Financial Services Commission of Ontario
Neutral Citation: 2017 ONFSCDRS 13 FSCO A16-004253
BETWEEN:
MUSSE MUSSA Applicant
and
AVIVA CANADA INC. Insurer
DECISION ON A PRELIMINARY ISSUE
Before: Arbitrator Cindy Dymond Heard: By written submissions due November 4, 2016
Appearances: Mr. Keith Finley participated for Mr. Musse Mussa Ms. Cara Boddy participated for Aviva Canada Inc.
Issues:
The Applicant, Mr. Musse Mussa, was injured in a motor vehicle accident on September 14, 2014 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. Mussa, through his representative, applied for Arbitration at the Financial Services Commission of Ontario (“FSCO”) under the Insurance Act, R.S.O. 1990, c. I.8, as amended (“the Act”).
The issues in this Preliminary Issue Hearing are:
Is Mr. Mussa’s Application for Arbitration barred for failure to mediate pursuant to s. 281(2) of the Act?
Is either party entitled to its expenses respecting this Preliminary Issue Hearing?
Result:
Mr. Mussa’s Application for Arbitration is barred for failure to mediate pursuant to s. 281(2) of the Act.
No expenses were requested with respect to this Preliminary Issue Hearing. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, within 30 days of this Order, the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code (“the Code”).
EVIDENCE AND ANALYSIS:
Evidence of Aviva
Ms. Boddy, on behalf of Aviva, requested a Preliminary Issue Hearing to determine whether there is jurisdiction to proceed with Mr. Mussa’s Application for Arbitration under the Act, when the Application for Arbitration was filed prior to the Mediation being held or failed in this matter.
Prior to April 1, 2016, disputes under the Schedule were required to be mediated prior to an Application for Arbitration being filed with FSCO. Deemed Mediation could have occurred 60 days after the filing of the Application for Mediation. However, effective April 1, 2016, a new statutory scheme for the resolution of disputes at the License Appeal Tribunal (“LAT”) came into effect. In this matter, the Application for Arbitration was filed with FSCO before April 1, 2016, but also before Mediation had occurred or been deemed failed, and before 60 days had elapsed from the date of the Application for Mediation.
Relevant Legislation
Before April 1, 2016
Section 281 of the Act, as it read before April 1, 2016, provides as follows:
- (1) Subject to subsection (2),
(a) the insured person may bring a proceeding in a court of competent jurisdiction;
(b) the insured person may refer the issues in dispute to an arbitrator under section 282; or
(c) the insurer and the insured person may agree to submit any issue in dispute to any person for arbitration in accordance with the Arbitration Act, 1991.
- (2) No person may bring a proceeding in any court, refer the issues in dispute to an arbitrator under section 282 or agree to submit an issue for arbitration in accordance with the Arbitration Act, 1991 unless mediation was sought, mediation failed, and, if the issues in dispute were referred for an evaluation under section 280.1, the report of the person who performed the evaluation has been given to the parties (emphasis mine).
In addition, Rule 21.1 of the Code states that:
21.1 Mediation has failed on an issue when:
(a) the mediator is of the opinion that mediation will fail and notifies the parties; or
(b) the time limit for mediation, including any extension, has expired and no settlement has been reached.
Rule 19 of the Code further provides that Mediation must be concluded within 60 days of the filing of an Application for Mediation. Similarly, section 10 of Ontario Regulation 664 provides that a Mediator is required to attempt resolution within 60 days. FSCO’s practice in recent years, supported by case law and legislation, and not in dispute in this particular Hearing, allows Mediations to have been deemed failed if Mediation does not occur within 60 days of the Application for Mediation.
After April 1, 2016
Section 280 of the Act, as it reads since April 1, 2016, provides as follows:
(1) This section applies with respect to the resolution of disputes in respect of an insured person’s entitlement to statutory accident benefits or in respect of the amount of statutory accident benefits to which an insured person is entitled.
(2) The insured person or the insurer may appeal to the License Appeal Tribunal to resolve a dispute described in subsection (1).
Timeline
Aviva submitted that the following relevant timeline occurred with respect to Mr. Mussa’s claim:
On November 30, 2015, Mr. Mussa applied for a designation of catastrophic impairment, which was denied by Aviva on February 25, 2016.
Mr. Mussa then filed an Application for Mediation (Form A) with FSCO on March 2, 2016.2 The sole issue in dispute was Mr. Mussa’s entitlement to a designation of catastrophic impairment under the Schedule.
On March 29, 2016, Mr. Mussa filed an Application for Arbitration (Form C) on the same (and sole) substantive issue of his catastrophic determination.3
On June 17, 2016, a Report of Mediator4 was issued indicating that the Mediation had been deemed failed.
It is Aviva’s position that Mr. Mussa did not have jurisdiction to commence the Arbitration proceeding on March 29, 2016, because although Mediation had been sought, Mediation had not yet failed as a required pre-condition to an Application for Arbitration in subsection 281(2) of the Act in force at that time.
Ms. Boddy also referred me to the Ontario Court of Appeal decision in Younis v. State Farm Mutual Automobile Insurance Company5 acknowledging that if Mediation has not proceeded within 60 days of the Application for Mediation, the Mediation could be deemed to have failed, but reiterating that no person may bring a proceeding until Mediation has failed.
Ms. Boddy also brought forward the Court of Appeal decision in Mader v. South Easthope Mutual Insurance Company et al.6 affirming the pre-condition of Mediation prior to bringing court proceedings with respect to entitlement to accident benefits.
