Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2016 ONFSCDRS 203
FSCO A14-007988
BETWEEN:
SHEM WHITTAKER
Applicant
and
AVIVA CANADA INC.
Insurer
DECISION ON A PRELIMINARY ISSUE
Before:
Arbitrator Jeffrey Shapiro
Heard:
By written submissions completed on May 6, 2016
Appearances:
Mr. Kwaku Bona for Mr. Shem Whittaker
Ms. Candace Mak for Aviva Canada Inc.
Issues:
The Applicant, Mr. Shem Whittaker, was injured in a motor vehicle accident on June 14, 2013 and sought accident benefits from Aviva Canada Inc. (“Aviva”), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Mr. Whittaker, 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 issues in this Preliminary Issue Hearing (“PIH”) are:
May this PIH be heard in writing?
Is Mr. Whittaker entitled to receive a weekly income replacement benefit (“IRB”) of $387.60 from March 31, 2014 to date and ongoing?
Is either party entitled to its expenses of the PIH?
Result:
This PIH may be heard in writing.
Mr. Whittaker is not entitled to receive a weekly IRB of $387.60 from March 31, 2014 to date and ongoing.
The issue of expenses of this PIH is deferred to the hearing of the matter.
No ruling is made on the remaining benefits at issue in the matter, which shall proceed to an Arbitration Hearing. The parties shall contact the Pre-Hearing Arbitrator within 30 days to schedule the Arbitration Hearing.
EVIDENCE AND ANALYSIS:
Background
The issues in dispute arising out of the June 14, 2013 motor vehicle accident are (1) the entitlement to weekly IRBs of $387.60 from March 31, 2014 to date and ongoing, (2) medical benefits of $335.40 for chiropractic and physiotherapy treatment, (3) interest and (4) legal expenses.
There does not appear to be a dispute that the Applicant provided Aviva with an Employer’s Confirmation of Income (OCF-2), dated August 3, 2013, and paystubs from McGregor Maids for the periods ending May 26, June 2, June 9 and June 16, 2013. The Applicant submits that the Insurer ‘verified’ some portion of the employment with the employer, although from the parties’ submissions it is unclear what exactly was verified. The Applicant also submits the paystubs show various deductions.
Although the exact date is not provided, an IRB was paid from approximately the date of the accident up to March 31, 2014. The reason for stoppage was not addressed by the parties. The parties do briefly address that the IRBs paid from the accident to March 31, 2014 were without the Applicant supplying tax returns. The Applicant contends those payments are an admission, while the Insurer claims they are not.
A Pre-Hearing discussion was held on August 6, 2015 before Arbitrator Henry. Since that time, the Insurer has not received any other documentation substantiating the Applicant’s claim for the IRB. The Insurer gave the Applicant notice that it required copies of his income tax returns from one year prior to the accident to the present, as per two letters to the Applicant’s representative, dated September 9, 2015 and March 21, 2016.
The Applicant’s representative wrote to the Canada Revenue Agency (“CRA”) by letter, dated October 27, 2015, which was attached to the Applicant’s submissions, requesting the Applicant’s tax returns from 2010 to 2014. The letter was time stamped “received” by the CRA, dated November 6, 2015. No explanation is offered as to why this material – perhaps critical – had not been requested at an earlier date, or if any follow-up has taken place to secure the returns. The Applicant, nevertheless, does not dispute that he has not produced such income tax returns to the Insurer, nor does he actually affirmatively state that they were filed2 – although they were requested.
On April 11, 2016, the Pre-Hearing Arbitrator issued a letter scheduling this PIH, stating, in part:
I conducted pre-hearing discussion in this case on August 6, 2015, and issued a pre-hearing letter the same day ordering certain requirements that were to be followed prior to the hearing in this matter scheduled to take place June 9-10, 2016.
Correspondence provided to me from both legal counsel in this matter indicates that evidence to substantiate Mr. Whittaker’s claim for income replacement benefits has not been provided – contrary to the directions in my order of August 6, 2015.
