Azza Mahmoud v. State Farm Mutual Automobile Insurance Company, 2015 ONFSCDRS 159

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2015 ONFSCDRS 159

Appeal P15-00035

OFFICE OF THE DIRECTOR OF ARBITRATIONS

AZZA MAHMOUD Appellant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Mr. Thomas P. Connolly and Mr. Joseph Y. Obagi for the Appellant, Mrs. Azza Mahmoud Mr. Bruce Chambers and Mr. Jean-Claude Rioux for the Respondent, State Farm Mutual Automobile Insurance Company

HEARING DATE: June 29, 2015 telephone conference call. Letter decision issued July 3, 2015.

PRELIMINARY APPEAL ORDER

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

1. Pursuant to Rules 50.2 and 51.2(c) of the Dispute Resolution Practice Code (Fourth Edition – Updated January 2014), this appeal from Arbitrator Morris’ April 29, 2015 letter decision on a motion is presently rejected. This is without prejudice to the Appellant renewing this appeal upon all of the issues in dispute in this arbitration being finally determined, subject to any other or further order of an appellate officer.

2. Arbitrator Reilly’s order resuming the arbitration hearing August 4, 2015 is not stayed.

3. If the parties cannot agree on the legal expenses of this appeal, either party may request an appeal expense hearing within thirty days of the date of this decision, as set out within.

July 28, 2015

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. BACKGROUND

This decision concerns whether I should exercise my discretion under Rules 50.2 and 51.2(c) of the Dispute Resolution Practice Code (Fourth Edition – Updated January 2014) (the “Code”) to accept at this time this appeal from Arbitrator Morris’ April 29, 2015 order on a motion.

This decision also addresses whether I should exercise my discretion under subsection 283(6) of the Insurance Act, R.S.O. 1990, c. I.8 to stay the order of the hearing arbitrator, Arbitrator Reilly, setting August 4, 2015 for the conclusion of the arbitration hearing.

The Appellant, Mrs. Azza Mahmoud, was injured in a February 26, 2008 motor vehicle accident. As a result, she sought statutory accident benefits under the 1996 Schedule¹ from her first-party automobile insurer, the Respondent, State Farm Mutual Automobile Insurance Company. The parties advise that three hearing days were held before Arbitrator Reilly in December 2014, with one concluding hearing day set for August 2015.

The Appellant brought a motion returnable April 10, 2015 before Arbitrator Morris as to whether the parties had reached a settlement of this matter on April 7, 2015. Arbitrator Morris’ April 29, 2015 letter decision held they had not.

The May 28, 2015 Notice of Appeal of Arbitrator Morris’ decision was followed by the Appellant’s June 11, 2015 letter requesting that the August 4, 2015 arbitration hearing resumption be adjourned or stayed.

II. ANALYSIS

Rule 51.2(c) of the Code 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. In Security National Insurance Co./Monnex Insurance Mgmt. Inc. and Hodges, (FSCO P12-00029, August 13, 2012), I held:

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;

(c) whether rejecting or hearing the appeal will prejudice either party;

(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.

Delegate Makepeace, in Allstate Insurance Company of Canada and Torok, (FSCO P01-00021, May 29, 2001), held that the purpose of the present Rule 50.2 of the Code is to:

… facilitate the most cost-effective resolution of disputes by minimizing the time and money spent on procedural or collateral matters. The decision whether to hear an appeal of a preliminary order is discretionary … the over-arching principle guiding the exercise of the discretion is that the rule “should be broadly interpreted to produce the quickest, most just and least expensive resolution of the dispute.” The criteria to be considered 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.

I decline to accept this appeal at this time for the following reasons:

1. The Notice of Appeal argues that leave is not necessary as the order being appeal disposes of her “substantive right to enforce a settlement agreement.” The Appellant relies on the Rules of Civil Procedure and the distinction between final and interlocutory orders. In this regard she cites, in part, Meisels v. Lawyers Professional Indemnity Company, 2015 ONCA 406:

An order that does not finally dispose of the rights of the parties to the litigation will be a final order for purposes of an appeal if it disposes of an issue that “deprive[s] the defendant of a substantive right which could be determinative of the entire action”: Ball v. Donais (1993), 1993 CanLII 8613 (ON CA), 13 O.R. (3d) 322 (Ont. C.A.), at p. 324.

