Neutral Citation: 2016 ONFSCDRS 112 FSCO A14-004984

BETWEEN:

THUY TRAN Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY Insurer

REASONS FOR DECISION

Before: Alan Mervin Heard: December 2, 2015, in London, Ontario. Written submissions were received on: January 8, 2016.

Appearances: No one appearing for Ms. Tran Joseph Dillon for Dominion of Canada General Insurance Company

Background:

The Applicant, Thuy Tran, alleged that she was involved in a motor vehicle accident on January 27, 2005, and she made a claim to Dominion of Canada General Insurance Company (“Dominion”) for statutory accident benefits, payable under the under the Schedule.¹

Disputes arose concerning the Applicant’s entitlement to certain accident benefits. The parties were unable to resolve their disputes through mediation, and Ms. Tran applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Dominion raised a preliminary issue as to whether or not Ms. Tran had actually been involved in a motor vehicle accident on January 27, 2005. Dominion was seeking repayment of all accident benefits paid by Dominion as a result of her alleged misrepresentations regarding her involvement in the accident.

The issues in this hearing are:

Preliminary Issue

Was Mrs. Tran involved in an accident on January 27, 2005?

For Ms. Tran

Is Ms. Tran entitled to receive a weekly income replacement benefit of $247.43 from February 2, 2005 to December 18, 2011?
Is Dominion liable to pay a special award because it unreasonably withheld or delayed payments to Ms. Tran?
Is Ms. Tran entitled to interest for the overdue payment of benefits?

For Dominion

Is Ms. Tran liable to repay Dominion accident benefits that were paid to her or paid to third parties as a result of her claims?
Is Ms. Tran liable to pay Dominion interest on accident benefits that she is ordered to repay?

For Both Parties

Is Dominion liable to pay Ms. Tran’s expenses in respect of the arbitration?
Is Ms. Tran liable to pay Dominion’s expenses in respect of the arbitration?

Result:

Ms. Tran was not involved in an accident on January 27, 2005.
Ms. Tran’s claims are dismissed in their entirety.
Ms. Tran shall repay to Dominion $93,858.04, plus interest owing thereon at the bank rate in effect on August 14, 2014, in accordance with section 52 of the 2010 Schedule.
Mrs. Tran shall also pay to Dominion $9,570.50 for its arbitration expenses.

EVIDENCE AND ANALYSIS

Abandonment of the Claim by Ms. Tran

According to the record, the initial pre-hearing conference in this proceeding was held by telephone conference call on August 5, 2015. Ms. Tran was self-represented and participated at the initial pre-hearing. The issues in dispute were discussed and agreed upon in her presence. One of the issues discussed and agreed upon at that time was whether Ms. Tran was required to repay the accident benefits she had already received, as the Insurer alleged that she was not involved in an accident.

At the pre-hearing conference, the hearing of all issues (including the preliminary issue of whether the Applicant was involved in an accident) was set to commence on December 2, 2015, in London, Ontario.

Apparently, at the pre-hearing, there was some discussion as to whether Ms. Tran was going to actually proceed to arbitration, so a date was set (September 15, 2015) for a resumption of the pre-hearing discussion. On September 15, 2015 Ms. Tran did not participate. The pre-hearing Arbitrator, in her letter of September 15, 2015 sent both to the Applicant and Insurer, indicated Ms. Tran did not appear to be available when she was contacted by telephone.

The resumption was then adjourned to October 9, 2015, to be resumed by teleconference call at 10:00 a.m. The pre-hearing letter reconfirmed the issues in dispute, and advised that the Applicant should be prepared on the resumption date to advise whether she will proceed to arbitration or withdraw her claims. A copy of that letter was sent to her last known address.

Following this, a Notice of Resumption of Pre-hearing to be held on October 9, 2015, was sent to the Applicant.

On October 9, 2015, the Applicant was unable to be reached by telephone, at 10:00 a.m., despite three attempts by the pre-hearing Arbitrator to do so. After waiting for an additional half hour, the Applicant was still unavailable, and the pre-hearing proceeded without her. The hearing date of December 2, 2015 at 10:00 a.m. in London was reconfirmed, the issues were restated and the Arbitrator sent to Ms. Tran a letter (dated October 16, 2015) containing the following notice:

Where notice of hearing has been sent to a party and a party does not attend, the arbitrator may proceed with the hearing in the party’s absence or without the party’s participation, as the case may be, and the party is not entitled to any further notice in the proceeding.

