Neutral Citation: 1999 ONFSCDRS 255

FSCO A98-000429

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

KHOUCHABA KORKISS

Applicant

and

PROGRESSIVE CASUALTY INSURANCE COMPANY

Insurer

DECISION ON A MOTION

Before:

John Wilson

Heard:

By written submissions on December 3, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Nicholas W. Fursman for Mr. Korkiss

Guy Farrell for Progressive Casualty Insurance Company

Background:

The Applicant, Khouchaba Korkiss, was injured in a motor vehicle accident on July 2, 1997. He applied for statutory accident benefits from Progressive Casualty Insurance Company ("Progressive"), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Korkiss applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The key issues in the arbitration hearing were whether Mr. Korkiss had staged the accident, giving rise to his claim for benefits, and whether the evidence of his employment with Huron Billiards was, as well, fabricated, to allow him to qualify for statutory accident benefits.

The arbitration hearing took place in London, Ontario on October 5, 6, and 7, 1999.

At the arbitration hearing, Progressive called evidence from a young offender, together with the testimony of two police officers, concerning the alleged involvement of the young offender in the staging of the accident which gave rise to this claim. The proposed evidence of the young offender was a crucial element in the Insurer's case against Mr. Korkiss.

However, when the young offender was called to testify at the hearing, he denied that he had been paid by Mr. Korkiss to stage the accident and suggested that any previous statements he had made to the contrary were made in an effort to secure unspecified preferences or better treatment for himself, and were not true.

Following the hearing of this matter, and before the issuance of my decision, Mr. Farrell, counsel for the Insurer, moved that the hearing be re-opened pursuant to Section 39 of the Practice Code to permit the introduction of new evidence.

The new evidence in this matter would be the testimony of an unidentified witness, who would testify as to Mr. Korkiss' alleged involvement in a conspiracy to stage the accident. In addition, the Insurer's materials indicated that the Insurer intended to call a further police witness, should the hearing be re-opened.

The motion is:

Pursuant to the Provisions of Section 39 of the Dispute Resolution Practice Code to reopen the hearing to admit evidence of a witness who has come forward since the close of evidence, but before the delivery of Reasons for Decision in the claim.

Result:

The Insurer is not permitted to re-open the hearing to adduce further evidence.

EVIDENCE AND ANALYSIS:

Mr. Farrell, counsel for Progressive, requested that the hearing be re-opened pursuant to section 39 of the Practice Code, to bring in new evidence that he did not present at the original hearing. Mr. Farrell alleges that this evidence is significant and relevant and could, if heard, have an impact my decision in this matter.

In support of its motion, Progressive provided the transcript of an interview of the unnamed witness, made in front of an official examiner in London. In this document, the person, who apparently had testified at the hearing, refers to events relevant to issues raised at the hearing and to other events, extraneous in time and location from the events leading up to the hearing in London.

Mr. Fursman, counsel for Mr. Korkiss, was not advised that this potential witness was to be examined under oath at the special examiner's office, and needless to say, was not present at the interview. Neither was counsel given the opportunity to cross-examine the deponent, or to object to any of the questions asked of the deponent by counsel for the Insurer. Mr. Korkiss, by his counsel, objected to the introduction of the transcript of the unidentified witness, and specifically requested the opportunity to cross-examine the witness on his affidavit, before responding to the Insurer's motion.

By a letter decision, I declined to order Mr. Farrell to produce the deponent for cross-examination at this time and ruled that although the interview with the witness purported to be under oath, the transcript of the interview was, in effect, the equivalent of a summary of the proposed testimony of the witness. The request to cross-examine on the material was premature as it was not yet admitted into evidence. I directed that Mr. Fursman proceed to provide his response to the Insurer's submissions on this motion.

Section 39 of the Code provides no guidance as to the nature of the evidence required to permit a re-opening, or to the criteria for an arbitrator to re-open a hearing. It merely gives an arbitrator the discretion to do so.

Requests to re-open hearings and bring new evidence are not without precedent, either in the context of arbitrations at the Commission or in the court system.

Arbitrator Manji, in Tran and Pilot Insurance Company (OICA-005207, August 16, 1995), dealt directly with the requirements to re-open a hearing. After finding that an arbitrator has full control of the post-hearing process and that it is within the arbitrator's discretion whether to receive further evidence, Arbitrator Manji concluded:

I believe that an arbitrator should exercise his or her discretion to receive further evidence after the case is closed only in exceptional or extraordinary circumstances. To do otherwise would be to delay and jeopardize the arbitration process and the finality required in the process.

