Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 83

FSCO A06-001921

BETWEEN:

YEVGEN BOGDANTSEV

Applicant

and

SECURITY NATIONAL INSURANCE CO./MONNEX INSURANCE MGMT. INC.

Insurer

PRE-HEARING DECISION

Before:

Arbitrator Lawrence Blackman

Heard:

April 24, 2007, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Mr. Meenaz Jaffer, student-at-law, for Mr. Bogdantsev

Mr. Tullio D'Angela, legal counsel, for Security National Insurance Co./Monnex Insurance Mgmt. Inc.

Issues:

Mr. Bogdantsev was injured in a motor vehicle accident on August 9, 2005. He subsequently applied for statutory accident benefits from his first party insurer, Security National Insurance Co./Monnex Insurance Mgmt. Inc. ("Security National"), payable under the Schedule.¹ Unable to resolve his disputes with Security National as to his entitlement to certain accident benefits, Mr. Bogdantsev applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The pre-hearing discussion in this matter was held before me on April 24, 2007, at which time the issues in dispute were confirmed as including entitlement to and the amount of weekly income replacement benefits ("IRBs").

At the pre-hearing, the Applicant indicated he was both an employee and self-employed at the time of the accident, earning income from and/or reporting to Cogir Management Inc. and El-Ad Group (Canada) Inc. Mr. Bogdantsev submits that he continued with modified, reduced duties after the motor vehicle accident until May 20, 2006 when he was hired by Alumarail Manufacturing Inc. That employment continued until approximately the end of July 2006, when Mr. Bogdantsev underwent surgery, following which he was off work until January 29, 2007.

The Insurer sought production of Mr. Bogdantsev's employment files at Cogir Management Inc., El-Ad Group (Canada) Inc. and Alumarail Manufacturing Inc. from one year pre-accident. Security National stated that it would pay the cost of the third party production.

Mr. Bogdantsev did not dispute the production request, but was of the view that providing the Insurer with signed authorizations allowing the release of the requested documentation from the third parties was sufficient compliance. The Insurer disagreed, submitting it was under no obligation to obtain documentation directly from the third parties. Rather, relying on Bali and Axa Insurance (Canada) (FSCO A03-000698, November 9, 2004), Security National argued that it was the insured who was required to obtain documentation from third parties both to prove his or her claim and provide full disclosure.

The Applicant submitted that the party seeking the documentation should be responsible for and be able to obtain same. As an example, should an applicant wish to receive the file of an insurer medical examiner, he or she should seek signed authorizations from the insurer to ensure full production of the third party's documentation.

The Insurer, however, indicated that having the other side obtain documentation from third parties is a means of showing how motivated they are in advancing their claim.

Therefore, the pre-hearing issue is:

Should Mr. Bogdantsev himself seek production from Cogir Management Inc., El-Ad Group (Canada) Inc. and Alumarail Manufacturing Inc. of his employment files from one year pre-accident or is it sufficient for him to provide signed authorizations to the Insurer.

Result:

Mr. Bogdantsev shall seek production from Cogir Management Inc., El-Ad Group (Canada) Inc. and Alumarail Manufacturing Inc. of his employment files from one year pre-accident and shall, within sixty days of this decision, provide Security National with copies of same or proof of best efforts. Security National shall pay the third party disbursement costs.

ANALYSIS AND RESULT:

Regarding the means by which documentation exchange may be effected, I am not persuaded that there is a hard and fast rule.

Rules 32 and 33 of the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003) (the "Code") address document exchange prior to and at the pre-hearing discussion. They are silent as to the means by which documents are to be obtained from third parties.

Practice Note 4 of the Code does not contemplate that every production request made by one party must be pursued by the other. Rather, the Practice Note specifically states that:

When an insurance company arranges to collect documents from a third party, it may require the applicant to authorize the collection before hand. The company must give copies of any documents it obtains to the applicant, as soon as possible.

The Bali decision pertained not to a pre-hearing production issue but rather to preliminary matters arising at an arbitration hearing itself. The latter matters included Mr. Bali's adjournment request on the basis that financial information was outstanding and whether the Applicant had been waiting for the other side to provide authorizations for him to sign allowing the insurer to obtain the relevant documentation.

In Bali, the arbitrator indicated that while an insurer may agree to an applicant executing authorizations for the release of information by third parties directly to the insurer, there is no requirement that they agree to this procedure.

I concur.

However, there is also no requirement that a party must agree to every production request made by the other side during the pre-hearing process, nor is there any requirement that a party must agree to the other party's dictate as to how that documentation is to be obtained.

Rather, one would hope that common sense, good faith and professional courtesy would prevail; that the parties would be able to work out a sensible, pragmatic approach to document exchange which facilitates early, efficient, inexpensive dispute resolution, whether the latter is by agreement or by arbitral decision.

Where the parties are unable to agree on the means of document exchange, the arbitrator should be guided by the philosophic basis of the Code, namely Rule 1, which provides that the Rules are to be interpreted to produce the most just, quickest and least expensive resolution of the dispute. The considerations relevant to deciding the preferable means by which a production request should be fulfilled would include:

(1) whether the requested documentation was more likely to assist the party from whom the undertaking is sought or the party seeking the documentation;

(2) whether providing authorizations would merely require the party seeking the documentation to do the "leg work" the other side should be doing;

(3) which party was in a better position to obtain the information;

(4) which party had the greater incentive to obtain the documentation (i.e. which route would be less likely to require a pre-hearing resumption to address outstanding productions);

(5) which party would be more likely to bring a third party motion and, hence, have an incentive to meet the requirements of Rule 67 of the Code, including making reasonable efforts to obtain the documents;

(6) considering the range and number of production requests, was there a concern that the disclosure requests had less to do with obtaining what was truly relevant and necessary for the hearing and more with wearing down the other side; put another way, were the production requests, prima facie, a "make work" project;

(7) was it more efficient to have the party which agreed to pay the third party disbursement costs deal directly with the third party; and,

(8) would the party being asked to provide documentation from third parties be properly compensated in legal expenses?

In this case, I find that the Applicant himself should seek production from the third parties noted above, for the following reasons:

– certain of the records sought are fundamentally relevant in establishing the Applicant's IRB quantum and entitlement claims. Mr. Bogdantsev indicated he had provided documentation to his law firm. It appeared that information had not been passed on and that the Insurer came to the pre-hearing discussion with significant gaps in understanding the basic elements of the Applicant's IRB claim;

– in the circumstances of this case, I was persuaded that providing authorizations would be requiring Security National to do the work the Applicant should be doing;

– the Applicant, having had a business relationship with the third parties, was presumably in a better position to obtain the requested documentation;

– as certain of the requested documentation appeared fundamental to establishing his claim, the Applicant had an incentive to obtain the requested documentation;

– there was no indication whatsoever that Security National was pursuing an unfair tactic of seeking to wear down the other side; rather, I was persuaded that the Insurer had directed its mind to limit its production requests to what was truly relevant, reasonable and necessary to advance the fair resolution of this dispute;

– requiring Security National to pay the third party's disbursement costs would, in the circumstances of this case, provide proper interim compensation; and,

– such a result would be the most just, efficient and cost-effective means of advancing the dispute resolution process in the circumstances of this case.

May 2, 2007

Lawrence Blackman

Arbitrator

Date