Neutral Citation: 2004 ONFSCDRS 146

FSCO A04-000300

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

RAVEENDRAN THAMBIMUTHU

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A MOTION

Before:

John Wilson

Heard:

By telephone conference call on September 28, 2004.

Appearances:

David S. Wilson for Mr. Thambimuthu

Ryan M. Naimark for ING Insurance Company of Canada

Issues:

The Applicant, Raveendran Thambimuthu, was injured in a motor vehicle accident on October 18, 2002. In the four weeks prior to the accident, he claimed to be employed as a courier with a company located across the American border near Buffalo.

Following the accident, he claimed income replacement benefits based on that employment. His income replacement benefits were paid on the basis of the salary earned from that employment. The parties were unable to resolve their disputes through mediation, and Mr. Thambimuthu applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

In this motion, ING requests the following relief:

Leave to amend the insurer's Response.
A stay of the arbitration.
An adjournment due to non-compliance with productions.
Adjournment to permit the testimony of certain medical witnesses, who may not be available.
An order suspending interest.
Expenses, arising both from this motion and any resulting adjournment.

Result:

Leave to amend the Response is denied due to the late date.
ING has not made out a case for a stay of the arbitration.
The request for an adjournment due to non-compliance with productions is denied.
The question of the testimony of the medical witnesses, and the manner in which their evidence shall be received, if at all, is more appropriately left to the hearing arbitrator.
There shall be no order suspending interest.
Given the complete success of the Applicant in this motion, he shall have his expenses, which I fix at $900.00, payable by ING forthwith, in any event of the cause.

EVIDENCE AND ANALYSIS:

A bit of background to this claim is necessary to set this motion in a proper context. According to Mr. Naimark, counsel for ING, this file has bounced around the law firm of Zarek Taylor Hanrahan and Grossman.

Mr. Grossman was the original counsel of record for the Insurer. He handled the pre-hearing at which I presided. Mr. Grossman was followed by another solicitor who then left the firm. Mr. Naimark then received the file in July, 2004, but did not have the time to review it until August.

At the time of the pre-hearing,¹ there was much discussion about the setting of the date for the hearing, with counsel for the Applicant being insistent that the hearing take place before the 104-week mark, to make certain that the hearing would deal only with the pre-104 "own occupation" test. Counsel for the Insurer, quite properly, accommodated this request, even to the extent of juggling his own and his firm's schedule to allow the hearing to be set commencing on October 4, 2004.

The Insurer now, in the week before the hearing, wants to add a further issue, and adjourn the matter to a later date to permit that issue to be heard, and to deal with certain production matters that it claims to be outstanding.

The result would be a delay in the hearing process. In fact, given the difficulty of scheduling this in the first place, likely a significant delay. Mr. Wilson, on behalf of Mr. Thambimuthu strenuously objects to the addition of a further issue, and to any adjournment which could delay the hearing process.

In a recent decision,² I dealt specifically with the question of adding further issues on the eve of an arbitration. In that matter, I found that, although an insurer may be permitted to add issues at any time prior to the hearing, there must be compelling reasons for such an action on the eve of arbitration. The decision whether to accept a proposed amendment, then, is based on a weighing of such matters as prejudice, delay, and laches. I would also add that the nature of the amendment and whether there is any likelihood of it the party succeeding on that issue are relevant considerations.

The amendment proposed by ING is significant. It seeks to add the question of whether Mr. Thambimuthu materially misled the Insurer in accordance with section 30(2) (a) of the Schedule. The consequence of material misrepresentation, if found, is that an insured forfeits entitlement to weekly benefits such as income replacement benefits and housekeeping. In Mr. Thambimuthu's case, it would also mean that he could be forced to pay back benefits already received.

The material misrepresentation alleged by ING is that Mr. Thambimuthu apparently used his vehicle for business purposes. It claims that it learned of this possibility from the September 10, 2004 letter from Mr. Wilson, which mentioned previous employment as a pizza delivery person. Enclosed with the letter was a letter from the proprietor of the pizza franchise confirming that employment. I note that although the letter does not mention the ownership of the vehicles used in pizza delivery, it is apparently not uncommon for drivers to provide their own vehicles for use in delivery.

