Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 2000 ONFSCDRS 95

Appeal P00-00022

Appellant

and

Respondent

Before: David R. Draper, Director's Delegate

Counsel: Altor Shields (for Zdrauko Pulic) Guy Farrell (for Zurich)

APPEAL ORDER

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

The appeal is allowed in part. Paragraph 2 of the arbitration order dated March 7, 2000 is revoked and replaced by the following order:
In accordance with Rule 37 of the Dispute Resolution Practice Code, if Zurich intends to rely on any portion of surveillance or investigative evidence at the arbitration hearing, it must provide, at least 60 days before the start of the hearing:

(a) the names and qualifications of the persons who secured the investigative or surveillance evidence, the dates, times and places where any surveillance or investigation was undertaken; and

(b) copies of all videotapes, photographs, reports, notes and summaries taken or prepared by anyone upon whose evidence Zurich intends to rely at the hearing.

If the parties are unable to agree on appeal expenses, written submission may be filed within 20 days of the date of this order.

June 1, 2000

David R. Draper Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This is an appeal by Zdrauko Puljic from a production order set out in a letter dated March 7, 2000. Mr. Puljic submits that the arbitrator erred in refusing to order Zurich Insurance Company (“Zurich”) to produce particulars of any surveillance done in this matter, whether or not it will be relied upon at the arbitration hearing.

Generally, appeals are not allowed from preliminary orders.¹ I held, however, that this appeal raised issues of sufficient significance and strength that it should be allowed to proceed. In reaching this decision, I was influenced by the fact that the appeal could be decided in time to avoid interrupting the arbitration process.

II. ANALYSIS

Mr. Puljic is claiming benefits as a result of an automobile accident on November 10, 1998. Following an unsuccessful attempt to resolve the dispute through mediation, he applied for arbitration. Consistent with usual practice, a pre-hearing was scheduled. One purpose of the pre-hearing was to deal with the exchange of documents needed for the hearing. In this case, most of the productions were resolved on consent, with three exceptions. Mr. Puljic appeals from the following order addressing the production of surveillance:

I denied the Applicant’s request for an order requiring the production of surveillance information obtained by the Insurer regardless of its intention to rely upon it at the hearing. In accordance with the Dispute Resolution Practice Code, I ordered the Insurer to produce, at least 60 (sixty) days prior to the first day of the hearing [scheduled to start on September 25, 2000], only the surveillance information upon which it intends to rely at the hearing.

On appeal, Mr. Puljic argues that the arbitrator erred in refusing his request because the information is “reasonably necessary to determine the issues being arbitrated,” within the meaning of Rule 32.1 of the Practice Code. In making this argument, he clarifies that he is not seeking production of the actual videotapes, photographs, reports or notes. Instead, he is asking for particulars of any surveillance done up to the time of the hearing, whether or not Zurich intends to rely on it. As I understand it, he wants to know the name of the person and company conducting the surveillance, the time, date and place of the surveillance and a synopsis of what was observed.

In Mr. Puljic’s submission, the arbitrator cannot properly assess Zurich’s actions without knowing whether it had surveillance favourable to his claim. He claims, for example, that an insurer’s reliance on favourable medical reports takes on a different complexion if it also had surveillance evidence that supports the insured person’s claim. The alternative, he argues, is for him to call all the claims adjusters as witnesses and ask if they ordered or had access to any surveillance — an unreasonably cumbersome and expensive approach.

There is considerable merit in Mr. Puljic’s position. Courts and tribunals have generally been moving toward early and full disclosure, minimizing the ability of a party to “bury” relevant information that might assist the other side. The Commission certainly encourages the early exchange of documents as an important part of the mediation process and to ensure a fair hearing.² However, the rules governing the exchange of documents are found in the Practice Code, including a specific rule for surveillance evidence. For reasons that follow, I conclude that the order in this case is consistent with the provisions of the Practice Code and, as a result, find no error of law.

The rules in the Practice Code are made pursuant to the Director’s authority in s.21 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, and the Statutory Powers Procedure Act, R.S.O. 1990, c.S.22, as amended. It was not suggested, nor do I find, that any of the production rules exceed the Director’s authority. The question, therefore, is how the rules apply to Mr. Puljic’s production request.

