Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2002 ONFSCDRS 174

Appeal P02-00016

OFFICE OF THE DIRECTOR OF ARBITRATIONS

GRAEME ERSKINE

Appellant

and

PERSONAL INSURANCE COMPANY OF CANADA

Respondent

Before:

David Draper

Representatives:

Kevin Wolf for Mr. Erskine

Ralph D'Angelo for The Personal

Hearing Date:

October 23, 2002

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 dismissed and the arbitration order, dated May 23, 2002, is confirmed.
Mr. Erskine shall pay The Personal's appeal expenses, fixed at $500.

November 1, 2002

David R. Draper Director of Arbitrations

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Graeme Erskine appeals from the Arbitrator's order, dated May 23, 2002, dismissing his claims for accident benefits and ordering him to pay half of the arbitration expenses incurred by the Personal Insurance Company of Canada ("The Personal"). He contends that the Arbitrator erred in law in concluding that he failed to establish that he was involved in an "accident," within the meaning of the SABS–1996.¹ More specifically, he submits that the Arbitrator erred in law in concluding that he failed to establish:

that he was involved in an incident on a Toronto Transit Commission ("TTC") bus; and
that he suffered an impairment as a result of this incident.

For reasons set out below, I find no error of law.

II. BACKGROUND

This case involves a key factual dispute. Mr. Erskine claimed that on October 10, 2000, he was injured in an incident on a TTC bus. His automobile insurer, The Personal, did not accept his version of events. In its view, the incident, if there was one, took place on a TTC subway train and, because a subway train is not an "automobile," accident benefits were not payable. The Personal explained the basis for this position in its Response to an Application for Arbitration, as follows:

In this regard, the Insurer states that the Applicant initially reported to the Insurer and his family doctor that the incident in question occurred on a TTC subway car. It was not until the Insurer advised the Applicant that there would be no coverage under the Schedule if the incident occurred on a subway car that the Applicant changed his version of the incident in order to maintain that it occurred while he was an occupant of a TTC bus.

The initial question, therefore, was whether Mr. Erskine was involved in an "accident," defined in s. 1 of the SABS-1996 as "an incident in which the use or operation of an automobile directly causes an impairment . . ."

This dispute went to an arbitration hearing in February 2002.² Mr. Erskine represented himself. He relied on documentary evidence and his own testimony. His only other witness was Mr. Jude Martineau, the President of The Personal, who attended in response to a summons that the Arbitrator refused to quash and did nothing to support the claim. Mr. Erskine did not call his family doctor, Dr. Sy Hoang Nguyen, or anyone else who could confirm his account of the incident.

The Personal was represented at the arbitration hearing by Mr. D'Angelo. He filed documents and called four employees from The Personal who were responsible for handling Mr. Erskine's claim: Ms. Jasminka Bukvic, the call centre employee who took the initial phone call from Mr. Erskine; Ms. Michelle Fernandes, the claims advisor initially assigned to the file; Ms. Wendy Willson, the claims advisor assigned to the file when Ms. Fernandes determined that some field investigation was required; and Ms. Leanne Tucker, who worked at the litigation desk and became involved with Mr. Erskine's claim in September 2001, eleven months after the initial contact.

In her decision, the Arbitrator addressed the onus and standard of proof. She held that "Mr. Erskine must demonstrate, on a balance of probabilities, that he sustained an impairment as a result of an incident involving the use or operation of an automobile." She then broke the issue down into three questions, as follows:

Did the incident occur on a TTC bus?
Did Mr. Erskine suffer an impairment?
Is Personal estopped from relying on the definition of "accident" in this case?

On the first question, the Arbitrator concluded that Mr. Erskine had not established, on a balance of probabilities, that he was involved in an incident on a TTC bus on October 10, 2000, as he claimed. She was not prepared to rely on his evidence, which she found inconsistent, and there was no independent confirmation. Although The Personal urged the Arbitrator to find that the incident occurred on a subway train, she declined to do so on the basis that it was not necessary for her decision.

