State Farm Mutual Automobile Insurance Company v. Roshanth Balasunderam, 2015 ONFSCDRS 58

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2015 ONFSCDRS 58

Appeal P14-00034

Appellant

and

Respondent

BEFORE:

Delegate Lawrence Blackman

Mr. Jonathan B. Schrieder for the Appellant, State Farm Mutual Automobile Insurance Company

Ms. Menreet Salama for the Respondent, Mr. Roshanth Balasunderam

March 13, 2015

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

The Appeal is allowed, in part. The Arbitrator’s August 14, 2014 Order is varied as follows:

(i) The amount of income replacement benefits owing in paragraph 1 is reduced from $2,528.22 to $1,533.81, exclusive of interest.

(ii) The paragraph 2 housekeeping and home maintenance benefit award is rescinded.

My October 9, 2014 stay of the Arbitrator’s Order is lifted. The other benefits are payable as ordered. The Arbitrator’s expense order following page 14 of his decision is confirmed.
If the parties cannot agree on the legal expenses of this appeal, either party may request an appeal expense hearing, as set out within, within forty-five days of this decision.

March 20, 2015

Lawrence Blackman Director’s Delegate

Date

I. NATURE OF THE APPEAL AND BACKGROUND

The Respondent, Mr. Roshanth Balasunderam, was injured in a January 2, 2010 motor vehicle accident. As a result, he applied to his first-party automobile insurer, the Appellant, State Farm Mutual Automobile Insurance Company, for statutory accident benefits under the Schedule.¹

The parties came before Arbitrator Robinson (the “Arbitrator”) for a determination of benefits in dispute.

The December 29, 2011 pre-hearing letter identified the disputed issues as income replacement benefits (“IRBs”) from September 3, 2010, the quantum of the weekly IRBs to which the Respondent was entitled, attendant care benefits from April 2, 2010, housekeeping and home maintenance benefits from August 20, 2010, a special award, interest and legal expenses.

The Arbitrator struck the Respondent’s claim for a special award due to his failure to provide written particulars as ordered by the pre-hearing arbitrator. He also denied the Respondent’s request that new issues of entitlement to medical benefits be added to the arbitration.

The Arbitrator made the following formal orders at the end of his August 14, 2014 decision, on a separate page entitled “Arbitration Order:”

The Appellant shall pay the Respondent IRBs in the total amount of $2,528.22 as out in the deficiency column of Schedule “A” to his decision, exclusive of interest.

I note that Schedule “A” includes in the deficiency column $331.47 a week for each of the weeks of August 16, 23 and 30, 2010, for a total of $994.41.

The Appellant shall pay the Respondent housekeeping and home maintenance benefits at the rate of $100 per week from January 2, 2010 to August 1, 2010.
The Appellant shall pay the Respondent attendant care benefits of $361.95 per month from April 2 to August 1, 2010.
The Appellant shall pay the Respondent interest on overdue payments found owing.
There is no order on the issue of expenses. The Arbitrator remained seized should the parties be unable to resolve this issue on their own.

I note, however, that in the body of his decision at pages three and four, the Arbitrator states that the Appellant is liable to pay the Respondent’s arbitration expenses and that the Respondent is not liable to pay the Appellant’s arbitration expenses.

The Appellant submits that the Arbitrator erred in law as follows:

In ordering payment of $2,528.22 in IRBs when it had already paid $994.41 for the period August 16 to September 3, 2010. Accordingly, only $1,533.81 was payable.
In ordering payment of housekeeping and home maintenance benefits from January 2 to August 1, 2010 when it had already paid those benefits.
In ruling that the Appellant pay the Respondent’s legal expenses.

I will deal with these grounds of appeal in turn.

II. ANALYSIS

(1) Income Replacement Benefits

The Appellant argues that it owes only $1,533.81 in IRBs as it had already paid $994.41 of the $2,528.22 ordered paid.

The Respondent states that Rule 65.1 of the Dispute Resolution Practice Code (Fourth Edition, Updated – January 2014) (the “Code”), provides that an “adjudicator will determine the issues before him or her by order and may make an order subject to such terms as he or she considers just.” The Respondent argues that this means that “the inclusion of the disputed dates is wholly within the discretion of the Arbitrator given the evidence and admissions as presented.”