On December 2, 2015, I attended the hearing at the City Hall in London. Mr. Dillon, legal counsel, appeared on behalf of the Insurer. The Applicant did not attend. No one appeared on behalf of Ms. Tran.

Mr. Dillon advised that he was ready to proceed, and that he had not heard from the Applicant since the initial pre-hearing, did not expect her to appear, and was seeking a dismissal of the Applicant’s claims on the basis that she was not involved in an accident, and therefore not entitled to receive any accident benefits. He also requested an order for repayment of all benefits paid out to her or on her behalf as a result of an alleged material misrepresentation by Ms. Tran.

In an abundance of caution, I waited until approximately 10:45 a.m. in case Ms. Tran’s arrival was delayed before commencing the hearing.

At 10:45 a.m., the hearing commenced. Mr. Dillon then moved for dismissal of the Applicant’s case, as the Applicant did not attend and no evidence was therefore presented on her behalf to establish her claim. He advised that, should I entertain his motion and dismiss the Applicant’s claims, that Dominion would be seeking an order for repayment of all benefits paid because of the Applicant’s alleged misrepresentation.

Having determined that she was properly served with Notice of Hearing, in her absence and the absence of any evidence to support her claims, her arbitration claims were then dismissed.

Dominion’s Claim for Repayment

The hearing then proceeded to consider the claims of the Insurer for repayment of benefits due to fraud or misrepresentation. Pursuant to section 52(1) of the Schedule, an insurer is entitled to repayment if a benefit that has been paid to the person, was obtained as a result of fraud or wilful misrepresentation.

Due to Ms. Tran’s failure to participate in the hearing, she failed to prove that she was involved in an accident. That is not sufficient, however, to prove on a balance of probabilities that she deliberately attempted to mislead the Insurer. Wilful misrepresentation requires evidence that Ms. Tran’s conduct was intentional and morally blameworthy. To establish that fact, the Insurer is relying upon a finding in a related civil proceeding.²

The Insurer produced as evidence several documents related to that tort action, including: a certified transcript of the Judge’s charge to the Jury, a certified copy of the judgment and a copy of the jury’s findings. I accept that this establishes, on a balance of probabilities, that the Applicant was not in the vehicle at the time of the accident on January 27, 2005.³

Dominion alleges that the payments it made upon receiving claims from or on behalf of Ms. Tran were the result of wilful misrepresentation, specifically that the Applicant alleged that she was in the vehicle at the time of the subject accident, when she was found by a Jury not to have been in the vehicle at the time of the collision.

Dominion submits that all the monies paid out pursuant to the Applicant’s claim are eligible for repayment to Dominion, whether they were paid directly to the Applicant or not.

With regard to liability for repayment, at the hearing, I advised the Insurer that several cases have decided that only monies paid directly to the Applicant, as s. 52 states, can be ordered to be repaid (not monies paid to third parties such as assessors or treatment providers)⁴, and invited the Insurer to research this area, and, if still requesting that I order repayment of monies paid to third parties (on behalf of the Insured), provide written submissions with authority. Nothing in the written submissions received from the Insurer addresses this issue.

I find that the opinions expressed by Arbitrators Allen, Feldman and Bujold in Yusuf, Addae, and Abdulkadir, respectively, though not binding on me, are persuasive authority that section 47 of the 1996 Schedule (and section 52 of the 2010 Schedule) refer specifically to benefits that are “paid to the person”, and that the section should be given a restrictive interpretation.

At the hearing, Ms. Erin Holman, the adjuster for Dominion in this matter, gave evidence as to payments made to the Insured. Further, a letter for repayment, dated July 30, 2014,⁵ setting out the amounts for which the Insurer was demanding repayment, was sent to the Applicant by the Insurer. This letter constitutes notice that the Insurer was seeking repayment, as required by subsection 52(2), and allows the Insurer to claim interest from 15 days after the notice was given, 2014, on the amount owing in accordance with sections 52(5) and (6) of the 2010 Schedule.

