Ontario Superior Court of Justice

Cornie v. Security National Insurance Company o/a TD Meloche Monnex
Hurst v. Aviva Insurance Company
Singh v. Aviva Insurance Company
Clarke v. State Farm Mutual Automobile Insurance Company
[Indexed as: Cornie v. Security National Insurance Co.]

109 O.R. (3d) 780

2012 ONSC 905

Ontario Superior Court of Justice,

Sloan J.

February 8, 2012

Insurance -- Automobile insurance -- Statutory accident benefits -- Mediation -- Sixty-day time period set out in Rule 19 of Dispute Resolution Practice Code being mandatory -- Mediation having failed where it is not concluded within 60 days of filing of application -- Sixty-day period commencing when application is filed and not when arbitrator is appointed -- Report from Financial Services Commission of Ontario declaring that mediation has failed not required where mediation has failed for non-compliance with Rule 19.

The plaintiffs were injured in motor vehicle accidents and applied for mediation with the Financial Services Commission of Ontario ("FSCO"). When the mediations were not held within 60 days, they asked for a mediator's report stating that the mediation had failed. They relied on Rule 19 of the Dispute Resolution Practice Code ("DRPC"), which provides that "mediation must be concluded within 60 days of the filing of an application for mediation", and on Rule 21, which states that mediation has failed when "the time limit for mediation . . . has expired and no settlement has been reached". The Dispute Resolution Services Mediation Unit of FSCO refused to issue failed mediation reports, taking the position that the filing of a mediation application does not take place, and the 60-day time limit does not start to run, until a mediator is appointed. The plaintiffs commenced court actions claiming entitlement to statutory accident benefits. The defendants moved to strike the statements of claim.

Held, the motion should be dismissed.

The 60-day period set out in Rule 19 of the DRPC is mandatory rather than directory. Nowhere in the DRPC does it state that the 60-day period does not commence to run until a mediator is appointed. The plaintiffs did not need a report from FSCO declaring that mediation had failed where they claimed that the mediation had failed through non-compliance with Rule 19. Nor were they required to use whatever appeal procedures were available to them under the DRPC or to proceed by way of judicial review before commencing actions.

MOTION to strike statements of claim.

Cases referred to
Alberta Teachers' Assn. v. Alberta (Information and Privacy Commissioner), [2010] A.J. No. 51, 2010 ABCA 26 , 21 Alta. L.R. (5th) 30, 316 D.L.R. (4th) 117, 474 A.R. 169, [2010] 8 W.W.R. 457, 185 A.C.W.S. (3d) 228, 1 Admin. L.R. (5th) 60, distd

Statutes referred to
Insurance Act, R.S.O. 1990, c. I.8 [as am.], ss. 278 - 283 [as am.], 280(2), (3), (4), (7), (8), 281.1, (1), (2)(b)
Personal Information Protection Act, S.A. 2003, c. P-6.5, s. 50(5)

Rules and regulations referred to
R.R.O. 1990, Reg. 664 (Insurance Act), s. 10
Statutory Accident Benefits -- Accidents on or after November 1, 1996, O. Reg. 403/96 [as am.]

Authorities referred to
Financial Services Commission of Ontario, Dispute Resolution Practice Code

Bruce Kelly and Ian Britto (student at law), for all plaintiffs.
Duane Burns and Jennifer Matic, for Security National Insurance Company o/a TD Meloche Monnex.
Catherine Korte and Matthew Dugas, for Aviva Insurance Company.
Pamela Quesnel and Alfred Cheng, for Aviva Insurance Company.
Steven Coons, for State Farm Mutual Automobile Insurance Company.

Endorsement

[1] Endorsement of SLOAN J.: -- All of the plaintiffs, who were victims of motor vehicle accidents, have commenced court actions claiming entitlement to their Statutory Accident Benefits ("SABs").

[2] Cornie was injured in a motor vehicle accident on October 18, 2009; applied for mediation with the Financial Services Commission of Ontario ("FSCO") on February 14, 2011; asked for a mediator's report stating that the mediation failed on April 13, 2011; got a reply from FSCO on May 5, 2011; and issued a Statement of Claim for SABs on May 30, 2011.

[3] Singh was injured in a motor vehicle accident on December 14, 2009; applied for mediation with FSCO on December 15, 2010; asked for a mediator's report stating that the mediation failed on May 11, 2011; got a reply from FSCO on May 12, 2011; and issued a Statement of Claim for SABs on May 18, 2011.

[4] Hurst was injured in a motor vehicle accident on September 28, 2009; applied for mediation with FSCO on May 31, 2011; asked for a mediator's report stating that the mediation failed on August 2, 2011; got a reply from FSCO on August 4, 2011; and issued a Statement of Claim for SABs on August 18, 2011.

[5] Clarke was injured in a motor vehicle accident on September 30, 2008, applied for mediation with FSCO on May 12, 2011 and issued a Statement of Claim on July 21, 2011. The dates of when she asked for a mediator's report stating that the mediation failed and the date on which she got a reply from FSCO do not appear to be in evidence.

[6] In all four cases, 60 or more days after the plaintiffs filed their request for mediation, the plaintiffs' solicitor wrote to the Dispute Resolution Services Mediation Unit of FSCO asking them to send a mediator's report confirming that the mediation had failed.