The arbitrator further outlined some of the criteria for a decision to re-open a hearing.

...even where the evidence is relevant it may be refused when it is offered after the case is closed. In my view, before an arbitrator exercises his or her discretion to receive further evidence, he or she must be satisfied that not only is the evidence relevant but it is also so weighty that if adduced it would have an important influence on the result of the case. It must also be shown that the lateness of its preparation was justified by unusual circumstances beyond the control of the party seeking to adduce it. If the evidence was available to or within the control of the party before the case is closed, it should not be admitted.

The criteria defined by Arbitrator Manji are reminiscent of the criteria for the introduction of new evidence on appeal in the court system. The Court of Appeal may hear evidence on appeal in civil cases, in special circumstances. Likewise, appeal courts in criminal matters may hear new evidence pursuant to section 610(1) (d) of the Criminal Code. Although the wording of the provisions and the precise legal basis for the introduction of new evidence may differ in the criminal sphere from practice at the Commission, the discussion of these issues is relevant to practice at this tribunal.

The most frequent jurisprudence on the issue of new evidence derives from the criminal code procedures. Ritchie J. observed in McMartin v. The Queen, (1964) S.C.R. 746, the rules applicable to the introduction of new evidence in the Court of Appeal in civil cases are not applied with the same rigour in criminal cases. Even so, he concluded that new evidence should not be admitted as a matter of course, but rather only in the existence of special circumstances.

More recently, the Supreme Court in R.v. Palmer, 1979 CanLII 8 (SCC), [1980] 1 S.C.R. 759, summarized the criteria for the admission of new evidence. Mclntyre J., in delivering the judgement of the court developed the following principles:

(1) The evidence should generally not be admitted if, by due diligence, it could have been adduced at trial provided that this general principle will not be applied as strictly in a criminal case as in civil cases...

(2) The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial.

(3) The evidence must be relevant in the sense that it is reasonably capable of belief, and

(4) It must be such that if believed it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result.

Accordingly, if Mr. Farrell is to be permitted to call his mystery witness, it is clear that he must be able to demonstrate not only the relevance and credibility of the proposed testimony, but that it was not reasonably available to him at the hearing. In addition, some consideration must be given of the potential effect on the outcome of the hearing of the addition of such evidence, notwithstanding the fact that no decision has yet been made in this case. Such an analysis would be consistent with Arbitrator Manji's approach in Tran & Pilot.

Identity of the proposed Witness:

Mr. Farrell indicated that he had concerns about the safety of his potential witness. Although the Insurer's motion does not identify the potential witness by name, the context of the statement itself indicates that it was a person who testified as a witness at the hearing. Mr. Fursman, on behalf of the applicant, identified the witness by name. I will for convenience however, and in deference to Mr. Farrell's security concerns, refer to Insurer's potential witness as Witness X.

Proposed Testimony:

In an interview at Triune Reporting in London, on October 21, 1999, some weeks after the hearing, Mr. Farrell, on behalf of the Insurer, interrogated Witness X. Mr. Farrell asked the witness about his knowledge of the accident, his knowledge of Mr. Korkiss, the Applicant, and about Mr. Korkiss' employment at Huron Billiards and some of the names and activities associated with Huron Billiards. In addition, questions were asked about Mr. Korkiss' injuries, pre-existing condition and his mental status post-accident. Mr. Farrell even asked the witness to recount discussions between Mr. Korkiss and his lawyer during the preparation for the hearing.

The interview was wide-ranging and touched upon some matters that go to the heart of this arbitration claim: whether an "accident" had occurred, as defined by the Schedule, and whether Mr. Korkiss was employed at Huron Billiards prior to the accident.

Witness X, in his statement, makes it clear that he has some knowledge of Mr. Korkiss' activities. However, for the most part, it is also clear that this information derives from secondary sources and from uncorroborated statements allegedly made by Mr. Korkiss. Much of what Witness X claims to know constitutes hearsay evidence and would not be admitted in a court of law, except under the most limited conditions.

Section 15 of the Statutory Powers Procedure Act permits a tribunal to admit any oral testimony and any document or other thing that is relevant to the subject matter of the hearing. That part of Witness X's testimony that was relevant to the issues at hand, then, could be admitted, subject to the right of the Applicant to cross-examine. The tribunal can then weigh the evidence for its probative value, and indeed, act on such evidence if it feels that this is appropriate.

It is possible that some of Witness X's information would be considered relevant and could be admitted as evidence in the context of an arbitration hearing. It is also clear that the probative value of much of evidence would be limited at best, due to its secondhand nature.

