issue. The Fund did not seek payment of its fees in relation to proceedings in which it had been unsuccessful, namely, on a preliminary issue hearing and appeal on the question of whether an arbitrator had jurisdiction to decide the issue raised by Mr. and Mrs. Govani.
Withdrawals
Rule 70 of the Dispute Resolution Practice Code deals with withdrawals and provides:
70.1 A party may seek permission to withdraw all or part of a dispute by:
(a) serving a request to withdraw on all parties; and
(b) filing the request to withdraw together with a Statement of Service in FORM F; or
(c) making an oral request to withdraw all or part of a dispute during a neutral evaluation, pre-hearing discussion, settlement discussion, preliminary conference or at a hearing.
70.2 An adjudicator may permit a party to withdraw all or part of a dispute where all parties agree.
70.3 Where a party does not agree to the withdrawal, an adjudicator may:
(a) permit the withdrawal on such terms and conditions as he or she considers just;
(b) award expenses to either party as permitted by Rule 75 and following.
Based on the agreement of the parties, I permit the Applicants to withdraw the arbitration application. As I read the provisions of Rule 70, it would appear that a party can only seek expenses if it does not consent to the withdrawal. In this case, the Fund has reversed its position and consented to the withdrawal - therefore under the Rule, I appear to have no authority to deal with expenses.
However, the question of entitlement to expenses under the provisions of section 282(11) of the Insurance Act is a disputed issue in the arbitration and I will deal with the parties' entitlement to expenses on that basis. Section 282(11) of the Act gives the arbitrator a discretion to award to the insured person or the insurer, all or part of their incurred arbitration expenses as may be prescribed in the regulations, to the maximum set out in the regulations.
In Pembridge Insurance Company and Howden, (FSCO P02-00031, May 17, 2004), the Director of Arbitrations held that the criteria which govern an award of expenses made on or after October 1, 2003 are those set out in Ontario Regulation 275/03. On this basis, the criteria applicable to the issue of expenses in this arbitration are the degree of success, the existence of offers to settle, the novelty of the issues, the conduct of the parties and their representatives, and whether any aspect of the proceeding was improper, vexatious or unnecessary.
1. Degree of success
The Fund submitted that had the Applicants not withdrawn prior to a decision being issued, the Fund would have been successful on the legal issue. Generally, I think it unwise to speculate on the outcome of a case. However, in this case, the caselaw no longer favoured the Applicants, and I accept that the Applicants would therefore have been unsuccessful in relation to the legal issue they raised. The Fund was unsuccessful on the preliminary issue hearing. Thus each of the parties had some lack of success in the arbitration.
2. Offers to Settle
No offers to settle were brought to my attention.
3. Novelty of the Issues
The Applicants wished a determination by preliminary issue as to whether the Fund was obliged to pay them statutory accident benefits as Ontario residents injured in a motor vehicle accident in the U.S.A. under section 57 of the Schedule.
At the time the arbitration was commenced, the caselaw appeared to support the Applicants' position. The issue the Applicants raised had not as yet been determined in an arbitration proceeding at the Commission. The arbitration raised a number of novel factual and legal issues. For example, whether the Applicants' receipt of a $5,000 payment of medical benefits under an Allstate policy of insurance was a payment of benefits under the law of California within the meaning of section 57 (1.1) of the Schedule, and whether the receipt of those payments precluded the Applicants from making an election to claim accident benefits in Ontario.
4. Conduct of the parties and representatives
The Fund agreed to obtain various productions with a view to investigating whether there was any other insurer, adjusting the claim if necessary and expediting any hearing on the substantive issue of entitlement to benefits. The Fund seeks its expenses of this aspect of the case.
The Applicants submitted that these steps were unnecessary to determine the issue of coverage and should not be borne by the Applicants. Counsel for the Applicants further submitted that the they should not have to bear the cost of these steps and in any event the Applicants had cooperated fully in this process.
