Neutral Citation: 2002 ONFSCDRS 2

FSCO A01-000296

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

KULWARN JAGPAL

Applicant

and

KINGSWAY GENERAL INSURANCE COMPANY

Insurer

PRE-HEARING DECISION

Before:

Judith Killoran

Heard:

By telephone conference call on December 18, 2001.

Appearances:

Gurcharan Anand for Mr. Jagpal

Deborah G. Neilson for Kingsway General Insurance Company

Issues:

The Applicant, Kulwarn Jagpal, was injured in a motor vehicle accident on February 7, 2000. He applied for statutory accident benefits from Kingsway General Insurance Company ("Kingsway"), which were denied. The parties were unable to resolve their disputes through mediation, and Mr. Jagpal applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

At the pre-hearing discussion of this case held on July 16, 2001, the following issues were identified and agreed upon by the parties:

Is Mr. Jagpal entitled to receive a weekly income replacement benefit of $400 from February 14, 2000 and ongoing, pursuant to section 4 of the Schedule?
Is Mr. Jagpal entitled to receive a medical benefit of $2,276.50 for Dr. Dossa's treatment plan of May 15, 2001, and $3,600 for Mr. Samuel's psychological counselling, claimed pursuant to section 14 of the Schedule?
Is Mr. Jagpal entitled to receive a rehabilitation benefit for the outstanding amount owing to the ACT Health Group, claimed pursuant to section 15 of the Schedule?
Is Mr. Jagpal entitled to payment of $600 for the cost of Dr. Joseph Wong's assessment, pursuant to section 24 of the Schedule?
Is Kingsway liable to pay a special award pursuant to subsection 282(10) of the Insurance Act because it unreasonably withheld or delayed payments to Mr. Jagpal?
Is Kingsway liable to pay Mr. Jagpal's expenses in respect of the arbitration under subsection 282(11) of the Insurance Act, R.S.O. 1990, c.I.8?
Is Mr. Jagpal liable to pay Kingsway's expenses in respect of the arbitration under subsection 282(11) of the Insurance Act, R.S.O. 1990, c.I.8?
Is Mr. Jagpal entitled to interest for the overdue payment of benefits pursuant to subsection 46(2) of the Schedule?

At the pre-hearing discussion, I made no rulings on production. However, my pre-hearing discussion letter of July 18, 2001 noted Rule 32 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001) (the "Code”) and the mutual undertakings of the parties to:

Prepare a joint list of further agreed productions and file it with the Financial Services Commission of Ontario within 30 days of the pre-hearing discussion date; and,
Within 60 days of the pre-hearing discussion date either have complied with the undertakings given or, in the case of documents not in a party's possession, control, or power, have provided proof of best efforts to comply with the undertakings.

The letter also advised the parties that should there be any issues arising out of the productions, the pre-hearing discussion could be resumed by telephone conference before me.

Section 42 - Insurer's Medical Examinations:

An issue arose with respect to a section 42 insurer's medical examination which was scheduled originally for September 14, 2001 and rescheduled for November 6, 2001. Mr. Jagpal did not attend on either of the scheduled dates. Kingsway requested a resumption of the pre-hearing to schedule a preliminary issue hearing on whether Mr. Jagpal was barred from proceeding with his arbitration pursuant to subsection 50(b) of the Schedule.

At the resumption of the pre-hearing discussion conducted on December 18, 2001, counsel for Mr. Jagpal confirmed that Mr. Jagpal would attend the insurer's medical examinations scheduled for the end of January 2002. Kingsway withdrew its request for a preliminary issue hearing but confirmed that this request would be revived if Mr. Jagpal failed to attend the insurer's medical examinations.

Productions:

On October 5, 2001, Mr. Jagpal sent to Kingsway a list of productions which Mr. Jagpal was prepared to produce and a list of productions requested of Kingsway. Kingsway objected to some of the requests.

