Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2012 ONFSCDRS 128

FSCO A07-000648

BETWEEN:

RISHNA RAJASEKARAM

Applicant

and

PRIMMUM INSURANCE CO.

Insurer

Before: Edward Lee

Heard: June 13, 2012, at the offices of the Financial Services Commission of Ontario in Toronto, Ontario.

Appearances: Harley Kruger for Mr. Rajasekaram Donata Di Iorio for Primmum Insurance Co.

Issues:

The Applicant, Rishna Rajasekaram, was injured in a motor vehicle accident on February 4, 2006. He applied for and received statutory accident benefits from Primmum Insurance Co. (“Primmum”), payable under the Schedule.¹ Primmum later terminated those benefits. The parties failed to resolve this dispute through mediation, and Mr. Rajasekaram applied for arbitration at the Financial Services Commission of Ontario (“FSCO”) under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

MOTION:

This is a motion brought by the Applicant seeking an order to: (i) reopen his arbitration file and (ii) schedule a resumption of a pre-hearing discussion in this matter.

ISSUES:

(i) Was this application closed by FSCO through an “administrative dismissal” or otherwise?

(ii) Should Mr. Rajasekaram be permitted to resume his pre-hearing discussion at FSCO?

RESULT:

(i) This application was neither closed by “administrative dismissal” nor by other means.

(ii) Mr. Rajasekaram is permitted to resume his pre-hearing discussion at FSCO.

BACKGROUND:

A pre-hearing discussion in this case took place at the offices of FSCO on March 10, 2008. On that date, the parties apparently settled the matter on a full and final basis, and Arbitrator Nastasi issued a letter confirming the reported settlement, dated March 10, 2008.

The Applicant was a minor at the time and the settlement required the approval of the Court. On February 3, 2009, the Court was presented with documentation (including a Consent and Minutes of Settlement).² Nonetheless, the Court refused to approve the putative settlement, and returned the application record³ with an endorsement dated February 20, 2009.

The Applicant’s Litigation Guardian then instructed Counsel for the Applicant to refrain from settling the matter on or about March 12, 2009.

At least one telephone conversation took place in December 2009 between Ms. Di Iorio (Counsel for the Insurer) and an associate of Counsel for the Applicant, during which Ms. Di Iorio was informed that the Applicant was seeking to rescind the original settlement.

Further attempts were made by Applicant’s Counsel to contact Insurer’s Counsel by telephone. On or about July 8, 2011, a letter was sent to Ms. Di Iorio informing her that the Applicant was seeking to discuss further settlement or to resume the pre-hearing discussion before an arbitrator at FSCO.⁴

On or about September 21, 2011, Applicant’s Counsel wrote to FSCO seeking to resume the pre‑hearing discussion.⁵

Primmum now opposes the reopening of the file and the resumption of the pre-hearing discussion. Although Primmum agrees that the matter was never settled, it argues that the application was closed through an “administrative dismissal” by FSCO, or alternatively, that the application should be barred because the Applicant waited too long to inform Primmum of their intentions.

EVIDENCE AND ANALYSIS:

i) Was the matter closed by FSCO through an “administrative dismissal” or otherwise?

Primmum argued that Arbitrator Nastasi’s letter of March 10, 2008⁶ was tantamount to an “administrative dismissal”, similar to those issued by masters and registrars in the courts. Primmum likened the FSCO process to the procedures set out in rules 48.14 and following of the Rules of Civil Procedure, whereby status notices may be issued and actions set down in court. Those rules describe how a plaintiff who is unable to meet a status notice deadline might request a status hearing to obtain a new deadline and thus avoid a dismissal of his action by a master or registrar.⁷

I am not convinced that Arbitrator Nastasi’s letter of March 10, 2008 amounts to an “administrative dismissal”. The letter is little more than an acknowledgement that the parties had reported a settlement during the pre-hearing discussion. When such letters are issued, the arbitrator may have little or no involvement in the settlement or pre-hearing discussion. There was no evidence that any deadlines had been set by the Arbitrator or that either party had been required to show cause for having failed to meet a deadline.

I find little or no similarity between the processes in the courts under rules 48.14 and following of the Rules of Civil Procedure, and the issuance of the Arbitrator’s letter. As a consequence, very little or none of the jurisprudence⁸ cited by Primmum is applicable to the procedures relating to the pre-hearing discussion at FSCO.

Nor do I find rule 69.2(b) of the Dispute Resolution Practice Code (“DRPC”) to be of help to Primmum. That rule states only that the Dispute Resolution Group will close its file 20 days after giving notice of its intent to close the file on the basis of a reported settlement.

Nothing in the DRPC or any other applicable legislation defines the word “close”. Further, the DRPC grants an arbitrator a wide latitude and jurisdiction to deal with all matters before him or her (rules 65.1 and 65.7). Rule 43 even allows an arbitrator to reopen a hearing that has been conducted and completed.

In the instant case, all parties were aware that the Applicant was a minor. Rule 10.7 of the DRPC requires a representative of a minor to comply with the approval of settlement requirements of rule 7.08 of the Rules of Civil Procedure. Court approval of the settlement was never obtained. Thus, I do not find that the file was closed by FSCO, “administratively”, or otherwise.

(ii) Should Mr. Rajasekaram be permitted to resume his pre-hearing discussion at FSCO?

