Shaun Edwards v. Optimum Frontier Insurance Company, 2016 ONFSCDRS 79

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2016 ONFSCDRS 79

Appeal P16-00008

OFFICE OF THE DIRECTOR OF ARBITRATIONS

SHAUN EDWARDS

Appellant

and

OPTIMUM FRONTIER INSURANCE COMPANY

Respondent

BEFORE:

Delegate Lawrence Blackman

REPRESENTATIVES:

Mr. David S. Wilson for the Appellant, Mr.Shaun Edwards

Ms. Amanda M. Lennox for the Respondent, Optimum Frontier Insurance Company

HEARING DATE:

By written submissions due March 4, 2016

PRELIMINARY ISSUE APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The Arbitrator’s January 4, 2016 expense order is stayed.

2. The questions of entitlement to and the quantum of the legal expenses of this preliminary issue appeal order are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.

March 10, 2016

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. BACKGROUND

The Appellant, Mr. Shaun Edwards, was injured in a March 12, 2003 motor vehicle accident.

The Commission dated stamped his Application for Arbitration as received September 12, 2005. The file was closed and subsequently reopened with new counsel for the Appellant.

The August 16, 2014 pre-hearing letter notes the issues in dispute as entitlement to non-earner, caregiver and housekeeping benefits, as well as interest, a special award and legal expenses. The pre-hearing arbitrator set a four-day arbitration hearing to start June 20, 2015.

The January 9, 2015 pre-hearing resumption letter notes additional disputed issues of attendant care and four OCF-18s (Treatment and Assessment Plans). The Commission’s July 16, 2015 letter confirmed that the parties agreed that “the substantive (benefit) issues in dispute had been resolved subject to receipt of payment” by the Appellant through his counsel. The questions of a special award, interest and legal expenses remained to be determined.

The January 4, 2016 decision of Arbitrator Jeff Musson of ADR Chambers (the “Arbitrator”) notes that at the start of the hearing the Appellant requested an order, on consent, that the Respondent, Optimum Frontier Insurance Company, pay him ongoing non-earner benefits. The Arbitrator’s July 23, 2015 Order directed the Respondent to pay the Appellant weekly non-earner benefits of $185 ongoing from June 2, 2015, subject to the statutory reduction at age 65.

The Arbitrator’s January 4, 2016 decision dismissed the Appellant’s claims for interest under the 1996 Schedule¹ and a special award under the Insurance Act, R.S.O. 1990, c. I.8. The Arbitrator awarded the Respondent its legal expenses. Should the parties not agree on the amount of the legal expenses, they were to request an expense hearing within 30 days of the decision.

The January 22, 2016 Notice of Appeal seeks, in part, a stay of the Arbitrator’s January 4, 2016 expense order.

Subsection 283(6) of the Insurance Act states that an appeal does not stay the arbitrator’s order

unless decided otherwise. A stay of the order of an arbitrator is thus the exception, not the rule.

Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000), adopted the following criteria for whether a stay of an arbitrator’s order should be granted:

1. The bona fides of the appeal;

2. The substance of the grounds for appeal; and,

3. The hardship to the respective parties if the stay is granted or refused.

In Menard and Royal Insurance, (OIC P-001055, October 22, 1992), Director Sachs held that a request for an appellate order that affects an arbitrator’s control of the process must be seen as a rare request for an exercise of appellate discretion, requiring special circumstances.

My correspondence to the parties noted these cases. I also noted Randhawa and State Farm Mutual Automobile Insurance Company, (FSCO P14-00064, February 5, 2016) where the appellant sought a stay of the arbitrator’s order regarding the process for determining arbitration expenses.

Agreeing that the onus of establishing the exceptional remedy of a stay of an arbitrator’s order is on the moving party, I stated that a stay of an arbitrator’s control of the process should be seen as a rare request for an exercise of appellate discretion requiring special circumstances. Finding the substance of the grounds for that appeal to be weak, I was not persuaded in that case to stay the arbitrator’s order.

The Appellant in this case submits:

1. The Appeal is for a bona fide purpose.

2. There is considerable substance to the appeal. The Arbitrator erred in:

(a) Making his expense order in the absence of submissions.

(b) Making his expense award in the absence of giving any reasons.

(c) Failing to consider that following its agreement that the settlement be rescinded, the Respondent denied payment of any further benefits until prior to the hearing when it paid some $300,000. The Arbitrator failed to consider the considerable legal time and disbursements the Appellant incurred to obtain that payment.

3. The Respondent will suffer no hardship if the stay is granted. The Appellant, who has limited resources, will suffer considerable hardship should he be required to pay the Respondent’s legal expenses.

Arguing against the requested stay, the Respondent submits:

1. The appeal is not bona fide as it does not raise a question of law as required by subsection 283(1) of the Insurance Act.

