Neutral Citation: 2004 ONFSCDRS 134

FSCO A01-000390

BETWEEN:

JOZEF KOZDRA

Applicant

and

CANADIAN GENERAL INSURANCE GROUP

Insurer

INTERLOCUTORY MOTION ON A PRODUCTION ISSUE

Before:

Beth Allen

Heard:

In part on May 10, 2004, at the offices of the Financial Services Commission of Ontario in Toronto.

Written submissions were received by June 30, 2004.

Appearances:

Reynold Kim for Mr. Kozdra

Deborah G. Neilson for Canadian General Insurance Group

The Applicant, Jozef Kozdra, was injured in three motor vehicle accidents on January 27, 1997, March 3, 1998 and September 8, 2000. He received statutory accident benefits from Canadian General Insurance Group ("Canadian General"), payable under the Schedule.¹ Canadian General terminated benefit payments and the Applicant applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issue in this motion is:

Is Canadian General permitted to file the three September 2002 videotapes into evidence pursuant to Rule 40 of the Dispute Resolution Practice Code² (the "Code")?

Canadian General is not permitted to file the three September 2002 videotapes into evidence.

Background:

The arbitration hearing commenced before me, Arbitrator Allen, and proceeded for six days in October 2003. The matter was rescheduled to resume from May 10 to 13 and September 20 to 23, 2004. On May 10, 2004, as counsel for Canadian General was at the completion of her cross-examination of the Applicant, she indicated that she would not be cross-examining the Applicant on surveillance videotapes commissioned by Canadian General. She stated that she wished to submit them into evidence for my consideration during my deliberations, subject to whether the Applicant's counsel intended to question the Applicant on the surveillance. The Applicant's counsel indicated that he would consent to allowing them into evidence without re-examining the Applicant on them. It was the Applicant's counsel's understanding that there were only the three surveillance tapes taken in September 2002.

As it turned out, Canadian General's counsel submitted four videotapes, three dated September 2002, and one dated November 19, 2003, taken after the arbitration had commenced in October 2003. The three videotapes taken in September 2002 had been produced to the Applicant in accordance with the Dispute Resolution Practice Code.³ Canadian General's counsel indicated that she had inadvertently submitted the fourth November 19, 2003 videotape. Therefore, the November 19, 2003 tape was only made known to the Applicant's counsel when I pointed out that Canadian General's counsel was submitting four videotapes into evidence and not three.

I allowed a recess of the hearing to give the Applicant's counsel an opportunity to review the November 19, 2003 videotape.

The Applicant's counsel requested an interlocutory order that Canadian General not be allowed to enter any surveillance material into evidence. I decided to determine the issue and make the appropriate order pursuant to an arbitrator's authority under subsection 279(4.1) of the Insurance Act to make interim or interlocutory orders pending the final order.

The Applicant's counsel requested an adjournment of the hearing to await my interlocutory order. He argued, and I agreed, that it would be prejudicial to the Applicant if the hearing were to continue any further at this time. In view of the fact that the surveillance issue emerged unexpectedly in the hearing, I allowed the parties to prepare written submissions on the matter. I granted the adjournment and set deadlines for written submissions. The Applicant's counsel filed a submission brief, Canadian General's counsel a submissions brief response, and the Applicant's counsel followed with submissions in reply.

The Parties' Submissions:

The Applicant's Counsel's Submissions:

After the Applicant's counsel reviewed the November 19, 2003 videotape, he argued that the Applicant would be prejudiced if Canadian General were allowed to submit any of the videotapes into evidence. He submitted that Canadian General was obligated by Rule 40.1 of the Code to produce the November 19, 2003 videotape in advance. Rule 40 of the Code states:

40.1 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.

The Applicant's counsel submits that under Rule 40.1, Canadian General was required to file the November 19, 2003 tape 30 days before the May 10, 2004 sitting on the basis that the November 19, 2003 videotape was created in relation to the disputes in the hearing. He submitted that even if I find that the hearing commenced on October 20, 2003, and not May 10, 2004 (so that the 30-day rule could not apply), Canadian General would in any event be obliged to disclose the existence of the November 19, 2003 tape and to produce it before cross-examining the Applicant. The Applicant's counsel pointed out that Canadian General's counsel cross-examined the Applicant on October 23 and 27, 2003 and continued with her cross-examination on May 10, 2004. It was as she approached the completion of her cross-examination on May 10, 2004 that the existence of the November 19, 2003 tape came to light.

