Neutral Citation: 1999 ONFSCDRS 195

FSCO A98-001084

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ROBERT COUSINEAU

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION ON PRELIMINARY ISSUES

Before:

Judith Killoran

Heard:

July 26, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Anna Modano for Mr. Cousineau

Darrell P. March for Zurich Insurance Company

Issues:

The Applicant, Robert Cousineau, was injured in a motor vehicle accident on February 28, 1996. He applied for and received statutory accident benefits from Zurich Insurance Company ("Zurich"), payable under the Schedule.¹ Zurich terminated weekly income replacement benefits on May 28, 1996. The parties were unable to resolve their disputes through mediation, and Mr. Cousineau applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issues are:

Should Mr. Cousineau's Application for Arbitration be dismissed due to his failure to produce documents which were the subject of a pre-hearing arbitrator's order?
Is an adverse inference to be drawn against Mr. Cousineau for failing to produce the documents?
Is Zurich entitled to its expenses of this preliminary issues hearing?

Result:

Mr. Cousineau's Application for Arbitration is not dismissed. Mr. Cousineau is entitled to proceed to an arbitration hearing.
An adverse inference is not drawn against Mr. Cousineau for failing to produce the documents.
Mr. Cousineau shall pay Zurich's expenses of this preliminary issues hearing.

EVIDENCE AND ANALYSIS:

Mr. Cousineau received $185 per week from Zurich in income replacement benefits from the time of the motor vehicle accident until May 28, 1996. Zurich terminated these benefits on the grounds that Mr. Cousineau did not supply sufficient documentation to establish his pre-accident income. Mr. Cousineau submitted that, although he received a partial disability pension from Workers' Compensation due to a work-related accident, he had continued to earn income prior to the motor vehicle accident. Mr. Cousineau claimed that he had earned income as a consultant who represented workers in Workers' Compensation Board (WCB) claims.

At the pre-hearing on February 8, 1999,² the arbitrator ordered the following:

Mr. Cousineau is to provide his complete WCB file.
Mr. Cousineau is to provide the clinical notes and records of his new family physician from two years before the accident.
Mr. Cousineau is to provide his complete banking records and other records dealing with his financial circumstances from three years before the accident to date.

On July 26, 1999, the first day set for the arbitration hearing, Zurich asked that Mr. Cousineau's claim be dismissed for failure to comply with the pre-hearing arbitrator's order. Zurich submitted that it was at a significant disadvantage because it could not prepare adequately for the hearing. This was attributed to Mr. Cousineau's failure to produce documents which were the subject of the pre-hearing arbitrator's order.

The first item in the order, namely the complete WCB file, was brought to the hearing by Mr. Cousineau and presented to Zurich. It was an extensive file, comprising more than a dozen binders, dating back approximately twenty-five years. It was not possible for Zurich to review such voluminous records and proceed to hearing that same day.

The parties agreed that the second item in the pre-hearing arbitrator's order had been produced. The clinical notes and records of Mr. Cousineau's new family physician from two years before the accident were provided to Zurich in advance of the hearing.

With respect to the third item in the order, the pre-hearing arbitrator noted that Mr. Cousineau indicated that he had not filed income tax returns for several years before the accident. As well, Mr. Cousineau claimed that client confidentiality required by legislation relating to workers' compensation cases prevented him from disclosing his fees unless he obtained the consent of his clients. The pre-hearing arbitrator ruled that Mr. Cousineau was to make his best efforts to provide the documentation within 60 days of the pre-hearing.

Approximately a week prior to the date set for the arbitration hearing, Mr. Cousineau submitted to Zurich, a list of Mr. Cousineau's clients, claim numbers, and fees received for services, for a one-year period prior to the accident. At the hearing, Mr. Cousineau advised that one client should be removed from the client list, as that income was earned outside the one-year period prior to the accident. Therefore, the income Mr. Cousineau claimed to have earned for the one-year period prior to the accident should be reduced from $56,900 to $46,900.

