Neutral Citation: 2016 ONFSCDRS 115 FSCO A14-005852

BETWEEN:

ELENA ANNIBALE Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON A MOTION

Before: Arbitrator Paulina Gueller Heard: By written submissions completed January 22, 2016

Appearances: Mrs. Elena Annibale did not participate Ms. Lina Grasso participated for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Mrs. Elena Annibale, was injured in a motor vehicle accident on September 14, 2011. She applied for and received statutory accident benefits from State Farm Mutual Automobile Mutual Insurance Company ("State Farm"), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mrs. Annibale applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The issues in this Motion are:

Should Mrs. Annibale's Application for Arbitration be deemed withdrawn pursuant to Rule 70 of the Dispute Resolution Practice Code ("the DRPC")?
Is Mrs. Annibale precluded from filing an Application for Arbitration or otherwise from disputing the same issues at a later date without prejudice to the Insurer's right to plead a limitation period defense?
Is Mrs. Annibale liable to pay the Insurer's expenses in respect of the Arbitration under section 282(11) of the Insurance Act?

Result:

Mrs. Annibale's Application for Arbitration is deemed to be withdrawn pursuant to Rule 70 of the DRPC.
At this time, I have no authority to resolve any future actions involving the same Applicant and the same Insurer. Therefore, I find that these issues are not before me.
No expenses are payable to State Farm; each party shall bear its own expenses of this process.

EVIDENCE AND ANALYSIS:

A first Pre-Hearing was held by Arbitrator Gibson on June 9, 2015. Mrs. Annibale did not attend and her counsel brought an oral Motion to be removed from the record as the Applicant's counsel.

By letter, dated July 14, 2015, Pace Law Firm provided an original duly executed authorization of the Applicant, consenting to remove Pace Law Firm from the record as her representative. As a consequence, ADR removed Pace Law Firm as the Applicant's counsel of record and the Applicant became self-represented. Also, Pace Law Firm provided a sworn Affidavit of Stephanie Squires, a law clerk with Pace Law Firm, dated July 9, 2015, where at paragraph 10 she stated "Ms. Annibale went on to advise that she does not want to proceed with her AB claim as her son is dying and all of her attention and focus is on him right now."

By letter, dated July 21, 2015, ADR Chambers notified Mrs. Annibale that Pace Law Firm was no longer representing her.

By letter, dated August 19, 2015, the Insurer brought a Motion to dismiss the claim, or in the alternative to obtain: a) an order against the Applicant to provide a complete breakdown of her claim, particulars and supporting documents; b) an order that the Applicant attend an Examination Under Oath; c) an order that any applicable interest be suspended; d) an order for costs against the Applicant; and e) an order for such further and other relief as FSCO may deem just and appropriate.

By letter, dated November 24, 2015, I advised the parties that prior to the Insurer's request to dismiss this Application for Arbitration, Mrs. Annibale had expressed in the Affidavit noted above that she did not want to continue with the Arbitration process. Hence, according to the chronology of events, I directed the Insurer to provide me with submissions in writing, concerning Rule 70 of the DRPC, so that I could make a decision on whether this Application for Arbitration is deemed to be withdrawn before I hear the Insurer's Motion to dismiss the claim.

By letter, dated December 4, 2015, Ms. Grasso provided me with State Farm's submissions, but, there was no statement of service showing that the Insurer served the Applicant. By letter, dated December 8, 2015, I mailed Mrs. Annibale a copy of State Farm's submissions, and I advised Mrs. Annibale that if she did not respond by January 7, 2016, I could proceed to determine whether her Application for Arbitration would be deemed to be withdrawn.

State Farm submitted that the Insurer would like to proceed with the Motion to dismiss the Application for Arbitration and in the alternative, State Farm does not take any position with respect to the withdrawal of the Application for Arbitration. State Farm further requested that if I find that the Application for Arbitration has been withdrawn or "constructively withdrawn," my order include the following statements: a) "Should Mrs. Annibale file an Application for Arbitration or otherwise dispute the same issues in dispute at a later date, she is first required to pay the Insurer's expenses of $400.00 as expenses thrown away for the current arbitration"; b) "Should Mrs. Annibale file for Arbitration or otherwise dispute the same issues in dispute at a later date, that this is without prejudice to the Insurer's right to plead a limitation period defense."