The Respondent, however, agrees the Arbitrator erred in calculating the IRBs payable, but by awarding too little rather than too much. The Respondent’s February 25, 2015 submissions, delivered six months after the Arbitrator’s decision and a little more than two weeks before oral appeal submissions, raised for the first time his argument that the correct IRB payable was $2,992.90, not $2,528.22.

The Respondent argues that even if the Arbitrator erred in awarding IRBs prior to September 3, 2010, the correct amount owing is $1,998.49, not $1,533.81 as argued by the Appellant.

However, the Respondent’s written submissions failed to state what specific error in law the Arbitrator made in determining the IRBs owed. Rather, the Respondent simply referenced three lines of his counsel’s closing submissions in the arbitration transcript.

In oral appeal submissions, the Respondent argued that the Arbitrator erred in applying a 70%, not an 80% multiplier against his post-accident income, contrary to subsection 6(2) of the Schedule that provides:

The insurer may deduct from the amount of the income replacement benefit payable to an insured person 80 per cent of the net income received by the insured person in respect of any employment subsequent to the accident.

[Emphasis added]

The Respondent’s submission is that the Arbitrator erred in applying the 70% factor under paragraph 7(3)(a) of the subsequent Schedule, effective September 1, 2010:

(3) The insurer may deduct from the amount of an income replacement benefit payable to an insured person,

(a) 70 per cent of any gross employment income received by the insured person as a result of being employed after the accident and during the period in which he or she is eligible to receive an income replacement benefit …

[Emphasis added]

The 80% versus 70% multiplier, however, would simply serve to increase the post-accident income deduction and decrease the IRB payable. The Respondent submits that the Arbitrator further erred in law in deducting his gross, not net, post-accident income.

The Respondent relies on a chart he had prepared for arbitration that sets out the IRBs he argued were payable. The Respondent submits that the chart was entered as an exhibit at arbitration. However, the chart is not listed in the Index of Exhibits at page 1-3 of the first arbitration transcript or in Volume 2 of the transcript. Nor was it to be found in the arbitration file.

On March 5, 2015, prior to the arbitration hearing, I sent both counsel an e-mail confirming my understanding of the appeal record, including the arbitration exhibits. I asked the parties to advise me, copied to the other side, if my recitation of the appeal record was in error. My letter did not include any notation of the Respondent’s chart. I received no response to my letter.

Submissions are not evidence. However, there is an even more fundamental concern.

Rule 55.1 of the Code, entitled “Appeal by Respondent (“Cross-Appeal), provides that “[i]f the respondent intends to appeal the arbitration order, a separate Notice of Appeal must be completed and the time periods for appeal, as set out above, apply” [emphasis added].

The Respondent has not completed a cross-appeal. The Respondent does not seek leave to bring a cross-appeal. However, the Respondent does seek to vary the Arbitrator’s order under the subsection 283(5) appeal provision of the Insurance Act.

The Respondent submits that Rule 55.1 of the Code does not apply because he is not initiating an appeal of the IRB order. Rather, he is simply leap-frogging on the Appellant’s appeal of the Arbitrator’s IRB order, albeit for a different result.

Accordingly, the implication is that he was not required to provide a Notice of Cross-Appeal to which the Appellant could provide a Response to Appeal, including raising any deficiencies on which the cross-appeal could be rejected under Rule 51.2. Nor was he required to pay the $250 filing fee, notwithstanding Rule 51.2(e) states that an appeal may be rejected if the required filing fee is not paid. Nor was he required under Rule 54.1 to provide written submissions within thirty days of the due date of the Response to Cross-Appeal. Nor would the other party be entitled under Rule 54.3 an opportunity to respond by written submissions to his cross-appeal.

I find that the Respondent has failed to comply with Rule 55.1 of the Code. The Respondent sees no unfairness to the Appellant, even when he first set out the basis of his IRB argument two and a half hours into oral submissions, seven months after the Arbitrator’s decision. The Respondent does not ask for any relief from Rule 55.1. I would decline to provide any.²

Returning to the Appellant’s appeal, the December 29, 2011 pre-hearing letter sets out the period of disputed IRBs as being from September 3, 2010. At the start of the hearing, at page 1-7 of the transcript, the Arbitrator confirmed the IRB entitlement issue was from September 3, 2010. The parties agree that at no time during the hearing was the disputed period of IRB entitlement amended.