The Applicant argued that in these circumstances, Canadian General had a continuing obligation to disclose all surveillance that bears on the issues in dispute - those issues being catastrophic impairment designation, entitlement to medical/rehabilitation, housekeeping/home maintenance and attendant care benefits. The Applicant's counsel disagrees with Canadian General's position that the November 19, 2003 videotape relates only to the income replacement benefit claim (not in dispute in this hearing). He pointed out that on cross-examination, Canadian General's counsel questioned the Applicant about his ability to perform his daily activities through questions that were not time specific.

The Applicant's counsel submitted that a common sense look at Rule 40.1 compels one to the interpretation that an insurer is obligated to serve any "new" or updated surveillance material at least 30 days before the first day of a resumption of a hearing. According to the Applicant's position, this would mean Canadian General was required to have served the November 19, 2003 videotape no later than April 30, 2004. He submitted that it is a breach of the principles of fair advocacy and natural justice for Canadian General to not have fully disclosed all surveillance.

The Applicant's counsel relied on the Commission decision in Downs and Allstate Insurance Company of Canada⁴ where the Arbitrator refused to admit video surveillance in the possession of the insurer during its cross-examination of the applicant in that case - surveillance of which the applicant was unaware. The Arbitrator found it would breach the rules of fairness and natural justice to allow the video surveillance in the circumstances.

Further, the Applicant's counsel argued that Rule 40.1 of the Code also obligates an insurer to produce all videotapes and other surveillance materials, if it intends to rely on any portion of it. He submitted that an insurer cannot pick and choose among portions of surveillance and produce only that part or parts which it chooses. He pointed to the Commission arbitration decision Campeau and Liberty Mutual Insurance Company⁵ to support this submission. The arbitrator in the Campeau case held that it would be unfair and contrary to a first insurer's duty of "utmost good faith" to its insured to be allowed to "pick and choose" amongst surveillance evidence.

The Insurer's Submissions

At the hearing, Canadian General's counsel indicated that she would not be relying on the fourth November 19, 2003 videotape, and further stated that she would therefore be prepared not to produce it since it was not generated in relation to issues in dispute in this hearing.

Canadian General's counsel further argued that Rule 40 of the Code contemplates setting time limits for the production of surveillance: that Canadian General intends to rely on; that was generated before the commencement of the arbitration hearing; and that was generated in connection with issues in dispute at the arbitration hearing. Canadian General's counsel pointed out that Canadian General produced the three September 2002 tapes in compliance with Rule 40 of the Code. She argued that she did not intend to submit the fourth November 19, 2003 videotape into evidence, and the fact that the November 19, 2003 tape was generated after the commencement of the hearing should not result in disallowing the three September 2002 tapes into evidence.

In her submissions, Canadian General's counsel relies on the Coles and Dominion⁶ arbitration case. In the Coles case, the arbitrator dealt with two sets of surveillance materials, one an earlier set produced in accordance with the Dispute Resolution Practice Code in effect at the time; and the other, a later set of surveillance material which was not disclosed in a timely manner. The earlier set of surveillance material was allowed into evidence and the arbitrator excluded the later surveillance material. With respect to the earlier surveillance material, the arbitrator in the Coles case ordered produced additional surveillance material generated by the investigator in relation to the earlier surveillance that had not yet been disclosed. It is not clear from the reasons in the Coles matter whether the applicant objected to the admission of the earlier surveillance material or whether the later surveillance material was generated after the commencement of the hearing, as in the case before me. I find that the Coles case does not assist Canadian General's position.

Contrary to the Applicant's position, Canadian General's counsel argues that the Applicant will not be prejudiced by the existence of the November 19, 2003 videotape. She submitted that she did not cross-examine the Applicant on the contents of the November 19, 2003 videotape and the Applicant's counsel had not yet re-examined the Applicant, so on re-examination he could deal with any issues arising from his review of the tape.

Canadian General's counsel further submits that Canadian General would be prejudiced if it were not permitted to rely on the three September 2002 surveillance materials under circumstances where they were relevant to the issues in dispute and they were properly produced in accordance with the Code.

