Wawanesa Mutual Insurance Company v. Subramaniam, 2014 ONFSCDRS 35

Financial Services Commission of Ontario

Financial Services Commission of Ontario Commission des services financiers de l’Ontario

Neutral Citation: 2014 ONFSCDRS 35

Appeal: P13-00006V

OFFICE OF THE DIRECTOR OF ARBITRATIONS

WAWANESA MUTUAL INSURANCE COMPANY Appellant

and

JEYAPALAN SUBRAMANIAM Respondent

BEFORE: Anne Sone

REPRESENTATIVES: J. Claude Blouin for Wawanesa Mutual Insurance Company David S. Wilson for Mr. Subramaniam

HEARING DATE: Final submissions were received on September 11, 2013

VARIATION OF ARBITRATION ORDER

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

1. The Arbitrator’s order dated July 13, 2012 is varied to include the following additional provisions:

2. Wawanesa is permitted to deduct the Canada Pension Plan disability benefit in the amount of $11,170.28 previously received by Mr. Subramaniam from the income replacement benefit to which he is entitled.

3. Mr. Subramaniam or his legal representative shall immediately advise Wawanesa of any material change in his circumstances that could affect the amounts payable under this order.

February 28, 2014

Anne Sone Arbitrator

Date

REASONS FOR DECISION

I. NATURE OF THE PROCEEDING

This matter involves the SABS–1996.¹ Wawanesa Mutual Insurance Company (Wawanesa) has brought an Application for Variation/Revocation of the Order of Arbitrator Rogers dated July 13, 2012, File No. A09-002594 (the Order).² This Application for Variation/Revocation seeks a variation of the Order to permit Wawanesa to deduct the Canada Pension Plan (CPP) disability benefits received by Mr. Subramaniam from the income replacement benefits to which he is entitled.

II. BACKGROUND / OVERVIEW

Mr. Subramaniam was injured in a motor vehicle accident on January 22, 2008. When Mr. Subramaniam filed his Application for Arbitration with the Financial Services Commission of Ontario on October 13, 2009, income replacement benefits were not in dispute (because Wawanesa was still paying income replacement benefits at that time).

Wawanesa subsequently terminated income replacement benefits. Mr. Subramaniam then initiated an Application for Mediation. That issue was not resolved at mediation, and it was then added to his Application for Arbitration. The weekly amount of his income replacement benefits was never in dispute.

The hearing in this matter took place on January 31 to February 3, 2011, March 26 to 29, 2012 and April 2 and 3, 2012.

Part-way through that hearing, Mr. Subramaniam became entitled to receive CPP disability benefits, retroactive to September 2010. After deducting $6,288.12 as a repayment to the Ontario Disability Support Program, Mr. Subramaniam received net CPP disability benefits of $5,969.70.

Afterwards, Mr. Subramaniam continued to receive monthly CPP disability benefits in the amount of $742.94 from February through to July 2012. The sum of these monthly amounts is $5,200.58.

In total, Mr. Subramaniam received net CPP disability benefits of $11,170.28. This sum was deductible from the arrears of income replacement benefits that Wawanesa was ordered to pay by Arbitrator Rogers.³ At the time that Order was made, however, Mr. Subramaniam had not disclosed to Wawanesa or to the Financial Services Commission that he was receiving CPP disability benefits.

Through his counsel, Mr. Subramaniam refused to acknowledge the deductibility of the CPP disability benefits relating to the arrears, and started enforcement proceedings by instructing the Sheriff of the City of Toronto to seize the sum of $15,877.98 from Wawanesa. This amount allegedly represented the amount of arrears owing to Mr. Subramaniam, including interest and costs.

Wawanesa provided a copy of a letter from its employee, Mr. Wayne Clay, dated March 8, 2013, addressed to the Sheriff of the City of Toronto. This letter enclosed Wawanesa’s draft in the amount of $15,877.98.

For the reasons set out below, I find that under section 284 of the Insurance Act, the Order of July 13, 2012 should be varied.

III. ANALYSIS

Wawanesa’s Submissions:

Wawanesa submits that, pursuant to the Schedule, the amount received by an insured person for CPP disability benefits should be deducted from any amount payable for income replacement benefits.

As a result, Wawanesa submits the amount seized by the Sheriff pursuant to the Writ of Seizure and Sale obtained by Mr. Subramaniam’s counsel ought not to have been paid, and Mr. Subramaniam or his counsel ought to be ordered to repay $15,977.98 to Wawanesa, together with interest⁴ from March 8, 2013.

Mr. Subramaniam’s Submissions:

In his submissions responding to Wawanesa’s Application for Variation/Revocation, Mr. Subramaniam stated the following:

• The jurisdiction to vary the Order of the Arbitrator dated July 13, 2012 is based upon Section 284 of the Insurance Act. This section requires that in order for an order to be varied, an Arbitrator or Director must be satisfied that there is a material change in the circumstances of the insured or that evidence not available on the arbitration or appeal has become available or that there is an error in the Order.

• None of these criteria have been met, and accordingly, Wawanesa is not entitled to the relief it seeks.

