Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2006 ONFSCDRS 63

FSCO A04-001435

BETWEEN:

YOUGIE MAHADEO

Applicant

and

AVIVA CANADA INC.

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Robert A. Kominar

Heard:

May 30 and 31, 2005, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Naresh Misir for Mr. Mahadeo

Pamela Quesnel for Aviva Canada Inc.

Issues:

The Applicant, Yougie Mahadeo, was injured in a motor vehicle accident on August 28, 2002. He applied for and received statutory accident benefits from Aviva Canada Inc. ("Aviva"), payable under the Schedule.¹ Mr. Mahadeo's benefits were terminated based on his failure to commence a tort action within two years of the accident. The parties were unable to resolve their disputes through mediation, and Mr. Mahadeo applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue to be determined is:

1. Is the election which Mr. Mahadeo executed to opt out of the benefit scheme of the Workplace Safety and Insurance Act valid, in that it was not made primarily for the purpose of obtaining statutory accident benefits as provided for under section 59(2) of the Schedule?

Result:

1. Mr. Mahadeo's election out of the Workplace Safety and Insurance Act was not valid, as he did not make that election primarily to pursue an action against a third party and therefore made it primarily to obtain statutory accident benefits contrary to section 59(2) of the Schedule.

EVIDENCE AND ANALYSIS:

The parties were advised earlier of my decision in this matter. The following are the reasons for my decision.

Mr. Mahadeo was involved in a motor vehicle accident on August 28, 2002. The parties mutually agree that Mr. Mahadeo was:

a) in the course of his employment at Nella Cutlery at the time of the accident;

b) found to have been entitled to benefits under the Workplace Safety and Insurance Act² (WSIA) as a result of this accident;

c) not at fault for the accident, given that his vehicle was hit from behind while it was stopped.

The dispute in this Preliminary Issue Hearing arises out of Mr. Mahadeo's election to opt out of the benefit scheme available to him under WSIA for work related injuries and into the statutory accident benefits (SABS) scheme and, more saliently, the recourse based on tort liability available under the Insurance Act. Mr. Mahadeo claims that he made a bona fide election to opt out of WSIA coverage, pursuant to section 59 of the Schedule. Aviva argues that the election Mr. Mahadeo purportedly made was not bona fide and therefore is invalid, in that it was made primarily to claim statutory accident benefits, contrary to section 59(2) of the Schedule.

The scope of SABS benefits and WSIA benefits overlap in cases where an injury arises out of an automobile accident which occurred while someone was in the course of their employment, as Mr. Mahadeo was.

The relevant provisions of the Schedule read as follows:

59. (1) The insurer is not required to pay benefits under this Regulation in respect of any insured person who, as a result of an accident, is entitled to receive benefits under any workers' compensation law or plan.

(2) Subsection (1) does not apply in respect of an insured person who elects to bring an action referred to in section 30 of the Workplace Safety and Insurance Act, 1997 so long as the election is not made primarily for the purpose of claiming benefits under this Regulation. (1).

(3) If a person is entitled to receive benefits under this Regulation as a result of an election made under section 30 of the Workplace Safety and Insurance Act, 1997, no income replacement, caregiver or non-earner benefit is payable to the person in respect of any period of time before the person makes the election.

(4) If a person who would be entitled to benefits under this Regulation in the absence of subsection (1) elects to bring an action referred to in section 30 of the Workplace Safety and Insurance Act, 1997 and there is a dispute concerning the insurer's liability to pay an expense for a vocational rehabilitation program that the person was attending at the time of the election and continues to attend, the insurer shall pay the expense pending resolution of the dispute.

(5) Despite subsection (1), if there is a dispute about whether subsection (1) applies to a person, the insurer shall pay full benefits to the person under this Regulation pending resolution of the dispute if,

(a) the person makes an assignment to the insurer of any benefits under any workers' compensation law or plan to which he or she is or may become entitled as a result of the accident; and

(b) the administrator or board responsible for the administration of the workers' compensation law or plan approves the assignment.

The relevant provisions of the Workplace Safety Insurance Act read as follows:

30. (1) This section applies when a worker or a survivor of a deceased worker is entitled to benefits under the insurance plan with respect to an injury or disease and is also entitled to commence an action against a person in respect of the injury or disease.

