Aviva Canada Inc. v. Wayne Henry, 2013 ONFSCDRS 157

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2013 ONFSCDRS 157

Appeal P13-00016

Appellant

and

Respondent

BEFORE:

Delegate Lawrence Blackman

Mr. James M. Brown for the Appellant, Aviva Canada Inc.

Neither Mr. Wayne Henry nor anyone on his behalf attended or participated

November 19, 2013

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

This appeal from the Arbitrator’s April 16, 2013 preliminary order is accepted at this time, restricted to whether the Arbitrator erred in law in the procedure followed in determining Mr. Henry’s mental capacity to proceed with his arbitration.
The Arbitrator’s January 10, 2013 letter to the Office of the Public Guardian and Trustee and the latter’s February 1, 2013 response are accepted as fresh evidence in this appeal.
The legal expenses of this preliminary issue appeal decision are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.

December 6, 2013

Lawrence Blackman Director’s Delegate

Date

I. NATURE OF THE APPEAL AND BACKGROUND

This appeal concerns, fundamentally, the determination of a party’s mental capacity to proceed in the dispute resolution process. This preliminary appeal decision concerns whether this appeal from the April 16, 2013 decision of Arbitrator Rogers (the “Arbitrator”) should be accepted at this time and, if so, whether correspondence between the Arbitrator and the Office of the Public Guardian and Trustee (“PG&T”) should be allowed as fresh evidence in this appeal.

Mr. Henry initiated the arbitration proceeding at the Commission, seeking statutory accident benefits under the Schedule¹ from his first-party automobile insurer, Aviva Canada Inc. (“Aviva”), as a result of his May 17, 2008 motor vehicle accident.

As Arbitrator Killoran noted in her March 1, 2012 interim benefits award, Mr. Henry was a front seat passenger in a vehicle, the driver of which was killed in the accident. Mr. Henry was diagnosed with bilateral fractures of his thigh bones, a fractured nose, multiple lacerations, a closed head injury and major depression. On May 29, 2008, Mr. Henry was transferred to a rehabilitation hospital, from which he was released on August 15, 2008.

Aviva paid Mr. Henry attendant care, housekeeping and caregiver benefits following the accident. It terminated those benefits March 8, 2010 after a multidisciplinary insurer’s medical examination (“IME”) concluded that Mr. Henry did not suffer a substantial inability to perform his pre-accident caregiver or housekeeping activities and that he did not require attendant care.

Arbitrator Killoran ordered that Aviva pay Mr. Henry, pending a final arbitration order, interim benefits up to May 17, 2010, which was the second anniversary of the accident, on the basis of strong medical evidence supporting Mr. Henry’s accident benefits claims for that period. At 104 weeks following an accident, the entitlement tests change. Arbitrator Killoran was not satisfied that the surveillance upon which Aviva relied established that the subject being observed was Mr. Henry, who denied it was him. Arbitrator Killoran was concerned that the IME’s adverse conclusions were based on a belief they were assessing someone who alleged he was confined to a wheelchair during the day, but was roaming the streets upright at night.

The main arbitration hearing commenced November 19, 2012. Mr. Henry, who had been represented at the interim benefits motion, was now self-represented. At the main hearing, the Arbitrator expressed his concern “whether Mr. Henry is competent to represent himself in this hearing.” When asked for its view, Aviva’s counsel stated “I would have no hesitancy saying he has not demonstrated that competence [of an understanding of the process in order to be able to represent himself] before you.” The Arbitrator adjourned the hearing to March 15, 2013.

The Arbitrator’s letter the next day confirmed:

… During my inquiry to determine the issues remaining in dispute, it became apparent that Mr. Henry lacks the ability to meaningfully participate in and appreciate the nature of the dispute resolution process.

The Arbitrator’s letter stated that if Mr. Henry had not retained a legal representative or taken steps to appoint someone to manage his affairs by December 31, 2012, he would refer this matter to the PG&T to determine if it was prepared to intervene under the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (“SDA”).

Mr. Henry did not retain a representative. On January 10, 2013, the Arbitrator wrote the PG&T. He stated that on November 19, 2012 he “concluded that Mr. Henry lacked the ability to meaningfully participate in and appreciate the nature of the dispute resolution process.” He requested that the PG&T “consider arranging for an assessment of the capacity of Mr. Wayne Henry, for the purpose of determining whether the Public Guardian and Trustee should represent Mr. Henry in this arbitration.”