I am hereby ordering that I will conduct a written preliminary hearing regarding the entitlement of income replacement benefits for Mr. Whittaker…
The Arbitrator proceeded to set a submission schedule of the initial submission, response and reply, all limited to one (1) page – presumably single spaced – from April 18, 2016 to April 29, 2016. The issue is as stated above.
Although I inquired of the parties if the one page limits were by agreement, I did not receive an answer. On April 18, 2016, I extended the submission schedule for the response and reply, and allowed the parties four (4) pages, plus “one or two decisions”.
After the close of submissions and prior to this decision, the Arbitration Hearing was adjourned, sine die, by another Arbitrator, pending the results of this decision. As of the closing of submissions, the tax returns have not been produced. As of the previously scheduled date of the Hearing, i.e. June 9 and 10, 2016, I also have no information before me that the returns have been produced.
Positions of the Parties
The Insurer relies on the recent decision of Howell and Chartis Insurance Company of Canada (FSCO A12-000029, July 30, 3014), issued by Arbitrator Jessica Kowalski. Howell dismissed a claim in similar circumstances under section 23(1) of the SPPA,3 which provides a tribunal authority to make orders to prevent abuse of its processes. The core of the Insurer’s position is as follows:
As the Applicant has not provided to Aviva income returns one year prior to the accident, as per section 4(5) of the Schedule, his income must be determined without reference to any income he has failed to report to the CRA. As such, the amount of IRBs he is entitled to is $0.00. Thus, proceeding on an IRB claim when the quantum is zero is an abuse of process.
The Insurer further submits that the paychecks merely show that the employer deducted sums from the Applicant’s paychecks for taxes, CCP and EI, “which McGregor Maids then presumably remitted to the Canada Revenue Agency. They are not proof that he reported his income to the Canada Revenue Agency.” The Schedule, the Insurer submits, bases the calculation on “reported” income.
Procedurally, the Insurer contends that the Applicant bears the legal onus to prove his claim, but that the Applicant is attempting to improperly reverse the onus - i.e. attempting to require the Insurer to disprove the reporting of income. The Insurer also contends that the IRB payments to date are not an admission. The Insurer submits that a written Hearing is appropriate, as the Applicant has not provided grounds to show a quantum of more than zero.
The Applicant presented several procedural arguments. He contends that this PIH is premature, and that “the SPPA prohibits the conduct of a hearing in writing, unless it is on procedural matters. Reference: section 5.1 (two). See also: Rule 37.2 of the DRPC.” (Emphasis in original). Thus, the Applicant submits that there is a lack of jurisdiction to hold a PIH in writing “without the consent of the parties” where a non-procedural matter is involved.
Substantively, the Applicant submits that he was an employee4 of McGregor Maids at the time of the car accident, and that his pay stubs - which he produced to Aviva - show tax deductions, and Aviva confirmed same with McGregor Maids in 2013. He states that “the [Insurer’s] written submissions failed to state that counsel for Mr. Whitaker [sic] has written to [the] CRA for certain tax records,” and supported his submission with a copy of his representative’s letter to the CRA, dated October 27, 2015, requesting tax returns from 2010 to 2014. The request letter is time stamped “received” by the CRA, dated November 6, 2015. The Applicant does not dispute that no such income tax returns have been produced to the Insurer, nor does he state that they have actually been filed.
He also argues that Aviva has not produced any evidence to show that the Applicant has not reported pre-accident income to the CRA as required by the Schedule. Finally, he cites Arbitrator Kowalski’s comment in Howell that “… The failure to file income tax returns or to declare income is not itself grounds to dismiss the claim…”
Analysis
May this matter be heard by written Hearing?
I initially note that the Howell decision itself states that it was decided by written submissions. The relevant legislative authority supports that conclusion.
