Olga Castaneda v. CGU Insurance Company of Canada, 2001 ONFSCDRS 190

Financial Services Commission of Ontario

Neutral Citation: 2001 ONFSCDRS 190 Appeal: P01-00053

Office of the Director of Arbitrations

Olga Castaneda, Applicant and CGU Insurance Company of Canada, Respondent

Before: David R. Draper, Director of Arbitrations

Representatives: Rod Hare and Mark Rowe (for Ms. Castaneda) Steve Newell (for CGU Insurance)

ORDER - BIAS APPLICATION

Under section 282(12) of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The application for appointment of a new arbitrator due to bias is dismissed.

Date: December 18, 2001 David R. Draper, Director of Arbitrations

REASONS FOR DECISION

I. NATURE OF THE APPLICATION

This is an application by Olga Castaneda under s.282(12) of the Insurance Act for the appointment of a new arbitrator. Her representatives, Mr. Rod Hare and Mr. Mark Rowe, submit that the behaviour of the arbitrator conducting the pre-hearing in this matter was "unreasonably hostile toward the claimant and her representatives, demonstrating his bias." In their submission, he should not be allowed to have any further involvement in this case, or in any other cases in which they are involved as representatives. For reasons that follow, I find little merit in this application.

II. ANALYSIS

A. Background

This application has a brief, but tortuous history. I am setting it out in detail due to allegations from Mr. Hare and Mr. Rowe that my actions compromised their ability to represent their client.

Ms. Castaneda was involved in an automobile accident on June 27, 2000. She claimed the cost of various assessments done by Profile Evaluations (Profile) under s.24 of the SABS-1996.¹ When CGU Insurance Company of Canada (CGU) denied the claim, she applied for mediation. At mediation, she was represented by Mr. Hare, the Director/Proprietor of Profile. According to the Report of Mediator, dated March 30, 2001, the issues in dispute were not resolved.

Ms. Castaneda then filed an application for arbitration, signed by Mr. Hare and Mr. Rowe, who is also a "proprietor" of Profile. The application claims $4,300, plus interest, for the cost of the assessments done at Profile, as well as arbitration expenses and a special award. It does not include any claim for weekly benefits, or the cost of treatment and rehabilitation recommended by Profile. In its Response by Insurer to an Application for Arbitration, CGU states that it refused to pay the amounts claimed because the assessments duplicated those already done. Mr. Hare then filed a Reply by the Applicant for Arbitration on behalf of Ms. Castaneda, setting out a lengthy list of documents needed "to assist in determining the issues being arbitrated." By any measure, it is an unusually extensive list of productions for an arbitration hearing involving such a narrow issue.

As part of the normal arbitration process, the matter was scheduled for a pre-hearing discussion on September 18, 2001, before Arbitrator Renahan. At this pre-hearing, CGU was represented by Mr. Newell. Ms. Castaneda was represented by Mr. Hare, Mr. Rowe and another non-lawyer, Mr. Conrad Bennett. Neither Ms. Castaneda nor anyone from CGU attended.

Arbitrator Renahan wrote a confirming letter that same day. It describes the issues in dispute and states that the parties agreed to deal with productions by filing a joint list of agreed productions within 30 days of the pre-hearing, and by complying with their undertakings, or providing proof of best efforts, within 60 days. The letter also sets out the general rules about productions, surveillance, witnesses, evidence and expenses. Finally, it confirms the dates of the hearing — January 7, 8, 9 and 10, 2002. The arbitrator then states as follows:

The total claim without interest amounts to $4,300. In view of the amount of the claim, I urged the parties to try to present their case in less than four days. I suggested that the applicant should present her evidence in one day and the insurer should present its evidence in one-half a day. The parties should attempt to make their submissions in one-half day. I pointed out that if the hearing takes more than this amount of time, an arbitrator may consider this in awarding expenses of the arbitration proceeding against one party or the other.

Neither party contacted the arbitrator to challenge the accuracy of this letter. However, three weeks later, on October 10, 2001, Mr. Hare and Mr. Rowe sent a fax marked "Confidential" to Mr. David Braund, Senior Arbitrator, complaining about Arbitrator Renahan's conduct during the pre-hearing. As this document is being relied upon in this application, it cannot be viewed as confidential.

