Financial Services Commission of Ontario Commission des services financiers de l’Ontario
Neutral Citation: 2015 ONFSCDRS 79
Appeal P13-00033
OFFICE OF THE DIRECTOR OF ARBITRATIONS
NADIA BAUDANZA Appellant
and
CHARTIS INSURANCE COMPANY OF CANADA Respondent
BEFORE: David Evans
REPRESENTATIVES: Aliza Karoly for Ms. Nadia Baudanza Claudia Batista for Chartis Insurance Company of Canada
HEARING DATE: November 17, 2014
APPEAL ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
The Arbitrator’s order of October 3, 2013 is confirmed and this appeal is dismissed.
If the parties are unable to agree on the legal expenses of this appeal, an expense hearing shall be requested pursuant to the Dispute Resolution Practice Code (Fourth Edition, Updated – January 2014), but as set out below and within forty-five days of the date of this decision.
April 20, 2015
David Evans Director’s Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
Ms. Baudanza appeals the decision of Arbitrator Richards of October 3, 2013, to allow Chartis Insurance Company of Canada an additional 20 days to file a Response to Arbitration to Ms. Baudanza’s arbitration application for claims under the SABS–1996.1
II. BACKGROUND
Ms. Baudanza was injured in a motor vehicle accident on March 12, 2010.
The affidavit of Luana Campbell, law clerk at Carranza LLP, indicates that an application for accident benefits was submitted to Chartis Insurance on Ms. Baudanza’s behalf on March 22, 2011. Over the next year, various medical and other documents were sent to the Chartis adjuster, David Gill. Mr. Gill participated in the mediation; a Report of Mediator was issued May 9, 2012. An Examination under Oath was then held in September 2012, and on November 21, 2012, an application for arbitration was submitted to FSCO, and Ms. Marva McLean was appointed as case administrator.
The affidavit goes on to note that Ms. McLean delivered the application for arbitration to Chartis for a response. The accompanying letter stated that insurers filing late responses “may not have standing to participate in the arbitration process…” Pursuant to R. 26.1 of the Dispute Resolution Practice Code, Chartis had 20 days of receipt to file a Response by Insurer.
No response was received within the time period or thereafter for a number of months. Ms. Campbell tried to arrange the pre-hearing with Mr. Gill. Ms. McLean then booked a joint pre-hearing for July 31, 2013.
On July 22, 2013, Ms. Karoly, counsel for Ms. Baudanza, faxed a letter to Ms. McLean stating that she wanted to cancel the pre-hearing and proceed to arbitration on an uncontested basis, relying on R. 27.3 of the Code.
R. 27.2 provides that, if a Response is incomplete, the Response may be held in abeyance for 20 days after notice of the problem is sent to the insurer. R. 27.3 provides that if the deficiencies are not corrected in that period, “an arbitrator may reject the Response and the arbitration will proceed on an uncontested basis.”
The affidavit indicates that the pre-hearing was rescheduled to October 3, 2013, and Arbitrator Richards was appointed to conduct it. He exercised his discretion to allow Chartis an additional 20 days to file a Response. The affidavit notes that Ms. Karoly provided a copy of Lebana and Zurich Insurance Company (Commercial Business), (FSCO A04-001439, May 26, 2005) and “opposed the arbitrator’s decision to give the insurer another chance.”
In his letter of October 7, 2013 to Chartis, Arbitrator Richards noted that no Response had yet been received, and no-one from Chartis appeared at the pre-hearing. He then wrote:
Pursuant to Rules 27.2(b) and 27.3, I will wait for 20 days from the delivery of this notice, which is Monday, October 28, 2013.
If you fail to file the Response by Insurer within the 20 days provided, the arbitration will proceed on an uncontested basis.
Ms. Karoly objected to my granting you 20 days to respond to the arbitration application. However I have exercised my discretion to proceed as stated above.
Shortly after the letter was sent, Chartis filed its Response, and Ms. Baudanza filed this appeal.
