Patience Sarpong and Victoria Owusu v. TD Home and Auto Insurance Company, 2008 ONFSCDRS 153

Financial Services Commission of Ontario

Neutral Citation: 2008 ONFSCDRS 153 Appeals P08-00003 and P08-00004 OFFICE OF THE DIRECTOR OF ARBITRATIONS

PATIENCE SARPONG AND VICTORIA OWUSU Appellants

and

TD HOME AND AUTO INSURANCE COMPANY Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Mr. Murray Tkatch and Mr. Kwaku Bona for Ms. Sarpong and Ms. Owusu Mr. John P. Desjardins for TD Home and Auto Insurance Company

HEARING DATE: August 8, 2008 Further written submissions were due August 29, 2008

MOTION ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The Appellants' motion that the Respondent be compelled to order the transcripts of the arbitration hearing is dismissed.
2. The legal expenses of this motion are deferred to the final resolution of these appeals, subject to any further or other order of an appellate officer.

September 18, 2008

Lawrence Blackman Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

On the consent of all parties, on March 7, 2008 I combined these two appeal proceedings.

The Appellants, Ms. Sarpong and Ms. Owusu, seek to compel the Respondent, TD Home and Auto Insurance Company, to obtain the transcript of the arbitration held before Arbitrator Muir (the "Arbitrator") on October 22, 23, 24, 25, 26, 29 and 30, 2007. The Appellants submit a letter from NTC Reporting & Transcription Services Inc. dated February 1, 2008 that the cost of the first copy of the transcript is $5,925, plus GST. The Appellants undertake to provide, at their own expense, copies of the transcript for the Respondent and the Commission.

The Appellants also seek their legal expenses of this motion. The Appellants concede that if they are unsuccessful in these appeals, the cost of the transcripts would be a reasonable disbursement to be claimed by the Respondent, although they should not be liable for same as the transcripts were reasonably required and should have been ordered by the Respondent.

The grounds provided for the motion are:

1. Rule 67 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the "Code") and subsection 282(11.1) of the Insurance Act, R.S.O. 1990, c. I.8.
2. The parties cannot agree on a joint Statement of Facts. As the Respondent states that "the transcripts are crucial for the Appellants to prove that the Director's Delegate should overturn [the Arbitrator's decision] due to palpable and overriding error," it has put the due administration of justice and fairness in issue and has made the transcripts necessary, material and integral to the disposition of these appeals.
3. Neither Appellant can afford to obtain the transcript, as evidenced by their affidavits.
4. The Respondent has not indicated that it is impecunious or that it lacks the financial means to obtain the transcripts.
5. The transcripts are necessary for a fair, proper, just and efficient adjudication of these appeals in accordance with the intent and spirit of the Code. Further, R. v. Echeverry-Forero, 2005 CanLII 45410 (Ont. S.C.) states there is no doubt an accurate transcript enhances the prospect of fairness and the administration of justice.
6. Rather than these matters being referred back to a new arbitration hearing, the appellate officer should find that the Appellants are entitled to the benefits sought. The transcripts are necessary to see the precise nature of the disputed facts and how the facts relate to the law as advanced by the Appellants.
7. The Supreme Court of Canada in British Columbia (Ministry of Forests) v. Okanagan Indian Band 2003 SCC 71, [2003] 3 S.C.R. 371 notes that "another consideration relevant to the application of costs rules is access to justice." There are broader issues of general importance in this case, namely:

(a) the Appellants' applications for benefits were perfected by filing the requisite disability and employer certificates. Failing a finding of fraud or that insurer disability medical examinations were held, the arbitrator had no jurisdiction to assess credibility or to deny benefits. Attakora v. Canada (Minister of Employment and Immigration) [1989] F.C.J. No. 444, provides that an adjudicator should not be zealous in finding credibility on the facts. To decide otherwise would set a chilling precedent. The transcripts are necessary to see if there was any conflicting medical evidence, what evidence was given by the Respondent's representatives and whether it was well-founded in law to deny these claims;

(b) can a claim be denied on the basis of the absence of a filed tax return;

(c) can an insurer call evidence beyond the four corners of its Response; and,

(d) there are meritorious legal arguments of general application which should not be prevented from going forward because of an inequality of bargaining power.