Zurich also objected to the late disclosure of Mr. Cousineau's witness list. At the hearing, Mr. Cousineau's representative reviewed the witness list and the status of prospective witnesses. She explained that there would be at least one witness, other than Mr. Cousineau, who would testify about the amount of money paid for his services.

Mr. Cousineau claimed that Zurich's allegation that he had refused to produce documents was unfounded. He submitted that Zurich knew at the pre-hearing that he had filed no tax returns and did not have any bank records. He insisted that there were no other documents to provide. Mr. Cousineau confirmed that any further evidence presented at the arbitration would be limited to his own testimony and that of other witnesses testifying about what they paid for his services. He submitted that he could not be expected to produce documents which he does not have, including banking records.

Zurich relied on the Manti³ decision. In Manti, the Applicant confirmed, during the second pre-hearing, that he did not intend to comply with the order for production. The Insurer brought a preliminary motion, as in this case, to summarily dismiss the Applicant's application for arbitration on the basis that he had not complied with the order of the pre-hearing arbitrator. In Manti, the Insurer referred to sections 17 and 18.5 of the Dispute Resolution Practice Code — First Edition. The content of these sections has been reflected in sections 33 and 36, respectively, of the Dispute Resolution Practice Code — Third Edition.

In Manti, the Insurer submitted that one of the main issues was whether the collateral benefits received by the Applicant were deductible from any weekly income benefit to which he might be entitled. The Insurer submitted that it could not proceed without information about the nature and amount of collateral benefits.

As outlined in Manti, subsection 279(1) of the Insurance Act, sets out the principle that disputes of entitlement or quantum of benefits are to be resolved in accordance with sections 280 to 283 of the Insurance Act and the Schedule. Subsections 282(3) and (4) of the Insurance Act empower an arbitrator and set out the procedural framework for decisions.

Section 21 of the Insurance Act authorizes the Director of Arbitrations to make rules for the practice and procedure to be observed in arbitrations. It was according to this authority that the Dispute Resolution Practice Code was produced. Section 22 of the Insurance Act sets out the power of arbitrators to summon witnesses and to compel the production of documents, records, and things. The power is similar to that of the Superior Court of Justice for the trial of civil actions. It was within this framework that the pre-hearing arbitrator ordered the Applicant to produce certain documents.

In Manti, the arbitrator ruled that the Applicant refused to cooperate in producing essential evidence on one of the main issues in the case before the arbitration hearing. In her view, in light of the Applicant's apparent contempt for the arbitration process, she had two options: to cite the Applicant for contempt or to draw an adverse inference with respect to both the nature of his pension income and its amount. The contempt proceedings are governed by the Statutory Powers Procedure Act, R.S.O. 1990, c.S. 22, as amended.

The arbitrator ruled in Manti that it was more appropriate to draw an adverse inference as a result of the Applicant's failure to comply with a production order than to commence a contempt proceeding.

Findings:

I find that this case can be distinguished from the Manti case. I agree with Mr. Cousineau's submissions that he has not refused to comply with the pre-hearing arbitrator's order. Rather, Mr. Cousineau has provided all the documents on which he is proposing to rely at arbitration, together with a witness list. In these circumstances, it would not be appropriate for me to draw an adverse inference. As well, to do so would be to usurp the role of the hearing arbitrator. It is the jurisdiction of the hearing arbitrator alone to weigh the evidence and render a decision.

I find that Mr. Cousineau's Application for Arbitration should not be dismissed for failure to produce certain documents. Mr. Cousineau is entitled to proceed to arbitration and have the hearing arbitrator decide the merits of his claim. The issue of what documents Mr. Cousineau has produced to substantiate his claim will contribute to determining the strength of his case at arbitration and not his entitlement to proceed.

However, I find that Mr. Cousineau offered no satisfactory explanation as to why Mr. Cousineau's WCB file was not produced until what was to be the first day of the arbitration hearing and for the late production of the witness list and other documents. This has resulted in substantial delay and the inability to proceed with the hearing on the scheduled dates.

EXPENSES:

I exercise my discretion to award Zurich its expenses incurred in this preliminary issues hearing.

October 8, 1999

Judith Killoran Arbitrator

Date