Neutral Citation: 2001 ONFSCDRS 142

FSCO A99-001031

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

RAJINDER SANDHU

Applicant

and

CAA INSURANCE COMPANY (ONTARIO)

Insurer

DECISION ON A MOTION

Before:

Tanja Wacyk

Heard:

By written submissions received by August 3, 2001

Appearances:

Ron E. Folkes for Mr. Sandhu

Lee Samis for CAA Insurance Company (Ontario)

Issues:

The Applicant, Rajinder Sandhu, was injured in a motor vehicle accident on March 7, 1995. He was insured under a standard automobile owner's policy issued by CAA Insurance Company (Ontario) ("CAA"). Every motor vehicle policy provides the benefits set out in the Schedule.¹

Mr. Sandhu and CAA disagree about his entitlement to weekly income replacement benefits. Mr. Sandhu has applied for arbitration at the Financial Services Commission of Ontario under section 279 of the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Insurance Act").

At the resumption of the pre-hearing in this matter, on June 15, 2001, the parties were unable to agree regarding production of materials related to the tort action resulting from this accident. It was agreed that CAA would particularize the documents being sought and the reasons they were producible. If the parties were still unable to agree on the matter it would be dealt with in the form of a motion, by written submissions.

CAA's written submissions were received by the Commission on June 19, 2001. Due to an oversight, the Applicant was not provided with a copy until July 18, 2001. The Applicant's submissions were received July 25, 2001, and the reply submissions followed on July 26, 2001.

However, as neither submission addressed the Commission's jurisprudence in this area, the parties were referred to the following cases and given an opportunity to make additional submissions by August 3, 2001:

Hornick and State Farm Mutual Automobile Insurance Company, (FSCO A00-000337, November 30, 2000);
Reid and Royal & Sunalliance Insurance Company of Canada, (FSCO A99-000959, January 19, 2000); heard on appeal on other issues by FSCO Appeal Order P00-00014, August 1, 2000; and,
Chin and Coseco Insurance Co./HB Group/Direct Protect, (FSCO A00-001024, April 18, 2001).

Subsequent submissions were received on August 2, and August 3, 2001.

The issue in this case is whether CAA is entitled to relief from the implied undertaking rule and an order requiring the production of the related tort file, or elements of it.

Result:

The request of CAA for relief from the implied undertaking rule and an order requiring the production of the related tort file, or elements of it, is denied.

Argument:

CAA argued that because Mr. Sandhu's tort claim was based on personal injuries sustained in the same accident as is the subject of this proceeding, the file would include medical reports and other documentation about the nature and extent of Mr. Sandhu's disability. CAA speculated that the file might include other relevant items such as notes of treating physicians, medical expense claim particulars, investigations with respect to disability and entitlement, as well as the testimony of Mr. Sandhu and others about issues that are relevant to the proceedings before the arbitrator.

CAA acknowledged that some documents within the file would be privileged.

Mr. Sandhu relied on Rule 30.1 of the Rules of Civil Procedure. More specifically, Rule 30.1.01(3) provides that all parties and counsel are deemed to undertake not to use evidence or information obtained from documentary discovery, examination for discovery, inspection of property, or medical examination other than for those proceedings in which the evidence was obtained.

Consequently, Mr. Sandhu argued that the medical reports and evidence obtained on examination for discovery cannot be produced.

Mr. Sandhu further argued that as he is not prepared to waive the deemed undertaking for documents which he had disclosed, the only other body with authority to order production was the Ontario Superior Court of Justice. Consequently, that was the proper forum in which to seek production of the information in the tort file.

CAA replied that pursuant to Rule 30.1.01(4), the deemed undertaking rule does not prohibit a use to which the person who disclosed the evidence consents. Consequently, the defendant insurer in the tort action may consent to disclose the information it obtained for the purpose of defending the tort action, as may Mr. Sandhu.

In his supplementary submissions, dated August 2, 2001, Mr. Sandhu noted that it was still not clear what CAA seeks from the tort proceedings by way of production.

Mr. Sandhu also noted that only a partial transcript of the examinations for discovery in the tort action exists, as the matter settled before trial. He also pointed out that the tort file dealt only with damages for pain and suffering.² It did not deal with loss of past or future income, which is the sole subject of the arbitration.

Mr. Sandhu relied on Horni'ck and State Farm to argue, as was the ruling in that case, that arbitrators do not have the authority to grant relief from the implied undertaking rule.

He argued that the decision in Chin and Coseco which granted relief from the implied undertaking rule, was an anomaly - resulting from the third party insurer, the accident benefit insurer, and their counsel being the same. As CAA was not a party to the tort action, Mr. Sandhu argued it is subject to "the privacy wall erected by Rule 30.1."