Evidence of Mr. Mussa
Mr. Finley, on behalf of Mr. Mussa, concurred with the timelines set out in Aviva’s submissions, accepted that Aviva’s legal authorities are binding in this matter, and affirmed that the presumptive state of law at the material time was that Arbitration could not be commenced until Mediation failed.
However, he submitted that additional dates are relevant in this Preliminary Issue Hearing. He indicated that as of March 15, 2016, Mediation was scheduled to take place on June 8, 2016, and this was posted to FSCO’s eCalendar with a notice stating that, “Booking exceeds 60 days legal period.”
Mr. Finley’s position was that as of March 15, 2016 the scheduled Mediation exceeded the 60-day legal period, so the Mediation was or should have been considered to have been deemed failed by default, and thus the dispute was eligible to be submitted to Arbitration under the Act. He argued that the Mediation scheduled for June 8, 2016 was redundant and that it should not be necessary to wait the 60-day period when the Mediation has been scheduled to take place outside of that period.
Mr. Finley also argued that other factors should be taken into account, namely the balance of convenience, because Hearing dates were already set at the Pre-Hearing when this Preliminary Issue Hearing was initiated. He suggested that the greater experience of FSCO Arbitrators over LAT Arbitrators, particularly with respect to complex disputes such as determination of catastrophic impairment, supported Mr. Mussa’s choice of the FSCO forum. He also stated that the Applicant’s preference for a decision bound by precedent and the potential for prejudice if the Applicant is required to have overlapping proceedings in two separate forums, warranted the choice of FSCO over LAT.
With respect, I do not agree that these factors are relevant in the question before me.
The Hearing dates have been set far enough in advance that there can be no argument for convenience this early in the process if those dates have to be changed. Due to the expedited timelines under the LAT process, Mr. Mussa might have a Hearing sooner if his dispute proceeds under LAT. I have no evidence that the relative expertise of Arbitrators in the forums is germane to the issue. Being bound by “precedent” also does not speak to his entitlement regarding either forum. Such entitlement flows from law, not from preference.
This is not a case of whether an issue should be added to an existing Application for Arbitration, which might possibly allow procedural fairness matters to be taken into account. This is a question of whether there is the right to initiate an Application for Arbitration under the old system, but without the statutory pre-conditions having been met, as a way to circumvent the unknowns of a new system that came into effect on April 1, 2016. The legislation did not provide a choice for new applications to be started in either the old or new systems, depending on preference or risk analysis of the system.
The only question is whether or not the necessary pre-conditions for Arbitration were met as of March 29, 2016 (the date of the Application for Arbitration).
In my view, they were not. The Act was clear on its face that a failed Mediation (deemed or otherwise) must exist before an Application for Arbitration could be filed.
The case law clearly supports a minimum 60-day waiting period before an Application for Arbitration could be filed. I was provided no case law that supports deeming Mediation failed on the basis that it is likely to fail, but before the 60-day period has elapsed. Deemed failure of Mediation by default prior to the elapse of 60 days is neither authorized nor implied, in my view, by the Act, Schedule, Code or case law. Thus, I rely on the general principles of statutory interpretation, and on a clear reading of the statute, to conclude that Mediation must have failed before the Application for Arbitration could have been validly filed.
An Application for Arbitration to FSCO in this case could only have been filed starting 60 days after the Application for Mediation, namely May 2, 2016.
Aviva further explored the timing of the Report of Mediator, issued June 17, 2016, and whether an inference could be drawn in March 2016 that a failed Report of Mediator would eventually be issued as the Mediation date was scheduled beyond the 60-day period.
Aviva’s position in its Reply was that there was no evidence to infer that a Mediator was of the opinion that the Mediation would fail prior to the June 17, 2016 issuance of the Report of Mediator. It submitted that since the prescribed time for Mediation in Ontario Regulation 664 is 60 days, even in circumstances where it is likely that no Mediation will occur within 60 days, there is no statutory provision or case law to suggest that such an expectation constitutes a basis for deeming failure to mediate, or inferring a Mediator’s opinion, in a shorter period of time.
I agree that while it may have been likely that the Mediation would fail, it was not necessarily the case that it would fail, or that a Mediator would be of that opinion as of March 29, 2016. Likelihood or expectation alone is insufficient to meet the requirement for failed Mediation, deemed or otherwise.
For all of these reasons, I find that the statutory conditions precedent to an Application for Arbitration in effect at the relevant time were not met by Mr. Mussa when this Application for Arbitration was commenced, and thus there is no jurisdiction to proceed with the Arbitration.
EXPENSES:
No expenses were requested with respect to this Preliminary Issue Hearing.
If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, the parties, within 30 days of this Order, may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Code.
January 16, 2017
Cindy Dymond Arbitrator
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:
Mr. Musse Mussa’s Application for Arbitration is barred for failure to mediate pursuant to s. 281(2) of the Insurance Act.
If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, the parties, within 30 days of this Order, may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.
January 16, 2017
Cindy Dymond Arbitrator
Footnotes
- The Statutory Accident Benefits Schedule - Effective September 1, 2010, Ontario Regulation 34/10, as amended.
- Attached as Tab “D” to Aviva’s submissions.
- Attached as Tab “E” to Aviva’s submissions.
- Attached as Tab “G” to Aviva’s submissions.
- (2012) ONCA 836. See Tab “H” of Aviva’s submissions.
- (2014) 2014 ONCA 714, 123 O.R. (3d) 120. See Tab “I” of Aviva’s submissions.