Financial Services Commission of Ontario Commission des services financiers de l’Ontario

Neutral Citation: 2009 ONFSCDRS 97

FSCO A06-001872

BETWEEN:

P.M. AS REPRESENTATIVE OF THE ESTATE OF D.M. Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY Insurer

and

BETWEEN: FSCO A06-001873

P.M. Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY Insurer

DECISION ON A MOTION FOR INTERIM BENEFITS

Before: Arbitrator Suesan Alves

Heard: By telephone conference call on June 10, 2009

Appearances: David Hayward for the Applicants Anna-Marie Musson for the Insurer

Issues:

Ms. M brought a motion for interim benefits pending the determination of her entitlement and that of her husband’s estate to statutory accident benefits under the Schedule.¹ Dominion submits that such an order will be prejudicial if Ms. M were required to repay those benefits.

The issues on this motion are:

1. Is Ms. M entitled to interim benefits pursuant to section 279(4.1) of the Insurance Act?

2. Is Ms. M entitled to expenses in respect of this motion?

Result:

1. Ms. M is entitled to interim benefits pursuant to section 279(4.1) of the Insurance Act.

2. The issue of expenses may now be addressed.

EVIDENCE AND ANALYSIS:

Background and positions of the parties

D.M. and his wife P.M. applied for arbitration of their entitlement to statutory accident benefits in August 2006 as a result of the injuries D.M. sustained on November 20, 2004.

The cardinal dispute between the Applicants and Dominion was whether Mr. M sustained impairments as a result of a motor vehicle accident on November 20, 2004, as the Applicants alleged, or whether his injuries were the result of a spontaneous stroke, as Dominion alleged.

The parties agreed to have that dispute determined at a preliminary issues hearing. During the course of that hearing, D.M. died and his widow P.M. was appointed as representative of his estate in these proceedings.

The preliminary issues hearing took place over the course of seven days, during which Arbitrator Ashby heard from several expert and lay witnesses. The parties then provided written submissions. Arbitrator Ashby determined that Mr. M’s impairments were “directly caused by the use or operation” of his truck, pursuant to subsection 2(1) of the Schedule.

Dominion appealed. The appeal hearing is scheduled to take place in September 2009. The substantive issues arbitration hearing, which will address both Applicants entitlement to benefits is presently scheduled to take place between August 24, 2009 and September 3, 2009. However, it is likely that the parties will seek an adjournment pending the outcome of the appeal.

On this motion, Ms. M seeks payment of $50,000 as interim benefits. Dominion submits that an award of interim benfits will be prejudicial if it succeeds on appeal and Ms. M is required to repay those benefits.

At the motion for interim benefits, counsel agreed that the style of cause should be amended as set out on page one. Consistent with the decsion of Arbitrator Ashby, I have used initials for the names of the Applicants.

Test for interim benefits

Section 279(4.1) of the Insurance Act R.S.O. 1990, c.I.8, as amended, gives adjudicators at the Financial Services Commission of Ontario the discretionary authority to make interim orders pending the final order in any matter. Arbitrators have disagreed as to the test which should be used to guide the exercise of that discretion. Few interim benefits awards have been made.

I am of the view that the appropriate test in these circumstances is that the Applicant should demonstrate a prima facie case, need and urgency.

Prima facie case

A prima facie case is one in which a party adduces evidence, which if unanswered and believed, is sufficient to render reasonable a conclusion in favour of entitlement.² For the following reasons, I find that Ms. M has demonstrated a prima facie case.

Arbitrator Ashby determined that Mr. M’s impairments were “directly caused by the use or operation” of his truck, pursuant to subsection 2(1) of the Schedule, as the Applicants had alleged. Dominion of Canada appealed. Despite the appeal, I find that Arbitrator Ashby’s decision remains in full force and effect, based on section 283(6) of the Insurance Act. That section states: “An appeal does not stay the order of the arbitrator unless the Director decides otherwise.” Dominion did not seek a stay of Arbitrator Ashby’s order. Accordingly her order remains in full force and effect.

The Applicants have obtained evidence from health practitioners which supports D.M.’s entitlement to attendant care benefits and income replacement benefits. There is little doubt as to the profound nature of D.M.’s impairments. He was admitted to hospital on November 20, 2004, remained there until February 8, 2005 when he was transferred to a rehabilitation hospital, then discharged home to Ms. M’s care on May 2, 2005. Mr. M was unable to return to work. When D.M. was called as a witness at the hearing before Arbitrator Ashby, she found that he lacked capacity and appointed P.M. as his representative.