Canadian General's counsel argues, in any event, that the November 19, 2003 videotape was not generated in connection with the issues being decided in this arbitration, but rather to investigate the Applicant's abilities and to adjust the claim with respect to the ongoing income replacement benefit issue, which is not in dispute in this hearing.

Reasons for Decision:

After a review of counsel's submissions, I have decided for the following reasons to exclude the three September 2002 and November 19, 2003 videotapes.

In arriving at this decision, I considered the purpose and intent behind the Rules in the Code that govern the production of documents. Compliance with the Rules is intended to guarantee a fair, expeditious and cost-effective arbitration process. Rule 1.1 of the Code reflects this intention: "These Rules will be broadly interpreted to produce the most just, quickest and least expensive resolution of the dispute." The Rules are aimed at allowing the parties the opportunity of knowing in advance the case they have to meet at arbitration and_to avoid trial brinkmanship. Time limits require productions to be made within a reasonable time before the hearing to allow parties adequate time to prepare their case. Rule 34 of the Code sets out the adverse outcomes to the offending party that can result from non-compliance with a time requirement under the Code. The arbitrator may impose or deny expenses; exclude the impugned document; impose a new timetable for compliance; draw an adverse inference; or make such other order she considers just.

Rule 40 of the Code sets out a time limit for the production of surveillance materials and a requirement as to the extent of production of these materials. Under this Rule, if an insurer intends to rely on any portion of the videotapes (and other listed surveillance material), the insurer shall produce copies of all videotapes (and other listed surveillance materials) taken or prepared in connection with the issues in dispute.

I find that Canadian General intends to rely on a portion of the surveillance material generated by the investigator - the three September 2002 videotapes. However, it does not intend to produce or rely on one of the videotapes generated in relation to this case - the November 19, 2003 videotape.

As well, I disagree with Canadian General's counsel's argument that the November 19, 2003 videotape was generated solely in relation to adjusting the ongoing income replacement benefits claim, and not in connection with the issues in dispute. I assume the November 19, 2003 videotape captures the Applicant in various states of activity and/or inactivity and is aimed at observing the Applicant's functional abilities on November 19, 2003. I find the issue of the Applicant's functional abilities is relevant not only to the income replacement benefit issue, but also the issues in dispute, namely - catastrophic impairment designation, entitlement to medical/rehabilitation, housekeeping/home maintenance and attendant care benefits. I therefore find that the November 19, 2003 videotape satisfies the requirement of having been generated in relation to the issues in dispute in the hearing.

I find Canadian General's position that it should be permitted to produce only the three September 2002 videotapes and not the fourth November 19, 2003 videotape is not supportable. Rule 40 clearly requires an insurer to produce all surveillance material generated in relation to the issues in dispute if the insurer intends to rely on any portion of it. I agree with the arbitrator in the Campeau case that it would be unfair for Canadian General to be allowed to pick and choose amongst its surveillance and investigative evidence.

As an aside, even if Canadian General were seeking to produce the fourth November 19, 2003 videotape together with the September 2002 videotapes, I would not have allowed this. I find the November 19, 2003 videotape would not have been produced within the required 30 days before the commencement of the hearing, irrespective of whether the hearing, for the purposes of this issue, is seen to have commenced on October 20, 2003 or May 10, 2004. That videotape only came to the Applicant's attention for the first time on May 10, 2004, the first day of the second sitting of this matter. It would not be fair to the Applicant to allow the November 19, 2003 videotape into evidence under circumstances where it was unavailable to the Applicant's counsel when he prepared his case. To permit that videotape into evidence would add insult to the injury already caused by the fact that Canadian General, unbeknownst to the Applicant, had the advantage of the November 19, 2003 videotape when it cross-examined the Applicant. It is not an answer to this unfairness for Canadian General to say that it did not cross-examine the Applicant on the contents of the November 19, 2003 videotape. Canadian General's counsel had the advantage of knowledge of the contents of that videotape when she questioned the Applicant about his functional abilities.

I therefore will not allow Canadian General to file the three September 2002 videotapes into evidence.

EXPENSES:

I reserve my decision on expenses until the matter has been finally heard.

September 13, 2004

Beth Allen Arbitrator

Date