A copy of this letter which set out the exact amounts claimed for repayment was included as Schedule D-2 in the Insurer’s Amended Response. A printout of payments made by the Insurer was also filed at the hearing.⁶

Ms. Holman testified that the Applicant was paid income replacement benefits in the amount of $237.43 per week. Those payments were paid to the applicant from February 2, 2005, until December 18, 2012, when the payments were suspended. Those payments total $93,858.00.

I find that the Insurer has paid this amount directly to the Applicant, and further find that this is the amount that the Applicant must repay to the Insurer, together with interest at bank rates from the date of this order.

I further find that $23,732.00 the Insurer has paid in examination costs, and $6,865.00 for medical and rehabilitation costs, are not subject to repayment. I find that these amounts were paid directly to third party service providers. Only benefits paid directly to Mrs. Tran are repayable.

EXPENSES:

After the hearing completed, I wrote to both parties requesting written submissions with respect to expenses. As this was a departure from FSCO’s usual practice of either hearing submissions at the hearing, or inviting the parties to request an expense hearing, in an abundance of caution, I allowed the Applicant an opportunity to make submissions even though she did not attend.

Dominion forwarded its written submissions claiming its expenses in this hearing. I have not received any submissions from the Applicant.

The Expense Regulation⁷ found in Section F of the Dispute Resolution Practice Code sets out the criteria that an arbitrator can consider when assessing expenses.

In this case, of the seven criteria set out in the regulation, I have considered the following criteria as applicable in this case:

Each party’s degree of success in the outcome of the proceedings;
The conduct of a party that tended to prolong, obstruct or hinder the proceeding; and
Whether any aspect of the proceeding was improper, vexations our unnecessary.

The Insurer’s submissions do not contain a formal bill of costs, but only outline the amount of docketed hours spent by Senior Counsel (48.3) and Junior counsel, (14.2) and law clerk (13.1). The submissions do not indicate the hourly rate requested for each, but I presume that the rates to be applied are those set out in the Expense Regulation in accordance with the legal aid tariff (civil) for Ontario.

The Insurer has submitted that as the Insured did not disclose the fact the tort action had been dismissed on the grounds that the insured was not in the vehicle at the time of the subject collision. Therefore, in addition to the normal preparation required for a hearing of this type, as the Insured did not withdraw her application for arbitration and took the position that the jury verdict was incorrect, counsel was required to review the liability issues including reviewing the transcript of portions of the trial and witness statements in order to properly assess the validity of the jury verdict.

In addition, as the Insured had made an assignment in bankruptcy, which required additional research with respect to enforcement of any judgement obtained against her, and whether benefits wrongly paid due to fraud were recoverable.

Further, research was required to determine the insured’s status when the Insurer found out about the dismissal of the tort action and the jury finding. This required further preparation and inquiries were made by counsel for the Insurer involving consultations with counsel for State Farm and obtaining a transcript of portions of the trial and the judge’s charge to the jury, which were required to assess whether the doctrines of res judicata, estoppel and/or abuse of process applied.

These extra steps were beyond the ordinary amount of preparation required for a hearing of this type.

Although the actual hearing lasted only an hour, as the Applicant did not attend, the Insurer had to prepare for what potentially was to be a multi-day hearing, should the Applicant attend.

Under the circumstances of this case, I find that the Insurer is entitled to its reasonable expenses of this proceeding. The Insurer was entirely successful in the result (except of course, for its claim for repayment of amounts paid directly to service providers). The actions of Ms. Tran, including her non-attendance at pre-hearings, her non-disclosure of the tort dismissal and grounds for same, and her abandoning her own arbitration by failing to attend the hearing rather than seeking to withdraw her claims at an earlier stage of the proceeding, all acted to increase the preparation, and ultimately, the costs incurred to properly defend this application.

Under these circumstances, I have decided to fix the expenses payable to the Insurer at $7,000.00 inclusive of HST.

In addition the Insurer requests an order for disbursements paid to copy the portions of the tort trial transcript, judge’s charge to the jury, and a certified copy of the judgement, all required for the hearing and entered into evidence. The total sought for these disbursements is $2,570.50. I find these disbursements to be reasonable and necessary, and order that these disbursements be paid in full.

I shall therefore order Ms. Tran to pay Dominion’s expenses, fixed in the total amount of $9,570.50, inclusive of fees, disbursements and all applicable taxes.

April 11, 2016

Alan Mervin Arbitrator

Financial Services Commission of Ontario