Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2016 ONFSCDRS 58
Appeal P16-00005
OFFICE OF THE DIRECTOR OF ARBITRATIONS
IOAN NAGY
Appellant
and
JEVCO INSURANCE COMPANY
Respondent
BEFORE:
Delegate Lawrence Blackman
REPRESENTATIVES:
Ms. Samia M. Alam for for the Appellant, Mr. Ioan Nagy
Mr. Bradley E. Remigis for the Respondent, Jevco Insurance Company
HEARING DATE:
By written submissions received by February 16, 2016
PRELIMINARY APPEAL ISSUES ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
This appeal is not rejected under Rules 50.2, 51.2(b), (c) or (d) of the Dispute Resolution Practice Code (Fourth Edition, Updated – January 2014).
The legal expenses of this preliminary issues appeal decision are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.
February 19, 2016
Lawrence Blackman Director’s Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL AND BACKGROUND
In his November 30, 2015 decision on a preliminary issue, Arbitrator Arbus of ADR Chambers (the “Arbitrator”), held that a November 8, 2010 Settlement Disclosure and Full and Final Release precluded the Appellant, Mr. Ioan Nagy, from proceeding to arbitration.
The Arbitrator found:
The Release included a catastrophic impairment report submitted by AssessNet Inc.
The Applications for Mediation and Arbitration, commenced in the name of AssessNet, were later changed to that of Mr. Nagy. The Arbitrator found the Applications for Mediation and Arbitration void ab initio and that they could not be later corrected.
The Arbitrator noted Akbulut and RBC General Insurance Company, (FSCO A13-002858, April 17, 2015), where Arbitrator Kowalski dismissed that arbitration as an effort by a third party service provider, also AssessNet Inc., to collect payment from the insurer after the matter had settled between the insured and the insurer on a full and final basis. Arbitrator Kowalski found that AssessNet had no standing to bring a claim.
The Appellant in this case sought leave to appeal the Arbitrator’s decision on a preliminary issue.
My January 22, 2016 acknowledgement letter noted Rules 50.2 and 51.2(c) of the Dispute Resolution Practice Code (Fourth Edition, Updated – January 2014) (the “Code”) that an appeal from a preliminary or interim order that does not finally decide the issues in dispute may be rejected. As the Arbitrator determined that the Appellant was precluded from proceeding to arbitration on any issues, I found it difficult to see how the Arbitrator’s order, no matter how it was termed, was anything but a final decision of all of the issues in dispute.
The Response to Appeal does not seek an order rejecting this appeal because it is from a preliminary or interim arbitration order. Rather, noting that leave to appeal in Akbulut was denied, it argues that Mr. Nagy has not been involved in this proceeding and as the Arbitrator found the Applications for Mediation and Arbitration void ab initio, neither AssessNet Inc. nor Mr. Nagy have standing to commence an appeal.
Subsection 283(1) of the Insurance Act restricts appeals to questions of law. The Respondent argues that the Appellant failed to provide sufficient detail in his Notice of Appeal as to how the Arbitrator erred in law and is simply seeking to appeal the Arbitrator’s factual findings
The Appellant replies that he testified at the arbitration hearing. He argues that Akbulut differs from the present case as Akbulut was simply a motion to dismiss the arbitration because it was brought by a third-party health care provider that did not have standing.
II. ANALYSIS
My January 22, 2016 letter, citing Rule 56.5 of the Code, stated that subject to the parties’ submissions and the material filed, the most expeditious, least costly and most just means of determining the preliminary appeal issues was on the record. I do not see a request for oral submissions. I am deciding the present preliminary issues on the record.
I first find that the Arbitrator’s November 30, 2015 decision on a preliminary issue decided all of the issues in dispute. Accordingly, I am not rejecting this appeal under Rules 50.2 and 51.2(c) of the Code.
Secondly, I am not persuaded to reject this appeal based on Rule 51.2(d) of the Code that it is incomplete or lacks sufficient detail to allow the Respondent to respond. The Respondent appears to fully appreciate what this appeal is about.
I am also not prepared at this point to reject this appeal on the basis of lack of standing.
In his letter decision in Akbulut and RBC General Insurance Company, (FSCO P15-00032, June 29, 2015), Delegate Evans rejected the appeal in that case because:
- Under subsection 283(1) of the Insurance Act and Rule 50.1 of the Code, the alleged Appellant had no standing to bring this appeal. Counsel’s May 15, 2015 letter accompanying the Notice of Appeal freely admitted:
While the appeal is being brought under the insured person’s name, Gulbiye Akbulut, I note that she did not participate in the motion and we appeared on behalf of AssessNet Inc. to seek standing before FSCO and be added as a party. The references to the Appellant are therefore, references to AssessNet Inc. Perhaps a conference call could be arranged to discuss whether we should proceed by way of an Application for Intervention.
