Financial Services Commission of Ontario

Neutral Citation: 2017 ONFSCDRS 182 FSCO A15-000744

BETWEEN:

EXZOR AN Applicant

and

INTACT INSURANCE COMPANY Insurer

REASONS FOR DECISION

Before: Arbitrator Marshall Schnapp

Heard: In person on May 2, 2017 at ADR Chambers, and by written submissions completed May 12, 2017

Appearances: Mr. Fawad Siddiqui, Lawyer, participated for Mr. Exzor An Ms. Tracy Brooks, Lawyer, and Mr. Barry Rosenthal, Lawyer, participated for Intact Insurance Company

Issues:

The Applicant, Mr. Exzor An, was injured in a motor vehicle accident (“MVA”) on October 29, 2013 and sought accident benefits from Intact Insurance Company (“Intact”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. An, through his representative, applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The issues in this Hearing are:

1. Is Intact liable to pay a special award because it unreasonably withheld or delayed payments to Mr. An?
2. Is either party entitled to its expenses of the Hearing?

Result:

1. Intact is not liable to pay a special award because it unreasonably delayed payments to Mr. An.
2. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, 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 (“DRPC”).

EVIDENCE AND ANALYSIS:

Background

The Applicant was involved in a MVA on October 29, 2013. As a result of the MVA, the Applicant initially applied for and received various accident benefits from Intact. As the result of a dispute on priority between Insurers, State Farm later assumed handling of the Applicant's claim on or about January 26, 2016. State Farm assumed carriage of all aspects of the Applicant's accident benefits claim, except for this ongoing dispute with respect to a claim for a special award.² The Applicant’s claim for a special award is limited to Intact and whether or not Intact properly handled Attendant Care Benefits (“ACBs”).³

State Farm and the Applicant entered into a full and final settlement of the accident benefits claim on August 12, 2016. The executed Settlement Disclosure Notice allocated no monies towards ACBs.⁴

Evidence

The parties appeared before me at ADR Chambers on May 2, 2017. At that time, they advised that the only issue was a special award, no witnesses would be called and some submissions had already been filed. Intact advised that it was raising a preliminary issue that there was no jurisdiction for an Order for a special award, as the Applicant had entered into a full and final settlement of the accident benefits claim on August 12, 2016. I requested further submissions and directed that this matter would be dealt with in writing.

The Positions of the Parties

The Insurer

The Settlement Disclosure Notice executed by the Applicant noted it is a "Final Settlement" of all "past, present and future claims for statutory accident benefits arising out of the October 29, 2013 MVA." The Applicant has not rescinded nor attempted to rescind the final settlement.

The jurisdiction for a special award, at the time of the MVA, was found in the former s. 282(10) of the Insurance Act, which states:

Special Award

282 (10) If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time benefits first became payable under the Schedule. R.S.O.1990, c. I.8, s. 282 (10); 1993, c.10, s.1.

The Insurer takes the position that when deciding on the issue of a special award, an Arbitrator must first determine whether the benefits are due and owing to the Applicant,⁵ and absent an award for benefits, there is no authority for a special award.⁶ The Insurer notes that a unilateral payment by an Insurer on the eve of Arbitration can be distinguished from a situation where the parties enter into a legitimate settlement which terminates all or part of the proceedings prior to Arbitration.⁷ A special award is only ordered when there has been a finding of an underlying entitlement to benefits, or recognition on the part of the Insurer that benefits were owed.⁸

According to the Insurer, on the facts of this case, the underlying claim for benefits, including ACBs, was resolved on a full and final basis in August 2016. This was a mutual agreement entered into between the Applicant and the priority Insurer. Thus, as the Applicant has settled his claim for substantive benefits, I can make no Order for the payment of a special award to the Applicant.

The Applicant

According to the Applicant, Intact failed to honour or observe its obligations under the Schedule and is liable for a special award. At the time the Application for Arbitration was filed, an Arbitrator had jurisdiction to make a determination on any Insured person's entitlement to accident benefits, or the amount to which an Insured is entitled.⁹ The Applicant submits that a settled claim does not shield an Insurer from arbitral scrutiny of its conduct. A special award can be granted when the issue is the delay prior to settlement.¹⁰

Findings

After considering the submissions from both parties, and reviewing the Settlement Disclosure Notice and case law, I find that I have no jurisdiction to order a special award.