(2) The worker or survivor shall elect whether to claim the benefits or to commence the action and shall notify the Board of the option elected.

(3) If the worker is or was employed by a Schedule 2 employer, the worker or survivor shall also notify the employer.

(4) The election must be made within three months after the accident occurs or, if the accident results in death, within three months after the date of death.

(5) The Board may permit the election to be made within a longer period if, in the opinion of the Board, it is just to do so.

(6) If an election is not made or if notice of election is not given, the worker or survivor shall be deemed, in the absence of evidence to the contrary, to have elected not to receive benefits under the insurance plan.

Consistent with the concept of an automobile insurer being the insurer of last resort, these two statutory benefit schemes provide that, if a person is entitled to receive workers' compensation benefits resulting from an auto accident, then that is what he or she should claim. However this general proposition is subject to the exception provided for in section 59(2) of the Schedule, which allows one to elect to "bring an action" against a person identified in section 30 of WSIA. That section provides that if a person is "entitled to commence an action against a person" as a result of the injury then one can elect to pursue that path provided one notifies the Board of that choice within the prescribed time frame.

Although the wording of the two statutory benefit schemes is complicated, the underlying concept is clear. The WSIA scheme is unarguably intended to be the default. If however a person is injured in an automobile accident while in the course of their employment, and if the circumstances are such that he or she has a right to sue a third party, then that person has the right to opt out of workers' compensation and into the automobile insurance scheme.

Section 59(2) of the Schedule states unequivocally that any election to opt out of the WSIA scheme cannot be made "primarily" for the purpose of claiming statutory accident benefits. This being the case, the only logical inference one can draw is that any valid election must be made "primarily" for the purpose of commencing an action in tort as provided for in the Insurance Act, as there are only two branches of recourse for injuries in an automobile accident: statutory accident benefits and tort.

The legislative policy behind these provisions is clear. Workers' compensation plans were developed to provide no-fault benefits to injured workers and to eliminate adversarial litigation against employers. The statutory accident benefit scheme has the similar purpose of providing specified no-fault benefits to people involved in auto accidents on a first party basis in lieu of funneling those claims through the fault-based litigation process. The election provided for in section 59(2) of the Schedule contemplates that, while the workers' compensation system is intended to be a complete no-fault scheme, the automobile insurance system still provides that, in certain cases, there is recourse available to an injured person beyond that provided for through statutory accident benefits.

This is where the dispute between Mr. Mahadeo and Aviva arises.

Mr. Mahadeo was injured in an auto accident on August 28, 2002. He applied for various auto insurance benefits and on September 3, 2002 CGU Insurance (later Aviva) notified him that, since the accident had occurred while he was working, he had to claim WSIA benefits unless he was in a situation where he was eligible to opt out of the WSIA scheme and bring a tort action.

On September 25, 2002, Mr. Mahadeo signed a written retainer agreement with Mr. Justin Mariani, a paralegal, to represent him, ostensibly on all claims arising out of this accident. In the retainer agreement, a boilerplate fill-in-the-blank form, Mr. Mahadeo explicitly authorizes Mr. Mariani to recover damages, initiate actions and retain counsel if necessary on his behalf.

Mr. Mariani proceeded to have Mr. Mahadeo execute an Assignment of Benefits in favour of CGU and then submitted an application for various housekeeping and medical rehabilitation expenses to them. On November 7, 2002, the Workplace Safety and Insurance Board (WSIB) wrote to Mr. Mahadeo and advised him that he needed to make an election between commencing an action in tort and claiming WSIA benefits. They enclosed an election form in their correspondence and advised him that, if he did not make his election within three months of the accident date, he would be deemed to have elected to not claim workers' compensation, pursuant to section 30(6) of the WSIA. Mr. Mahadeo never did return the election form to the WSIB and so he was deemed to have elected the automobile insurance system as of November 28, 2002, with all that entails. In fact, Mr. Mahadeo never made any claim for WSIA benefits. All his subsequent dealings were with the automobile insurer.

It is necessary to outline the documentary evidence entered in the arbitration as I am required to draw certain inferences from it in reaching my decision.

