Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2008 ONFSCDRS 74

Appeal P08-00013

OFFICE OF THE DIRECTOR OF ARBITRATIONS

APRIL PICHE (Now known as April Loyst)

Appellant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Respondent

BEFORE:

Delegate Lawrence Blackman

REPRESENTATIVES:

Mr. Andrew R. Kerr for Ms. Piche

Mr. Ian D. Kirby for Allstate Insurance Company of Canada

HEARING DATE:

Written submissions were received by May 2, 2008

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The Appellant’s request for a stay of the Arbitrator’s March 6, 2008 order is denied.

May 9, 2008

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL AND BACKGROUND

The Appellant, Ms. April Loyst, applied to her insurance company, Allstate Insurance Company of Canada (the “Respondent”), for payment of statutory accident benefits pursuant to the Schedule¹ as a result of injuries sustained in a November 14, 2003 motor vehicle accident. The parties ultimately came before Arbitrator Leitch (the “Arbitrator”) for a determination of the Appellant’s entitlement to certain benefits.

In his initial August 3, 2007 decision, the Arbitrator found that the Appellant had not materially misrepresented to the Respondent that she was driving the vehicle involved in this single car accident. That decision has not been appealed.

In his March 6, 2008 decision, the Arbitrator found that the Appellant was not entitled to payment of continuing or higher weekly income replacement benefits (“IRBs”) claimed under clause 5(2)(b) of the Schedule, nor was she entitled to payment of rehabilitation, attendant care or housekeeping benefits claimed pursuant to sections 15, 16 and 22 of the Schedule respectively. The Arbitrator also found that the Appellant was required to repay the Respondent $4,487.11 in IRBs, plus interest in accordance with subsection 47(6) of the Schedule.

The Notice of Appeal, received April 7, 2008 by the Commission, submitted that the Arbitrator erred in law regarding the IRB quantum, as well as rehabilitation, attendant care and housekeeping entitlement. The Appellant specifically sought an order that she be paid the difference between $288.63 per week and what the Respondent had paid (with credit given for income earned from January 20, 2005 to January 6, 2006) as well as payment of $34,975.01 for rehabilitation, attendant care and housekeeping expenses, together with pre-judgment interest.

The Appellant did not specifically appeal the Arbitrator’s order regarding repayment. Rather, the Appellant requested a stay of that order, on the following grounds:

The operative part of the order requires the Appellant, who is now a single mother raising 3 children on a limited income, to repay certain benefits to the insurer. The Appellant does not have the funds to do so. The Appellant wishes to appeal the failure of Arbitrator Leitch to award certain benefits claimed. If the appeal is successful, this award can be used to set off amounts owing to the insurer.

The Commission received the Response to Appeal on April 16, 2008. The Respondent opposed the request for a stay of the March 6, 2008 repayment order for the following reasons:

(a) the repayment order arose from an overpayment due to the Appellant not advising she had returned to work;

(b) the Appellant had returned to part-time employment in June 2005 and has been employed on a full-time basis since June 2006;

(d) there is little prospect for success in this appeal, as the arbitrator’s decision was based largely upon (1) credibility issues, the Arbitrator finding the Appellant’s evidence on key points to be unreliable or misleading, and (2) upon an absence of evidence to support many of the claims advanced by the Appellant.

By letter to the parties dated April 18, 2008, I noted that Delegate Richardson, in Canadian Home Assurance Company and Scavuzzo, (OIC P-000626, May 18, 1992), citing Re Great Northern Capital Corporation et al. and City of Toronto et al. (1973), 1973 CanLII 762 (ON HCJ), 1 O.R. (2d) 160 (H.C.), found the following criteria applicable as to whether a stay should be granted:

the bona fides of the appeal;
the substance of the grounds for appeal; and,
the hardship to the respective parties if the stay is granted or refused.

I further noted that I did not see that the Appellant was appealing the repayment order. Stating that I would be deciding the stay request on the basis of written submissions, I indicated that I thought it fair to give both parties a further opportunity until May 2, 2008 to serve and file, if they so wished, additional written submissions regarding the stay request, and specifically address my jurisdiction and/or the appropriate exercise of discretion to stay an arbitration order which was not being appealed.

