Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2006 ONFSCDRS 75
FSCO A05-000884
BETWEEN:
RYSZARD SIAREK
Applicant
and
AVIVA CANADA INC.
Insurer
DECISION ON A MOTION
Before: Anne Sone
Heard: By telephone conference call on December 28, 2005 Final written submissions received by February 16, 2006
Appearances: Jamie Pollack for Mr. Siarek Marlett Dobson for Aviva Canada Inc.
Issues:
The Applicant, Ryszard Siarek, was injured in a motor vehicle accident on September 24, 1994. He applied for statutory accident benefits from Aviva Canada Inc. ("Aviva"), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Mr. Siarek applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
Mr. Siarek brought a motion for production of Aviva's documents. The issue on this motion is:
- Is Mr. Siarek entitled to production from Aviva of a copy of its complete statutory accident benefits file, including all claims adjusting notes, memos and conversation summaries by all persons at Aviva who participated in the administration of Mr. Siarek's claim, including all claims representatives, rehabilitation service advisors and claims managers, up to December 22, 2004, the date of the Application for Mediation?
Result:
- Aviva agrees to produce a copy of its statutory accident benefits file from October 11, 1994 to January 22, 1996. Mr. Siarek is entitled to production from Aviva of a copy of its statutory accident benefits file, including all claims adjusting notes, memos and conversation summaries by all persons at Aviva who participated in the administration of Mr. Siarek's claim, including all claims representatives, rehabilitation service advisors and claims managers, from June 1, 1997 to December 22, 2004, by May 25, 2006.
ANALYSIS:
Background
Mr. Siarek was involved in an accident on September 24, 1994 near Detroit, Michigan. As a result of this accident, Mr. Siarek sustained three fractured ribs on the left side, a fractured left clavicle and a hairline fracture of his left hip, among other injuries. On October 11, 1994, he submitted an Application for Accident Benefits to Aviva. Dr. P.A. Gresko was Mr. Siarek's family physician at the time of the accident. In a clinical note dated January 31, 1995, he said that Mr. Siarek was very disturbed, unable to talk, and forgetful. The doctor requested a CT scan of Mr. Siarek's head. Dr. Gresko also prepared a Health Practitioner's Certificate dated February 9, 1995. In it, he notes Mr. Siarek's altered mental state and his inability to remember anything. Dr. Gresko stated that Mr. Siarek had not acted this way before and appeared to be very irritable and agitated. Dr. Gresko again ordered a CT scan of Mr. Siarek's head. This Health Practitioner's Certificate was submitted to Aviva.
On February 17, 1995, Mr. Siarek was admitted to Hotel Dieu Grace Hospital in Windsor, after having ingested methanol (anti-freeze). Mr. Siarek sustained irreversible brain damage due to methanol poisoning.
Mr. Siarek's doctors stated that he was suffering from depression and that his behaviour had changed since the September 24, 1994 accident. They also suspected that he may have incurred brain injuries as a result of his accident.
Mr. Siarek filed an Application for Mediation with the Commission on January 22, 1996. He claimed weekly income replacement benefits from February 4, 1995, on an ongoing basis. He also claimed interest on overdue benefits.
Aviva did not appoint counsel to conduct this mediation with Mr. Siarek.
The Report of Mediator dated February 6, 1996 indicated that Mr. Siarek was not able to proceed with mediation. Due to an intervening medical circumstance, he was unable to provide instructions to his representative.
By letter dated February 6, 1996, Mediator Michael Rubenstein advised Aviva that he was closing the Commission's file. He stated that he had advised Mr. Siarek's representative at the time, Ms. Francine A. Herlehy, to file another Application for Mediation when she obtained the proper authority to proceed.
On August 31, 1998, Mr. Siarek was admitted to Anagram Premier Rehabilitation Community. This is a facility for persons with acquired brain injuries.
After inactivity since February 1996, Aviva closed its file on Mr. Siarek in May 1997.
In correspondence dated April 8 and 21, 2003, Mr. Siarek requested production of Aviva's complete file. Subsequently, in 2003, Mr. Siarek provided additional information to support his claim, and requested reinstatement of his statutory accident benefits.
When Aviva did not reinstate the benefits he was claiming, Mr. Siarek filed an Application for Mediation on December 22, 2004, claiming weekly benefits, loss of earning capacity benefits, medical benefits, rehabilitation benefits, attendant care benefits, costs of examinations and interest on overdue accounts.
The mediation was held on February 23, 2005. Aviva retained the services of Brown & Korte, Barristers on March 24, 2005. Mr. Siarek filed another Application for Mediation on April 21, 2005 for medical and rehabilitation benefits. This mediation was held on April 22, 2005.