There is a chain of correspondence between the adjusters for CGU, later Aviva, and both Mr. Mahadeo and Mr. Mariani regarding the status of his tort claim. The correspondence on this topic begins on September 3, 2002, at which time both the WSIB and the auto insurer explain to Mr. Mahadeo that, if he intends to opt into the automobile insurance system, he needs to commence a tort action. For the next 16 months the correspondence between the parties appears to be the normal type of correspondence that one would expect to see in many automobile accident benefit claims.

On February 27, 2004, Ms. Yvonne Nahnybida, the independent adjuster assigned by Aviva to take over the file, wrote to Mr. Mariani, and to Mr. Mahadeo, and advised them that she needed Mr. Mahadeo to sign a consent to collect and use personal information under the new federal Personal Information Protection and Electronic Documents Act, (PIPEDA). This letter also requested an update on the status of Mr. Mahadeo's tort action. On the same date Ms. Nahnybida wrote to the Bodily Injury Claims department of Liberty Mutual Insurance, the insurer of the vehicle involved in the collision with Mr. Mahadeo, inquiring whether a claim had been made against their insured and, if so, the current status of it. On March 22, 2004, Liberty Mutual wrote back to Ms. Nahnybida to advise that, as of that date, they had not been put on notice of any claim made against their insured arising out of this accident. Specifically, they noted that they had not been contacted by Mr. Mariani's office putting them on notice of a claim. Based on this information Ms. Nahnybida again wrote to Mr. Mariani and Mr. Mahadeo on June 9, 2004 to advise them that she had been informed that no claim had been made to the tort insurer arising out of this accident. Once more she requested a status report on the tort action from Mr. Mahadeo or his legal representative.

On July 9, 2004, Mr. Mariani responded to Ms. Nahnybida's inquiry, made on February 27, 2004, by enclosing the requested consent under PIPEDA, which was apparently signed by Mr. Mahadeo on June 30, 2004. That letter from Mr. Mariani is notable in that it contains absolutely no reference whatsoever to the repeated requests for information regarding the status of Mr. Mahadeo's tort claim. On July 13, 2004, once again Ms. Nahnybida wrote to Mr. Mariani and Mr. Mahadeo acknowledging the receipt of the PIPEDA consent, this time explicitly reminding Mr. Mariani and Mr. Mahadeo that there is a two-year limitation period to commence a tort action. She further explicitly advised them that if no action was commenced within the limitation period, all accident benefit claims would be suspended for Mr. Mahadeo and that Aviva would seek a reimbursement of all benefits paid to date. No response of any sort was forthcoming from Mr. Mariani or Mr. Mahadeo.

In addition to the correspondence between the claims adjusters and Mr. Mariani and Mr. Mahadeo, a mediation requesting the reinstatement of income replacement benefits - which had been stopped in March 2003 as a result of independent medical examinations leading the insurer to conclude that Mr. Mahadeo no longer met the disability test - along with claims for payment of various medical and housekeeping expenses, was conducted through the Financial Services Commission of Ontario. A representative of Mr. Mariani's firm, Global Accident Claims, is recorded on the Mediator's Report as having represented Mr. Mahadeo at that mediation. The mediation failed to resolve the issues in dispute and Mr. Mariani's firm filed an Application for Arbitration with the Commission dated June 30, 2004.

The Insurer retained Mr. Robert Rogers of the firm of Evans, Philp to represent them in the arbitration and on August 3, 2004 he filed a Response to the Application for Arbitration. An Amended Response to the Application for Arbitration was filed on December 3, 2004. The significant difference between the two Responses is that the Amended Response raises the issue that Mr. Mahadeo failed to commence a tort action within the limitation period and therefore a claim was being asserted for reimbursement of all accident benefits paid to Mr. Mahadeo in the total amount of $24,903.00.

In the interim period between the filing of the Application for Arbitration and the filing of the Amended Response to the Application, Mr. Rogers wrote to Mr. Mariani on September 1, 2004, setting out his document production requests, as provided for in section 32 of the Dispute Resolution Practice Code, 4th edition. One of those requests was for "proper proof that a timely tort lawsuit has been commenced." No response of any sort from Mr. Mariani was received to that inquiry. On December 1, 2004, Ms. Pamela Quesnel, also of Evans, Philp, wrote to Mr. Mariani advising him that based on their information that no tort action had ever been commenced, they would be amending their Response to the Application for Arbitration and also be reclaiming all benefits Aviva had paid to Mr. Mahadeo.