The focus of the complaint is on the arbitrator's handling of the length of the hearing. According to the complaint letter, Arbitrator Renahan said that four days was far too long and that the issue should be dealt with in a much shorter time frame. It goes on to say: "Arbitrator Renahan then turned directly to the claimant, Ms. Castaneda, and warned her that she faced the possibility of extensive costs from FSCO [Financial Services Commission of Ontario] directly, that could be as high as $10,000, if she was unsuccessful. He then added potentially, the insurer faced the same costs if the claimant were successful. Arbitrator Renahan then stated that in his opinion, a day and one-half was all that was required in view of the issue in dispute, leaving a further half-day for submissions."

The complaint goes on to state that Mr. Hare and Mr. Rowe were "amazed" by the manner in which Arbitrator Renahan addressed the issue of expenses, although they acknowledge that no one raised any objection at the time. According to the letter, Mr. Hare then said it would be unfair to restrict the claimant's ability to address all of the factors that arbitrators have said are relevant in a s.24 claim. At that point, according to their letter, Arbitrator Renahan became agitated, lecturing Mr. Hare about his responsibilities and again warning Ms. Castaneda that she faced the possibility of expenses of at least $10,000. Mr. Hare and Mr. Rowe allege that he spoke in a "loud voice and condescending manner," stating that in view of the nominal amount in dispute, the case should be heard in no more than two days, and that he would make that recommendation in his pre-hearing letter — as he did. The action requested is set out in the final paragraph:

Based on Arbitrator Renahan's conduct at the Pre-Hearing, specifically the animosity and inappropriate behaviour exhibited towards both the applicant and her representatives, we cannot accept the arbitrator's ongoing involvement. Further, representatives for the claimant can no longer accept Mr. Renahan's involvement on any other application within FSCO.

As discussed in more detail below, this was an unlikely outcome. Arbitration is meant to be a relatively informal, expeditious and inexpensive process. Parties cannot be allowed to unreasonably inflate the time and cost of hearings with impunity. Therefore, pre-hearing arbitrators are expected to control the process, including warning parties about the possible cost consequences of their positions. Even if the allegations in this case are accepted at their highest, they suggest that the arbitrator may have lost his temper. While everyone involved in the dispute resolution process deserves to be treated with respect, bias only arises if there is a reasonable apprehension that the arbitrator is unable or unwilling to approach the case with an open mind. That is a hard argument where, as here, the issue at the heart of the controversy is decided in the complainant's favour — the arbitration hearing was scheduled for four days as Mr. Hare and Mr. Rowe requested.

Unfortunately, the situation became unnecessarily complicated. On October 15, 2001, before his complaint was addressed, Mr. Hare arrived at the Commission to discover that another of his cases, a three-day hearing in Campbell and Kingsway General Insurance Company, (FSCO A00-001259), had been scheduled before Arbitrator Renahan. There is no suggestion that this was anything other than coincidental. Not unreasonably, Mr. Hare contacted Senior Arbitrator Braund to discuss the situation. Subsequent correspondence suggests, however, that they came away from their discussion with different understandings about what was to happen.

According to Mr. Hare and Mr. Rowe, the Senior Arbitrator suggested that they go ahead with the hearing, at least as far as dealing with the preliminary issues they intended to raise, without disclosing the complaint to Arbitrator Renahan. In their letter, dated October 15, 2001, they advised Senior Arbitrator Braund what occurred when their preliminary arguments were unsuccessful:

With a dispute of the Arbitrator's decision having arisen, the applicant's representatives are placed in a very difficult position. Normally, we would now be consulting our client with respect to an appeal of the arbitrator's decision. You had asked us to not disclose the outstanding complaint to Arbitrator Renahan. It was thus impossible to answer the Arbitrator's further questions with respect to our refusal to proceed further. Understandably, Arbitrator Renahan was annoyed at our apparently bizarre behaviour. As we departed, he was in the process of considering the insurer's request for a decision with respect to dismissal of the entire application and expenses. This application is completely out of control and retrospectively, it was ill advised to proceed at all with today's proceedings. Your immediate assistance and intervention is required.