Mr. Siarek filed an Application for Arbitration on May 3, 2005 claiming benefits for all issues which had previously failed at mediation. Mr. Siarek also claimed a special award from Aviva on the basis of the unreasonable withholding of benefits owed to him. At a pre-hearing discussion in this matter, Aviva objected to producing a complete copy of its file from the date of the accident to present, claiming litigation privilege. Aviva did agree to produce its file from the date of the accident up to the date of the first Application for Mediation, which was January 16, 1996.
Law
Subsection 22(1) of the Insurance Act provides that an arbitrator has the same power as is vested in the Ontario Court to order production of documents. It states as follows:
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 15 of the Statutory Powers Procedure Act ("SPPA") sets out what evidence is not admissible at hearings. Subsection 15(2) provides as follows:
Nothing is admissible in evidence at a hearing,
(a) that would be inadmissible in a court by reason of any privilege under the law of evidence; or
(b) that is inadmissible by the statute under which the proceeding arises or any other statute.
Section 32.3 of the Dispute Resolution Practice Code (Fourth Edition, October 2003), provides that an arbitrator may at any time order production of any document he or she considers relevant to determining the issues in dispute. It states as follows:
An arbitrator may at any time order the production of documents or the giving of information that he or she considers relevant to the determination of the issues in the arbitration, on such terms as he or she considers appropriate.
Based on the SPPA and the Code, I find that I have the power to order the production of documents which I consider to be relevant to the proceedings. However, this power is subject to solicitor-client and litigation privilege.
As set out in R. v. McClure,2 solicitor-client privilege is "a fundamental protective principle of substantive law.
Solicitor-client privilege describes the privilege that exists between a client and his or her lawyer. This privilege is fundamental to the justice system in Canada. The law is a complex web of interests, relationships and rules. The integrity of the administration of justice depends upon the unique role of the solicitor who provides legal advice to clients within this complex system. At the heart of this privilege lies the concept that people must be able to speak candidly with their lawyers and so enable their interests to be fully represented.
This privilege can be waived in fact or by operation of law. In addition, the privilege only arises where the client has sought legal advice from a lawyer.
As stated by Arbitrator Muir in Wilkerson and Allianz Insurance Company of Canada3 litigation privilege is related to solicitor-client privilege, but different in that it is broader in its application. Litigation privilege is defined in R. v. McClure4 as follows:
Litigation privilege exists to protect from production a communication made or a document created for the dominant purpose of assisting the client in litigation, actual or contemplated. It applies to third party communications made in confidence and for purposes of preparing for trial.
As stated by Master Kelly in Sathiyapalan v. Citadel General Assurance Company,5 "a sweeping assertion by the party claiming privilege, that the documents are litigation privileged is generally insufficient."
Arbitrator Muir states in Wilkerson that the onus of establishing that either solicitor-client or litigation privilege applies rests, at least initially, with the party asserting it, in this case, Aviva.
Arbitrator Muir also notes that:
...arbitrators have often relied on the date the insured person refers the dispute to mediation – the first formal step in the dispute resolution process – to define a line between claims adjustment and litigation for purposes of determining whether internal insurer documentation is producible. This bright line only reflects a presumption, which is rebuttable, that before that date the insurer was primarily concerned with adjusting the file and that after that date its focus might have reasonably shifted to preparing for litigation.6
As indicated above, arbitrators generally use the date of the Application for Mediation for establishing when privilege attaches to a case.
Arbitrator Blackman in Halford and Allstate Insurance Co. of Canada,7 sets out the competing interests an arbitrator weighs in production issues of this nature, including the following:
on the one hand, society's need for fair trials. This entails, amongst other things, facilitating the search for the truth..., which, in turn, supports the argument for broad disclosure.
on the other hand, in an age of limited resources, society must place temporal and monetary limits even on the search for the truth. The search for the truth is also specifically restricted by the need for a zone of privacy to facilitate adversarial litigation...., a concept enshrined by the SPPA;
on the other hand, the interpretive imperative that the purpose of the Schedule is to promote consumer protection...also buttresses the argument for full disclosure. Nonetheless, fairness dictates that both parties must also be allowed to speak candidly with their counsel to enable their interests to be fully and properly represented. A fair process requires just and even-handed safeguards. This may well require, in the best of all possible worlds, a very procedural, case-by-case approach;
on the other hand, this Commission was created to provide an expeditious, simplified, cost-efficient alternative means of dispute resolution. In order to achieve that goal, court processes such as examinations for discovery and affidavits of documents have been discarded. Such an alternative means of dispute resolution is enhanced by broad (but not inflexible) guidelines which discourage repeated motions on the same procedural issues.