At pages 1-51 and 1-52 of the transcript, the Respondent, in examination-in-chief, testified that the Appellant stopped paying IRBs about nine or ten months after the January 2, 2010 accident.

I take note that that would be September or October 2010. At page 1-51, the Respondent also states that he received “around $1,700” a month from the Appellant in IRBs. In oral appeal submissions the Respondent conceded that at no time in his evidence did he dispute receiving $1,700 a month in IRBs until September 2010. At page 1-78, in cross-examination, the Respondent confirmed he was only claiming IRBs after September 3, 2010.

The Arbitrator, at page two of his decision, sets out the IRB entitlement issue as being from September 3, 2010. At page three he states that the Respondent is entitled to weekly IRBs from September 3, 2010 to January 1, 2012. On page seven, he states that the Appellant “paid benefits to the Applicant after the accident but those benefits were terminated on September 1, 2011.” Later on that same page, the Arbitrator held that the matter for consideration is whether the Respondent is entitled to IRBs from September 3, 2010.

However, the Arbitrator’s Schedule “A” includes $331.47 a week as deficiencies for the weeks of August 16, 23 and 30, 2010. $331.47 is 100% of the Respondent’s weekly base IRB. The Respondent submits that when he testified he received $1,700 a week until September 2010, he qualified that with the adjective “around.” The implied submission is that “around” $1,700 IRBs a month encompasses receiving zero IRBs for the weeks of August 16, 23 and 30, 2010.

However, the Respondent’s own chart does not claim the week of August 16, 2010. Rather, it shows only two weeks, claimed at $331.47 each, being August 22 and August 30, 2010. The Respondent submits that his week of August 22, 2010 actually encompasses the two weeks of August 16 and 23, 2010. That does not explain, however, why only the single sum of $331.47 is shown as payable for that period.

The Arbitrator’s two pages of reasons pertaining to IRB quantum devote considerable attention to the Respondent’s failure to meet his burden of proof regarding any deficiency in IRBs after 2010. Regarding the Appellant having started work at the Pickle Barrel Restaurant on August 16, 2010, the Arbitrator appears to have accepted the evidence that nothing was paid in wages up to and including September 2, 2010. However, the Respondent himself conceded receiving around $1,700 a month in IRBs into September 2010. The Arbitrator provided absolutely no evidentiary basis for there being a shortfall in IRBs paid for the three weeks prior to September 3, 2010.

There is a real issue whether the Arbitrator erred in law in granting IRBs for a period in which neither entitlement nor quantum was in dispute. In any event, in Liberty Mutual Insurance Company and Young, (FSCO P03-00043, June 20, 2005), application for judicial review dismissed, 2006 CanLII 7286 (ON SCDC), Delegate Evans cited Delegate McMahon in Lombardi and State Farm Mutual Automobile Insurance Company, (FSCO P01-00022, February 26, 2003):

… errors of law include findings of fact made in the complete absence of supporting evidence, made on the basis of conjecture, or made on the basis of a misapprehension of the evidence caused by a misdirection on a legal principle. The vital distinction is between a conclusion that there was “no evidence” to support a finding and a mere “insufficiency of evidence.”

I find that the Arbitrator’s finding of a shortfall in IRBs prior to September 3, 2010 to be based on an absence of evidence, not a mere insufficiency of evidence. Accordingly, I find that the Arbitrator erred in law in awarding the Respondent IRBs of $331.47 a week for the weeks of August 16, 23 and 30, 2010, for a total of $994.41. Accordingly, paragraph 1 of the Arbitrator’s decision is varied to reduce the IRBs owing from $2,528.22 to $1,533.81.

(2) Housekeeping and Home Maintenance Benefits

At the start of the arbitration hearing, at page 1-7 of the transcript, the Arbitrator confirmed the housekeeping and home maintenance benefits dispute as being from August 20, 2010. The parties agree that at no time during the arbitration hearing was the entitlement period in dispute regarding this benefit amended.

