Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2011 ONFSCDRS 69

Appeal P11-00001

Appellant

and

Respondent

BEFORE:

Delegate Lawrence Blackman

Mr. Sean Giovannetti for the Appellant, Pilot Insurance Company

Mr. Michael A. Yermus for the Respondent, Salandra Tyler

May 25, 2011

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

The December 16, 2010 arbitration decision is rescinded and this matter is remitted to arbitration for a new preliminary issue hearing.
If the parties are unable to agree on the legal expenses of this appeal, pursuant to Rule 79 of the Dispute Resolution Practice Code (Fourth Edition – Updated September 2010), an expense hearing shall be requested, as set out below, within thirty days of the date of this decision.

August 16, 2011

Lawrence Blackman Director’s Delegate

Date

I. THE BACKGROUND AND NATURE OF THE APPEAL

This appeal pertains to a limitation period dispute. For reasons set out below, I find that this matter should be remitted to arbitration for a new preliminary issue hearing.

The Respondent, Mrs. Salandra Tyler, was injured in a motor vehicle accident on April 26, 2005. As a result, she applied to her first-party automobile insurer, the Appellant, Pilot Insurance Company, for statutory accident benefits payable under the Schedule,¹ specifically, weekly non-earner benefits (“NEBs”). The Appellant initially paid the NEBs as claimed. However, by an OCF-9 Explanation of Benefits dated November 24, 2006, the Appellant terminated NEBs, effective December 15, 2006.

The Respondent applied in July 2008 for mediation to resolve her entitlement dispute. Mediation took place on February 23, 2009, but failed to resolve the issue of NEB entitlement.

The Commission received the Respondent’s Application for Arbitration on July 3, 2009. On October 20, 2010, a preliminary issue hearing was held before Arbitrator Rogers (the “Arbitrator”). In question was whether the Respondent was precluded from proceeding to arbitration on her NEB claim due to a missed limitation period under clause 281.1(2)(b) of the Insurance Act, R.S.O. 1990, c. I.8 (the “Act”) and subsection 51(2) of the Schedule.

Section 281.1 of the Act provides that:

281.1 (1) A mediation proceeding or evaluation under section 280 or 280.1 or a court proceeding or arbitration under section 281 shall be commenced within two years after the insurer’s refusal to pay the benefit claimed.

Exception

(2) Despite subsection (1), a proceeding or arbitration under clause 281(1) (a) or (b) may be commenced,

(b) if mediation fails but there is no evaluation under section 280.1, within 90 days after the mediator reports to the parties under subsection 280(8).

Subsection 51(2) of the Schedule likewise provides that “a court proceeding or arbitration under clause 281(1)(a) or (b) of the Act may be commenced within 90 days after the mediator reports to the parties under subsection 280(8) of the Act.” Subsection 280(8) states that, in addition to any notice required to be given, the report to be given to the parties shall set out, amongst other matters, the mediator’s description of the remaining issues in dispute, a recommendation whether the disputed issues should be referred to neutral evaluation and an opinion whether non-produced materials requested by the parties were required for the settlement discussion.

The parties agree that the Respondent commenced mediation within the requisite period. The Appellant submits that the Respondent was then required to apply for arbitration under clause 281.1(2)(b) of the Act within ninety days of the date she was deemed to have received the Report of Mediator. The Appellant argues that this date is March 2, 2009, being the fifth business day after the Mediator’s letter dated February 23, 2009 to both the Appellant and her counsel. The Appellant thus submits that the ninety-day limitation extension expired May 31, 2009 and that the Respondent was statute barred when she commenced her arbitration more than a month later.

The Arbitrator’s December 16, 2010 preliminary issue decision held that where a claimant has appointed a representative, the ninety-day limitation period runs from the date of delivery of the Report of Mediator on the representative. The Arbitrator found that the Respondent’s representative received the Mediator’s Report on June 24, 2009. Hence, the Arbitrator found that the Respondent applied for arbitration less than ninety days after receiving the Mediator’s Report and, therefore, was not precluded from proceeding to arbitration in respect of her NEB claim.

The Appellant appeals this decision, asking that the Arbitrator’s Order be set aside and the Respondent’s NEB claim dismissed, with costs in its favour. In the alternative, the Appellant submits that the Arbitrator’s decision should be set aside and the preliminary issue reheard at a new hearing at which cross-examination is permitted on the Respondent’s affidavits that are allowed into evidence.

