TTC Insurance Company Limited v. The Estate of Francis Agius, 2016 ONFSCDRS 245

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2016 ONFSCDRS 245

Appeal P16-00039

OFFICE OF THE DIRECTOR OF ARBITRATIONS

TTC INSURANCE COMPANY LIMITED

Appellant

and

THE ESTATE OF FRANCIS AGIUS

Respondent

BEFORE:

Delegate Jeffrey Rogers

REPRESENTATIVES:

Mr. Chad Townsend, solicitor for TTC Insurance Company Limited

Mr. Sandev Purewal, solicitor for the Estate Of Agius

HEARING DATE:

Heard by written submissions completed on September 1, 2016

APPEAL ORDER

Under section 283 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 Regulation 664, R.R.O. 1990, as amended, it is ordered that:

1. The Arbitrator’s order is confirmed and this appeal is dismissed.

2. The following clause is added to paragraph 1 of the Arbitrator’s order of April 18, 2016: The title of the proceedings is amended to show “the Estate of Francis Agius” as the Applicant.

3. If the parties cannot agree on the legal expenses of this appeal, they may request a determination of the issue within 30 days of this decision.

September 19, 2016

Jeffrey Rogers Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

TTC Insurance Company Limited (TTC) appeals the Arbitrator’s decision of April 18, 2016. The Arbitrator denied TTC’s motion to dismiss the arbitration on the grounds that it was commenced after the insured person had died, without authority, and without a litigation administrator being appointed.

TTC submits that the Arbitrator erred by:

• Failing to answer the questions raised by the motion, answering instead a different, narrower question
• Concluding that mediation could be commenced and/or continued on behalf of a deceased insured person, without any process recognizing the status of the proposed trustee or guardian to act on behalf of the estate
• Failing to consider whether the solicitors acting in this matter were given specific and informed instructions to apply for mediation

For the reasons that follow, I reject these submissions and conclude that:

• The Arbitrator did answer the question the motion raised and the Arbitrator also answered the additional questions TTC raised in its submissions
• The Arbitrator was correct in refusing to inquire further into the specific instructions the executrix of the estate gave to counsel
• The Arbitrator was correct in concluding that the executrix had the authority to instruct counsel to commence and pursue the proceeding, without court appointment, and that counsel being unaware of the death when the application for mediation was filed does not erode that authority
• Even if TTC is correct, the approach in CGU Insurance Company and Bittan¹ means that the arbitration would not be dismissed

As a result, this appeal is dismissed.

II. BACKGROUND

The late Francis Agius was injured in a motor vehicle accident on April 28, 2007. At the time of the accident Mr. Agius’s wife was his Attorney, under a Power of Attorney dated March 29, 1995. Pursuant to that authority, with the assistance of counsel, Mrs. Agius submitted an application for accident benefits to TTC. TTC paid various benefits. The arbitration concerns TTC’s decision to reduce the amount of its monthly payment for attendant care benefits, effective February 2012.

Counsel filed an Application for Mediation on January 24, 2014. Unknown to counsel, Mr. Agius had died on December 25, 2013. He left a will, naming his wife as executrix of his estate. Counsel did not become aware of the death until February 18, 2014. Unlike previous claim documentation, Mrs. Agius did not sign the Application for Mediation. The Application for Mediation was signed by counsel in the box for “Representative Signature”. The box for “Claimant Signature” was blank.

On July 14, 2014, Mrs. Agius and counsel attended the Mediation. TTC was not informed of the death until that day. At the same time, counsel advised TTC that Mrs. Agius was the executrix of the estate. Mediation failed and counsel filed an Application for Arbitration along with copies of Mr. Agius’s death certificate and his will. Francis Agius was named as the applicant in the Application for Arbitration.

The matter came before the Arbitrator as a preliminary issue hearing. This is how the pre-hearing Arbitrator described the question to be determined at the preliminary issue hearing:

TTC raised the following preliminary issue:

(1) The application is barred as it does not meet the requirements for a valid mediation as required by Section 55 of the SABS and Sections 280 and 281(2) of the Insurance Act;…

TTC did not ask the pre-hearing Arbitrator to amend the report regarding the issue it had raised. TTC filed written submissions at the preliminary issue hearing, with a different description of the issue. In its submissions TTC described the issue as follows:

(1) Whether the arbitration should be dismissed because it was brought in the name of an applicant without authority; and

(2) Whether the arbitration should be dismissed because there is no litigation administrator for the Applicant.

The Arbitrator’s decision first answers this question: “Does the absence of a “Claimant Signature” make the Application for Mediation Invalid?”

The Arbitrator ruled that the Application for Mediation did not require a Claimant signature and, even if it did, the absence of a signature was a defect in form or a technical breach that did not render the proceeding invalid.

