Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2012 ONFSCDRS 135

Appeal P12-00031

OFFICE OF THE DIRECTOR OF ARBITRATIONS

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Appellant

and

THIRUVARUL PONNAMPALAM Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Mr. T.J. McCarthy for the Appellant, State Farm Mutual Automobile Insurance Company Mr. S. Kanaga for the Respondent, Mr. Thiruvarul Ponnampalam

HEARING DATE: By written submissions received by September 17, 2012

PRELIMINARY APPEAL ORDER

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

I exercise my discretion under Rules 50.2 and 51.2(c) of the Dispute Resolution Practice Code (Fourth Edition – Updated August 2011) to accept at this time this Notice of Appeal from an arbitration decision on a preliminary issue.
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.

September 20, 2012

Lawrence Blackman Director’s Delegate Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL AND BACKGROUND

Arbitrator Miller (the “Arbitrator”), in her July 25, 2012 decision on a preliminary issue, held that the Respondent, Mr. Thiruvarul Ponnampalam, was not precluded by the limitation period in subsections 281(5) of the Insurance Act, R.S.O. 1990, c. I.8 and 51(1) of the Schedule¹ from proceeding to arbitration on his claim for income replacement benefits (“IRBs”). The Arbitrator held that the Respondent was precluded from proceeding with his claim for a February 27, 2008 treatment plan because his Application for Arbitration was filed late in that regard.

The August 22, 2012 Notice of Appeal of the Appellant, State Farm Mutual Automobile Insurance Company, asked that this appeal from a preliminary arbitration order proceed at this time as the Arbitrator’s decision was, in essence, a final order.

The Respondent has not appealed the Arbitrator’s decision.

My August 27, 2012 letter noted Rules 50.2 and 51.2(c) of the Dispute Resolution Practice Code (Fourth Edition - Updated August 2011) (the “Code”) respecting restrictions on appeals from preliminary or interim orders. I set time lines for responding and reply written submissions on whether this appeal should be presently accepted. Noting that Rule 56.5 of the Code provides that an appeal may be decided in a manner considered appropriate, I asked the parties to address whether additional oral submissions were reasonably necessary on this initial appeal question.

The Response to Appeal, dated September 12, 2012, submitted that the Arbitrator’s decision was correct, that the Appellant did not provide a clear refusal and that an appeal was not acceptable, The Respondent did not directly address Rules 50.2 and 51.2(c) and whether this appeal should be accepted at this time.

In its September 17, 2012 reply submissions, the Appellant stated that it had nothing to add as the Respondent was arguing that the appeal should not be allowed on its merits, which is not the same as arguing that the appeal should not be heard at this time.

II. WHETHER TO ACCEPT THIS APPEAL FROM A PRELIMINARY ORDER

Neither party requested an opportunity to provide oral submissions on whether this appeal should be accepted at this time. Pursuant to Rule 56.5, I find it appropriate to determine whether to accept this appeal on the basis of the written submissions received.

The Appellant cites the Ontario Court of Appeal in Ball v. Donais, 1993 CanLII 8613 (ON CA), 13 O.R. (3d) 322 and Joseph v. Paramount Canada’s Wonderland, 2008 ONCA 469, [2008] 90 O.R. (3d) 401, to the effect that the determination of a limitation period one way or another is a final order even though made in an interlocutory or preliminary context.

Ball v. Donais held, in the context of a court proceeding under the Rules of Civil Procedure, that the defendant’s appeal was properly before the court on the basis that while “that order did not finally dispose of the rights of the parties to the litigation, it did, subject to appeal therefrom, finally dispose of the issue raised by that defence, and thereby deprived the defendant of a substantive right which could be determinative of the entire action.”

Rules 50.2 and 51.2(c) of this specialized Tribunal differ from the Rules of Civil Procedure. The Code does not differentiate simply between a final and an interlocutory order at first instance. Rather, Rule 50.2 of the Code states that a party may not appeal a preliminary or interim order of an arbitrator until all of the issues in dispute have been finally decided, unless ordered otherwise. Likewise, 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 plural) in dispute.

