Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2009 ONFSCDRS 90

Appeal P09-00018

DOMINION OF CANADA GENERAL INSURANCE COMPANY Appellant

and

JODI MONKS Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Ms. Jane Cvijan for Dominion of Canada General Insurance Company Mr. Robert A. Zigler for Ms. Jodi Monks

HEARING DATE: Written submissions were received by June 22, 2009

PRELIMINARY APPEAL ORDER

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

The Notice of Appeal herein received May 26, 2009 is not rejected pursuant to Rule 50.2 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) on the basis that it is from a preliminary decision.
The legal expenses of this preliminary appeal decision are deferred to the conclusion of this appeal, subject to any other or further order of an appeals adjudicator.

July 3, 2009

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

The Respondent, Ms. Jodi Monks, was injured in a September 28, 2003 motor vehicle accident and subsequently applied for statutory accident benefits from the Appellant, Dominion of Canada General Insurance Company (“Dominion”), payable under the Schedule.¹

The parties came before Arbitrator Ashby (the “Arbitrator”) by way of written submissions to determine whether the Respondent was precluded from proceeding to arbitration in respect of her claims for medical, attendant care and housekeeping and home maintenance benefits on the basis that her application for arbitration was filed beyond the limitation period set out in section 281.1 of the Insurance Act and section 51 of the Schedule.

The Arbitrator’s May 1, 2009 decision held that the Respondent was not precluded from proceeding to arbitration on these claims.

The Arbitrator accepted that between April 20, 2005 and January 12, 2006 the Respondent advanced various claims that were refused by the Appellant and that the Respondent applied for mediation at the Financial Services Commission of Ontario (the “Commission”) on November 9, 2007. The Arbitrator further found that on February 29, 2008, the Mediator’s Report was released respecting the medical, attendant care and housekeeping and home maintenance benefits remaining in dispute. The Report was received by the parties on March 4, 2008. On June 2, 2008, the Respondent filed her Application for Arbitration with the Commission.

Holding that a limitation defence required that an insurer confirm its denial of benefits in clear and unequivocal language, the Arbitrator found inadequacies in the Appellant’s refusals regarding physiotherapy and massage therapy. Regarding housekeeping and home maintenance claims, the Arbitrator held that the Appellant did not provide a valid refusal.

Clause 281.1(2)(b) of the Insurance Act provides that notwithstanding the two-year limitation period under subsection 281.1(1), an arbitration may be commenced 90 days after the mediator reports to the parties under subsection 280(8). With regard to orthodontic treatment and attendant care, the Arbitrator found that the Respondent had applied for arbitration on the 90th day, the Report of Mediator being received March 4, 2008 and the Respondent filing her Application for Arbitration June 2, 2008.

Accordingly, the Arbitrator found that the Respondent’s claims were not barred by the limitation period and that she could proceed to arbitration.

The Appellant submits that the Arbitrator erred in law in:

failing to find that the 90-day extension commences as of the date of the Report of Mediator, not when the Report is received by the parties. The Appellant relies on the decisions in Kurichh and Allstate Insurance Company of Canada, (FSCO A97-002118, May 6, 1999),² Greenidge v. State Farm Mutual Insurance Company, [1997] O.J. No. 5243 (upheld by the Court of Appeal, [1999] O.J. No. 232), and Kanapathipillai and Personal Insurance Company of Canada, (FSCO A07-0002597, April 6, 2009);
failing to give proper effect to when an arbitration proceeding is commenced. The Appellant submits that while the Respondent delivered her Application for Arbitration to the Commission’s legal services branch on June 2, 2008, same was not delivered, in accordance with Rules 4.1 and 6 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”), until received by the Commission’s Dispute Resolution Group on June 5, 2008;
failing to distinguish between a clear and unequivocal refusal to pay benefits and the reasons given for a refusal to pay the benefit, relying on Bhambi and State Farm Mutual Automobile Insurance Company, (FSCO A07-001075, March 27, 2008). The Appellant submitted that its refusal complied with the requirements of Smith v. Co-operators, 2002 SCC 30, [2002] 2 S.C.R. 129 and was clear and unequivocal, satisfying the requirements of section 49 of the Schedule and detailing the reasons for the refusal; and,
failing to consider or distinguish the prevailing case law put before her.

The Appellant requested that discretion be exercised in accepting this appeal from a preliminary decision, pursuant to Rule 50.2 of the Code, for the following reasons:

the weight of the case law supported the 90-day extension being calculated as of the date of the Report of Mediator;
there was, nonetheless, inconsistency in the case law whether the limitation period commenced 90 days after the Report of Mediator is dated or is received. Further, the Appellant was unaware of case law addressing the distinction between a clear and unequivocal refusal and the reasons an insurer is obliged to provide for its refusal. Nor was the Appellant aware of case law that considered when an arbitration proceeding commences for the purposes of the limitation period; and,
given that the Respondent waited approximately two years to submit her claims, there was no urgency. In any event, if the Appellant succeeded on appeal, there would be no need for the four-day arbitration hearing contemplated in this matter.