The Respondent asks that the Arbitrator’s December 16, 2010 decision be upheld, with costs in her favour. The Respondent withdraws her request for an appeal order granting her a special award under subsection 282(10) of the Act.

My February 23, 2011 preliminary appeal order, exercising the discretion provided by Rule 51.2(c) of the Dispute Resolution Practice Code (Fourth Edition – Updated September 2010) (the “Code”), allowed this appeal from a preliminary decision to proceed on the basis, in part, that the appeal raised broadly significant questions of law and that accepting this appeal at this juncture, rather than after the main arbitration hearing, was the most efficient and cost effective means of resolving this specific dispute.

II. PRELIMINARY ISSUE: WHETHER TO ALLOW FRESH EVIDENCE

The Respondent seeks leave to enter as fresh evidence in this appeal her own affidavit, sworn February 25, 2011, to the effect that she has no recollection of personally receiving the Report of Mediator. The Respondent argues that the issue of her personal receipt of the Report of Mediator arose only on appeal, thus prompting her affidavit.

The Respondent, citing Mercer et al. v. Sijan et al. (1977), 14 O.R. (2d) 13 (C.A.), submits that it would be an affront to common sense not to allow her affidavit into evidence. She argues that if her fresh evidence is received, the potentially decisive issue of whether the Report of Mediator must be served on both her and on her counsel would be rendered moot. The Respondent submits that there would be no prejudice to the Appellant in allowing this fresh evidence on appeal.

The Appellant objects to this fresh evidence being received. It submits that the Respondent’s affidavit addresses the key question at arbitration of whether the Report of Mediator was served on the Respondent, and that it was incumbent upon the Respondent to have produced such evidence at arbitration. To now allow this evidence would deny the Appellant the opportunity of cross-examination, contrary to the principles of procedural fairness and natural justice under both common law and the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (the “SPPA”).

The leading case of Budd and Personal Insurance Company of Canada, (FSCO P99-00032, January 8, 2000) adopted the following criteria in determining whether fresh evidence should be accepted on appeal:

The evidence should generally not be admitted if, by due diligence, it could have been adduced at trial;
The evidence must be credible, in the sense that it is reasonably capable of belief;
The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial; and,
The evidence must be such that, if believed, it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result.

The Appellant concedes that the fresh evidence, if believed, when taken with the other evidence adduced at first instance, could affect the result of this proceeding. I find that the fresh affidavit evidence bears upon a potentially decisive issue of whether, pursuant to clause 281.1(2)(b) of the Act, the Report of Mediator was served on the Respondent herself. The Appellant’s September 16, 2010 written submissions specifically addressed this issue at arbitration, submitting that that the “evidence does not favour the applicant’s contention that neither she nor her counsel received a copy of the Report of Mediator until June 24, 2009.”

Mercer, relied upon by the Respondent, sets out criteria similar to Budd, but in the context of Rule 234 of the then Rules of Civil Procedure regarding the Court’s discretion to receive further evidence on appeal. In weighing the public interest of having finality in litigation versus the Court closing its eyes to facts that falsified the trial judge’s assessment of damages under the Fatal Accident Act, R.S.O. 1970, c. 164, the Court considered, in part, whether by due diligence the further evidence was discoverable before the end of the trial.

I find that the Respondent’s fresh evidence could have, with due diligence, been adduced at arbitration. Further, to allow this evidence on appeal, without the Appellant having an opportunity to cross-examine the Respondent on her affidavit, would fundamentally prejudice the Appellant. Accordingly, I am not allowing the requested fresh evidence.

III. ANALYSIS

I will now address the Appellant’s grounds of appeal.

That the Arbitrator’s decision results in an absurdity

The essence of this appeal is the interpretation of clause 281.1(2)(b) of the Act as to the meaning of the words “90 days after the mediator reports to the parties under subsection 280(8).”

The Arbitrator, following Dominion of Canada General Insurance Company and Monks, (FSCO P09-00018, December 10, 2009), application for judicial review dismissed, Dominion of Canada General Insurance Co. v. Monks, 2011 ONSC 3881, held that the clause 281.1(2)(b) limitation period runs not from the date of the Report of Mediator but from the date the Report is received or, where appropriate, is deemed to have been received by the insured person. This is not disputed. What is disputed is when is the Report of Mediator deemed to have been delivered and whether reporting to the parties means reporting to counsel when the insured is represented.