The Arbitrator then went on to answer this question: “Was the Application for Mediation Duly Authorized by the Applicant?”

The Arbitrator found the following facts:

• Mrs. Agius had authority to act on behalf of Mr. Agius under the Power of Attorney until he died on December 25, 2013.
• Mr. Agius left a will naming Mrs. Agius as his executrix
• Mrs. Agius specifically authorized counsel to apply for mediation.
• On August 6, 2014, Mrs. Agius specifically instructed counsel to proceed with Arbitration.

With regard to the law, the Arbitrator ruled as follows:

It is … 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.

Applying the statement of law to the facts, the Arbitrator concluded that Mrs. Agius had the authority to act and to instruct counsel throughout the relevant period, and her authority was not diminished because counsel was unaware of the change in capacity when Mrs. Agius gave her instructions to apply for mediation.

III. ANALYSIS

The Arbitrator answered the question

One of the purposes of a pre-hearing discussion is to identify the issues in dispute. The issue that TTC raised, as described by the pre-hearing Arbitrator was:

The application is barred as it does not meet the requirements for a valid mediation as required by Section 55 of the SABS and Sections 280 and 281(2) of the Insurance Act;…

TTC did not ask the pre-hearing Arbitrator to amend the report. There was no agreement by the parties to amend the issue. Without amendment of the pre-hearing report or agreement by the parties, this was the only question the Arbitrator was required to answer. Therefore, the Arbitrator could not have erred by failing to answer other questions, as TTC argues. The pre-hearing issue was the first question that the Arbitrator answered under the heading: “Does the absence of a “Claimant Signature” make the Application for Mediation Invalid?”

The Arbitrator found that the absence of a claimant’s signature does not render invalid the Application for Mediation. TTC does not appeal that finding. It submits however that the Arbitrator should have taken the absence of a signature into account in determining whether the mediation was authorized. That submission is addressed below.

The Arbitrator answered the additional questions TTC raised

The Arbitrator’s decision starts by identifying the issue. In that section of the decision, the issue is described as it was in the pre-hearing report. However, that was not the only issue the Arbitrator addressed. The Arbitrator went on to deal with the issues of authorization that TTC raised in its submissions under the heading: “Was the Application for Mediation Duly Authorized by the Applicant?”

The Arbitrator found that Mrs. Agius specifically authorized counsel to apply for mediation. There was evidence before the Arbitrator to support that finding. That evidence included:

• The affidavit of Mrs. Agius in which she stated that counsel was authorized to act at all times, with a broad mandate, and that she specifically instructed mediation
• The affidavit of an assistant in the office of counsel, confirming receipt of specific instructions to apply for mediation
• The transcripts of cross-examinations on the above, confirming the substance of the above
• The fact that Mrs. Agius attended the mediation

The Arbitrator considered TTC’s submission that the evidence regarding authorization was untrustworthy and rejected it. The Arbitrator stated:

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 months 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.²

The finding of fact was clear. The reasons for doing so were clear. The Arbitrator was not required to specifically address every alternate scenario that TTC envisaged.

Section 283(1) of the Insurance Act limits appeals to “a question of law”. The leading case on the interpretation of s. 283(1) is Lombardi and State Farm Mutual Insurance Company³. As discussed in that case, an error of law is a finding of fact made in the complete absence of supporting evidence, based on conjecture, or arising from a misapprehension of the evidence that is caused by misdirection on a legal principle.

Having found that Mrs. Agius specifically authorized mediation, the Arbitrator was not required to engage in a further inquiry as to whether she made an informed decision, as TTC submits. That would necessarily involve disclosure of privileged communication between solicitor and client. The Arbitrator was also not required to investigate those discussions in order to conclude that mediation was authorized. The Arbitrator was correct in refusing to do so. I find no error of law in the Arbitrator’s conclusion that Mrs. Agius authorized the mediation.

The Arbitrator also found that Mrs. Agius specifically authorized the arbitration. TTC does not challenge that finding. Thus, the only remaining question is whether the Arbitrator was correct in concluding that the will gave Mrs. Agius the authority to instruct counsel to commence proceedings, without any process appointing her to act on behalf of the estate. I find that the Arbitrator was correct in this regard. I also agree with the Arbitrator that, although the fact that counsel was unaware of the death shows that there was not the best communication with Mrs. Agius, the state of mind of counsel does not diminish Mrs. Agius’s authority.

The following excerpt from Oosterhoff on Wills⁴ summarizes the law:

The question is often asked: Is it necessary to obtain probate [certificate of appointment of estate trustee] in every case? The answer is no. This is because executors derive their authority from the will rather than from the probate process. As a result, executors have the lawful authority to deal with estate property even if they do not obtain probate…

The primary function served by probate…is therefore not to vest executors with authority to deal with estate property but rather to authenticate to third parties that the persons presenting themselves as the executors are indeed the persons…with that authority.