However, this forum is not governed by the Rules of Civil Procedure, although those rules may provide non-binding assistance in applying the Code (issued under the authority of the Insurance Act) where applicable and consistent with the legislative intent of this tribunal.

The Appellant argues that the Code does not provide guidance in defining preliminary or interim orders versus final orders regarding appeals. That is not correct. Rather, Rule 50.2 of the Code, specifically states:

A party may not appeal a preliminary or interim order of an arbitrator until all of the issues in dispute in the arbitration have been finally decided, unless the Director orders otherwise. [Emphasis added]

Likewise, Rule 51.2(c) of the Code provides that an appeal may be rejected if it is from a preliminary or interim order that does not finally decide the “issues” (in the plural, not in the singular, “an” issue) in dispute.

Accordingly, while Arbitrator Morris finally determined, at first instance, whether a settlement was reached on April 7, 2015, she did not finally decide “all of the issues in dispute in the arbitration.” Accordingly, under Rules 50.2 and 51.2(c) of the Code, leave is necessary to accept an appeal from Arbitrator Morris’ decision on a motion.

2. The Appellant cites my decision in Rocheleau and Allstate Insurance Company of Canada, (Appeal P11-00017, February 23, 2013):

… I find that the Code, similar to the Rules of Civil Procedure, is:

… intended to do away with overly “technical” arguments about the effect of the Rules and orders made under them. Instead, these provisions aim to ensure that the Rules and procedural orders are construed in a way that advances the interests of justice and ordinarily permits the parties to get to the real merits of their dispute.

However, I further stated:

… the context of the Code is distinct, being part of an alternative dispute resolution system with its own well-entrenched case management governed by the Statutory Powers Procedure Act (including the power under section 23 to give such orders or directions as the tribunal considers proper to prevent abuse of its processes). The Code also exists in the context of consumer protection and the timely assistance to victims of motor vehicle accidents. Arbitrator Naylor, in McCormick and Economical Mutual Insurance Company, (OIC A-000139, November 10, 1991, held that:

The discretion to award expenses should be exercised, having regard to the intent and purpose of the legislative scheme. The arbitration process has been established under the Insurance Act as amended, in order to facilitate applicants’ access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits. The discretion to award expenses should be exercised in accordance with this objective, having regard to the individual circumstances of each case.

The Appellant argues that it has been mainly insurers who have raised the question of whether a settlement was reached. To accept the Appellant’s argument regarding final orders would mean that should an arbitrator decide against an insurer on whether there had been a settlement an appeal would be accepted automatically.

Similarly, should an arbitrator decide against an insurer and find there was an accident, as defined in the applicable schedule, an appeal would be automatically allowed. Should an arbitrator decide that an insured person did not miss a limitation or notice period an appeal would be automatically allowed.

Accepting the Appellant’s argument as a general proposition that her appeal should be automatically accepted at this time because it is from a final decision would significantly erode the “consumer protection and the timely assistance to victims of motor vehicle accidents,” as stated in Rocheleau and “applicants’ access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits,” as stated in McCormick, that the Code is intended to enhance.

A saving exception in the Code and in the case law is that discretion will be exercised, as stated in Torok, to allow an appeal that will “facilitate the most cost-effective resolution of disputes by minimizing the time and money spent on procedural or collateral matters.”

3. The Appellant submits that Arbitrator Morris erred in not following Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, in interpreting offer and acceptance as not constituting a settlement agreement. She further argues that the Arbitrator departed from court decisions regarding unilateral mistake as well as from Commission cases that an insurer seeking to permanently exclude a right to further benefits must clearly state that intention. The Appellant submits that these arguments will be fleshed out once her appeal is accepted.

Subsection 283(1) of the Insurance Act restricts appeals from an arbitrator’s order to questions of law. In Sattva, the Supreme Court held at paragraph 55:

As mentioned above, the goal of contractual interpretation, to ascertain the objective intentions of the parties, is inherently fact specific. The close relationship between the selection and application of principles of contractual interpretation and the construction ultimately given to the instrument means that the circumstances in which a question of law can be extricated from the interpretation process will be rare. In the absence of a legal error of the type described above, no appeal lies under the AA from an arbitrator’s interpretation of a contract. [Emphasis added]

As this appeal, at this present juncture, appears to be fact specific, there is a question as to the strength of the appeal, given the restriction on appeals in the Insurance Act to questions of law. I do note, however, that Sattva also held:

… A court considering whether leave should be granted is not adjudicating the merits of the case … A leave court decides only whether the matter warrants granting leave, not whether the appeal will be successful … This is true even where the determination of whether to grant leave involves, as in this case, a preliminary consideration of the question of law at issue. A grant of leave cannot bind or limit the powers of the court hearing the actual appeal …

4. I am not persuaded that this appeal is novel simply based on the Appellant’s argument that most Commission decisions on whether there was a settlement have been brought by insurers, not insured persons.

