Randolph Chin v. Coseco Insurance Co./HB Group/Direct Protect, 2001 ONFSCDRS 59

Financial Services Commission of Ontario

Neutral Citation: 2001 ONFSCDRS 59

FSCO A00-001024

BETWEEN:

RANDOLPH CHIN

Applicant

and

COSECO INSURANCE CO./HB GROUP/DIRECT PROTECT

Insurer

DECISION ON A PRELIMINARY PRODUCTION ISSUE

Before: Beth Allen

Heard: By oral submissions on February 7, 2001 and written submissions by March 19, 2001.

Appearances:

Alden M. Dychtenberg for Mr. Chin

Alexander M. Voudouris for Coseco Insurance Co./HB Group/Direct Protect

Issues:

The Applicant, Randolph Chin, was injured in a motor vehicle accident on May 29, 1999. He applied for and received statutory accident benefits from Coseco Insurance Co./HB Group/Direct Protect ("Coseco"), payable under the Schedule.¹ Coseco terminated weekly income replacement benefits on March 3, 2000. The Insurer disputes the rate of the income replacement benefit and requests a repayment of benefits paid. The parties were unable to resolve their disputes through mediation, and Mr. Chin applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Act").

At the pre-hearing discussion held on February 7, 2001, the Applicant disputed one of Coseco's production requests, namely, its request for discovery transcripts from the related tort action. Coseco is also the insurer in the tort action. In a letter dated November 1, 2000, counsel for Coseco requested, among other items, the following:

Production of the tort defence file dealing with all medical and financial documentation and investigation, surveillance together with the examination for discovery transcripts.

At the pre-hearing discussion, the Applicant's counsel indicated that to date there were no medical, financial or investigation documents or materials in the tort file. At a teleconference subsequent to the pre-hearing discussion, the parties agreed that if any such documents are generated in the tort file and a production dispute develops, the dispute can be handled by way of a further pre-hearing discussion.

However, counsel for the Applicant objected to producing the examination for discovery transcripts on the basis of the deemed or implied undertaking rule set out in Rule 30 of the Rules of Civil Procedure.² This dispute is the subject matter of this decision.

The preliminary production issue is:

Is the Applicant required to produce for the arbitration hearing the examination for discovery transcripts from the related tort action?

Result:

The Applicant is required to produce the examination for discovery transcripts in the tort file.

The parties made no submissions as to expenses. I leave the expenses for this proceeding to be decided by the hearing arbitrator.

ARGUMENTS AND ANALYSIS:

Rule 30 of the Rules of Civil Procedure:

Rule 30 codifies the common law rule relating to documentary discovery and evidence obtained on examinations for discovery, as enunciated by the Court of Appeal in Goodman v. Rossi.³ The Rule basically provides that parties and their counsel are deemed to undertake not to use evidence or information obtained from certain proceedings enumerated under the Rule, including examinations for discovery, for any other purposes other than those of the proceeding for which the evidence was obtained. The Rule contains the following exceptions: if the other party consents to the use of the evidence; if evidence is filed with the court; evidence if given or referred to during a hearing; for information obtained from that evidence; and to permit the use of evidence obtained in one proceeding to impeach the testimony of a witness in another proceeding. A court may also order, with terms and directions, that the deemed undertaking rule does not apply.

Rule 30 states:

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).

(2) This Rule does not apply to evidence or information obtained otherwise than under the rules referred to in subrule (1).

(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.

(5) Subrule (3) does not prohibit the use, for any purpose, of,

(a) evidence that is filed with the court;

(b) evidence that is given or referred to during a hearing;

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

(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.

(7) Subrule (3) does not prohibit the use of evidence or information in accordance with subrule 31.11(8) (subsequent action).

(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.

The Insurer's Arguments:

Counsel for Coseco made alternative arguments.

Counsel for Coseco submitted that the discovery transcripts are relevant to the arbitration matter since the evidence in both proceedings arise from the same motor vehicle accident and both involve disability, financial and employment issues. He further argued that the transcripts are not protected by any privilege.

Counsel for Coseco argued, in line with the Reid and Royal⁴ and Haripersaud and State Farm⁵ arbitral and appeal decisions, that arbitrators have the discretion provided by Rule 30(8) to order that the implied undertaking rule does not apply if it would be unfair or a prejudice to a party if the evidence were excluded. He referred to the powers granted arbitrators by the Act under section 20 to decide all issues of fact and law, and under section 22, which vests arbitrators with the jurisdiction to, among other things, compel witnesses to produce documents, records and things. The relevant portion of section 20 states:

20.—(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.

The relevant portion of 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.

Counsel for Coseco also referred to the powers granted under section 15 of the Statutory Powers Procedure Act⁶ (the "SPPA") which grant arbitrators the jurisdiction to admit evidence whether given or proven under oath or affirmation or admissible as evidence in a court. This subsection (1) provides:

15. (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.

Counsel for Coseco argued that Coseco would be prejudiced if the discovery transcript is not required to be produced. He argued that credibility issues exist in relation to the Applicant’s pre-accident earnings and his employment at the family bakery where he claims to have been employed at a certain wage before the accident. The Applicant's counsel conceded at the pre-hearing discussion that, to date, the Applicant's mother, the owner of the bakery, has not been forthcoming with financial and employment records.