The Arbitrator’s April 16, 2013 written decision stated that he did not receive a formal response from the PG&T. However, the PG&T advised him it would take no further steps as preliminary information indicated Mr. Henry did not meet the test under the SDA of lack of capacity to manage his property.

Neither Mr. Henry nor anyone on his behalf appeared at the March 15, 2013 arbitration resumption. The Arbitrator’s April 16, 2013 decision denied Aviva’s request that the arbitration be dismissed. The Arbitrator held that it would be unfair to dismiss the arbitration while Mr. Henry lacked the capacity to participate in the proceeding.

The Arbitrator determined there was no prejudice to Aviva in preserving Mr. Henry’s rights to pursue his claims. He found that any prejudice from delay would accrue to Mr. Henry as memories faded and medical evidence became more remote from the relevant time periods.

The Arbitrator stayed the arbitration. He ordered that either party could request that the arbitration be reopened if (a) there was a change in Mr. Henry’s ability to meaningfully participate in the process, (b) Mr. Henry retained representation, or (c) a litigation guardian was appointed.

In this appeal, Aviva asks that the Arbitrator’s April 16, 2013 order be set aside, that the arbitration be dismissed or, in the alternative, that the arbitration be adjourned to a new hearing date that would allow for a formal response from the PG&T. Aviva argues:

The Arbitrator erred in law in determining Mr. Henry’s capacity to participate in the proceedings in the absence of any medical evidence.
The Arbitrator erred in law in not having a fair procedure by not advising Aviva of information received from the PG&T or allowing Aviva to give submissions in response.

The Arbitrator’s decision is a preliminary or interim order. Rule 50.2 of the Dispute Resolution Practice Code (Fourth Edition, Updated August 2011) (the “Code”) provides 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. Rule 51.2(c) states that an appeal may be rejected if it is from a preliminary or interim order that does not finally decide the issues in dispute.

Aviva cites Security National Insurance Co./Monnex Insurance Mgmt. Inc. and Hodges, (FSCO P12-00029, August 13, 2012):

As set out in Allstate Insurance Company of Canada and Tesfay, (FSCO P99-00023, June 21, 1999), Allstate Insurance Company of Canada and Al-Obaidi, (FSCO P99-00009, May 2, 2000) and Allstate Insurance Company of Canada and Torok, (FSCO P01-00021, May 29, 2001), the decision whether to hear an appeal from a preliminary or interim order is discretionary. The relevant criteria include:

(a) the apparent strength of the appeal;

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

(d) the preference of the parties;

(e) whether the arbitration decision represents a departure from 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.

Aviva seeks leave that this appeal be accepted at this time on the basis:

There is strength in this appeal. Barnes v. Kirk 1968 CanLII 389 (ON CA), [1968] 2 O.R. 213 (Ont. C.A.), held that the question of unsoundness of mind essentially is one to be decided based upon medical evidence. State Farm Mutual Automobile Insurance Co. v. R.(S.), 2013 CarswellOnt 4444 (Ont. Div. Ct.), held that to “constitute an error of law, there would have to be a complete absence of evidence from which the inferences could be made.” Aviva submits that the Arbitrator determined Mr. Henry’s mental capacity in the complete absence of any medical evidence.
The only possible evidence before the Arbitrator respecting Mr. Henry’s capacity was the PG&T’s informal response. Aviva was given no opportunity to respond to this evidence. Howard and State Farm Mutual Automobile Insurance Company, (FSCO P04-00017, November 19, 2004) held that questions of law include questions of fair procedure.
The Arbitrator’s decision regarding Mr. Henry’s capacity, based solely on his own observations and in the absence of any medical evidence, is without precedent.
The arbitration has been stayed indefinitely. Should this appeal be rejected, Aviva would be prejudiced as the events that the Arbitrator stipulated could lift the stay are beyond Aviva’s control. Arbitrator Killoran’s award was an interim order and was subject to Mr. Henry establishing his entitlement at a full hearing. The Arbitrator’s April 16, 2013 decision has potentially converted Arbitrator Killoran’s interim order into a final order.
There is no prejudice to Mr. Henry if the appeal is heard at the present time. Aviva’s preference is that the appeal be heard now.

