Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2010 ONFSCDRS 78
FSCO A09-002604
BETWEEN:
DARLENE RITCHIE
Applicant
and
WEST ELGIN MUTUAL INSURANCE COMPANY
Insurer
PRE-HEARING DECISION
Before: Arbitrator John Wilson
Heard: By telephone conference call on March 3, 2010.
Appearances: Eric Armour for Ms. Ritchie
Talaal Bond for West Elgin Mutual Insurance Company
Issues:
The Applicant, Darlene Ritchie, was injured in a motor vehicle accident on May 6, 2006. She applied for and received statutory accident benefits from West Elgin Mutual Insurance Company (“West”), payable under the Schedule.1 West Elgin declined to pay weekly income replacement benefits. The parties were unable to resolve their disputes through mediation, and Ms. Ritchie applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
At the pre-hearing discussion of this case held on March 3, 2010, Mr. Armour advised that Ms. Ritchie would not be participating. He further advised that although he had spoken to Ms. Ritchie, he was not in a position to compromise her claim, and that short of the Insurer conceding every issue in litigation, there could be no settlement discussions.
Mr. Bond, appearing on behalf of West Elgin, objected immediately to the absence of Ms. Ritchie and asked that I rule on whether her presence was required.
When pressed, Mr. Armour suggested that the atmosphere of an adversarial pre-hearing would not be helpful to his client’s emotional health, and cited her experience in the mediation process as an example of what she could expect.
I declined at the outset of the pre-hearing to make a ruling, and asked the parties to attempt to make the best of the situation and see what could be accomplished. If either still wished to make submissions at the end of the pre-hearing, I would consider and rule at that time.
Once the pre-hearing had progressed as far as was possible under the circumstances, Mr. Bond reiterated West Elgin’s position that Ms. Ritchie was in default of her obligation to have been present and participating in the pre-hearing, and consequently her conduct should be subject to the sanction of an award of expenses, albeit a modest one, in favour of West Elgin.
Mr. Armour then offered to have his client participate by telephone in the pre-hearing. I ruled, however, that since the pre-hearing was over, such a concession was too late and that nothing useful could be added by bringing her into the process at that late point.
I then reserved on the issue of non-attendance.
The issues are:
Was Ms. Ritchie obliged to actively participate in the scheduled pre-hearing?
If so, what would be an appropriate sanction for non-attendance in this matter?
Result:
Ms. Ritchie was obliged to actively participate in the scheduled pre-hearing, unless excused by the arbitrator
Expenses are fixed at $85, payable by Ms. Ritchie to West Elgin.
The payment under this order is suspended until such time as this arbitration has been completed and an overall expense order made by the hearing arbitrator.
EVIDENCE AND ANALYSIS:
The arbitration process leading to a determination of statutory accident benefits disputes is unique. Despite many similarities to court litigation, and to private arbitrations, it has its own ways of proceeding that are not directly replicated in other forums. Foremost among these practices is the requirement that the parties themselves, in addition to their counsel, be present and involved in each stage of an arbitration. This policy is embodied in section 279(5) of the Insurance Act which provides as follows:
Power to bind parties
(5) If an insurer or an insured is represented in a mediation under section 280, an evaluation under section 280.1, an arbitration under section 282, an appeal under section 283 or a variation proceeding under section 284, the mediator, person performing the evaluation, arbitrator or Director, as the case may be, may adjourn the proceeding, with or without conditions, if the representative is not authorized to bind the party he or she represents.
The Introduction to the Dispute Resolution Practice Code (4th edition, October 2003) (the Practice Code), which governs arbitrations at the Commission, notes that our procedural rules aim to promote “timely, cost-effective and fair dispute resolution services.” Since the principal alternative to arbitration of accident benefits disputes at the Commission is a legal proceeding instituted in the Ontario Superior Court of Justice, the measure of the timeliness and effectiveness of arbitration must be in relation to those courts.
As part of this commitment to achieve timely resolution of arbitrations, the Practice Code at Rules 9.2 and 9.3 and Practice Note 3 reiterates the provisions of the Insurance Act, mandating the attendance of persons with authority to bind the parties at an arbitration or its component parts.
