Neutral Citation: 2007 ONFSCDRS 87

FSCO A06-002126

BETWEEN:

SANDRA YAMPOLSKY

Applicant

and

CO-OPERATORS GENERAL INSURANCE COMPANY

Insurer

PRE-HEARING DECISION

Before: Robert Bujold

Heard: April 25, 2007, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Idan Erez for Ms. Yampolsky

Philippa Samworth for Co-operators General Insurance Company

A pre-hearing discussion in this matter was held on April 25, 2007, at 2:00 p.m., at the offices of the Financial Services Commission of Ontario. At the conclusion of the pre-hearing, Co-operators General Insurance Company ("Co-operators") requested costs of the pre-hearing fixed in the amount of $200.00. I heard oral submissions and reserved on my decision. The following is my decision and reasons.

Issues:

Is Co-operators entitled to an award of expenses for the pre-hearing discussion that was held on April 25, 2007?

Result:

Co-operators is entitled to an award of expenses in the amount of $200.00 payable forthwith.

EVIDENCE AND ANALYSIS:

Co-operators submitted that it should be entitled to an award of expenses for the pre-hearing discussion that took place on April 25, 2007 on the grounds that Ms. Yampolsky failed to provide information and documentation necessary for the parties to engage in meaningful settlement discussions, thereby frustrating an important purpose of the pre-hearing discussion as set out in Rule 32 of the Dispute Resolution Practice Code (the "Code").

In its Pre-Hearing Memorandum dated April 17, 2007, Co-operators submits that Ms. Yampolsky failed to respond to several letters requesting production of the documents listed in Schedule "C" of the Response which, if produced, would have provided "a better opportunity to facilitate settlement and narrow the issues." Letters from Co-operators to Mr. Gary Mazin regarding productions are found at Tab 6 of Co-operators' memorandum. The letters are dated October 30 and December 1, 2006, and January 16, February 14 and April 17, 2007.

Mr. Erez, on behalf of Ms. Yampolsky, admitted that there was a "dearth of correspondence" in reply to Co-operators' requests for productions. He submits, however, that I should also take into account correspondence sent by his office prior to the filing of the Application for Arbitration, i.e. prior to September 21, 2006. Specifically, he notes correspondence in May, June and August 2006 enclosing 2004 and 2005 tax returns and other documentation sent in response to a section 33 request made by Co-operators in March 2006.

Mr. Erez further submits that, notwithstanding the requirements of Rule 32 and Practice Note 4, his experience suggests a culture of non-compliance regarding the exchange of documents before the pre-hearing by applicants and insurers alike.

With respect to this latter point, I recognize that documents identified in an Application and Response are often not exchanged prior to the pre-hearing. At times, an explanation is proffered as to why a document has not been provided. In other cases, the dispute may have evolved (e.g. new issues added; other issues clarified, narrowed or resolved) and the exchange of documents may be seen as following the ongoing and evolving process of the claim itself. At yet other times, the documents may not be key to understanding the issues in dispute and may not materially affect the parties' ability to pursue settlement discussions, and the parties are content to provide authorizations or set time lines for the exchange of remaining documents in the event that settlement discussions fail. This last example may not reflect perfect compliance with Rule 32, but at least the purposes of a pre-hearing discussion are not frustrated. In any case, the above examples do not apply to the case at hand. Here, Co-operators made it clear by several letters that certain information was required in order for meaningful settlement discussions to take place and further advised that it would be seeking costs.

At its core, what we are dealing with here is a question of what is reasonable in terms of the minimum that should be expected regarding the exchange of information and documents prior to a pre-hearing discussion. In that regard, I note that Rule 33 opens with the words "One or more pre-hearing discussions may be held before an arbitrator who will attempt to resolve the dispute, and will assist the parties to prepare for the arbitration by ... ." Efforts at settlement precede the list of the other enumerated purposes of a pre-hearing discussion. In order that the purpose of settlement not be subverted, the parties will, in my view, need to have exchanged sufficient information and documentation to identify the issues in dispute and to provide some rationale or evidentiary underpinning for their respective positions. Exactly how much information or documentation is required to allow for meaningful discussions aimed at settlement or narrowing of the issues will depend, at least in part, on the nature of the issues in dispute and would need to be decided on a case-by-case basis.

