Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2013 ONFSCDRS 111
Appeal P13-00020
OFFICE OF THE DIRECTOR OF ARBITRATIONS
WESTERN ASSURANCE COMPANY
Appellant
and
CLIFF BURDEN
Respondent
BEFORE:
David Evans
REPRESENTATIVES:
Peter Durant for Western Assurance Company
K. Jay Ralston and Nicola Romano for Mr. Burden
HEARING DATE:
By written submissions received by August 16, 2013
PRELIMINARY APPEAL ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- This appeal of Arbitrator Kowalski’s decision of June 5, 2013 is acknowledged.
August 23, 2013
David Evans Director’s Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
Western Assurance Company appeals Arbitrator Kowalski’s finding in her decision dated June 5, 2013 that Mr. Burden is not precluded from proceeding to arbitration.
II. BACKGROUND
Mr. Burden was injured in a car accident on August 17, 2001. He received income replacement benefits pursuant to the SABS–1996.1 By OCF-17 dated July 29, 2004, Western gave Mr. Burden notice that, effective August 13, 2004, the income replacement benefits would be terminated, and they were terminated on that day.
Although the Arbitrator’s decision does not specifically say so, Mr. Burden applied for mediation regarding the termination of his benefits well after the two-year limitation period (if it is applicable in this case) set out in s. 51 of the SABS; the pre-hearing letter states that “The Applicant did not seek to mediate this stoppage until in or about 2010.”
The preliminary issue before the Arbitrator was whether the July 29, 2004 OCF-17 was sufficient to start the running of the two-year limitation period, and if so, whether Mr. Burden was barred by s. 51 from proceeding with his claim for income replacement benefits.
The Arbitrator found that Part 5 of the OCF-17 tells insureds that if they do not sign the portion of the form requesting an assessment by a Designated Assessment Center (DAC), then they cannot continue on to mediation if they disagree with the stoppage of benefits. However, termination of benefits is governed by s. 37 of the SABS, and the Arbitrator found that it provides the DAC merely as an option. She held:
Section 37 did not require Mr. Burden to request or attend a DAC before he could apply for mediation. While he had the right to request a DAC, it was not a pre-requisite to disagreeing with the insurer’s decision to stop benefits.
By using language that suggested that the DAC was a mandatory step, I find that the OCF-17 was confusing and unclear, and that it therefore did not comply with section 37 or Smith [v. Co-operators General Insurance Co., [2002] S.C.R. 129]. To paraphrase Smith, the goal cannot be to confuse people about their rights when it comes to limitation periods.
In my view there can be no doubt that Part 5 imposed a requirement on an insured person that was not required by the Schedule. For the reasons set out above, I find that the OCF‑17 did not constitute a proper refusal, and that the limitation period did not therefore begin to run.
III. ANALYSIS
Western served its Notice of Appeal on June 24, 2013. It requests permission to appeal this preliminary order because “It would be counter-intuitive for this Appeal not to be heard before the Arbitration proceeds.” The Notice also requests a stay of any further arbitration proceedings.
I wrote to Western and to Mr. Burden, noting that before the appeal proceeds any further, I had to decide whether to acknowledge it or reject it as premature pursuant to Rule 51.2(c) of the Dispute Resolution Practice Code. This Rule provides that an appeal may be rejected if “it is from a preliminary or interim order that does not finally decide the issues in dispute.”
I advised Mr. Burden that he could address the issue in brief written submissions, as well as Western’s request for a stay of the arbitration order pending the outcome of the appeal.
In his response, Mr. Burden advises that the arbitration hearing is now scheduled for July 8, 2014 to July 11, 2014. He submits that if I decide to hear this appeal, “the Arbitration slated for hearing is at risk if Mr. Burden cannot move forward with the Arbitration preparation and incur additional costs without certainty.”
In reply, the Insurer indicates that it agreed to the July 2014 arbitration dates
to avoid the obvious delay that would be felt by both parties in waiting to schedule the hearing until after learning the outcome of the Appeal. The Applicant also agreed that the July 2014 dates would accommodate the appeal (if accepted) and is now using it as a basis to argue that the appeal should not be accepted.
The underlying appeal of the preliminary issue decision was taken into account by both parties and the pre-hearing Arbitrator when deciding when the arbitration would commence.
It was anticipated that the appeal, if accepted, would be heard and disposed of well in advance of the July 2014 arbitration. In fact, the insurer also prefers to have the hearing as soon as possible, but given the nature of the appeal, it would be counterintuitive for the hearing to pre-date the appeal.
As was stated in Allstate Insurance Company of Canada and Torok, (FSCO P01-00021, May 29, 2001), the criteria for accepting an appeal of an interim order “include the apparent strength of the appeal, the importance or novelty of the issue raised, and whether rejecting the appeal or hearing it will prejudice either party.”
It is the rare limitation case that would not be admitted to appeal, given that, as Western submits, it would be counter-intuitive to conduct a full hearing if, in the end, it was found that the limitation period applies.
Furthermore, I am satisfied that the issue is novel and of great importance, given that an approved form was found insufficient to commence the limitation period and that this issue has not been previously addressed.
I am also satisfied that Western has raised bona fide legal issues about whether the error in the form, if there is such, is sufficient to fail the Smith v. Co-operators test.
As for prejudice to Mr. Burden, I am confident that the appeal can be heard and my decision rendered in time for the parties to be able to prepare properly for the scheduled arbitration hearing, should I uphold the Arbitrator.
Accordingly, the appeal is acknowledged.
Since the parties have now agreed to an arbitration hearing date, it is not necessary for me to deal with the stay request.
The issue of expenses will be dealt with at the same time as the appeal.
Unless the parties request more time, Mr. Burden’s Response to Appeal is due by September 16, 2013. Western must then serve and file its written submissions by October 16, 2013, and Mr. Burden must then serve and file his written submissions by November 5, 2013. The hearing will be arranged as soon as possible thereafter.
August 23, 2013
David Evans Director’s Delegate
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.