The Insurer also stated that Mrs. Annibale contacted Ms. Grasso's office on October 20, 2015 at which time the Applicant spoke with Ms. Grasso's assistant. The Insurer submitted that Mrs. Annibale confirmed that she had received the Insurer's letters and settlement documentation, but her son had been at Sunnybrook Hospital for the last two months, and the Arbitration process was not her priority. It was further submitted that Mrs. Annibale did not express an interest in pursuing her claim, except if costs were being sought against her.

Further, State Farm stated that in the four years since the Applicant signed her OCF-1, which was on October 4, 2011, the Applicant failed to provide any information. The Affidavit of Karen K. Chee, lawyer with Withrow & Associates, State Farm's counsel, detailed the different times during different steps of the Applicant's claim and proceedings, where Mrs. Annibale failed to attend Pre-Hearings and the Examination Under Oath, as well as failing to provide the information requested by the Insurer.

Should Mrs. Annibale's Application for Arbitration be deemed withdrawn pursuant Rule 70 of the DRPC?

The Insurance Act, the Schedule, and the DRPC do not contain specific rules or guidance regarding the abandonment of claims. Rule 70 of the DRPC assumes the party's request to withdraw and Rule 70.3(a) of the DRPC sets out that an Arbitrator may permit a withdrawal on such terms or conditions as the adjudicator considers just.

Mrs. Annibale's motor vehicle accident occurred on September 14, 2011, she filed for Arbitration on July 16, 2014 and she did not attend any of the Pre-hearings scheduled, nor did she respond to any of Arbitrator Gibson's or my letters. In the absence of any evidence to the contrary, I find that Mrs. Annibale received all the correspondence from State Farm, FSCO and ADR Chambers. Thereby, I conclude that she does not have any interest in proceeding with her Application for Arbitration.

Ms. Grasso, counsel for State Farm, provided me with Arbitrator Osunde's decision, where the Arbitrator found that even where an Applicant has not made a specific declaration that they wish to withdraw the Application for Arbitration, in certain circumstances, an Arbitrator may find that the Applicant has "constructively withdrawn" their claim. In the same decision, Arbitrator Osunde states that "Arbitral jurisprudence here at FSCO has established that conduct of this nature on the part of an applicant can be inferred as a constructive withdrawal of a dispute, which is consistent with a broad interpretation of Rule 1.1 of the Code."²

I agree with this line of reasoning and find that Mrs. Annibale did not take any action and that she abandoned her claim. This is supported by the fact that she has expressed a few times that she did not want to pursue her Application for Arbitration. Therefore, Mrs. Annibale's Application for Arbitration is deemed to be withdrawn. Consequently, the Motion brought by the Insurer to dismiss the claim will not proceed.

Is Mrs. Annibale precluded from filing an Application for Arbitration or otherwise from disputing the same issues at a later date without prejudice to the Insurer's right to plead a limitation period defense?

The Insurer is asking me to make a decision on an uncertain and unconfirmed future possibility, where the Applicant might dispute the same issues.

I find that at this time, I have no authority to resolve any future actions involving the same Applicant and the same Insurer. Therefore, I find that these issues are not before me.

EXPENSES:

Ms. Grasso requested State Farm's expenses in the amount of $400.00, but did not provide a Bill of Cost or details of State Farm's disbursements. She stated that the amount claimed equates to approximately four hours of time (Motion preparation and attendance for two in person Pre-Hearings and one teleconference). By letter, dated December 8, 2015, I advised Mrs. Annibale that pursuant to Rules 75 through 78 of the DRPC, State Farm's expenses could be awarded against her.

