Diesha Chambers v. Aviva Canada Inc., 2017 ONFSCDRS 152

Financial Services Commission of Ontario

Neutral Citation: 2017 ONFSCDRS 152

Appeal P16-00085

OFFICE OF THE DIRECTOR OF ARBITRATIONS

DIESHA CHAMBERS Appellant

and

AVIVA CANADA INC. Respondent

BEFORE: David Evans

REPRESENTATIVES: Shahen Alexanian for Ms. Diesha Chambers Ahmad H. Khan for Aviva Canada Inc.

HEARING DATE: On the Record, following a teleconference on March 30, 2017

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 appeal of the Arbitrator’s order dated November 7, 2016 is allowed. Paragraph 1 thereof is rescinded and replaced with the following:

   1. Ms. Diesha Chamber’s Application for Arbitration is not dismissed as statute barred and she may proceed to arbitration.

2. If the parties are unable to agree about expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

June 1, 2017

David Evans Director’s Delegate

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Ms. Diesha Chambers was injured in a motor vehicle accident on March 6, 2014, and sought benefits from her insurer, Aviva Canada Inc., pursuant to the SABS–2010.¹

After a dispute arose, she filed for mediation but did not attend the mediation. She then filed for arbitration. Ms. Chambers appeals the Arbitrator’s order dated November 7, 2016 that her Application for Arbitration is statute-barred for her failure to attend the mediation.

In making that order, the Arbitrator relied mainly on the arbitration decision in Pararajasingam and State Farm Mutual Automobile Insurance Company, (FSCO A13-012792, October 30, 2015).

Ms. Chambers then filed an appeal. Just before her written submissions were due, I reversed the Pararajasingam arbitration decision in Pararajasingam and State Farm Mutual Automobile Insurance Company, (FSCO P15-00065, February 2, 2017).

Ms. Chambers then filed her submissions, incorporating a good part of what I said in the Pararajasingam appeal. After the submissions were received, Aviva advised that it would be taking no position on the appeal and would not be filing submissions. A teleconference was arranged for March 30, 2017, to confirm Aviva’s position. However, the parties could not agree about appeal expenses, so it was agreed that I would issue a decision on the record based on Mr. Alexanian’s submissions on behalf of Ms. Chambers and that the appeal expenses would be dealt with later.

The factual background is essentially the same between this case and that in Pararajasingam, so for the reasons set out below I find that Ms. Chambers is entitled to proceed to arbitration.

II. BACKGROUND AND ANALYSIS

As noted above, Ms. Chambers claimed various benefits from Aviva arising from her March 6, 2014 accident. At some point they were denied. Accordingly, Ms. Chambers had to seek mediation before applying for arbitration because s. 281(2) of the Act prevents insured persons from commencing arbitration regarding disputes about accident benefits “unless mediation was sought [and] mediation failed.” The procedures for mediation in turn are set out in s. 280.

Ms. Chambers filed an application for mediation with the Commission on March 27, 2015.

As discussed in Cornie v. Security National Insurance Co. (c.o.b. TD Meloche Monnex), 2012 ONCA 837, the prescribed time for mediation is 60 days after filing, pursuant to s. 10 of the regulations.² However, the parties can agree to extend the time for mediation pursuant to s. 280(5), as happened here.

A mediation was scheduled for June 2, 2015, more than 60 days after filing. Ms. Chamber’s legal representative requested an adjournment of the mediation. Aviva consented. The mediation was rescheduled for June 22, 2015. Neither Ms. Chambers nor her representative attended the rescheduled mediation.

Subsection 280(7) states: “Mediation has failed when the mediator has given notice to the parties that in his or her opinion mediation will fail, or when the prescribed or agreed time for mediation has expired and no settlement has been reached.” [Emphasis added.] Subsection 280(8) provides that if mediation fails, the mediator shall prepare and give to the parties a report.

The mediator issued a report of failed mediation dated June 22, 2015. The report “confirms that the prescribed or agreed time for mediation of the issues in dispute has expired, no settlement has been reached and mediation has failed.” It then sets out the issues in dispute, as required by s. 280(8).

Ms. Chambers filed her application for arbitration on November 19, 2015, within the limitation period in s. 281.1.

Aviva moved for a permanent stay of the arbitration based on the failure of Ms. Chambers to attend at the scheduled mediation. It submitted that the requirements of section 281(2) of the Insurance Act, namely that mediation be sought and that mediation fail, were not met and as a result, Ms. Chambers was precluded from proceeding to arbitration.

The Arbitrator found that by failing to attend the scheduled mediation without excuse Ms. Chambers acted “in bad faith.” The Arbitrator further found that the mediator was required under Rule 17.3 of the Code to report to the parties that mediation has not taken place. As a consequence, by operation of s. 282 of the Insurance Act, the Arbitrator concluded that the Appellant was not eligible to refer the issues in dispute to arbitration.

However, in doing so, the Arbitrator relied on irrelevant cases, and distinguished relevant ones.

Chiefly, the Arbitrator relied on the Pararajasingam arbitration decision and an old case dealing with the failure to participate in a mediation, Couraud and Co-operators General Insurance Company, (OIC A-006346, October 31, 1994). As noted above, I reversed the Pararajasingam arbitration decision. On appeal, I noted that Couraud dealt with a situation where the prescribed time had not yet expired. I found that Couraud and Rule 17.3 have no application to determining when mediation has failed once the prescribed or agreed time for completion of mediation has expired. Therefore, the mediator in this case was correct in noting that the prescribed or agreed time for mediation of the issues in dispute had expired so mediation had failed; he did not have to apply Rule 17.3 and find there had been no mediation.

The Arbitrator also cited the decision of the Ontario Court of Appeal in Mader and South Easthope Mutual Insurance Company, 2014 ONCA 714, and the decision of the Divisional Court in Amorini v. Select Coffee Roasters Inc., 2001 CanLII 62759 (ON SC), [2001] O.J. No. 581 in support of his decision. Both cases contain statements about mediation being a statutory precondition to bringing proceedings. However, both cases are distinguishable because the plaintiffs had not even filed for mediation. That is not what happened here, since Ms. Chambers did file for mediation.

I find that the Arbitrator erred in distinguishing Cornie as well as State Farm Mutual Automobile Insurance Company and Leone, (FSCO Appeal P12-00004, July 31, 2012), on the basis that the cases arose by reason of systemic delay in circumstances where the Applicants were initially willing to participate in the mediation process but were frustrated in so doing by reason of that delay.

However, the Court of Appeal in Cornie simply held that the 60-day clock runs from the time the application was delivered, so once that period had run (or the agreed time had expired), then the insured could request a report of failed mediation. Accordingly, there is no basis to distinguish Cornie or Leone, since the agreed time had expired and mediation had therefore failed.

In conclusion, a person seeks mediation by filing for it, and can proceed to arbitration once it fails. One of the ways it can fail is if the agreed time expires, as happened here. The time expired, there was no settlement, and the Report of Mediator accurately set out what happened. This entitled Ms. Chambers to refer the issues in dispute to arbitration within the limitation period. The Arbitrator therefore erred in dismissing Ms. Chamber’s Application for Arbitration as being barred under s. 281(2) of the Act.

The appeal is therefore allowed.

III. EXPENSES

As noted above, the parties were unable to agree about expenses of this appeal. Accordingly, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

June 1, 2017

David Evans Director’s Delegate

Footnotes

1. 1The Statutory Accident Benefits Schedule — Effective September 1, 2010, Ontario Regulation 34/10, as amended.
2. 2Automobile Insurance Regulations, R.R.O. 1990, Reg. 644, s. 10.