By letter dated April 25, 2008, the Respondent acknowledged that there would be “little hardship to the Insurer if the stay were granted,” but that could probably be said in virtually every case in which a repayment has been ordered.

The Appellant, in her further submissions of May 2, 2008, argued that:

(a) it was not correct that she was not appealing the overpayment issue. Rather, she was requesting that the overpayment order be set aside because the Respondent had not been paying the correct IRB rate;

(b) if successful in her appeal, monies would be available to set off the repayment order;

(c) the repayment order did not arise from a finding that she had engaged in misleading conduct, but, in any event, the question of bona fides related to the appeal itself and not the prior behaviour of a party;

(d) there was ample documentary evidence that the business in which she said she was involved prior to the accident in fact existed and that she was involved in that business. The Arbitrator thus erred in not taking into consideration the income she submitted she earned from that business; and,

(e) the Respondent had conceded that there was no hardship to it if a stay was granted, whereas it would be a great hardship to the Appellant to force her to repay the monies ordered pending the appeal, given she was on a fixed and modest income attempting to raise three children, especially when the appeal could make the repayment unnecessary.

II. ANALYSIS

Subsection 283(6) of the Insurance Act, R.S.O. 1990, c. I.8 (as amended) provides that an appeal does not stay the order of an arbitrator, unless the Director decides otherwise. Accordingly, in Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000), Delegate McMahon stated that a “stay is the exception rather than the rule.”

I stated in Allstate Insurance Company of Canada and N.I. (FSCO P07-00024, March 7, 2008), that subsection 283(6) is consistent with subsection 283(1) of the Insurance Act (which limits appeals of the order of an arbitrator to questions of law), both provisions showing deference to arbitration decisions. I further stated that:

Motions for stays are heard after a full hearing has been held. The appellate officer is at a distinct disadvantage when a stay is requested, usually having the benefit of neither full submissions on the merits of the appeal nor all the relevant supporting documentation such as transcripts.

I now turn to the criteria set out in Scavuzzo as they pertain to the circumstances of this case:

The bona fides of the appeal and the substance of the grounds for appeal

In significant measure, the Arbitrator, in his March 6, 2008 decision, determined the issues in dispute on the basis of difficulties with the Appellant’s credibility. The Arbitrator’s findings included:

The Appellant failed to disclose to the Respondent that she had returned to part-time work in June 2005. The Respondent continued to pay her IRBs until December 2005 without deducting her post-accident earnings. The Arbitrator confirmed in his March 6, 2008 decision that he found that the Appellant’s “failure to disclose her earnings was misleading conduct and undermined her credibility.”
Regarding the Appellant’s claim that income she said she received from a roofing business she ran with her husband the year prior to the accident should be included in her IRB calculation, the Arbitrator noted the Appellant’s admission that while her husband did all of the roofing and she only spoke to clients and kept the books in the business, she declared all of the income from the roofing business. Further, her income from 2003 was declared in her income tax return for that year only in 2006, without any verifiable business records being presented to the Respondent.
The Appellant claimed university tuition fees, books and a laptop computer as rehabilitation expenses. The Arbitrator found the Appellant’s rehabilitation goal unrealistic. The Arbitrator indicated it was not made clear to him how the Appellant (who was working full-time and never indicated she intended to complete her remaining courses on a part-time basis) would be able to pay her own living expenses and those of the three children in her custody, without continuing to work full-time.
Regarding the claim submitted in 2005 for payment of a microwave oven, the Arbitrator stated that there was evidence that the Appellant already had a microwave oven in 2004. No explanation was provided why she no longer had this microwave. In addition, there was no medical evidence to support the Appellant’s allegation that accident-related forgetfulness required her to use a microwave oven rather than an ordinary oven.
Regarding her claim for post-104 IRBs under the “any occupation test,” the Appellant was working full-time and acknowledged that she was able to drive to job locations, notwithstanding her alleged panic attacks associated with driving phobia being one basis for her claim of disability.
Regarding her claim for attendant care benefits, notwithstanding her own evidence and that of her mother that she gradually required less assistance over time, the number of hours claimed remained constant from November 14, 2003 to April 17, 2004. The Arbitrator stated that the Appellant “attempted to explain this as the inclusion of her mother’s travel time but [her] mother denied that travel time was included.”
Regarding her claim for housekeeping benefit beyond March 2004, the Arbitrator indicated that the only evidence before him was that of the Appellant and her mother. The Arbitrator stated “I find that evidence unreliable” and that contrary to the Appellant’s own evidence that at some point early in the period claimed she started to do some housekeeping, the claim for housekeeping benefits remained unchanged throughout 2004.