On January 7, 2005, three days prior to the scheduled arbitration pre-hearing, Mr. Misir wrote to the insurer's counsel and to the Commission advising that his firm had been retained to assume carriage of the matter. He enclosed with his letter a copy of a document styled "Direction and Termination", dated December 8, 2004, wherein Mr. Mahadeo terminated Mr. Mariani's retainer.

On January 6, 2005, Mr. Misir's firm issued a Statement of Claim against the alleged owner and driver of the vehicle which was involved in the accident with Mr. Mahadeo, claiming various tort damages.

The only other relevant document in evidence in this arbitration is a letter from Mr. Mariani, dated February 14, 2003, addressed to the same two individuals named as Defendants in the Statement of Claim, who apparently live at different addresses. The letter advises them that Mr. Mariani represents Mr. Mahadeo and puts them on notice that, if he does not hear from them or their insurer within seven days, he has instructions to commence a legal action against them. There is no evidence before me that suggests that either of these individuals ever contacted Mr. Mariani, or Mr. Mahadeo; nor did the insurer of their vehicle, Liberty Mutual; nor that Mr. Mariani's office ever took any steps to follow up on this notice letter in any way whatsoever.

The oral evidence at the hearing can be summarized briefly.

Mr. Mahadeo testified that he "wanted to sue the guy who hit me." He further stated that Mr. Mariani advised him that if he went through WSIA he could not sue. His injuries, as he described them, were that he had a runny, bleeding nose, and that his neck and back hurt.

He was asked in direct examination by Mr. Misir why he did not commence a lawsuit prior to August 28, 2004, the two-year anniversary of the accident. His answer was that he had no medical proof that would support such a claim until he saw Dr. Chizen on July 30, 2003, who told him he had "chronic pain or something like that." Mr. Mahadeo stated that he still has nasal problems resulting in smelly nostril odours and the need for regular use of nasal sprays. He also experiences headaches, lack of sleep and some back pain.

On cross-examination, Ms. Quesnel asked Mr. Mahadeo why he did not respond to any of the insurer's requests for information about his tort claim. He stated that Mr. Mariani had counseled him that if he received any correspondence from the insurer that he should not open it, not read it, and just send it off to him. Complying with at least a portion of Mr. Mariani's instructions he never read any correspondence received from the insurer. He did not testify that he actually sent all of the mail received from Aviva off to Mr. Mariani. Mr. Mahadeo further stated that he never saw the Amended Response to the Application for Arbitration when it was filed and he was not aware that a reimbursement of benefits was being claimed by Aviva. He also claimed that he was unaware whether a motion for summary judgment was pending before the court in his tort action, based on his having missed the limitation period for initiating such a claim.

Mr. Mahadeo was asked whether he ever discussed commencing a tort claim with Mr. Mariani, and he testified that Mr. Mariani told him he would need more medical evidence before he could do that. He stated that he had some form of discussion with Mr. Mariani around February 2004 and that, as of that date, he was told by Mr. Mariani that they still "needed to get more medical documents." Mr. Mahadeo's understanding at that time was that some of the doctors he had seen were saying that he was fully recovered and could go back to work. He was asked when he instructed Mr. Mariani to commence a tort action and he responded that it was in October 2003, but on re-examination changed that answer, after his counsel's prompting, to October 2002.

Ms. Nahnybida's evidence basically summarized the history of correspondence she directed to Mr. Mariani and Mr. Mahadeo. She also stated in cross-examination that, as of the date of Mr. Mahadeo's deemed election to commence an action, the insurer had no particular reason to believe that he did not intend to do so.

The final witness at the hearing was Mr. Mariani, who was summonsed by Aviva to testify and to produce the contents of his file. It should be noted that Mr. Mariani at first resisted attending the arbitration or disclosing the contents of his file. His concerns were expressed to be with solicitor-client privilege and litigation privilege. Mr. Misir advised me that Mr. Mahadeo wanted Mr. Mariani to testify and that Mr. Mahadeo waived any and all privilege that he may be entitled to rely on with respect to his relationship with Mr. Mariani. In the face of this, Mr. Mariani decided not to pursue his general argument that paralegals are covered by solicitor-client privilege and allowed the parties to review his file contents prior to his testimony.