8. The transcripts are necessary to show that:

(a) the Arbitrator erred in determining a specific distance in the absence of evidence;

(b) the Respondent did not prove its allegations of fraud;

(c) the Appellants' medical certificates, which were not contradicted by the Respondent, were ignored by the Arbitrator;

(d) the Appellants' evidence regarding their employment and income was not contradicted by the Respondent;

(e) the Arbitrator failed to ask the Appellants important questions at the hearing;

(f) the Arbitrator, who is not a medical doctor, erred in substituting his own opinion for that of the Appellants' medical expert; and,

(g) the Respondent failed to comply with the Schedule regarding insurer medical examinations and disability Designated Assessment Centre ("DAC") assessments.

II. THE RESPONDENT'S SUBMISSIONS

The Respondent submits that the motion herein should be dismissed, with legal costs, as:

1. Appeals are limited to errors of law. Little is to be gained by ordering the transcripts as the grounds for appeal are primarily based on specific portions of the Arbitrator's decision itself and the Appellants are seeking a rehearing of the evidence.
2. The Appellants have not shown (a) sufficient merit in their appeals (b) that this rare and exceptional remedy is merited or (c) that there are the most unusual of circumstances.
3. The Appellants have provided insufficient evidence regarding impecuniosity.
4. Allowing this motion would shift the onus onto the Respondent and set a precedent that a party need only raise bald allegations of fact or bias to warrant a transcript being ordered paid by the adverse party. As in L.C. and Pafco Insurance Company Limited, (FSCO P02-00019, June 18, 2003), the Appellants' main concern is that they were not awarded benefits rather than any reasonable apprehension of bias to a reasonable and well informed member of the community.
5. The Arbitrator gave detailed reasons for his finding regarding credibility, which should not be lightly disturbed.
6. British Columbia (Ministry of Forests) does not apply to these appeals, as the Courts, unlike the Commission, have inherent equitable discretion to award legal costs. The Code only contemplates an award of legal expenses after a proceeding has been completed. In any event, none of the requirements set out in British Columbia (Ministry of Forests) are present. There is no evidence the Appellants will be unable to proceed without a transcript and they have not established a prima facie case or special circumstances. Further, as per Justice Major's dissent, the reason for the restrictive use of interim awards is that it is seen as prejudging the merits. Where an interim award of costs is made, "the objectivity of the Court making such an order will almost automatically be questioned."

III. ANALYSIS

Subsection 282(11.1) of the Insurance Act provides that the arbitrator "may at any time during an arbitration proceeding make an interim award of expenses, subject to such terms and conditions as may be established by the arbitrator." Subsection 283(7) states that subsections 282(10) to (11.2) apply, with necessary modifications, to appeals before the Director and, hence, by virtue of subsection 6(4) of the Insurance Act, to the Director's Delegate.

Subsection 283(1) of the Insurance Act restricts appeals to questions of law. The Supreme Court of Canada in Housen and Nikolaisen, 2002 SCC 33, [2002] S.C.J. No. 31, quoted with approval the statement in Underwood v. Ocean City Realty Ltd. (1987), 1987 CanLII 2733 (BC CA), 12 B.C.L.R. (2d) 199 (C.A.) that:

The appellate court must not retry a case and must not substitute its view for the views of the trail judge according to what the appellate court thinks the evidence establishes on its view of the balance of probabilities.

The leading Commission decision regarding interim benefits is that of Arbitrator Manji in Bernicky and Guardian Insurance Company of Canada, (OIC A-006268, July 6, 1994). Arbitrator Manji held that an arbitrator should exercise his or her discretion to award interim expenses only in restricted circumstances, namely:

(i) where the Application for Appointment of an Arbitrator raises a bona fide issue;

(ii) where the expenses claimed are reasonable and necessary for the conduct of the arbitration; and,

(iii) where the applicant is unable to carry the expenses claimed until the arbitration hearing.

Arbitrator Naylor, in Haile and Old Republic Insurance Company, (OIC A-008657 et al., January 6, 1995), held that raising a bona fide issue meant addressing "the merits of the application, not merely the good faith of the applicant in bringing it." In Champaigne and Co-operators General Insurance Company, (FSCO A03-001344, September 3, 2004), I found that Bernicky was still good law notwithstanding amendments to the Insurance Act.