The parties agree that regarding the question of delivery one looks to the Code for assistance. Rule 5.7 of the Code provides that:

Where these Rules require the delivery of a document by the Dispute Resolution Group, delivery will be deemed to have occurred where:

(a) one of the methods of delivery permitted under Rule 7 is used; and

(b) the document is sent to the last known address of the party, contained in the records of the Dispute Resolution Group.

Rule 7.1 of the Code, under the heading “Service of Documents,” states that one of the permitted methods of delivery is regular, registered, or certified mail. Rule 7.3(b) provides that:

7.3 Service by a party or delivery by the Dispute Resolution Group will be considered to take place within the time frames set out below: …

(b) if a document is served by regular, registered, or certified mail, service takes place on the fifth day after the date the post office stamps the mailed document; . . . [emphasis added]

The Appellant submits that Rules 5.7 and 7.1 of the Code are clear and unambiguous that delivery of a document by Mediation, as part of the Dispute Resolution Group (the “DRG”), is deemed to have occurred where the document is sent by mail to a party’s last known address. In this case, the Report of Mediator was addressed to the Respondent’s last known address. The Appellant submits that there is no evidence that the Respondent did not receive the Report.

The Appellant argues that the Arbitrator erred in determining that a claimant could not be found or deemed to have received the Report of Mediator in the absence of proof of a post office stamp on the mailed document. The Appellant submits that the Arbitrator conceded that under his interpretation an insurer would never be able to establish that a Report of Mediator was sent out to the parties and, therefore, could never establish the start of the ninety day limitation extension. The Appellant argues that the Arbitrator’s decision eliminates the limitation period under clause 281.1(2)(b) of the Act and subsection 51(2) of the Schedule.

The Appellant submits that the arbitration decision allows a missed limitation period to be negated merely by a claimant making a bald allegation that the Report of Mediator was not received. This result, the Appellant maintains, is an absurdity, wherein the Code provides for service by regular mail under Rule 7.1, but no means by which to prove such service. The Appellant cites Sullivan and Driedger on the Construction of Statutes, 4th ed. (Vancouver: Butterworths, 2002), that it is presumed that legislation is not intended to have absurd consequences and that whenever possible an interpretation that leads to absurd consequences should be rejected in favour of an interpretation that avoids absurdity.

The Appellant further argues the Arbitrator further erred in failing to follow prior case law. The Appellant cites Kurichh and Allstate Insurance Company of Canada, (FSCO A97-002118, May 6, 1999), upheld on appeal, (FSCO P00-00027, November 26, 1999), and on judicial review, [2001] O.J. No. 2523, leave to the Court of Appeal refused, [2001] O.J. No. 5750, where the claimant and/or his counsel were found to have received the Report of Mediator in the absence of any mention of when the post office stamped the mailed document.

The Appellant submits that in Bhambi and State Farm Mutual Automobile Insurance Company, (FSCO A07-001075, March 27, 2008), the Report of Mediator was deemed to have been received five days after the Report was issued without reference to the date of the post office stamp. In Zuger and Zurich North America Canada, (FSCO A01-000896, May 13, 2002), in the absence of any evidence regarding a post office stamp, the Report of Mediator was found to have been post-marked on the date it was prepared and deemed to have been served five days later.

The Respondent argues that the deeming provisions of the Code are not findings of fact but rather rebuttable presumptions as to the start of notice periods. If the authors of the Code had intended a mailed document to be deemed to have been served five days following an act other than the post office stamping the document, the Code would have said so. In any event, the Respondent submits that an appeal is not the appropriate forum to debate the Code’s alleged inadequacies. Rather, it is submitted that the Arbitrator applied the applicable provision of the Code to the facts of this case. The Respondent argues that the absurdity would be to find the Report of Mediator to have been received without any evidence it was even mailed.

The Respondent further argues that Kurichh establishes that it is possible to prove documents sent by regular mail have been received. In Zuger, the claimant acknowledged receiving the Report of Mediator but did not have the post-marked envelope and was not certain of the date of receipt. In the absence of contradictory evidence, Arbitrator Allen found that the limitation period had not been missed, that the envelope containing the Report of Mediator was post-marked the date it was prepared and applied the five-day service rule in Rule 7.3(b) of the Code.

