Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 109

FSCO A08-000794

BETWEEN:

HAMID ZAKI

Applicant

and

TD GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Joyce Miller

Heard: May 12, 2009, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Joseph Campisi Jr. for Mr. Zaki

David Silverstone for TD General Insurance Company

Issues:

The Applicant, Hamid Zaki, was injured in a motor vehicle accident on July 21, 2007. He applied for statutory accident benefits from TD General Insurance Company (“TD General”), payable under the Schedule.¹ TD General denied Mr. Zaki’s entitlement to statutory accident benefits on the basis that he is entitled to benefits under a workers’ compensation law or plan. The parties were unable to resolve their disputes through mediation, and Mr. Zaki 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 issue is:

1. Is Mr. Zaki barred from claiming accident benefits pursuant to section 59(1) of the Schedule?

2. Should the preliminary issue hearing be adjourned?

Result:

1. TD General’s request for an adjournment of the preliminary issue hearing is denied. On consent, the preliminary issue is withdrawn. The hearing on the substantive issues will proceed on the date the parties agreed to at the pre-hearing.

ADJOURNMENT REQUEST

At the start of the hearing TD General, on behalf of both parties, requested an adjournment of the preliminary issue hearing. The preliminary issue hearing had been set peremptory to TD General as a result of a previous adjournment request. TD General submitted this second adjournment request is so that it could apply to the Workplace Safety and Appeals Tribunal (“WSIAT”) to get a determination as to whether or not Mr. Zaki is a Schedule 1 Employee. TD General submitted that it would take 10 to 12 months to get a date to be heard on this issue and further time would be needed until the decision was rendered. TD General submitted that this would be “the cheapest, least expensive, expeditious” way to get a determination in this dispute. Accordingly, the parties were requesting that the arbitration be stayed sine die until they get such a determination.

Before providing my reasons as to why I refused the parties request, it is important to provide some background information leading to the preliminary issue hearing.

Background

Mr. Zaki was injured in a motor vehicle accident on July 21, 2007. At the time of the accident Mr. Zaki was working as a truck driver. He applied for accident benefits. TD General denied Mr. Zaki’s claims for income replacement benefits, physiotherapy, transportation, neuro rehab services, attendant care, and an in-home assessment. Mr. Zaki applied for mediation.

Mediation took place on January 28 and March 26, 2008. The mediator provided a report on March 26, 2008 which stated that the mediation had failed.

On April 15, 2008, Mr. Zaki applied for arbitration.

In its response on May 13, 2008, TD General stated that it had denied Mr. Zaki’s claim pursuant to section 59(1) of the Schedule. Section 59(1) provides:

The insurer is not required to pay benefits under this Regulation in respect of any insured person who, as a result of an accident, is entitled to receive benefits under any workers’ compensation law or plan.

TD General submits that pursuant to section 28(1) of the Workplace Safety and Insurance Act (“WSIA”), Mr. Zaki was a worker employed by a Schedule 1 Employer and is barred from commencing an action against Mr. Zaki’s co-worker who is also a worker employed by Mr. Zaki’s Schedule 1 Employer.

Accordingly, TD General submits that Mr. Zaki as a Schedule 1 Employee is entitled to receive benefits pursuant to a “workers’ compensation law or plan” and therefore pursuant to section 59(1) of Schedule TD General is not required to pay any accident benefits to Mr. Zaki.

At the pre-hearing held on November 27, 2008, Mr. Zaki disputed TD General’s position and claims that he is an independent contractor and therefore not a Schedule 1 Employee within the meaning of the WSIA.

A preliminary issue hearing was scheduled for March 18 and 20, 2009 to deal with the issue of whether or not Mr. Zaki was barred from claiming accident benefits pursuant to section 59(1) of the Schedule.

On March 11, 2009, TD General’s counsel requested an adjournment of the preliminary issue hearing on the basis that he recently replaced the previous counsel on the file and that “the parties are exploring the possibility that the Commission may not have jurisdiction over the preliminary issue hearing. We require some additional time to discuss this matter and therefore we ask that a new date for the preliminary hearing not be scheduled immediately.”

The adjournment was granted and a new date for the preliminary hearing was set, on consent, for May 12 and 13, 2009. The notice of hearing dated March 18, 2009 stated: “Please note this is the second re-scheduling of this matter for a preliminary hearing. The hearing of a preliminary issue will therefore proceed peremptory to the party requesting the re-scheduling.”

