Muhammad Qureshi v. State Farm Mutual Automobile Insurance Company, 2009 ONFSCDRS 137

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2009 ONFSCDRS 137

Appeals P09-00030A and P09-00030C

Appellant

and

Respondent

AND

Cross-Appellant

and

Cross-Respondent

BEFORE:

Delegate Lawrence Blackman

Mr. Gary Mazin for Mr. Muhammad Qureshi

Ms. Carla S. Falkeisen for State Farm Mutual Automobile Insurance Company

HEARING DATE:

By written submissions to be received by October 7, 2009

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

The Arbitrator’s July 9, 2009 order that each party bear their own expenses of the arbitration is rescinded. The issues of entitlement to and the quantum of the legal expenses of the arbitration proceeding are referred back to the Arbitrator for the parties to provide submissions and for the Arbitrator’s decision, with written reasons.
The Arbitrator’s July 9, 2009 decision is otherwise confirmed.
Accordingly, the Cross-Appellant’s August 10, 2009 Notice of Appeal is allowed and the Appellant’s August 6, 2009 Notice of Appeal, other than on the issue of arbitration legal expenses, is dismissed.
If the parties are unable to agree on the legal expenses of this appeal proceeding, an appeal expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003).

October 14, 2009

Lawrence Blackman Director’s Delegate

Date

I. NATURE OF THE APPEAL

The Appellant, Mr. Muhammad Qureshi, was injured in a December 13, 2005 motor vehicle accident and applied to the Cross-Appellant, State Farm Mutual Automobile Insurance Company, for statutory accident benefits payable under the Schedule.¹

A dispute arose between the parties as to the Appellant’s entitlement to certain benefits. The parties came before Arbitrator Lee (the “Arbitrator”) for an arbitration hearing in early 2009. In his July 9, 2009 decision, the Arbitrator found the Appellant entitled to payment of some, but not all of the benefits claimed in arbitration. In the body of his decision, under the section entitled “Expenses,” the Arbitrator held that “[e]ach party shall bear their own expenses in this arbitration.” The Arbitrator gave no reasons for this specific determination.

II. THE APPELLANT’S APPEAL

The Appellant’s August 6, 2009 Notice of Appeal appealed the following aspects of the Arbitrator’s July 9, 2009 decision:

The restriction of payment of weekly income replacement benefits (“IRBs”) to January 15, 2007;
The dismissal of the claim for housekeeping and home maintenance services; and,
The expense order.

The Appellant submitted that the Arbitrator failed to consider objective evidence relating to his pelvic fracture and, thereby, made a palpable and overriding error amounting to an error of law. The Arbitrator, in stating that the Appellant’s case lacked objective medical evidence, specifically failed to consider:

The December 13, 2005 consultation note of Dr. J.A. Stewart that the Appellant had “a basically very minimally displaced interarticular pelvic fracture.”
The December 21, 2005 consultation note of Dr. N. MacPhadyen that there was “a comminuted fracture involving the left inferior pubic ramus extending to involve the symphysis. There is also an undisplaced fracture through the left ileum at the level of the superior aspect of the acetabulum.”
The January 17, 2006 consultation note of Dr. D. Vickar that there “are mildly displaced fractures through the left acetabulum, left inferior pubic ramus and left pubic bone. As well, the fracture of the left acetabulum extends to involve the left iliac wing.”
The January 17, 2006 consultation note of Dr. Stewart that he had warned the Appellant that he may develop arthritis in his hip.

The Appellant further submitted that the Arbitrator, having failed to give any rationale or reason for his legal expense determination, “violated a fundamental right of parties to be provided reasons of a decision made by an Arbitrator.”

The Cross-Appellant submitted that appeals are limited to questions of law. It was not the role of appeals to review the evidence presented at arbitration and draw different factual conclusions or engage with a standard of perfection in a microscopic analysis of the arbitrator’s decision. In order to constitute an error in law, there must be a finding of fact made in the complete absence of supporting evidence.

The Cross-Appellant submitted that the Appellant did not take issue with the Arbitrator’s interpretation of the Schedule but rather with the Arbitrator’s findings respecting the nature and severity of the Appellant’s injury, which were factual determinations.

The Cross-Appellant argued that the Arbitrator did not ignore the accident-related fractures referred to in the above consultation notes (all dated within a few weeks of the accident) cited by the Appellant, notes that did not address the legal entitlement tests the Arbitrator was obliged to consider.

