Waterloo Insurance Company v. Ashok Sobti, 2014 ONFSCDRS 141

Financial Services

Commission of Ontario

Commission des services financiers

de l’Ontario

Neutral Citation: 2014 ONFSCDRS 141

Appeal P14-00029

Appellant

and

Respondent

BEFORE:

Delegate Lawrence Blackman

Mr. Nicholaus de Koning for the Appellant, Waterloo Insurance Company

Ms. Samia M. Alam for the Respondent, Ms. Ashok Sobti

By written submissions received by August 25, 2014

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

Exercising my discretion under Rules 50.2 and 51.2(c) of the Dispute Resolution Practice Code (Fourth Edition – Updated January 2014), I accept this appeal from the Arbitrator’s June 20, 2014 preliminary issue order.
The legal expenses of this preliminary appeal order are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.

August 28, 2014

Lawrence Blackman

Director’s Delegate

Date

I. NATURE AND BACKGROUND OF THE APPEAL

The Respondent, Ms. Sobti, was injured in an October 1, 2008 motor vehicle accident. As a result, she applied to her first-party automobile insurer the Appellant, Waterloo Insurance Company, for statutory accident benefits available under the 1996 Schedule.¹

The Appellant, by affidavit sworn August 30, 2013, stated at paragraph 7 that the two-year limitation period for the Respondent’s attendant care and housekeeping benefits ran from December 30, 2008 and for income replacement benefits (“IRBs”) from March 27, 2009.

The parties agree the Respondent commenced mediation regarding housekeeping and attendant care benefits by Application for Mediation dated December 6, 2010. The May 22, 2012 Report of Mediator stated that although IRBs were not included in the Respondent’s Application for Mediation, the parties “agreed that this matter would be addressed in this mediation.”

The parties came before Arbitrator Garbutt (the “Arbitrator”) for a determination of whether the Respondent had missed the limitation period and was barred from proceeding to arbitration on her benefit claims. The preliminary issue hearing proceeded by affidavit evidence and written submissions filed by October 31, 2013. The Arbitrator noted that neither “party sought cross-examinations on affidavits although they were entitled to do so.”

The Appellant argued, in part, that the Respondent failed to commence mediation regarding IRBs within the requisite two years under subsection 281.1(1) of the Insurance Act, R.S.O. 1990, c. I.8. Regarding all three benefit claims, the Appellant argued that the Respondent failed to commence arbitration within ninety days after the mediator reported to the parties, contrary to clause 281.1(2)(b) of the Insurance Act.

The Arbitrator’s June 20, 2014 decision dismissed the Appellant’s motion for an order that the Respondent’s IRB, attendant care and housekeeping benefits claims were statute barred.

The Arbitrator accepted the affidavit evidence of Mr. P. Barrafato (the Respondent’s counsel) and Ms. J. Borne (a paralegal with Mr. Barrafato’s office) that they did not receive an OCF-9 (Explanation of Benefits) denying IRB entitlement. The Arbitrator further accepted that the IRB issue was added at mediation on consent without qualification there being nothing in the Report of Mediator indicating the Appellant had raised a limitation defence as a preliminary issue although it was open to it to have done so.

The Arbitrator found, in any event, that even if the Respondent had received an OCF-9 denying IRB entitlement, the OCF-9 was deficient in failing to provide “clear and unequivocal reasons to terminate the benefits claimed.”

The Appellant’s August 30, 2013 affidavit stated at paragraph 15 that “[a]ssuming that the Applicant and her counsel received the Report of Mediator on May 25, 2012, then the Application for Arbitration should have been registered with FSCO by no later than August 23, 2012.”

The Arbitrator found that the Commission received the Application for Arbitration by fax on August 9, 2012 and that the Application was complete and commenced at that time, being within ninety days after the mediator reported to the parties. The Arbitrator was not persuaded that the Application for Arbitration was complete only when the Commission received, on or about December 18, 2012, a hard copy of the Application for Arbitration and the $100 filing fee.

II. THE PARTIES’ POSTIONS

The Appellant submits that the Arbitrator erred, in part:

Finding that the Appellant had waived or had abandoned its limitation defence at mediation. Rather, the Appellant argues, a limitation period defence need not be mediated nor does it have to be identified as a preliminary issue in the Report of Mediator.
Finding that the Respondent did not receive a copy of an OCF-9 denying payment of IRBs when the Respondent’s affidavit material did not deny that OCF-9s were received by the Respondent herself. The Respondent could have, but did not swear a personal affidavit in this preliminary issue hearing.
Finding that the Application for Arbitration was complete in all respects when the Commission did not process the Application until the Respondent sent the filing fee in December 2012. An Application for Arbitration, it argues, is not commenced until the Application for Arbitration is complete in all respects, including the requisite filing fee.
The Arbitrator basing his decision, in the Appellant’s words, on the completely irrelevant and “uninformed opinion” of “an administrative functionary” who considered the Application timely even if the filing fee was received several months later.

The Appellant argues that this appeal should be heard before the main, four-day arbitration hearing takes place “in order to reduce the time and expense to the parties.” It advises that the hearing scheduled for the week of July 29, 2014 has been adjourned to start August 17, 2015.

The Respondent submits that only if the appeal is successful would this preliminary issue decision have the potential to finally decide the issues in dispute. She argues that this appeal should not be accepted and the Arbitrator’s order should be allowed to stand. The Respondent submits that “disagreements about an arbitrator’s factual findings based on the evidence are questions of fact, not law.” As subsection 283(1) of the Insurance Act limits appeals from the order of an arbitrator to questions of law, such findings are not reviewable.

