Dispute Resolution Services

Services de règlement des différends

Neutral Citation: 2020 ONFSCDRS 12

A02-001577

BETWEEN:

THANH HO

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Edward Lee

Heard: October 4, 2019, at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions were received on November 30, 2019

Appearances: Kevin Doan for Mr. Ho Jennifer Griffiths for Allstate Insurance Company of Canada

Issues:

The Applicant, Thanh Ho, was injured in a motor vehicle accident on December 19, 2000. He applied for statutory accident benefits from Allstate Insurance Company of Canada (“Allstate”), payable under the Schedule.¹ Disputes arose which the parties were unable to resolve through mediation, and Mr. Ho applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

1. Is Mr. Ho precluded from proceeding to arbitration before FSCO because his application for arbitration has been extinguished through the operation of section 22(2) of the O. Reg 664?

Result:

1. Mr. Ho is precluded from proceeding to arbitration before FSCO because his application for arbitration has been extinguished through the operation of section 22(2) of O. Reg 664.

2. Either Mr. Ho or Allstate may reapply for a determination of this matter at the LAT.

This matter arose through usual circumstances. Mr. Ho was involved in an automobile accident in December 2000, and his arbitration process was apparently initiated in 2002. A hearing was scheduled to proceed in February 2004, but no hearing ever took place. A settlement of this matter occurred in May 2004.

No further action was taken by Mr. Ho after the settlement of May 2004, and no further claims were advanced to Allstate or before FSCO by Mr. Ho or anyone representing him. FSCO took no further action in regard to this file. No proceeding was scheduled, and no steps were taken to adjudicate this matter.

Nothing was heard from either party until March 28, 2019 (a period of almost fifteen years after the settlement) when Mr. Ho, through his current counsel, sent a letter to FSCO for the purpose of advancing his accident benefits claims arising out of the accident which occurred on or about December 19, 2000: “[Mr. Ho] rescinds the settlement pursuant to the Settlement Regulation.”

A second letter was sent several months later to Allstate and to FSCO wherein Mr. Ho listed further grounds for which he sought to “… continue to arbitration before FSCO …”².

Dates for a teleconference were requested in this letter and I was assigned this matter in the summer of 2019. I convened a telephone discussion with the parties on August 12, 2019.

At the teleconference of August 2019, Allstate raised jurisdictional and procedural objections to Mr. Ho’s rescinding of the settlement of May 2004. Specifically, Allstate argued section 9.1 of the Settlement Regulation requires a party seeking to rescind a settlement to first re-pay all consideration received for the settlement. Second, Allstate argued the transitional provisions enacted in O. Reg. 664 obliged Mr. Ho to pursue any claim he might have at the Licence Appeal Tribunal (“the LAT”) rather than at FSCO. Mr. Ho objected to these considerations, but nevertheless indicated he would repay the consideration he had previously received as a settlement of this matter.

At a later teleconference, Mr. Ho confirmed he had indeed repaid the consideration he had received for the settlement of 2004 by repaying approximately $60,000.00 to Allstate on August 28, 2019. The teleconference was then adjourned so the parties could make arrangements as to the exchange and production of documents.

I wrote the parties on October 7, 2019, directing them to address some of the jurisdictional issues raised in the earlier discussions. Specifically, I invited the parties to provide me with submissions in regard to sections 21(1), 22(1), and 22.1 of the recent amendments to O. Reg. 664, dealing with whether a proceeding may take place before FSCO or whether it should be heard at the LAT. I directed the parties to consider this as a preliminary matter related to the continuance of this proceeding at FSCO.

I. The Nature of the Dispute:

The jurisdictional dispute in this preliminary proceeding arises from the following sections of the recent amendments to O. Reg 664:

21(1) A proceeding described in subsection (2) that was commenced but not completed before the transition date is continued after that date. O. Reg. 43/16, s. 5.

21(2) The proceedings referred to in subsection (1) are the following:

1. A mediation under section 280 of the pre-transition date Act.

2. A proceeding in a court of competent jurisdiction brought in accordance with clause 281 (1) (a) of the pre-transition date Act.