At page 2-76 of the transcript, the Respondent completed his closing submissions stating he was entitled to housekeeping and home maintenance benefits from the date they were cut off, being August 20, 2010. However, at page three of his decision, the Arbitrator sets out the housekeeping and home maintenance benefits entitlement issue as ongoing from January 2, 2010 and awards the Respondent such benefits from January 2 to August 1, 2010.

The Respondent now submits there is no record of the Appellant paying any housekeeping and home maintenance benefits for the period January 2, to August 1, 2010. However, a May 14, 2010 OCF-9 (Explanation of Benefits) at page 36 of Tab 26 of the Joint Arbitration Brief notes an attached draft of $1,960 covering January 3 to May 19, 2010 for such benefits. The OCF-9 also states that these benefits would be paid on a bi-weekly basis as long as the Respondent qualified. The Respondent, however, argues there is no record of any payments being made and, hence, the Arbitrator did not err in finding housekeeping benefits being owed up to August 1st.

In the alternative, the Respondent submits that if the Arbitrator erred, it was a mistake of fact, not of law, and that this aspect of the appeal should be rejected under Rule 51.2(b) of the Code that limits appeals from the decision of an arbitrator to errors of law. In the further alternative, he argues that, at the very least, $1,054.29 is owed for the period May 20 to August 1, 2010.

Under Rule 33 of the Code, one of the purposes of the pre-hearing discussion is to identify and obtain agreement as to the issues for arbitration. The pre-hearing arbitrator’s December 29, 2011 pre-hearing letter specifically states that the “issues in dispute were identified and agreed to as follows,” and then sets out as the fourth issue entitlement to housekeeping and home maintenance benefits “from August 20, 2010.”

The Respondent submits that the August 20, 2010 start date set out in the pre-hearing letter was an oversight or error by all. Regarding whether it was unfair for the Arbitrator to have made an order for a period of time the Appellant did not know was in dispute, the Respondent argues that what matters is that housekeeping and home maintenance benefits were in issue, not the specific period.

I am persuaded that the Arbitrator erred in law in deciding entitlement for a period of housekeeping and home maintenance benefits that was not before him, that the Appellant did not know was being disputed at the arbitration hearing and to which it did not have an informed opportunity to respond with oral and/or written evidence and submissions.

Accordingly, paragraph 2 of the Arbitrator’s August 14, 2014 Order granting housekeeping and home maintenance benefits of $100 per week from January 2 to August 1, 2010 is rescinded.

(3) Arbitration Legal Expenses

The Appellant submits that the Arbitrator erred in awarding the Respondent his arbitration legal expenses. It argues that the Respondent was not entirely successful in his claims. Rather, his claim for a special award was struck and his request that additional medical benefit issues be added was denied. The Appellant also notes the Arbitrator’s statement at page four of his decision that the Respondent’s testimony lacked credibility, followed by two pages of examples.

In addition, the Respondent submits that the Arbitrator’s expense award was premised on incorrect orders respecting the benefits payable.

The Respondent argues he is entitled to his arbitration legal expenses in that looking at the arbitration proceeding as a whole, even with minor inconsistencies in his evidence, he was successful.

As noted, the Arbitrator’s Order states “[t]here is no order on the issue of expenses. I remain seized should the parties be unable to resolve this issue on their own.” This is consistent with page 14 of the decision that states “[i]f the parties are unable to reach an agreement on expenses, they may request an appointment before me in accordance with Rule 79 of the Dispute Resolution Practice Code.” This is also consistent with the parties’ agreement that no submissions were provided regarding arbitration legal expenses.

However, notwithstanding the Arbitrator’s actual formal order at the end of his decision and notwithstanding he gives no reasons for any award of legal expenses anywhere in his decision, at page three in the body of his decision the Arbitrator states, under the heading “Result,” “State Farm is liable to pay Mr. Balasunderam’s expenses in respect of the arbitration.” On the next page, the Arbitrator states “Mr. Balasunderam is not liable to pay State Farm’s expenses in respect of the arbitration.”

Delegate McMahon, in Allstate Insurance Company et al. and Saliba, (FSCO P01-00031, July 24, 2001) stated:

The right of appeal is founded in the Insurance Act, R.S.O. 1990 ch. I.8, as amended, which provides in section 283(1) that “A party to an arbitration under section 282 may appeal the order of the arbitrator to the Director on a question of law”[emphasis added]. Beyond the statutory linkage of the right of appeal to the “order,” there is a long standing principle that an appeal is taken from the order of the adjudicator, not from her reasons. In that regard, I quote with approval the following passage from Sopinka and Gelowitz, The Conduct of an Appeal, 2nd ed. (Toronto: Butterworths), at p.6.