Rather, the Arbitrator specifically noted that the April 30, 2007 examination by Dr. B. Souter, D.C., showed that the Appellant’s fracture of his pelvis appeared to have healed. The Arbitrator further quoted Dr. E. Mah, D.C., following an August 24, 2007 examination, that the fractures should have healed and that the current physical examination failed to reveal ongoing objective signs of accident-related musculoskeletal impairment that would support the Appellant’s reported symptomatic complaints.

The Arbitrator also quoted Dr. G. Conn, orthopaedic surgeon, following a September 2008 evaluation, that the Appellant had healed “quite satisfactorily” and that he did not find any “specific objective findings to suggest any ongoing musculoskeletal impairment related to the December 13, 2005 accident.”

The Cross-Appellant further noted that the Arbitrator ordered payment of IRBs until January 15, 2007 on the basis that an ultrasound that day showed that the Appellant’s bursitis had healed. An earlier, February 2006, ultrasound revealing bursitis in the Appellant’s left shoulder provided the Arbitrator “some objective evidence to substantiate [the Appellant’s] accident-related complaints of pain in his shoulder until January 15, 2007.”

The Cross-Appellant agreed that the Arbitrator did not set out his reasoning in denying both parties their legal expenses of the arbitration. The Cross-Appellant argued that had the Arbitrator heard submissions from the parties on this issue, he would have awarded the Cross-Appellant its legal arbitration expenses.

III. THE CROSS-APPELLANT’S APPEAL

The Cross-Appellant’s August 10, 2009 cross-appeal requested that the Arbitrator’s orders respecting IRB and housekeeping benefits stand, but that his order regarding arbitration legal expenses be set aside and replaced with an order that the Appellant pay the Cross-Appellant its legal costs of same.

The Cross-Appellant submitted that the Arbitrator gave no reasons for his costs order and that he erred in law in failing to consider the applicable criteria set out in the legislation. The Cross-Appellant set out its arguments as to why it was entitled to its arbitration costs, and sought an order that such expenses be set at $20,000, in addition to its disbursements of $9,459.16.

The Appellant responded that he should have been granted his legal expenses of the arbitration.

IV. ANALYSIS

The Appellant’s September 9, 2009 written submissions consented to these two appeals being combined. The Appellant stated that it was “further in agreement that an oral hearing is not necessary for this within appeal … and that matters can be dealt with by written submissions.”

In its letter of September 1, 2009, the Cross-Appellant submitted that these two appeals should be combined as there was a common issue. The Cross-Appellant further stated that it was “of the view that both appeals can be dealt with by way of written submissions; an oral hearing is not required.”

By letter dated September 11, 2009, on the consent of both parties, I combined these two appeals on the basis that they involved the same parties, arose from the same arbitration decision and had issues or questions of law, fact or policy in common. I also stated that I would be determining on the basis of the written submissions whether, in accordance with Rule 56.5 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”), to decide the appeal on the record, by way of oral hearing or otherwise.

By letter dated September 23, 2009, the Appellant sought clarification whether he needed to respond to the Cross-Appellant’s submissions regarding entitlement to and the quantum of arbitration expenses. If so, he asked that both parties be ordered to exchange Bill of Costs.

My letter of September 24, 2009 responded that:

I will find of assistance the submissions of both parties as to my jurisdiction, as an appellate officer, in addition to the requested variance of the Arbitrator’s order respecting entitlement to the legal expenses of the arbitration, to determine the quantum of such expenses at first instance. One question that arises is that if I do determine arbitration expenses, to whom would one have a right of appeal?

A further issue, presuming such jurisdiction, is whether, nonetheless, it is more appropriate in the circumstances herein that the arbitration legal expense entitlement and/or quantum issues be returned to the arbitrator or to a different arbitrator.

The Cross-Appellant’s letter of September 28, 2009 submitted that as an adjudicator, a Director’s Delegate had the authority under Rule 75.1 of the Code to determine the quantum of arbitration expenses. Pursuant to Rule 1.1 of the Code, it would be most expeditious and cost-efficient for both parties that an appellate officer determine such expenses. It was submitted that regarding any appeal, an appeals officer’s determination of arbitration legal expenses would be no different than any determination on any issue.

Pursuant to the Director’s discretion under Rule 56.5 of the Code and my delegation under subsection 6(4) of the Insurance Act, R.S.O. 1990, c. I.8, and with the benefit of the parties’ written submissions, I am persuaded that these appeals should be decided on the record.