Mr. Mariani testified that he believes he would have had some discussion at the outset of his retainer with Mr. Mahadeo about his election and about the requirements for making a tort claim. He stated that he usually provides his clients with a pamphlet that sets out the relevant tests for bringing such a claim. Generally, he stated that he likely would have told Mr. Mahadeo that once he had enough supportive medical evidence, then he could pursue a tort claim but also that he would need to retain a lawyer to do that. When he was shown a copy of the letter addressed to him from Ms. Nahnybida, dated February 27, 2004, he was asked whether he had anything in his file which would reflect that he had advised Mr. Mahadeo that, as of that date, he did not have enough medical evidence to meet the threshold test for a tort claim. His response was that there were no notes to that effect in his file and that he has no recollection of talking to Mr. Mahadeo about the matter around that time. He was advised that Mr. Mahadeo had testified that this was the advice he was given by Mr. Mariani at the time. Mr. Mariani stated that he did not recall any such conversation. He also confirmed that there is nothing in his file indicating that he responded to the letter from the adjuster, with the proviso that he does not always make specific file notes. Mr. Mariani added that he did have a notation on his copy of the letter from Ms. Nahnybida dated June 9, 2004 reflecting that one of his assistants had written the name "Misir" on the letter and highlighted it in green. He stated that this meant, he believed, that the Misir law firm was looking after the tort. Mr. Mariani made no further inquiries with the Misir firm regarding the nature of their representation of Mr. Mahadeo.

Notwithstanding this file "notation," Mr. Mariani testified that he did not personally refer Mr. Mahadeo directly to the Misir law firm, or to any other law firm for that matter. He did recall speaking to Mr. Misir about Mr. Mahadeo on a number of unspecified occasions. His file was not transferred to the Misir firm until December 2004. However, he stated that Mr. Mahadeo was originally referred to him in December 2002 by Mr. Dev Misir on the understanding that the client wanted to pursue a tort claim. According to Mr. Mariani, notwithstanding the retainer agreement he had Mr. Mahadeo sign, his presumption was that the Misir law firm was handling the tort claim all along and "what and when they do is not in my control."

Finally, Mr. Mariani was asked whether he told Mr. Mahadeo not to read any correspondence the insurer sent to him. He answered that he never told Mr. Mahadeo to do that, but that he likely would have told him to not contact the office. Mr. Mariani testified that he runs a very busy practice and that he could not run such an office efficiently if clients were contacting him all the time about correspondence they received. His advice to clients was basically "don't call me, I'll call you if I need to talk to you."

ANALYSIS

Both parties concede that the relevant point in time for the determination of whether Mr. Mahadeo's election was valid is at the time of his election. Since Mr. Mahadeo did not return the election form to the WSIB, section 30 of the WSIA deems him to have elected to commence a tort action three months after the accident, absent evidence to the contrary, of which there is none here. On the basis of this I find that Mr. Mahadeo purported to elect out of the WSIA scheme and into the automobile insurance scheme on November 28, 2002.

The question which flows from this finding is: Was Mr. Mahadeo, as of November 28, 2002, primarily intending to commence a tort action or primarily concerned with claiming statutory accident benefits?

On the one hand, Mr. Mahadeo's evidence was that he always intended to "sue someone" for his injuries. On the other hand, one has to weigh this stated intention in the balance with a history of actions and inactions, both on his part and on Mr. Mariani's part, which suggest that he was not seriously intending to commence a tort action, at least not until Aviva decided to mount a claim in this arbitration for reimbursement of benefits already paid to him.