Senior Arbitrator Braund responded by fax, and then following a telephone conversation with Mr. Hare, wrote a confirming letter. He stated that he did not agree with all of their statements, and set out his understanding, as follows:

I indicated that, what might otherwise be the result of your complaint about the Arbitrator's conduct in a pre-hearing discussion in another matter, the Arbitrator would not be removed from hearing cases involving you, based on the contents of that complaint. Whether such a decision might be appropriate in more grievous circumstances is hypothetical. I told you Monday morning to deal with the preliminary issues and then call me again, if you wished, before the main hearing. I appreciate that you may have misconstrued this as a possibility of the Arbitrator being relieved of the hearing, but I did say that our inclination would not be to change an Arbitrator's hearing assignment because of a complaint.

Let me focus again on the current situation. As I understand it, you made submissions in this matter to Arbitrator Renahan on the preliminary issues, but were unsuccessful. He then asked you to present your case on the main issues, but you were not prepared to do so, or to explain our reasons. In your letter, you state that your apparently unusual behaviour was because I told you not to mention your complaint to Arbitrator Renahan. This is not what I said, although I accept that there could have been a misunderstanding. I simply wanted to assure you that you could proceed before the Arbitrator knowing that he was unaware of your complaint.

Senior Arbitrator Braund then presented two alternatives. He advised Mr. Hare that he could ask Arbitrator Renahan to reopen the hearing, as allowed by Rule 43 of the Dispute Resolution Practice Code (Fourth Edition). This would allow him to proceed on the substantive issues or raise any allegations of bias directly with the arbitrator. Alternatively, he could apply to the Director of Arbitrations for the appointment of a new arbitrator under s.282(12) of the Insurance Act, which provides as follows:

282. (12) A party may apply to the Director for the appointment of a new arbitrator if the party believes that the arbitrator is biased and the Director shall determine the issue.

I note that neither the Insurance Act nor the Dispute Resolution Practice Code establishes procedures for applications under this section.

Later that same day, Mr. Hare and Mr. Rowe pursued both options. I received a fax from Mr. Hare in the Campbell case, asking for the appointment of a new arbitrator under s.282(12), and requesting 30 days to make submissions on the issue. Mr. Hare and Mr. Rowe also wrote to Senior Arbitrator Braund, sending a copy to me. In this letter, they indicated that they wanted to bring a motion to reopen the hearing, but raised various questions about how that would proceed. They also referred to the Castaneda hearing, as follows:

Insurer's counsel has asked for a period of time to the end of October to consult with his client with respect to a settlement. It is our belief that the issue will likely be resolved. However, this does not remove the concerns raised within our letter of October 9th. We may not actually need to consider the removal of the Arbitrator if the benefit is resolved. However, as the issue with respect to bias arose in this proceeding, do we need to proceed under s.282(12) just to have this issue addressed specifically? Thank you for your assistance in this matter. We understand the need to act immediately. However, we do not want to further compound matters.

I had serious questions about the relief being sought. Mr. Hare and Mr. Rowe were alleging bias in Campbell based on what happened in Castaneda. Absent any evidence of bias in the Campbell proceeding, this seemed an unlikely proposition. However, to ensure that they had an opportunity to present their arguments without unduly interrupting the proceedings, I directed Arbitrator Renahan not to release any formal orders and set out the following timetable:

At this point, it seems to me that there are two separate options — as identified by Senior Arbitrator Braund. First, Mr. Hare, on behalf of Ms. Campbell, can ask Arbitrator Renahan to re-open the hearing under Rule 43 of the Dispute Resolution Practice Code. This request would be based on Mr. Hare's uncertainty about how to proceed following the disposition of the preliminary issues. The outcome, if the hearing is re-opened, would be that Arbitrator Renahan would continue with the hearing. Any request that he issue written rulings on the preliminary issues, or that the main hearing be adjourned, would be addressed by him in that context.

Second, Ms. Campbell can proceed with her bias application under s.282(12). The allegations made in Mr. Hare's materials are serious and, if this route is pursued, they will be taken seriously. This means that I will require evidence of Arbitrator Renahan's actions.

At a minimum, this will require an affidavit from Mr. Hare or someone else who observed the actions that give rise to the allegations of bias. Any such affidavits could be subject to cross-examination if I determine that is necessary. While I appreciate that you will need some time to organize this evidence, this issue should be addressed quickly, particularly given Mr. Hare's position that Arbitrator Renahan should not be assigned to any cases in which he is involved.

