Neutral Citation: 2012 ONFSCDRS 78 FSCO A11-000783

BETWEEN:

ZAHRA ALI Applicant

and

AVIVA CANADA INC. Insurer

REASONS FOR DECISION ON A MOTION

Before: Arbitrator John Wilson Heard: May 4, 2012, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Mohamed Doli for Ms. Ali Leilah Edroos for Aviva Canada Inc.

Issues:

The Applicant, Zahra Ali, claimed to have been injured in a motor vehicle accident on July 6, 2008. She applied for and received certain statutory accident benefits from Aviva Canada Inc. ("Aviva"), payable under the Schedule.¹ Aviva ultimately discontinued payment of benefits. The parties were unable to resolve their disputes through mediation, and Ms. Ali applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. While Ms. Ali claimed caregiver, housekeeping and the costs of examinations, Aviva claimed the repayment of caregiver benefits.

At the first pre-hearing in this matter, which was scheduled for November 9, 2011, Ms. Ali did not attend, although her then representative, Ms. Maritza Sierra, did appear on her behalf.

Following the November 9th pre-hearing, I issued a report which I noted:

Aviva has further taken the position that:

Ms. Ali was not involved in an accident pursuant to section 2(1) of the Schedule.
Ms. Ali has failed to provide information reasonably required to assist the Insurer in making a determination of entitlement to benefits pursuant to section 33 of the Schedule.
Ms. Ali has, to date failed to submit to an examination under oath.

With the agreement of both counsel, I set a March 20 and 21, 2012 date to deal with these as preliminary issues. I also ordered that the Insurer provide full particulars of its allegations and ordered the pre-hearing resumed on January 27, 2012.

Prior to the date of the resumption Ms. Ali underwent an examination under oath. The examination revealed that Ms. Ali had made another, overlapping claim for benefits from a different accident at the same time as she was receiving benefits from Aviva. On January 26, 2012, Aviva filed a further amended Response in which it reiterated its previous objections, including the claim for repayment, but adding a claim for willful misrepresentation.

At the pre-hearing, the then representative acknowledged Aviva's amended Response and consented to the addition of the repayment without mediation. My letter issued January 30, 2012, dealt solely with the issues related to the preliminary issue hearing, and did not note the repayment.

The Insurer's letter of January 26, 2012, copied to Ms. Maritza Sierra, had indicated:

Please also be advised that the insurer will be filing an application for mediation in respect of this further amendment regarding repayment unless it is agreed that the issues will be added to the pending application for arbitration.

A follow-up letter of February 1, 2012 from Ms. Edroos noted that "we confirm that the applicant, Zahara [sic] Ali, through her representative, Ms. Maritza Sierra-Vasquez, has consented to the further amendment to our Response by Insurer to an Application for Arbitration, that was filed with FSCO on January 26, 2012."

Complicating matters was the decision of Ms. Maritza Sierra to withdraw as representative to Ms. Ali which was noted at the pre-hearing on February 1, 2012.

On March 13, 2012, Reybroek Barristers, (the employer of Ms. Maritza Sierra), wrote to the case administrator:

Further in this matter, please be advised that the above noted client [Ms. Ali] is no longer represented by Reybroek Barristers as of February 3, 2012. A letter to that effect was sent notifying Ms. Ali of same.

We have terminated our relationship due to a fundamental breakdown of the client/solicitor relationship.

Mr. Todd Reybroek notified council today via telephone advising our position.

On March 15, 2012, Ms. Ali wrote to the Commission requesting an adjournment of the upcoming preliminary issue hearing.

On March 20, 2012, following a further attendance by the parties, I wrote a letter, confirming that a short adjournment would be granted to allow Ms. Ali to retain counsel. Having confirmed that Ms. Ali now consented to the Reybroek firm being removed, I made an order removing them as counsel of record. I also ordered that the pre-hearing be resumed on May 4th to set new dates for the preliminary issue and the arbitration.

On April 23, 2012, a letter was received by FSCO advising that Mr. Mohamed Doli had been retained by Ms. Ali as counsel.

At the resumption of the pre-hearing on May 4, 2012, Mr. Doli requested that Ms. Ali be allowed to withdraw her Application for Arbitration.

Aviva was not prepared to consent to a withdrawal without first addressing both its expenses and its claim for repayment.