Both parties are content that I decide these appeals on the basis of these submissions, having been given further until October 7, 2009 to express any concerns in this regard, and I have no further questions arising from their respective written submissions. Further, proceeding to determine these appeals on the basis of the record would, in accordance with Rule 1.1 of the Code, result in the most expeditious and cost-efficient resolution of these disputes, without adversely affecting the justice of the process.

As submitted by the Cross-Appellant, appeals from an order of an arbitrator, under subsection 283(1) of the Insurance Act, are restricted to questions of law. I further agree that the Appellant

takes issue with the Arbitrator’s finding of fact regarding the extent of his disability.

Delegate McMahon stated in Lombardi and State Farm Mutual Automobile Insurance Company, (FSCO P01-00022, February 26, 2003) that “a finding of fact made in the complete absence of supporting evidence amounts to an error of law.”

In Sarpong and Owusu and TD Home and Auto Insurance Company, (FSCO P08-00003 and P08-00004, February 2, 2009), I stated that:

I agree that appeals from an arbitrator’s order are now restricted, under subsection 283(1) of the Insurance Act, to questions of law. Even prior to this restriction, Delegate Naylor set out in Kasap and Allstate Insurance Company of Canada, (FSCO P96-00071, March 13, 1998) the standard of appellate review as follows:

It is well established that my role on appeal is not to second guess the arbitrator’s evaluation of the evidence or substitute my own view of the weight to be attributed to it. The arbitrator has the advantage of hearing and observing the witnesses in person. This gives an arbitrator the opportunity to assess the credibility of their testimony and to evaluate the documentary evidence in light of the evidence as a whole . . .

The Appellants are essentially asking me to review the evidence presented at arbitration and draw different factual conclusions from those determined by the Arbitrator. That is not my role. Nor is it my role to engage, with a standard of perfection, in a microscopic analysis of the Arbitrator’s decisions . . .

I am further guided by the Ontario Divisional Court decision in State Farm Mutual Automobile Insurance Co. v. Movahedi, [2001] O.J. No. 5099, that:

Not reciting all the evidence does not mean the arbitrator failed to consider it. We find there was ample evidence before the arbitrator to support his findings of credibility as described in his decision.

The leading decision regarding IRB entitlement is that of Quattrocchi and State Farm Mutual Automobile Insurance Company (OIC A-006854, September 29, 1997), in which Arbitrator Makepeace sets out general principles, the first three of which are summarized as follows:

Pain on its own is not compensable in this statutory accident benefit scheme. Nor does a diagnosis of chronic pain syndrome guarantee entitlement. However, an insured may be found entitled to benefits because of disabling pain, despite there being no objectively confirmable impairment.
It is not necessary for an Arbitrator to accept any particular diagnosis of the Applicant’s complaints, because the issue for the Arbitrator is whether the Applicant is substantially disabled from performing the essential tasks of his or her pre-accident job as a result of the accident. This requires a comparison of the insured’s functional ability before and after the accident. Arbitrators have shown little interest in debates between medical experts as to the legitimacy or significance of a diagnosis of chronic pain syndrome.
Where there is no objective evidence of impairment, or the objective evidence does not explain the degree of pain reported by the insured person, the insured’s credibility becomes important. In assessing the insured’s subjective pain complaints, arbitrators consider all of the circumstances, including the consistency of the insured’s complaints and apparent functional level.

The Arbitrator, at page ten of his decision, determined, on the weight of the medical evidence, “that there were few objective physical findings to substantiate [the Appellant’s] claims of persistent and severe pain in his left shoulder, left knee, left hip, low back and right thumb.” The Arbitrator proceeded to give reasons as to why he preferred the evidence of Dr. A. Sekyi-Otu and Dr. G. Conn, upon whom the Cross-Appellant relied, over the evidence of Dr. J. Super and Dr. S. Esmail, upon whom the Appellant relied.

Without specifically referencing Quattrocchi, the Arbitrator stated that “the mere lack of objective medical evidence is not necessarily determinative of [the Appellant’s] pain-related complaints, as pain is a subjective experience that might not be measurable or traceable to an objective pathological component.” The Arbitrator proceeded to specifically find that the Appellant was not “a forthright witness.” The Arbitrator gave reasons for his finding.

However, notwithstanding his finding that the Appellant’s complaints of pain and disability were likely exaggerated and that the Appellant was not as disabled as he claimed, the Arbitrator accepted that the Appellant’s pre-accident job was physical and fast-paced, and that his attempt to return to work from September to October 2006 was unsuccessful as the Appellant was unable to keep up with the pace demanded by his employers.