2. The Appellant’s real argument goes to the sufficiency of the evidence upon which the Arbitrator based his findings, including legal expenses.

3. As stated in Randhawa, a stay of the Arbitrator’s expense order requires special circumstances as it would affect the arbitrator’s control of the process. The Appellant has not raised any special circumstances.

4. The only issues before the Arbitrator at the hearing were the Appellant’s entitlement to interest and a special award. The Respondent was successful on both issues. While the Arbitrator “did not specifically state that the insurer [was] entitled to its costs as it was the successful party, such reasoning is self-evident from the decision.”

II. ANALYSIS

My February 3, 2016 acknowledgement letter noted Rule 56.5 of the Dispute Resolution Practice Code, (Fourth Edition – Updated January 2014) (the “Code”) that that an appeal may be decided in any manner considered appropriate. The parties did not advise (although invited to do so) that oral submissions, in addition to their written submissions, were necessary regarding the requested stay. Applying Rule 1.1 of the Code, I find that the most expeditious, least costly and most just means of determining whether the Arbitrator’s Order should be stayed is by written submissions.

The requested stay in this case involves interfering with the Arbitrator’s control of the process. I agree with the Appellant that this is one of the (hopefully) rare cases in which the exercise of appellate discretion in favour of a stay is appropriate. I am persuaded that the Appellant has met his onus of establishing special circumstances to intervene in the Arbitrator’s control of the process and stay his January 4, 2016 expense order for the following reasons:

1. It is not disputed the Arbitrator did not receive submissions on entitlement to legal expenses. That is a breach of natural justice. In Howard and State Farm Mutual Automobile Insurance Company, (FSCO P04-00017, November 19, 2004), Delegate Makepeace stated that questions of law include questions about fair procedure.

2. In determining legal expense entitlement, the Arbitrator simply stated “Optimum is entitled to its expenses of this Arbitration.” The Respondent does not dispute that the Arbitrator failed to give reasons for his award. This is not a case about the sufficiency of reasons. It is a case where the Arbitrator gave no reasons for his expense decision.

In Murphy v. Murphy, 2013 ONSC 7015, Perell J. stated “[i]t is an error in law for a judge or tribunal member to fail to provide an explanation of his or her decision that is sufficiently intelligible to permit appellate review” citing, in part, R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869. As expanded on, below, I find the Arbitrator’s reason for his expense order insufficiently intelligible.

3. The Respondent argues it was not unreasonable for the Arbitrator to award the Respondent “its costs of the arbitration.” However, this arbitration included numerous issues. Most of these issues were resolved on the eve of the arbitration hearing. That resolution led, in part, to the Arbitrator’s July 23, 2015 consent order that the Respondent pay the Appellant ongoing weekly non-earner benefits.

Rule 75 of the Code states that one criterion in the award of legal expenses is “each party’s degree of success in the outcome of the proceeding.” The Rule is not restricted to a party’s success solely in the outcome of the contested arbitration hearing. The Respondent submits:

… [an] arbitration hearing was not required on the insured’s entitlement to specific benefits as this determination was made prior to the within hearing. Entitlement to specific benefits was separate from the disputes at issue in the arbitration and heard by the Arbitrator … these payments do not prevent the insurer from being entitled to its costs of the arbitration as a result of being the successful party, nor does it make the Arbitrator’s decision unreasonable.

The Arbitrator did not limit his expense award to the arbitration hearing. The Respondent does not state it is restricting its arbitration expense claim to the hearing alone. The Arbitrator did not state if, or why, he was excluding from consideration, amongst other things, the Appellant’s success in obtaining a consent order for ongoing weekly benefits.

4. The Respondent does not dispute there is no prejudice to it in having the Arbitrator’s expense order stayed. The Respondent does not dispute there is prejudice to the Appellant if the Arbitrator’s expense order is not stayed.

III. WRITTEN SUBMISSIONS

Taking into consideration the time for delivery of this decision, I apply Rule 81 of the Code to extend the time lines under Rule 54 for the exchange of the written submissions of both parties on the substantive issues of this appeal, as follows:

1. The Appellant shall, by Wednesday, April 27, 2016, serve the Respondent and file (with a Statement of Service in Form F) with this office its written submissions.

2. The Respondent shall, by Wednesday, June 1, 2016, serve on the Appellant and file (with a Statement of Service) with this office her responding written submissions.

3. The Appellant shall, by Wednesday, June 22, 2016, serve the Respondent and file (with a Statement of Service in Form F) with this office its written reply submissions.

IV. APPEAL LEGAL EXPENSES

The questions of entitlement to and the quantum of the legal expenses of this preliminary issue appeal order are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.

March 10, 2016

Lawrence Blackman Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.