FSCO recently released a precedent-setting decision where the insurer successfully challenged the capacity of the self-represented claimant. In RL v. Royal and SunAlliance, (Arbitration, Preliminary Issue, FSCO 4681), Royal and SunAlliance Insurance Company of Canada (“RSA”) brought a preliminary issue hearing to ask FSCO to make a determination regarding whether the self-represented claimant had the capacity to participate in the dispute resolution process. Throughout the dispute resolution process, the claimant was of the habit of retaining lawyers or paralegals at the last minute before mediations, pre-hearings or resumptions, and then firing them shortly thereafter. Based on RSA’s dealings with the claimant over the course of the dispute resolution process, as well as the mental health issues and numerous diagnoses contained in the claimant’s medical file, RSA had good reason to raise concern regarding whether the claimant might lack the capacity to participate in the dispute resolution process. An insurer cannot proceed to arbitration against a self-represented claimant who might lack capacity.

The claimant was represented by a senior lawyer at the time of the preliminary issue hearing, but he fired this lawyer shortly after the hearing and subsequently filed a notice to FSCO and RSA advising that he intended to represent himself at the arbitration hearing.

A preliminary issue hearing was granted by one of the pre-hearing arbitrators, pursuant to section 10 of the Dispute Resolution practice Code. At the preliminary issue hearing, RSA provided Arbitrator Sapin with the claimant’s entire medical file, so as to provide the arbitrator with comprehensive and informed grounds to make her determination. At the hearing, RSA did not argue that the claimant lacked capacity, rather RSA made factual submissions as to the claimant’s behaviour throughout the dispute resolution process and why the claimant’s behaviour had  brought about the need for the preliminary issue hearing. RSA also suggested that this was an appropriate case for the arbitrator to order the claimant to attend a capacity assessment.

During the preliminary issue hearing, the claimant’s lawyer advised the arbitrator that he felt there were no issues in his lawyer/client communications with the claimant and that he had no trouble obtaining instructions from the claimant. The claimant’s lawyer also admitted that he had been retained only a few days prior to the preliminary issue hearing and that he had not had a chance to review the claimants entire medical file. The claimant’s lawyer correctly argued that  that there is always a presumption of capacity and that finding incapacity required a very stringent test. The arbitrator posed several questions to the claimant regarding his living situation, whether he understood the issues in dispute in his claim, whether he handled his own banking, etcetera. The claimant was able to answer the questions, albeit with prompting from his lawyer and the arbitrator.

At the request of the lawyer for RSA, the arbitrator agreed to review the claimant’s medical file and provide a written decision at least 30 days prior to the arbitration. Upon reviewing the claimant’s medical file; reviewing FSCO’s dispute resolution file; as well as being advised that the claimant intended to represent himself at the arbitration, the arbitrator found that the claimant lacked the capacity to participate in the dispute resolution process. The arbitrator ordered that the claimant should attend a capacity assessment arranged through the Public Guardian and Trustee if he did not select a litigation guardian within 30 days of the decision.

The decision of RL v. Royal and SunAlliance serves as an exhaustive guide to the protocol by which insurers must bring a preliminary issue hearing, pursuant to section 10 of the Dispute Resolution Code, when faced with a self-represented claimant that might lack the capacity to participate in the dispute resolution process. The decision is also helpful where it provides detailed analysis regarding the test for capacity pursuant to the Substitute Decisions Act, 1992.

The lawyer acting for RSA was Meredith A. Harper of Zarek Taylor Grossman Hanrahan LLP.