The issues in this hearing are:

Should Ms. Ali be allowed to withdraw her Application for Arbitration?
If so, should any conditions be attached to her withdrawal?

Result:

Ms. Ali's request to withdraw the issues she referred to arbitration is accepted on the understanding that the issues raised by Aviva remain live.
The Arbitration is not dismissed at this time.
Should Aviva wish the arbitration to go ahead on the repayment and/or the expense issue, it should advise the Commission and all parties within 30 days of the issuance of this decision.
If Aviva intends to proceed only on the issue of expenses, then it should serve and file its Bill of Expenses within the same time frame.
If I have not heard from Aviva within the above time limit, then I will accept Ms. Ali's request and dismiss the arbitration without further conditions

EVIDENCE AND ANALYSIS:

As outlined above, Ms. Ali has made claims that have been characterized by the Insurer as essentially fraudulent. Firstly, Aviva challenges, based on engineering and other evidence, the proposition that a motor vehicle accident, as defined by the Schedule, ever happened. The incident of July 6, 2008 which underlies Ms. Ali's claim is alleged to be contrived.

Secondly, Aviva challenges the good faith of Ms. Ali's claim, based on the records obtained from Belair Insurance, which indicate that, for part of the duration of this claim, Ms. Ali was claiming similar benefits from Belair relating to a 2009 accident that was not disclosed.

Thirdly, Aviva has raised the issue of repayment of benefits paid as a result of what Aviva considers to have been misrepresentation.

Ms. Ali, on the advice of her new solicitor, now wishes to withdraw her Application for Arbitration, and to shut down this arbitration. The Insurer does not. It wants both repayment and its expenses incurred in defending what they consider to be a fraudulent claim.

Counsel for Ms. Ali takes the position that I should grant the request made by his client, without making conditions any part of my order. He points to Ms. Ali's impecuniosity as grounds for both granting the order and avoiding a costs order. It is clearly Ms. Ali's position that, should the Insurer wish to recover any alleged overpayment, it must do such by beginning an action in the courts. Since the claim for repayment is subsidiary to any claim by the Applicant, it too must fall with the withdrawal of the Application for arbitration.

I am asked, therefore, to in effect strike out the claim for repayment by confirming Ms. Ali's withdrawal of the Application for Arbitration. In taking such a position, Ms. Ali finds some support in the Commission jurisprudence. In Tikhanova and Aviva², Arbitrator Kominar granted an applicant leave to withdraw an application, notwithstanding an insurer's claim for repayment. Citing a series of early cases from the Commission archives, the arbitrator found that, "absent any issue brought to arbitration by the applicant there is no jurisdiction for the insurer to proceed in this forum." Consequently, the arbitration was dismissed.

Although the arbitrator in Tikhanova observed that: "(T)here is nothing in the Insurance Act, the Schedule, or the Dispute Resolution Practice Code (the "Code") which creates a free-standing right³ for an insurer to arbitrate a dispute at the Commission", in both Tikhanova and the present case, it was the Applicant who began an arbitration process. The Insurer merely added its own issues, once the insured made her election to proceed by way of arbitration.

No-one is disputing that an applicant may at any time request to withdraw all or part of the issues referred to arbitration. Nor is anyone claiming that an Insurer can, on its own account pre-empt an insured's election of forum and commence the arbitration of a dispute, without an insured first having referred issues to, and elected the arbitration forum.

That said, the question that needs to be posed is whether an arbitration can continue, faced with an applicant's attempted withdrawal of the original issues in dispute, or whether an insurer's claims must be dismissed, as in Tikhanova, albeit with the right to proceed in another forum.

The Insurance Act at section 282(3) appears to deal directly with this issue.

Determination of issues

(3) The arbitrator shall determine all issues in dispute, whether the issues are raised by the insured person or the insurer.

Now, once an arbitrator is appointed to handle a matter, then that arbitrator is required to determine all issues in dispute, whatever their source. To allow an applicant to withdraw unilaterally, when issues have been added by an insurer, would be possible only if one determined the insurer's issues at the same time as the withdrawal.

Although it is possible that a claim for repayment may be determined by striking out the claim on a preliminary basis if it were found to be frivolous or vexatious or without jurisdiction, such would require a motion by the applicant, and a determination based on the facts in evidence.

Patently, that is not the case here. The Applicant has only asked to withdraw, and has provided no reason for the dismissal of the repayment issue, other than the Applicant's belief that such an issue is properly decided in the courts.