The Appellant concedes in her May 2, 2008 submissions that she:

. . . is not appealing (and indeed has never disputed) the factual finding that income received by the appellant from alternative employment from June 20, 2005 onward was not taken into account by Allstate in the income replacement benefit payments that it has made.

The Appellant further submits that “[i]t was never disputed by the appellant that the income earned from the replacement job needed to be taken into account.”

What I find most compelling in this request for a stay is that the Respondent’s entitlement to the monies order paid is not being appealed. Although the Notice of Appeal states, in general terms, that the Appellant seeks an Order “setting aside the Order of the Arbitrator,” it is clear that the Appellant is not, in actuality, disputing (1) the Arbitrator’s finding of her misrepresentation regarding post-accident employment (2) that this misrepresentation was the basis for the overpayment and (3) that, accordingly, the $4,487.11, plus interest, is owed to the Respondent.

Rather, the Appellant is seeking to stay payment of this acknowledged debt on the basis that she has a bona fide case regarding other benefits in dispute and that her success in this regard will set off the need for any repayment.

A review of the Notice of Appeal reveals that the appeal, in significant measure, pertains to the Arbitrator’s credibility findings regarding the roofing business and the Arbitrator’s alleged ignoring, misinterpreting or failure to consider important evidence.

The Appellant’s May 2, 2008 submissions state that there was ample documentation that the roofing business existed and there was no dispute she was engaged in the business at the time of the accident. That, however, did not appear to be the Arbitrator’s concern. Rather, the Arbitrator stated that given his doubts about the Appellant’s credibility, he was “not prepared to accept her unsubstantiated evidence that she earned income merely because, at a point well after the accident, she told Revenue Canada she did. [The Appellant] may have calculated that a one-time tax payment was well worth an inflated, and what she obviously hoped would be an ongoing, IRB claim.”

The Appellant may have genuine, bona fide concerns regarding certain findings of the Arbitrator. The Respondent disputes the substance, but not the bona fides of this appeal. Subsection 283(1) of the Insurance Act, however, restricts appeals of arbitration decisions to questions of law. I find that the Respondent raises an arguable concern as to the prospect of success for those grounds of the appeal which, at first glance, appear to pertain more directly to questions of fact.

I am not persuaded that the Appellant has set out a case, let alone a compelling case or exceptional circumstances for a stay, wherein the deference normally given an arbitrator who had the advantage of hearing all of the evidence, should be displaced based either on the substance or bona fides of the appeal, specifically in circumstances where the repayment order sought to be stayed arises from the Appellant’s own misrepresentation.

The hardship to the respective parties

The Appellant’s most compelling, prima facie, argument is that of hardship, namely that she is a single mother raising three children, all under the age of five, on a limited income. This is especially so, considering Delegate McMahon’s statement in Guardian that:

. . . the drafters of the legislation recognized that the insurer is in a much better position than the insured person to bear the risks inherent in not staying the arbitrator's order.

The Appellant does not dispute that she had been working full-time since June 2006. Nor does she dispute that the custody arrangement is temporary and is for her nephews and niece. The Appellant does not advise the specifics of this arrangement, including whether she is receiving any support or any other assistance, when the arrangement began or when it may be expected to end. The Appellant does not advise as to what income she has been receiving or what, if any, efforts she may have made to endeavour to honour her acknowledged debt. Unanswered, as well, is the Arbitrator’s query in his March 6, 2008 decision as to how the Appellant intended to return to school yet continue to pay the living expenses for herself and the children.

Notwithstanding one’s sympathy for the purported circumstances of the Appellant, there are simply too many unanswered questions regarding her alleged hardship to provide an exceptional stay order regarding an order for repayment (which, itself, is not being appealed) based on her continued misrepresentation leading to overpayments which have been outstanding for more than two years, and regarding the first overpayments, outstanding nearly three years. Accordingly, the stay request is denied.

III. EXPENSES

The expenses of this preliminary issue are deferred to the appellate officer hearing the main appeal.