As noted, it is not disputed that the clause 281.1(2)(b) limitation period runs not from the date of the Report of Mediator, but from the date of delivery. Rule 5.7 of the Code does not deem delivery to have occurred simply by the existence of a dated Report of Mediator. Rather, the Rule provides that delivery is deemed to have occurred when a document is sent by a permitted method of delivery to the last known address of a party. Rule 5.7 does not, however, deem the date of delivery, a key question in this proceeding.

The deeming provision of Rule 7.3(b) provides assistance where a document is acknowledged to have been received, the stamped envelope is in evidence, but the date of receipt is in question. That the provision may not also assist where receipt is in question does not, in my view, render the provision absurd.

Section 68 of the Schedule addresses delivery of all notices required or permitted under that Regulation, except as otherwise permitted by the Regulation. Subsection 68(5) provides that:

In the absence of evidence to the contrary, a person is deemed to receive anything delivered by letter mail, under clause 2(d) on the fifth business day after the day the document is mailed in accordance with clause 2(d).

Clause 68(2)(d) provides that delivery is permitted by letter mail, or by certified or registered mail, in the case of a person other than an insurer, addressed to the person at his or her last known address.

For an insurer to prove mailing, its representative can be called to give evidence. Subsection 11(5) of the Act provides that a mediator shall not be required to testify respecting any mediation conducted under the Act. Hence, the different wording that is found in Rule 7.3(b) of the Code from section 68 of the Schedule. I am not persuaded that the Arbitrator, in addressing the question of “deemed receipt,” erred in law in applying the clear and unambiguous wording of Rule 7.3(b).

However, the Arbitrator did not end his discussion there regarding the question of receipt of the Report of Mediator. The Arbitrator did not state that, in the absence of a post office stamp, an insurer would never be able to establish that a Report of Mediator was delivered. Rather, the Arbitrator stated that a party could not take advantage of the Rule 7.3(b) deeming provision without proof of the date the post office stamped the mailed document.

Then, as in Kuricch, Zuger and Bhambi, the Arbitrator went on to weigh the evidence before him. In this case, as noted below, the Arbitrator placed significant emphasis on the August 26, 2010 affidavit of Ms. Joy Manuel, a legal assistant to the Respondent’s counsel, unchallenged by cross-examination, in concluding that the Respondent’s representative did not receive the Report of Mediator until June 24, 2009.

That the Arbitrator erred in finding that the Report of Mediator must be served on the claimant’s representative

A further question in this appeal is whether the Arbitrator erred in finding that the clause 281.1(2)(b) limitation period in this case ran from the date the mediator delivered her report to the Respondent’s representative.

The Arbitrator notes Rule 9 of the Code that where a party appoints a representative, the party must provide the DRG with the representative’s address. The Arbitrator further notes Rule 16.01(4)(a) of the Rules of Civil Procedure that service of a document not required to be served personally must be served on counsel where the party has a lawyer on record. In the absence of the Code directly addressing the service of documents where a representative has been retained, the Arbitrator interpreted Rules 5.7 (regarding service) and 9 (that addresses representation) of the Code to mean that where a party has appointed a representative, delivery by the DRG occurs where the document is sent to the representative’s address.

Accordingly, the Arbitrator did not make a finding whether, and if so when, the Respondent herself received the Report of Mediator.

The Appellant submits that Rule 5.7 of the Code deems delivery of a document to have occurred where “the document is sent to the last known address of the party, contained in the records of the Dispute Resolution Group.” The Appellant submits that the party contemplated is the Respondent herself and, therefore, the Arbitrator erred in finding that where a representative has been appointed, delivery occurs only on service to the address of the representative.

The Appellant asks that judicial notice be taken that the Commission serves all documents on the party itself, even after a representative has been retained. The Appellant argues that it was implicit in Kurichh that service on either the claimant or his or her counsel would trigger the ninety-day limitation extension. The Appellant submits that there is no evidence that the Respondent failed to receive the Report of Mediator and asks that I make such a finding of fact.