Aviva seeks to introduce as fresh evidence in this appeal the Arbitrator’s January 10, 2013 letter to the PG&T and the PG&T’s February 1, 2013 response to that letter that the Arbitrator’s letter had been forwarded on for review. Aviva relies on the criteria in Brookes and Aviva Canada Inc., (FSCO P09-00004, December 2, 2009), on whether fresh evidence should be allowed on appeal:

Could the evidence, by due diligence, have been adduced at the arbitration?
Is it relevant in that it bears on a decisive or potentially decisive issue?
Is the evidence credible, in the sense that it is reasonably capable of belief?
If believed, could it reasonably, when taken with the other evidence adduced, be expected to have affected the result?

Aviva argues that the documentation is relevant, material and credible in showing that it was deprived of procedural fairness in not being advised that the PG&T had suggested that Mr. Henry did not lack capacity and that the PG&T was not continuing its investigation. Aviva submits that this evidence could reasonably be expected to have affected the arbitration result.

My July 4, 2013 letter held that under Rule 56.4 of the Code, the transcripts of the November 19, 2012 and March 15, 2013 arbitration hearings are part of the appeal record. Accordingly, it was not necessary that they be admitted as fresh evidence.

Mr. Henry did not respond to this appeal although served with the Notice of Appeal in accordance with the Code, as confirmed by Aviva’s May 16, 2013 Form F, Statement of Service.

Rule 9.1(c) of the Code provides:

(c) Parties and their representatives must provide the Dispute Resolution Group with written notice of any change of their address, telephone number and e‑mail address. The Dispute Resolution Group is entitled to rely upon the last known addresses, telephone numbers and e‑mail addresses contained in its records.

Mr. Henry has not responded to any letters this appellate office has sent him, all of which were sent to his last known address the Dispute Resolution Group had obtained from Mr. Henry’s applications for mediation, and then arbitration. The letters from this office included advising Mr. Henry how he might obtain representation, as well as extending the time for his response. Mr. Henry has not responded to any of the messages left by the Appeals Administrator at his last known telephone number.

This office has not received any information that the address and telephone number it has for Mr. Henry is no longer correct. None of the mail sent to Mr. Henry was returned to this office as being undelivered.

Rule 56.5 of the Code provides that an appeal may be determined on the record, by way of an oral or electronic hearing or in any manner considered appropriate. My September 12, 2013 letter stated that:

The finding of lack of capacity is an important determination with significant consequences. The issue of capacity, central to this appeal, would seem to mandate a face-to-face hearing. Oral Commission hearings are normally heard where the insured person resides. Although the present oral hearing is on a preliminary appeal issue, the result may be to reject the appeal.

Weighing these considerations, subject to any submissions received by either party within twenty days of the date of this letter, I am presently of the view that a face-to-face oral hearing in Toronto is the fairest and most appropriate means of determining the preliminary appeal issue whether to accept this appeal from a preliminary appeal decision.

Not receiving any objection, a Notice of Preliminary Issues Hearing – Appeal, dated October 10, 2013, was sent to the parties. The appeal hearing, scheduled to start at 10:00 a.m. on November 19, 2013, was held down to await Mr. Henry. Mr. Henry did not attend, nor did anyone attend on his behalf.

Rule 58 of the Code provides:

58.1 The Director may proceed with an appeal even though a party fails to file any document required by these Rules.

58.2 Where a Notice of Hearing has been delivered to a party, and the party does not attend, the Director may proceed with the oral submissions or the hearing in the absence of the party, and the party is not entitled to any further notice in the proceeding.

Pursuant to subsection 6(3) of the Insurance Act, R.S.O. 1990, c. I. 8, the Director has delegated his appellate duties in this proceeding to me.

In this proceeding, Aviva has filed Form F, Statements of Service confirming having served Mr. Henry with its Notice of Appeal, its additional submissions on leave to appeal, its Appeal Record and Book of Authorities.

This office’s October 10, 2013 Notice of Hearing was served on both parties at their last known address. The Notice of Hearing included the Rule 58.2 warning as to the possible consequences of non-attendance. The Notice of Hearing was not returned to this office as being undelivered.