At the resumption of the pre-hearing discussion conducted by teleconference on December 18, 2001, Mr. Anand undertook to produce, within one week, authorizations for the following:

Mr. Jagpal's 1997 accident benefits file with Cooperators
Mr. Jagpal's 1999 Revenue Canada income tax records
Dr. Laschko's clinical notes and records from 1997 to the present
Mr. Jagpal's employment records from Flagship Autobody

All of the outstanding production issues were resolved to the satisfaction of the parties except for the investigator's reports relating to an alleged offer of employment made to Mr. Jagpal. Kingsway confirmed that its investigator had not received any documents from this employer and claimed litigation privilege over the investigation reports sent by its investigator. However, Kingsway indicated that it would be prepared to provide a memo summarizing what its investigator would say if called to testify. Kingsway put Mr. Jagpal on notice that it did not intend to call the investigator as a witness but if the potential employer's evidence at the hearing contradicted what he had told the investigator, the investigator would be called.

Kingsway requisitioned the investigator's report on July 13, 2001, prior to the pre-hearing discussion. Kingsway submitted that the investigator was retained to investigate an issue which was central to the dispute. Kingsway asserted that it was crucial that the investigator was hired not by it but by its lawyer's office. Mr. Jagpal sought production of the investigator's reports in order to prepare for the arbitration hearing.

Rule 40 of the Code reflects the Commission's evolution in the area of disclosure of surveillance and investigative evidence. Rule 40 states:

If a party intends to rely on any portion of surveillance or investigative evidence, including videotapes, photographs, reports, notes and summaries of surveillance observations or investigations, at least 30 days before the hearing, the party shall provide:

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

(b) copies of all videotapes, photographs, investigative reports, notes and summaries taken or prepared in connection with the issues in dispute.

In my estimation, section 40 sets out a minimum level of production regarding surveillance and investigative evidence. I concur with Arbitrator Blackman's statement in Campeau and Liberty Mutual Insurance Company,¹ that:

... it would be unfair, and further contrary to a first party's duty of the utmost good faith to its own insured, to be allowed to pick and choose amongst its surveillance and investigative evidence, and produce only what it felt would advance its own case. If an insurer is to be allowed significant invasion of its insured's privacy, at a minimum, even when it intends to rely on only certain portions, it should be required to produce all such evidence.

In Puljic and Zurich Insurance Company,² the Director's Delegate questioned whether an insurer's production obligations should be restricted to those occasions when it decided to rely on any portion of the surveillance or investigative evidence. In his words:

Courts and tribunals have generally been moving toward early and full disclosure minimizing the ability of a party to "bury" relevant information that might assist the other side. The Commission certainly encourages the early exchange of documents as an important part of the mediation process and to ensure a fair hearing.

In General Accident Assurance Co. v. Chrusz et a., 1999 CanLII 7320 (ON CA), [1999] 45 O.R. (3d) 321, the Ontario Court of Appeal held that the appropriate test for privilege is the "dominant purpose" test. The onus in this case is on Kingsway, the party asserting the privilege, to establish the evidentiary basis for the privilege. I am doubtful that the "dominant purpose" of the investigation reports was that of litigation. In my view, based on the parties' submissions, the reports were requisitioned prior to the pre-hearing discussion in order to resolve the issue of whether Mr. Jagpal had fulfilled the requirements of section 4.3 of the Schedule regarding a "legitimate contract of employment." In that case, the "dominant purpose" may not have been litigation but rather, adjusting the file or settling the disputed issue.

Perhaps more significantly, Kingsway reserves the right to call its investigator as a witness at the arbitration hearing. I am mindful of the criticism of the lower court's reasoning in Chrusz when the Court of Appeal commented:

The majority reasons reflect a traditional view of the entitlement to privacy in a lawyer's investigative pursuits. It is an instinctive reflex of any litigation counsel to collect evidence and to pounce at the most propitious moment. That's the fun in litigation! But the ground rules are changing in favour of early discovery. Litigation counsel must adjust to this new environment and I can see no reason to think that clients may suffer except by losing the surprise effect of the hidden missile.³

In the spirit of full and fair disclosure, I find that given Kingsway's insistence that it reserves the right to call its investigator as a witness, Kingsway must disclose to Mr. Jagpal the investigator's reports relating to Mr. Jagpal's alleged offer of employment.

Order:

I order that Kingsway produce to Mr. Jagpal all of its investigator's reports relating to the alleged offer of employment.

January 4, 2002

Judith Killoran Arbitrator

Date