III. ANALYSIS
Ms. Baudanza submits that the Arbitrator erred in applying Rules 27.2 and 27.3 and that Chartis has no standing. Chartis submits that it meets the criteria set out in Lebana for allowing an insurer to be part of a proceeding despite a late response. For instance, Chartis discussed how it had a meritorious defence.
The merits of the defence are not relevant to me as an appeals officer, since the appeal is from a decision where Chartis was absent and the arbitrator had no occasion to review the merits of the defence. Chartis is seeking for me to make a decision on the facts in the Arbitrator’s stead, which is not my role.
Rather, the question is the issue of standing and the exercise of the arbitrator’s discretion. The Appellant states the Arbitrator had no power to grant relief under R. 27.3. The Appellant also states that the Arbitrator did not consider R. 81.1, which allows the waiver of time periods, in reaching his decision.
However, R. 27.3 is simply a warning that, where a Response is non-compliant, an arbitrator may exclude the insurer if the deficiency is not fixed. It does not mean an arbitrator cannot apply a similar power in this context. I find there was no error when the Arbitrator drew an analogy to R. 27.3 where a Response had not yet been filed.
Further, this was a pre-hearing, and R. 34.1 specifically gave the Arbitrator the power to “(c) impose a new timetable for compliance” or “(e) make such other order as the arbitrator considers just … [w]here a party fails to comply with a time requirement established by these Rules.” He did not have to consider R. 81.1 in those circumstances.
The Appellant relies on the old case of Ntana and Zurich Insurance Co., (OIC A-003279 and A‑003280, November 15, 1993) for its position that Chartis lacks standing. First, the situation was very different in that case. Zurich had failed to file a response or pay its assessment. The matter proceeded to a hearing with a decision against Zurich, and then Zurich sought to re-open the matter. Not only is the scenario dissimilar from that in this case, where the process was still at the pre-hearing stage, but Chartis had already paid its assessment long before the pre-hearing. I find this a significant difference from the situation in Ntana or that in the courts. Unlike the situation in Ntana, where an insurer had to file its fee along with its response, insurers are now assessed their fees shortly after the application for arbitration is filed. This also weakens the analogy to the many court cases cited by the Appellant. I find that, by default, insurers now have standing once the fee is assessed, as was done in this case. It seems absurd to say that a party that has paid thousands of dollars to be part of the process has no standing if a response is delivered late. I do not find the standard letter to the insurer that was sent in this case is determinative of the issue either.
I agree with the viewpoint Arbitrator Rogers expressed in Moschonissios and Security National Insurance Co./Monnex Insurance Mgmt. Inc., (FSCO A09-000429, March 5, 2010):
I do not view the issue as one of standing, as stated in the letter to the insurer and as found in the decision in Lebana and Zurich Insurance Company. The Rules contain no penalty for late filing of a response. The Rules contain no equivalent to the court process of noting pleadings closed. My view is that the insurer named in an Application for Arbitration has standing to participate in the process, until an Arbitrator orders otherwise. [Footnote omitted.]
Furthermore, while the arbitrator had no evidence one way or the other about the merits of the insurer’s defence, I do not find that necessarily required him to preclude the insurer from participating.
All the arbitrator did was give the insurer one more chance to file its response, which it did well before the 20-day deadline imposed by the Arbitrator expired. R. 34 gave him the discretion to do so, and I see no error in law in his exercise of that discretion. Failure of the insurer to respond at that point would have brought a strong sanction, as it would have been precluded notwithstanding whatever the merits of the defence.
Accordingly, the appeal is dismissed.
IV. EXPENSES
If the parties are unable to agree on the legal expenses of this appeal, applying the procedure set out in R. 79.2 of the Dispute Resolution Practice Code, an expense hearing shall be requested, within forty-five days of the date of this decision. The request shall be accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs, as well as written submissions regarding entitlement to and/or the quantum of legal expenses, as are in dispute.
April 20, 2015
David Evans Director’s Delegate
Date