It is important to note that section 282(3), as it is written, only dates from the reforms brought in by Bill 59, which first took effect on November 1, 1996. Prior to that date, insurers had no clear legislative right to formally add issues to an arbitration. It is clear that the arbitration decisions that Arbitrator Kominar relied upon in Tikhanova were decided under the earlier legislative framework and, thus, not relevant to the issues in this arbitration.

Consequently, even if Ms. Ali purports to withdraw all her issues from arbitration, the arbitration continues until the arbitrator has dealt with all issues, including those raised by the Insurer.

Repayment as an issue:

Although it is clear that the question of the Insurer's costs has been properly raised before the arbitrator, the issue of repayment was not specifically mentioned in the original mediator's report. It was, however, in the Insurer's Response which states clearly, with regard to Caregiver Benefits, that "(T)he insurer states that an overpayment of caregiver benefits was made and that it has notified the applicant of the amount required to be repaid…." There is no doubt, however, from the mediator's report that Ms. Ali's claim for caregiver and, consequently, Aviva's denial, were the subject of mediation.

As noted in the chronology outlined earlier in this decision, the arbitration of the issue of repayment was consented to by Ms. Ali's then representative, prior to her withdrawal. It was clearly the intention for Aviva to have an arbitrator determine the issue of repayment.

Section 282(2) of the Insurance Act provides for mediation as a prerequisite for both arbitration and the court process. It reads as follows:

Limitation

(2) No person may bring a proceeding in any court, refer the issues in dispute to an arbitrator under section 282 or agree to submit an issue for arbitration in accordance with the Arbitration Act, 1991 unless mediation was sought, mediation failed and, if the issues in dispute were referred for an evaluation under section 280.1, the report of the person who performed the evaluation has been given to the parties. 1996, c. 21, s. 37.

As with much of the accident benefit system, there has been some disagreement as to just what constitutes a failed mediation under this section. Although some have taken it to mean that each individual sub-issue and variation thereon must be rigorously mediated prior to an arbitration, others have advocated a more liberal view of the process.

It is of some importance that the heading of the section identifies the provision as a limitation. It is trite law that, where any ambiguity exists, a limitation or restriction must be narrowly interpreted.

However, I do not believe that there is much room for ambiguity. The provision expresses the simple proposition that the parties to an accident benefit dispute must first mediate that dispute before moving to the adjudicative stage. Its purpose is to facilitate resolution, not to provide employment for mediators.

If the essential elements of the dispute have been mediated, then the potentially infinite variations of those elements do not need to be subject to separate mediations. Court decisions have recognized this pragmatic approach to the mediation pre-condition. In Woodman, Charbonneau J. opted not to follow a strict technical interpretation of the requirement for mediation. After reviewing the range of jurisprudence, he accepted the insured's proposition that:

as long as the plaintiff has sought mediation on one of the potential accident claim and mediation has failed, there should be no requirement to have mediation on the other issues.⁴

While not unanimously accepted, Charbonneau J.'s decision has not been overruled by any higher court and has been positively cited or mentioned in more than a dozen court and arbitration decisions since.

While I believe that it is still useful to attempt to mediate radically new and different issues in order to give parties the opportunity to address them outside of litigation, Charbonneau J.'s liberal approach to mediation makes practical sense. Just as I see no reason to mediate each and every refusal of an insurer to pay for the same treatment, or to issue income replacement benefit cheques, so it should not be necessary to dissect each and every issue into all possible component parts, each to be mediated separately. In this matter, the repayment issue flows consequentially from the reasons that the Insurer failed to keep on paying Caregiver Benefits.

Aviva alleges as its primary defence that no accident took place and that, consequentially no entitlement to benefits ever materialized, including for that period when benefits were paid.

Should it be necessary to find that the repayment claim was a live element in this arbitration, I would do so. I note, however, that Ms. Ali has not raised this issue in the withdrawal dispute and, indeed, has, through counsel, explicitly consented to the addition of the issue.

Withdrawal:

Rule 70 of the Dispute Resolution Practice Code deals with withdrawal of all or part of a dispute from arbitration.

70.1 A party may seek permission to withdraw all or part of a dispute by:

(a) serving a request to withdraw on all parties; and

(b) filing the request to withdraw together with a Statement of Service in Form F; or

(c) making an oral request to withdraw all or part of a dispute during a neutral evaluation, pre-hearing discussion, settlement discussion, preliminary conference or at a hearing.