The Appellant requested a stay of the arbitration hearing until the appeal was resolved, for the following reasons:

If the Appellant succeeded on appeal, it would dispose of the arbitration in its entirety;
the appeal was bona fides and raised legal issues that required clarity; and,
if the appeal was accepted but the arbitration hearing was not adjourned, then the Appellant would incur excessive legal fees and, potentially, would be required to pay out benefits that it might not be able to recover.

The Respondent submitted that the significant issue in this appeal was the event from which the 90-day limitation period ran. The Respondent argued that the Schedule must be interpreted within the context that it is both consumer protection and remedial, and that limitation periods should be narrowly construed. Relying on Peixeiro v. Haberman, 1997 CanLII 325 (SCC), [1997] 3 S.C.R. 549, the Respondent maintained that the limitation period should not commence before the insured person knows that it has started to run.

The Respondent argued that the Arbitrator’s decision was in accordance with Graham and State Farm Mutual Automobile Insurance Company (FSCO A04-002268, December 7, 2005) (that the additional 90-day grace period under clause 282.1(2)(b) followed the delivery of the Report of Mediator) and Bhambi (that the 90-days commenced on the day the Report of Mediator was received or was deemed to be received by the parties). Further, this interpretation was consistent with the Appellant’s own OCF-9 termination of benefits that stated that the 90-days began to run from the date that the Mediator provided his or her Report.

The Respondent submitted that Kurichh “did not specifically find that the date on a Mediator’s Report is set in stone as the date the limitation commences.”

The Respondent further argued that regarding the housekeeping and attendant care claims, the Arbitrator found as a fact that the refusal was not clear and unequivocal and that a finding of fact is not appealable.

The Respondent, therefore, requested that the arbitration proceed to the earliest possible hearing date. If the appeal were accepted, then the arbitration would be unreasonably and unfairly delayed, especially when the Appellant’s chances of success were small, there being Arbitration decisions and policy principles supporting the Arbitrator’s decision.

II. ANALYSIS

Rule 50.2 of the Code provides that a party may not appeal a preliminary or interim order of an arbitrator until all of the issues in dispute in the arbitration have been finally decided, unless the Director (or, by virtue of subsection 6(4) of the Insurance Act, the Director's Delegate) orders otherwise. Rule 51.2(c) of the Code provides that an appeal may be rejected if it is from a preliminary or interim order that does not finally decide the issues in dispute.

Delegate Makepeace, in Allstate Insurance Company of Canada and Tesfay, (FSCO P99-00023, June 21, 1999), held that the decision whether to hear an appeal from a preliminary or interim order is discretionary, the following criteria being applicable:

(a) the strength of the appeal;

(b) the importance or novelty of the issue raised; and,

(c) whether the appeal would provide the quickest, most just and most expeditious way of disposing of the issues between the parties, in accordance with Rule 1.1 of the Code.

As noted above, the case law is presently inconsistent whether the additional 90-day grace period under clause 281.1(2)(b) runs from the date of the Report of Mediator or from the date the Report is received or is deemed to have been received.

While Kurichh and Greenidge were upheld on appeal, neither the Divisional Court nor the Court of Appeal addressed this specific question of law. The Director’s Delegate in Kurichh appears to have been more directed to whether the Report of Mediator had been received by the insured and questions of bias, rather than the specific question raised herein.

Clarification of the law on this limitation issue is important. This will, unfortunately, delay this arbitration. However, given the Respondent’s notable lack of haste in moving to mediation and then on to arbitration, this case does not appear to be one of urgency. Further, any ultimate decision regarding entitlement would include determination of interest under section 46 of the Schedule.

Upon these considerations, the Notice of Appeal is not rejected pursuant to Rule 50.2 of the Code on the basis that it is from a preliminary decision. To expedite this matter, the following time lines for the exchange of written submissions are now set in accordance with Rule 54 of the Code:

The Appellant will have thirty days, that is, until Tuesday, August 4, 2009, to serve and file its written submissions (this decision being served by facsimile transmission on its date of issuance);
The Respondent will have a further twenty days, that is, until Monday, August 24, 2009, to serve and file her written submissions.

Subsection 283(6) of the Insurance Act provides that an appeal does not stay the order of the arbitrator unless the Director (or, by virtue of subsection 6(4) of the Insurance Act, the Director's Delegate), decides otherwise. I am not advised as to any presently pending arbitration order regarding an arbitration hearing date. Hence, no stay order is necessary.

III. EXPENSES

The legal expenses of this preliminary appeal decision are deferred to the conclusion of this appeal, subject to any other or further order of an appeals adjudicator.