On April 3, 2009, TD General’s counsel wrote to the Commission requesting the issue set down for the preliminary issue hearing proceed by way of stated case to a Director’s Delegate.

On May 8, 2009, the Director of Arbitrations responded to TD General’s request. In denying TD General’s request, the Director or Arbitrations gave the following reasons:

You state that the FSCO arbitration decisions on the question of whether the issue of employment should be decided by a FSCO arbitrator or by the WSIT are contradictory. For this reason you “seek leave from the Director’s Delegate to entertain this matter as a “special case” and “without the necessity of proceeding before an arbitrator at the lower level”. However, while you refer to a decision of Arbitrator Leitch that says that this type of issues [sic] are more properly resolved by the WSIT, not FSCO, you do not provide any information about the various FSCO decisions that you indicated are contradictory. In fact you state that “these decisions…do not address the jurisdictional issues considered by Arbitrator Leitch”.

… I find nothing in legislation or the Practice Code provisions that would allow me to grant your request. I have no authority as Director of Arbitrations to stop the arbitration proceeding and refer the matter to a Director’s Delegate as a “special case”, as you requested.

The proper procedure to deal with such matters is to allow the arbitration to run its course and, if you are not satisfied with the outcome, to file an appeal in accordance with the Insurance Act and the Practice Code.

On May 11, 2009, circa 3:20 p.m., Mr. Zaki’s counsel faxed to the Commission a letter wherein he stated: “Please be advised that the preliminary hearing scheduled to take place on May 12 and May 13, 2009 will not be proceeding. … Given the fact that the Director of Arbitrations refused to comment on the issue of jurisdiction, we may be proceeding with a hearing at the Worker’s Safety and Insurance Act Tribunal, WSIAT. We may also request a stay for the proceedings pending a decision from WSIAT.”

On receipt of the fax, the Case Administrator informed counsel they could not unilaterally decide not to proceed with the hearing. They must make an adjournment request pursuant to the Dispute Resolution Practice Code (the “Code”). As it was too late in the day for an adjournment request to be considered by the adjournment officer, the parties were expected to appear for the preliminary issue hearing and could make their request for an adjournment to the arbitrator.

At the preliminary issue hearing, counsel for TD General reiterated his request for an adjournment arguing that I lacked jurisdiction to determine the preliminary issue.

Analysis and Findings

Pracitce Note 9 of the Code provides the three reasons for which adjournments are granted.

Requests for adjournments are considered:

• in cases of personal emergencies, such as serious illnesses or deaths in the family;
• for valid reasons relating to the hearing itself, such as an imminent settlement, or medical or other critical evidence that is unavoidably delayed; or
• when a lawyer is involved in a trial or other proceeding that was schedule to conclude before the start of the Commission proceeding and which has continued or been held over into the time scheduled for the Commission proceeding.

In addition, arbitrators exercising their discretion can allow adjournments for other reasons.

Although the adjournment request was made by TD General with Mr. Zaki’s consent, Mr. Zaki did not provide any submissions of his own to support the adjournment request. On the facts of this particular case, I find that TD General’s request for the adjournment neither fell within the criteria in the Practice Note, nor was TD General’s request sufficiently valid or reasonable for me to exercise my discretion and allow the adjournment. Accordingly, for the following reasons, I declined TD General’s adjournment request.

Mr. Zaki was seriously injured in his accident on July 21, 2007. TD General knew very early on (possibly as early as when Mr. Zaki made his claim for accident benefits) ² that it was raising a defence to Mr. Zaki’s claim for accident benefits, pursuant to section 59(1) of the Schedule. As well, TD General ought to have known that the burden of proof rests with TD General to show why pursuant to section 59(1), Mr. Zaki is not entitled to accident benefits. Pursuant to section 31(1)(c)³, TD General had the ability to apply to WSIAT for a determination as to whether or not Mr. Zaki was a Schedule 1 Employee. However, it did not do so and has yet to do so.

TD General’s request for an adjournment was twofold: on the one hand, it submitted that an arbitrator may not have the jurisdiction to make a determination pursuant to section 59(1) of the Schedule on whether or not an insurer is required to pay accident benefits and on the other hand, it needed time to get a determination from WSIAT as to whether or not Mr. Zaki was a Schedule 1 Employee. Accordingly, TD General submitted that it would be efficient to adjourn the preliminary issue hearing sine die until a decision could be made from WSIAT.