Arbitrator Kowalski noted that the Insurance Act only allows an insured or insurer to apply for mediation and only insureds to apply for arbitration. Long-standing appeal case law states that third party assessment facilities have no standing to commence arbitration at the Commission in their own name or that of the insured person, nor is there any public policy reason to allow third party providers to do so.
Delegate Evans saw no possibility for the Arbitrator being found in error in this regard. He further noted subsection 283(1) of the Insurance Act that a “party to an arbitration under section 282 may appeal the order of the arbitrator to the Director on a question of law.” As AssessNet was not a party to the arbitration, it could not bring an appeal.
- The Notice of Appeal failed to raise a question of law as required.
In Akbulut, Arbitrator Kowalski stated that no one appeared for Ms. Akbulut, but counsel did appear for AssessNet Inc. In this case, the Arbitrator’s Decision notes Ms. Alam as counsel for Mr. Nagy.
In Akbulut, Arbitrator Kowalski stated that AssessNet conceded it did not have Ms. Akbulut’s authority to pursue the claim. In this case, the Appellant states that he testified at arbitration, contrary to the Respondent’s assertion he never participated at all. The Respondent states that if this appeal is accepted, it will order the arbitration transcript. That may make things clearer.
In Akbulut, Delegate Evans found that counsel’s letter acknowledged she did not represent
Ms. Akbulut and was bringing the appeal on behalf of AssessNet Inc. I see no such acknowledgement in this case.
The Appellant argues that unlike Akbulut, he was not aware of the outstanding account, and the undisputed evidence at arbitration was that the Respondent believed the account had been paid and, therefore, was not outstanding. The Appellant’s argument of the misapprehension of material facts does not appear to have been addressed in the Arbitrator’s decision.
It may be that this appeal is simply a more sophisticated, but still improper, attempt by AssessNet Inc. to get around the long-standing case law enunciated in Akbulut. On the other hand, this may be a bona fide appeal from Mr. Nagy to which there may be merit. I am not prepared to use the gatekeeping function of Rules 50 and 51 to exercise my discretion at this juncture to reject this appeal based on the material presently before me.
As a caveat, however, I note Royal & Sunalliance Insurance Company of Canada v. Volfson, 2005 CanLII 38902 (ON SCDC), where the Divisional Court found that a “bogus applicant … put the innocent insured and insurer to the expense of a hearing to determine the legitimacy of the application.” The Divisional Court noted the Commission decisions in:
… Piotto v. Kingsway General Insurance Company (FSCOA00 001061) and Gurevich and Royal and. Sun Alliance Insurance Company of Canada (FSCOA01 000936) [where] Arbitrator Wilson held that the service providers, acting without lawful authorization, could be found liable for costs because they, not the insured’s, were the party …
The Divisional Court found that Arbitrator Wilson’s approach made sense, that if subsection 23(1) of the Statutory Powers Procedure Act (Abuse of Processes) was:
… to have any meaningful effect, it must be interpreted as enabling a tribunal to bring before it the person who had wrongly engaged its process … Even without making Volfson a party, the tribunal had jurisdiction under s. 23(1) of the Statutory Powers Procedure Act to prevent an abuse of its process … Volfson’s conduct was improper, was an abuse of the process of the tribunal and resulted in expenses being incurred by the Shusters and Royal before the Tribunal. It must surely be part of a tribunal’s power to prevent abuse to ensure that those who perpetrate such abuse not be permitted to do so with impunity. Accordingly, requiring Volfson to pay the expenses of the innocent parties must be seen as a logical and necessary extension of the tribunal’s control of its own process and its power to prevent them from being abused.
III. WRITTEN SUBMISSIONS
As noted, the Respondent states it intends to order the arbitration transcript. Rule 54.2 of the Code provides that if a transcript has been ordered the time limit for the appellant’s written submissions set out in Rule 54.1(a) (30 days from the date on which the Response to Appeal was due), is extended to 30 days from the date on which the transcript is received. I look forward to confirmation of receipt of the arbitration transcript.
IV. EXPENSES
The legal expenses of this preliminary appeal issue decision are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.
February 19, 2016
Lawrence Blackman Director’s Delegate
Date