In this case, I find that any reasonable attempt to resolve the issues in dispute were thwarted by Ms. Yampolsky's failure to provide certain information and documentation in advance of the pre-hearing. However, it was not so much Ms. Yampolsky's failure to produce the documents in Schedule "C" of the Response that proved problematic as her failure to provide any explanation for the $400.00 per week that she is advancing as the proper quantum of her income replacement benefit. Income replacement benefits are a significant portion of Ms. Yampolsky's claims. At the pre-hearing, Mr. Erez stated that he had had discussions with Ms. Yampolsky suggesting that $400.00 per week was appropriate, but he did not offer any further information and he indicated that he still needed to discuss the issue with her employers.

The pre-hearing in this case took place on April 25, 2007, approximately seven months after the Application for Arbitration was filed on September 21, 2006. The Co-operators' calculation (or estimation) of the appropriate quantum was contained in a report from their accountant dated September 29, 2006. The accountant's report, as well as Co-operators' Response filed October 30, 2006, made abundantly clear Co-operators' position that the quantum of Ms. Yampolsky's income replacement benefit was "something substantially less" than $400.00 per week.

On or about December 27, 2006, Mr. Mazin wrote to Co-operators (directly) putting forward an offer to resolve Ms. Yampolsky's claims. Co-operators forwarded Mr. Mazin's letter to their counsel, Ms. Samworth, who responded to Mr. Mazin by letter dated January 16, 2007. In that letter, Ms. Samworth stated:

"In order to provide recommendations to our client with respect to your offer it would be helpful if you could provide us with a breakdown as to how that offer is reached. You will have recently have received our client's accounting report and cheque to cover the income replacement benefit. We do not know what your position is with respect to quantum nor have we any details with respect to post accident earnings.

... Once we have heard from you further we would be happy to review your offer with our client and provide a response."

Mr. Mazin knew or ought to have known from the delivery of the accountant's report, and in any case no later than January 16, 2007, that details of the applicant's position on quantum and post-accident earnings were necessary in order for meaningful settlement discussions to take place. Co-operators had made its position clear and provided an explanation for its position.

There is no evidence that Ms. Yampolsky, or her solicitors, made any effort to secure information or documentation necessary to put forward an explanation of her position on quantum in advance of the pre-hearing discussion. Ms. Yampolsky gave Co-operators no evidentiary or other basis upon which it could reasonably be expected to revisit its position on the quantum issue and, as a result, settlement discussions were effectively over before they began.

With respect to the submission that certain information was provided prior to the Application for Arbitration, I find it provides no answer to the failure to provide information and documentation that was requested and required for settlement discussions to take place at the pre-hearing.

I agree with Arbitrator Muir, as stated in Antony and RBC General Insurance Company (FSCO A05-000898, January 23, 2006), that expense awards for interlocutory proceedings should generally be reserved for exceptional cases. I also share his concern that "the routine awarding of expenses following an interlocutory step in the proceeding only tends to engender further disputes and delays in the proceeding." At the same time, as Arbitrator Muir also recognizes, there is an explicit power to make an interim award of expenses contained in section 282(11.1) of the Insurance Act and a common law duty to control the process. In the exceptional case, an award of expenses may be appropriate "to send a message to the offending party that their conduct is inappropriate."

For the reasons stated above, I find this to be an appropriate case to award expenses. Specifically, I find that the conduct of Ms. Yampolsky, or her solicitors, obstructed or hindered the pre-hearing proceeding, meeting the criterion set out in section 12(2)4 of the Expense Regulation (Regulation 664, R.R.O. 1990), and I hereby order expenses payable forthwith in the amount of $200.00.

If Ms. Yampolsky's solicitors had contacted her employers in advance of the pre-hearing, as Mr. Erez suggested they still needed to do, and came prepared to discuss the basis for the amount claimed of $400.00 per week, the result may have been different.

I note that there is no evidence that Ms. Yampolsky personally refused or delayed in providing her cooperation to secure information or documentation that would explain her position on the quantum of her income replacement benefit. However, the request for expenses did not request expenses against Ms. Yampolsky's solicitors be considered pursuant to section 282(11.2) of the Insurance Act. As a result, I am constrained to make the award against Ms. Yampolsky.

May 4, 2007

Robert Bujold Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario