Soo Kyeong Lyu v. Security National Insurance Co./Monnex Insurance Mgmt. Inc., 2007 ONFSCDRS 244

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 244

FSCO A06-000303

BETWEEN:

SOO KYEONG LYU

Applicant

and

SECURITY NATIONAL INSURANCE CO./MONNEX INSURANCE MGMT. INC.

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Denise Ashby

Heard: Written submissions were completed on November 13, 2007.

Appearances: Salvatore Shaw for Ms. Lyu

Tricia McAvoy for Security National Insurance Co./Monnex Insurance Mgmt. Inc.

Issues:

The Applicant, Soo Kyeong Lyu, was injured in a motor vehicle accident on April 3, 2004.

She applied for and received statutory accident benefits from Security National Insurance Co./Monnex Insurance Mgmt. Inc. (“Security National”), payable under the Schedule.¹ A dispute arose between the parties which they could not resolve through mediation. Ms. Lyu 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 issues are:

Does Ms. Lyu have the mental capacity to proceed in the dispute resolution process pursuant to Rule 10.3 of the Dispute Resolution Practice Code?
In the event Ms. Lyu does not have the mental capacity to proceed in the dispute resolution process, is Ms. Lyu’s husband, Edward Stanulis, an appropriate person to be appointed to act on her behalf pursuant to Rule 10.5 of the Dispute Resolution Practice Code?

Result:

Ms. Lyu does not have the mental capacity to proceed in the dispute resolution process pursuant to Rule 10.3 of the Dispute Resolution Practice Code.
Ms. Lyu’s husband, Edward Stanulis, is an appropriate person to be appointed to act on her behalf pursuant to Rule 10.5 of the Dispute Resolution Practice Code.

Backgound:

On April 3, 2004, Ms. Lyu was crossing the street when she was struck by a motor vehicle. As a result of this incident, Ms. Lyu suffered a brain injury, a lateral tibial plateau fracture to her knee and other injuries. Post-accident she developed and suffers from a conversion disorder.

Prior to the accident, Ms. Lyu was engaged to marry, Edward Stanulis, who seeks to act on her behalf. The couple married in July 2004.

On October 10, 2007, during settlement discussions with an arbitrator, the issue of Ms. Lyu’s capacity to proceed in the dispute resolution process pursuant to Rule 10.3 of the Dispute Resolution Practice Code (the “Code”) was raised by the parties’ counsel. The arbitrator ordered, on consent of the parties, that a written hearing be conducted to determine the issue. Security National does not dispute that Ms. Lyu is incapable of proceeding in the arbitration process.

EVIDENCE AND ANALYSIS:

Sub-rule 10.1 of the Code provides:

Subject to Rule 10.2, a party to a mediation, settlement discussion, neutral evaluation or proceeding is presumed to have the mental capacity to manage his or her property, appoint and instruct a representative, and conduct his or her own case.

A determination that a person does not have the capacity to manage her property, is incapable of appointing and instructing a representative and cannot conduct her case is onerous and may have ramifications beyond the arbitration process. Thus to find a person incapable to proceed, an arbitrator must balance considerations of protecting an incapable person’s interests with the need to avoid restricting a capable person’s right to govern his or her affairs.

The parties do not dispute that Ms. Lyu is incapable. Notwithstanding their agreement, to rebut the presumption of capacity, I must be presented with clear, convincing and cogent evidence that she does not have the capacity to proceed in the arbitration process.

Prior to the accident, Ms. Lyu was a creative writer, who won international recognition for her films. Mr. Stanulis was a film producer. They met in their professional capacities and formed a personal and business partnership. In or about 2001, the couple purchased a large home which provided them with living and office space and rental income.

The medical reports filed in this proceeding chronicle a steady decline from the date of the accident to the point that by November 16, 2005, Ms. Lyu was described by Dr. A. Feinstein as follows:

…She appeared perplexed when I offered her the chair to sit in. She looked at it, turned 360 degrees, looked over to her husband for assistance and remained standing. Only with firm encouragement from her husband did she finally sit. She then lapsed into what I can only describe as a fetal position, hunching down in her chair and studiously avoiding eye contact. Occasionally, she would rock back and forth during the interview and at one point almost toppled out of her chair. At no point would she speak to me or acknowledge my presence…²

Dr. Feinstein concluded that Ms. Lyu was suffering from a conversion disorder with possible features of Major Depression. He indicated that the prognosis for improvement was guarded. At that time Mr. Stanulis was assisting his wife with her most basic bodily functions.³

The MDAC psychological assessment conducted on March 6, 2006, describes Ms. Lyu as “totally unresponsive and uncommunicative during the assessment.”⁴ MDAC’s

Catastrophic Impairment DAC report dated June 22, 2006, concludes that Ms. Lyu sustained and continues to experience no less than a Class 4 mental and behavioural impairment as defined in the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition.⁵

A Future Care Needs and Costs Analysis assessment was conducted in September 2007. The report, dated October 9, 2007, described Ms. Lyu as non-verbal and unable to respond appropriately to emergency situations. Although the report also indicates that Mr. Stanulis saw improvement in his wife’s condition, due to a change in her treatment regime, it is apparent that Ms. Lyu’s cognitive and communication abilities were substantially unchanged from that reported by Dr. Feinstein.⁶

On the basis of the foregoing, I find that Ms. Lyu is incapable of managing her property, appointing and instructing a representative, and conducting her own case pursuant to sub-rule10.3(a) of the Code.

I was provided with no evidence that there are persons who meet the descriptions set out in sub-rules 10.3(b) and (c) respectively. Therefore, I have considered whether Mr. Stanulis is an appropriate person to act on Ms. Lyu’s behalf pursuant to sub-rule 10.5 of the Code.

The reports referred to above, and the others submitted as part of Exhibit 1, all reflect that

Mr. Stanulis is Ms. Lyu’s caregiver. He is the source of the historical information provided to the assessors. Notwithstanding the clinical nature of those reports, it is apparent that Mr. Stanulis is the person that Ms. Lyu, in her compromised state, relies upon and trusts. The reports also indicate that prior to the accident the couple’s financial affairs, both personal and business, were shared. Therefore, I find that Mr. Stanulis is an appropriate person to act on Ms. Lyu’s behalf.

The reports in Exhibit 1 lead me to conclude that at no point in the dispute resolution process was Ms. Lyu a capable person. Therefore, Mr. Stanulis’ appointment is effective, nunc pro tunc, the day upon which the Application for Mediation was filed on Ms. Lyu’s behalf.

Further, pursuant to sub-rule 10.7 of the Code, Mr. Stanulis shall comply with the approval of settlement requirements of Rule 7.08 of the Rules of Civil Procedure.

EXPENSES:

No submissions with respect to expenses were made by the parties. I defer this issue to the discretion of the hearing arbitrator.

December 6, 2007

Denise Ashby Arbitrator

Date