The Respondent submits that where the Code is silent, the Rules of Civil Procedure shall guide the interpretation of the Code. The Respondent argues that Rule 16.01(4)(a) of the Rules of Civil Procedure was properly applied by the Arbitrator as the Code does not address the question of service when a party is represented.

The Respondent further argues estoppel. She submits that from the moment an insured person retains a representative, that representative is served with all documents from the insurer and the Commission. A claimant, therefore, comes to rely on his or her representative being in receipt of all documents in this complex and technical accident benefits process and that the representative will take such necessary steps on the claimant’s behalf to preserve his or her rights. To find otherwise, she submits, prejudices claimants.

The Respondent notes the October 15, 2010 letter of the Manager of Mediation Services, entered into evidence at arbitration, confirming that original signed copies of the Report of Mediator are mailed separately to the claimant and their representative. The Respondent argues that this is consistent with the consumer protection objective of the Act and demonstrates that, as a matter of practice, the Commission has been following Rule 16.01(4)(a) of the Rules of Civil Procedure.

Again, the crux of this appeal is the interpretation of clause 281.1(2)(b) of the Act and the words “within 90 days after the mediator reports to the parties under subsection 280(8).” The Act does not define or detail how a mediator is to report to the parties.

Rule 5.7 of the Code provides that delivery will be deemed to have occurred when the document is sent to the last known address “of the party” contained in the records of the DRG. As noted by the Arbitrator, there is no specific provision in the Code respecting service when a representative has been retained.

However, as the Arbitrator also notes, Rule 16.01(4)(a) of the Rules of Civil Procedure, requiring service on the representative rather than on the party personally, is premised on personal service of a document not being required. In this case, the October 15, 2010 letter of the Manager of Mediation Services was before the Arbitrator. The letter responds, in part, to the Appellant’s question as to the normal method of delivery of the Report of Mediator to the parties and when and to whom the Report would have been sent. The Manager’s response, in part, states that:

Three original signed copies of the Report of Mediator together with covering letters are separately mailed. The claimant, their representative and the Insurer/their representative, each receive their own copy.

The standard Commission covering letter to the enclosed Report of Mediator is addressed and sent to the claimant even, as here, when the claimant is represented. In addition to setting out the options following a failed mediation, the covering letter, also sent to her counsel, advises the Respondent that she “may wish to seek legal advice” about her options.

Consistent with the Commission’s practice that the Report of Mediator be delivered personally to the claimant is Rule 9.1(b) of the Code that a party must provide the DRG with their own contact information, including their address, “and” (not “or”), if represented, the contact information of their representative. The Commission practice is also consistent with Rule 9.1(c) of the Code that parties “and” their representatives must provide the DRG with written notice of any change of their contact information, including their address. The latter also provides that the DRG is entitled to rely upon the last known address contained in their records.

Thus, under Rule 7.3(b) of the Code, where a party and/or a representative have failed to provide the DRG with current contact information, delivery is deemed to have been served on the fifth day after the date the post office stamps the mailed document (presumably to be returned to the DRG), when the document is served by regular, registered or certified mail. Although the term “party” is not defined,” Rule 5.7 of the Code, by deeming delivery to have occurred where documents are sent “to the last known address of the party,” appears to contemplate service on the principal personally.

Section 68 of the Schedule provides alternative means of delivery of documents by an insurer or an insured person. Documents that may be delivered would include notices that start the initial limitation period under subsection 281.1(1) of the Act and run from the date of the insurer’s refusal to pay the benefit claimed.

Under section 68 of the Schedule, a document may be faxed to the “person” or to the solicitor or authorized representative, if any, of the person. Delivery may also be effected by personal delivery to the “person” or by leaving a copy with the solicitor or authorized representative, or their employee. In the case of ordinary letter, certified or registered mail, however, a document may be delivered, in the case of a person other than an insurer, addressed to the person at his or her last known address. Alternative delivery to a representative by mail is not provided.

In Smith, the Supreme Court addressed the initial limitation period under the Schedule, where the insured had been represented by counsel throughout. While Smith notes that a refusal letter was sent to the claimant’s counsel the same day as the insurer sent (a different) letter to the claimant, the Court’s focus was consumer protection and the letter sent to the claimant. However, the majority, at paragraph 20, note that any concern as to the clarity of the insurer’s notice sent to the claimant herself was rectified by the insurer’s concurrent letter to the claimant’s counsel clearly stating that the claimant was no longer entitled to specific benefits.