5. I do not agree with the Appellant’s submission that should this appeal not be accepted at this time she may lose an appeal right she would have had if the matter had been heard in the Superior Court of Justice.

In State Farm Mutual Automobile Insurance Company and Blakely, (FSCO P12-00005, April 27, 2012), as an example, I exercised my discretion under Rule 50.1 to reject an appeal from a preliminary arbitration decision without prejudice to that appeal being renewed once all of the issues in dispute in arbitration were finally decided. The appellant subsequently (in FSCO P13-00036A) renewed its appeal from the preliminary arbitration decision together with an appeal of the final arbitration decision.

In this case the Respondent itself, in its June 11, 2015 letter, states “the appeal should be rejected at this time without prejudice to the appellant’s right to appeal the Arbitrator Morris’ decision, and any other issues, after all issues in dispute in the arbitration have been finally decided.”

6. The arbitration hearing is presently set to resume and conclude on August 4, 2015. If the Appellant is at least as successful at that hearing as the argued settlement, this present appeal becomes moot. If the Appellant is not as successful, any appeal from the main arbitration hearing (the decision from which will be forthcoming much sooner than a decision on the merits in this present appeal where dates for written, followed by oral submissions, are still to be set) can be brought with this present appeal issue.

7. The parties advise that the remaining witnesses have been subpoenaed for the August 4, 2015 arbitration hearing resumption. The Appellant advises he has met with one practitioner who has cancelled his appointments for that day. If this appeal were to be accepted at this time and should the Appellant not be successful on this appeal, both parties would be prejudiced both by having to prepare again for the arbitration as well as being prejudiced by the further passage of time. I note that this matter pertains to ongoing non-earner benefits claimed from August 26, 2008, already almost seven years ago.

Subsection 283(6) of the Insurance Act provides that an appeal does not stay the order of an arbitrator, unless so ordered. Thus, as stated by Delegate McMahon in Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000), a stay from the order of an arbitrator is the exception rather than the rule. In Armstrong, Delegate McMahon adopted the following criteria as to whether a stay should be granted:

1. The bona fides of the appeal;
2. The substance of the grounds for appeal; and,
3. The hardship to the respective parties if the stay is granted or refused.

Director Sachs, in Menard and Royal Insurance, (OIC P-001055, October 22, 1992), held that a request on appeal that the resumption of an arbitration hearing be postponed pending the appeal affects an arbitrator’s control of the process. Director Sachs held that for this reason it must be seen as a rare request for an exercise of appellate discretion, requiring special circumstances. The Respondent concedes that an appellate officer has authority to stay a set arbitration hearing.

The parties confirm that neither party has requested an adjournment of the arbitration hearing resumption. Neither has sought the hearing arbitrator’s advice as to her availability should the arbitration be adjourned or stayed. Neither has requested any discussion with the hearing arbitrator regarding any concerns regarding completion of the arbitration hearing.

In the specific circumstances of this case, with the absence of any discussion with the hearing arbitrator to determine the most expeditious, cost efficient and just resolution of the arbitration, I am not persuaded that special circumstances exist to take control of the arbitration process away from the hearing arbitrator. If I am not persuaded to stay the arbitration hearing, it makes little sense to accept, at this time, this appeal from Arbitrator Morris’ April 29, 2015 preliminary arbitration decision.

Accordingly, this appeal from Arbitrator Morris’ April 29, 2015 decision on a motion is presently rejected without prejudice to the Appellant renewing this appeal upon all the issues in dispute in the arbitration being finally determined, subject to any other or further order of an appellate officer.

II. APPEAL EXPENSES

If the parties cannot agree on the legal expenses of this appeal, pursuant to Rule 79.1 of the Code, either party may request an appeal expense hearing, as the parties agreed, within thirty days of the date of this decision.

The request for an appeal expense hearing shall be accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs, as well as submissions on such entitlement and/or quantum expense issues as are in dispute.

July 28, 2015

Lawrence Blackman Director’s Delegate

Date

Footnotes

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