Neutral Citation: 2016 ONFSCDRS 117 FSCO A14-007298

BETWEEN:

THE ESTATE OF FRANCIS AGIUS Applicant

and

TTC INSURANCE COMPANY LIMITED Insurer

DECISION ON PRELIMINARY ISSUE

Before: Arbitrator Ellen Fry Heard: By written submissions completed on March 11, 2016 Appearances: Mr. Sandev Purewal for the Estate of Mr. Francis Agius Mr. Chad Townsend for TTC Insurance Company Limited

Issues:

The Applicant, the late Francis Agius, was injured in a motor vehicle accident on April 28, 2007 and sought accident benefits from TTC Insurance Company Limited (“TTC”), payable under the Schedule.¹ The parties were unable to resolve their disputes through Mediation, and the Applicant, through his representative, applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The issue in this Preliminary Issue Hearing is:

Did the Application for Mediation fail to meet the requirements for a valid Mediation as required by Section 55 of the Schedule and Sections 280 and 281(2) of the Insurance Act because it was not authorized by the Applicant?

Result:

The Application for Mediation was authorized by the Applicant and therefore did not fail to meet the requirements for a valid Mediation as required by Section 55 of the Schedule and Sections 280 and 281(2) of the Insurance Act.

EVIDENCE AND ANALYSIS:

Relevant Events

The Applicant was injured in a motor vehicle accident on April 28, 2007. The Applicant’s wife (Mrs. Agius), with the assistance of counsel, signed a claim for accident benefits on his behalf in 2007, as well as ongoing expense forms. In signing, she signed under the authority of a Power of Attorney from the Applicant, dated March 29, 1995. The Power of Attorney was filed in evidence and the transcript of the cross-examination of Mrs. Agius indicated that the Power of Attorney remained in effect at all relevant times.

The Insurer paid various benefits to the Applicant. This proceeding concerns the Insurer’s decision to reduce the amount of its payment of attendant care benefits. The Insurer sent a letter, dated February 3, 2012, to the Applicant and his counsel, together with an Explanation of Benefits Payable, to communicate this decision.

The Applicant died on December 25, 2013. Mrs. Agius was named as executrix in the Applicant’s will, which was dated October 23, 1998. The Applicant’s death certificate and will were filed in evidence.

On January 24, 2014, the Applicant’s counsel submitted an Application for Mediation concerning the claim for attendant care benefits. Unlike previous claim documentation, Mrs. Agius did not sign the Application for Mediation on behalf of the Applicant. The Application for Mediation was signed by counsel in the box that says “Representative Signature”. The box that says “Claimant Signature” was blank.

On January 24, 2014, the Applicant’s counsel was not aware that the Applicant had passed away on December 25, 2013. The Applicant’s counsel did not become aware that the Applicant had passed away until February 18, 2014.

On July 14, 2014, Mrs. Agius and counsel attended the Mediation. The Insurer was not informed until that day that the Applicant had passed away. Applicant’s counsel advised the Insurer at that point, Mrs. Agius was the executrix for the Estate.

On August 6, 2014, Mrs. Agius instructed counsel to proceed with Arbitration. On September 4, 2014, the Applicant’s counsel submitted an Application for Arbitration and filed copies of the Applicant’s death certificate and will. On September 14, 2015, Mrs. Agius and counsel attended a Pre-Hearing conference for the Arbitration.

Because the Insurer’s refusal to pay attendant care benefits at the level claimed was made on February 3, 2012, an application to mediate this issue needed to be filed within 2 years of that date in order to be within the limitation period established by Section 56 of the Schedule. If the Applicant’s January 24, 2014 Application for Mediation was valid, the limitation period has been met; if it was invalid, the Applicant’s claim is time-barred.

Does the absence of a “Claimant Signature” make the Application for Mediation Invalid?

Rule 12.2 of the Dispute Resolution Practice Code (“the Code”) provides that “A party who applies for Mediation must file, in duplicate, a completed Application for Mediation in Form A...”

Under the heading “Signature and Certification”, Form A contains two signature boxes. As indicated above, one box says “Claimant Signature” and the other “Representative Signature”.

However, Form A does not indicate whether signatures are required in both boxes or whether a signature in one box or the other is sufficient.²

Rule 12.2 of the Code lists five elements that are required to be included in a completed Form A. None of these elements gives any guidance on the issue of whether one or both signatures are required.

In addition, Rule 1.3 of the Code provides that “A defect in form or other technical breach will not make a proceeding invalid.”

