Aviva Canada Inc. v. Tahseen Al-Khunfusi and Dhakeaa Abbas, 2018 ONFSCDRS 9

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2018 ONFSCDRS 9

Appeal P17-00009 and P17-00010

OFFICE OF THE DIRECTOR OF ARBITRATIONS

AVIVA CANADA INC.

Appellant

and

TAHSEEN AL-KHUNFUSI and DHAKEAA ABBAS

Respondents

BEFORE:

David Evans

REPRESENTATIVES:

Meredith Harper for Aviva Canada Inc. Samia Alam for Mr. Tahseen Al-Khunfusi and Mrs. Dhakeaa Abbas

HEARING DATE:

On the record with submissions received by December 1, 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 January 9, 2017, regarding Tahseen Al‑Khunfusi, in FSCO file A15-007963, is allowed. Paragraph 1 of the Arbitrator’s order is revoked, and the following substituted:

2. Aviva Canada Inc.’s preliminary issue motion precluding Tahseen Al-Khunfusi from adding issues to this proceeding after April 1, 2016 is allowed.

3. The appeal of the Arbitrator’s order dated January 9, 2017, regarding Dhakeaa Abbas, in FSCO file A15-005798, is allowed. Paragraph 1 of the Arbitrator’s order is revoked, and the following substituted:

4. Aviva Canada Inc.’s preliminary issue motion precluding Dhakeaa Abbas from adding issues to this proceeding after April 1, 2016 is allowed.

5. 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.

January 10, 2018

David Evans Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

In two related decisions released on January 9, 2017, Arbitrator Stramwasser allowed the Respondents, Mr. Tahseen Al-Khunfusi and Mrs. Dhakeaa Abbas, to add issues to their existing FSCO arbitration proceedings against their insurer, Aviva Canada Inc., notwithstanding the amendments to the Insurance Act: As of April 1, 2016, the transition date, pursuant to s. 280 of the revised Insurance Act, disputes about entitlement to or the amount of accident benefits are brought exclusively before the Licence Appeal Tribunal (LAT).

Aviva appeals those decisions, relying on my decision in Aviva Canada Inc. and Duong, (FSCO P16-00048, January 12, 2017) that, except in limited circumstances, new issues cannot be added to existing arbitration proceedings after the transition date.

For the reasons set out below, I find that Duong applies equally to the cases under appeal, so the appeals are allowed.

II. BACKGROUND

Mr. Tahseen Al-Khunfusi and Mrs. Dhakeaa Abbas were injured in a motor vehicle accident on July 26, 2013. They each filed claims for statutory accident benefits pursuant to the SABS–2010¹ from their insurer, Aviva. After denials of certain claims and mediation, they commenced arbitration.

Regarding Mrs. Abbas, Aviva denied non-earner benefits in an explanation of benefits dated June 9, 2014. It also denied the costs of several examinations. On August 7, 2015, Mrs. Abbas filed her Application for Arbitration at FSCO, disputing the denial of those examination costs. As for the NEBs, Aviva signed a consent to fail mediation on November 15, 2015. Although a Report of Mediator was not issued until later, the mediation was deemed to have failed 60 days later, that is, by January 15, 2016.²

At the first FSCO pre-hearing before the Arbitrator on March 1, 2016, the issues regarding the examination costs were confirmed; no request was made to add the issue of the NEBs. A Report of Mediator regarding the NEBs was issued on April 20, 2016, followed by an amended Report on May 12, 2016.

On May 27, 2016, a request was made to Aviva to add the NEB issue to the existing arbitration, which Aviva refused. An Application was then filed with the LAT on July 15, 2016; the initial denial of the NEBs was, however, on June 9, 2014, so the LAT Application was filed more than two years after the denial.

Regarding Mr. Al-Khunfusi, he filed his Application for Arbitration on November 1, 2015 at FSCO regarding NEBs, medical benefits and costs of examinations. On February 12, 2016, he filed an Application for Mediation with FSCO for further assessments. That mediation effectively failed 60 days later, or on April 12, 2016, after the transition date. A Report of Mediator was ultimately issued on June 10, 2016. A request to add the issue to arbitration was sent July 6, 2016, but on July 13, 2016, Aviva refused to add these issues. A LAT proceeding was not commenced as the two years from denial for payment of those assessments had not passed.

At a further pre-hearing before the Arbitrator, Aviva opposed adding any of the issues because the April 1, 2016 deadline to commence Applications for Arbitrations or add issues at FSCO had passed. Further, with respect to Mrs. Abbas, Aviva took the position that the two-year limitation to commence an action, arbitration or appeal had expired on June 9, 2016.

In two related decisions, Al-Khunfusi and Aviva Canada Inc., (FSCO A15-007963, January 9, 2017) and Abbas and Aviva Canada Inc. (FSCO A15-005798, January 9, 2017), Arbitrator Stramwasser allowed the insureds to add their respective issues to their ongoing arbitration claims after April 1, 2016, despite the exclusive jurisdiction of the Licence Appeal Tribunal to deal with proceedings commenced after that date (s. 280 of the Act).

The two decisions are parallel in reasoning. The Arbitrator found that mediation had failed in both cases; she found the dates of the failure and of the requests to add issues was irrelevant.

The Arbitrator found that issues could be added without a new Application for Arbitration being filed based on common practice, the interpretation of the DRPC set out in Little and Pembridge Insurance Company, (FSCO A11-001373, February 8, 2016), legitimate expectation, the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, and legislative intent. As part of that same discussion, she found that adding issues is not the same as filing new applications for arbitration.