Clause 281.1(2)(b) of the Act provides that the limitation extension commences 90 days after the mediator reports to the parties. Accordingly, the Report of Mediator must be delivered to the insurer, as well as the insured, for the limitation period to begin. The parties do not dispute the Commission practice that mediators report to an insurer by sending an original signed copy of the Report of Mediator to either the insurer itself or to its representative. Nonetheless, the result of applying Rule 16.01(4) of the Rules of Civil Procedure is that if the Report is not received or deemed to have been received by an insurer retained representative, but only by the insurer, the limitation extension for the insured person would not begin to run. It is unclear how wording of the Act or the consumer protection aspect of such legislation warrants such a result.

Respectfully, I am persuaded that the Arbitrator erred in strictly applying Rule 16.01(4) of the Rules of Civil Procedure to the reporting requirements of clause 281.1(2)(b) of the Act. Rather, the clause 281.1(2)(b) limitation extension may run from the later date of receipt or deemed personal receipt by the insured person and the insurer of the Report of Mediator.

Regarding the mediator reporting to the insured person, the appeal decision in Kurichh, in upholding the arbitrator’s decision, held that:

The arbitrator rejected Mr. Kurichh’s contention that neither he nor [his representative] Mr. Sawhney received the Report of Mediator until September 1997, nearly a year after the mediator signed it. He found on a balance of probabilities that Mr. Kurichh and/or Mr. Sawhney received it in late September 1996 and, accordingly, the 90-day extension for applying for arbitration ran from the date of the report—September 23, 1996.

Implicitly, this decision stands for the proposition that delivery of the Report of Mediator runs from the earlier of delivery of the Report on the insured and his or her representative, if any.

Birjasingh v. Coseco Insurance Co., 1999 CanLII 14888 (ON SC), [1999] O.J. No. 4546 (S.C.J.), addressed whether an insurer had given an insured person written notice within the meaning of section 9.1(2) of Ontario Regulation 664, R.R.O. 1990 as amended (the “settlement regulation”). Nordheimer J. held that:

A solicitor is an agent of his or her client … the solicitor is assumed to have authority to act on the client’s behalf and to effect a compromise of the client’s claims. It is further assumed that communication of a matter to the solicitor is, in effect, communication of that matter to the client. In other words, it is assumed that if something is communicated to the solicitor it will be passed on by the solicitor to the client. Does the settlement regulation change these assumptions? I do not believe that it does.

I am not persuaded that clause 281.1(2)(b) of the Act, or that the Report of Mediator is also sent to the insured person personally, changes the presumption that reporting, or “communication of a matter to the solicitor is, in effect, communication of that matter” or reporting to the client.

As regards estoppel, in Offeh and Allstate Insurance Company (OIC A-006494, October 25, 1994), Arbitrator Manji defined estoppel as a person representing to others in words, or by acts and conduct, or (being under a duty to speak or act) by silence or inaction, with the intention (actual or presumptive), and with the result, of inducing the other person on the faith of such representation to alter his or her position to his detriment. In any subsequent litigation between these parties, the person who made the representation is estopped, as against the representee, from making, or attempting to establish by evidence, any averment substantially at variance with his or her former representation, if the representee at the proper time and manner, objects.

In this case, the conduct in question is that of the Commission in mailing the Report of Mediator. It is difficult to see how the Appellant can be estopped by conduct over which it has no control. In any event, there is no evidence in this case as to the pattern of communication between the Appellant and the Respondent, nor was there any evidence of the Respondent having altered her position to her detriment, as the Respondent submits that she herself never received the Report of Mediator.

Accordingly, I am persuaded that the clause 281(1.1)(b) limitation period runs, in the case of an insured person from the earlier of the date the Report of Mediator is received (or where it is appropriate, is deemed to have been received) by the insured or, where represented, by his or her representative.

The Arbitrator made no findings of fact regarding delivery of the Report of Mediator by the Appellant or by the Respondent herself. Such findings should be made at first instance, not by an appellate officer. The question of the Arbitrator’s finding of fact as to delivery of the Report of Mediator on the Respondent’s counsel is addressed next.