These options cannot be pursued at the same time. Therefore, the timetable will be as follows:

• By Friday, November 9, 2001, Mr. Hare will advise whether he is pursuing his bias application under s.282(12) of the Insurance Act. This should be done in writing with a copy to Mr. Pollack [counsel for Kingsway].

• Assuming he is, he will have until Friday November 16, 2001 to file any evidence in support of his application, with copies to Mr. Pollack.

• Upon receipt of Mr. Hare's material, Mr. Pollack will advise whether he intends to file any evidence in response. If he does, he will have until Monday, November 26, 2001 to do so, with copies to Mr. Hare.

• At that point, I will determine how the matter will proceed. Therefore, if either party has submissions on how the matter should proceed, including the need for cross-examinations or oral submissions, please let me know. If an oral hearing is needed, I intend to make myself available for an early date.

Mr. Rowe responded on November 9, 2001, objecting to the procedures set out in my letter. He stated that while the issue of bias arose in the Castaneda case, I had established a process "where the issue of bias on one application will be heard within a second application." In his submission, this would only complicate matters, and would "risk the disclosure of details with respect to Ms. Castaneda's application to parties not directly related to the proceeding." Mr. Rowe also confirmed that they were pursuing bias applications in both Campbell and Castaneda, suggesting that the Campbell application be put on hold pending the outcome of the application in Castaneda. Finally, he asked for a resumption of the pre-hearing in Castaneda to deal with production issues, raising the possible need for an adjournment of the hearing scheduled for January 7-10, 2002. For reasons that are not clear, this letter was not copied to counsel for either CGU or Kingsway, the insurer in Campbell.

It was my opinion — an opinion I still hold — that Mr. Hare and Mr. Rowe raised the connection between the two cases. On behalf of Ms. Campbell, they were asking for an order preventing Arbitrator Renahan from issuing his interim decisions and proceeding with her hearing based on evidence from the Castaneda case. There is no question that such an order would directly affect Kingsway. Therefore, I responded on November 14, 2001, stating that as the two applications were related, they would be addressed together, although not formally combined, with both insurers being given a chance to respond to any evidence of bias. I also sent a copy of Mr. Rowe's letter to Mr. Pollack and Mr. Newell, advising Mr. Rowe that I could not engage in a one-sided conversation with any of the parties.

On November 19, 2001, I received a letter from Mr. Rowe and Mr. Hare, including affidavits sworn by each of them. In response to my request for submissions on the need for oral submissions, they asked for an oral hearing. In this letter, they again objected to evidence from the Castaneda hearing being used in the Campbell matter, stating as follows:

While the two matters (Castaneda, Campbell) are indeed related, in our opinion, evidence on behalf of the Castaneda application should not be included within the Campbell matter. We do not have authority to release details of Ms. Castaneda's application to either Ms. Campbell or Kingsway Insurance. We have not provided a copy of the enclosed affidavits to Mr. Pollack as he is not a party to Ms. Castaneda's application. The original Castaneda complaint to Arbitrator Braund and the application under 282(12) are the basis for the Campbell application. In our opinion, Castaneda must be dealt with in advance of Campbell.

It is difficult not to view this as contemptuous of my previous rulings. Not only were the affidavits not sent to Mr. Pollack, neither was the covering letter. The reason given was: "Our letter of November 9th had explained why we had not copied the other parties involved. Please confirm that FSCO will contact Mr. Pollack directly with respect to the current status of the Campbell application." Further, the affidavits were not even sent to Mr. Newell, counsel for CGU in the Castaneda matter. This was based on Mr. Rowe and Mr. Hare's belief "that this may prejudice or otherwise might influence the preparation of evidence from the insurer." Finally, the letter asked that I confirm that the Castaneda hearing in January had been adjourned.

I responded on November 21, 2001, stating as follows:

. . . I respond with some frustration. My previous letter was intended to allow Mr. Hare to present his arguments on behalf of his clients quickly and fairly. However, he has chosen not to follow my directions. While this might justify dismissing the applications, I am prepared to attribute his non-compliance to some confusion about the process. This letter sets out revised steps that must be followed.