II. ANALYSIS

My July 24, 2014 letter noted that Rule 56.5 of the Dispute Resolution Practice Code (Fourth Edition – Updated January 2014) (the “Code”) provides that an appeal may be decided in any manner considered appropriate. Subject to the parties’ submissions and the material filed, in accordance with Rule 1.1 of the Code, I was of the view that the most expeditious, least costly and most just means of determining whether this appeal should be accepted was by written submissions. The parties were to advise, with reasons, if oral submissions were reasonably necessary.

The Appeals Unit has not received such a request. Accordingly, I am rendering my decision.

Allstate Insurance Company of Canada and Al-Obaidi, (FSCO P99-00009, May 2, 2000) held:

Although the general thrust of [the present Rule 50.2] is to defer such appeals until the arbitration is over, parties have been allowed to go ahead where it makes sense to do so before they are put to the expense and time of a full arbitration hearing. This is a case-by-case determination. Previous appeal decisions reflect a number of considerations including the apparent strength of the appeal, the importance of the issue, whether the ruling represents a departure from the approach taken in previous cases and whether hearing the appeal in the interim would result in significant savings in time and expense or streamline the process

in some way. The preference of the parties is an important factor. [Emphasis added]

The onus is on an appellant to establish that its appeal from a preliminary or interim order of an arbitrator should be accepted.

Subsection 281.1(1) of the Insurance Act requires that a mediation proceeding or an arbitration be “commenced” within two years after the insurer’s refusal to pay the benefit claimed.

The Arbitrator, at page six of his decision, cites Mohammed-Amin v. RBC General Insurance Co., (FSCO A06-002188, June 25, 2007) that “it is well established that a limitation defence must be strictly construed since the results may deny an applicant the opportunity to have his or her claim adjudicated on the merits.” The Appellant does not dispute this, at this juncture.

The Appellant’s July 23, 2014 appeal submissions, at paragraph one, state that the Respondent “faxed, through her counsel, an Application for Arbitration to the [Commission] on August 9, 2012.”

Section 281.1 of the Insurance Act does not include the word “completed” in the limitation provision. Rule 11.2 of the Code, however, provides that an insured person may file a “completed” Application for Arbitration within ninety days after the mediator reports to the parties in the Report of Mediator. Rule 25.1(e) states that a completed Application for Arbitration in Form C includes payment of the filing fee. Rule 1.3 of the Code, however, states that a “defect in form or other technical breach will not make a proceeding invalid.” Rules 25.4 and 25.5 of the Code provide:

25.4 If it appears that an Application for Arbitration is incomplete, has been received after the time required for commencing the proceeding has elapsed, exceeds the jurisdiction of the dispute resolution process under the Insurance Act and its Regulations, or is frivolous, vexatious or an abuse of process, the Dispute Resolution Group will:

(a) deliver written notice of the jurisdictional concerns or deficiencies in the Application to the applicant and his or her representative; and

(b) hold the Application in abeyance for 20 days from the delivery of the notice.

25.5 Where the applicant does not satisfy the jurisdictional concerns or rectify the deficiencies set out in the written notice within the 20 days provided under Rule 25.4(b), an arbitrator may reject the Application.

In Huynh and Allstate Insurance Company of Canada, (FSCO A98-001309, November 21, 2000), regarding a limitation defence and an incorrect application for arbitration form being filed, Arbitrator Killoran held:

It was through an error on the part of the Commission that counsel for Mr. Huynh was not contacted about the defect in form … I find that the defect in form relating to Mr. Huynh’s original Application for Arbitration is not sufficient to invalidate the process, particularly as Mr. Huynh had no opportunity to remedy the defect prior to the expiration of the limitation period. Therefore, I find that Mr. Huynh can proceed to arbitration.

The Appellant submits that the issue of “completed” and “commenced” appears to be novel.

However, more significantly regarding whether this appeal should be presently accepted, on July 16, 2014 the Respondent, not the Appellant, wrote the Arbitration Unit requesting, on consent, that the four-day arbitration hearing scheduled to begin July 29, 2014 be adjourned to dates a year hence, in August 2015. The Respondent stated that the “reason for the adjournment is that the Insurer may be appealing the decision on the Preliminary Issue dated June 20, 2014.” The Appellant served its Notice of Appeal a week later.

Thus, notwithstanding the Respondent’s submission that this appeal not be accepted, her actions negate that position. The implicit agreement of both parties is that this appeal will be accepted. The Appellant’s reply submissions argue that it “certainly appeared to be the preference of both parties [until the Respondent’s August 13, 2014 appeal submissions] that the appeal should be dealt with prior to a three or four day Arbitration hearing.”

If this appeal is accepted, the parties have allowed sufficient time for the appeal to be completed prior to the scheduled arbitration hearing, should this appeal be ultimately dismissed. Whether any application for judicial review or further appeals that may follow would be completed within that time is unlikely, no matter how expeditiously they may proceed. Nonetheless, balanced against future unknown possibilities, I lean against having this matter sit on hold for a year, with nothing accomplished.

Accordingly, exercising my discretion under Rules 50.2 and 51.2(c) of the Code, I accept this appeal from a preliminary order that does not finally decide the issues in dispute. I set the following time line for the exchange of written submissions:

Adapting the thirty-day time line from Rule 54.1 of the Code, the Appellant shall by Monday, September 29, 2014 serve the Respondent and file (with a Statement of Service in Form F) with this office its written submissions on this appeal.
Following Rule 54.3 of the Code, the Respondent shall by Monday, October 20, 2014, serve on the Appellant and file (with a Statement of Service) with this office her responding written submissions.
The Appellant shall, by Thursday, October 30, 2014, serve and file any reply submissions.

The Appeals Case Administrator will contact the parties to arrange a date for oral submissions.

IV. EXPENSES

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

August 28, 2014

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.