[7] The plaintiffs' lawyer requested these reports because he opined that mediation was, by definition, failed since it was not held within 60 days. Counsel relied on Rules 19 and 21 of the Dispute Resolution Practice Code ("DRPC") in support of this proposition.

[8] In response to the plaintiffs' request for a failed mediation report, their lawyer received a letter from one John Lobo, who has the title of "Manager Mediation" of FSCO's Dispute Resolution Services Mediation Unit.

[9] In answer to the requests of Cornie and Singh, Mr. Lobo responded on May 5 and 12, 2011 respectively, with a form letter as follows (the lettering of the paragraphs is mine):
(a) Thank you for your letter dated April 13 [May 11 for Singh], 2011 with respect to the above noted mediation file, requesting the Report of Mediator be issued confirming the failure of all issues in dispute, because they have not been mediated within 60 days of the filing of the applications.
(b) We are not prepared to issue the requested Report of Mediator at this time. The Insurance Act establishes a mandatory mediation process, which is aimed at providing the parties with a speedy, economical and accessible mechanism for resolving disputes before they go to the trouble and expense of litigation or arbitration. The Dispute Resolution Services Branch (DRSB) is charged with ensuring that the parties are provided with an opportunity to settle their disputes through meaningful mediation, which obviously has not yet occurred in this case.
(c) FSCO has published timelines for processing the mediation applications in the Dispute Resolution Practice Code (DRPC). The DRPC provides that an Application for Mediation will be registered and assigned to the mediator within weeks of it being deemed a completed application. It is the responsibility of DRSB to decide whether an application is complete and what particulars if any, are needed for completion. Once assigned to a mediator, mediations are concluded within 60 days or within the time extended by the agreement of the parties.
(d) As you are aware, due to the dramatic increase in application volume in recent years a significant backlog has developed, resulting in longer wait times for assignment.
(e) A number of initiatives have been undertaken to address the situation and we continue to explore further additional options to deal with the backlog.
(f) In the meantime, we would ask for your continued co-operation in scheduling mediations to assist our staff in dealing with these matters as quickly and efficiently as possible. (Emphasis added)

[10] With respect to Mr. Lobo's letters of May 5 and 12, 2011, he does not take issue with the fact that more than 60 days have passed since the filing of the applications. He also does not state that the applications are deficient in any way.

[11] In answer to the request of Hurst, Mr. Lobo responded on August 4, 2011 with a revised form letter. The revision is to para. (d), with all other paragraphs being identical.

[12] Paragraph (d) in the August 4, 2011 letter reads:

As you are aware, due to the dramatic increase in application volume in recent years, there is a significant backlog in both deeming the application to be complete and assignment. Your application is in the queue and is not yet considered to be filed until registered as a complete application. The 60 day time period has not begun to run so the request for a Report of Mediator is premature. (Emphasis added)

[13] Unfortunately for the plaintiffs, the letters do not say anything about when they will have the opportunity to try to get their SABs.

[14] What is evident from both paras. (d) is that there has been a backlog for years (plural) and that nothing has improved with respect to the scheduling of mediations between May and August 2011.

[15] In para. (d) of the August 4, 2011 letter, Mr. Lobo sets forth new nebulous rules for when his department deems an application to be filed and further states that he does not consider the application of Ms. Hurst to be filed yet. Unfortunately, he does not support this contention with any statutory authority and the word "registered" does not appear in the definition section of the DRPC. His letter does state, however, that mediation reports can be obtained 60 days from the point at which registration is complete.

[16] Pursuant to the Insurance Act, R.S.O. 1990, c. I.8 , a court action to enforce SABs cannot be commenced unless mediation is sought and mediation has failed.

[17] The defendant insurance companies have collectively brought this motion requesting that the court strike the Statements of Claim or, alternatively, stay them.

[18] The plaintiffs submit they have complied with the law and that the mediation has by statutory definition "failed" since the 60-day time limit set out in the DRPC has expired.

[19] The insurance companies put forth numerous submissions as to why the actions should be dismissed or stayed.

[20] They are as follows: (a) The 60-day period set out in Rule 19 of the DRPC is directory not mandatory. (b) The Insurance Act is paramount to the DRPC and ss. 278 to 283 are a complete code for dispute resolution of the SABs. (c) If the actual mediation does not take place, it undermines the limitation periods set out in ss. 281.1(1) and 281.1(2)(b) of the Insurance Act. (d) The filing of the mediation application does not take place until a mediator is appointed, which starts the 60-day time limit. This means that the 60-day time limit had not run as of the filing of the court actions. (e) FSCO has exclusive jurisdiction to deal with mediation of the SABs and until there is a failed mediation the court has no jurisdiction. (f) If this court allows a "deemed mediation/deemed failure of mediation", s. 280(8) of the Insurance Act cannot be complied with. (g) There will be a substantial prejudice to the insurance companies if their right to force mediation is taken away through no fault of their own. They submit there will be SABs Armageddon with thousands of additional court actions being filed. (h) Because 75 per cent of mediations are successful, cost effective and a substantial benefit to the insurance companies and plaintiffs, they must be held.

(Decision continues exactly as in the source…)

Motion dismissed.