Mr. Hare has confirmed that he is making applications under s.282(12) of the Insurance Act in respect of both the Castaneda and Campbell proceedings. The basis for the applications in both cases is the pre-hearing held before Arbitrator Renahan on September 18, 2001 in the Castaneda arbitration. The contention is that during this pre-hearing, Arbitrator Renahan demonstrated bias toward the insured person and her representatives that should prevent him from being involved in any further steps in that case, or in any other cases where Mr. Hare and Mr. Rowe are involved, including Campbell.

Mr. Hare suggests that the Campbell matter should be put on hold pending the outcome of the application in Castaneda, and that he should not have to disclose anything related to the Castaneda matter to counsel for Kingsway in Campbell. This ignores the fact that he is asking for relief that directly affects Kingsway, and has already received interim relief through my direction that Arbitrator Renahan not release any formal decisions in Campbell. Consequently, Kingsway is entitled to the evidence upon which the application is based. I will not consider making an order that directly affects its interests without allowing it to participate.

It remains my intention to proceed with these applications expeditiously. As a result, I am not prepared to adjourn the January 2002 hearing in Castaneda, as requested by Mr. Hare. The revised timetable is as follows:

• Mr. Hare must file any evidence, including all affidavits, upon which he intends to rely by Monday, November 26, 2001, at 5:00 p.m. This material must be delivered or faxed to Mr. Newell by the same deadline. If Ms. Campbell intends to pursue her application, Mr. Hare must provide this material to Mr. Pollack by the same deadline.

• Mr. Hare must file his written submissions in Castaneda by Wednesday, November 28, 2001. He must deliver or fax these submissions to Mr. Newell by the same deadline. Assuming Ms. Campbell is proceeding with her application, Mr. Hare must file his written submissions in that case, or advise that he is relying on the same submissions in respect of both cases. The submissions must be delivered or faxed to Mr. Pollack by the same deadline.

• The insurers must serve and file any responding evidence and written submissions by December 3, 2001.

On November 26, 2001, I received a covering letter from Mr. Rowe and Mr. Hare and two additional affidavits, one sworn by Ms. Castaneda and the other by Mr. Conrad Bennett, "the Legal Representative for the over all claim in respect to Ms. Olga Castaneda accident claim against CGU." Despite my previous directions, the affidavits were not sent to either Mr. Newell or Mr. Pollack. The explanation given is set out below:

We have not provided copies of the actual affidavits to Mr. Newell, as we believe that this may prejudice or otherwise might influence the preparation of evidence from the insurer.

We do not have authority to release details of Ms. Castaneda's application to either Ms. Campbell or Kingsway Insurance. We have not provided a copy of the enclosed affidavits to Mr. Pollack, as he is not a party to Ms. Castaneda's application.

The next day, I received another letter from Mr. Rowe and Mr. Hare, asking for the appointment of "an independent, impartial and neutral arbitrator (outside of FSCO), to determine the issue." According to the letter, this request was made under s.282(16) of the Insurance Act, which reads:

"The Arbitrations Act does not apply to arbitrations under this section." The argument, as I understand it, is that because a bias application is not an arbitration, the Arbitrations Act applies.

The letter goes on to argue that no one at FSCO has sufficient independence to decide the bias issue. Further, it contends that my involvement in making procedural rulings and my refusal to adjourn the Castaneda hearing has put Ms. Castaneda in "an impossible position." Therefore, Mr. Rowe and Mr. Hare requested a resumption of the pre-hearing in Castaneda before Arbitrator Renahan "on a with prejudice basis." Finally, the letter makes reference to additional evidence from another case in which Mr. Hare represented the insured person — Smith and Citadel General Assurance Company, (FSCO A00-000984, June 27, 2001 and August 16, 2001), currently under appeal. This letter was sent to Mr. Newell, but not Mr. Pollack.

I forwarded a copy of this letter to Mr. Pollack and responded the following day, November 28, 2001. My letter states as follows:

Mr. Hare and Mr. Rowe have sent four affidavits to the Commission, but have not provided them to either counsel. I am leaving that decision to them, although my expectations are clearly set out in my previous letter, dated November 21, 2001.

In their letter, Mr. Hare and Mr. Rowe argue that these bias applications cannot be decided by me or "any party within FSCO" due to an inability to "independently and impartially consider the determination of bias. " In my view, this submission is without merit. The Insurance Act specifically provides that an application for the appointment of a new arbitrator on the grounds of bias is made to the Director of Arbitrations, the position I currently hold. Nothing has transpired in these cases that prevents me for performing this duty.