Due Diligence:

For the hearing to be re-opened, the Insurer must prove that the information could not have been adduced at the hearing since it was neither available nor within its control. The party must also show that it exercised due diligence in seeking out the information.

Witness X was available, and indeed, testified at the original hearing in this matter. His testimony was relatively short and appeared to be introduced as corroboration for the Applicant's story of his travels on the evening of the accident. Mr. X answered some 20 questions in his examination-in-chief, in which he attempted to confirm Mr. Korkiss' intentions to visit him that evening and that a pattern of informal visits was common.

On cross-examination by Mr. Farrell, however, Mr. X admitted that he had no direct personal information about Mr. Korkiss' proposed activities that night and had likely received any information from his spouse who may have spoken to the Applicant on the telephone. Mr. Farrell's cross-examination of the witness was short, presumably because he was satisfied that with the admission of lack of personal knowledge of the Applicant's intentions that evening, the testimony had little probative value.

Progressive claims that there was no reason to suspect that Witness X had any evidence to offer on the issues he now appears prepared to discuss. Counsel for Progressive states that he only became aware of the identity of this witness just prior to the hearing and could not contact or interview the witness at that time. Mr. Farrell further alleges that the witness was intimidated and was afraid to come forward with the evidence at an earlier time.

In International Corona Resources Ltd. v. Lac Minerals Ltd., 1988 CanLII 4534 (ON HCJ), 66 O.R. (2d) 610. (Ont. H.C.J.), Osborne J. dealt with the issue of prior availability of evidence.

In any event, the evidence LAC seeks to rely upon was available before trial. That is not to say that LAC had the evidence in the concrete form before the trial. LAC did, however, have knowledge of the issues it now raises and could easily have obtained the evidence.

Mr. Korkiss submits that although the Insurer may not have been aware of the exact nature of Witness X's testimony, it was aware of the issue of fraud from the moment it rejected Mr. Korkiss' application for benefits on that basis. If it was unaware of the existence of Witness X or of the potential importance of his testimony, it was only because Progressive had not diligently pursued this case and instead intended to rely upon an off the record "confession" of a young offender as the basis for its denial of benefits.

Counsel points to the very late date of the interview and statement by the young offender, relied upon by the Insurer, which appears to have been taken only in August of 1999, as evidence of the Insurer's failure to diligently investigate the fraud issue in this matter at an early date. Likewise he points to evidence that the fraud investigation was still in progress at the time of the hearing, as demonstrated by documents tendered at the hearing, without having been previously disclosed.

The Insurer did undertake some investigations early on in the process, mostly with regard to the issue of Mr. Korkiss' post-accident disability, which the Insurer ultimately conceded at the hearing. On the issue of fraud, it appears to have made up its mind on the basis of its representative's discussions with the various police authorities, and indeed did not investigate further for some two years. This lack of further investigation is emphasised by the correspondence between Mr. Korkiss' counsel and Progressive which was tendered in evidence (Exhibit 13).

A letter dated October 24, 1997 from Tim Christie at Progressive states:

Mr. Adams has been in constant contact with the London police in regards to the question of this accident being a "staged" accident. It is his opinion at this time this is not a questionable staged accident but "definite" staged accident.

Constable Mackenzie of the London Police testified that as of October 1997, there was no realistic case to proceed in the matter of the alleged Insurance fraud. He further testified that Progressive would have provided any further information to the police if it became available but that none was provided.

No further information was provided on the alleged fraud, either because, in spite of a diligent investigation, none was forthcoming or, because no further serious investigation was undertaken until the eve of the hearing when the Insurer decided to interview the young offender who had allegedly implicated Mr. Korkiss.

If the first alternative is correct, then it is not clear why Progressive would be so adamant in its letter of October 24 that this was definitely a "staged" accident.

The plausibility of the second scenario is strengthened, at least in part, by the flurry of investigation just prior to the hearing that produced, among other matters, the interview with the young offender and investigations of Mr. Korkiss' post-accident conduct.

It is not clear whether any amount of investigation would have resulted in a discovery of Witness X and his exact evidence. Mr. Farrell states that there was no reason to suggest that Witness X... "had any evidence to offer on the issues of which he now speaks," and that to expect otherwise would be to require "clairvoyance."

Admittedly it is hard to predict which witness has light to shed on any issue. It is easier however, to focus on the more productive sources if a party undertakes the task early on in the process. Here the Insurer has called into question the Applicant's employment status and the bona fides of the accident from the outset, and cannot claim at this late date to be surprised by the need for evidence on this matter.