Pursuant to Rule 58.2 of the Code, on November 19, 2013, Mr. Henry having failed to attend after holding the matter down, I proceeded to receive Aviva’s oral submissions restricted to the preliminary appeal issues of whether to presently accept this appeal from a preliminary or interim arbitration order and, if so, whether to accept as fresh evidence the requested documents.

II. ANALYSIS

Rule 10 of the Code pertains to a party under a disability. I set out Rule 10, in full, in my July 4, 2013 letter to the parties. The portions of Rule 10 pertinent to this case state:

10.1 Subject to Rule 10.2, a party to a mediation, settlement discussion, neutral evaluation or proceeding is presumed to have the mental capacity to manage his or her property, appoint and instruct a representative, and conduct his or her own case. [Subsection 10.2 pertains to a minor or a person who has been declared mentally incapable within the meaning of Sections 6 or 45 of the SDA. There is no evidence before me that this is applicable in this case]

10.3 Where an adult party has not been declared mentally incapable under the provisions of the SDA, but exhibits signs of mental difficulty during the course of a mediation, settlement discussion, neutral evaluation or proceeding, either party may request a hearing on a preliminary issue, or the Dispute Resolution Group may direct a hearing on a preliminary issue to determine whether:

(a) the party has the mental capacity to proceed in the dispute resolution process;

(b) there is an attorney with a valid continuing power of attorney over the party’s property; or

(c) there is a person such as a spouse, same sex partner, near relative, close friend or a professional such as a doctor, lawyer or business entity, such as a trust company, who has made or intends to make arrangements for the appointment of a guardian over the party's property under the provisions of the SDA.

10.4 Parties shall be given written notice of the hearing on a preliminary issue to inquire into a party’s mental capacity to proceed in the dispute resolution process.

10.5 Where an adjudicator is not satisfied that a party has the mental capacity to proceed in the dispute resolution process, and there is no attorney or person such as described in Rule 10.3(b) and (c), the adjudicator may appoint a spouse, same sex partner or near relative of the party to act on the party’s behalf if that person, in the adjudicator's opinion, is suitable, willing and able to proceed in the dispute resolution process and to receive and administer statutory accident benefits on behalf of the party who has exhibited signs of mental difficulty. The adjudicator may place such conditions or restrictions upon appointments pursuant to this section, as the adjudicator considers reasonable and necessary to protect the interests of the person exhibiting mental difficulty, the other parties to the proceeding and the dispute resolution process. 10.6 Where there is no person such as described in Rules 10.2, 10.3 or 10.5 available to act, the adjudicator may notify the Public Guardian and Trustee to request that appropriate steps be taken pursuant to the provisions of the SDA.

[Subsection 10.7 pertains to complying with the approval of settlement requirements of Rule 7.08 of the Rules of Civil Procedure.]

[emphasis added]

Rule 10.1 confirms the presumption that a party has the mental capacity to manage his or her property, appoint and instruct a representative, and to conduct his or her own case. Aviva cites Arbitrator Wilson, in L.G. and Lombard General Insurance Company of Canada, (FSCO A09-000531, January 28, 2010):

The test for interfering with the autonomy of an individual, to the extent of requiring him or her to be represented by a litigation guardian if an insured wishes to pursue an accident benefit claim at arbitration is not however one of the “best interest” of the party in question. Rather it is whether there is evidence before the arbitrator that would justify the conclusion that L.G. is “not able to understand information that is relevant to making a decision in the management of his or her property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.”

The Arbitrator, as confirmed in his November 20, 2012 letter, found that it was apparent that Mr. Henry lacked the ability to meaningfully participate in and appreciate the nature of the dispute resolution process. At page 18 of the November 19, 2012 transcript, the Arbitrator stated to Mr. Henry:

As a self-representative, you should at least understand the process and be able to present your case. The way things stand right now, if you proceed, there’s no chance of success. So, what I’ve decided is there should be at least an effort made to get you representation.

Rule 10 of the Code provides that where a party exhibits signs of mental difficulty during a proceeding, before the presumption of mental capacity is negated and, by implication, individual autonomy is restricted, either party or the Dispute Resolution Group may direct a hearing on a preliminary issue whether the party has the mental capacity to proceed in the dispute resolution process. Rule 10.4 states that written notice of the hearing on this specific issue “shall” be given.