Furthermore, Mr. Sandhu argued that CAA has been aware of the medical and psychiatric information upon which he relies for more than a year. He maintained that the parameters of the arbitration are now established, and it would be too late for CAA to arrange for any additional insurer’s medical and psychiatric examinations. Consequently, the request for production of any defence medical reports at this late date constitutes an attempt to circumvent the timelines in the Dispute Resolution Practice Code.³

In responding submissions dated August 3, 2001, CAA responded that it was seeking the production of all medical and financial documentation, as well as any investigation or surveillance tapes and/or reports prepared in the tort action.

CAA relied on the decisions in Reid and Royal & Sunalliance Insurance Company of Canadaj and Chin and Coseco Insurance Co./HB Group/Direct Protect to argue that arbitrators do have the authority to grant relief from the implied undertaking rule. In Reid, Arbitrator Blackman allowed medical reports from the tort file to be relied on in the accident benefits arbitration. In Chin, Arbitrator Allen allowed the transcripts from the tort proceeding to be used to test the Applicant's credibility.

The Insurer also reiterated that the documents were relevant, and that Mr. Sandhu had not referred to any specific prejudice that would result from the disclosure of documents contained in the tort file.

Legislative Provisions:

The relevant provisions of Rule 30.1 state:

30.1.01 (1) This Rule applies to,

(a) evidence obtained under,

(i) Rule 30 (documentary discovery),

(ii) Rule 31 (examination for discovery),

(iii) Rule 32 (inspection of property),

(iv) Rule 33 (medical examination),

(v) Rule 35 (examination for discovery by written questions)

(b) information obtained from evidence referred to in clause (a).

(3) Deemed undertaking - All parties and their counsel are deemed to undertake not to use evidence or information to which this Rule applies for any purposes other than those of the proceeding in which the evidence was obtained.

(4) Exceptions - Subrule (3) does not prohibit a use to which the person who disclosed the evidence consents.

(6) Subrule (3) does not prohibit the use of evidence obtained in one proceeding, or information obtained from such evidence, to impeach the testimony of a witness in another proceeding.

(8) Order that undertaking does not apply - If satisfied that the interests of justice outweigh any prejudice that would result to a party who disclosed evidence, the court may order that subrule (3) does not apply to the evidence or to information obtained from it, and may impose such terms and give such directions as are just.

Section 20 of the Insurance Act provides arbitrators with authority to decide all issues of fact and law. It states:

20.— (1) This section applies with respect to proceedings under this Act before the Tribunal, the Superintendent and the Director and before an arbitrator.

(2) A person referred to in subsection (1) has exclusive jurisdiction to exercise the powers conferred upon him or her under this Act and to determine all questions of fact or law that arise in any proceeding before him or her and, unless an appeal is provided under this Act, his or her decision thereon is final and conclusive for all purposes.

In addition, and most importantly in this instance, section 22 of the Insurance Act grants arbitrators the same power vested in the Ontario Court (General Division) (now the Ontario Superior Court of Justice) for the trial of civil actions to summon and enforce the attendance of witnesses, compel them to give evidence, and to produce documents, records and things.

Section 22 states:

22.—(1) For the purpose of exercising the powers and performing their duties under this Act the Director and every arbitrator has the same power to summon and enforce the attendance of witnesses and compel them to give evidence on oath or otherwise, and to produce documents, records and things, as is vested in the Ontario Court (General Division) for the trial of civil actions.

Section 15 of the Statutory Powers Procedure Act⁴ (the"SPPA") grants arbitrators the jurisdiction to admit evidence regardless of whether it is admissible in a court. This section provides:

(1) Subject to subsections (2) and (3), a tribunal may admit as evidence at a hearing, whether or not given or proven under oath or affirmation or admissible as evidence in a court,

(a) any oral testimony; and

(b) any document or thing,

relevant to the subject-matter of the proceeding and may act on such evidence, but the tribunal may exclude anything unduly repetitious.

Analysis:

Arbitrations are not proceedings that come within the Rules of Civil Procedure.⁵

However, Rule 30.01 essentially codifies the existing law in Ontario with respect to implied undertakings as articulated in the judgment of Morden, A.C.J.O. in Goodman v. Rossi⁶ In that decision, Morden A.C.J.O adopts the following statement of the common rule in Matthews and Malek's Discovery (1992) at page 253:

The primary rationale for the imposition of the implied undertaking is the protection of privacy. Discovery is an invasion of the right of the individual to keep his own documents to himself. It is a matter of public interest to safeguard that right. The purpose of the undertaking is to protect, so far as is consistent with the proper conduct of the action, the confidentiality of a party's documents. It is in general wrong that one who is compelled by law to produce documents for the purpose of particular proceedings should be in peril of having those documents used by the other party for some purpose other than the purpose of the particular legal proceedings and, in particular, that they should be made available to third parties who might use them to the detriment of the party who has produced them on discovery. A further rationale is the promotion of full discovery, as without such an undertaking the fear of collateral use may in some cases operate as a disincentive to proper discovery.

