Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 1998 ONFSCDRS 93

Appeal: P98-00053

OFFICE OF THE DIRECTOR OF ARBITRATIONS

DOMINION OF CANADA GENERAL INSURANCE COMPANY

Appellant

and

Ms. Z

Respondent

Before:

David R. Draper, Director's Delegate

Counsel:

Lee Samis (for Dominion of Canada)

Barbara L. Legate (for Ms. Z)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The arbitration hearing must be conducted by an arbitrator without prior involvement in this dispute.

2. No appeal expenses are payable.

December 11, 1998

David R. Draper Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This is an appeal by Dominion of Canada General Insurance Company ("Dominion") from an interim arbitration decision dated September 25, 1998. It contends that the arbitrator who issued the decision should not continue as the arbitrator when the hearing resumes in January 1999. In Dominion's submission, her involvement in the interim issues raises a reasonable apprehension of bias.

II. ANALYSIS

In its Notice of Appeal, Dominion challenged three aspects of the arbitrator's decision. It claimed that she erred in ordering that:

(1) it is required to pay Ms. Z interim weekly income benefits of $434.28 from September 25, 1998, the date of her order, until a further order of an arbitrator;

(2) Ms. Z's psychologist is not required to provide it with a copy of her clinical notes; and,

(3) she will continue as the arbitrator when the hearing resumes in January 1999.

Since its appeal was from a preliminary or interim order, Dominion could not proceed without leave. Rule 46.2 of the Dispute Resolution Practice Code provides that "a party may not appeal a preliminary or interim order of an arbitrator until all of the issues in dispute in the arbitration have been finally decided, unless the Director orders otherwise."

After hearing oral submissions from counsel, I concluded that Dominion's appeal should be allowed to proceed, but only on the third issue. I was not persuaded that the other issues had the same strength or urgency. Therefore, the only issue in this appeal is whether the same arbitrator can continue to conduct the hearing.

Through my order, I advised Ms. Z that if she wanted to participate in the appeal, she had to serve and file a Response to Appeal forthwith. The order also set out a schedule for the parties to file additional submissions.

Ms. Z decided not to participate. She did not file a response or any written submissions. In contrast, Dominion filed lengthy written submissions, arguing that fairness requires a hearing before a different arbitrator. For the following reasons, I accept Dominion's position.

This history of this dispute is unusual. In summary, it arises out of Dominion's decision to stop paying weekly income benefits effective July 2, 1997, more than four years after Ms. Z's accident. Ms. Z applied for arbitration in January 1998, claiming ongoing weekly income benefits, some rehabilitation expenses and a special award. At the same time, she brought a motion for interim benefits.

A pre-hearing conference took place on May 20, 1998. By this time, both parties were represented by lawyers - Ms. Z by Ms. Barbara Legate and Dominion by Ms. Joan Takahashi. The motion for interim benefits was scheduled for July 3, 1998, but the hearing could not be scheduled until the end of June 1999, more than a year away.

Unfortunately, the interim motion was not heard in July 1998 because Ms. Z had not given Dominion the documents she agreed to provide at the pre-hearing. However, the time originally scheduled for the interim motion was used for a further pre-hearing before a different arbitrator. The pre-hearing arbitrator ordered Ms. Z to pay Dominion $150 for failing to meet her production obligations. He also rescheduled the interim benefits motion for August 14, 1998 and set out a timetable for exchanging affidavits and other material for the motion.

On August 14, 1998, the matter came before yet another arbitrator for the interim benefits motion. Ms. Takahashi and Ms. Legate were the only participants. Rather than hearing the motion, the arbitrator expressed concern that the hearing dates were still 10 months away and the medical reports suggested that Ms. Z presented a suicide risk. Over Dominion's objections, he moved the hearing up to September 8 and 9, 1998, although it was clear that it would take more than two days. He also adjourned the motion for interim benefits to those dates. It was clear, however, that the hearing could not be completed in two days. Acknowledging that Dominion had planned to arrange for a psychiatric assessment, the arbitrator indicated that it should do so as soon as possible so that the results would be available for an early resumption of the hearing.

As stated in my earlier letter to the parties, I have considerable sympathy for the arbitrator's actions. He felt the matter needed a final resolution as soon as possible and that by moving the start of the hearing forward, it could at least get underway. The short date meant that interim benefits were not so critical. However, because the hearing would not be completed in the two days scheduled, he left the question of interim benefits pending the resumption to the hearing arbitrator. Unfortunately, he was less clear about whether the interim benefits issue was to proceed as a preliminary matter based on affidavits, or based on the evidence presented during the first two days of the hearing.

Dominion was still dissatisfied and asked the Registrar for an adjournment of the September dates. The primary reasons were continuing productions problems and its desire to obtain additional medical examinations. The Registrar agreed that on September 8 and 9, 1998, Ms. Legate would call Ms. Z and her psychologist, Dr. Schachter, with both parties having the right to recall either witness when the hearing resumed. In addition, he expressed concern about the ongoing productions problems and directed both parties to prepare a list of outstanding productions to be presented to the hearing arbitrator at the start of the hearing.

In my view, the message to counsel was clear. The hearing needed to start and any remaining issues would be addressed in the context of the hearing. I find nothing wrong with this. On the contrary, these were reasonable efforts to achieve a quicker, but fair outcome.

The hearing did not start on September 8, 1998 as scheduled. The parties agreed to spend that day with a mediator in an attempt to resolve the dispute. Unfortunately, it was not resolved.

On September 9, 1998, the hearing started, but not with opening statements or the calling of evidence. Nor did counsel file their productions lists as suggested in the Registrar's letter. Instead, both raised preliminary issues. Ms. Legate spoke first. She told the arbitrator there still were production issues to be addressed and that she wanted restrictions placed on the issues to be decided in the arbitration. Ms. Takahashi then advised that she wanted to deal first with her request for an adjournment, then with the production issues and some housekeeping matters. She also reminded the arbitrator that the interim benefits motion still had not been decided.

The transcript shows that the proceedings became confused and contentious. The arbitrator attempted to identify the issues to be decided and deal with them in a practical manner. It is clear, however, that she became frustrated. While the arbitrator could have been more measured in some of her comments, counsel bears some responsibility for her frustration. They were unable to agree on much of anything, making it difficult for her to make constructive use of the limited hearing time available.

While I am not persuaded the transcript comes close to showing actual bias, there were problems with the process. The biggest concern, in my view, is the uncertain interaction between the arbitrator's role as the hearing arbitrator and her involvement with the preliminary issues. The preliminary issues proceeded on an odd combination of affidavit and oral evidence, with the main hearing starting before all of the preliminary issues, including Dominion's adjournment request, were decided. The result is that the arbitrator considered evidence that might not be admitted as part of the main hearing.

For practical reasons, I am prepared to take a cautious approach in this case. Although the hearing started in September, it only involved the brief testimony of an appraiser. There were no opening statements and while three exhibits were filed, two relate to the production of the psychologist's clinical notes. As a result, no significant delay will result in involving a different arbitrator.

Finally, this is not a case of "arbitrator shopping." I am convinced that the combination of the procedural confusions, the rulings made by the arbitrator, and the contentious nature of the September hearing are sufficient to establish a reasonable apprehension of bias. Therefore, the appeal is allowed.

December 11, 1998

David R. Draper Director's Delegate

Date