It is a fundamental premise in the law of appellate review that an appeal is taken against the formal judgement or order, as issued and entered in the court appealed from, and not against the reasons expressed by the court for granting the judgement or order. Although the appellate court will frequently discover in the reasons for judgement errors of law that ultimately ground the reversal of the judgment or order, it is the correctness of the judgment or order that is in issue in the appeal, and not the correctness of the reasons.

The Appellant concedes the Arbitrator’s decision is contradictory. I find that the Arbitrator’s formal expense order itself, from which an appeal is taken, however, is clear. There is not yet any order regarding legal expenses. This is consistent with an absence of reasons regarding any award of legal expenses. This is consistent with submissions on legal expenses not yet being received. I see no error of law in the Arbitrator’s actual formal expense order.

However, in the alternative, if the Arbitrator did make formal orders awarding legal expenses of the arbitration proceeding to the Respondent and denying the Appellant its legal expenses of same, I would rescind those orders on the basis that the Arbitrator provided no explanation for such a result, especially when such a result is contradicted elsewhere in the same decision. In this regard, I rely on Murphy v. Murphy, 2013 ONSC 7015 that stated in part:

It is an error in law for a judge or tribunal member to fail to provide an explanation of his or her decision that is sufficiently intelligible to permit appellate review: R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, [2002] S.C.J. No. 30; Law Society of Upper Canada v. Neinstein (2010), 99 O.R. (3d) 1, [2010] O.J. No. 1046, 2010 ONCA 193, at para. 61.

The Appellant submits that if the Arbitrator left open the question of entitlement to and the quantum of legal expenses, then Rule 79 of the Code applies. Rule 79 allows thirty days from the date the decision for a party to request an appointment before an adjudicator to determine legal expenses. The Appellant submits that as it is now some seven months after the Arbitrator’s decision, both parties are out of time to request an arbitration expense hearing.

However, the Appellant’s August 25, 2014 Notice of Appeal, dated eleven days after the Arbitrator’s decision, sought a stay of the Arbitration Order. The Respondent’s September 25, 2014 letter stated he did not object to that request. My October 9, 2014 letter, following a telephone preliminary conference earlier that day under Rule 57 of the Code, exercised my discretion under subsection 283(6) of the Insurance Act to stay the Arbitrator’s August 14, 2014 Order pending the resolution of this appeal proceeding.

Rule 81 of the Code provides, in part, that an adjudicator may, on such terms as he or she considers just, set aside any time limit set out in the Code for doing any act, serving any notice, filing any document or holding any hearing. I am not persuaded to make any ruling restricting the entitlement of either party to request before the Arbitrator a determination of the questions of entitlement to and/or the quantum of arbitration legal expenses.

Having resolved this appeal, other than the question of appeal legal expenses, as set out below, I lift my October 9, 2014 stay of the Arbitrator’s August 14, 2014 Order.

III. APPEAL LEGAL EXPENSES

If the parties cannot agree on the legal expenses of this appeal, amending Rule 79.1 of the Code, as permitted under Rule 81.1(a), the time for either party to request an appeal expense hearing is extended to forty-five days from 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.

March 20, 2015

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.
The Arbitrator’s 30% deduction in his Schedule “A” is actually explained at page 12 of his decision. He notes subsection 6(1) of the Schedule being applicable as the accident happened before September 1, 2010. That provision states that the base IRB is 80% of one’s net weekly income from employment. The Arbitrator further notes that the Appellant did not dispute the Respondent’s submission that his gross income be reduced by 30% to arrive at a net income figure. What the Arbitrator may have done in Schedule “A” is to reduce the Respondent’s post-accident gross income by the agreed 30% to arrive at a net amount, but failed to deduct only 80% of that net amount as required by subsection 6(2). Rule 65.5 of the Code allows an adjudicator at any time to correct “a typographical error, error of calculation, technical error or similar error made in his or her decision or order” [emphasis added].