As a result of the implied undertaking rule, parties and their counsel are deemed to undertake not to use evidence or information obtained from the other party during the course of litigation for any purposes other than those of the proceeding for which the evidence was obtained. The rule contains a number of exceptions, and also provides that a court may order, with terms and directions, that the implied undertaking rule does not apply.

Section 20 of the Insurance Act authorizes arbitrators to decide any question of fact or law brought before them. Furthermore, section 22 provides arbitrators with a clear authority parallel to that vested in the court to, amongst other things, order the production of documents.

Consequently, I find, as did Arbitrator Allen in Chinij that by extension, arbitrators have the authority to grant relief from the implied undertaking rule.

This parallel authority avoids the inefficiency and delay which would otherwise result from having to deal with a single matter in two different forums.

Furthermore, I believe section 15 of the SPPA, which allows tribunals to admit evidence regardless of whether it is admissible in court, articulates an intended flexibility in the exercise of discretion in these proceedings - with fairness and efficiency prevailing over technical rules.

The jurisprudence regarding the transportability of elements of related tort and accident benefits files is unsettled.⁷

I agree with Arbitrator Allen that in determining whether relief from the implied undertaking rule should be granted, arbitrators "should be guided by considerations of relevance, the balance between competing access and privacy rights, fairness and any possible prejudice to a party."

However, these considerations must be carefully weighed. In most instances, elements of the tort file will be relevant. In many instances, credibility will be an issue. To grant relief in all such circumstances would result in the integrity of the implied undertaking rule being routinely infringed.

Furthermore, the Insurance Act and the Dispute Resolution Practice Code address the information to which parties proceeding before the Commission are entitled. A liberal interpretation of the exemptions to the implied undertaking rule would allow parties to gain access indirectly to information they are not entitled to directly in proceedings before the Commission.

In many instances it would allow insurers to essentially double-up on the medical information they can rely on, and would distort the adjudication process into a battle of numbers. This would also result in lengthier hearings, as parties and arbitrators sift through the additional information. In particular, this would undermine the expediency of the arbitration process, which is an important distinguishing characteristic, and often the reason parties choose arbitration over litigation.

Nor should it be forgotten that the implied undertaking rule reflects the importance of protecting the privacy of litigants who are compelled to provide information they would not offer up in other circumstances, and through that protection, the facilitation of a full and proper disclosure in the course of litigation.

I do not agree that, as CAA has argued, because the third party Insurer was able to compel the Applicant to attend medical examinations and provide the information it now seeks, that information is now that Insurer's to disclose. In my view, it remains the confidential information of Mr. Sandhu, and therefore subject to the implied undertaking rule.

In my view, there is a presumption that the privacy of litigants will be protected unless the party seeking disclosure can demonstrate that, in those particular circumstances, their legislated rights to information in proceedings before the Commission are not sufficient, and the interests of justice outweigh any prejudice resulting to the party who disclosed the evidence. Different facts may lead to different conclusions regarding how the interests of justice will best be fostered.

In the case of a third party seeking such relief, the burden is a particularly heavy one. That is precisely the harm to be avoided as articulated in the statement from Goodman v. Rossi, set out above, at page 8 of this decision.

While the decisions in Chin and Coseco and Reid and Royal & Sunalliancej both issued by this Commission, granted relief from the implied undertaking rule and ordered production of elements of the tort file in an accident benefits proceeding, they did so based on different facts and for different reasons.

As noted in Chin, the tort and accident parties were the same. Arbitrator Allen allowed the use of the discovery transcript to test the applicant's credibility. However, in doing so she made findings regarding the commonality of issues and the applicant's waiver of his right to privacy which are not applicable in the instant case. The matter did not involve access by a third party as is the case here.

In Reid, the insurer did not have access to any other medical examinations regarding the medical issues in dispute. Arbitrator Blackman found that without medical reports from the tort file, the insurer would be significantly prejudiced in responding to the application for arbitration. Consequently, he found that the interest of justice outweighed the prejudice to the applicant and ruled that the implied undertaking rule did not apply to the defence medicals from the tort file.

In the instant case, CAA has not alleged any special circumstances to support its request. Other than generic descriptions, I have no information regarding the specific materials which are sought and why. Rather, CAA makes a general argument of relevance. In my view, that is not sufficient to demonstrate that the interests of justice would best be served by granting relief from the implied undertaking rule, so as to overcome the presumption against disclosure.

Order:

The request of CAA for relief from the implied undertaking rule and an order requiring the production of the tort file, or elements of it, is denied.

EXPENSES:

I leave the matter of expenses to the hearing arbitrator who makes the final determination in this case.

October 3, 2001

Tanja Wacyk Arbitrator

Date