70.2 An adjudicator may permit a party to withdraw all or part of a dispute where all parties agree.

70.3 Where a party does not agree to the withdrawal, an adjudicator may:

(a) permit the withdrawal on such terms and conditions as he or she considers just;

(b) award expenses to either party as permitted by Rule 75 and following.

It is clear from the provision that withdrawal is not an absolute right, but is at the discretion of the Arbitrator appointed to deal with the arbitration.

Rule 70.3, however, attempts to deal with withdrawal where a party does not agree to the withdrawal. It appears to provide two alternatives in such cases; namely, to permit the withdrawal on conditions or to award expenses against the withdrawing party.

One permissible reading would be that Rule 70.3 restricts the discretion of the arbitrator and mandates the acceptance of all withdrawal requests subject only to conditions and costs. I do not agree.

The Code is not, in spite of its name, a complete and exhaustive compendium of practice at the Commission. Indeed, Rule 1.2 specifically anticipates lacunae and provides:

1.2 Where something is not specifically provided for in these Rules, the practice may be decided by referring to similar Rules in this Code.

To allow Ms. Ali to unilaterally withdraw the arbitration, on the basis of Rule 70.3, even with conditions, would put the Code in direct conflict with section 282(3) of the Insurance Act which mandates the determination of all issues placed before an arbitrator, whether by Ms. Ali or Aviva. As such, without the consent of Aviva to withdraw their own claims, I cannot allow the withdrawal of Ms. Ali's claims and the dismissal of the arbitration as she requests.

Even if the Code is to be interpreted as mandating withdrawal, any conflict between it and the enabling legislation must be resolved in favour of the Insurance Act. This is even more evident in the case of the Code which, unlike the Civil Rules, is neither legislation nor regulation. It is a series of practice rules created under the discretion of the Director of Arbitrations to set up rules for practice and procedure at arbitrations.

At best, its provisions must be interpreted in a way that is congruent with the Insurance Act. In any conflict the Insurance Act provisions must prevail.

Consequently, faced with a unilateral request to withdraw, I find that I have the discretion as an arbitrator to do more than just accept the withdrawal request and dismiss the arbitration with or without costs or conditions. Unlike the situation in Tikhanova, I find that, even in the event that Ms. Ali withdraws the issues she referred to arbitration, there remains an active lis, and consequently jurisdiction for the arbitration process to continue.

In this matter, however, I see no reason not to accept the request by Ms. Ali to withdraw her issues in dispute. I do this on the understanding that the issues raised by the Insurer, expenses and repayment, remain live and at issue in this ongoing arbitration.

I note that Ms. Ali made it clear that her withdrawal is not a concession that Aviva's allegations of fraud may be true, but that, given the challenges of pursuing this case and her limited resources, it would be strategic to withdraw.

Although Aviva retains the right to proceed to a hearing on its issues, I emphasize that it has yet to prove its allegations of fraud and the related entitlement to repayment. Counsel for Ms. Ali made a fervent plea for Aviva to consider her impecuniosity in deciding to proceed with the repayment and expense claims. Mr. Doli reminded Aviva that it had no likely prospect of realizing on any award, if made, and that a vendetta against his client would serve no purpose.

I leave it to Aviva to decide whether to proceed further. Should it wish the arbitration to go ahead on the repayment issue, it should advise within 30 days of the issuance of this decision. If it intends to proceed only on the issue of expenses, then it should serve and file its Bill of Expenses within the same time frame.

In either case, Aviva should advise the case administrator and opposite counsel of its intentions and request appropriate hearing dates, as the case may be.

If I have not heard from Aviva within the above time limit, then I will accept Ms. Ali's request and dismiss the arbitration without conditions.

May 11, 2012

John Wilson Arbitrator

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

Ms. Ali's request to withdraw the issues she referred to arbitration is accepted on the understanding that the issues raised by Aviva remain live.
The Arbitration is not dismissed at this time.
Should Aviva wish the arbitration to go ahead on the repayment and/or the expense issue, it should advise the Commission and all parties within 30 days of the issuance of this decision.
If Aviva intends to proceed only on the issue of expenses, then it should serve and file its Bill of Expenses within the same time frame.
If I have not heard from Aviva within the above time limit, then I will accept Ms. Ali's request and dismiss the arbitration without further conditions.