3. An arbitration under section 282 of the pre-transition date Act.

4. An appeal under section 283 of the pre-transition date Act.

5. An application for a variation or revocation of an order under subsection 284 of the pre-transition date Act. O. Reg. 43/16, s. 5.

22(1) No party may commence any of the following proceedings on or after June 8, 2019:

1. A mediation under section 280 of the pre-transition date Act.

2. An arbitration under section 282 of the pre-transition date Act.

3. An appeal under section 283 of the pre-transition date Act.

4. An application for a variation or revocation of an order under subsection 284 of the pre-transition date Act. O. Reg. 180/19, s. 3 (1).

22(2) If the parties to a proceeding continued under subsection 21 (1) or section 22.1 enter into a settlement as defined in subsection 9.1 (1) in respect of the proceeding on or after June 8, 2019 or have entered into a settlement in respect of the proceeding before that date, the proceeding is extinguished. However, either of the parties may make a new application to the Licence Appeal Tribunal in accordance with section 280 of the Act to resolve the dispute and, for greater certainty, the dispute shall be resolved in accordance with the rules of the Licence Appeal Tribunal. O. Reg. 180/19, s. 3 (1). [Italics mine]

These recent amendments have an impact on determining whether accident benefits proceedings will take place at FSCO or at the LAT.

As suggested in the parties’ submissions, there are two parts to this analysis. First, it should be determined whether a proceeding has been continued under section 21(1) or section 22.1; and second, if it has been continued, whether the matter has been extinguished under section 22(2). A matter that has been extinguished at FSCO may be heard before the LAT.

Mr. Ho’s argument:

Mr. Ho made initial legal arguments that his accident benefits case should be heard at FSCO and not the LAT. He stated that his accident benefits case (A02-01577) was commenced in December 2002, but never completed. He also suggested that Allstate accept the following assumed, but at this time, unproven facts:

a. The applicant commenced the arbitration proceeding in late 2002;

b. FSCO reported a first settlement by the parties in 2003 but it subsequently fell through;

c. FSCO further reports a second settlement in 2004 while the applicant represented himself. FSCO reported that the settlement was “subject to compliance” with O. Reg. 664;

d. The proceeding was administratively closed by FSCO subsequently in 2004;

e. No order has been taken out to dismiss the proceeding; and

f. no final adjudication order by an arbitrator has taken place.³

In essence, Mr. Ho claims that although his case commenced in late 2002, it has not been “completed” despite the purported settlement of May 2004.

To support his arguments, Mr. Ho cites Y. C. and Economical Mutual Insurance Company,⁴ where an arbitrator at the LAT determined that FSCO retained the jurisdiction to hear a case where there had not been a final disposition of an application for arbitration at FSCO and no formal evidence of a withdrawal of that proceeding at FSCO. The LAT arbitrator reasoned that a LAT file would be reopened even if it were considered closed when a settlement failed, and in such a situation, an applicant would not be required to re-file a new application at the LAT.

Nonetheless, the facts of the present case differ from those in Y. C. In Y. C., the insured was given a full and final release and settlement disclosure notice, but a few months later, informed the insurer it would not be signing or completing the settlement documentation. The insurer agreed the insured could rescind the settlement agreement initially reached. Both parties accepted the settlement never took place.

In the present case, the parties agree a purported settlement occurred in May 2004. No action was taken to suggest that this was other than a complete and final settlement of all issues until almost fifteen years later. Unlike the Y. C. case, there has never been a determination or agreement that the settlement of May 2004 was invalid. Allstate maintains and has always maintained this was a valid full and final settlement.

Nor am I bound by decisions of LAT arbitrators and how they determine their cases involving the reopening of their files. Further, I note the LAT arbitrator in Y. C. did not consider section 22(2) of the recent amendment of O. Reg 664, already noted above.⁵ In summary, I find the Y. C. decision provides me little persuasive guidance in the examination of the present case.