Although Ms. Nahnybida's evidence was that the insurer originally had no particular reason to believe that the election was not bona fide, I believe that it is important, as Ms. Quesnel argued, to assess Mr. Mahadeo's decision in the light of subsequent events. There are numerous points where Mr.Mahadeo's evidence is too inconsistent and implausible to accept:

1. Mr. Mahadeo stated that, from the beginning, he wanted to sue someone and that that was his primary reason for opting out of the WSIA scheme. Yet, notwithstanding that he apparently consulted with the Misir law firm before retaining Mr. Mariani, the evidence before me is that he did absolutely nothing to get that action started for over two years. Mr. Mariani's evidence was that Mr. Mahadeo was being represented all along by the Misir firm on the tort claim, yet Mr. Mahadeo apparently had no contact with that firm while he was working with Mr. Mariani and pursuing statutory accident benefit claims.

2. Mr. Mahadeo apparently believed that Mr. Mariani was taking care of all his claims arising out of this accident, and he signed a retainer agreement to that effect; yet he testified that he ultimately terminated Mr. Mariani's retainer because he was "not a lawyer" and thus could not handle his tort claim. Mr. Mariani testified that he clearly advised Mr. Mahadeo that he would need a lawyer to commence a tort action. If Mr. Mahadeo's "primary intention" all along was to pursue his tort claim, I find it difficult to comprehend why he did absolutely nothing to retain or instruct counsel who was competent to do that for him for more than two years. There is no evidence before me that Mr. Mahadeo ever contacted the Misir firm, or any other law firm, during that period of time. I also note that the retainer agreement which Mr. Mariani had Mr. Mahadeo sign explicitly authorizes Mr. Mariani to retain counsel, yet there is no evidence that Mr. Mariani ever took any steps to do this on Mr. Mahadeo's behalf.

3. Mr. Mahadeo and Mr. Mariani both testified that, until they obtained the report of Dr. Chizen in July 2003, they had no basis to believe Mr. Mahadeo even potentially met the threshold for a tort claim under the Insurance Act. Thus, I find that at the time of his election, Mr. Mahadeo had no reasonable grounds to believe he could succeed in a tort claim. If he did want to "sue someone" at that point in time, it would have been a manifestly unwarranted desire, and one that would have been inconsistent with all the legal advice he said he had received up until that time. Mr. Mahadeo's evidence reflected that he has a layman's understanding of legal procedure. I find it implausible for him to maintain now that he always intended to pursue a tort action in the face of the actions and inactions of his chosen legal agent who apparently never seriously concerned himself with the issue until the stakes were raised by Aviva's claim for a repayment of benefits.

4. Mr. Mahadeo, through Mr. Mariani, asserted numerous claims for various statutory accident benefits, during the period in which he was not pursuing a tort claim. He and Mr. Mariani were clearly motivated to press forward with these accident benefit claims, including initiating dispute resolution proceedings, and their assertiveness in pursuing accident benefits stands in stark contrast with the complete lack of action on the tort claim, which Mr. Mahadeo is maintaining was always his "primary" concern.

5. Mr. Mahadeo's evidence is that Mr. Mariani instructed him not to open or to read any correspondence from the insurer. I find this course of conduct to be either suspect or utterly foolish. If Mr. Mariani did instruct Mr. Mahadeo to do this, I find it to have been completely irresponsible to have followed such advice, particularly in the face of the regular stream of letters sent to Mr. Mahadeo over the years. Surely any reasonable person would at least have wondered what all this correspondence was about and at least contacted Mr. Mariani's office to inquire about the status of his case, notwithstanding any "instruction" from Mr. Mariani not to do so. If Mr. Mariani did not actually tell Mr. Mahadeo to ignore this correspondence, then I find that Mr. Mahadeo took a "hands off" approach to his claims which is seriously inconsistent with his stated "primary" purpose of actively bringing a tort action.

6. Even if one accepts Mr. Mahadeo's evidence that he was gathering medical evidence to support a tort claim up to the point he received Dr. Chizen's report, this does nothing to explain his continued lack of action after that date. Mr. Misir argued that the discoverability principle may ultimately result in a decision from the court that the limitation period here has not been missed. However, it is not my role to answer that question. For the purposes of the determination which I have to make, I find it difficult to understand why, after Mr. Mariani received and reviewed Dr. Chizen's report, he apparently still did nothing to encourage Mr. Mahadeo to consult legal counsel about the status of his tort claims. Mr. Mariani did not testify that there was anything in his file noting that he believed the relevant limitation period was extended as a result of receiving this report. Once again, the complete lack of action on Mr. Mariani's part strongly supports a conclusion that there was a substantial lack of interest in pursuing the tort claim, rather than a conclusion that it ranked as Mr. Mahadeo's primary legal concern.

