Auto arbitration points to the importance of meeting deadlines

A recent priority dispute between insurers serves as a reminder of meeting legal deadlines to conduct a pre-hearing and complete an arbitration within two years, according to counsel for SBA Lawyers, an insurance defence and risk management legal firm.  

“This decision stands as an important reminder of the less often discussed but still important timelines prescribed in the [Statutory Accident Benefits Schedule] priority dispute scheme,” SBA Lawyers counsel Ethan Edwards commented in a blog post published on Mondaq in April.

“While caselaw has established that these deadlines are not necessarily mandatory, insurers are reminded that arbitrators will not exercise their discretion to excuse or extend a missed deadline absent clear and compelling circumstances.”

In Aviva v. MVACF, a driver identified only as ‘SF’ was injured in a vehicle collision in May 2018. The driver of the vehicle is not known. SF filed an application for statutory accident benefits from Aviva Canada, which insured her grandmother at the time.

SF was not a named driver on her grandmother’s auto insurance policy. However, SF contended she was financially dependent upon her grandmother at the time of the collision.

Aviva disputed her financial dependence on her grandmother and served a priority dispute notice on Ontario’s Motor Vehicle Accident Claims Fund (MVAC), which is the public insurer of last resort when a collision involves an unknown driver.

SF filed her claim close to the end of the two-year deadline. Once in receipt of a claim, auto insurers have 90 days to put a higher-priority insurer on notice of a claim. Aviva commenced an arbitration against the Fund in May 2021, well within the deadline. MVAC responded by requesting details to help adjust the claim.

Ontario’s accident benefit law says a pre-hearing must take place within 120 days of the appointment of an arbitrator, making the pre-hearing deadline in this case Sept. 6, 2023. A pre-hearing conference call was scheduled to take place on June 22, 2023.

MVAC showed up to the pre-hearing, but Aviva’s legal representative could not be reached. “I was later advised that new counsel had been retained by Aviva,” Ontario arbitrator Shari Novack wrote in her decision released in February.

The day after the aborted pre-hearing, Aviva’s new counsel confirmed he had been retained by the insurer, and that he had a call scheduled with Aviva the next day. “He advised that he would be back in touch once he confirmed his instructions,” the arbitrator’s decision states. “No further communication was received from his office through the rest of June, or in July or August.”

Finally, the pre-hearing call was arranged on Feb. 14, 2024, and a second one was held in late March 2024 — both well past the September 2023 deadline.

MVAC sent a letter to Aviva saying it did not agree to extending the two-year deadline for completing the arbitration, and applied to the court to reject Aviva’s claim in the priority dispute, based on the missed deadlines.

Aviva objected, saying caselaw shows arbitration pre-hearing and completion deadlines are meant to be “directory and permissive,” rather than mandatory.

The arbitrator sided with MVAC, finding Aviva was responsible for the delay.

In considering Aviva’s position, the arbitrator noted the discretion to extend deadlines found in caselaw is based on the facts in a specific case. In this case, the arbitrator ruled, there were no compelling reasons to extend the deadline.

“The parties expressed differing views regarding the complexity of the proceeding,” Edwards wrote of one reason to extend a deadline. “From the evidence provided, I do not find it to be particularly complex….

“There are only two parties involved, and the sole issue is whether Ms. F was principally dependent for financial support on her grandmother, the Aviva insured. This question is likely the most frequent issue raised in priority disputes under [SABS], and while each case may involve different details, the overall approach taken to questions of dependency is fairly straightforward.”

As for missing the pre-hearing conference, the arbitrator found that even though a change in counsel nixed the June 2023 hearing, Aviva’s counsel still had 76 days to arrange another hearing within the statutory timeline, but it did not.

Edwards says “take home” rules of the thumb from the case include making use of “tickler” systems to remind of when deadlines must be met, hiring counsel early in the process, promptly responding to counsel’s correspondence, and being proactive in requesting extensions from arbitrators.