In beginning the analysis, I note that section 5, and its subparts, of the SPPA is substantially identical to Rule 37, and its subparts, of the DRPC5 with regard to written Hearings. Rule 37.1(b) provides that “[the] arbitrator may” hold a Hearing in a number of specified ways, including “hold a written hearing.” Rules 37.2 and 37.4 then limit the use of a written Hearing for non-procedural matters, but only “where a party satisfies the arbitrator that there is a good reason for not doing so.” No such limitation is made for procedural matters. The relevant sections of the SPPA are:
5.1 (1) A tribunal whose rules made under section 25.1 deal with written hearings may hold a written hearing in a proceeding. 1997, c. 23, s. 13 (6).
(2) The tribunal shall not hold a written hearing if a party satisfies the tribunal that there is good reason for not doing so.
(2.1) Subsection (2) does not apply if the only purpose of the hearing is to deal with procedural matters. 1999, c. 12, Sched. B, s. 16 (4).
(3) In a written hearing, all the parties are entitled to receive every document that the tribunal receives in the proceeding. 1994, c. 27, s. 56 (10).
5.2 (1) A tribunal whose rules made under section 25.1 deal with electronic hearings may hold an electronic hearing in a proceeding. 1997, c. 23, s. 13 (7).
(2) The tribunal shall not hold an electronic hearing if a party satisfies the tribunal that holding an electronic rather than an oral hearing is likely to cause the party significant prejudice.
(3) Subsection (2) does not apply if the only purpose of the hearing is to deal with procedural matters.
Stating it in another manner, in the case of a procedural matter, the Arbitrator may hold a written Hearing even where a party shows a good reason for not doing so. Where a non-procedural matter is involved, a written Hearing may also be utilized, except where a party satisfies the Arbitrator that there is a good reason for not doing so.
Thus the Applicant’s statement that the SPPA prohibits the conduct of a Hearing in writing, unless it is on non-procedural matters, is not accurate. It is only where a party satisfies the Arbitrator that there is good reason not to do so that a Hearing should not be in writing.
In the context of the DRPC and existing jurisdiction, I believe that a better course would have been not to set this matter down for a PIH at all and let it proceed to a Hearing. In fact, in this case, setting this for a PIH has resulted in an adjournment of the Hearing. However, now that it was scheduled, I do not find that there “is good reason” that it should not be writing, and I believe that in writing is preferable to an oral PIH.
Should this matter be dismissed under the analysis of the Howell decision?
While the Howell decision is on point in many regards, it has distinguishing features. Howell is premised on section 23(1) of the SPPA, which provides that a tribunal may make such orders to give directions in proceedings to prevent abuse of its processes. The Arbitrator found that Mr. Howell “irrevocably prejudiced [the Insurer’s] ability to assess him and to adjust and defend the IRB claim,” and his conduct throughout the claim as a whole was an abuse of process, one part of which was the failure to produce documents. There was no dispute he did not file returns, although there was an 11th hour request to adjourn to do so, which the Arbitrator did not believe would actually happen, and so she denied the adjournment request.
Many of the egregious factors in Howell are not present herein. The key element, however, is that like Mr. Howell, the Applicant herein has not filed Income Tax Returns, or if he has, as of the close of the submissions - approximately thirty days from the Hearing - he has not produced them.
The Arbitrator in Howell specifically disagreed with the Insurer’s contention that the IRB claim is “completely barred” without tax returns, but importantly found the quantum to be zero, as follows:
I disagree with Chartis’ submission that the IRB claim is completely barred by operation of … s.4(5), of the Schedule, which deals with unreported income. Section … 4(5), require[s] income to be reported to the CRA in order for IRBs to be payable; any income that has not been reported does not form part of the calculation of an income replacement benefit.
The remedy for an IRB claim where there is undeclared income is simply that the insurer is not required to consider that income in any calculation of an IRB. In this case, where all of the income on which the claim is based is zero because none has been reported, then the amount that Chartis is required to pay is zero.
