Superior Court Refuses to Dismiss Accident Benefits Lawsuits, Despite Mediation Not Having Taken Place

Last week, Mr. Justice James W. Sloan delivered a ruling in four cases that will have an impact on statutory accident benefits litigation.

The cases are: Cornie v. Security NationalHurst v. Aviva Insurance Company, Singh v. Aviva Insurance Company and Clarke v. State Farm Mutual Automobile Insurance Company.

In each case, the defendant insurer was moving to “strike the statements of claim or alternatively stay them”. Justice Sloan’s reasons do not say under what rule the motions were brought but the argument was that because mediation had not failed in any of the four disputes, section 281(2) of Insurance Act barred the suits. That section provides that “[n]o person may bring a proceeding in any court, refer the issues in dispute to an arbitrator under section 282 or agree to submit an issue for arbitration in accordance with the Arbitration Act, 1991 unless mediation was sought, mediation failed and, if the issues in dispute were referred for evaluation under section 280.1, the report of the person who performed the evaluation has been given to the parties.”

In each of these cases, mediation had been requested but, because of a backlog at FSCO, mediation did not take place within 60 days following the requests, as required by section 10 of the Dispute Resolution section of O.Reg. 664 under the Insurance Act. (Actually, what the provision says is that “[a] mediator is required, under subsection 280(4) of the Act, to attempt to effect a settlement of the dispute within 60 days after the date on which the application for the appointment of the mediator is filed.”)

The evidence before Justice Sloan was 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”.

Insurers argued that because section 280 (7) of the Act states that “mediation has failed when the mediator has given notice that in his or her opinion mediation will fail, or when the prescribed or agreed upon time for mediation has expired and no settlement has been reached” and since no mediations had taken place in any of these four cases, it could not be said that the mediation had “failed”. Therefore, it was argued, section 281 (2) prevented the suits from being brought. His Honour agreed that mediation had not “failed” but he went on to say that “to suggest that an individual must go the expensive route of Judicial Review is ludicrous. This is consumer legislation and SABS issues often relate to small amounts of money and medical/rehabilitative assistance which are needed on a timely basis.” Justice Sloan went on to observe that “the insurance companies take the position that the accident victims must simply wait. To entertain this argument could mean that an accident victim might have to wait 100, 300 or 500 dates for mediation. I find that submission preposterous.”

On that basis, he dismissed the insurers’ motions. No word yet on whether the decision will be appealed.

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