Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2017 ONFSCDRS 89

Appeal P16-00063

WESTERN ASSURANCE COMPANY Appellant

and

SHANICE CLARKE-HUNTER Respondent

BEFORE: Delegate Jeffrey Rogers

REPRESENTATIVES: Mr. Rajiv Haté, solicitor for Western Ms. Kate Mazzucco, solicitor for Ms. Clarke-Hunter

HEARING DATE: On the record, by written submissions completed on February 6, 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:

This appeal is dismissed.
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.

March 27, 2017

Jeffrey Rogers Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Western appeals the Arbitrator’s decision of July 18, 2016. The Arbitrator’s denied Western’s motion to stay or dismiss the arbitration on the grounds that the claims in arbitration duplicate claims made in an action in the Superior Court regarding the same accident. Western submits that the Arbitrator erred in concluding that the issues in arbitration are not raised in the court action. For the reasons that follow, I find that the Arbitrator correctly concluded that the arbitration does not duplicate the issues in the court action. The appeal is therefore dismissed.

II. BACKGROUND

The arbitration arises from a motor vehicle accident on September 30, 1998. Ms. Clarke-Hunter, then nearly three years old, was struck by a car driven by Alan Keith Richardson and owned by W. Emerson Richardson. She suffered serious injuries from which she has now substantially recovered.

Ms. Clarke-Hunter’s lawyer at the time submitted an Application for Accident Benefits dated October 13, 1998, but did not pursue a claim for benefits. It is not clear to whom the application was submitted. There is a priority dispute between Royal & SunAlliance Insurance Company of Canada (RSA), which owns the Respondent Western, Dominion of Canada General Insurance Company (Dominion), and the Motor Vehicle Accident Claims Fund (MVAC Fund).

Ms. Clarke-Hunter is not a party to this dispute, brought under the Priority Disputes Regulation.¹ The decision in that dispute will resolve the question of who is responsible for payment of accident benefits to Ms. Clarke-Hunter. The priority dispute was not resolved at the time of the hearing before the Arbitrator. It was expected that a hearing date would be set in September, 2016. Western does not dispute that it is required to respond to Ms. Clarke-Hunter’s claims, pending resolution of the priority issue.

On August 31, 2000, Ms. Clarke-Hunter commenced an action in the Superior Court on behalf of herself and her mother and served a Statement of Claim on the named defendant, Alan Keith Richardson.

With leave granted on June 13, 2012 by Master Brott, Ms. Clarke-Hunter filed an Amended Statement of Claim adding as party defendants the Estate of W. Emerson Richardson, RSA and Dominion. Along with claims for other relief, the Amended Statement of Claim added the following claims relevant to the arbitration:

A declaration that Royal and SunAlliance Canada Group and/or The Dominion of Canada General Insurance Company are obliged to provide statutory accident benefit coverage to Shanice Clarke-Hunter
In the alternative, if neither Royal & SunAlliance Canada Group nor The Dominion of Canada General Insurance Company are required to pay statutory accident benefits, a declaration that Her Majesty the Queen be required to pay statutory accident benefits coverage to Shanice Clarke-Hunter, pursuant to the provisions of the Motor Vehicle Accident Claims Act, in conjunction with s.268 of the Insurance Act;

The Superior Court action now involves six parties. The issues include: liability of the driver and the owner of the motor vehicle; a consent issue between driver and owner; contributory negligence alleged on the part of Ms. Clarke-Hunter’s mother; quantum of damages for Ms. Clarke-Hunter and for her mother; and underinsured or family protection coverage.

At the time of the hearing before the Arbitrator, the Superior Court action had not yet reached discovery, with examinations for discovery scheduled in July and September 2016. The trial is not likely to take place before 2018.

In August 2014, Ms. Clarke-Hunter submitted to RSA the four treatment plans which are in issue in the arbitration. She claimed:

$3698.11 for speech language pathology services;
$2023.13 for social work sessions;
$2922.23 occupational therapy; and
$1935.08 for a MacBook Pro computer and software already incurred.

RSA denied these four treatment plans on September 11, 2014. Ms. Clarke-Hunter applied for mediation which failed to resolve the dispute, and then she applied for arbitration. As I noted above, Western moved for an order dismissing or staying the arbitration on the grounds of duplication of the court action and the Arbitrator denied the motion.