The relevant criteria for an Arbitrator when awarding expenses to a party, if the Adjudicator is satisfied that the award of expenses is justified, are prescribed by subsection 12(2) of O. Reg. 664 (the Expense Regulation)³ which provides as follows:

The Adjudicator shall, under subsection 282(11) of the Insurance Act, consider only the following criteria:

Each party's degree of success in the outcome of the proceeding;
Any written offers to settle made in accordance with subsection (3);
Whether novel issues are raised in the proceeding;
The conduct of a party or a party's representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders;
Whether any aspect of the proceeding was improper, vexatious or unnecessary.

In awarding expenses, I am taking into consideration the relevant criteria, which includes the party's success in the proceedings and the conduct of the party that prolonged the proceeding unnecessarily. Mrs. Annibale filed an Application for Arbitration on July 16, 2014 and she has not provided any reasonable explanation why she did not provide documents in a timely manner. She failed to pursue her claim, instruct her counsel, respond to my letters and she failed to attend all the Pre-Hearings. Also, I take into consideration her repeated concern about her son being in the hospital, at least for two months prior to October 2015, or that he was dying.

The evidence before me does not demonstrate that Mrs. Annibale's Application for Arbitration is frivolous or vexatious, or that she willfully brought an unmeritorious claim, or that her conduct was deceptive or malicious. On the contrary, after she became self-represented, she contacted the Insurer by telephone to withdraw her claim.

In Reid and ING Insurance Company of Canada,⁴ Arbitrator Killoran held that:

The relationship between insurer and insured is a contractual one. The insured is entitled to access the dispute resolution at FSCO as a result of that contract. The Insurance Act and its regulations must be interpreted in such a way as to uphold the protective and remedial nature of the legislation which it follows.

While the Applicant did not make submissions, she had expressed a few times that she wanted to withdraw her claim, through Ms. Squires' Affidavit and Ms. Grasso's submissions. Thereby, I conclude that she did not want to prolong the Arbitration process unnecessarily. State Farm had direct confirmation from Mrs. Annibale on October 20, 2015 that Mrs. Annibale wanted to withdraw her claim. State Farm also knew that the Insurer was dealing with an unrepresented Applicant.

I cannot find State Farm's actions to be within the intention of the legislation. Rather State Farm's actions were exactly the opposite. State Farm brought the Motion to dismiss or seeking orders against the Applicant. Even after the Applicant confirmed on October 20, 2015 directly to Ms. Grasso's assistant that the Applicant's intention was to withdraw, the Insurer kept stating that the Insurer would like the Motion to dismiss to be heard.

In my view, State Farm had other options, for example, State Farm could have dropped the Motion to dismiss, consented to the withdrawal and disputed costs.

The Insurer stated that State Farm sent the settlement documents to the Applicant, but Mrs. Annibale told Ms. Grasso's assistant that she needed someone to explain them to her.

I find that State Farm has contributed to prolonging and obstructing the process by maintaining the request for an unnecessary Motion to dismiss the claim, aggravated by the fact that the Applicant was unrepresented and she clearly expressed that she needed someone to explain to her the settlement documents at a time when she also stated that her attention was on her son, who had been at the hospital for two months.

The intention of the natural justice principles and the consumer protection legislation is not to force an unrepresented Applicant to sign a document that she does not understand, nor, to obtain an unfair decision for either party. Conversely, the legislation intends to maintain procedural fairness by protecting the rights of individuals and enhancing public confidence in the process.

Rule 1.1 of the DRPC is clear about the Arbitration proceeding, stating that it is to be done in the most just, quick and least expensive means possible. Accordingly, in the circumstances of this case, I am not persuaded that an award of expenses against Mrs. Annibale is appropriate. Therefore, I have decided that each party shall bear the party's own expenses of this process.

I find that no expenses are payable to State Farm.

April 15, 2016

Paulina Gueller Arbitrator

Date

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c. I.8, as amended, it is ordered that:

Mrs. Annibale's Application for Arbitration is deemed to be withdrawn pursuant to Rule 70 of the DRPC.
At this time, I have no authority to resolve any future actions involving the same Applicant and the same Insurer. Therefore, I find that these issues are not before me.
No expenses are payable to State Farm; each party shall bear its own expenses of this process.