Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 100

FSCO A16-004100

BETWEEN:

LINH NGUYEN

Applicant

and

AVIVA CANADA INC.

Insurer

Before: Caroline King

Heard: November 22, 2016, by teleconference hearing

Appearances: William Goldstein for Ms. Nguyen Kevin Griffiths for Aviva Canada Inc.

Issues:

The Applicant, Linh Nguyen, was injured in a motor vehicle accident on April 11, 2014. She claimed statutory accident benefits from Aviva Canada Inc. (“Aviva”), payable under the Schedule.¹ A dispute arose about the benefits claimed. The parties were unable to resolve their dispute through mediation, and Ms. Nguyen applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

Is the Applicant entitled to commence this arbitration proceeding?

Result:

The Applicant is entitled to commence this arbitration proceeding.

INTRODUCTION:

This preliminary issue hearing is to determine whether the Applicant was entitled to commence this arbitration proceeding on March 30, 2016 prior to the mediation failed report. This hearing resolves a jurisdictional error and does not consider the merits of the application. The parties submitted a joint statement of agreed facts² in advance of the preliminary issue hearings.

On the date this application for arbitration was filed, the applicable law required that mediation must fail before a person is entitled to commence arbitration proceedings. The Applicant commenced arbitration proceedings on March 30, 2016 when the application for arbitration was filed. The agreed upon date for mediation, did not occur until after the application for arbitration was filed.

This decision will set out the key facts, the law and an analysis.

EVIDENCE AND ANALYSIS:

Agreed upon Facts:

The parties submitted an Agreed Statement of Facts.³ The key facts are as follows:

On April 11, 2014, the Applicant was injured in a motor vehicle accident. A disagreement about the Applicant’s entitlement to benefits arose.

The Mediation Process:

On January 25, 2016, The Applicant applied to FSCO for mediation.
On February 3, 2016, the parties agreed to schedule the mediation to take place on April 5, 2016 and accordingly, that date for mediation was booked directly on the DRS eCalendar system.
On March 17, 2016, the Counsel for the Applicant faxed a “Consent to Fail Mediation” form to Aviva’s adjuster and requested that Aviva consent to fail the mediation and sign the form and return it to the Applicant’s counsel as soon as possible. Aviva did not respond to this request.
On April 5, 2016, the mediation proceeded as scheduled by the parties. The mediation failed on that date.

The Arbitration Process:

On March 30, 2016 the application for arbitration was filed.

When may an application for arbitration be filed?

When the application for arbitration was filed on March 30, 2016, the law was clear and settled that mediation must fail prior to commencing arbitration proceedings. Section 281(2) of the Insurance Act effectively precludes the commencement of arbitration proceedings until after mediation has failed. This is consistent with the requirements set out in Rule 21.3 the Dispute Resolution Practice Code (the “Code”) which requires that mediation must be sought and has failed before a party can refer an issue in dispute to an arbitrator. Rulr 25.1(a) of the Code further reinforces requirement for issues in dispute to be mediated and failed prior to commencing proceedings as it provides that an application for arbitration includes issues which were submitted to mediation and had failed at mediation.

Section 280(5) of the Act allows parties to agree to extend the time for mediation to occur. An application for arbitration may only be filed after mediation has been sought and has failed. Therefore, the question to answer is when did mediation fail in this case?

When did the Mediation fail?

For the reasons that follow, I find that the mediation failed before the application for arbitration was filed as required by law.

The application for mediation was filed on January 25, 2016. Rule 19.1 of the Code requires that mediation must be concluded within 60 days of filing the application for mediation. To extend the time for mediation beyond 60 days, the parties are required to comply with the procedural steps set out in Rule 19.3 of the Code, which states as follows:

Where the parties have agreed to extend the time limit, they must: a) consult with a mediator, and (b) provide the mediator which written confirmation of the dates agreed upon for the extension. [my emphasis].

There is no evidence that these mandatory steps were followed. In this case, on February 3, 2016 the parties agreed to set an April 5, 2016 date for mediation which extended beyond the 60 day period (which would otherwise have concluded on March 26, 2016) and then, on consent, one party booked the mediation directly on the DRS eCalendar for the agreed date of April 5, 2016. I am not satisfied that the technological ability of the parties to book mediation proceedings directly on the DRS eCalendar, eliminates any legal requirements to comply with the procedural rules in the Code. The procedural rules provide the framework that parties are required to follow in order to have a just, quick, and least expensive resolution of the dispute. The requirement that parties must consult with a mediator helps FSCO mediators to have early contact with the parties. This early contact can help expedite mediation and can help to identify issues which can further expedite or frustrate the matter proceeding to an arbitration. It is possible, that for some cases the requirements set out in Rule 19.3 would not have any material impact on the dispute resolution process. However, that is not the case here.

FSCO’s jurisdiction to accept new applications for arbitrations ended on March 31, 2016. Effective April 1, 2016, all new applications to resolve statutory accident benefits claims must be brought before the Licence Appeal Tribunal.

Since Rule 19.3 of the Code was not complied with, a mediator did not have the early contact with the parties to facilitate early resolution and/or raise with both parties jurisdictional issues inherent with their scheduled mediation date of April 5, 2016. Sometime around March 17, 2016, the Applicant’s counsel faxed to the Insurer’s counsel a Consent to Fail Mediation Form and asked them to sign it so that it could be forwarded to FSCO on an urgent basis. The Insurer did not respond by stating it did not consent to fail mediation, or that it wanted to wait until April 5, 2016. They simply did not respond.

Conclusion – The Mediation is deemed failed on March 26, 2016

I find that the parties did not comply with the mandatory procedural steps set out in Rule 19.3 of the Code, and this renders their agreement to extend the time for mediation invalid. The mediation is deemed failed on March 26, 2016 which is when the time limit for mediation expired. In my opinion, to find any other way would render Rule 19.3 meaningless, and in this case would enable this Insurer to gain an unfair advantage over the Applicant, by effectively denying the Applicant the ability to have her application resolved at FSCO, and instead start a new application process at the Licence Appeal Tribunal.

The mediation is deemed failed on March 26, 2016, which is 60 days after the application for mediation was filed. When the application for arbitration was filed on March 30, 3016, mediation had been sought and had failed. Arbitration proceedings to consider the merits of this application may commence.

EXPENSES:

If the parties are unable to agree on the matter of expenses of this preliminary hearing, either party may request in writing and within 30 days of the issuing of this decision, an appointment before me to determined expenses, as per Rule 79 of the Dispute Resolution Practice Code.

April 3, 2017

Caroline King Arbitrator

Date