On page 2 of the Settlement Disclosure Notice, the following is written: “Full and Final Release in respect of all past, present and future claims for statutory accident benefits arising out of the October 29, 2013 motor vehicle accident”.¹¹ If a full and final release had not been executed, and the Applicant had pursued his Application for Arbitration to a Hearing to deal with the ACBs and special award issues, I would have had jurisdiction to deal with both issues; but those are not the facts before me.

The case law provided by the Insurer is consistent, and supports the position that a special award may only be ordered when there has been a finding of underlying entitlement to benefits, or recognition by the Insurer that benefits were owed and paid prior to a Hearing. In this case, these are not the facts, and the settlement documents indicate that the Insurer paid no monies towards ACBs to settle the file.

The Applicant also failed to provide any submissions distinguishing the case law relied upon by the Insurer. With respect to two cases relied upon by the Applicant, neither of them persuade me that I may Order a special award in this matter. In Abel (Estate) and State Farm, the facts were very different in that no settlement had been reached between the parties. In Jiwa Estate and Royal & SunAlliance, a settlement cheque was never provided to the Applicant, and the settlement documents did not indicate how the parties arrived at their settlement figure. In the facts before me, the Applicant received the settlement funds and the settlement documents indicated that no monies were being allocated for ACBs.

Accordingly, I find I have no jurisdiction to consider an Order for a special award. I therefore dismiss this Application for Arbitration.

EXPENSES:

The parties are encouraged to resolve the issue of expenses for this matter on their own. If they are unable to do so, they may schedule an Expense Hearing in writing before me according to the provisions of Rule 75 to 79 of the DRPC.

June 26, 2017

Marshall Schnapp Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2017 ONFSCDRS 182 FSCO A15-000744

BETWEEN:

EXZOR AN Applicant

and

INTACT INSURANCE COMPANY Insurer

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:

1. Intact is not liable to pay a special award because it unreasonably delayed payments to Mr. An.
2. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, 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.

June 26, 2017

Marshall Schnapp Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule - Effective September 1, 2010, Ontario Regulation 34/10, as amended.
2. 2Correspondence from Mr. D'Arcy McGoey, counsel for State Farm, dated January 26, 2016, Intact’s Factum, Tab 1.
3. 3Pre-Hearing Letter, dated April 21, 2016, Intact’s Factum, Tab 2; Correspondence from Mr. Fawad Siddiqui, dated May 17, 2016, Intact’s Factum, Tab 3; and Pre-Hearing Letter, dated October 1, 2016, Intact’s Factum, Tab 4.
4. 4Settlement Disclosure Notice, dated August 12, 2016, Intact’s Factum, Tab 5.
5. 5Persofsky and Liberty Mutual Insurance Company (FSCO A99-000598, June 23, 2000).
6. 6Whitney and Co-Operators General Insurance Company (OIC A-001005, March 31, 1993), aff'd Whitney and Co-operators General Insurance Company, 1996 Carswell Ont 3105.
7. 7Jensen and Gan Canada Insurance Company (FSCO P96-0007, September 24, 1996).
8. 8Ibid., at pg. 23; Nicolle and State Farm Mutual Automobile Insurance Company, 2014 Carswell Ont 17083, para 82; Quarrington and Jevco Insurance Company, 1995 Carswell Ont 5115, paras 58, 62; Lopez and State Farm Mutual Automobile Insurance Company, 1998 Carswell Ont 2497, at pg. 11; Lopez and State Farm Mutual Automobile Insurance Company, 1999, Carswell Ont 5671; Rocca and AXA Insurance (Canada), 1999 Carswell Ont 5506, para 72.
9. 9Insurance Act, ss. 279 and 282; Abel (Estate) and State Farm Mutual Automobile Insurance Company, [2017], O.F.S.C.D., para 40.
10. 10Estate of Jiwa and Royal & SunAlliance Insurance Company of Canada, [2005] O.F.S.C.D. No. 3, para 43.
11. 11Settlement Disclosure Notice, Intact’s Factum, Tab 5.