The Insurer has cited the statement in Luskin v. Personal Insurance Company of Canada³ that a claimant signature is required. However, Luskin addressed an entirely different situation. The issue in Luskin was whether the Arbitration should be dismissed due to a long history of non-compliance by the claimant. Failure to sign the Application for Mediation was cited by the Arbitrator as simply part of the considerable evidence of the claimant’s detachment from the Arbitration. Although the Arbitrator did express the view that the claimant’s signature was required, based on his interpretation of the Personal Health Information Protection Act, 2004, there was no suggestion that the lack of a signature made the proceeding invalid.

Taking all of the above factors into consideration, I do not consider that the absence of a “Claimant Signature” made the Application for Mediation invalid. First, I am not convinced that a “Claimant Signature” was required on the Application for Mediation. Second, even if I considered that a “Claimant Signature” was required, I would consider that this was a “defect in form” or “technical breach” within the meaning of Rule 1.3 of the Code.

Was the Application for Mediation Duly Authorized by the Applicant?

In addressing this issue, the first question to consider is whether Mrs. Agius had the power to authorize the Application for Mediation on January 24, 2014.

As indicated above, the evidence indicates that Mrs. Agius had a Power of Attorney from the Applicant, dated March 29, 1995, that was not revoked, that she was named as executrix in the Applicant’s will, and that the Applicant died on December 25, 2013.

It is clear law that Mrs. Agius had authority to act on the Applicant’s behalf under the Power of Attorney until the Applicant died on December 25, 2013. It is also clear law that the authority of Mrs. Agius, as executrix named in his will, to act on behalf of his Estate, started immediately upon his death. This is different from a situation where a person dies intestate, in which no one is authorized to act as administrator on behalf of the Estate until so appointed.

I note that in this context the Insurer has cited several cases in which the claimant died intestate, but none in which an executor has been required to obtain additional documentation in order to represent the claimant’s Estate in an Arbitration under the Schedule. I also note that the Insurer has also cited portions of the Rules of Civil Procedure. These do not determine the outcome in this situation, given that the Rules of Civil Procedure do not apply to proceedings under the Schedule.

Given the fact that the Applicant’s counsel did not learn about the Applicant’s death until almost two months after it occurred, it is clear that the communications between Mrs. Agius and counsel in this situation were less than ideal. However, the state of knowledge of the Applicant’s counsel is not determinative. During the relevant timeframe, Mrs. Agius continuously had the power to authorize action under the Schedule. Until the Applicant’s death on December 25, 2013, she obtained her power from the Power of Attorney. From that point, she obtained her power as executrix under his will. The fact that as of January 24, 2014 the Applicant’s counsel was not aware of her change of status to executrix does not change the fact that during the relevant timeframe she continuously had the power to authorize the Application for Mediation.

The second question to consider in addressing this issue is whether Mrs. Agius authorized the Applicant’s counsel to file the Application for Mediation.

It is the professional responsibility of counsel to ensure that they have authority for the action they take on behalf of their clients. Generally an Arbitrator presumes that counsel has the necessary authority and it is not appropriate for the Arbitrator to inquire into this. This issue is only being addressed in this proceeding because of the questions raised by the specific circumstances.

The Applicant has filed an Affidavit sworn by Mrs. Agius, dated November 5, 2015. This Affidavit states, among other things, that:

Throughout the course of [their retainer], my solicitors have at all times operated with my knowledge, consent and authority. This would include all steps taken to advance the accident benefits claims or to dispute insurer denials by way of both Mediation and arbitration.

The Applicant has also filed an Affidavit by Molly McRae, a legal assistant in the office of the Applicant’s counsel, sworn October 14, 2015. Ms. McRae states in her Affidavit that she was advised by Gloria Yellery, an accidents benefits clerk in the office, that on or about December 16, 2013, Mrs. Agius instructed Ms. Yellery to apply for Mediation.

Both Mrs. Agius and Ms. McRae were cross-examined on their Affidavits by the Insurer’s counsel, and the transcripts of these cross-examinations have been filed in evidence.

In her cross-examination, Mrs. Agius confirmed that she gave counsel a broad mandate to deal with the accident benefits claim and that she was in ongoing communication concerning the file with counsel and the law clerks in counsel’s office. She also indicated that she specifically recalls telling Ms. Yellery by telephone on December 16, 2013 to apply for Mediation.

In her cross-examination, Ms. McRae indicated that the reason she, rather than Ms. Yellery, swore the Affidavit concerning Mrs. Agius’ instructions to apply for Mediation, was that Ms. Yellery was absent on maternity leave at that point. Ms. McRae also indicated that Ms. Yellery did not subsequently return to work for the firm. Ms. McRae indicated that prior to swearing her Affidavit, she spoke to Ms. Yellery on the phone and that Ms. Yellery told her Mrs. Agius gave instructions “on or about December 16” to apply for Mediation.

