Patricia Majer v. Kingsway General Insurance Company, 2003 ONFSCDRS 104

Neutral Citation: 2003 ONFSCDRS 104

FSCO A03-000466

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PATRICIA MAJER

Applicant

and

KINGSWAY GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRODUCTION ISSUE

Before:

Judith Killoran

Heard:

By telephone conference call on June 23, 2003.

Appearances:

Judith A. Hull for Ms. Majer

Bruce A. Keay for Kingsway General Insurance Company

Issues:

The Applicant, Patricia Majer, was injured in a motor vehicle accident on May 25, 2000. She applied for and received statutory accident benefits from Kingsway General Insurance Company ("Kingsway"), payable under the Schedule.¹ Kingsway terminated weekly income replacement benefits on December 9, 2000. The parties were unable to resolve their disputes through mediation, and Ms. Majer applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

1. Is the Insurer entitled to production of the transcript of the Applicant's examination for discovery in a tort action commenced as a result of the same accident which resulted in these proceedings?

Result:

1. Kingsway is not entitled to production of the transcript of the Applicant's examination for discovery in the related tort action.

EVIDENCE AND ANALYSIS:

At a pre-hearing discussion held by teleconference on Monday, June 23, 2003, Kingsway requested production of the transcript of the Applicant's examination for discovery in a related tort action. Ms. Majer refused the production request and submitted that case law at FSCO supported her denial. Kingsway asked for an order for production on the grounds that the documentation is relevant to these proceedings.

Neither party raised the question of the implied undertaking rule.

Recently, in Tanner v. Clark and Reimer v. Christmas,² the Ontario Court of Appeal ruled on the issue of whether the implied undertaking rule operates to protect medical reports obtained in an arbitration proceeding from disclosure in a related tort action. In the lower court, Madam Justice Epstein found that the documents were relevant to the tort proceedings and were not privileged. She analyzed Rule 30.1.01(3) of the Rules of Civil Procedure (the deemed undertaking rule) and concluded that, by its own terms, it does not apply to accident benefits proceedings. She also concluded that the common law implied undertaking rule had no application because the principle behind the rule is directed to protecting against use by the recipient of the information, not to protect the information from all uses. The Court of Appeal agreed with this analysis and stated that the plaintiffs were seeking not an enforcement of an undertaking, but a protective shield against production of relevant evidence. Therefore, it ruled that the Insurer was entitled to production of the Applicant's medical reports from the accident benefits claim.

In delivering the decision of the Court of Appeal, Carthy J.A. stated:

In my view, it would do no service to the implied undertaking rule to extend it in this fashion and would, indeed, be a considerable disservice. It would wrap a cloak of privilege around evidence given in any administrative tribunal hearing where a related issue arose in other proceedings. It would stand in the way of courts and tribunals having available the best evidence, or all of the evidence, bearing upon the issue in dispute.

Tanner v. Clark et al. can be distinguished from the circumstances of this case in two significant respects. First, the production request concerns a transcript of an examination for discovery and not medical reports. Second, the transcript was produced in the course of a civil action. Kingsway is seeking to import this transcript to the dispute resolution process at FSCO, rather than the reverse process - the use of material from an accident benefits case in a civil action.

In Sandhu and CAA Insurance Company (Ontario)³, and J. V. and State Farm Mutual Automobile Insurance Company,⁴ Arbitrator Wacyk ruled that the insurer was not entitled to an order compelling the insured to produce documents from a related tort action. She noted in J. V. and State Farm that FSCO's process does not include an oral pre-hearing discovery. Therefore, an order compelling the insured to produce a transcript from a related tort action, allows the insurer to do indirectly what the legislature has chosen not to allow it to do directly.

Arbitrator Wacyk tied her concern for the integrity of FSCO's process to the burden the insurer must meet, stating in Sandhu:

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.

I agree with Director's Delegate McMahon's reasoning in the appeal of Sandhu⁵ where he found that a production request such as this should be treated as a request made in the context of a FSCO proceeding for an order requiring the insured to produce documents from a related civil action. This request involves the exercise of the arbitrator's authority to control the process by ruling on the production of documents that would not ordinarily be compellable as part of FSCO's pre-hearing discovery process. The exercise of my discretion involves a consideration of the principles underlying the prohibition against the use of evidence for some collateral purpose.

This does not require a reference to the implied undertaking rule nor does this result in an undermining of the rule. The foundation of the rule is the prohibition against collateral use. As expressed by Director's Delegate McMahon:

...the undertaking is simply a legal construct that allows the court to punish someone who has used documents for some unauthorized purpose. In these circumstances, considering the matter without reference to an implied undertaking does not and, by extension, operates as a deterrent. In circumstances such this case, where the insurer is not in possession of the documents, neither punishment for misuse, or deterrence is an issue. The inappropriate use of such documents can be controlled by dismissing the motion to compel production. Conversely, where the arbitrator concludes that the insurer should be able to use the document, they need only order its production.

Section 20 of the Insurance Act provides arbitrators with the 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, 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 22 provides arbitrators with the authority parallel to that vested in the court to, amongst other things, order the production of documents.

Section 15 of the Statutory Powers Procedure Act⁶ (the "SPPA") grants arbitrators the jurisdiction to admit evidence regardless of whether it is admissible in a court. This section provides:

15. (1) Subject to subsection (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.

A comprehensive set of procedural rules and practices govern the resolution of disputes over statutory accident benefits. Most are found in the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001) while others have developed from arbitral case law. Not only are these rules and practices designed to allow a fair, balanced and appropriate level of disclosure to the parties but they are also designed to offer a less expensive and more efficient alternative to a civil action. Therefore, the impact on the arbitration process must be recognized when considering a request to compel production from a tort file.

I agree with the insurer that the transcripts from the examination for discovery may be relevant. However, the dispute resolution system at FSCO does not include examinations for discovery. When an insured person chooses to arbitrate, rather than bringing a civil action, they give up both the possibility of being examined and of examining the other party prior to the hearing. A party would gain an unfair advantage if it could obtain production of a transcript from an examination for discovery from a related tort or other civil action. This would also lead to a distortion of the process at FSCO, as set out in the Insurance Act.

Accordingly, Kingsway's request for an order requiring the production of the transcript of the examination for discovery in the related tort action is denied.

July 10, 2003

Judith Killoran

Arbitrator

Date

Neutral Citation: 2003 ONFSCDRS 104

FSCO A03-000466

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PATRICIA MAJER

Applicant

and

KINGSWAY GENERAL INSURANCE COMPANY

Insurer

ORDER

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

1. Kingsway's request for production of the transcript from the examination for discovery in the related tort action is denied.

July 10, 2003

Judith Killoran

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, 303/98, 114/00 and 482/01.
2. 22003 CanLII 41640 (ON CA), [2003] O.J. No. 677 (C.A.)
3. 3(FSCO A99-001031, October 3, 2001)
4. 4(FSCO A00-001002, November 27, 2001)
5. 5(FSCO P01-00044, January 18, 2002)
6. 6R.S.O. 1990, c.S.22, s. 15