Upon review of the record, including the transcripts, there is a significant question whether on November 19, 2012, or at any point between that date and the Arbitrator’s April 16, 2013 decision, there was an arbitration process that followed Rule 10 or such amendment of that process, as allowed by Rule 81.1 of the Code, as may have been just. There is the concern whether prior to the Arbitrator’s capacity decision, Mr. Henry was advised of the consequences of being found to lack mental capacity to proceed with his arbitration, or whether either party was given an opportunity, or a meaningful opportunity, to make submissions on the question.

Aviva’s first request in this appeal is that the Arbitrator’s order be set aside and a new order granted dismissing the arbitration. Given the Arbitrator’s finding that Mr. Henry exhibited signs of mental difficulty at the November 19, 2012 proceeding, that concern being echoed by Aviva’s counsel (although Aviva argues it subsequently qualified its position at the March 15, 2013 arbitration resumption), I am not persuaded as to the strength of the argument the Arbitrator erred in not dismissing Mr. Henry’s arbitration.

Aviva requests, in the alternative, that the arbitration proceed to a new hearing to allow, in the interim, a formal response from the PG&T. I am not persuaded as to the strength of this submission. Rule 10 requires that the adjudicator, not the PG&T, determine whether a party has the mental capacity to proceed in the process. The PG&T’s proposed role in this proceeding was to assist in representation, which it has apparently declined to do. Again, given the Arbitrator’s finding that Mr. Henry exhibited signs of mental difficulty at the November 19, 2012 hearing, it would seem premature to set to a final hearing date to determine Mr. Henry’s benefit entitlement.

There, however, remains the issue of fairness regarding the determination of Mr. Henry’s mental capacity to proceed at arbitration. Aviva submits that the arbitration procedure was unfair. It was not advised of information provided by the PG&T. It was not allowed to make submissions in response. The Arbitrator determined capacity in the absence of medical evidence.

Delegate Makepeace held in Howard that questions of law include questions of fair procedure.

The Arbitrator appears to have made his capacity decision orally on November 19, 2012, which he confirmed in writing the next day. The significance, therefore, of the PG&T’s involvement in the Arbitrator’s November 2012 capacity determination is presently unclear to me, when the PG&T appears to have been first contacted, some weeks later, in January 2013.

However, there are other issues regarding fairness. Was there a failure to provide notice to the parties of a preliminary issue hearing to inquire into Mr. Henry’s mental capacity to proceed in the arbitration? Was there a failure to advise this self-represented party of the possible consequences of such a finding? Was there a failure to allow both parties to present evidence and to make submissions on the issue of capacity?

Applying the criteria as to whether to accept an appeal from a preliminary or interim arbitration order, I am persuaded that there is strength in the procedural fairness question of the appeal. I am persuaded that this issue is important both as it affects Mr. Henry’s autonomy and as a procedural precedent. As the arbitration is presently stayed, accepting this appeal at this time will not delay the arbitration.

Exercising my discretion under Rules 50.2 and 51.2(c) of the Code, I accept this appeal at this time, restricted to whether the Arbitrator erred in law in the procedure followed in determining Mr. Henry’s mental capacity to proceed with his arbitration. Amending (as allowed by Rule 81.1) the time lines of Rule 54 of the Code regarding written submissions, I order that:

(1) Aviva shall have until Monday, January 20, 2014 to serve on Mr. Henry and (with a Statement of Service in Form F) file with the Appeals section of the Commission its written submissions, as restricted.

(2) Mr. Henry shall have until Monday, February 24, 2014 to serve on Aviva and (with a Statement of Service in Form F) file with the Appeals section of the Commission his written submissions, as restricted, upon which he intends to rely. The Appeals Administrator will again provide Mr. Henry with blank Statements of Service to be completed.

I am persuaded, as they may still be relevant to the decisive or potentially decisive issues of fairness and transparency raised in this appeal, that the Arbitrator’s January 10, 2013 letter to the PG&T and PG&T’s February 1, 2013 response should be received as fresh evidence.

IV. EXPENSES

The legal expenses of this preliminary issue appeal decision are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.

December 6, 2013

Lawrence Blackman Director’s Delegate

Date

Footnotes

The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.