In the case of pre-hearings at the Commission, there is a strong functional argument for the presence of the parties themselves at settlement conferences. In a process where time is of the essence, it is important that the parties to litigation be in a position to make decisions in real time; that is, as information becomes available and as questions are raised in the course of a pre-hearing or settlement conference. Otherwise, the opportunity may be missed and the matter will continue to proceed to resolution by a hearing.
That the presence of parties, and the ability to make on-the-spot decisions as to the issues in dispute and the process to be taken not to mention settlement are important, is confirmed by the adoption of similar policies in the context of mandatory mediation.
In Magahaes v. Lusitania Portugese Recreation Club2, Master Beaudoin, as he then was, underlined the utility of the attendance at mediations by the parties themselves:
The fact that counsel attends with access to someone in authority does not constitute attendance by a party; nor can this be considered to a mediation. There are occasions where it is not necessary or practical that the named party attend the mediation session. This is particularly true in cases where the plaintiff’s claim is insured. Generally, a representative of the insurer, typically the adjuster, will attend in their place. At other times, namely, where cases allege professional negligence, it may be critical that the named party attends.
As noted earlier, the Insurance Act and the Dispute Resolution Practice Code have also attempted to create an atmosphere surrounding the arbitration process that can lead to early resolution of the claims.
As part of this process, section 279(5) of the Insurance Act, cited earlier, specifically mandates the presence of a person “authorized to bind the party he or she represents.”
As Master Beaudoin pointed out, above this involves more than just the presence of counsel for the party. It means that someone with appropriate authority has to be present who can “impose one or more legal duties on a person or institution.” Mr. Armour acknowledged at the outset of the pre-hearing that he was not in such a position.
Practice Note 7 details the expectations of pre-hearings. It provides for “settlement” as the first listed goal of a pre-hearing. It also notes that “the pre-hearing discussion can be held in person or by telephone conference, at the arbitrator’s discretion.” In this matter, Mr. Armour started off the process with a statement that no settlement discussions were possible, and that Ms. Ritchie herself would not take part.
Practice at the Commission has been that the majority of pre-hearings, at least in the Toronto region, take place in person, at the offices of the Commission. This practice has not arisen without some solid, practical reasons for its existence. Although arguably the Commission has neglected its mandate in not attempting to provide the same service to the balance of Ontario outside of Toronto, the same observations apply with necessary modifications to electronic pre-hearings.
In the absence of formal discoveries in the arbitration process, the pre-hearing fulfills some of that function as well, although on an informal basis. Face-to-face meetings with all parties present give an arbitrator an opportunity to engage the parties themselves in the process at the pre-hearing.
The discovery aspect of the process works best when the parties are able to visually observe and evaluate each other (or at least hear one another). Anecdotally, every arbitrator can recall a settlement achieved simply because a party was solidly convincing and credible at pre-hearing.
The pre-hearing also functions as a motions court, and often is the forum for both major and minor interlocutory matters. Indeed, a pre-hearing is often the only formal proceeding in an arbitration for the majority of applicants. With a small percentage of cases actually finishing the complete hearing process, pre-hearings are the face of the arbitration system most seen by the general public.
A pre-hearing, then, is a crucial step in a proceeding that provides an opportunity to facilitate settlement, and also a formal proceeding to deal with procedural and interlocutory issues.
According to Mr. Armour, Ms. Ritchie was potentially available by telephone but would not take part, either listening to or answering any questions that might be addressed to her. He reiterated that he did not have the requisite authority to deal with or compromise any issues in dispute.
Although his position moderated somewhat at the end of the pre-hearing, Mr. Armour was also adamant that he did not think it either necessary or wise that his client actually participate in the pre-hearing discussion. Other than a vague reference as to what he believed to have been an unproductive experience at mediation, Mr. Armour provided no real backup for his position.
More importantly he did not advise the Commission in advance, nor provide a “heads up” to opposing counsel. In effect, by excluding his client without offering either notice or reasonable excuse, Mr. Armour made a unilateral decision as to the outcome of the pre-hearing.
Mr. Bond had his adjuster come in from outside of London to be present and to participate in the pre-hearing. They claimed to be ready to discuss all issues, including resolution. Had Mr. Bond received advance notice that Ms. Ritchie would not be participating, he suggests that he would have expected the same indulgence in order to save his client the expense and trouble of traveling to his office in London.