The letter raises other issues, effectively asking me to revisit earlier rulings. I find no reason to do so. It remains my view that the process set out in my previous letters — particularly the most recent one, dated November 21, 2001 — is fair and will allow these cases to proceed without undue delay, whether before the same or a different arbitrator.

Unless advised otherwise, I will treat the letters I have received from Mr. Hare and Mr. Rowe as part of their written submissions. However, if they intend to make any further submissions, they are due today. This is the deadline established in my letter of November 21, 2001.

Later that same day, I received another letter from Mr. Rowe and Mr. Hare. It includes the following:

Ms. Castaneda and her representative, Mr. Bennett, will not permit the release of any medical or otherwise personal information to Mr. Pollack or Kingsway and we trust that all parties will respect this request. We have today faxed copies of the four affidavits to Mr. Pollack. We continue to maintain our position that it is inappropriate for Mr. Pollack and Kingsway to have any involvement in the Castaneda application for determination of bias.

Please confirm the resumption date for the Castaneda pre-hearing. Your letter does not respond to this request. We again remind you that the Hearing is scheduled for early January and we require a resumption by November 30th.

We appreciate the need to proceed with undue delay. However, we are not a legal firm and this type of activity is not our primary business. The complexity of the application has also increased with the involvement of CGU. We will require additional time to seek advice and prepare our submissions. The timeframe set in the earlier letter of November 21st cannot be met. We note that we are also scheduled for a 4-day Hearing next week at FSCO. The best that we can attempt to achieve would be the completion of our submissions by December 14th, 2001.

My response is dated November 29, 2001, and includes the following:

The letter from Mr. Hare and Mr. Rowe states that the four affidavits filed with the Commission have been sent to Mr. Pollack. If they have not also been sent to Mr. Newell, they should be. If there is any uncertainty about the obligation of Ms. Castaneda and Ms. Campbell to provide their evidence to both counsel, it is hereby ordered that they must do so.

The next step was for Mr. Hare and Mr. Rowe to file written submissions on behalf of their clients. They state, however, that were unable to meet the time limit of November 28, 2001, and ask for an extension until December 14, 2001, or later. They also ask for a pre-hearing with Arbitrator Renahan "on a with prejudice basis" by November 30, 2001.

I am not prepared to schedule a pre-hearing with Arbitrator Renahan in the face of these applications. This is an untenable proposition. Ms. Castaneda is being given the opportunity to present her submissions on the issue of bias. If she demonstrates a reasonable apprehension of bias, she will not be expected to continue before Arbitrator Renahan. If she does not, the matter will proceed in the normal course. In my view, everyone's time is better spent resolving this issue, rather than proceeding with a "with prejudice" pre-hearing, whatever that might mean.

I am prepared to grant a short extension for filing submissions, but not until December 14, 2001. As has been pointed out, the Castaneda hearing is scheduled for early January 2002. Also, the Campbell hearing has been put on hold pending the outcome of these applications. In the circumstances, the written submissions for both Ms. Castaneda and Ms. Campbell must be filed by Monday, December 3, 2001, with copies provided to both Mr. Newell and Mr. Pollack.

Finally, I am concerned by the reference in the letter to "Ms. Castaneda and her representative, Mr. Bennett." Applications under s.282(12) are made by a party. My understanding is that Mr. Hare and Mr. Rowe represent these two insured persons. That is what our records reflect. If that is not the case, I need to know immediately.

That same day, I received two more letters from Mr. Rowe and Mr. Hare. The first confirmed that they had accepted a settlement offer in Castaneda, but still wanted the bias issue determined. In this letter, they also alleged that my actions had impeded their ability to represent Ms. Castaneda, and that "FSCO's rush to resolve the applications for determination of bias has directly influenced the actual arbitration process and supports our earlier request for the appointment of an independent and neutral evaluator."

The second letter dated November 29, 2001, confirmed that the affidavits were sent to Mr. Newell. It also explained that Mr. Bennett "is Ms. Castaneda's representative on the larger issue of her AB claim with CGU. We represent Ms. Castaneda only with respect to the issue in dispute under the above application and related matters." The letter goes on to make various arguments that Mr. Hare and Mr. Rowe asked to be considered as part of their submissions, which I have done.