The Insurer has not obtained any section 42 assessments and accordingly there is no evidence to contradict the Applicants claim of entitlement to benefits up to the date of D.M.’s death in June 2008. On this basis, I find that the Applicants evidence on entitlement to benefits is unanswered. If that evidence is accepted and believed by the hearing arbitrator, it is likely that the Applicants will be successful. For these reasons, I find that the Applicants have established a prima facie case of entitlement to benefits.

Counsel for the Applicant estimated the amount of the attendant care benefits payable to the Estate of D.M. based on the only Form 1 in this case at $252,000, and the amount of the income replacement benefits payable at $75,000. D.M. died intestate. As his spouse, P.M. is entitled to the first $200,000 of his estate under section 45 of the Succession Law Reform Act.³ She would therefore be entitled to payment of a significant amount of the benefits payable to D.M.’s estate.

Need and urgency

I am satisfied that Ms. M has demonstrated need and urgency in the Affidavit material which was filed.

Dominion’s position is that Mr. M’s impairments did not result from a motor vehicle accident and it did not pay statutory accident benefits to either Applicant. Ms. M quit her job on or about November 28, 2004 to care for her husband and attend to his needs as a result of the accident, so the family lost both breadwinners for approximately three and a half years.

Following his accident, Mr. M received a CPP disability benefit of $1,000 per month. The Applicants used their savings, line of credit and Visa to pay their living expenses and to pay for D.M.’s rehabilitation and treatment. Following D.M.’s death in June 2008, the family no longer had access to the CPP disability payment. Ms. M was bereaved and consequently unable to work for a period of time following her husband’s death. She obtained a temporary job which ended on April 30, 2009.

The Applicant has 3 children. The youngest, a 14 year old son is experiencing emotional difficulty. He has been referred to a therapist by his family physician and is presently awaiting an appointment. Ms. M deposes that she is also incurring a further $100 per month in extraordinary expenses for her 14 year old son. The Applicant deposes that she is unable to seek full time work because of her son’s emotional status. Ms. M and her family now rely on social assistance.

Ms. M deposes that she has a mortgage of over $100,000, shorter term debt of approximately $50,000 consisting of a line of credit used to meet their living expenses and D.M.’s rehabilitation expenses. The Visa account is in collections and her personal account is in overdraft. In May 2009, one mortgage payment was N.S.F. The June property tax installment payment has also been missed. Thus, shelter is about to become a critical problem for the Applicant and her family.

In January 2009, Ms. M consulted with a trustee in bankruptcy, and was advised to hold off declaring bankruptcy for as long as possible. Bankruptcy still carries some stigma and is noted on a person’s credit history for several years. During that period, Ms. M will have very limited or no access to credit, and is likely to encounter landlords who may be reluctant to lease apartments or other dwellings to her because of the bankruptcy. The harm to the Applicant, if she must file for bankruptcy, will extend for a considerable period of time.

Counsel for the Insurer relies on the case of Meehan and Wawanesa Mutual Insurance Company (FSCO A02-000335, November 4, 2003). In that case the Applicants were farmers who operated a farm at a loss prior to the accident. One of the Meehan’s had been able to supplement the family’s income by working as a school bus driver prior to the accident. The Applicants were the parents of 4 young children, alleged they were insolvent and brought an application for interim benefits. While they alleged urgency and sought interim benefits, they had repeatedly adjourned hearing dates at the Financial Services Commission, retained three different counsel, and had not produced relevant financial documents. Four years had elapsed since the date of the accident and the Insurer had paid some income replacement benefits to one Applicant.

Counsel for the Insurer relied on Meehan for three propositions. With the greatest respect to Arbitrator Renahan, these are different from the criteria I have chosen to use to guide the exercise of my discretion in this case. One proposition in Meehan is that an award of interim benefits is inherently prejudicial to an insurer. In my view, by requiring the Applicant to demonstrate a case which is meritorious on its face, the prima facie case test gives sufficient consideration to the potential prejudice of making an award of interim benefits before the adjudication of entitlement to benefits. For the reasons given at pages 4 and 5 above, I concluded that the Applicant has met the prima facie test.

The second proposition on which Dominion relies is that Applicants can expect to experience financial hardship following a motor vehicle accident and that interest and a special award compensate insured persons for such “usual” hardship. At times, it can be difficult to draw the line between “usual” hardship and “extraordinary” hardship. As stated earlier the test I have chosen is one of need. I am persuaded that the Applicants financial situation is urgent and precarious.

Arbitral jurisprudence establishes that a consideration of need is not limited to financial circumstances. The stress of the Applicants financial situation, the possible loss of the family home, and the loss of a sense of security cannot possibly be helpful to her son’s recovery. Indeed, it may further compromise or jeopardize that recovery. Depending on his circumstances, the harm may become irreparable. Even if that is not the case, I am not persuaded that the emotional health of a teenager can be repaired at some later stage by an award of interest or a special award. So long as his emotional health is in crisis, Ms. M will be unable to return to full time employment. I do not accept that this is a case in which a future payment of interest or a special award will adequately compensate the Applicant or her son.

The third proposition is that Applicants should exercise their ordinary remedies and seek an early hearing date, before seeking an extraordinary remedy of interim benefits. I take Dominion’s point that the Applicant did not request preliminary issues hearing dates based on the urgency of her situation. She also requested an adjournment of that hearing date because one of her medical expert witnesses was unavailable. I accept the submission of counsel for the Applicant that

Ms. M believed she would have a resolution of the cardinal dispute with Dominion in April 2008, when the hearing commenced before Arbitrator Ashby. Such a belief is not inconsistent with the information on the Financial Services Commission of Ontario’s website—that a person can move through the arbitration process within fifty weeks. Ms. M. applied for arbitration in August 2006.

I do not believe that the Applicant should be faulted for failing to anticipate that Dominion would appeal the preliminary issues decision; that her bereavement would prevent her from working; that her son’s emotional condition would prevent her from seeking full time work; or for waiting until her financial situation became urgent and precarious in the spring of 2009 to serve a motion for interim benefits. It appears unlikely that the parties will have an arbitration decision on entitlement to benefits until sometime in 2010.

With respect to the arbitration process, I find her situation distinguishable from that of the Meehan’s who alleged urgency in the context of their failure to produce relevant documents; retained three different counsel; and requested and obtained repeated adjournments of arbitration hearing dates. In this case, the Applicants proceeded to a preliminary issues hearing at which the parties’ evidence and positions were fully canvassed, and a decision issued, which remains in full force and effect. It appears unlikely that the parties will have an arbitration decision on entitlement to benefits until sometime in 2010.

I find that the circumstances of this case favour an exercise of my discretion to grant the interim remedy requested. With respect to the risk of repayment, the Applicant was not physically injured in the accident. She is sufficiently recovered from her bereavement that she is able to work. But for her son’s emotional difficulties she would be seeking full time work. Ms. M anticipates that she will be able to find full time employment once her son makes some gains in his emotional recovery.

As to the amount, I find it appropriate to order Dominion of Canada General Insurance Company to pay the sum of $30,000 to Ms. M as interim benefits to the date of the appeal hearing in September 2009. The Order is subject to any further or other order by an adjudicator, including the appeals officer. Dominion of Canada General Insurance Company shall pay that amount on or before July 20, 2009.

Expenses:

If the parties are unable to agree on expenses of this motion, that issue may now be addressed.

July 15, 2009

Suesan Alves Arbitrator

Date

Financial Services Commission of Ontario Commission des services financiers de l’Ontario

Neutral Citation: 2009 ONFSCDRS 97

FSCO A06-001872 and A06-001873

BETWEEN:

P.M., AS REPRESENTATIVE OF THE ESTATE OF D.M. Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY Insurer

and

BETWEEN:

P.M. Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY Insurer

ARBITRATION ORDER

Under sections 279(4.1) and 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Dominion of Canada General Insurance Company shall pay P.M interim benefits in the amount of $30,000 by July 20, 2009. This order is subject to the further order of any other adjudicator.

2. If the parties are unable to agree on expenses of the motion, that issue may now be addressed.

July 15, 2009

Suesan Alves Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Malabanan and Canadian General Insurance Company (OIC A96-00084, July 26, 1996)
3. 3Decision of Arbitrator Ashby