It goes without saying that an unexplained non-attendance at a proceeding where attendance is mandatory, unless excused, does not reflect highly on a party or his counsel.3
While there can certainly be situations where the attendance of a party can be waived, due to illness, fragility or simply the logistics of ensuring participation, these are situations which call for prior notice. Ultimately, in this system, the decision is made by the arbitrator. It is not something that a party should decide unilaterally.
This request for an expense order is not about whether or not the parties were able to settle their dispute at the pre-hearing. Sometimes, even with the best intentions and the most scrupulous adherence to their procedural obligations, parties are unable to approach settlement.
The failure to settle in itself is not a reason to conclude that a pre-hearing was a waste of time. It is expected, however, that parties will, in good faith, be in a position to seriously consider both settlement options, and also react to new and relevant information.
Patently, Mr. Armour was not in a position to do this and alter his client’s position, without resort to outside authorization, so any discussion of whether settlement could or could not have resulted is merely speculative. Because of the position taken by her counsel early on in the discussion, no one will ever know.
An opportunity was missed not only to explore settlement but for Ms. Ritchie to hear and understand the positions taken by West Elgin, and to offer explanations from her own personal knowledge, of circumstances that may be fundamental to the Insurer’s refusal to pay certain benefits.
West Elgin has asked for an award of expenses to compensate it for time wasted through attendance at a pre-hearing that went nowhere. It also no doubt sees such an award as punishing the Applicant somewhat for her non-attendance.
Section 23(1) of the Statutory Powers Procedure Act provides that: “(A) tribunal may make such orders or give such directions in proceedings before it as it considers proper to prevent abuse of its processes.” This is a wide, discretionary power4and includes the power to order costs where appropriate.
Rule 75.2(d) of the Practice Code provides for the award of expenses to a party based on “the conduct of a party or a party’s representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders.”
I accept that the failure to observe the rule requiring the attendance of parties in question has contributed to delays in the arbitration process. Another resumed pre-hearing will likely be necessary to deal with settlement with the input of Ms. Ritchie. As such, the non-attendance can be seen as prolonging, obstructing or hindering the proceeding, and so form the basis for an expense award.
Intentionally flouting the rule regarding attendance at pre-hearings would also be an abuse of process and subject to sanctions.
I agree with Mr. Bond that at least a modest sanction is appropriate to both compensate and ensure compliance with the rules in this forum.
Therefore, I will fix costs at $85, payable by Ms. Ritchie to West Elgin. This amount relates specifically to the unnecessary attendance of West Elgin’s own representative, an attendance for which Mr. Bond would have asked a dispensation, had Mr. Armour had the courtesy to advise counsel and the Commission in advance of his intentions.
It is of some importance in this forum that insureds with serious claims should not be unduly discouraged from pursuing them. Such claims, however, must proceed within the spirit and the letter of the rules. In this case, compliance includes attendance at pre-hearing unless previously excused by the arbitrator.
In this matter, I note that Ms. Ritchie is said to be of modest means. There is no suggestion that her accident benefit claim is frivolous, nor any reason to believe that her non-appearance related to any personal decision. Rather, it had all the hallmarks of a tactical decision taken by her solicitor.
Given the above I will suspend the payment of the order until such time as this arbitration has been completed and an overall expense order made by the hearing arbitrator. As such, the expense award may be added to the final expense award, or set off against any expense award made against the Applicant, if such is the outcome.
June 7, 2010
John Wilson
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2010 ONFSCDRS 78
FSCO A09-002604
BETWEEN:
DARLENE RITCHIE
Applicant
and
WEST ELGIN MUTUAL 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:
Ms. Ritchie was obliged to actively participate in the scheduled pre-hearing, unless excused by the arbitrator.
Expenses are fixed at $85, payable by Ms. Ritchie to West Elgin.
The payment under this order is suspended until such time as this arbitration has been completed and an overall expense order made by the hearing arbitrator.
June 7, 2010
John Wilson
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- Magahaes v. Lusitania Portugese Recreation Club [1999] O.J. No. 3754
- Thompson v. Freeman [2008] O.J. No. 3186
- See Royal & SunAlliance v. Volfson