A more specific mention of commercial use is contained in a worksite physical demands report prepared on September 3, 2003, apparently at the request of the Insurer. The copy of the report produced at this motion is marked as received by the Insurer on September 17, 2003.

The report comments "The client reported that he uses his own 1990 Toyota Corolla to pick up and deliver small items." It also lists a GMC Savannah, apparently belonging to his employer, that was used for "larger or numerous items."

There is no question that the knowledge of a potential commercial use of Mr. Thambimuthu's vehicle was known and available to the Insurer long before Mr. Grossman received the file on March 15, 2004. Consequently, the information was available to both ING and Mr. Grossman when the Insurer's response was draughted and filed on March 26, 2004. For whatever reason, the Insurer chose not to rely on that information in its defence.

Why then was the matter not raised in the response? The only possible answer given is that it did not become apparent that it was a potential issue until Mr. Naimark reviewed the file in August. This epiphany was possibly reinforced by Mr. Wilson's revelation of the earlier work as a pizza driver which came to light in September.

I find that a competent review of the file in March 2004 should have triggered an awareness of the potential commercial use of an insured vehicle. I also find that, at that time, ING could properly have raised the defence as a preliminary issue relating to coverage.

To raise it now, a week prior to the arbitration hearing, means a necessary adjournment. Although the parties have not provided specific alternative dates, the gymnastics necessary to set the original hearing date suggest a significant possible delay in hearing this matter, if adjourned. Presumably the parties have begun their preparation for hearing at this time as well.

While costs thrown away by an adjournment due to the new issue might be addressed by an expense order, there are other matters worthy of some consideration. For whatever reason, the Applicant was adamant that the hearing take place before the two-year mark. This would be impossible if the hearing were to be adjourned.

Any delay in a hearing means further time that the Applicant is without benefits, assuming that he is eligible. Furthermore, a delay of some two years since the accident before even raising misrepresentation cannot make an applicant's defence of the misrepresentation issue any easier.

I am also troubled by the evidence and the arguments in support of adding the issue of material misrepresentation. While the Insurer obviously does not need to fully prove material misrepresentation in order to add it as an issue, it should be able to satisfy me that the elements pleaded, if believed, could constitute material misrepresentation.

Material misrepresentation requires that a representation be made, that the insurer be shown to have relied upon it in issuing the policy, and that the insurer would not have issued the policy had the misrepresentation not been made.

Mr. Grossman's affidavit contains no reference to any specific representation made by Mr. Thambimuthu in applying for his policy. It does, however, contain a statement (on information and belief) attributed to a person, who Mr. Naimark concedes is not involved at all in underwriting, stating that ING would not have issued the policy had it known of a commercial use. Neither is a copy of the policy, or any record of the nature of the policy or the basis upon which it was issued, attached as an exhibit.³

One would expect that given the need to provide compelling reasons to add this issue on the eve of arbitration, the Insurer would have put its best foot forward and provided some indication that the proposed defence would have a reasonable possibility of success. I am not persuaded that, as presented, it would.

I find then that, on the balance, the prejudice to the Applicant in granting an amendment, and the consequent adjournment, is such that the amendment should be denied. While the Insurer may well be prejudiced by its inability to raise a defence of material misrepresentation, I find that any such prejudice is directly attributable to its own failure to review the file and raise the issue in a timely manner.

ING also requested an adjournment on the basis of Mr. Wilson's alleged failure to honour an undertaking to produce certain income tax records as well as the failure to produce the employment file for Buffalo Courier.

There are no outstanding production orders. There are no written undertakings to produce any documents. There is, however, a disagreement about Mr. Wilson's verbal agreement with regard to the tax records. Mr. Naimark says that he undertook to produce them. Mr. Wilson says he agreed to make best efforts to obtain them. Unfortunately he was unable to obtain them.