The Practice Code addresses the exchange of documents at various stages of the dispute resolution process. Rules 12.3 and 14.2 require that the parties to a mediation provide all documents that it “intends to refer to in the mediation.” This suggests an ability to withhold documents that is reinforced by Rules 18.3 and 18.4, protecting the confidentiality of information and documents provided to a mediator in confidence. Interestingly, Rule 22.1 directs the mediator to include in his or her report, “a list of materials requested by the parties that have not been produced and that, in the opinion of the mediator, were required for the purpose of discussing settlement of any issue that remains in dispute.” This rule has received little attention and, in this case, the mediator’s report states that there was no material requested by either party that, in her opinion, was required for the purpose of discussing settlement.

Rule 32 deals with the exchange of documents in arbitration prior to the pre-hearing discussion. The relevant parts provide as follows:

32.1 Before a pre-hearing discussion, the parties must exchange the documents that are reasonably necessary to determine the issues being arbitrated. See Practice Note 4 found in Section — of the Code.

32.2 At least 10 days before the pre-hearing discussion, each party must:

(a) obtain and exchange those documents listed in the Report of Mediator as being required for the purpose of discussing settlement of the issues;

(b) exchange the documents in the party’s possession on which the party intends to rely;

(d) identify documents that the party requests from any other party; and

(e) establish reasonable time frames for the exchange of the documents referred to in (c) and (d).

Additionally, Rule 32.3 creates an ongoing obligation on the parties to promptly exchange “documents including updates to the information previously exchanged and any additional documents obtained.” Rule 32.4 authorizes arbitrators to order, at any time, the production of “any document or the giving of information that he or she considers relevant to the determination of the issues in the arbitration, on such terms as he or she considers appropriate.”

As noted above, Mr. Puljic relies on the wording of Rule 32.1, arguing that his production request involves information “reasonably necessary to determine the issues being arbitrated.” In my view, the stronger argument may be under Rule 32.4, as it deals with the giving of information, not just documents. In any event, the problem with Mr. Puljic’s position is that the Practice Code includes a specific rule dealing with surveillance evidence:

37.1 If a party intends to rely on any portion of surveillance or investigative evidence, including videotapes, photographs, reports, notes and summaries of surveillance observations or investigations, the party shall provide:

(a) the names and qualifications of the persons who secured the investigative or surveillance evidence, the dates, times and places where any surveillance or investigation was undertaken; and

(b) copies of all videotapes, photographs, reports, notes and summaries taken or prepared by anyone whose evidence the party intends to rely at the hearing.

While it might be argued that this rule deals only with surveillance on which the insurer³ intends to rely, remaining silent on the disclosure obligations for other surveillance, I am not convinced that is a fair reading. In my opinion, the clear implication of Rule 37.1 is that the insurer’s production obligation only arises when it decides “to rely on any portion of surveillance or investigative evidence.” There may be reason to question the appropriateness of this rule in a first-party system, but in my view, that is what the rule provides. Similarly, Practice Note 4, referred to in Rule 32.1, addresses surveillance evidence as follows:

Surveillance or investigative evidence a party intends to rely on. The party must provide particulars of the names and qualifications of any person who took such evidence, including the dates, times and places where any surveillance or investigation was undertaken. The party must provide copies of all surveillance evidence taken or prepared by anyone upon whose evidence the party intends to rely at the hearing.

In support of his position, Mr. Puljic points to the practice in the courts, arguing that he would be entitled to more information in that forum. There is no question that the courts have been moving toward earlier and more complete disclosure. However, the approach in the courts is based on specific rules that form part of a more technical system that includes formal pleadings and oral discoveries. The rules distinguish between the discovery of documents and the discovery of information, with recent decisions suggesting that obligation to provide information or documents will depend on precisely what is being requested, when it is being requested, whether the material is protected by litigation privilege, and whether the material will be used as part of the party’s case or simply to impeach the testimony of an opposing witness.⁴ In contrast, the Practice Code establishes simple rules designed to ensure a fair, efficient process. I am unable to conclude that the arbitrator erred in following the provisions of Rule 37 and Practice Note 4, dealing specifically with surveillance evidence.

Mr. Puljic also made an alternative argument. He contends that even if the arbitrator was entitled to reject his production request, the order is too narrow. In his submission, Rule 37 does not allow the insurer to provide only the surveillance evidence upon which it intends to rely at the hearing. I agree. The Rule 37 applies if the insurer “intends to rely on any portion of surveillance or investigative evidence.” Therefore, the order must be amended to reflect the wording of the rule.

III. APPEAL EXPENSES

I did not hear any submissions on appeal expenses. If the parties are unable to resolve this issue, written submissions may be filed within 20 days of the date of this decision.