Witness X was involved in the claims process in conjunction with the Applicant. Witness X, in his deposition mentioned that he took Mr. Korkiss to his various doctors. In his testimony at the hearing, Witness X also testified that he provided translation services to Mr. Korkiss during the period of his application for benefits. Witness X was neither in hiding nor unwilling to involve himself in Mr. Korkiss' claim. Had the Insurer wished to obtain information from Witness X, a reasonable investigation would likely have turned up a mention of his name. I have no information to indicate that the Insurer undertook any investigation of Mr. Korkiss' friends or potential accomplices.

Surveillance reports were filed in this proceeding (at Tabs 18A and B and 20A of Exhibit 1). The first of these reports was undertaken in October 1998, over a year after the accident. All deal with generalized surveillance of Mr. Korkiss and do little more than confirm his apparent physical activity and his presence at various facilities from a secondary school to the London Psychiatric Hospital.

The focus of these investigations was clearly on Mr. Korkiss' claimed disabilities and not on finding evidence of fraudulent conduct. In the absence of further materials from the Insurer, the only inference that can be made is that it was satisfied with the evidence already available to it on the fraud question, and looked no further for corroborating information. Certainly there is no evidence that anyone asked Witness X or other friends of Mr. Korkiss the type of questions that elucidated the answers contained in Witness X's statement.

I find that Progressive has not satisfied the evidentiary burden of proving that even with due diligence, the evidence of the fraud referred to by Witness X could not have been adduced at the hearing. The evidence referred to by the witness was at least "available" to the Insurer had it made the necessary enquiries at the relevant time.

In the event that I am wrong, I will deal as well with the remaining criteria for re-opening a hearing.

Relevance:

Witness X's statement, inasmuch as it deals with the legitimacy of Mr. Korkiss' employment with Huron Billiards, the question of whether the accident was staged and Mr. Korkiss' credibility is relevant to the principal issues in the arbitration. In addition, Witness X may be able to shed some light on the identity of "Johnny," a person who figures in the statement given by the young offender and from whom Witness X may have purchased a stolen computer. Other matters raised touch on areas that are not only irrelevant but are inflammatory and prejudicial and would be excluded from evidence.

Credibility:

The proposed new evidence must be credible to be admitted. The Insurer suggests that Witness X's assertions are credible because of his position and long acquaintance with Mr. Korkiss and his personal involvement in some of the matters in question.

In addition, Progressive accounted for his failure to come forward with this information at the hearing by alleging that this witness was intimidated. No evidence of actual intimidation of this witness or of any other, was presented, other than the witnesses' assertion that he feared that his son would be murdered.

Witness X did give sworn testimony in favour of Mr. Korkiss at the hearing. He did not reveal any of the contradictory information that he now refers to in his statement. One version or other of his testimony is not credible.

Counsel for Mr. Korkiss points to references in the witness' statement to a request made to him (Mr. Fursman) at a meeting with Witness X in his office, asking for a percentage of the proceeds of the case as a motivation for the change of mind by the witness. Although the exact details of the proposed transaction are obscure, the reference to this matter raises questions about the motive of the witness' involvement in this case and of the reasons for his supposed change of heart.

Mr. Korkiss, at least in the period after the accident, appears, if the evidence offered at the hearing by Progressive is to be believed, to have involved himself with characters immersed in a murky world of petty fraud and small time crime. It would not be inconsistent with the Insurer's view of this world for Witness X to have been tainted as well since he was, by his own statements, closely involved in the claims process with Mr. Korkiss. Witness X also mentions having been involved in the purchase of apparently stolen goods, from a person he now implicates in the alleged accident fraud prior to the accident. I do not accept that Witness X is necessarily a credible witness with respect to the matters contained in his statement, and conclude that much of his evidence, even if accepted, would be given little weight.

Would the evidence, if believed, have affected the outcome of the hearing?

The evidence of Witness X at the hearing was peripheral and not given much attention by either counsel for the Applicant or the Insurer. At best, his evidence served to corroborate some of the statements by the Applicant, Mr. Korkiss, about his intentions on the night of the accident. Even in this sphere, the effect was limited due to his admitted limited personal knowledge of the matters referred to. In short, his evidence was of little weight.

The proposed new evidence, although more detailed and graphic, still for the most part suffers from the witness' lack of personal knowledge. He refers to alleged events in Kuwait and Italy, which he knows of only by hearsay and reputation and by Mr. Korkiss' alleged statement to him.