The deadline for written submissions from Ms. Castaneda and Ms. Campbell was Monday, December 3, 2001. They arrived by fax the following afternoon. The submissions excerpt passages from various legal texts, including citations for a substantial number of court decisions. However, none of the decisions were provided.

B. Disposition

After reviewing the correspondence, affidavits and written submissions filed by Mr. Hare and Mr. Rowe, I concluded that this application, and the related application in Campbell, were not sufficiently strong to require an oral hearing or a response from either insurer. Although this meant that the evidence would not be tested, there seemed little point in putting them to the time and expense of responding. I wrote to the parties on December 7, 2001, advising them of my decision and that written reasons would follow shortly.

A few days later, I received another fax from Mr. Rowe and Mr. Hare, reminding me that they had asked for an oral hearing and questioning my decision not to hold one. In their view, the decision was premature, as I had "not allowed the applicant a hearing to present their evidence fairly." Finally, the letter notes that I sent my letter to Mr. Newell and asks what status, if any, CGU or Mr. Newell has in this application.

The lack of specific procedures for bias applications creates some uncertainties. However, representatives must act reasonably. In my view, Mr. Hare and Mr. Rowe have been unnecessarily confrontational, making it difficult to proceed in a timely manner with applications they brought on behalf of their clients. Their insistence on treating the process as an ongoing dialogue has been troublesome, but most disturbing is their refusal to accept or comply with my rulings. This led to delays about which they complained.

There is no requirement for an oral hearing on applications under s.282(12) of the Insurance Act. Although I raised it as a possibility, including the possibility of cross-examinations on any affidavits filed, I did not suggest that an oral hearing would necessarily be held. If I had been convinced that an oral hearing was needed, I would have scheduled one. However, despite all the procedural wrangling, the underlying application is surprisingly weak. First, there is the question of mootness. Ms. Castaneda has settled her claim with CGU. As my authority under s.282(12) is to appoint a new arbitrator, it is difficult to see what remedy I could grant in this case. This seems to be the point of the question raised by Mr. Hare and Mr. Rowe about the ongoing involvement of CGU and Mr. Newell. Their position is somewhat curious, however, given their insistence throughout these proceedings that the determination of bias should be done in Castaneda, not Campbell.

More importantly, even if the allegations are accepted, they fall well short of justifying the kind of order Mr. Hare and Mr. Rowe seek — that Arbitrator Renahan cannot be involved in any case where they represent the insured person, including Campbell.

The four affidavits are similar. They describe the pre-hearing in Castaneda in much the same terms as the original complaint letter. Mr. Hare's affidavit is the most detailed. It describes an initial exchange where Arbitrator Renahan challenged the need for four hearing days, and told Ms. Castaneda that she faced an award of at least $10,000 if she lost. The affidavit continues as follows:

34. Arbitrator Renahan continued on with his tirade and stated that there was no way we should take so much time on a claim that was for such a small amount.

35. I again stated that it was not our choice to be at this proceeding but that there was little choice for claimants when insurers deny benefits without valid reasons.

36. Mr. Rowe then asked the arbitrator if he was implying that a claimant should only be permitted to proceed to arbitration if the cost of a benefit in dispute is above a certain amount and if this amount should also dictate the time and effort give to the case by FSCO.

37. Arbitrator Renahan stated that was not what he was saying.

38. I then asked Arbitrator Renahan to clarify what he was saying and asked if it was appropriate for him to be considering the quantum of the benefit in dispute when trying to estimate the amount of time required for a hearing.

39. Arbitrator Renahan became even more agitated, raised his voice further and stated that he had made his point clear and that in his view with a minimal amount in dispute the case should be dealt with quickly at a hearing and that in his opinion two days would be sufficient and that is what he would be recommending in the pre-hearing letter.

40. Mr. Rowe interjected again stating that he felt that the arbitrator's conduct was out of line and becoming inappropriate.

41. Arbitrator Renahan responded by stating that he had heard enough and was going to leave the conference and further stated that he had made his position clear, that it was his responsibility to defend the FSCO arbitration process, that if we didn't like it that we shouldn't come here and that if we wanted fairness then we should not come to FSCO.

