Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2017 ONFSCDRS 90
FSCO A12-001626
BETWEEN:
COMERT TOPRAK
Applicant
and
ECONOMICAL MUTUAL INSURANCE COMPANY
Insurer
DECISION ON A MOTION
Before: Arbitrator Lynda Tanaka
Heard: By written submissions due February 21, 2017
Appearances:
Mr. Brian Cintosun for Mr. Comert Toprak
Ms. Sonia Fabiani for Economical Mutual Insurance Company
Issues:
The Applicant, Mr. Comert Toprak, was injured in a motor vehicle accident on August 24, 2008 and sought accident benefits from Economical Mutual Insurance Company (“Economical”), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and the Applicant, 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 issue in this Motion is:
- Should an Order be given to permit Economical to set off $37,839.76 owed to the Applicant against moneys owing to it by the Applicant in the amount of $40,357.10, so that in sum, the Applicant would owe Economical $2,517.34?
Result:
- Economical is entitled to set off the amount of the expenses which the Applicant owes it against the amount that Economical owes to the Applicant for benefits, and therefore the Applicant owes Economical $2,517.34. Interest on the amount owing to the Applicant for benefits stops running as of January 10, 2017.
EVIDENCE AND ANALYSIS:
Background
On January 17, 2017, Economical brought a Motion for an Order permitting it to set off moneys owing by it to the Applicant against moneys owing by the Applicant to Economical. As part of the relief requested, Economical requests an Order concerning the date as of which interest is owed for the purpose of calculation of the set-off. I ordered that the Motion be determined by written Hearing. Economical provided further written submissions clarifying the points made in its initial Motion request, and the Applicant was given the opportunity to make submissions in response. When the date for his submissions passed, Applicant’s counsel was contacted by email. In his response, dated February 24, 2017, Applicant’s counsel confirmed he was not making any submissions on the Motion.
Economical is seeking to set off the amount that the Applicant owes it for expenses against the amount that it owes the Applicant as a result of the decision on the merits of the claims that were arbitrated. In my decision issued August 2, 2016, I found in favour of the Applicant on claims for attendant care benefits, the cost of an examination, and interest. However, I rejected the balance of the claims, including a claim for catastrophic impairment and income replacement benefits. Economical brought an application for expenses, and in my decision, dated January 10, 2017, I found that the Applicant was liable to Economical for $40,357.10, for a portion of its expenses of the Arbitration.
Economical has provided calculations of the amounts it owes to the Applicant as a result of my decision, as follows:
For cost of examination: $2,238.00, plus interest to January 11, 2017: $5,180.58
For attendant care: $5,899.79, plus interest to January 11, 2017: $24,521.38
Total owing to the Applicant: $37,839.762
Interest was calculated to January 11, 2017, as ending on the day after the Decision on Expenses was issued, since that decision crystallized Economical’s right to be paid money by the Applicant. The Motion requests that interest stop running as of January 10, 2017.
Economical seeks an Order that the Applicant pay it the difference between the two amounts ($2,517.34). The importance is that Economical has made no payment to the Applicant despite the award in his favour. Economical was aware that a Notice of Garnishment was issued for fees and disbursements of one of the Applicant’s former counsel, because that Notice was an Exhibit in the Hearing. Therefore, an Order is sought confirming that no funds are owing by Economical to the Applicant.3 Economical had anticipated that it would be awarded expenses because it was substantially successful in the Hearing.
