Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2008 ONFSCDRS 68
Appeal P08-00008V
OFFICE OF THE DIRECTOR OF ARBITRATIONS
JAMES JOHNSTON Applicant
and
AXA INSURANCE (CANADA) Respondent
BEFORE: Delegate Lawrence Blackman
REPRESENTATIVES: Mr. Adam R. Little for Mr. Johnston Mr. David F. Murray for AXA
HEARING DATE: Written submissions were received by April 25, 2008.
VARIATION ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- The Application for Variation/Revocation will be heard by the same appellate officer hearing the Notice of Appeal.
- Subject to any further or other order of an appellate officer, both proceedings are stayed pending release of Arbitrator Bujold’s decision as to the amount of the Special Award.
- The parties shall, upon release of the Arbitrator Bujold’s Special Award decision, forthwith arrange a telephone conference with the appellate officer having carriage of this matter to address, amongst other things, whether the Appeal and Variation proceedings should now be scheduled to be heard at the same time, one immediately after the other, or whether one proceeding should be suspended pending the determination of the other.
May 1, 2008
Lawrence Blackman Director’s Delegate
Date
REASONS FOR DECISION
I. BACKGROUND
This matter arises from a decision of Arbitrator Bujold (the “Arbitrator”) dated February 8, 2008.
It is not disputed that Mr. Johnston (the “Applicant”) was injured in a December 12, 2000 motor vehicle accident. The Arbitrator noted that the Applicant had applied to, and had received from AXA Insurance (Canada) (the “Respondent”), weekly income replacement benefits (“IRBs”) pursuant to both the “own occupation” and the “any occupation” tests under the Schedule. 1
In dispute at the thirteen day arbitration hearing was whether the Applicant was self-employed at the time of the accident and if so what, if any, losses he had suffered from self-employment as a result of the accident, in accordance with subsection 6(5) of the Schedule.
The Arbitrator found that the Applicant was self-employed at the time of the accident and that he was entitled to additional IRBs.
By Application for Variation/Revocation received by the Commission on March 14, 2008, the Applicant sought to vary the Arbitrator’s February 8, 2008 order on the basis of a new, February 25, 2008 accounting report prepared by Mr. D.M. Edwards. The report addressed alleged inconsistencies in financial information presented to the Arbitrator. The Applicant submitted that this evidence only became available upon review of the Arbitrator’s decision.
The Respondent had filed with the Commission, on March 7, 2008, a Notice of Appeal. The Appeal submitted, amongst other things, that the Arbitrator had erred in law both in finding the Applicant self-employed and in calculating losses.
Rule 61.4(c) of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”) states that an Application for Variation/Revocation may be rejected if it is in respect of an order that has been appealed, and the appeal is pending. Rule 63 of the Code states that an Application for Variation/Revocation may be heard by the Director, his or her delegate, the same adjudicator who made the original order, or another adjudicator.
On April 7, 2008, I held a telephone conference call with both parties, the results of which I confirmed by letter the same day. The parties advised that there were two outstanding issues in arbitration, namely the amount of the special award and entitlement to and the amount of legal expenses. On the consent of both parties, I ordered the appeal proceeding stayed pending the release of the Arbitrator’s decision regarding the quantum of the special award.
I also agreed with the parties that given that the Application for Variation/Revocation pertained to specific accounting issues, it appeared sensible, at least in my view presently, to proceed with the Application for Variation/ Revocation ahead of the Notice of Appeal.
On consent, I also set timelines for serving and filing pleadings in the Variation/Revocation proceeding, including submissions as to the appropriate person to hear this Application.
II. SUBMISSIONS
The Applicant submits that the Arbitrator is the appropriate person to hear the Application for Variation/Revocation because:
the Application concerns a discrete accounting error in his calculations;
this was a complicated and lengthy arbitration, involving some three weeks of testimony, covering numerous accounting and business loss issues, resulting in an arbitration decision nearly 100 pages in length; and,
such a procedure would produce, in accordance with Rule 1.1 of the Code, the most just, quickest and least expensive resolution of the dispute, as appointing someone else would necessitate that new person reviewing and gaining an understanding of the Arbitrator’s reasons for his decision.