The best case which Mr. Mahadeo can put forward on this point is that he somehow intuitively knew about the discoverability principle and that he, and Mr. Mariani, were both prepared to gamble that the limitation period was not actually at the two-year mark after the accident, and that they serendipitously reached this meeting of the minds without even discussing it together. Whether the discoverability principle governs the tort situation or not, I find that any such scenario is completely implausible. Even though, as Mr. Misir argued, Mr. Mahadeo had the right to wait until the eleventh hour to file his lawsuit if he so chose, the totality of the facts before me are much more consistent with a cavalier disregard as to whether he had a tort claim or not.

7. Mr. Mariani's persistent and consistent unresponsiveness to letters from adjusters and insurer's counsel is at odds with representing someone whose primary intention was to commence a tort action. Notwithstanding that there is the letter from Mr. Mariani purporting to put the owner and driver of the other vehicle on notice of Mr. Mahadeo's claim, I find it salient that neither of these defendants, who lived at different addresses, apparently contacted their insurer or Mr. Mariani as a result of this correspondence. I accept as true that, at the time Ms. Nahnybida contacted Liberty Mutual to inquire about the tort claim, they had not heard from anyone regarding the matter. The inference I draw from this is that the letter may not have been actually sent by Mr. Mariani's office. This conclusion, I find, is strongly supported by the complete failure on Mr. Mariani's part to take any steps to follow up on this "notice" afterwards or to refer Mr. Mahadeo along to a lawyer who would do that for him. I also find it odd that Mr. Mariani would take it upon himself to put tort defendants on notice, and to demand that they respond to his office, when his evidence was that he explicitly told Mr. Mahadeo that a lawyer would have to handle the tort side of his claims. This strongly supports the conclusion that Mr. Mahadeo and Mr. Mariani were much more interested in collecting SABS benefits than they were in making a tort claim.

8. When asked why he ultimately chose to terminate Mr. Mariani's retainer, Mr. Mahadeo stated that Mr. Mariani was not a lawyer and therefore he could not handle the case. He testified that Mr. Mariani told him that he now had to get a lawyer to represent him. However, if Mr. Mahadeo's intention from the time of his election was to pursue a tort claim then it is puzzling why he was not concerned much earlier with the "status" of his legal representative. I further find it problematic for Mr. Mariani to have counselled Mr. Mahadeo to elect out of WSIA benefits and then not in any way monitor the status of the tort claim which forms the condition precedent to any valid election of this sort.

Whether Mr. Mariani's office handles tort claims or not is not the point. Their professional obligation, it seems to me, in such a case is to make Mr. Mahadeo aware of what he needed to do to preserve his entitlements. Mr. Mariani, in response to this ongoing stream of inquiries about the tort claim, should have advised Aviva that he was not handling the tort claim and also should have told Mr. Mahadeo that he needed to follow up on this aspect of his case with someone else. I find that it is absurd to suggest that a failure to take any steps to advance a tort claim for two years, coupled with a persistent pattern of ignoring inquires from the insurer about its status can be reasonably interpreted as reflecting a "primary" intention to pursue it.

Mr. Misir advanced the argument that there was some legal uncertainty around whether Mr. Mahadeo had actually missed the limitation period or not, based on the discoverability principle. He also argued that Mr. Mahadeo may well have been financially better off to have claimed WSIA benefits if he did not have a tort, based on what he might have been paid for analogous claims. Presumably the force of the latter argument is that, if it is true, it supports a bona fide intention to pursue a tort claim. Why else would anyone opt out of better benefits through WSIA if SABS benefits were all that one would ever receive? Both of these arguments, interesting as they are, I find relate to the current status of Mr. Mahadeo's issues with WSIA, the tort defendants, and Mr. Mariani, not to whether Mr. Mahadeo made a valid election.

The relevant point in time to assess Mr. Mahadeo's intention in this case is the time when he is deemed to have elected out of WSIA. Mr. Mahadeo's evidence was that, at that time, he intended to sue someone. However, based on the documentary history in this matter, and the oral evidence I heard, I find that Mr. Mahadeo's, and his agent Mr. Mariani's, subsequent conduct was completely inconsistent with that intention.