Even his opinion on one of the more relevant matters to the issue at the hearing and of Mr. Korkiss' employment at Huron Billiards, is based solely on the fact that Mr. Korkiss visited the witness at his home three or four times a week during the alleged work period, not on any personal observation of Mr. Korkiss at Huron Billiards or any admission by Mr. Korkiss that he did not work.

Witness X also refers to alleged admissions by Mr. Korkiss after the event, while Mr. Korkiss was a psychiatric patient. The witness acknowledges in the context of some of these admissions that "He was not in a normal way of thinking..." (Page 15 Tab 2 of the Insurer's motion brief).

If every matter referred to in the witness' statement were admissible, credible and possessing significant probative value, I have no doubt that Witness X's testimony would affect the outcome of the hearing. This, however, is not the case.

The lack of a credible explanation for the witness' change of mind, combined with the allegation of an attempted "shakedown" by Witness X and the lack of personal knowledge of many key matters by the witness lead me to conclude that Witness X's evidence could not be relied upon and would not affect the outcome in any serious way.

Fraud:

Mr. Farrell, on behalf of the Insurer, suggests that in the event of fraud, an independent ground of review is established for the introduction of new evidence. Relying on Gusulo v. ICBC, 50 C.P.C. (2d) and Applecrest Investments Ltd. v. Guardian Insurance Co., 13 C.P.C. (#d), 394. He advances the proposition that if the evidence points to a fraud on the process, then the evidence of such fraud should be admitted to avoid bringing the process and the tribunal into disrepute. This point of view is summarized in Meek v. Fleming [1961] 2 Q.B. 366, a judgement of the Court of Appeal in England which states at page 154:

Finis Litum is a desirable object, but it must not be sought by so great a sacrifice of justice which is and must remain the supreme object. Moreover, to allow the victor to keep the spoils so unworthily obtained would be an encouragement to such behavior, and do even greater harm than the multitude of trials.

In the Applecrest case, Mr. Justice Rosenberg granted an order staying judgement and re-opening evidence, "...in an attempt to see that 'a miscarriage of justice does not occur.'" The new evidence in this matter contradicted the evidence of a party and brought his previously accepted testimony into question.

In Applecrest, there had been no question of fraud prior to the identification of this new witness. The new evidence pointed not only to a discrepancy in the key testimony of a party but an apparent scheme to fabricate the records that substantiated the party's testimony. Rosenberg J., in re-opening the hearing, applied the principles in Lac Minerals but accepted that the reasonable diligence test still applied and that the evidence of the fraud must not have been known at the time of the trial.

Taken in conjunction with Osborne J.'s decision in Lac Minerals, Applecrest clearly does not create a separate head for re-opening a hearing on the basis of fraud. In essence, the same rules apply as to any other re-opening, with the exception that when there is a new allegation or evidence of fraud on the tribunal by a party going to the heart of the case, then the discretion must be left to the judge to prevent an abuse of the process of the tribunal.

Conclusion:

Each litigant is forced to make tactical decisions in the handling of a case which affect the manner in which a case is presented, the issues and evidence to be dealt with at a hearing. Sometimes, with hindsight, it appears that different strategies would have been more productive than those actually chosen. The nature of the adversarial process dictates that a party's case must frequently stand or fall on the basis of such choices.

Without in any way faulting its present counsel whom I note only became counsel of record just prior to the hearing, it is apparent that Progressive made decisions on how to proceed with this case that it may now regret. It chose to rely on evidence of fraud that was discredited at the hearing and not to seek corroborating evidence to supplement its key witness. It must now live with the consequences of those decisions.

I have found that the evidence of the alleged fraud referred to by Witness X could have been discovered by due diligence prior to the hearing and that the new evidence with its apparent weaknesses would likely not have affected the result of the hearing. Consequently, there is no case to re-open the hearing on the basis of Applecrest or Gusola v. ICBC.

I find that the basic criteria for re-opening referred to by Arbitrator Manji in Tran apply to this motion and that the Insurer has not met the test. This case may have twists and turns and characters that are beyond the boundaries of the average benefits dispute but that alone does not create the "exceptional or extraordinary circumstances" necessary to consider re-opening the hearing. I decline to re-open the hearing to permit the evidence of Witness X to be heard.

EXPENSES:

Since I have found that Progressive failed to exercise due diligence in obtaining the evidence of Witness X and since the nature of the arbitration process is to provide a reasonably prompt and cost-effective method of resolving disputes, I find that Progressive, in bringing this unnecessary motion has unreasonably prolonged the hearing process. I therefore exercise my discretion to award Mr. Korkiss his expenses incurred in this motion.

December 23, 1999