Pilot Insurance Company v. Salandra Tyler, 2011 ONFSCDRS 18

Financial Services Commission of Ontario

Neutral Citation: 2011 ONFSCDRS 18

Appeal P11-00001

OFFICE OF THE DIRECTOR OF ARBITRATIONS

PILOT INSURANCE COMPANY Appellant

and

SALANDRA TYLER Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Mr. Sean Giovannetti for the Appellant, Pilot Insurance Company Mr. Michael A. Yermus for the Respondent, Salandra Tyler

HEARING DATE: February 16, 2011

PRELIMINARY APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered, as stated orally on February 16, 2011, that:

1. I exercise my discretion under Rule 51.2(c) of the Dispute Resolution Practice Code (Fourth Edition – Updated September 2010) to accept this Notice of Appeal from a preliminary arbitration decision.

2. The Appellant’s request for a stay of the arbitration proceeding is denied.

3. 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.

February 23, 2011

Lawrence Blackman Director’s Delegate Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

The Appellant, Pilot Insurance Company, appeals the December 16, 2010 decision of Arbitrator Rogers (the “Arbitrator”) on the preliminary issue of whether the Respondent, Salandra Tyler, missed the limitation period extension (to ninety days after the mediator reports to the parties) under clause 281.1(2)(b) of the Insurance Act, R.S.O. 1990, c. I.8 and subsection 51(2) of the Schedule.¹ Finding that the Respondent had applied for arbitration less than ninety days after receiving the Report of Mediator, the Arbitrator held that the Respondent was not precluded from proceeding to arbitration on her non-earner benefits (“NEB”) claim.

The Arbitrator determined the following relevant dates:

• April 26, 2005 the motor vehicle accident took place
• December 15, 2006 the Appellant terminated NEBs
• July 28, 2008 the Respondent applied for mediation
• February 23, 2009 mediation was held / the Report of Mediator is dated
• July 3, 2009 the Respondent applied for arbitration

The Arbitrator found that where, as here, a party had a representative, Rules 5.7 and 9 of the Dispute Resolution Practice Code (Fourth Edition – Updated September 2010) (the “Code”) required service of the Report of Mediator on the insured person’s representative. The Arbitrator preferred the Respondent’s evidence that her representative did not receive the Report of Mediator until June 24, 2009.

The Arbitrator held that a party cannot take advantage of the deemed service by mail provision of Rule 7.3(b) of the Code without proof of the date the post office stamped the mailed document. The Arbitrator found that such evidence was not before him.

The Arbitrator found that as mediators cannot be required to testify, an insurer seeking to rely on the ninety-day limitation extension would be unable to provide direct evidence of the mailing of the Report of Mediator. However, the alternative was to ignore the requirements of Rule 7.3 and assume that the Commission had an infallible system for mailing such reports. This, the Arbitrator determined, would more likely lead to an unfair result of an insured person being barred from pursuing a claim for accident benefits based on an untested assumption.

The January 14, 2011 Notice of Appeal seeks leave to appeal the Arbitrator’s Order on a preliminary issue and requests that the arbitration proceeding be stayed pending the outcome of this appeal. If this appeal is accepted, the Appellant requests that the December 16, 2010 decision be set aside and the disputed NEB claim dismissed or that a new preliminary issue hearing be held to remedy the Arbitrator’s refusal to allow the Appellant to cross-examine on the Respondent’s affidavit.

I now turn to addressing the preliminary appeal questions of (a) whether to accept this appeal and, if so, (b) whether to grant the requested stay.

II. WHETHER TO ACCEPT THIS APPEAL FROM A PRELIMINARY ORDER

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, in this case, the Director’s Delegate appointed under subsection 6(4) of the Insurance Act) orders otherwise. Rule 51.2(c) 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.

The Appellant relies on Allstate Insurance Company of Canada and Al-Obaidi, (FSCO P99-00009, May 2, 2000). In that decision, Delegate Naylor held that although the general thrust of the Code is to defer appeals from preliminary or interim orders until the arbitration is over, such appeals have been allowed to proceed where it makes sense to do so before the parties are put to the expense and time of a full arbitration hearing. This case-by-case determination reflects a number of considerations, including:

… the apparent strength of the appeal, the importance of the issue, whether the ruling represents a departure from the approach taken in previous cases and whether hearing the appeal in the interim would result in significant savings in time and expense or streamline the process in some way. The preference of the parties is an important factor.

The Appellant submits that:

1. It has three strong arguments. First, the Arbitrator’s decision “results in an absurd scenario in which the Code provides for service by regular mail, but no means by which service can be proved. In order to overcome a missed limitation period, a claimant merely needs to assert a bald allegation that the Mediator’s Report was not received, without adducing any evidence.”

The Appellant further submits that the Arbitrator erred in not allowing the Appellant to cross-examine on an affidavit submitted by the Respondent, contrary to the rules of natural justice and contrary to clause 10.1(b) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (the “SPPA”).

Lastly, the Appellant submits that the Arbitrator erred in holding that the limitation period runs only from the date of service on the insured person’s representative.

2. The Arbitrator’s decision has important consequences in that as service of the Report of Mediator can never be deemed effective in the face of an insured’s bald denial it was received, the limitation period will never begin to run.

3. The Arbitrator’s decision departs from Kurichh and Allstate Insurance Company of Canada, (FSCO A97-002118, May 6, 1999) that service of the Report of Mediator is deemed to occur five days after the date of the Report and, implicitly, that service on either the claimant or on counsel will trigger the start of the ninety-day limitation extension.