Second, Mr. Ho relies on the FSCO appeal decision of Botezatu and Certas Home and Auto Insurance Company,⁶ where Delegate Evans held the following:

However, the mere fact that FSCO closed its file did not make the dispute magically disappear. That is why insurers often sought dismissal orders after a settlement and a resulting file closure, as until there was a dismissal, the dispute still existed. … In addition, FSCO often reopened files to deal with ongoing disputes after alleged settlements.⁷ [Italics mine]

Nonetheless, a review of this decision also demonstrates little relevance to the present case. In Botezatu, the settlement agreement was rescinded within the two-day statutory “cooling off” period available to all insureds.⁸ The parties knew this settlement was voided almost from the very start. This is again different from the instant case, where no challenge was made to the purported settlement until some fifteen years after its making.

In Botezatu, the insured then appealed the arbitrator’s award of expenses to the insurer for the withdrawal of his application, arguing that there had never been a dispute to withdraw because of the settlement [despite his having rescinded it], and no expenses could have been ordered for a “non-existent dispute.”⁹

It was in this context that the Delegate made his comments about file closures and dismissal orders. He cited notes of past counsel forums at FSCO, but those notes demonstrate an irregular and inconsistent process whereby counsel sometimes sought dismissal orders, and sometimes did not. Dismissal orders were even sought for partial settlements. For years, FSCO attempted to discontinue the practice of issuing dismissal orders due to the large backlog of such requests.¹⁰ The Delegate’s own observation that FSCO “often” reopened files reflects the ambiguity and irregularity of the practice.

Therefore, I find there were no hard and fast rules regarding consent dismissal orders, and Botezatu only demonstrates the issuance or non-issuance of a dismissal order is inconclusive as to whether a file was completed or not.

Therefore, based on Mr. Ho’s initial legal arguments, I am not convinced his case is one which was commenced in 2002, but was not completed by the transition date and would thus be necessarily “continued” under section 22(1) of O. Reg 664.

Allstate’s argument:

Allstate contends the purported settlement of 2004 was a full and final settlement of all issues in dispute and that Mr. Ho provided Allstate with an executed Settlement Disclosure Notice with respect to all of his accident benefit claims arising from this accident – past, present, and future.

Allstate relied on the settlement made in 2004 and paid Mr. Ho the aggregate sum of $65,000.00 as a result. The settlement reached in May 2004 was binding, and it is incumbent on Mr. Ho to prove it is not. Allstate argues that because of the recent amendments to O. Reg 664, it is the LAT, not FSCO, which now has jurisdiction to make any and all determinations in regard to this matter.

Finally, Allstate argues that this case can only be considered at FSCO if it is a file that has been continued under section 22(1) of the O. Reg 664. It was not continued and as such, it is extinguished by O. Reg. 664.

Analysis:

Both parties made lengthy submissions as to the intent and effect of these recent legislative amendments. Overall, it is clear the purpose of these transitional provisions is to direct how those few cases which remain at FSCO will be determined. Without doubt, the amendments support the transfer of all remaining open Dispute Resolution Services (DRS) cases from the Financial Services Commission of Ontario (FSCO) to the LAT.¹¹ To this end, a hard deadline has been set. On July 1, 2020, any cases not been finally determined at FSCO (including those where no decision has been issued) will be “extinguished.¹²” These cases will then be eligible to be restarted by either party as new applications before the LAT, using existing LAT processes and rules.

As mentioned, Allstate does not accept the “assumed facts” set out in Mr. Ho’s submissions. Instead, Allstate contends the Settlement Disclosure Notice, executed and submitted in 2004, was a full and final disclosure settlement which determined all his claims to accident benefits arising from this accident—past, present, and future.

This initial step of the analysis—whether a file has been completed or “continued”— is factually based. Any determination of this preliminary question would be made on evidence adduced by the parties.

The parties are not in agreement as to facts of the settlement in question. Further, at the time of the making of these submissions, the parties were not even in agreement as to the production of documents or the existence of an actual documentary record. Needless to say, there was no agreement as to a joint record. There has been no discussion of what evidence, witnesses, or documents might be necessary for this consideration. In the absence of a factual record or evidence, I am not prepared to make a determination as to whether this file has been completed or whether it is a file that has been “continued.”

The most reasonable and cost efficient method to proceed with this file would be to assume, without finding at this time, that this file has not yet been completed. Otherwise, a preliminary hearing on the issue of whether the file had been completed, based on facts and evidence that could date from as long as fifteen years in the past, would have to be first conducted. As noted, the parties are nowhere close to proceeding with such a hearing at this time.