That the Arbitrator erred in not allowing Ms. Manuel to be cross-examined

The Appellant submits that the Arbitrator failed to comply with the rules of natural justice and with subsection 10.1(b) of the SPPA by denying it the opportunity to cross-examine Ms. Manuel on her August 26, 2010 affidavit.

Ms. Manuel attested that the Respondent’s counsel did not receive the Report of Mediator until June 24, 2009. Subsection 10.1(b) of the SPPA states that a party to a proceeding may “conduct cross-examinations of witnesses at the hearing reasonably required for a full and fair disclosure of all matters relevant to the issues in the proceeding.”

The Appellant states that at the July 6, 2010 arbitration pre-hearing resumption, its then counsel agreed on a timetable for the preliminary issue hearing anticipating it would not be necessary to cross-examine on the Respondent’s not yet received affidavit. On reconsideration, the Appellant’s counsel wrote the pre-hearing arbitrator three days later that he anticipated that cross-examination would be required, limited to one hour. No procedural steps had been taken in the interim. The Respondent ultimately served Ms. Manuel’s affidavit on August 31, 2010.

The Appellant argues that it was prejudiced by the Arbitrator’s decision not to allow it to cross-examine Ms. Manuel, when, as a result of subsection 11(5) of the Act, it was unable to call direct evidence from the Mediator on the key issue of service of the Report of Mediator. The Appellant submits that the Respondent did not suggest that any prejudice would result from a one hour cross-examination, nor would there be any delay or inordinate additional costs.

The Appellant relies on Innisfil (Township) v. Vespra (Township), 1981 CanLII 59 (SCC), [1981] 2 S.C.R. 145, that:

It must be emphasized that if the appellant has here the right to cross-examine … it is not for the appellate court to withhold such right because in its judgment it is doubtful, or even impossible, in the view of the Court for the appellant to advance its case by such cross-examination. The decision to exercise the right is solely that of the holder of the right. He, of course, must exercise it at his peril as is the case in any other administrative or judicial proceeding where such a right arises.

The Respondent relies on the Arbitrator’s October 6, 2010 letter decision that held, in part, that absent unforeseen or unusual circumstances, the Appellant should be bound by its initial pre-hearing agreement that cross-examination would not be necessary. The Arbitrator found that such circumstances did not exist. The Respondent further submits that she never received the Appellant’s letter sent three days after the pre-hearing resumption. The July 9, 2010 letter is not noted as being copied to the Respondent.

Delegate Makepeace, in Howard and State Farm Mutual Automobile Insurance Company, (FSCO P04-00017, November 19, 2004), states that questions of law include questions of fair procedure. Under clause 10.1(b) of the SPPA, cross-examination is not an unrestricted right. The extent of such examination is restricted by subsection 23(2) of the SPPA to that which, again, is “sufficient to disclose fully and fairly all matters relevant to the issues in the proceeding.”

The Arbitrator’s October 6, 2010 letter decision not to allow the requested cross-examination of Ms. Manuel rested, first, on the Appellant having waived same at the July 6, 2010 pre-hearing. The Appellant’s September 27, 2010 letter to the Arbitrator requesting the opportunity to cross-examine does not reference its earlier July 9, 2010 letter to the different arbitrator who conducted the pre-hearing. It is not clear whether the Arbitrator was aware of the earlier letter.

The Appellant’s September 27th letter noted significant, unspecified contradictions between the parties’ affidavits. Before deciding whether to allow cross-examination of Ms. Manuel, the Arbitrator requested a list of the specific disputed facts. The Appellant’s brief reply of October 5, 2010 reply challenges some statements made by Ms. Manuel in her affidavit. The Respondent’s submissions of the same day, however, argue that the Appellant’s “failure to request to cross-examine previously must lead to the inference that the evidence provided in Ms. Manuel’s affidavit is unchallenged.”

In deciding not to allow the requested cross-examination of Ms. Manuel, the Arbitrator held that he did not expect the cross-examination to assist in assessing the evidence, the real dispute appearing to be about what the mediation file should contain. The Arbitrator’s subsequent decision, however, was not based on what the mediation file should contain but, rather, that “Ms. Manuel’s evidence is the only evidence that directly addresses the issue of receipt.”