Although this conclusion was sufficient to end the matter, the Arbitrator went on to consider the second question. She concluded that Mr. Erskine failed to establish that he suffered an impairment as a result of an incident on October 10, 2000. In particular, she noted the absence of reliable medical evidence.

Finally, the Arbitrator addressed Mr. Erskine's estoppel argument. Relying on my appeal decision in Bissoon and Pilot Insurance Company, (OIC P96-00084, October 8, 1997), she held that "[f]or the principle of estoppel to apply in this case, Mr. Erskine must demonstrate that Personal represented to him that it would not be relying on the location of the accident as a defense to his claim. He would also have to demonstrate that he relied on that representation to his detriment." The Arbitrator concluded that Mr. Erskine failed to establish either element — The Personal did not represent that it would not be relying on the location of the incident in defense of the claim, and Mr. Erskine did not provide any evidence that he relied to his detriment on any representations made by The Personal.

With respect to expenses, the Arbitrator decided that Mr. Erskine should not be awarded any portion of his own expenses and should be ordered to pay one-half of The Personal's expenses. In reaching this conclusion, the Arbitrator referred to the criteria in Rule 75.2 of the Dispute Resolution Practice Code and stated as follows:

In this regard, I note that Mr. Erskine was entirely unsuccessful in the outcome of this proceeding. I also note that he adopted a position with respect to the summons to witness for Mr. Martineau which was manifestly unfounded. (p. 13)

Mr. Erskine appeals from the resulting order dismissing his claim for accident benefits and requiring him to pay half of The Personal's arbitration expenses.

III. THE APPEAL

A. Preliminary issue - New evidence

At the appeal hearing, Mr. Erskine asked to file a letter from his family doctor, Dr. Nguyen, as new evidence. In this letter, Dr. Nguyen purports to explain his clinical note dated October 16, 2000, in which he recorded Mr. Erskine's description of the incident as follows: "on TCC [sic], Subway ..abruptly stopped." He states that although he does not remember Mr. Erskine's exact words, it is "possible" that his clinical note described Mr. Erskine continuing to the subway after his accident, not an accident taking place on the subway. The Personal objected to the admission of the letter.

The criteria for admitting new evidence on appeal are discussed in Budd and Personal Insurance Company of Canada, (FSCO P99-00032, January 8, 2000). In that case, Director's Delegate McMahon followed previous Commission decisions in relying on the following principles established in Palmer v. The Queen, 1979 CanLII 8 (SCC), [1980] 1 S.C.R. 759:

The evidence should generally not be admitted if, by due diligence, it could have been adduced at trial;
The evidence must be credible, in the sense that it is reasonably capable of belief;
The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial; and
The evidence 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.

Director's Delegate McMahon noted that in civil cases, there has been a tendency to impose a higher standard in respect of the fourth criterion, and that the four criteria must be weighed together, not in isolation, in order to balance the competing goals of finality and correctness.

On behalf of Mr. Erskine, Mr. Wolf conceded that Dr. Nguyen could have been called as a witness at the arbitration hearing. However, he relied on the fact that Mr. Erskine was not represented, and that the first criterion is not absolute — it says "generally." In Mr. Wolf's submission, this new evidence was important due to the substantial weight the Arbitrator placed on Dr. Nguyen's clinical notes and the absence of any supporting evidence that Mr. Erskine initially reported that he was injured on a bus.

Mr. D'Angelo agreed with the approach to new evidence described in Budd. He argued, however, that Dr. Nguyen's letter only met the third criterion. In his submission, Dr. Nguyen could have been called as a witness at the arbitration hearing and, further, the letter is so qualified that it would only have added to the inconsistencies.

In an oral ruling, I refused to accept Dr. Nguyen's letter as evidence in the appeal. It was my view, which I reiterate here, that this evidence did not meet the criteria set out in Budd.