To be clear, the test here is not whether Mr. Mahadeo had a "viable" tort claim or not. The test is whether he made a bona fide election. It is the subsequent history of actions and inactions, on the parts of both Mr. Mahadeo and Mr. Mahadeo, which lead me to the conclusion that Mr. Mahadeo was not primarily concerned with making a tort claim at the time of his election.

Even if Mr. Mahadeo, after obtaining advice from Mr. Misir, decided to launch an action in tort, such an act is only one factor to be weighed in assessing whether his actual election was bona fide. The act of issuing a Statement of Claim, more than two years after the accident, in and of itself, is not conclusive evidence of Mr. Mahadeo's intentions at the time the election was made. His intentions have to be assessed in the full context of his actions and inactions. It is just as plausible that, in the circumstances here, Mr. Mahadeo issued the Statement of Claim when he did to defend against Aviva's claim for benefit repayments as it is that he seriously intended to pursue tort defendants. The overwhelming weight of the evidence in this arbitration supports the inference that Mr. Mahadeo issued the claim to resist Aviva and nothing in evidence even plausibly supports his doing so based on an ongoing intention to seek recourse in tort. It is completely implausible to me to suggest that Mr. Mahadeo had, from the outset, the intention of claiming against a third party, yet completely and utterly ignored that aspect of his case until after the normal limitation period expired, notwithstanding Aviva's regularly reminding him and his legal representative that the two-year mark was approaching and that some action was required. The only reasonable inference I can draw from Mr. Mahadeo's actions and inactions is that he really didn't care much about making a tort claim.

Even if Mr. Mahadeo did subjectively believe that he wanted to sue someone when he made this election, that does not necessarily demonstrate bona fides in my view. His bona fides would need to be evidenced by subsequent conduct which was at least consistent with that intention. The Schedule is drafted in a way that contemplates and rejects someone opting out of WSIA ostensibly to pursue a tort, but with the real primary intention of collecting SABS benefits. The test for consistency in this situation is not particularly demanding in my view. But certainly some evidence consistent with pursuing a tort claim is expected if Mr. Mahadeo's choices are to be accepted as bona fide. But even if I am wrong and that a standard of "some consistency" is too onerous, the bare minimum would have to be that there is no overwhelming evidence to the contrary. I find that there is in fact a high level of evidence to the contrary here.

The only evidence which I have that could even potentially support Mr. Mahadeo's intentions to pursue a tort action is the letter in Mr. Mariani's file addressed to the alleged third party defendants. However, as I noted above, I doubt whether this letter was ever actually sent to or received by these individuals. Had Mr. Mariani chosen to follow up on this correspondence in any way at all the situation here might have been different. But the clear evidence before me is that he did absolutely nothing to follow up. This is evidence that the tort claim didn't really matter to Mr. Mahadeo. It is certainly not a problem which can be properly deflected back onto Aviva.

In summary, I find that the intention of Mr. Mahadeo, at the time he was deemed to have elected out of the WSIA scheme, was not primarily to pursue an action in tort against a third party. Rather, I find that his intentions were primarily to collect statutory accident benefits. Based on that finding his purported election was invalid. Aviva is entitled to a repayment of all statutory accident benefits paid to Mr. Mahadeo after November 28, 2002, the date of his deemed election.

EXPENSES:

I exercise my discretion to award Aviva its expenses incurred in this preliminary issue hearing. The parties shall have 30 days from the date of this decision to agree on the amount of expenses. If they cannot an expense hearing may be arranged with the case administrator and I shall assess them.

April 27, 2006

Robert A. Kominar

Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2006 ONFSCDRS 63

FSCO A04-001435

BETWEEN:

YOUGIE MAHADEO

Applicant

and

AVIVA CANADA INC.

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. Mahadeo's election out of the Workplace Safety and Insurance Act was not valid, as he did not make that election primarily to pursue an action against a third party and therefore made it primarily to obtain statutory accident benefits contrary to section 59(2) of the Schedule.

April 27, 2006

Robert A. Kominar

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2S.O. 1997, Chapter 16