As submitted by the Cross-Appellant, on the basis of the objective evidence of a February 2006 ultrasound showing bursitis in his left shoulder, the Arbitrator awarded weekly IRBs until the date of the January 15, 2007 ultrasound that showed that the bursitis had healed.

Regarding the Appellant’s claim for housekeeping benefits, the Arbitrator again provided reasons for denying the Appellant’s weekly claims from July 14, 2006 to December 12, 2007. He indicated why he preferred the medical expert evidence relied upon by the Cross-Appellant over the Appellant’s experts. He further found the Appellant’s credibility regarding his housekeeping services lacking, specifically the Appellant’s statement that the five adult people living in his household were completely segregated in their household duties and that no adult ever cooked or cleaned or did any pre-accident housework for the benefit of others.

The Arbitrator further found (1) inconsistencies in the Appellant’s testimony as to his pre-accident household duties, (2) he was not convinced that the Appellant performed as much housekeeping and home maintenance as claimed, (3) the Appellant’s wife, who was said to have taken over the Appellant’s housekeeping tasks, testified that she could not read the housekeeping invoices submitted and had not kept track of the housekeeping she had done, and (4) the Arbitrator was not convinced that the Appellant had sustained an accident-related impairment that substantially disabled him between July 14, 2006 and December 12, 2007 from performing the housekeeping and home maintenance services he normally performed before the accident.

I am not persuaded that the Arbitrator erred in law regarding his determinations regarding the Appellant’s entitlement to IRB and housekeeping and home maintenance benefits. Rather, the Arbitrator, who had the advantage of hearing and observing the witnesses in person, determined these entitlement issues upon assessing credibility and evaluating the evidence as a whole. I see no basis upon which to overturn these findings.

Regarding the question of the legal expenses of the arbitration proceeding, the parties agree, and I concur, that the Arbitrator failed to give reasons for his decision that each party should bear their own expenses of the arbitration proceeding.

The Supreme Court of Canada, in Baker v. Canada, 1999 CanLII 699 (SCC), [1999] 2 S.C.R. 817, held that:

… it is now appropriate to recognize that, in certain circumstances, the duty of procedural fairness will require the provision of a written explanation for a decision. The strong arguments demonstrating the advantages of written reasons suggest that, in cases such as this where the decision has important significance for the individual, when there is a statutory right of appeal, or in other circumstances, some form of reasons should be required … It would be unfair for a person subject to a decision such as this one which is so critical to their future not to be told why the result was reached.

I am persuaded that there was a duty of procedural fairness requiring written reasons for the Arbitrator’s decision regarding legal expenses. This determination had important significance for both parties. There was a statutory right of appeal from the Arbitrator’s decision under subsection 283(1) of the Insurance Act. Rule 65.3 of the Code provides that an “order which finally decides the issues in dispute will be supported by written reasons.” It would be unfair to both parties not to be told why an expense decision was reached.

Accordingly, I find that the parties are entitled to a written decision, with reasons, regarding entitlement to and the quantum of legal expenses following a reasonable opportunity by the parties to provide submissions on these issues. I have significant doubts, at the very least, as to the appropriateness of my determining these issues.

Appeals to the Director or his Delegate are from the order of an arbitrator. An appeal from my decision regarding arbitration legal expenses would be by application for judicial review. I am not persuaded that this would be a more expeditious or cost-efficient process than returning these issues to arbitration, with the right to an internal appeal at the Commission on these issues.

Further, I am mindful of the Supreme Court of Canada’s observation in Housen and Nikolaisen, 2002 SCC 33, [2002] S.C.J. No. 31, of the trial judge’s “advantageous position to make factual findings, owing to their extensive exposure to the evidence and the benefit of hearing the testimony viva voce.” I am persuaded that the same reasoning applies herein and that it is appropriate that I exercise any discretion that I may have to remit these issues to the Arbitrator, especially as there is no submission that these issues should be remitted to a different arbitrator.

Accordingly, the Arbitrator’s July 9, 2009 order that each party bear their own expenses of the arbitration is rescinded. The issues of entitlement to and the quantum of the legal expenses of the arbitration proceeding are referred back to the Arbitrator for the parties to provide submissions and for the Arbitrator’s decision, with written reasons.

V. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, an appeal expense hearing may be arranged in accordance with Rule 79 of the Code.

October 14, 2009

Lawrence Blackman Director’s Delegate

Date

Footnotes

The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.