Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2007 ONFSCDRS 67
FSCO A05-001749
BETWEEN:
KAROLIS VALAUSKAS Applicant
and
MOTOR VEHICLE ACCIDENT CLAIMS FUND Insurer
and
WAWANESA MUTUAL INSURANCE COMPANY Intervenor
DECISION ON A MOTION
Before: Jeffrey Rogers
Heard: March 9, 2007, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances: Mr. David Levy, solicitor for Mr. Valauskas Mr. Robert Kerkmann, solicitor for Motor Vehicle Accident Claims Fund Mr. Daniel Strigberger, solicitor for Wawanesa Mutual Insurance Company
Issue:
The Applicant, Karolis Valauskas, brought a motion for an order amending the Application for Arbitration by adding Wawanesa Mutual Insurance Company (Wawanesa) as an insurer.
The issue on the motion is:
- Does an Arbitrator have the jurisdiction to add Wawanesa as an insurer in this application and, if so, should Wawanesa be added as an insurer?
Result:
- An Arbitrator does not have the jurisdiction to add Wawanesa as an insurer in this application.
FACTS AND ANALYSIS:
Mr. Valauskas was injured in a motor vehicle accident on September 14, 2004. He applied for statutory accident benefits from Motor Vehicle Accident Claims Fund ("MVAC Fund"), payable under the Schedule.1 MVAC Fund disputed its obligation to pay benefits. The parties were unable to resolve their dispute through mediation, and Mr. Valauskas applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
A pre-hearing was held on March 30, 2006. On December 15, 2006 MVAC Fund wrote to the Commission requesting that the pre-hearing be resumed, with Wawanesa participating, because it had been informed that Wawanesa had accepted handling Mr. Valauskas' accident benefits claim, but Wawanesa had not confirmed that it was prepared to replace the Fund as the respondent in this arbitration. The letter did not indicate that Wawanesa had agreed to participate in the resumed pre-hearing.
I informed the parties that I was not prepared to resume the pre-hearing as requested and that, if they could not resolve the issue of Wawanesa replacing MVAC Fund as respondent, I would deal with the issue by way of motion, on notice to Wawanesa.
In January 2007, Mr. Valauskas served a notice of motion on MVAC Fund and Wawanesa, requesting an order that Wawanesa replace MVAC Fund as respondent. Mr. Valauskas later amended his request, seeking instead an order adding Wawanesa as a respondent. Although Wawanesa was not served with the amended request, its counsel agreed to proceed with the motion on March 9, 2007. The parties agreed that Wawanesa be granted intervenor status on the motion.
By letter of March 7, 2007 Wawanesa informed the Commission and the parties of its position that it is beyond the jurisdiction of an Arbitrator to grant the relief sought. It maintained that position at the hearing.
It is not disputed that Mr. Valauskas was an occupant of an automobile insured by Wawanesa when he was injured. It is also agreed that Mr. Valauskas first applied to MVAC Fund for accident benefits and later applied to Wawanesa.
Section 2 of Ontario Regulation 283/95 provides that the first insurer that receives a completed application for benefits is responsible for paying benefits to an insured person, pending the resolution of any dispute as to which insurer is required to pay benefits. The Regulation also provides that the dispute as to which insurer is required to pay is to be resolved by arbitration under the Arbitration Act, 1991, not by the Commission. MVAC Fund takes the position that the application it received was incomplete and that there was not sufficient nexus between the Fund and Mr. Valauskas for the Fund to be considered an insurer, within the parameters established in Allstate Insurance Co. of Canada v. Brown.2 Neither the Fund nor Wawanesa has initiated proceedings to arbitrate the priority issue.
Mr. Valauskas and MVAC Fund submitted that an arbitrator does have the required jurisdiction to add Wawanesa. Mr. Valauskas relied on what counsel described as the "common law practice" of making a claim against more than one defendant. He also relied on Practice Note 10 of the Dispute Resolution Practice Code (4th edition, 2003 updated).
MVAC Fund submitted that there must be jurisdiction because nothing says that there is no jurisdiction. The Fund also relied on the decision of the Divisional Court in Allstate v. Brown.3In that decision, the Court ruled that although an arbitrator has jurisdiction to determine whether the insurer named as the respondent in the arbitration was an "insurer" under the Insurance Act, notice of the hearing to resolve that issue should be given to the other potential insurers. The Fund submitted that jurisdiction to add the insurers as parties is implicit in the Court's ruling that they should be put on notice.
Jurisdiction to bring an action in Court against more than one defendant is specifically conferred in Rule 5.02(2) of the Rules of Civil Procedure? That rule does not confer jurisdiction on an arbitrator and there is no similar rule in the Dispute Resolution Practice Code. Assuming that the Courts had similar jurisdiction at common law, I can find no basis for importing that jurisdiction to the statutory function of an arbitrator. Practice Note 10 on which Mr. Valauskas relies, addresses the subject matter described in its title: Process for Settling Disputes Between Auto Insurance Companies. It points out that priority disputes are removed from the dispute resolution process at the Commission. There is no mention at all of the jurisdiction at the Commission that Mr. Valauskas says it supports.