4. Accepting this appeal at this time is the most efficient and expedient manner of resolving this dispute. If the appeal is successful, there will be no need for an arbitration hearing on NEB entitlement. Further, the Respondent will not be prejudiced by delay. If the appeal is unsuccessful, the Appellant will co-operate in re-scheduling the hearing for the earliest available date and, in any event, the Respondent will receive interest on any past NEBs found owing.

The Respondent submits, in part, that:

1. The Notice of Appeal fails to raise a question of law. The Arbitrator found that “there was no evidence that the mail containing the Report of Mediator was ever stamped by the post office, thus the service of the document could not be deemed to have taken place in accordance with Rule 7.3(b) of the Code.” The Respondent submits that this is simply a case where the Arbitrator preferred the Respondent’s evidence over the Appellant’s.

The Respondent argues that the Arbitrator’s findings of fact were not made in the complete absence of supporting evidence and cannot be characterized as reviewable errors of law, as set out in Lombardi and State Farm Mutual Automobile Insurance Company, (FSCO P01-00022, February 26, 2003). What, it is argued, the Appellant really wants is to have the evidence reassessed. This, the Respondent submits, is contrary to subsection 283(1) of the Insurance Act that limits appeals from the decision of an arbitrator to questions of law.

2. In any event, the Appellant is out of time with respect to the Arbitrator’s October 6, 2010 letter order denying the Appellant the opportunity to cross-examine on the Respondent’s affidavit.

I find that the Arbitrator’s December 16, 2010 decision allowing the Respondent to proceed to arbitration is properly characterized as a preliminary or interim order. As I stated in my oral ruling on February 16, 2011, I am exercising my discretion, pursuant to Rule 51.2(c) of the Code, to accept this appeal from a preliminary or interim order, for the combined following reasons:

1. The Notice of Appeal from the December 16, 2010 decision raises legitimate issues of law, specifically whether the limitation period extension under clause 281.1(2)(b) of the Insurance Act runs only from the date of service of the Report of Mediator on an insured’s representative and, further, whether the deemed service by mail under Rule 7.3(b) of the Code is inapplicable to such service.

2. These issues of law are of broad, significant importance to the some 30,000 applications for mediation now received annually by the Commission, and to the understanding by both applicants and insurers of certain basic concepts under the Insurance Act, the Schedule and the Code.

3. The Arbitrator’s determinations regarding the limitation period running only from service on the insured’s representative and the inapplicability of Rule 7.3(b) are an apparent departure from the case law cited by counsel.

4. The January 11, 2010 arbitration pre-hearing letter notes the Respondent’s intention to call eight experts to the four-day main hearing, in addition to three lay witnesses. The Appellant intends to call two experts. The issue before me is an either/or question. If the Respondent is ultimately found to be barred by the limitation period, an extensive and expensive arbitration hearing on NEB entitlement in the interim will have been for naught. If the appeal is dismissed, a significant stumbling block to possible settlement is removed.

5. The Respondent’s February 3, 2011 letter advised that the parties had already agreed to adjourn the March 2011 arbitration hearing, the latter having been set eight months earlier in July 2010. The initial September 2010 arbitration hearing dates were set eight months earlier, in January 2010. The parties indicated that realistically, they would be looking at the fall of 2011 for a new arbitration hearing date in order to avoid the summer months when medical experts may not be available.

Thus, in order to expedite this appeal, as I advised in my February 16, 2011 oral ruling, I set the following time lines for the further exchange of documentation in this appeal:

1. Pursuant to Rule 53.1 of the Code, the Respondent will have twenty days from my February 16, 2011 oral acknowledgement of the Notice of Appeal to serve on the Appellant and file with the Commission (with a Statement of Service in Form F) her Response to Appeal in Form J.

2. Pursuant to Rule 54.1 of the Code, the Appellant will have thirty days from the date the Response to Appeal is due, to serve on the Respondent and file with the Commission (with a Statement of Service in Form F) its written submissions.

3. The Respondent, pursuant to Rule 54.3 of the Code, will have twenty days from the date the Appellant’s written submissions are due, to serve on the Appellant and file with the Commission (with a Statement of Service in Form F) her written submissions.

In the interim, the Appeals Case Administrator will contact the parties to arrange a date for oral submissions in late May 2011. All remaining issues will be addressed at that time, including the limitation defence raised by the Respondent pertaining solely to the Arbitrator’s initial October 6, 2010 letter order regarding cross-examination on the Respondent’s affidavit.

III. WHETHER TO ORDER A STAY

Subsection 283(6) of the Insurance Act provides that an appeal does not stay the order of an arbitrator, unless the Director decides otherwise. Delegate McMahon stated in Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000) that a stay from an order of an arbitrator at the Financial Services Commission of Ontario is the exception, rather than the rule. In determining whether a stay should be granted, Delegate McMahon adopted the following criteria:

1. the bona fides of the appeal;

2. the substance of the grounds for appeal; and,

3. the hardship to the respective parties if the stay is granted or refused.

The Appellant seeks a stay not of the Arbitrator’s December 16, 2010 order or any specific order setting a hearing date, but rather seeks a stay of the entire arbitration proceeding. As noted, the parties advise that they agreed on the March 2011 arbitration hearing being adjourned. There is presently no order of which I am aware, to stay. I am, however, of the view that the absence of a stay of the arbitration may serve to inspire an expeditious resolution of this appeal.

Accordingly, the Appellant’s request for a stay of the arbitration proceeding is denied.

IV. 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.

February 23, 2011

Lawrence Blackman Director’s Delegate Date

Footnotes

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