The Arbitrator’s decision to allow the Respondent’s claim for income replacement benefits to proceed does not finally decide all of the issues in dispute. Beside the IRB and physiotherapy claims, the April 4, 2012 pre-hearing letter sets out as arbitration issues $1,575 for a chronic pain assessment, interest, a special award under subsection 282(10) of the Insurance Act and legal expenses.

The case law² on whether to hear an appeal from a preliminary or interim order holds that such a decision is discretionary and that the relevant criteria include:

(a) the apparent strength of the appeal;

(b) the importance or novelty of the issue raised;

(d) the preference of the parties;

(e) whether the ruling represents a departure from the approach taken in prior cases; and,

(f) whether rejecting or hearing the appeal would provide the quickest, most just and least expensive way of disposing of the issues between the parties.

This appeal from a limitation defence decision has the potential of finally deciding the main issue in dispute at arbitration, ongoing weekly IRBs of $400 from September 19, 2008.

The Respondent, while arguing against the merits of the appeal, does not note opposition to its timing. Nor does the Respondent note any prejudice if this appeal is heard at this time. The pre-hearing letter set a hearing date for the preliminary limitation issue, but not for the main hearing. I am not advised that any arbitration hearing date has been set or that hearing this appeal would delay the arbitration hearing.

On the other hand, this appeal raises an important issue regarding limitation periods. Section 281.1 of the Insurance Act provides that:

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.

The Arbitrator, in her preliminary decision, cites general propositions regarding limitation cases set out by Arbitrator Muzzi in Mohammed-Amin and RBC General Insurance Company, (FSCO A06-002188, June 25, 2007), that:

the insurer’s refusal itself must be in writing and must be clear and unequivocal notice of the insurer's refusal to pay the benefits in issue;
the refusal must provide sufficient or complete reasons for the refusal to pay;
a proper refusal must also inform the insured of the dispute resolution process; and,
ongoing negotiations or requests for further information between an insured and the insurer do not extend the time limits for disputing an otherwise clear and unequivocal refusal.

The Arbitrator then held that the commencement of the limitation period, “the insurer’s refusal to pay the benefit claimed,” is the “date of termination of the benefit, with proper notice of termination,” not “the date when an applicant is notified of the refusal to pay benefits.” No case law is provided in support.

The Arbitrator held, in the alternative, that the Appellant did not provide the Respondent with ”a clear and unequivocal termination date” in terminating IRBs effective September 19, 2008 while advising that the limitation period was two years from the date of its September 12, 2008 notice.

In Torok, Delegate Makepeace stated that the purpose of what is now Rule 50.2 “is to facilitate the most cost-effective resolution of disputes by minimizing the time and money spent on procedural or collateral matters.”

I am persuaded to exercise my discretion under Rule 50.2 of the Code to accept this appeal at this time as the most cost-effective, expeditious and just resolution of this limitation issue. I base this decision on the general importance of the preliminary issue addressed, the dominant importance of IRB entitlement to this proceeding, the absence of any prejudice raised by the Respondent and the absence of any specific objection to the timing of this appeal.

In order to move this appeal forward, I am setting the following time lines for the exchange of appeal written submissions:

Applying the time period of Rule 54.1 of the Code, the Appellant has thirty days from the date of this decision, being served by facsimile transmission as well as courier, to serve on the Respondent and file with the Commission (with a Statement of Service in Form F) its written submissions.
The Respondent, pursuant to Rule 54.3 of the Code, has twenty days from the date the Appellant’s written submissions are received to serve on the Appellant and file with the Commission (with a Statement of Service in Form F) his written submissions.

Concurrently, the Case Administrator will contact the parties to arrange a date for oral submissions on the substance of this appeal.

III. 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.