Arbitrator Blackman further stated in Halford:
Campeau and Liberty Mutual Insurance Company8 endeavoured to balance these competing considerations by finding the date of application for mediation as a prima facie dividing line between producible and non-producible insurer documentation, subject to submissions as to why the scope of production should be narrowed or broadened in a particular case.
In this case, Arbitrator Blackman found that the applicant had established a basis for extending the customary period of production of an insurer's file from the date of the Application for Mediation to the date of the Application for Arbitration, approximately five months later. In his view, Mrs. Halford was entitled to disclosure of Allstate's thought process both in setting up and receiving a section 42 report (after an insurer's medical examination).
In Partola and Liberty Mutual Insurance,9 the parties resolved all the benefit claims. The only issue left in dispute was a special award. The applicant requested additional documents from the insurer, including all adjusting notes regarding the handling of Ms. Partola's accident benefit claim. Arbitrator Sandomirsky ordered that Liberty Mutual file with the Commission and serve on Ms. Partola a sworn Affidavit of Documents that listed all the adjuster's notes, and included enough particulars to identify each note and fully articulate the basis of the claim for privilege.
She also noted that she was satisfied that, even where the issue in dispute is entitlement to a special award, litigation privilege protects the adjusters' notes where the dominant purpose of the note was created for the purpose of the litigation process. As a general rule, the line that demarks the point where the insurer stops adjusting the file and starts preparing the file for litigation is the date of the Application for Mediation. However, an insurer continues to have an obligation to adjust the claim even after benefits have been denied and litigation has been initiated.
She also refers to the "dominant purpose" test adopted since the Court of Appeal case in General Accident Assurance Co. v. Chrusz10 to establish the existence of litigation privilege. The Court of Appeal quotes from an article from R.J. Sharpe (now Sharpe J.A.) called Claiming Privilege in the Discovery Process. In it, he refers to the competing interests to be considered when a claim of litigation privilege is asserted – the need for a zone of privacy to facilitate adversarial preparation and the need for disclosure to foster a fair trial.
In Davies v. American Home Assurance Co.,11 the Divisional Court confirmed that litigation privilege exists
...to protect from production a communication made or a document created for the 'dominant purpose' of assisting the client in litigation. The point is that litigation privilege (or solicitor-client privilege), when properly asserted, trumps relevance in almost all circumstances. That is its very nature. There is no "bad faith insurance claim exception to either litigation privilege or solicitor-client privilege that creates a special rule for bad faith claims against insurers and consigns the normal rules respecting privilege to other claims. The same rules apply in all cases.
The positions of the parties
Mr. Siarek's Submissions
Mr. Siarek argues that the adjuster's notes are prima facie relevant to both his claim for statutory accident benefits and to his claim for a special award pursuant to subsection 282(10) of the Insurance Act. He submits that Aviva continued to adjust his file after his entitlement to statutory accident benefits was terminated, after his original Application for Mediation was filed and even after the original mediation was aborted by the applicant’s legal representative.
Mr. Siarek states that the onus of establishing that either solicitor and client or litigation privilege applies rests with Aviva. In his view, for litigation privilege to be established, the documents in question must be shown to have been created for the dominant purpose of litigation.
Mr. Siarek also submits that counsel were not involved on behalf of Aviva prior to March 24, 2005, one month prior to the conclusion of the mediation in this matter, which proceeded on February 23, 2005 and concluded on April 22, 2005.
Mr. Siarek further states that there is no evidence as to litigation being the dominant purpose of any documents up to the date of the second mediation in this matter. Aviva admitted it had closed its file due to "inactivity" in May 1997. This file was not re-opened by Aviva until February 27, 2003. Mr. Siarek also alleges that what gives rise to a broader scope and period of disclosure is Aviva's lack of response to requests to reinstate statutory accident benefits.
Mr. Siarek also refers to a number of policy arguments to support his position. He submits that society's need for fair trials entails facilitating the search for truth which, in turn, supports the argument for full disclosure. Further, the purpose of the Schedule is to promote consumer protection which also supports the argument for full disclosure. He points out that the Commission was created to provide an expeditious, simplified, cost-effective alternative means of dispute resolution. In order to achieve that goal, court processes, such as examinations for discovery and affidavits of documents, have been discarded. In his view, in the absence of affidavits of documents and examinations for discovery in this process to fine-tune which precise documents are producible and which are not, it cannot be left to one party to decide which of its documents are relevant, especially in light of the consumer protection purpose of the Schedule.