The Insurer advances a number of arguments that in its view would lead to the conclusion that Mrs. Agius did not authorize counsel to apply for Mediation. The Insurer argues that Mrs. Agius did not give instructions that were specific enough; that she did not provide informed instructions to bring the Mediation; that the information in Ms. McRae’s Affidavit concerning instructions given to Ms. Yellery is untrustworthy; that in his document handling practices, the Insurer’s counsel is demonstrating “indifference for the need for proper authority”; and that the fact that certain claim forms erroneously claimed expenses for the period after the Applicant’s death casts doubt on the assertions of Mrs. Agius and Ms. Yellery that they remember instructions being given on December 16, 2013.

As indicated above, the evidence indicates that Mrs. Agius attended the Mediation in July 2014. In November 2015, she swore that she had given counsel broad authority to pursue the accident benefits claim, and that she was satisfied counsel had acted in accordance with her instructions at all times. On March 4, 2016, she again stated this in cross-examination. She also stated in cross-examination that, in general, she had telephone conversations with counsel and counsel’s law clerks from time to time concerning the file. Concerning the Application for Mediation specifically, she indicated that on December 16, 2013, she instructed Ms. Yellery by telephone to apply for Mediation.

If Mrs. Agius did not consider that she authorized the Application for Mediation, it is unlikely that she would have attended the Mediation in July 2014 and over a year later stated twice under oath over a period of several months⁴ that she authorized it. I therefore accept the evidence that Mrs. Agius authorized counsel to apply for Mediation, resulting in the January 24, 2014 Application for Mediation. I do not consider that there is significant doubt about Mrs. Agius’s credibility based on the Insurer’s inferences concerning the alleged document handling practices of the Applicant’s counsel, or the erroneously prepared claims for expenses incurred after the Applicant’s death.

Mrs. Agius has indicated that she authorized the Application for Mediation as part of a broad mandate she gave to counsel to pursue the accident benefits claim. How specific a client’s instructions to counsel need to be, and in what detail the client’s instructions need to be informed, are part of the solicitor-client relationship, to be agreed on between the individual client and counsel. In this instance, Mrs. Agius and counsel evidently were comfortable with a broad mandate. It is not appropriate to make a determination in this proceeding about whether the instructions were specific enough or informed enough.

In addition to the broad mandate, Mrs. Agius has stated that she gave Ms. Yellery specific instructions by telephone to apply for Mediation. I also note that according to Ms. McRae’s Affidavit, Ms. Yellery stated the same thing to Ms. McRae. However I give little weight to this statement by Ms. Yellery, given the fact that there was no opportunity to test it by cross-examination.

In cross-examination, the Insurer sought to cast doubt on the recollections of Mrs. Agius and Ms. Yellery that December 16, 2013 was the date when Mrs. Agius gave instructions to apply for Mediation. I note that it is not important to determine the specific date on which Mrs. Agius gave the instructions. It is clear that the instructions were given on or before the Application for Mediation was filed on January 24, 2014. As discussed above, the authority of Mrs. Agius to give the instructions did not cease when the Applicant died, and she had continuous authority to give the instructions during the relevant timeframe.

EXPENSES:

Rule 74.2 of the Code (reiterating subsection 282(11) of the Insurance Act) directs me to consider only the following criteria in awarding expenses:

Each party’s degree of success in the outcome of the proceeding;
Any written offers to settle;
Whether novel issues are raised;
The conduct of a party or the party’s representative; and
Whether any aspect of the proceeding was improper, vexatious or unnecessary.

The outcome of the Preliminary Issue Hearing is that the Applicant is successful. There have been no written offers to settle the preliminary issue. Although the circumstances giving rise to the preliminary issue are probably unusual, I do not consider that the issue itself is novel. The conduct of both parties’ representatives was less than exemplary, in that:

The Applicant’s counsel learned of the Applicant’s death on February 18, 2014, but did not inform the Insurer’s counsel of this until the Mediation on July 14, 2014;
The Insurer’s counsel did not raise this preliminary issue at the Mediation, despite seeing only counsel’s signature on the Application for Mediation and learning at the Mediation that the Applicant had passed away.

The Insurer has raised an arguable issue in this proceeding and therefore I do not consider that the Preliminary Issue Hearing was improper, vexatious or unnecessary.

Taking all of these factors into account, I award expenses concerning the hearing of this Preliminary Issue to the Applicant. If the parties are unable to agree on the quantum of the expenses, they may request an appointment with me to determine the quantum, in accordance with Rules 75 to 79 of the Code.

April 18, 2016

Ellen Fry Arbitrator

Date

Financial Services Commission of Ontario