I accept that given the correspondence from the Mr. Grossman that refers to "consent" to producing the file, that indeed was what was intended and agreed to by both parties, and no more. A consent is not an undertaking.

Mr. Wilson has produced documentation showing that he sent off authorizations and a request letter to the Canada Revenue Agency (Revenue Canada) within a reasonable time after the pre-hearing. He also has produced subsequent follow-up correspondence. Unfortunately, the Canada Revenue Agency is likely not a compellable witness before a provincial tribunal, and so the documents cannot be ordered produced by either a third party production order, or by witness summons. I find that in the circumstances, Mr. Wilson has made his best efforts to produce the documents in question.

Much the same circumstances apply to the Buffalo Courier employment file, although Mr. Naimark acknowledges that there was no undertaking. Rather, he mentions that it was an oversight by the Insurer. The jurisdiction of Canadian tribunals does not have application extra-territorially. That may explain why Buffalo Courier felt no inclination to reply to Mr. Wilson's requests.

While these documents might both be relevant and useful, I am not willing to adjourn this matter in the faint hope that both these documents will turn up in due course. The Applicant has the overall burden of proof in this matter. If he does not produce sufficient supporting evidence for his claims, then he loses. If anything, the potential prejudice arising from the unavailability of these documents would seem to lie mostly with the Applicant. He is apparently willing to accept that risk.

I would also note that section 34 of the Dispute Resolution Practice Code (4th Edition, Updated October 2003) provides specific remedies for non-production, none of which includes the adjournment of the arbitration. Therefore, I decline to order an adjournment on the basis of the non-production of the employment file and the income tax file.

The Insurer also requested an adjournment on the basis that two of its medical witnesses may not be available since they have made alternative plans for the hearing dates. Although the Insurer filed their reports, he took no efforts to ensure their availability during the planned hearing, despite being put on notice that both witnesses would be required for cross-examination. Certainly Mr. Naimark did not issue any witness summons within the timelines set by the Practice Code.

The cross-examination of witnesses is a fundamental part of the adversarial system of justice. One cannot expect to conduct an examination-in-chief, and then not make the witness available for cross-examination. The filing of reports is no different. It is merely a courtesy to permit evidence to be entered in an efficient manner. It does not nullify in any way the right to cross-examine. It is incumbent upon a party filing evidence by way of reports to make certain that a witness is available for cross-examination, if required. It was Mr. Naimark's duty to take the necessary steps to have his witnesses available, once he was put on notice that their presence was required.

At this point, so near to the hearing, I find that it is more appropriate for the hearing arbitrator to address the question of whether the reports should be admitted, and how the witnesses may be accommodated, if at all.

ING also requested an adjournment to investigate the employment with 241 Pizza. While this is late-breaking information that may potentially be relevant to the hearing, it is probably more relevant to any post-104 week claim. There is no evidence that the information was in any way concealed by Mr. Wilson. It seems to have been forwarded upon receiving the letter from the employer. Mr. Wilson indicates that he is not intending to rely upon the employment in any case, and indeed would need the leave of the arbitrator to have the letter admitted.

Mr. Thambimuthu has clearly framed his claim in the context of his work in the four weeks prior to the accident. If he is unsuccessful in that, then any other work, whenever it took place, will be of no assistance to him. In any event, if ING finds that the testimony of the pizza owner is necessary on some other point, it may attempt to summons him, and with leave of the arbitrator to call him as a witness. I decline to grant an adjournment to investigate the 241 Pizza employment.

Because there is no adjournment, I make no order suspending interest.

EXPENSES:

I exercise my discretion to award Mr. Thambimuthu his fixed expenses in this motion hearing. ING should have been aware of the jurisprudence against trying to add issues at this late date, and that their motion had little possibility of success. Mr. Thambimuthu was successful on all issues. The motion took a full morning to hear, and necessitated filing significant written materials. Consequently, I fix the Applicant's expenses at $900, payable forthwith in any event of the cause.

September 30, 2004

John Wilson Arbitrator

Date