• With respect to the income replacement benefits due for the period commencing July 14, 2012, Wawanesa made a deduction for CPP disability benefits. Mr. Subramaniam does not take issue with this deduction. Nonetheless, Wawanesa is not entitled to the order that it seeks.

Is there jurisdiction to vary the Arbitrator’s Order dated July 13, 2012?

Under subsection 284(3) of the Insurance Act, if satisfied there has been

• a material change in circumstances of the insured or
• that evidence not available on the arbitration has become available or
• there has been an error in the order

the Director or an arbitrator appointed by the Director may vary or revoke the order and may make a new order if he or she considers it advisable to do so. I will look at these three issues to determine whether I have the jurisdiction to vary the Order dated July 13, 2012.

1. Does Mr. Subramaniam’s receipt of CPP disability benefits constitute a material change in his circumstances?

It is not disputed that Mr. Subramaniam started to receive CPP prior to the date of the Order. As a result, technically speaking, his circumstances did not change after the date of Order.

2. Is there an error in the Order?

There is no evidence to suggest that there was an error in the Order.

3. Was there evidence that was not available on the arbitration that has become available?

Although Mr. Subramaniam started to receive CPP disability benefits part-way through his hearing, it appears that this change in his circumstances was not disclosed to Wawanesa or to Arbitrator Rogers. I do not have any evidence as to why this occurred.

Rule 32.2 of the Dispute Resolution Practice Code (Fourth Edition, August 2011) stipulates that the parties have an ongoing responsibility to ensure the prompt and complete exchange of documents that are reasonably necessary to determine the issue being arbitrated, including updates to the information previously exchanged and any additional documents obtained. (emphasis added)

At the very least, the evidence about CPP disability benefits was available to Mr. Subramaniam. However, this evidence was not introduced at the arbitration. Does this mean that Mr. Subramaniam’s receipt of CPP disability benefits was “available” on the arbitration?

The current principles of statutory interpretation are set out by Justice Laskin in Bapoo v. Co-operators as follows:

The modern approach to statutory interpretation calls on courts to interpret a legislative provision in its total context. The court’s interpretation should comply with the legislative text, promote the legislative purpose and produce a reasonable and just meaning. Professor Sullivan described the modern approach in the following passage in Drieger on the Construction of Statutes, 3rd ed. (Toronto: Butterworths, 1994) at 131, which was cited by Kitely, J.:

There is only one rule in modern interpretation, namely, courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of the legislation, the consequences of proposed interpretations, the presumptions and special rules of interpretation, as well as admissible external aids. In other words, the courts must consider and take into account all relevant and admissible indicators of legislative meaning. After taking these into account, the court must then adopt an interpretation that is appropriate. An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is, its compliance with legislative text; (b) its efficacy, that is, its promotion of the legislative purpose; and (c) its acceptability, that is, the outcome is reasonable and just.⁵

If I interpret the word, “available” so restrictively that I am unable to vary the Order, it would actually encourage and reward parties who do not disclose relevant information as it arises, even if it is during the course of the hearing. Obviously, this would be an unfair and absurd result. For example, what would happen if a dependent child who is the subject of a claim for caregiving benefits dies part-way through a hearing, and this fact is not disclosed?

I also agree with Director’s Delegate Draper’s decision in Allstate Insurance Company of Canada and York Fire & Casualty Insurance Company and Osbourne.⁶ He states the following:

I do not accept that a variation/revocation hearing is available only if the information being brought forward was not in existence at the time of the hearing. While finality is important, so is reaching the right result. Where it can be shown that critical information was not disclosed or was untrue, a variation/revocation application maybe appropriate, subject to a consideration of whether the “new” evidence should have been presented at the original hearing. In my view, the use of the variation/revocation option is particularly appropriate where, as here, the actual litigants were misled by purportedly neutral witnesses who controlled the information being relied upon.

The way Mr. Subramaniam interprets this provision does not allow an insurer to vary an order obtained, where the arbitrator has not had the benefit of the updated information, due to the applicant not disclosing it. I do not agree with this interpretation.

In addition, if the information about CPP disability benefits was available to Arbitrator Rogers during the arbitration hearing, it is highly likely that it would have affected his Order.

Conclusion:

Based on the reasons set out above, I find that Mr. Subramaniam’s receipt of CPP disability benefits part-way through his hearing was evidence that was not available on the arbitration that has become available.

Accordingly, I am varying Arbitrator Rogers’ Order dated July 13, 2012 and adding additional provisions to it on that basis.

IV. EXPENSES

If the parties are unable to agree about the legal expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

February 28, 2014

Anne Sone Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2By Arbitrator Rogers pursuant to his decision in Subramaniam and Wawanesa Mutual Insurance Company (FSCO A09-002594, July 13, 2012).
3. 3Pursuant to subparagraph 7(1)1.i, paragraph 2(9)1 and subsection 2(10) of SABS-1996.
4. 4Wawanesa did not claim interest in its Application for Variation/Revocation. Accordingly, I am not dealing with that issue.
5. 51997, Can LII 6320 (ONCA) paragraph 8.
6. 6(FSCO P97-00067, June 23, 1998) at page 5. Judicial review dismissed at [1999] O.J. No. 5424.