I found the raising of the “jurisdictional reason” to be a red herring. Except for comments on jurisdiction made in an expense decision by Arbitrator Leitch⁴, there has never been a dispute as to whether an arbitrator has the jurisdiction to make an order pursuant to section 59(1) of the Schedule. On the contrary, there have been a number of arbitrations where arbitrators have made orders in respect of section 59(1).⁵ Succinctly, while an arbitrator did not have any jurisdiction to decide whether or not an applicant is a Schedule 1 Employee pursuant to the WSIA, an arbitrator had the jurisdiction to decide whether or not an insurer is required to pay benefits pursuant to section 59(1) of the Schedule. Accordingly, I did not accept the jurisdictional argument as a reason to adjourn the preliminary issue hearing.

Regarding the request to adjourn the hearing sine die, the Commission has a strict practice of not granting a sine die adjournment or stay. The purpose of arbitration as an alternative to the court system is to provide fair, efficient, inexpensive and expeditious hearings. What distinguishes the arbitration process most significantly from the courts is not only our informality and streamlined procedures, but the fact that we provide expeditious hearings in a fair manner. Accordingly, the granting of a sine die adjournment or stay is rare at our tribunal.

On the rare occasion that a hearing is adjourned or stayed sine die, it must be for a good reason. On the facts of this case, especially the fact that TD General had more than ample notice that a WSIB claim could be made. TD General did not offer any good or valid reason that the hearing should be adjourned sine die for a period of at least one, if not more years, until a determination is received from WSIAT.

Accordingly, for these reasons, TD General’s request for an adjournment of this preliminary issue hearing, made peremptory on TD General, is denied.

WITHDRAWAL

After the parties were advised that I was not granting the adjournment, counsel for TD General on May 12, 2009 faxed a letter to me wherein he stated: “…in light of your refusal to grant the parties the requested adjournment which we again confirm was on consent, I would confirm that the parties have agreed to withdraw the preliminary issue presently before you and which you have directed [sic] proceed tomorrow. Notwithstanding the withdrawal, I would ask that you proceed to provide written reasons for the refusal to grant the parties the requested adjournment (on consent) for our records and for future matters.”

Rule 70.2 of the Code states that:

An adjudicator may permit a party to withdraw all or part of a dispute where all parties agree.

On the facts of this case, I find that it was a prudent decision to withdraw the preliminary issue hearing. Accordingly, I find that the preliminary issue is withdrawn and the hearing on the substantive issues will be held on the date the parties agreed to at the pre-hearing.

EXPENSES:

I leave any expenses claimed in this preliminary issue hearing to the hearing arbitrator.

August 4, 2009

Joyce Miller Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 109

FSCO A08-000794

BETWEEN:

HAMID ZAKI

Applicant

and

TD GENERAL INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The preliminary issue hearing set for May 12 and 13, 2009 is not adjourned.

2. The preliminary issue hearing is withdrawn on consent of the parties.

August 4, 2009

Joyce Miller Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2It would appear that right from the time TD General received and denied Mr. Zaki claim for accident benefits, TD General was taking the position that Mr. Zaki was entitled to benefits from WSIB. In any case, at the latest, according to TD General’s response to Mr. Zaki’s application for arbitration, TD General knew by a letter dated March 3, 2008 received from WSIB that it was taking the position that Mr. Zaki was not entitled to accident benefits because he was covered by a workers’ compensation plan.
3. 3Pursuant to section 31(1)(c) of the WSIA, a party to an action or an insurer from whom statutory accident benefits are claimed under section 268 of the Insurance Act, may apply to WSIAT to determine whether an applicant is entitled to claim benefits under the WSIA.
4. 4Lin and Liu and ING Insurance Company of Canada (FSCO A06-001732 and A06-001689), May 2, 2008. Arbitrator Leitch’s comments on jurisdiction were not made in the context of whether or not FSCO had jurisdiction to deal with matters under section 59(1) but were made in the context of an expense decision and whether or not expenses should be awarded. TD General’s counsel noted in his submissions to the Director of Arbitrations, that there are no cases on the issue of jurisdiction by FSCO arbitrators.
5. 5Gebru and Coseco Insurance Co./HB Group/Direct Protect (FSCO A01-000709, September 11, 2001); Gebru and Coseco Insurance Co./HB Group/Direct Protect (FSCO P01-00043, January 7, 2002) Appeal; Champaigne and Co-operators General Insurance Company (FSCO P07-00011, November 27, 2008) Appeal; Mahadeo and Aviva Canada Inc. (FSCO P06-00015, March 22, 2007) Appeal; Lawrence and ACE INA Insurance (FSCO P07-00007, May 16, 2008) Appeal.