Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 82

FSCO A05-002022

BETWEEN:

IYATHURAI THARMARAJAH

Applicant

and

CO-OPERATORS GENERAL INSURANCE COMPANY

Insurer

DECISION ON A MOTION

Before:

Elizabeth Nastasi

Heard:

March 16, 2007, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Adam Ezer for Mr. Tharmarajah

Carlie Smith for Co-operators General Insurance Company

Issues:

The Applicant, Iyathurai Tharmarajah, was injured in a motor vehicle accident on July 14, 2004. He applied for and received statutory accident benefits from Co-operators General Insurance Company ("Co-operators"), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Tharmarajah applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues on this motion are:

Is Co-operators entitled to amend its Response by Insurer to an Application for Arbitration to include a claim for repayment of benefits pursuant to section 47 of the Schedule?

Result:

Co-operators is entitled to amend its Response by Insurer to an Application for Arbitration to include a claim for repayment of benefits pursuant to section 47 of the Schedule.

BACKGROUND:

Co-operators brought a motion seeking an Order granting leave to amend its Response by Insurer to an Application for Arbitration ("Response"). Co-operators seeks to add the issue of repayment of benefits to the arbitration hearing scheduled for May 7, 8, 9 and 10, 2007.

The accident in this case occurred on July 14, 2004. Mr. Tharmarajah filed an Application for Arbitration ("Application") with respect to housekeeping, caregiver and medical benefits in respect of this accident. He was involved in a subsequent accident on January 25, 2005 and filed a claim for accident benefits with the Economical Insurance Group. The Applicant eventually commenced an action against the Economical Insurance Group in the Toronto Small Claims Court. Co-operators alleges that Mr. Tharmarajah has made claims to both insurers for the same benefits and for the same time period for both accidents.

I heard submissions on March 16, 2007 and gave an oral ruling at that time. The parties requested that I also provide written reasons for my decision.

EVIDENCE AND ANALYSIS:

Co-operators informed Mr. Tharmarajah of its intention to pursue the issue of repayment by way of letter dated October 19, 2006.² Mr. Tharmarajah did not consent to adding the issue of repayment and Co-operators promptly filed for mediation. The repayment issue proceeded to mediation and a Report of Mediator confirming that the issue was mediated and failed was issued February 27, 2007.

The basis of Mr. Tharmarajah's refusal and objection to this motion is that the Insurer has not sufficiently pleaded the necessary elements of a claim for repayment under section 47 of the Schedule.

Counsel for Mr. Tharmarajah argued that the necessary elements derived from section 47 include the following:

(a) A willful misrepresentation made by the insured to the insurer that the insurer relied upon in making payment of benefits; and

(b) That the benefit sought to be repaid had been paid directly to the insured - not to any third-party service provider.

Mr. Tharmarajah argued that submitting invoices for housekeeping and caregiving benefits is not a "representation." He argued that the misrepresentation being claimed by the insurer is in fact merely a statement allegedly made to another insurer, not a "misrepresentation" made to Co-operators. Further, Mr. Tharmarajah argued that Co-operators did not rely on any false or misleading statements to pay his claims. On this basis, Mr. Tharmarajah maintained that the Insurer's case is "devoid of merit."

Although perhaps an interesting legal argument, the merits of the Insurer's case and the strength of its evidence are matters for the hearing arbitrator. The issue of whether the Insurer is able to prove all the necessary elements required under section 47 of the Schedule is not for me to decide. The issue before me at this motion is whether Co-operators should be permitted to amend their Response in order to have the issue of repayment added.

Although the Insurance Act, its regulations and the Dispute Resolution Practice Code do not specifically set out procedures for making amendments to an Application or Response, in practice amendments occur at all stages of the arbitration process. Often, amendments are made on consent in order to avoid multiple proceedings and produce the most just, quickest and least expensive resolution to a dispute.

Section 282(3) of the Insurance Act provides authority for an arbitrator to determine all issues in dispute between an insured and an insurer. I agree with the comments of Arbitrator Kominar in Halliday and Certas that a dispute can "evolve" as it makes its way though the various stages of the arbitration process. Issues are often clarified, refined, added to and/or abandoned at the pre-hearing stage or later.³ A flexible yet balanced approach is necessary in order to ensure that all of the issues in dispute are put before the hearing arbitrator in a fair, cost effective and timely manner.

Some of the relevant factors to be considered in deciding whether to permit a proposed amendment are prejudice, delay, laches, the nature of the amendment and the timing of the request.⁴ A request made on the eve of the hearing will require compelling reasons to accommodate the change especially if it will delay the proceedings.⁵ Mr. Tharmarajah did not make submissions that adding the issue of repayment would cause prejudice to his case or that the timing of the request was strategic.

Co-operators submitted that when it filed its Response it was unaware of the details surrounding Mr. Tharmarajah's January 25, 2005 accident. Co-operators was not able to access that information without authorization from Mr. Tharmarajah. A pre-hearing was held on May 30, 2006 in which I ordered Mr. Tharmarajah to produce the accident benefits file related to the January 25, 2005 accident. Mr. Tharmarajah provided portions of the file in or about September 2006. It was not until the Insurer reviewed the accident benefits file of the January 25, 2005 accident that it became aware of a potential material misrepresentation by Mr. Tharmarajah with respect to the July 14, 2004 accident which is the subject of this arbitration. The Insurer's position is that since it did not and could not have come into possession of the pertinent records until well after filing its Response, it could not properly raise all of the issues in dispute at the time the Response was originally filed.

I do not consider the timing of Co-operators' request to be on the "eve of the hearing" or strategic. Once all of the issues in dispute were crystallized the Insurer promptly notified Mr. Tharmarajah of its intention to mediate the matter and seek repayment of all benefits paid to him. Given the length of time that Mr. Tharmarajah has been aware that Co-operators intended to pursue the issue of repayment, I do not find that Mr. Tharmarajah will be prejudiced by adding the issue to the upcoming arbitration hearing.

Mr. Tharmarajah also argued that the Insurer should not be permitted to add the issue of repayment to the arbitration as it has not provided sufficient particulars. In addition to the criteria set out in Carby, Arbitrator Wilson in Graham also noted that some consideration should be given to the merit of the proposed amendment in order to prevent a meritless claim being added as a tactic of delay or harassment. I do not interpret this to mean that the merit of the claim needs to be assessed and determined by the pre-hearing arbitrator. I do, however, accept that sufficient particulars of the claim should be provided by the party wishing to add the issue, not only to make the other side aware of the case it has to meet, but also to establish that the proposed claim raises a genuine issue.

In this case, I find that the details and information provided by Co-operators to the Applicant, both at the time of the mediation and in their motion record, to be sufficient particulars and satisfy me that there is a genuine issue for the hearing.

For the reasons set out above, Co-operators will be permitted to amend its Response as requested.

EXPENSES:

The issue of expenses is reserved for the hearing arbitrator.

April 30, 2007

Elizabeth Nastasi Arbitrator

Date