Mr. Erskine knew at an early stage that The Personal was questioning the location of the incident. More particularly, he knew that it was relying on evidence of his initial descriptions, including Dr. Nguyen's clinical notes, to argue that the incident occurred on a subway train, not a bus. Although he was unrepresented, Mr. Erskine is a fairly sophisticated litigant. He had made a previous claim for accident benefits, and had worked previously as a property claims adjuster with two insurance companies, including this one. In these circumstances, Mr. Erskine's failure to call Dr. Nguyen as a witness was a significant consideration.

I also heard conflicting submissions on whether Mr. Erskine expected Dr. Nguyen to be at the arbitration hearing. Through counsel, he claimed that The Personal advised him that it would be calling Dr. Nguyen as a witness. Mr. D'Angelo responded that The Personal advised Mr. Erskine well in advance of the hearing that it would not be calling Dr. Nguyen. In support of this submission, he referred to letters dated January 15, 2002 and February 20, 2002, that were not part of the appeal record. Mr. Erskine acknowledged receiving an enclosure sent with the second letter, but not the letter itself.

It is difficult to sort out this kind of factual dispute on appeal, without an evidentiary hearing. However, nothing in the transcript suggests that Mr. Erskine was taken by surprise. In Mr. D'Angelo's opening statement, he indicated that he would only be calling employees of The Personal.³ In the circumstances, I was not persuaded that Mr. Erskine's failure to call Dr. Nguyen resulted from any procedural unfairness.

Nor was I persuaded that the information in Dr. Nguyen's letter would have been likely to affect the outcome. The problem is that his explanation is far from definitive. As noted above, Dr. Nguyen concedes that he does not recall Mr. Erskine's exact words, but states that when he says "TCC," he "usually" means "TCC bus not TCC subway." He goes on to say that it is " possible" that his clinical note describes Mr. Erskine continuing to the subway after his accident, not an accident taking place on the subway. In my opinion, this evidence is not sufficiently strong to overcome the need for finality.

B. Analysis

Appeals are limited to questions of law.⁴ While Mr. Erskine has framed his arguments as questions of law, his real objection is to the Arbitrator's factual findings. She did not accept his version of events. This was within her authority and, in my opinion, the decision provides a complete explanation for her conclusions. Mr. Erskine's specific arguments are addressed below.

1. Did the Arbitrator err in law in failing to give due weight and consideration to Mr. Erskine's testimony and documents in the absence of any adverse credibility finding?

Credibility was the central issue at this arbitration hearing. Because Mr. Erskine's claim rested almost entirely on his own testimony and documents that he created, the Arbitrator's evaluation of his evidence was critical. However, she found it inconsistent "on important points." On the key question of how he initially described the accident, she preferred the Insurer's evidence and found that he reported an incident on a subway train, not a bus. While perhaps not explicitly stated, this was a credibility finding. The Arbitrator was not prepared to rely on Mr. Erskine's evidence. Further, her assessment of his evidence underlies the balance of the decision, including her unwillingness to make a disability finding without medical evidence supporting the extent and duration of any impairment. In my opinion, all of this was within the Arbitrator's authority. I have no basis for interfering.

2. Did the Arbitrator err in law in placing too high a burden of proof on Mr. Erskine?

Mr. Erskine submits that the Arbitrator erred in law in dismissing his claim because it was not corroborated by anyone else. I would be concerned if she had adopted such a fixed, absolute rule. However, that is not what she did. At page 3 of the decision, the Arbitrator accurately sets out the onus and burden of proof: "As the Applicant, Mr. Erskine must demonstrate on a balance of probabilities that he sustained an impairment as a result of an incident involving the use or operation of an automobile." She then reviews the evidence and notes that with respect to the location of the incident, Mr. Erskine relied exclusively on his own testimony and documents that he created. At page 7, she states: "I find in this case that the uncorroborated evidence of an interested party is not sufficient to meet the onus of proving the location of the incident. This is particularly so when that testimony is marked by inconsistencies 'on important points.'" In my view, these two sentences and the balance of the decision make it clear that the Arbitrator was not prepared to rely on Mr. Erskine's uncorroborated evidence because she found it inconsistent, not simply because it was uncorroborated. Again, this was within her authority.