Thus, I will assume, without determining, that the file is not complete and it has been “continued,” pursuant to sections 21(1) or 22.1 of the O. Reg 664. Turning to the second part of the analysis, I must now decide whether this is a matter that is extinguished under section 22(2) of O. Reg 664.

Both parties made submissions on just this assumption, and I turn now to those arguments.

II. Is this file extinguished by the action of section 22(2) of O. Reg 664?

Thus, assuming but not finding, that the proceeding has been continued under section 21(1) or 22.1, the next step is to determine if this matter has been extinguished. The relevant provision of O. Reg 664 is the following:

Section 22(2) If the parties to a proceeding continued under subsection 21 (1) or section 22.1 enter into a settlement as defined in subsection 9.1 (1) in respect of the proceeding on or after June 8, 2019 or have entered into a settlement in respect of the proceeding before that date, the proceeding is extinguished. However, either of the parties may make a new application to the Licence Appeal Tribunal in accordance with section 280 of the Act to resolve the dispute and, for greater certainty, the dispute shall be resolved in accordance with the rules of the Licence Appeal Tribunal. O. Reg. 180/19, s. 3 (1). [Italics mine]

Allstate argues this provision has the effect of extinguishing the present application for the following reasons:

First, the provision refers to a settlement “as defined in subsection 9.1(1),” and does not specifically refer to a settlement that “meets all the conditions of subsection 9.1.” Allstate submits this squarely encompasses the May 2004 settlement that took place.

Second, if this were a proceeding that had been continued under section 21(1), section 22(2) would deem this to be a proceeding that had been extinguished, and thus to be continued at the LAT.

Third, according to Allstate, this deeming provision is a very strong indication that the intent of this legislative framework is to treat all arbitration proceedings that have been the subject of a settlement as having been “completed.” The corollary of this is that any later dispute, including whether or not the claimant had a right to rescind an earlier settlement, should be treated as a new dispute under the “new system” [at the LAT]. This approach is sensible, logical, and consistent with the overall legislative scheme.

On the other hand, Mr. Ho argues that despite there having been a settlement in May 2004, (a date before the amendment date of June 8, 2019), it would be incorrect to interpret the effect of section 22(2) as extinguishing his arbitration proceeding.

He argues the correct interpretation of section 22(2) turns on an examination of the use of the indefinite article in the words, “a proceeding,” in the first sentence of section 22(2), as opposed to the use of the definite article in the words, “the proceeding,” in the second part of the same sentence. According to Mr. Ho, the use of different articles (definite versus indefinite) leads one to the conclusion that section 22(2) only acts to extinguish those proceedings where the settlement has been entered into on or after the transition date of April 1, 2016, which he states is the earliest date a proceeding could have been “continued under section 21(1).”

Second, he argues that discussions and communications involving FSCO and the Ministry of Finance provide further evidence that the legislative intent of the amendments support the interpretation that “all open and ongoing dispute resolution cases will continue until the transitional period ending on June 30, 2020.”

Third, Mr. Ho argues the statutory interpretation of a consumer protection provision such as section 279 of the Insurance Act (and its subordinate legislation such as the Schedule) requires one to apply a large and liberal or “generous” interpretation in favour of the consumer. According to Mr. Ho, such an interpretation would allow him to continue in the forum where he had commenced his proceeding. Further, it would insulate him from the risk that his application might be rejected in both the LAT and FSCO.

Analysis:

I do not find Mr. Ho’s argument, based on the use of the indefinite and definite articles in section 22(2), provides the simplest, most reasonable, and most logical reading of the provision. Mr. Ho seems to suggest a reader should consider there to be two different proceedings, rather than one.

I find this is incorrect. Only one proceeding is discussed in this section. Further, the parts of sentence in section 22(2) are conjoined by the conjunction “or.” A simple application of this conjunction suggests that in either case, the proceeding would be extinguished. A plain and straightforward reading of section 22(2) means that a proceeding where a settlement was reached (before or after June 8, 2019) is simply extinguished.

