Court File and Parties

CITATION: Waldock v. State Farm Mutual Automobile Insurance Company, 2016 ONSC 6546

COURT FILE NO.: 412/16

DATE: 2016-10-21

SUPERIOR COURT OF JUSTICE – ONTARIO – DIVISIONAL COURT

RE: Thomas Waldock (Applicant /Responding Party)

AND: State Farm Mutual Automobile Insurance Company (Respondent/Moving Party)

BEFORE: MOLLOY J.

COUNSEL: Talaal F. Bond and Eric Grigg, for the Moving Party, State Farm Leonard H. Kunka, for the Responding Party, Waldock Brendan Forbes, for the Respondent Financial Services Commission of Ontario

HEARD: October 19, 2016 in Toronto

ENDORSEMENT

Introduction

[1] This is a motion before a single judge of the Divisional Court seeking to quash a judicial review proceeding, primarily on the grounds of prematurity.

Procedural Background

[2] Thomas Waldock was seriously injured in a motor vehicle accident on March 25, 2008. He applied to State Farm for statutory accident benefits. The issue of whether Mr. Waldock sustained a “catastrophic impairment” proceeded to arbitration. In a decision dated November 10, 2014, under the heading “Decision on a Preliminary Issue,” Arbitrator Knox Henry found there was a “catastrophic impairment.” In that same decision the Arbitrator deferred the determination of the parties’ entitlement to “their expenses.”

[3] State Farm initially sought to appeal that decision to the Financial Services Commission of Canada (“FSCO”), but subsequently withdrew its appeal.

[4] Subsequently, after a one-day oral hearing and subsequent receipt of written submissions, Arbitrator Henry issued a decision entitled “Decision on Expenses” dated November 16, 2015, in which he ordered that:

(i) Mr. Waldock is entitled to $361,520.30 for Attendant Care and Housekeeping and Home Maintenance Benefits, commencing July 7, 2010;

(ii) Mr. Waldock is entitled to interest on overdue benefits at 2% per month compounded monthly from July 7, 2010;

(iii) Mr. Waldock is entitled to costs in the amount of $125,435.00 and disbursements of $45,824.52; and

(iv) Mr. Waldock is entitled to a Special Award of $108,456.09 plus interest from July 7, 2010, because of compensation unreasonably withheld or delayed.

[5] On December 11, 2015, State Farm filed a Notice of Appeal to FSCO with respect to Arbitrator Henry’s Decision on Expenses. In this appeal, State Farm essentially takes the position that the issue of payment of benefits and the substantive merits of a Special Award were not properly before the Arbitrator and he made his decision on the merits of those claims without notice to State Farm and in breach of principles of natural justice and procedural fairness.

[6] Mr. Waldock brought a motion to strike the appeal on various grounds and State Farm brought a motion to stay the Arbitrator’s order under appeal. These preliminary issues were heard by Delegate Blackman and disposed of by him in an Order dated March 18, 2016. Delegate Blackman ordered a stay of the decision under appeal and refused to dismiss the appeal outright. Subsequently, Delegate Blackman retired from FSCO and Delegate Feldman assumed management of the matter.

[7] In June 2016, counsel for Mr. Waldock brought a motion to strike certain materials and references from State Farm’s appeal book and factum, in particular two affidavits and the decision of Delegate Blackman on the stay motion. One affidavit provided a chronology of the events leading up to Arbitrator Henry’s Decision on Expenses, including the understanding of the parties and other matters relevant to issues of natural justice that State Farm argued could not otherwise be put before the decision-maker on appeal because there was no transcript of the proceedings before the Arbitrator. The second affidavit provided particulars of payments already made to Mr. Waldock by State Farm. Delegate Feldman dismissed the motion for reasons dated July 27, 2016.

[8] On August 15, 2016, counsel for Mr. Waldock filed a motion before Arbitrator Henry, returnable on August 25, 2016, seeking “clarification” of aspects of his Decision on Expenses. Counsel for State Farm objected to this procedure as improper, taking the position that Arbitrator Henry was functus and had no power to vary or change his Order. In response, later on August 15, 2016, counsel for State Farm faxed an urgent letter to Delegate Feldman seeking “an emergency telephone conference for tomorrow morning at 7:30 a.m. with counsel to obtain your directions in this matter.” He attached a copy of the notice of motion returnable before Arbitrator Henry and an exchange of correspondence between counsel as to the propriety of the motion.

[9] No conference call was conducted and no submissions were obtained from counsel for Mr. Waldock. Instead, Delegate Evans issued a letter on August 16, 2016 advising that he was dealing with the matter as Delegate Feldman was on vacation, stating “I find this motion is improper,” and further directing that counsel for Mr. Waldock was “enjoined from bringing this motion and the Arbitrator should not hear it.”

[10] Mr. Waldock thereupon commenced a judicial review application in the Divisional Court seeking, inter alia:

(i) an order reversing the decision of Delegate Feldman, dated July 27, 2016;

(ii) an order reversing the decision of Delegate Evans, dated August 16, 2016; and

(iii) an order permitting Arbitrator Henry to provide clarification of his Decision on Expenses prior to the hearing of the appeal from that order.

[11] State Farm now seeks to quash the judicial review application.

Judicial Review of the Procedural Order of Delegate Feldman

[12] Counsel for Mr. Waldock argued before me, as he argued before Delegate Feldman, that the affidavits filed by State Farm in its appeal materials constituted “fresh evidence” and were not properly part of the record. He also argued that the decision of Delegate Blackman on the stay motion was irrelevant to any issue the appeal tribunal would have to decide and potentially prejudicial.

[13] Delegate Feldman declined to remove anything from the materials filed.