Coseco's counsel also submitted that the discovery transcripts are relevant to the credibility issue and can be employed to impeach the Applicant's evidence on the circumstances of his pre-accident employment and earnings. He further argued that it would be unfair and unjust to prevent the Insurer access to evidence relevant to the arbitration issues.

Counsel for Coseco further argued that no prejudice to the Applicant would result. He pointed out that the policy behind the deemed undertaking rule is to protect confidentiality by guarding against evidence from one proceeding being used in another. He added that since the parties are the same in the tort and arbitration proceedings, and similar medical, financial evidence will be the subject-matter of both proceedings, the Applicant will not be prejudiced by a breach of confidentiality.

In making this argument, counsel for Coseco relied on the judgement in the Worthington Trucking⁷ case. In this case, the Divisional Court held that a plaintiff who uses confidential medical or non-medical information, that is relevant and otherwise not privileged, against a defendant in one proceeding, waives his right to confidentiality over this information and cannot therefore prevent the defendant from using the information to defend against a claim by this plaintiff.

Counsel for Coseco argued that for all these reasons, the Insurer is entitled for the purposes of the arbitration hearing, to the tort transcripts.

The Applicant's Arguments:

The Applicant's counsel argued that the applied undertaking rule as enunciated in Rule 30 and the common law, applies to the discovery transcripts and accordingly they are not producible for the arbitration hearing. He relied on the Goodman v. Rossi case for the proposition that the interest of justice requires that documents, including discovery transcripts, should only be produced for the limited purposes of the litigation before the court and not for any other litigation or collateral purpose.

The Applicant’s counsel relied on the Hornick⁸ arbitration decision which held that where the other exceptions to the applied undertaking rule do not apply, a party must apply to a court for the relief permitted under Rule 30.1.01 (8). According to this decision, an arbitrator is not authorized to grant such relief.

The Applicant's counsel also argued that no substantial prejudice to the Insurer would result if the transcripts were not disclosed.

ANALYSIS:

After reviewing the parties' arguments, I order production of the tort discovery transcripts.

With respect, I disagree with the ruling in the Hornick arbitration decision. It did not consider the powers afforded arbitrators under the Act. I find that section 22 of the Act expressly vests in arbitrators the same powers as the Ontario Court, General Division, to among other things, order the production of documents. Section 20 authorizes arbitrators to decide any question of fact or law brought before them. I find that by extension, arbitrators have the authority to grant the relief provided by the Rule 30.1.01 (8) exception to the implied undertaking rule. In exercising this power, like the courts, arbitrators should be guided by considerations of relevance, the balance between competing access and privacy rights, fairness and any possible prejudice to a party.

I find that the transcripts are relevant to the issues in dispute in the arbitration. The tort action and the arbitration hearing involve the same motor vehicle accident and a common claimant and insurance company. The issues of disability, employment and quantum of income are also common to both proceedings. I therefore find there is more than a reasonable likelihood that evidence adduced from the discovery transcripts will be relevant to the arbitration proceeding.

I also find the interest of fairness and justice outweighs any prejudice that would result to the Applicant if the transcripts were produced. Since there are credibility issues in this case, I conclude it would be unfair to deny Coseco the opportunity to employ the transcripts to test the Applicant's credibility. I can see little if any prejudice to the Applicant if the transcripts are disclosed. I accept Coseco's argument, in line with Worthington Trucking, that since the transcripts have already been disclosed in the tort action which also involves Coseco, the Applicant has waived his right to the privacy the deemed undertaking rule seeks to protect.

I therefore order the Applicant to produce the transcripts from the tort action related to this arbitration hearing.

EXPENSES:

I leave the matter of the parties' arbitration expenses to the arbitrator who makes the final decision in this case.

ORDER:

I order the Applicant to produce to Coseco the transcripts for the related tort action.

April 18, 2001

Beth Allen Arbitrator

Date

Neutral Citation: 2001 ONFSCDRS 59

FSCO A00-001024

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

RANDOLPH CHIN

Applicant

and

COSECO INSURANCE CO./HB GROUP/DIRECT PROTECT

Insurer

ARBITRATION ORDER

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

The Applicant shall produce to Coseco the transcripts in the related tort action.

April 18, 2001

Beth Allen Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96 and 303/98.
2. 2Ontario Annual Practice 2000-2001, Rules of Civil Procedure
3. 3Goodman v. Rossi, (1995), 1995 CanLII 1888 (ON CA), 24 O.R. (3d) 359, 125 D.L.R. (4d) 613, 37 C.P.C. 181 (C.A.)
4. 4Reid 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.
5. 5Haripersaud and State Farm Mutual Automobile Insurance Company (FSCO P98-00018, January 6, 2000).
6. 6Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, s.15
7. 7Worthington Trucking Inc. et al. v. Klingbeil, a minor under the age of 18 years by her Litigation Guardian et al., 1999 CanLII 19927 (ON CTGD), 43 O.R. (3d) 697; [1999] O.J. No. 867, Docket Nos. 899/97 and 291/97 Ontario Court (General Division) Divisional Court
8. 8Hornick and State Farm Automobile Mutual Insurance Co. (FSCO A00-000337, November 30, 2000).