Mr. Howell has to date not reported his income. He knew from the outset of his claim that the insurer was requesting proof of income. His recent pledge notwithstanding, and despite Mr. Marshall’s commendable efforts during his brief retainer, I find that Mr. Howell’s conduct so far belies any genuine intention to file returns and to rehabilitate the IRB claim. [Emphasis added; Citations omitted]
In consideration to the case at hand, there is little question that the Applicant has not secured and produced the critical documents supporting his claim. I do not find that that the full breadth of abuse of process present in the Howell case is found here, but at the same time, pursuing a claim from inception to the eve of an Arbitration Hearing without those documents is not proper. If it becomes clear, or ought to be clear, that a benefit cannot be supported at a Hearing, it ought to be withdrawn. If the Applicant sought an adjournment on the basis he is awaiting the documents but unavoidably cannot secure them, that would cast this in a different light, but the Applicant has not – and coupled with a glaring absence of affirmation that the documents exist, leads me to believe that they do not. The claim for the IRB has become a borderline abuse of process under section 23(1) of the SPPA, and has become frivolous under Rule 68 of the DRPC.
I do not accept the Applicant’s assertion that a few paystubs purporting to show payroll deductions is the same as reporting his income. Various deductions or other losses, for instance, could show his income to be nil.
To be clear, I do not believe that filing the claim without the documents is of itself an abuse of process or frivolous - it’s the maintaining of an action to the eve of Hearing without the relevant evidence that begins to be so.
From my perspective, however, the central nature of this inquiry is less about abusing the process in the sense of willfully refusing to comply with productions requests, but rather it is about the Applicant’s inability to prove his claim and still forcing an opposing party to a Hearing on that issue. Essentially, this motion is at its core akin to a motion for summary judgment or a prima facie inquiry. The Insurer has shown that (1) the Applicant’s evidence, even if believed, produces a quantum of zero, and secondarily that (2) the Applicant’s maintenance of this claim to the eve of a Hearing without evidence is marginally an abuse of process and frivolous.
As mentioned above, I do not believe the behaviour involved – though deficient – is so egregious that it required this PIH. Rather, a regular Hearing, with cost consequences, may have been “the most just, quickest and least expensive resolution of the dispute” – and in line with existing custom and practice at the Commission. However, now that the parties have provided submissions, making the parties proceed to a further Hearing on the IRB matter, when the Applicant – years into the process, has failed to produce the required documents to establish a quantum other than zero, would certainly not be “the most just, quickest and least expensive resolution of the dispute.”
Conclusion
Bearing in mind my reservations about setting this matter for a PIH as stated above, although ample opportunity has been provided, the Applicant has failed to produce documents that even if believed establish an IRB quantum other than zero, thus the claim for IRBs has become a borderline abuse of process and/or frivolous claim, and is dismissed. The matter shall proceed to an Arbitration Hearing on the remaining issues.
EXPENSES:
Expenses are deferred to the Hearing Arbitrator.
July 27, 2016
Jeffrey Shapiro
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2016 ONFSCDRS 203
FSCO A14-007988
BETWEEN:
SHEM WHITTAKER
Applicant
and
AVIVA CANADA INC.
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c. I.8, as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Ontario Regulation 664, as amended, it is ordered that:
This Preliminary Issue Hearing may be heard in writing.
Mr. Whittaker is not entitled to receive a weekly income replacement benefit of $387.60 from March 31, 2014 to date and ongoing.
The issue of expenses of this Preliminary Issue Hearing is deferred to the Hearing of the matter.
No ruling is made on the remaining benefits at issue in the matter, which shall proceed to an Arbitration Hearing. The parties shall contact the Pre-Hearing Arbitrator within 30 days to schedule the Arbitration Hearing.
July 27, 2016
Jeffrey Shapiro
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule - Effective September 1, 2010, Ontario Regulation 34/10, as amended.
- Likewise, the record is absent of any other fact or allegation that if believed establishes that the returns were ever filed, such as an allegation of who prepared them, or a request to adjourn the Hearing to secure them.
- Statutory Powers Procedure Act (“SPPA”), R.S.O. 1990, c. S.22.
- The Insurer takes issue with the fact that the Applicant's submission refers to him being an employer, rather than an employee, of McGregor Maids. From the context, I find that to be a typo and have addressed this decision on the basis that the Applicant is employee.
- The Dispute Resolution Practice Code (“DRPC”), 4th Edition.