The determination of this Motion depends on two sub-issues:
a) Do I have jurisdiction to order a set-off?
b) Should the set-off request be granted and, if so, what is its quantum? In determining the quantum, I must determine the date as of which interest should be suspended on the benefits owing to the Applicant.
a) Jurisdiction
A jurisdiction issue arises because Arbitration awards are enforced by the courts under the Insurance Act and an Arbitrator under the Insurance Act has only the jurisdiction granted to her by the legislation. Set-off is historically regarded as an equitable remedy which is, generally speaking, the prerogative of the courts. The issue of jurisdiction was canvassed extensively in a 1996 decision of Director’s Delegate Susan Naylor, Boodhai and Allstate.4 The decision dealt directly with the issue of setting off amounts owing for expenses (in that case, by the Insurer to the Insured), against amounts owed by the Insured to the Insurer for repayment of overpaid benefits. The Director’s Delegate extensively examined the jurisprudential and legislative background of set-off in the context of the Insurance Act, and held:
It is a matter of common sense that the arbitrator should be permitted to take the extra step of sorting out the net effect of his or her order or orders on the parties to the arbitration. In my view, this is a reasonable, sensible and necessary adjunct to the arbitrator’s authority to deal with disputed issues about an insured person’s entitlement to, and the amount of, statutory accident benefits and to award arbitration expenses.5
The Director’s Delegate founded her analysis on a review of section 279(4) of the Insurance Act, which provides that Arbitrators must determine issues before them “by order and may make an order subject to such conditions as are set out in the order”. That wording was still in place during the relevant period of this claim.6 Therefore, the same legislative support remains for my granting the Order requested in this case as was in place for Boodhai.
The Director’s Delegate also referenced the principles that require that a statutory interpretation be consistent with the purpose and objectives of the legislated dispute resolution scheme. She held:
This conclusion [that an arbitrator has jurisdiction to award a set-off] is consistent with the purpose and objectives of the dispute resolution scheme, which is to deal with accident benefit disputes quickly, relatively simply and with some finality. An interpretation that requires the arbitrator to ignore the ultimate positions of the parties, and forces them to pursue divergent streams of enforcement does not advance this objective. On the contrary it involves unnecessary complexity and encourages multiple, split, proceedings.7
Economical also referred to the decision of Arbitrator Rogers in Anthonypillai and TD,8 which applied Boodhai and referred to a consistent application of its principles by Arbitrators in subsequent cases.
The Applicant provided no contrary argument. I am satisfied that the Motion is for an Order to sort out the net effect of my Orders on the claims for benefits and expenses. I therefore find that I have jurisdiction to grant this Motion for set-off.
b) Should the set-off request be granted and, if so, in what amount? As of what date should interest be suspended?
The Applicant did not dispute that Economical’s calculations are correct. The amount flows from the application of the wording of the legislation. I have been provided with no grounds on which to reject the request. The rationale for the relief requested is consistent with the precedents relied on and by the legislative scheme.
With respect to interest, I accept that January 11, 2017 is the date when the amount of expenses owing would have crystallized, as it reflects the date of the Decision on Expenses.
I find that Economical is permitted to set off the amount of the expenses to which it is entitled against the amount owing by it to the Applicant, and that the set-off results in an amount owing by the Applicant to Economical of $2,517.34.
EXPENSES:
Economical did not request expenses of this Motion and none are ordered.
March 27, 2017
Lynda Tanaka Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2017 ONFSCDRS 90
FSCO A12-001626
BETWEEN:
COMERT TOPRAK
Applicant
and
ECONOMICAL MUTUAL 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:
- Economical is entitled to set off the amount of the expenses which the Applicant owes it against the amount that Economical owes to the Applicant for benefits, resulting in an amount owing by the Applicant to Economical of $2,517.34. Interest on the amount owing to the Applicant for benefits stops running as of January 10, 2017.
March 27, 2017
Lynda Tanaka Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- Written Submissions of the Moving Insurer, paras. 9 to 11(inclusive), Tabs B and C.
- Exhibit 2 in the Hearing, Tab 12A, Notice of Garnishment, February 3, 2014.
- Boodhai and Allstate Insurance Company of Canada, FSCO Appeal P-004002, September 18, 1996, applied in Anthonypillai and TD Home and Auto Insurance Company, FSCO A09-002810, November 19, 2013.
- Supra, at p. 7.
- The section was repealed in the amendments set out in Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, s. 14, c. 9, but that does not affect this Arbitration proceeding.
- Boodhai, at p. 8.
- Op. cit., at p. 5.