The same statement of the law is echoed in Hancock, (estate of) and RBC General Insurance Company⁵, one of the decisions TTC relied on:

In estate matters, the executor or trustee under a will derived his or her powers from the will. These powers may be confirmed by a court having jurisdiction, but they trace from the appointment made in a will, and date from the time of death. Subject to certain restrictions, an executor may deal with property, if required, from the date that it vests in him or her as trustee.

In the absence of a will an administrator, appointed by the courts, can trace his or her power to the appointment by a court. No property vested in an administrator, except by virtue of the appointment.

Perhaps because the law is clear, the issue of authority to commence proceedings has only arisen at the Commission in cases where the insured person died without leaving a will. As noted in Hancock, in those cases, no one has the authority to act unless appointed by the Court. The Arbitrator was correct in distinguishing those cases.

TTC submits that it is not clear that there was no will in all of the cases. No case mentions the existence of a will. The existence of a will would be critical evidence of authority, so it would have been mentioned specifically. For instance, in The Estate of Nana Owusu-Asamoah and State Farm Mutual Automobile Insurance Company⁶ the person prepared to proceed with the arbitration is referred to as “the next of kin” without mention of a will.

As noted above, the Arbitrator was correct in concluding that Mrs. Agius had the authority to instruct counsel to commence the proceedings, without any process appointing her to do so.

One final note: even if the Arbitrator had concluded that TTC is correct that a Court-appointed representative of the estate is required, precedent at the Commission establishes that the absence of an appointment does not mean that the arbitration is dismissed as a nullity, as TTC requested.

The leading case is CGU Insurance Company and Bittan.⁷ In that case, solicitors filed an application for arbitration on behalf of an insured person, not knowing that he had recently died intestate. The insurer sought dismissal on the grounds that the arbitration was a nullity. The Arbitrator allowed it to proceed, on the authority of an estate trustee, appointed a year later. The insurer appealed. The Director did not agree with the Arbitrator’s reasons, but nonetheless dismissed the appeal.

The Director conducted an exhaustive review of the law on the issue, including the provision in the Rules of Civil Procedure to the effect that a proceeding commenced in the name of a deceased person is not a nullity. The Director disagreed with the Arbitrator’s conclusions that the common law doctrine of “relation back” applied and that the process at the Commission is subject to Rules of Civil Procedure. However, the Director concluded that the circumstances mandated the same result at the Commission as provided in Court, and that an Arbitrator has the jurisdiction to correct the title of proceedings as a defect in form. The Director reasoned as follows:

It would be an odd result if the more formal, technical court rules could deal with a defect in the form of an originating document, but the purportedly more flexible, user-friendly alternative of arbitration could not. Therefore, it is my view that the arbitrator’s authority should be interpreted in this broader context, including Rule 9.03(3), and that the Dispute Resolution Practice Code provides sufficient authority to correct the defect in the original application for arbitration. While a specific rule might have clarified the situation, the Dispute Resolution Practice Code is intentionally less detailed than the Rules of Civil Procedure.⁸

The circumstances in this case would dictate the same result as in Bittan.

Title of the Proceedings

The application for arbitration named Francis Agius as the applicant. That was not accurate. By that time, all involved knew that Mr. Agius had died. Counsel filed the death certificate and the will with the application for arbitration. The Arbitrator found that the arbitration was commenced upon instructions from the executrix. The Arbitrator’s decision accurately shows the applicant as “The Estate of Francis Agius”, but the Arbitrator did not make a formal order amending the title of proceedings. For the sake of clarity, I have added a term to that effect to the Arbitrator’s order. This will also address TTC’s concern that, as filed, the application put no applicant at risk of liability for legal expenses.

IV. EXPENSES

The parties did not make submissions on the issue of expenses of this appeal. If the parties cannot agree, they may request a determination of the issue within 30 days of this decision.

September 19, 2016

Jeffrey Rogers Director’s Delegate

Date

Footnotes

1. 1(FSCO P01-00058, May 30, 2002)
2. 2At pages 6-7
3. 3(FSCO P01-00022, February 26, 2003)
4. 4Albert Oosterhoff, C. David Freedman et al., Toronto: Thompson Reuters, 2016, at page 33 (Tab 7, Book of Authorities of the Applicant/Respondent)
5. 5(FSCO A11-000896, February 10, 2012), at page 5
6. 6(FSCO A12-006626, January 13, 2016)
7. 7See footnote 1 supra
8. 8Bittan supra, At page 16