Then the Arbitrator found that adding issue to the arbitrations was the fairest way of hearing them, noting that it would avoid duplication and avoid the significant prejudice to Mrs. Abbas due to the limitation issue whereas Aviva would suffer no significant prejudice.

However, a couple of days after the Arbitrator issued her decision, I held in Aviva Canada Inc. and Duong, (FSCO P16-00048, January 12, 2017) that adding issues to a FSCO arbitration proceeding is the same as filing new applications for arbitration. Just as no new applications for arbitration could be filed after the transition date, no further issues could not be added to an existing arbitration proceeding after April 1, 2016 unless they necessarily flowed from existing issues, such as a catastrophic impairment claim in an ongoing claim for benefits that are not payable in the absence of catastrophic impairment.

III. ANALYSIS

Appeal decisions are binding on arbitrators. Further, as stated by the Court of Appeal in Pastore v. Aviva Canada Inc., 2012 ONCA 642, the Director’s Delegate determines whether the arbitrator’s decisions of law, including statutory interpretation, are correct.

Therefore, my finding in Duong that issues cannot be added to an arbitration proceeding after April 1, 2016, is binding, unless the Respondents persuade me otherwise. However, they have not done so, in particular because in Duong I was applying what the Court of Appeal had already effectively held in Gordyukova v. Certas Direct Insurance Co., 2012 ONCA 563, namely that adding issues to an existing arbitration is equivalent to commencing an arbitration.

Furthermore, none of the issues added in the arbitration proceedings by the Arbitrator fall within the Duong exception. Just as with the issue of the treatment plan added in error to the arbitration proceeding in Duong, the NEB and assessment expenses issues are separate claims and do not necessarily arise from the issues already in dispute.

It follows that there was no discretion to add those issues to arbitration. Although the Arbitrator did not specifically refer to Non-Marine Underwriters, Mbrs. of Lloyd’s and Mangat, (FSCO P00-00020, August 1, 2000), which deals with the criteria regarding the discretion to add issues to arbitration, she essentially carried out a Mangat analysis. However, those criteria apply only when there is a discretion to add issues. Therefore, the portions of the Arbitrator’s decision that conduct a Mangat analysis by, for instance, focusing on the relative merits of the FSCO and LAT proceedings, are irrelevant.

In that regard, the Arbitrator found that Mrs. Abbas would suffer prejudice due to the passing of the limitation period for the NEB claim at the LAT if she could not add the issue to arbitration. However, there is nothing intrinsic in the system that caused this problem for Mrs. Abbas. She could have added the issue at the first pre-hearing in March 2016, as the mediation had already been deemed failed by that point. Alternatively, she could have filed for adjudication of the issue at the LAT prior to the expiration of the limitation period. The hardship for her was not created by a system whereby new issues cannot be added to a FSCO arbitration after the transition date, so there is no reason to interpret the legislation otherwise.

The Arbitrator also referred to the legislative intent of consumer protection to find that new issues could be added to pending arbitrations. However, the Arbitrator failed to heed the legislative intent to cease hearings at FSCO, a purpose that would not be met by allowing new issues to be added to existing FSCO proceedings.

Furthermore, the change was procedural. The law did not affect Mrs. Abbas’ substantive rights to benefits. The presumption is that legislation is meant to apply immediately and generally to on-going facts unless its application would interfere with vested rights. However, by definition, provisions that are purely procedural do not interfere with vested rights: GAN Canada Insurance Company and Lehman, (FSCO P97-00064, August 10, 1998).³

And even if it could be said that the Respondents had a vested right to proceed at FSCO and not at the LAT, the presumption that legislation is not meant to interfere with vested rights may be rebutted by the clear intent of the legislature. For instance, in the recent Divisional Court decision in State Farm Automobile Insurance Co. v. Kulaveerasingam, 2017 ONSC 6278, about which the parties provided submissions, the Court overturned the finding of the Delegate that where an automobile contract was entered into before the 2010 SABS went into effect, the right to interest on outstanding benefits at 2% had vested, even if the accident occurred after the 2010 SABS came into force. However, the Court found that it was clear from the wording of s. 2(1) of the 2010 SABS that the Legislature intended it to apply to all accidents on and after September 1, 2010, even if the insured was covered by a policy entered into before that date.

Similarly, in this case, although the accident happened before the transition date, s. 280(1) of the current Act sets out the sole jurisdiction of the LAT to determine statutory accident benefits disputes after the transition date. The Legislature has made it clear that, from April 1, 2016 on, all such disputes must be heard at the LAT, regardless of the date of the accident. As discussed in Duong, an exception is made for ongoing existing claims at FSCO. However, since adding a new issue to an ongoing claim is the same as applying for adjudication, it follows that issues that had not been added to an arbitration proceeding at FSCO prior to the transition date must also be determined at the LAT.

Therefore, I find that the reasoning in Duong applies equally to this case. The Arbitrator erred in allowing the Respondents to add their respective issues to the arbitration proceedings.

The appeals are therefore allowed.

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.

January 10, 2018

David Evans Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Effective September 1, 2010, Ontario Regulation 34/10, as amended.
2. 2Hurst v. Aviva Insurance Company, 2012 ONCA 837.
3. 3Application for judicial review dismissed: Lehman v. Gan Canada Insurance Co., [2000] O.J. No. 4902. In Motor Vehicle Accident Claims Fund and Barnes, (FSCO P16-00087, April 6, 2017), Delegate Rogers applied Lehman and found that, pursuant to s. 268(1) of the Insurance Act, even substantive rights may be affected when the Legislature amends the SABS.