3. Did the Arbitrator err in law in drawing a negative inference from Mr. Erskine's failure to cooperate with the TTC, a third-party insurer?

When The Personal learned that there was no record of the incident, it urged Mr. Erskine to contact the TTC and cooperate with its investigation. He refused to do so on the advice of a lawyer. In his submission, he cooperated fully with The Personal, and no adverse inference should have been drawn from any failure to cooperate with the TTC, which was not a party to his claim for accident benefits.

As I read the decision, the Arbitrator did not find that Mr. Erskine was disentitled because he failed to cooperate with the TTC. Instead, this evidence was important in two respects. First, the Arbitrator found that Mr. Erskine was inconsistent in describing his initial contact with the TTC. He initially indicated that he contacted the TTC to ensure there was a record of the incident. Later, he tried to explain the lack of any records by stating that he phoned the TTC to ask a generic question about accident benefits and did not report the incident. The Arbitrator relied on this inconsistency, which is supported by the transcript, in finding that she could not rely on Mr. Erskine's evidence. She was entitled to do so.

Second, the Arbitrator also considered the lack of any record of the incident. Mr. Erskine may not have been required to cooperate with the TTC, but the absence of any independent record of an incident on a TTC bus on October 10, 2000, did not assist his case. Again, this was a legitimate consideration.

4. Did the Arbitrator err in law in concluding that The Personal was not estopped from denying Mr.Erskine's claim on the basis that it took place on a subway based on its initial acceptance and processing of his claim?

Following Mr. Erskine's initial contact with The Personal, Ms. Fernandes, the Accident Benefits Claims Advisor, left him a telephone message. She advised that because the accident occurred on the subway, he was not covered for accident benefits. Mr. Erskine then left her a message, stating that the accident was on a TTC bus, not a subway train. When Ms. Fernandes responded to this call, she apologized and took some further information. The word "apologized" appears in her file notes and, in her testimony, she acknowledged that she apologized to Mr. Erskine. She did not concede, however, that she or The Personal accepted his version of events — only that further information was required.⁵

Mr. Erskine places a great deal of importance on Ms. Fernandes' apology. In his submission, by apologizing and sending out the accident benefits claims forms, The Personal accepted his application and gave up its right to contest the location of the accident. I do not agree. Insurers determine entitlement in response to applications. While it may be good customer service to provide information over the phone, including fielding initial inquiries, insurers should not be discouraging applications. According to s. 32 of the SABS-1996, they are obligated to provide the appropriate application forms and other information to any person "who wants to apply for benefits."⁶

In this case, The Personal acted appropriately in sending Mr. Erskine the claims package. He had every right to apply, but The Personal then had every right to evaluate his application and make a decision based on the material it received. According to the Arbitrator, The Personal repeatedly advised Mr. Erskine that it needed additional information about the incident before it could determine whether he was entitled to any accident benefits at all, and never made any representation that it would not be questioning the location of the incident. I have no basis second-guessing these findings. Consequently, I find no error in her conclusion that estoppel does not apply.

5. Did the Arbitrator err in law in concluding that Mr. Erskine did not sustain an "impairment" despite objective, reliable medical evidence in support of his claim?

The medical evidence in this case was extremely limited. Although Mr. Erskine claimed that he was disabled until April 1, 2001, a period of approximately 24 weeks, he saw Dr. Nguyen just twice — on October 16 and 30, 2000. The only evidence from Dr. Nguyen were his clinical notes and a Disability Certificate that he completed on Mr. Erskine's second and final visit. Unfortunately for Mr. Erskine, the Arbitrator found it "of little probative value," explaining her assessment as follows:

There is no indication in the disability certificate or in Dr. Nguyen's notes as to the basis for his conclusion that Mr. Erskine suffers from an impairment. Dr. Nguyen did not testify at the hearing and there is therefore no evidence of the basis for Dr. Nguyen's conclusions concerning Mr. Erskine's impairment.