The ruling in Allstate v. Brown does not imply jurisdiction to add parties. I interpret the ruling to mean simply that, because their interests could be adversely affected by the decision on the status of the named insurer, fairness required that the other potential insurers be put on notice. Indeed, by the Fund's interpretation, the issue in this motion is moot, because I required Mr. Valauskas to give Wawanesa notice of this motion.
As a statutory decision maker, the jurisdiction of an Arbitrator must either be specifically granted, or flow by necessary implication from a specific grant. Jurisdiction does not arise because it is not specifically excluded, as the Fund submits. I find that an Arbitrator lacks the jurisdiction to add Wawanesa as a defendant because that jurisdiction is not specifically granted and is excluded by necessary implication by both section 281(2) of the Insurance Act, and the priority dispute process established in O.Reg. 283/95.
Section 281(2) prohibits arbitration of an issue unless mediation was first sought and mediation failed. There has been no mediation of a dispute between Mr. Valauskas and Wawanesa. If the Commission refused to process Mr. Valauskas' Application for Mediation in which Wawanesa was named as the insurer, as counsel advised, Mr. Valauskas' remedy is to challenge that decision. The refusal does not confer on an arbitrator the jurisdiction to circumvent section 281(2).
O.Reg. 283/95 establishes arbitration under the Arbitration Act, 1991, as the forum for resolving priority disputes. It is precisely that jurisdiction that Mr. Valauskas suggests that an arbitrator should usurp, by adding Wawanesa as a respondent. One of the issues in this arbitration will be whether MVAC Fund was the first insurer to receive a completed application. As noted in Allstate v. Brown, an arbitrator has the jurisdiction to decide that issue in this arbitration, as it is currently composed. Such a decision would only bind the current parties. Were Wawanesa to be added as a party, upon a decision being made on that issue, the priority dispute between the Fund and Wawanesa would have been resolved. The Arbitrator would thus have done indirectly, what there is no jurisdiction to do directly.
I therefore find that an arbitrator does not have the jurisdiction to grant the relief that Mr. Valauskas has requested. The motion is denied.
Preliminary Issue
The parties agreed that, because it has the potential to determine the entire dispute, in the event that the motion was not successful, the issue of whether MVAC Fund was the first insurer to receive a completed application should be heard as a preliminary issue. They also agreed that the hearing, currently scheduled for May 7, 8, 9 and 10, 2007, would be cancelled. Instead, the preliminary issue will be heard on May 7, 2007. The parties also agreed that Wawanesa would be granted intervenor status at the preliminary issue hearing. It is understood that the decision on this issue will include a determination of whether there was sufficient nexus between Mr. Valauskas and the Fund for the Fund to be considered an insurer.
The parties agreed that MVAC Fund would serve any materials upon which it intends to rely in the preliminary issue hearing, no later than April 8, 2007 and that Mr. Valauskas would serve any responding material, no later than 15 days before May 7, 2007.
Counsel for Wawanesa requested an order requiring MVAC Fund to provide Wawanesa with a copy of its complete file. I denied the request on the grounds that I have no jurisdiction to make such an order, in favour of a non-party. I suggested that Wawanesa could seek that production in a priority dispute arbitration, which it can still commence.
EXPENSES:
The parties made no submissions on expenses. I reserve the assessment to the hearing Arbitrator. However, should the parties resolve the matter without a hearing but are unable to resolve the issue of expenses, either party may make an appointment for me to determine the matter in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.
April 3, 2007
Jeffrey Rogers Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2007 ONFSCDRS 67
FSCO A05-001749
BETWEEN:
KAROLIS VALAUSKAS Applicant
and
MOTOR VEHICLE ACCIDENT CLAIMS FUND Insurer
and
WAWANESA MUTUAL INSURANCE COMPANY Intervenor
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Mr. Valauskas motion for an order adding Wawanesa Mutual Insurance Company as an insurer is denied.
The hearing, currently scheduled to start on May 7, 2007 is cancelled.
In its place, a preliminary issue hearing on the issue of whether MVAC Fund was the first insurer to receive a completed application will be held on May 7, 2007.
Wawanesa Mutual Insurance Company is granted intervenor status in the preliminary issue hearing.
The assessment of expenses of this motion is reserved to the hearing Arbitrator.
Should the parties resolve the matter without a hearing but are unable to resolve the issue of expenses, either party may make an appointment for me to determine the matter in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.
April 3, 2007
Jeffrey Rogers Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- (1998), 1998 CanLII 18877 (ON CTGD), 40 O.R. (3rd) 610, (Ont. Div. Ct.)
- at paragraph 31.