Primmum argues Mr. Rajasekaram should be barred from resuming the pre-hearing discussion and proceeding with this application for the following reasons.

First, Primmum argued that Mr. Rajasekaram failed to give notice to FSCO “promptly” that he was objecting to the closure of the file (rule 69.2(b) of the DRPC). Second, Mr. Rajasekaram failed to exercise his rights in a timely fashion, thereby prejudicing Primmum, and to allow Mr. Rajasekaram to resume his pre-hearing would violate the principles of finality required in litigation.

Before proceeding to the analysis of these arguments, I note that no evidence was tendered to convince me that the failure to obtain Court approval was due to any fault on Mr. Rajasekaram’s or his Counsel’s part. More importantly, I also note that settlement funds were in fact never paid to Mr. Rajasekaram or his Counsel, despite the letter⁹ written by Counsel for Primmum to Counsel for Mr. Rajasekaram.

(a) Did Mr. Rajasekaram fail to “promptly” notify FSCO and the other parties that he objected to the closure of the file?

Rule 69.3 of the DRPC requires a party who objects to the closure of a file after receiving the 20 day notice to “promptly” notify the Dispute Resolution Group and all other parties in writing.

Primmum argued that Mr. Rajasekaram only notified FSCO of his intentions on September 21, 2011, “approximately 3 years and 6 months after FSCO closed the file; the reported settlement having occurred at the Pre-Hearing on March 10, 2008.”¹⁰

I agree that Mr. Rajasekaram’s first letter advising FSCO of his request for resumption is dated September 21, 2011, but I do not agree that this actually occurred “3 years and 6 months after FSCO closed the file”. As already discussed, this settlement required Court approval, which was never granted. Nor am I particularly concerned that FSCO received the notice when it did.

In the present case, Mr. Rajasekaram seeks only to resume a pre-hearing discussion which was apparently settled. No hearing has been held. No evidence has been led. Mr. Rajasekaram could have notified FSCO or the other party in writing earlier, but at FSCO, parties are often encouraged to consult each other and to attempt to resolve their differences informally before engaging the processes at FSCO. It is clear that there were discussions to reschedule the pre‑hearing discussion and letters between counsel long before the September 21, 2011 letter was sent to FSCO. In these circumstances, I am satisfied that Mr. Rajasekaram violated no provisions of the DRPC by notifying FSCO or the other party when he did.

(b) Did Mr. Rajasekaram fail to exercise his rights in a timely fashion, and does this delay unduly prejudice Primmum?

I find that the delay in this file was attributable to both sides. Although the apparent settlement was reached on March 10, 2008, documentation was not submitted for Court approval until February 2009. In the interim, Counsel for Mr. Rajasekaram sent numerous letters to Counsel for Primmum seeking that documentation.¹¹

Counsel for Primmum demonstrated a slow response to these requests.¹² It is also evident that at least three lawyers have had carriage of this file for Primmum since the matter reached the reported settlement.

The critical period in this file commences from March 2009, when Mr. Rajasekaram’s Litigation Guardian instructed his Counsel that he did not want to settle the matter but wished to proceed with the application for arbitration.

Primmum contended that their first discussion with Counsel for Mr. Rajasekaram in regard to proceeding with the pre-hearing discussion took place in December 2009, some nine months after instructions were received from Mr. Rajasekaram’s Litigation Guardian to proceed with the file. Primmum argues that they are prejudiced by this delay and to allow Mr. Rajasekaram to resume the pre-hearing would violate the principles of finality.

I agree that delay may lead to prejudice in litigation proceedings, but this applies to both parties. As noted by Counsel for Primmum, the passage of time causes memories to fade and other forms of evidence may be lost. Nevertheless, Primmum presented no evidence of actual prejudice. Nor am I convinced that the presumed prejudice is as great as alleged. Although the parties initially believed the matter had been settled, Primmum admitted it never received Court documentation approving or refusing the settlement. Just as importantly, Primmum never paid the settlement funds. As late as January 2010, Primmum’s Counsel maintained this mistaken belief that settlement funds had been paid. This misunderstanding was not attributable to any act or omission on the part of Mr. Rajasekaram or his Counsel. Primmum should have known their settlement money had not been paid out. They should have known that Court approval had not been sent to them.

Thus the notion of finality does not aid Primmum. Without confirmation of Court approval and without having paid settlement funds, they would not have been entitled to believe that the file had been finalized.

At the latest, by December 2009, Counsel for Primmum had actual knowledge that Mr. Rajasekaram was seeking to resume the pre-hearing. Counsel for Mr. Rajasekaram could have informed them as early as March 2009, but I am not convinced this nine-month delay warrants a barring of Mr. Rajasekaram’s application. Further, the prejudice to Mr. Rajasekaram would greatly out-weight any presumed prejudice to Primmum.

Finally, Counsel for Primmum suggested that the general two-year limitation period referenced in the Limitations Act¹³ was an appropriate measure for determining delay. Even accepting that argument, the nine-month delay in this case was clearly far less than the two years referenced in the Limitations Act.

Mr. Rajasekaram is permitted to resume his pre-hearing discussion at FSCO. A resumption of the pre-hearing discussion will be scheduled in this matter.

EXPENSES:

The parties may consult with me in accordance with the DRPC if they are unable to agree on the issue of expenses.

August 31, 2012

Edward Lee

Arbitrator

Date