Further, I find this interpretation supports the legislative intent. It is well known and much publicized that FSCO has been closing for years. This process was communicated to stakeholders at a very early stage, and the transfer of statutory accident benefits disputes from FSCO to the LAT commenced in 2016. All parties are aware that files were closing or being sent to other forums. Nor do I accept Mr. Ho’s contention that recent communications between FSCO and the Ministry of Finance support a contrary intention. Those communications merely discuss the processing of “open and ongoing” cases until June 30, 2020, making no reference to files that have been putatively settled, including those where settlements have been unchallenged and inactive for approximately fifteen years.

Finally, I am also not convinced there is any underlying consumer protection principle supporting Mr. Ho’s argument that a party should always be permitted to complete and conclude an application in the forum where it was commenced. There is no hard and fast rule in this regard, especially in Mr. Ho’s case, where his application was filed in 2002, settled in 2004, and has lain dormant and inactive for approximately fifteen years. Any expectation in this regard that Mr. Ho might have had when he filed his application eighteen years ago would be neither reasonable nor realistic.

In fact, what Mr. Ho now seeks from FSCO is a two-stage process: first, a preliminary determination that the 2004 settlement was invalid; and second, a further determination of catastrophic impairment and enhanced benefits related to such a finding.

At the present time, less than a month remains in FSCO’s mandate to consider any cases. At the conclusion of this short period, all FSCO cases will be extinguished, regardless of their stage of completion in the overall process.

Any factual determination as to whether Mr. Ho’s 2004 settlement was invalid will be long and complex, given the years since the creation of that settlement. Even more challenging would be a determination of catastrophic impairment (such hearings in the best circumstances often requiring eight to twelve days) based on an accident that took place in 2002 and any enhanced benefits to which the insured might be entitled.

Given the short timeframe in which FSCO has left to operate, it is highly unlikely that such a long and protracted hearing process (including the issuance of a decision) would be complete by June 30, 2020. Much legal time, hours of preparation and hearing, and the prohibitive costs of this proposed proceeding, would thus be expended without result, wasted, and lost. Clearly, the simplest, most cost-effective, and easiest manner (including to the insured) for this matter to proceed is at the LAT for a full determination.

Compounding these considerations are the consequences of the ongoing emergency situation that has engulfed the province of Ontario and Canada as a result of the global pandemic caused by the COVID-19 virus. At the current time, there is no indication that there will be a cessation of the emergency and isolation measures imposed. In addition, the applicant now resides out of province.

Finally, I find nothing to support Mr. Ho’s contention that the LAT would simply reject his application based on jurisdiction. The words of the statute state unequivocally that he may reapply at the LAT. In any case, even if the LAT somehow refused to hear him, he would have the same recourse he previously had at FSCO: he could seek a judicial review of that decision.

Accordingly, I find the effect of section 22(2) of O. Reg 664 is the following: Mr. Ho’s proceeding is extinguished at FSCO. Further, in accordance with that provision, either Mr. Ho or Allstate may reapply for a determination of this matter at the LAT.

The issue of the expenses of this proceeding was raised by neither party and no submissions were made in this regard. No assessment of expenses will be made at FSCO.

June 10, 2020

Edward Lee Arbitrator

Date

Dispute Resolution Services

Services de règlement des différends

Neutral Citation: 2020 ONFSCDRS 12

A02-001577

BETWEEN:

THANH HO

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

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 Regulation 664, as amended, it is ordered that:

1. Mr. Ho is precluded from proceeding to arbitration before FSCO because his application has been extinguished through the operation of section 22(2) of O. Reg 664.

2. Either Mr. Ho or Allstate may reapply for a determination of this matter at the LAT.

June 10, 2020

Edward Lee Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Letter of May 17, 2019
3. 3Written submissions of Mr. Ho page 4, October 31, 2019
4. 4LAT File No. 18-008802, August 28, 2019
5. 5Paragraph 12 of submissions
6. 6(FSCO P18-00036, December 12, 2018)
7. 7Ibid., Page 5
8. 8Ibid., Page 2, and section 9.1(3)
9. 9Ibid., Page 5
10. 10Counsel forum notes, FSCO website
11. 11I agree with and endorse the decision of Arbitrator Morris as to the intent of this legislation as discussed in her decision of November 9, 2019 in the following matters: A11-003590 and A11-003586.
12. 12Section 20(1)