[14] It does not follow from Delegate Feldman’s decision that the appeal tribunal will consider the impugned material filed to be relevant or determinative of any issue before it. The tribunal might find that it is not bound by the decision of Delegate Blackman on the very issue before it, or it might decide otherwise. It might find that the affidavit material is useful to provide background or missing evidence with respect to the procedural fairness issues, or it might find that it is not properly tendered and ignore it. All of these issues remain open. The Order of Delegate Feldman is clearly interlocutory in nature and is not determinative of any rights of the parties.

[15] Administrative proceedings are meant to be expeditious. Parties are to be discouraged from running to the Divisional Court to resolve preliminary or procedural issues prior to the conclusion of the proceedings before the tribunal. Requiring the parties to complete the proceedings before the tribunal before turning to the courts for judicial review is consistent with ensuring a streamlined, cost-effective and expeditious process, as well as with principles of deference to the tribunal system. I see no reason to depart from these general principles in this case.[^1] There are no issues raised on the judicial review of this decision that cannot properly be raised before the appeal tribunal. Mr. Waldock still has the option to seek cross-examination on the affidavits filed, or to file responding material before the tribunal, if so advised.

[16] In my view, it is clear-cut that this judicial review application is premature and cannot possibly succeed. It is appropriate to dispose of it now on a motion before a single judge rather than waiting for a hearing before the full Panel. Accordingly, the motion to quash the judicial review in respect of Delegate Feldman’s Order dated July 27, 2016 is granted.

Judicial Review of the Order of Delegate Evans

[17] In his letter dated August 16, 2016, Delegate Evans purported to issue: (1) a declaration that the motion brought by counsel for Mr. Waldock was improper; (2) an injunction enjoining counsel from bringing the motion; and (3) a prohibition order that the Arbitrator should not hear the motion. This was done without notice to counsel for Mr. Waldock, without any opportunity for Mr. Waldock to respond, and flowed from a letter requesting a conference call with all counsel to discuss the matter. Even if Delegate Evans had been asked to issue the Orders that he did, and even if he had done so after a full opportunity for Mr. Waldock to be heard, I have doubts as to his jurisdiction to grant such relief.

[18] In my view, the same principles of prematurity apply to Delegate Evans as are applied in this court. There was no need for Delegate Evans to proceed as he did. The parties could have proceeded first before the Arbitrator. It may be the case that the Arbitrator is functus. If the motion for clarification proceeded before the Arbitrator, he might find that to be the case and rule that his reasons speak for themselves. Alternatively, he might rule that there is an ambiguity and that this is a matter about which he has jurisdiction to provide clarification. Whatever the decision of the Arbitrator, it will be for the appeal tribunal to decide if any clarification provided by the Arbitrator was made with or without jurisdiction, and whether it is relevant or appropriate to take it into account in determining the appeal.

[19] If the Arbitrator does have jurisdiction, and if he would have been prepared to provide clarification, this information and potential basis for defending the Order will have been completely removed from the responding party by the pre-emptive order of Delegate Evans. This may affect the rights of the parties before the appeal tribunal.

[20] This is also a situation in which there has been a breach of natural justice and procedural fairness by Delegate Evans, and also likely a decision made by the Delegate without jurisdiction.

[21] I cannot say that this is a decision that is so manifestly premature that the judicial review should be quashed on motion before a single judge. Further, it cannot be said that this aspect of the judicial review application is manifestly without merit or is sure to fail. On the contrary, I find it has considerable merit.

[22] I consider these to be the kind of exceptional circumstances in which it may be appropriate for this court to intervene by way of judicial review so as to ensure the parties have a fair hearing before the appeal tribunal. I am therefore not prepared to quash this aspect of the judicial review application.

Order Permitting Arbitrator Henry to Hear the Motion

[23] The other form of relief sought in the judicial review proceeding is an order granting permission to Arbitrator Henry to provide clarification of his Decision on Expenses. In my view this relief is unnecessary and inappropriate.

[24] If the Divisional Court quashes the decision of Delegate Evans, there will be no impediment to the Arbitrator hearing argument on the motion for clarification. If the Divisional Court determines that Delegate Evans did not err and that his decision should stand, then the motion for clarification clearly cannot proceed. Therefore, a determination on the Order of Delegate Evans would make it unnecessary for the Court to grant “permission” for the Arbitrator to proceed.

[25] Apart from this issue, it would be inappropriate for this Court to issue a declaration in advance authorizing the Arbitrator to issue a clarification. That decision should be made in the first instance by the Arbitrator, and then subject to appeal to the tribunal. The Divisional Court ought not to step in prematurely to render a decision as to the Arbitrator’s jurisdiction or potential jurisdiction.

Conclusion

[26] An Order shall issue quashing the judicial review proceeding in so far as it relates to the relief claimed at page 4 of the Application in paragraph 1 (an order reversing the decision of Delegate Feldman dated July 27, 2016) and paragraph 3 (an order permitting Arbitrator Henry to provide clarification of his decision).

[27] The motion is dismissed in respect of the relief sought in paragraph 2 (an order reversing the decision of Delegate Evans).

[28] I am concerned about the considerable delay that has already elapsed in respect of a compensation claim for a catastrophic injury that occurred in 2008. I appreciate that permitting this judicial review application to proceed will result in further delay. However, the issues in the judicial review proceeding have now been considerably narrowed. Counsel are directed to contact Justice Nordheimer, the administrative lead for the Divisional Court to request a date upon which the remaining issue on this judicial review application can be heard before a Panel on an expedited basis.

[29] In view of the divided success, there is no order as to costs with respect to the motion before me.

MOLLOY J.

Date: October 21, 2016

[^1]: Volochay v. College of Massage Therapists of Ontario, 2012 ONCA 541; See also, Ackerman v. Ontario Provincial Police Service, 2010 ONSC 910 and cases referred to therein;