III. ANALYSIS

Section 281(1) of the Insurance Act, R.S.O. 1990, c. I.8 (prior to the amendments of April 1, 2016) allowed an insured person to choose to bring a claim for accident benefits in either a court proceeding or before an Arbitrator. However, the insured person’s choice is not unfettered. Jurisprudence holds that a multiplicity of proceedings should be avoided.

The parties agree, as do I, that the factors to be considered in deciding whether to allow an arbitration to proceed when there is also a pending court action are neatly summarized in Wasiela and Wawanesa Mutual Insurance Company.² They are:

a) Does the arbitration involve issues substantially similar to those in the civil action? b) How far along is the civil action? c) Is the civil action broader in scope than the arbitration, both in terms of the issues involved and the relief sought? d) Does the arbitration unduly duplicate the proceedings leading to greater costs, delays, and raising the specter of inconsistent results? e) Is there any serious impediment to having the issues in the arbitration move to the civil action?

The Arbitrator considered each of these factors. She found that the issues were not substantially similar. She found that, with regard to accident benefits, the court action requests declaratory relief only with no claim for specific accident benefits. She wrote:

Examining the Applicant’s Amended Statement of Claim, I find that the substantive relief of the amendments claimed is limited to declarations. Ms. Clarke-Hunter in her civil action, is not asking the court to order payment by Western of any specific damages to which she may be entitled, but simply to decide - if she is entitled - which of the multiple defendants must bear the cost of compensating her³.

With regard to the other factors, the Arbitrator noted that the arbitration could be resolved long before the civil action. She discounted Western’s submission that she should consider that it has expended considerable resources in defending the court action. She found that to be irrelevant since the issues are different. Similarly, although it was agreed that the court action is broader in scope than the arbitration, the Arbitrator found that to be irrelevant because, although broad, the court action does not include the issues in arbitration. Finally, on the question of whether there is any serious impediment to moving the issues in arbitration to the civil action, the Arbitrator ruled that the fact that the issues in the Arbitration can be transferred to the civil action does not mean that they should be transferred. She wrote:

The Insurer argues that there is no impediment at all to having the issues in the Arbitration move to the civil action. Counsel for the Applicant on the other hand, cites the prejudice that will occur by delaying the resolution of her claim for a further 18 months. While it is true that no claims were pursued for fifteen years after the accident, that alone is not a reason to deny a bona fide claim as the circumstances change.⁴

I find that the Arbitrator correctly interpreted the claims made in the court action and correctly applied the Wasiela factors. This is not at all a case of duplication. Western relies on the endorsement Master Brott made in allowing Ms. Clarke-Hunter to amend her Statement of Claim. The Master wrote “To deny the Plaintiff her right to pursue a claim for accident benefits is to deny her procedural fairness.” Western argues that the endorsement makes it clear that the relief sought in court includes pursuing specific claims for accident benefits and is not limited to a priority dispute. However, the scope of the court action is determined by the claims actually made and not by the claims that Ms. Clarke-Hunter could possibly make.

The only claim regarding accident benefits that Ms. Clarke-Hunter has actually made in court is to resolve the priority dispute. She could not have claimed accident benefits in court because no submitted claims had been denied and no mediation had taken place. Even the priority dispute in court is a red herring. Jurisdiction for resolving that dispute is found in the ongoing private arbitration between the various insurers. The issue will likely be resolved in that forum, long before the court action proceeds, leaving no issue of accident benefits in the court action.

Furthermore, the priority issue and the question of entitlement to specific accident benefits are not substantially similar. There would be no overlap in evidence. Any overlap in evidence between the issues in court and the arbitration arises from the tort issues in court. But that is likely true whenever there is a tort action and a concurrent claim for accident benefits. Therefore, Western’s logic only applies if every claim for accident benefits were required to be pursued in the same proceeding as a concurrent tort action.

I agree with the Arbitrator that the impact of the other Wasiela factors flows from the determination that the issues in court are not duplicated in the arbitration. That determination means that the status and scope of the court action are not relevant. Also, whether or not the issues in arbitration can be moved into court becomes a minor concern, because it is the insured person who has a choice of forum, and not the insurer.

As already stated, I find no error by the Arbitrator. This appeal is therefore dismissed.

IV. EXPENSES

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.