The Respondent submits that someone other than the Arbitrator should hear the Application for Variation/Revocation because:
section 286 of the Insurance Act provides that an arbitrator appointed by the Director cannot vary or revoke an order made by him or her and cannot make a new order or replace an order made by him or her if the order is under appeal; and,
it would not be possible for the Arbitrator to reconsider his original decision with the requisite level of objectivity.
III. ANALYSIS
Rule 61.1 of the Code states that:
61.1 Either the insured person or the insurer may apply to the Director to vary or revoke an arbitration order or an appeal order if:
(a) there has been a material change in the circumstances of the insured;
(b) evidence not available on the arbitration or appeal has become available; or,
(c) there is an error in the order.
The Applicant does not submit that there has been a material change in his circumstances.
The Applicant does submit that evidence regarding the alleged inconsistent methodology only became available upon review of the Arbitrator’s February 8, 2008 decision. The Respondent, however, argues that Mr. Edwards states in his February 25, 2008 report that his office discovered certain financial differences “shortly prior to the hearing in late 2006.” The Respondent raises a preliminary issue as to whether this is indeed new evidence, and if so, whether it is a reasonable basis upon which to allow this variation/revocation proceeding to proceed. The Applicant has deferred his response to these further preliminary issues.
Regarding, whether there has been “an error in the order,” the Respondent relies upon the comments of Arbitrator Wilson in Olszewski and Citadel General Insurance Company, (FSCO A03-000765, December 16, 2004) that:
Clearly, Variation/Revocation has limited application. An "error in the order" would appear to address problems such as typographical errors, numerical errors or perhaps an inconsistency between the form of the order and the result shown in the body of the decision. It would not likely be available for an error in law, or an error in the arbitrator's reasoning process.
Rule 65.5 of the Code states that:
65.5 An adjudicator may, at any time, correct a typographical error, error of calculation, technical error or similar error made in his or her decision or order.
I agree with Arbitrator Wilson’s comments. At first glance, based strictly on the written submissions filed, I am not presently persuaded that the error alleged by the Applicant to be contained in the February 8, 2008 decision pertains to the type of error contemplated by Rule 61.1(c) of the Code.
There is no basis whatsoever in this case for determining that the Arbitrator does not have the requisite objectivity to hear this Application for Variation/Revocation. If there were no Notice of Appeal filed, it would make eminent good sense for an Application for Variation/Revocation to be heard by the Arbitrator, given the lengthy and complicated accounting evidence received in this matter.
However, the pending appeal herein encompasses similar complicated accounting evidence heard over the course of the thirteen day arbitration hearing that would, by itself, necessitate an appellate officer reviewing and gaining an understanding of the Arbitrator’s reasons for his decision.
In the circumstances of this case, there does not appear to be any advantage in time or expense in appointing the Arbitrator to hear this Application for Variation/Revocation, rather than having the Application and the Appeal heard by the same appellate officer. Rather, if the Arbitrator were appointed to hear the Application for Variation/Revocation, both parties retain under Rule 50.1 of the Code the right to appeal to the Director the “order of an arbitrator” (Rule 50.1, in accordance with subsection 283(1) of the Insurance Act, addressing not the type of order appealed, but who has made the order), which would result, potentially, in an extra level of proceedings.
In these circumstances, I see no basis not to adhere to section 286 of the Insurance Act, even if the Applicant’s argument was correct that the provision was not applicable on the basis that the appeal proceeding had, on consent, been stayed.
Accordingly, the Application for Variation/Revocation will be heard by the same appellate officer hearing the Notice of Appeal. Subject to any further or other order of an appellate officer, both proceedings are stayed pending release of the Arbitrator’s decision regarding the amount of the Special Award. The stay includes the further preliminary issues raised by the Respondent.
The parties shall, upon release of the Arbitrator’s Special Award decision, forthwith arrange a telephone conference with the appellate officer having carriage of this matter to address, amongst other things, whether the Appeal and Variation proceedings should now be scheduled to be heard at the same time, one immediately after the other, or whether one proceeding should be suspended pending the determination of the other.
IV. EXPENSES
The legal expenses of this preliminary matter are reserved to the appellate officer finally determining these proceedings.
May 1, 2008
Lawrence Blackman Director’s Delegate
Date