The Arbitrator held that:

I have no direct evidence that the Report of Mediator was mailed to Mrs. Tyler's solicitors on or around February 23, 2009 or, if mailed that it was delivered. I prefer the direct evidence of Ms. Manuel to the circumstantial evidence that tends to show otherwise. I give no weight to the double-hearsay information on mailing, contained in [the Appellant’s] affidavit.

Maple Lodge Farms Limited v. Government of Canada, 1982 CanLII 24 (SCC), [1982] 2 S.C.R. 2, held that:

It is . . . a clearly-established rule that the courts should not interfere with the exercise of a discretion by statutory authority merely because the court might have exercised the discretion in a different manner had it been charged with that responsibility. Where the statutory discretion has been exercised in good faith and, where required, in accordance with the principles of natural justice, and where reliance has not been placed upon considerations irrelevant or extraneous to the statutory purpose, the courts should not interfere.

National Ballet of Canada v. Glasco, [2000 CanLII 22385 (ON SC)](https://www.minicounsel.ca/scj/2000/22385), held that:

It is where the refusal of cross-examination interferes with the ability of a party to address key issues or essential elements of its case that the courts have found a denial of fairness or natural justice by an administrative tribunal.

This alternative dispute resolution system is predicated on a more expeditious, streamlined and less costly process, which is presumably why the Arbitrator implicitly raised with the parties the question of whether cross-examination was reasonably required for a full and fair disclosure of all matters relevant to the issues in the proceeding.

In this case, however, there are questions as to holding a party, prior to seeing an affidavit, to the party’s anticipation that cross-examination will not be needed. Ultimately, in this case the Respondent’s inability to cross-examine Ms. Manuel on her affidavit interfered with its ability to address the issue in the end determined by the Arbitrator to be paramount, namely, when was the Report of Mediator received by the Respondent’s counsel.

On this basis, respectfully, I find that fairness and natural justice require interference with the Arbitrator’s exercise of discretion and that the December 16, 2010 arbitration decision should be set aside and this matter remitted to arbitration for a new preliminary hearing.

That the Arbitrator erred in law in weighing the evidence

The Appellant agrees that an arbitrator need not address every piece of evidence. It submits, however, that the Arbitrator failed to give proper weight to its affidavit evidence and to the written evidence of the Manager of Mediation Services that Reports of Mediator are issued within seven days of the mediation.

The Appellant further argues that the Arbitrator failed to give any weight to the Respondent’s failure to follow up with the Mediator until four months after mediation and the Respondent’s consequent failure to satisfy the heavy onus on claimants in such circumstances. The Appellant submits that an adverse inference should have been drawn against the Respondent as the Arbitrator had done against the insured person in Moschonissios and Security National Insurance Co. /Monnex Insurance Management Inc., (FSCO A09-000429, March 5, 2010).

The Respondent argues that the Appellant is improperly seeking to set aside the Arbitrator’s finding of fact regarding receipt that was based on direct evidence that the Respondent’s counsel did not receive the Report of Mediator until June 24, 2009. The Appellant further submits that the parties agree that where the Code is silent, the Rules of Civil Procedure shall guide the interpretation of the Code. The Appellant argues that Rule 16.07 of the Rules of Civil Procedure places a heavy onus on the party challenging service to adduce persuasive evidence to rebut it.

In this regard, the Appellant cites Master Peppiatt, in Allfur Trading Ltd. v. Polizos, [1991] O.J. No. 2379, followed in Teskey v. Ricciardella, [1999] O.J. No. 3077 and Long v. Carl, [2000] O.J. No. 1007, “that there is an onus upon a defendant to rebut the evidence of service … I am not prepared to accept the bald denial of service.” However, Master Peppiatt further states that what the onus requires to rebut evidence of service “will vary with the circumstances of the case.”

Delegate Makepeace, in Howard, stated that “[d]isagreements about the evidence, or the factual conclusions drawn from the evidence, are generally not questions of law, unless there was no evidence to support the Arbitrator’s findings of fact.” As this matter is being returned to arbitration for a new preliminary issue hearing, I decline to address this ground of appeal.

IV. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, pursuant to Rule 79 of the Code, an expense hearing shall be requested within thirty days of the date of this decision. The request shall be accompanied by a Bill of Costs describing the expenses claimed, services received and the costs, as well as submissions regarding entitlement to and the quantum of such legal expenses.