42. Mr. Rowe responded to Arbitrator Renahan stating that his conduct has gone well beyond the point of reasonableness based on his comments to the claimant and myself.

43. Arbitrator Renahan stated that he had said all he was going to say, gathered his belongings and abruptly left the proceedings.

It is difficult to imagine an arbitrator saying that if someone wants fairness, they should look elsewhere, or that his role is to defend the arbitration process at FSCO. However, a pre-hearing arbitrator might well say that he must protect the process from abuse. The suggestion seems to be that it was inappropriate for Arbitrator Renahan to consider the amount in dispute in questioning the number of hearing days required. I disagree. While there may be cases where it is appropriate to allow the litigation costs to significantly outstrip the amount in dispute, that cannot be the norm. In my view, it was entirely appropriate for Arbitrator Renahan to express concerns about a four-day hearing in this case, particularly as his pre-hearing letter urges both parties, not just Ms. Castaneda, to control length of the hearing.

The tone of the pre-hearing is a different question. As stated above, everyone involved in the dispute resolution process deserves to be treated with respect. In my view, the affidavits suggest that there may have been a heated exchange between Mr. Hare, Mr. Rowe and Arbitrator Renahan. At its highest, the arbitrator lost his temper. Even if he crossed the line of appropriate decorum, I am not convinced that this created a reasonable apprehension of bias sufficient to prevent his involvement in cases where Mr. Hare and Mr. Rowe act as representatives. The Supreme Court of Canada has adopted the following test for reasonable apprehension of bias, originally set out by de Grandpre J., writing in dissent, in Committee for Justice and Liberty v. National Energy Board, 1976 CanLII 2 (SCC), [1978] 1 S.C.R. 369, at p. 394:

... the apprehension of bias must be a reasonable one, held by reasonable and right minded persons, applying themselves to the question and obtaining thereon the required information. According to the Court of Appeal, that test is "what would an informed person, viewing the matter realistically and practically -- and having thought the matter through -- conclude. Would he think that it is more likely than not that [decision-maker], whether consciously or unconsciously, would not decide fairly."²

He went on to say that the "grounds for this apprehension must, however, be substantial and I entirely agree with the Federal Court of Appeal which refused to suggest that the test be related to the 'very sensitive or scrupulous conscience.'" Therefore, the question is whether the allegations, as presented, would lead a reasonable and informed person, viewing the matter realistically and practically, to conclude that no insured person represented by Mr. Hare and Mr. Rowe, including Ms. Campbell, would receive a fair hearing if Arbitrator Renahan were involved as the pre-hearing or hearing arbitrator.

In evaluating this question, I find it overwhelmingly significant that Arbitrator Renahan allowed four days for the hearing. In other words, he expressed his concerns and pointed out the risks, but allowed Ms. Castaneda and her representatives to proceed as they wished. This simply does not evidence a closed mind.

It is also significant that the complaint arose out of a pre-hearing, where the arbitrator's role is different than in a hearing. This obviously is not to suggest that pre-hearing arbitrators can run roughshod over the parties or their representatives. However, in defining the issues in dispute, dealing with production issues, organizing the hearing, and attempting to narrow or settle the issues, there needs to be a full and frank exchange. Consequently, pre-hearing arbitrators are expected to intervene more than they would at a hearing. Finally, as noted above, Mr. Hare and Mr. Rowe have asked me to consider Arbitrator Renahan's decisions in Smith and Citadel Assurance Company, along with the transcripts and submissions they filed on behalf of Ms. Smith in her appeal. They submit that it shows a history of animosity against them as representatives. As these decisions are currently under appeal, I am not prepared to review them in any detail. Mr. Hare and Mr. Rowe will have an opportunity to address the fairness of that hearing, and any implications arising out of a finding of unfairness, in that appeal.

For these reasons, the application is dismissed.

III. EXPENSES

There is no expense power that attaches to applications under s.282(12) of the Insurance Act. Therefore, I make no order with respect to expenses.

Date: December 18, 2001 David R. Draper, Director of Arbitrations

Footnotes

1. 1Ontario Regulation 403/96, as amended, the Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996.
2. 2Recently, this test was adopted in Mavis Baker v. Canada (Minister of Citizenship and Immigration), 1999 CanLII 699 (SCC), [1999] 2 S.C.R. 817, 174 D.L.R. (4th) 193.