Aviva's Submissions
Aviva submits that its file, from the date of the initial Application for Mediation, is subject to litigation privilege. It also submits that the date upon which it retained legal representation is irrelevant to the question of litigation privilege. Litigation privilege, unlike solicitor and client privilege, seeks to protect the litigation process itself and arises when the parties start preparing for litigation, in this case as of the date of the initial Application for Mediation.
Aviva submits that allegations of bad faith by Mr. Siarek have no bearing on the issue of privilege. Allegations of bad faith do not narrow the zone of privacy required for the purposes of adversarial preparation, and do not broaden the scope of production. Aviva states that it did not continue to adjust Mr. Siarek's claim after the date of the initial Application for Mediation, and that all documents prepared after that were prepared for the dominant purpose of litigation. It claims that it did not make any adjusting decision regarding Mr. Siarek's condition and entitlement to ongoing benefits after January 10, 1996 (the date of the original Application for Mediation).
Aviva states that it terminated benefits on the basis that the accident did not cause Mr. Siarek's condition. In Aviva's opinion, Mr. Siarek's ingestion of methanol, approximately eleven months prior to the date of the initial Application for Mediation, caused his condition. Aviva submits that the subsequent Applications for Mediation stem from the same decision, and therefore all documents prepared by it, or on its behalf, after the date of the initial Application for Mediation are subject to litigation privilege.
Aviva submits that litigation was reasonably foreseeable in this matter at the date of the initial Application for Mediation. Aviva was provided with submissions from Mr. Siarek prior to the date of the initial Application for Mediation, expressing the opinion that Mr. Siarek ingested methanol as a result of depression arising from the accident. Aviva's investigation and assessment of the matter was made before the date of the initial Application for Mediation, and has not changed since that time.
Aviva also agrees that the onus to establish privilege rests with the party claiming it. It states that the Commission has adopted a streamlined process, with arbitrators consistently holding that the date for litigation privilege commences with the Application for Mediation. Furthermore, arbitrators recognize that privilege is enshrined in the SPPA, which precludes a statutory decision-maker from ordering the production of privileged documents.
Conclusion
Aviva has produced its files to Mr. Siarek up to January 22, 1996, after the date of the first Application for Mediation. In this case, I am satisfied that Aviva has established that there is enough grounds for litigation privilege to find that I should not allow production beyond the customary date of that Application for Mediation.12 However, once Aviva closed its file on Mr. Siarek due to "inactivity" on May 31, 1997, I find that the activity on the file until Mr. Siarek's second Application for Mediation on December 22, 2004 comes under the category of adjusting the file, rather than for the dominant purpose of preparing for litigation. Therefore, I find that Aviva's statutory accident benefits file, including all claims adjusting notes, memos and conversation summaries by all persons at Aviva who participated in the administration of Mr. Siarek's claim, including all claims representatives, rehabilitation service advisors and claims managers, from June 1, 1997 to December 22, 2004 is producible to Mr. Siarek. I order this production to occur by May 25, 2006.
May 12, 2006
Anne Sone Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2006 ONFSCDRS 75
FSCO A05-000884
BETWEEN:
RYSZARD SIAREK
Applicant
and
AVIVA CANADA INC.
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Aviva Canada Inc. produce a copy of its statutory accident benefits file, including all claims adjusting notes, memos and conversation summaries by all persons at Aviva who participated in the administration of Mr. Siarek's claim, including all claims representatives, rehabilitation service advisors and claims managers, pertaining to Ryszard Siarek from June 1, 1997 to December 22, 2004, by May 25, 2006.
May 12, 2006
Anne Sone Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended.
- 2001 SCC 14, [2001] 1 S.C.R. 445, 195 D.L.R. (4th) 513.
- (FSCO A03-000753, January 13, 2004).
- Footnote 2, supra.
- 2003 CanLII 47728 (ON SC), [2004] O.J. No. 364 at 366.
- Footnote 3, supra.
- (FSCO A04-001319, April 21, 2005).
- (FSOO A00-000522, March 12, 2001).
- (FSCO A03-00097, July 15, 2004).
- (1999), 1999 CanLII 7320 (ON CA), 45 O.R. (3d) 321)
- (2002), 2002 CanLII 62442 (ON SCDC), 60 O.R. (3d) 512.
- In Halford, footnote 1, supra, for example, Arbitrator Blackman extended the usual parameters of production to deal with the insurer's notes, records and thought process pertaining to a section 42 examination and report which it had ordered.