Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2012 ONFSCDRS 12
FSCO A11-002196
BETWEEN:
NICHOLAS LEONE
Applicant
and
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before: Arbitrator Jeffrey Rogers
Heard: By written submissions, completed on January 16, 2012
Appearances: Mr. Alexander Voudouris, solicitor for Mr. Leone
Ms. Heather Kawaguchi, solicitor for State Farm Mutual Automobile Insurance Company
Issues:
Where there is a dispute about entitlement to statutory accident benefits between an insurer and a person injured as a result of an automobile accident, applying for mediation is a mandatory first step in the dispute resolution process. The issue in this hearing arises as a result of the long delay between the time when the Financial Services Commission receives an Application for Mediation, and when the Director appoints a mediator.
Mr. Leone says that, as a result of the delay, mediation is deemed to have failed and he could therefore apply for arbitration without participating in a formal mediation. State Farm says that the time limit within which mediation must occur does not start when the Commission receives Mr. Leone’s Application for Mediation. It starts when the Commission determines that the Application is complete and the Director appoints a mediator. Since this had not occurred when Mr. Leone filed his Application for Arbitration, the Application is premature and it should be stayed.
The preliminary issue is:
Did mediation fail before Mr. Leone commenced arbitration by way of Application for Arbitration?
Is either party liable to pay the other’s expenses of this preliminary issue hearing?
Result:
Mediation is deemed to have failed before Mr. Leone commenced arbitration.
The decision on expenses is reserved to the hearing Arbitrator. Should the parties resolve the matter without a hearing but are unable to resolve the issue of expenses, either party may make an appointment for me to determine the matter in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.
EVIDENCE AND ANALYSIS:
Overview
Mr. Leone was injured in a motor vehicle accident on September 11, 2009. He applied for and received statutory accident benefits from State Farm, payable under the Schedule.[1] Disputes arose over his entitlement to certain further benefits. Disputes about entitlement to statutory accident benefits must be resolved under the process set out in sections 280 to 283 of the Insurance Act [2] and the applicable Schedule.
Section 281(2) of the Act precludes referring issues in dispute to arbitration “unless mediation was sought” and “mediation failed”. A person seeking mediation must “file an application for the appointment of a mediator with the Commission.”[3] Mediation has failed “when the mediator has given notice to the parties that…mediation will fail, or when the prescribed or agreed time for mediation has expired and no settlement has been reached.”[4]
The “prescribed” time for mediation is found in section 10 of O. Reg 664. It states that “[A] mediator is required…to attempt to effect a settlement…within 60 days of the date on which the application for the appointment of a mediator is filed.”
The Commission received Mr. Leone’s Application for Arbitration more than 60 days after it received his Application for Mediation. The question therefore is whether Mr. Leone “filed” his Application for Mediation when he delivered it to the Commission.
For the reasons that follow, I find that Mr. Leone filed his Application for Mediation when he delivered it to the Commission. Mediation is therefore deemed to have failed before he filed his Application for Arbitration. That conclusion is based on the definition of “file” in the Dispute Resolution Practice Code’s (“DRPC”) Rules of Procedure.[5] It is consistent with the object of the Act and the Schedule to promote prompt payment of benefits and speedy resolution of disputes. To hold otherwise would make it impossible for injured persons to calculate time limits for commencing proceedings and result in differing time limits for injured persons whose circumstances are the same.
The Facts
The facts are not in dispute. Mr. Leone delivered an Application for Mediation to the Commission under cover of letter dated September 28, 2010. The Commission acknowledged receiving the Application on September 30, 2010. The Commission assigned a mediation file number at that time and informed Mr. Leone that “we are currently experiencing an increase in processing time. Complete applications are taking longer to be assigned to a mediator as a result of the large volume of applications which we continue to receive.[6]”
Mr. Leone delivered an Application for Arbitration to the Commission under cover of letter dated March 14, 2011. Mediation had not taken place. The letter states that Mr. Leone is relying on the fact that mediation is deemed to have failed as a result of the passage of the prescribed time.[7] The Application for Arbitration is stamped as received by the Commission on March 18, 2011. That is 169 days after the Commission acknowledged receiving the Application for Mediation.
The Commission informed Mr. Leone by letter dated July 14, 2011 that it could not process his Application for Arbitration because mediation had not failed. The correspondence indicated that the Application would be held in abeyance for 20 days so that Mr. Leone could address the “jurisdictional concerns”.[8] Mr. Leone responded by reiterating his position that mediation was deemed to have failed by the passage of the prescribed time.
Under cover of letter dated August 16, 2011, the Commission informed Mr. Leone that it had registered his Application on that date and had sent a copy to State Farm. On August 26, 2011, State Farm delivered a Response in which it raised the jurisdictional issue and other defences.
By letter of August