The disability certificate is also ambiguous. Whereas Dr. Nguyen indicates that Mr. Erskine cannot return to work, he also indicates that Mr. Erskine is not prevented from accomplishing substantially all of his pre-accident activities. There is no indication in the disability certificate as to the type of work that Mr. Erskine was prevented from doing as a result of his impairment. (p.10)

It was up to the Arbitrator to assess the evidence. Properly completed medical forms must be taken seriously, but she was not bound to accept Dr. Nguyen's checkmark indication that Mr. Erskine could not return to work, particularly in support of a claim that ran for another five months. In my opinion, the Arbitrator's conclusion was within her authority.

6. Did the Arbitrator err in law in denying Mr. Erskine his arbitration expenses, and in ordering him to pay one-half of The Personal's expenses, when there was no evidence that his conduct unduly delayed the proceedings or was manifestly unfounded?

Before November 1996, arbitrators could only award arbitration expenses to the insured person. The insurer could not recover its expenses. Subsection 282(11) was then amended to expand the options. Arbitrators can now award expenses to the insured person or the insurer according to criteria prescribed in the regulations. As I stated in Gray and Zurich Insurance Company, (FSCO P98-00047, June 11, 1999), this signalled a change. Arbitrators must now apply the criteria in respect of both parties and have at least three options: award the insured person some or all of his or her expenses; award the insurer some or all of its expenses; or award expenses to neither party. Consequently, decisions made under the previous legislative scheme must be viewed with caution.

The criteria for awarding expenses are found in section 12(2) of O.Reg. 464/96, which states as follows:⁷

12.- (2) An arbitrator may award expenses to an insurer or insured person under subsection 282(11) of the Act if the arbitrator is satisfied that the award is justified, having regard to the following criteria:

Each party's degree of success in the outcome of the proceeding.
Conduct of the insurer or insured person that tended to shorten or facilitate the proceeding or that tended to prolong, obstruct, or hinder the proceeding, including failure to comply with undertakings or orders.
Whether the proceeding or any position taken by the insurer or the insured person during the proceeding was manifestly unfounded, frivolous, vexatious, fraudulent or an abuse of process.
The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.
If the insurer or the insured person requests, any written offers to settle made after the conclusion of mediation and before the conclusion of the arbitration in accordance with the rules of practice and procedure applicable to the proceeding, including the terms of the offers, the timing of the offers and the responses to the offers, having regard to the result of the proceeding.
Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.

In this case, both parties claimed their arbitration expenses. The Arbitrator exercised her discretion to award The Personal half of its expenses. As she explains in the decision, she denied Mr. Erskine's claim on the basis of his lack of success and his manifestly unfounded insistence on calling Mr. Martineau who he knew would not assist in the presentation of his case. She awarded The Personal its expenses, but gave Mr. Erskine credit for not unduly prolonging the proceedings, other than calling Mr. Martineau.

This was a weak claim made worse by Mr. Erskine's insistence on calling Mr. Martineau. Further, he knew the risks. In arguing that he should be allowed to compel Mr. Martineau's attendance, Mr. Erskine acknowledged that if the Arbitrator concluded that he did so without cause, this could be addressed through expenses.⁸ In the circumstances, the Arbitrator acted well within her authority. There is no basis for me to second-guess her order.

IV. APPEAL EXPENSES

Appeal expenses are based on the same criteria as arbitration expenses, set out above. Mr. Erskine was completely unsuccessful in this appeal and, in my view, raised no novel or significant legal issues. As stated above, his real objection was to the Arbitrator's factual findings. In the circumstances, I conclude that he must pay The Personal's appeal expenses, which I fix at $500.