At the initial pre-hearing, the arbitrator held that the factual issues needed to be addressed before the legal issue would be determined. At each resumption of the pre-hearing counsel for the Applicants demanded on behalf of the Applicants that they be permitted to proceed to a hearing without further delay. In this context, I cannot fault the Fund for obtaining productions which would permit it to deal expeditiously with the question of entitlement to benefits should the Fund be found liable to pay the Applicants statutory accident benefits. I reject the Applicants' submission that in obtaining these productions, the Fund was either attempting to delay the Applicants from their remedy or incurring unnecessary expense.
The Applicants submitted that they "did everything in their power to facilitate a quick determination of the issues in dispute. All undertakings were complied with expeditiously."
I disagree. I find the Applicants were less than cooperative in assisting in obtaining productions. Two examples will suffice. There was a two-month unexplained delay on the part of the Applicants in providing signed authorizations which would permit the Fund to obtain documents. As a second example, the Fund obtained a copy of the OHIP summary in relation to each Applicant. The Fund alleged there were numerous post-accident entries on each summary and asked the Applicants to identify which of the health practitioners were seen as a result of their injuries. This had the potential to both minimize the expense to the Fund and minimize the intrusion into the Applicants' medical history. Counsel for the Applicants advised that neither Applicant could be helpful with identifying any of the doctors.
However, the Applicants moved promptly to withdraw the arbitration application once the law on which they relied when they commenced the arbitration no longer favoured their position.
5. The proceeding
I am required to consider whether any aspect of the proceeding was improper, vexatious or unnecessary.
The Fund submitted that the arbitration proceeding was unnecessary because early in the proceedings it became apparent that the Applicants had access to coverage under a policy in California which paid $5,000 U.S. in medical and rehabilitation benefits, and in the circumstances, counsel for the Applicants knew, or ought to have known that his clients were not uninsured and therefore would have no access to the Fund for payment of their statutory accident benefits.
The Applicants submitted that the issue they raised was novel. Section 57 of the present Schedule had not yet been interpreted at the Commission, and that while they had received $9,010 U.S. in medical benefits, to preclude them from receiving benefits under the Ontario scheme, they would have had to receive benefits of equivalent amounts and subject to the same conditions as those available under the Ontario scheme. Section 57 does not say this. However, this was an arguable issue and one to be determined in the arbitration.
More troubling to me is the allegation by counsel for the Applicants, that the Applicants claimed the $5,000 in medical and rehabilitation benefits under a U.S. policy because an arbitrator at the Commission required them to do so. There is no indication in the file of such an order, and, when counsel for the Applicants was asked to provide particulars, he neither responded nor withdrew the allegation.
In reviewing the written submissions, a number of the requirements of section 57 of the Schedule were not addressed by either party. I reject the Fund's submission that the Applicants' request to withdraw the arbitration is an abuse of process.
In my view, the Fund's challenge to an arbitrator's jurisdiction was unnecessary, as it failed to take into account the provisions of section 20 of the Insurance Act which confer on an arbitrator the "exclusive jurisdiction to exercise the powers conferred upon him or her under this Act and to determine all questions of fact or law that arise in any proceeding before him or her......" and arbitral case law with respect to the nature of this tribunal's jurisdiction.
Conclusion
In summary then, there were issues with respect to success, conduct, aspects of the proceeding and novelty of the issues. Each party put the other through unnecessary steps and consequent expense. In my view, the appropriate order in this case is that each party bear its own expenses of the proceeding.
Order:
The Applicants are permitted to withdraw the arbitration application.
Each party will bear its own arbitration expenses.
March 31, 2005
Suesan Alves
Arbitrator
Date
Neutral Citation: 2005 ONFSCDRS 40
FSCO A00-000717
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
FARIDA GOVANI and SADRUDDIN GOVANI
Applicants
and
MOTOR VEHICLE ACCIDENT CLAIMS FUND
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
The Applicants are permitted to withdraw the arbitration application.
Each party will bear its own arbitration expenses.
March 31, 2005
Suesan Alves
Arbitrator
Date