In British Columbia (Ministry of Forests), Lebel J., speaking for the majority of the Supreme Court of Canada, stated that the following criteria that must be present to justify an award of interim costs in cases of public importance:

1. The party seeking interim costs genuinely cannot afford to pay for the litigation, and no other realistic option exists for bringing the issues to trial — in short, the litigation would be unable to proceed if the order were not made.

2. The claim to be adjudicated is prima facie meritorious; that is, the claim is at least of sufficient merit that it is contrary to the interests of justice for the opportunity to pursue the case to be forfeited just because the litigant lacks financial means.

3. The issues raised transcend the individual interests of the particular litigant, are of public importance, and have not been resolved in previous cases.

British Columbia (Ministry of Forests) does not address subsection 282(11.1) of the Insurance Act which gives adjudicators express statutory authority to award interim expenses. In Champaigne, I stated that "[a]lthough the ultimate award of expenses may …'continue the move toward a more results-based approach to expenses,' the question of interim expenses in this context appears to be more concerned with process than results." While it is questionable whether the third criterion in British Columbia (Ministry of Forests) is applicable to arbitration, it may be a relevant consideration in appeals, the latter being limited to issues of law.

In Marques and Commercial Union Insurance Company, (FSCO P97-00047, May 25, 1998), Delegate Draper would have allowed an award of interim expenses if he was convinced that the appeal raised serious questions about the arbitration decision. However, he found that the arbitrator had carefully reviewed the evidence and had reached conclusions supported by the evidence.

In Malabanan and Canadian General Insurance Company, (OIC P96-00073, February 4, 1998) Delegate Draper stated that:

The filing of a transcript has never been a formal requirement in the appeal process. While it may be useful in some appeals, the decision whether to obtain and file a transcript has been left to the parties.

I agree … that interim expenses are not to be ordered on a routine basis …Unlike the practice at the arbitration level, appeal expenses are often denied to unsuccessful applicants where the appeal focuses on the arbitrator's assessment of the evidence, or raises no significant or novel issue. In this case, the transcript is most relevant to the parts of the appeal dealing with the arbitrator's factual findings. However, those are precisely the kind of appeals that are often unsuccessful and where expenses are not awarded. I am not persuaded by the material before me that the appeal is sufficiently strong that interim expenses should be ordered.

Delegate Evans noted in Kingsway General Insurance Company and Pereira, (FSCO P05-00031, September 17, 2007) that it was "the option of a party to request the attendance of a court reporter at a hearing, as is the option to obtain and file the transcript, and it is only in very limited circumstances that parties have ever been required to order and produce a transcript."

In Ms. Z and Dominion of Canada General Insurance Company, (FSCO P00-00023, September 11, 2001), Delegate Makepeace stated that:

…a bald assertion of a flaw in the process is not enough. Nor is a transcript required just because a party disagrees with the arbitrator's assessment of the evidence. Appeals are restricted to questions of law … A perverse finding of fact, or one that ignores or misconstrues important evidence, may amount to an error of law, but an appeal is not a re-hearing of the evidence. In this case, the arbitrator gave 29 pages of detailed reasons for his decision, which was based on an extensive documentary record, as well as the oral evidence. I am not satisfied that a full transcript is required for a full and fair hearing of the appeal.

I agree with Delegate Makepeace's statement in L.C. that an interim award of expenses under [s]ubsection 282(11.1) of the Insurance Act could include ordering an insurer to pay for a transcript requested by the insured person.

I accept that the Appellants genuinely cannot afford to pay for the transcripts. Their affidavits support this finding and the Respondent chose not to examine the Appellants. However, I am not persuaded that there is no other realistic option for bringing the Appellants' issues of law to appeal or that they would be unable to proceed if the order for interim expenses were not made.

R. v. Echeverry-Forero has no application to this case. It pertains to a police videotaped statement concerning which the court stated that "there is no doubt that an accurate transcript of a recorded statement enhances the prospect of the admissibility of the recording, the effective communication of the evidence to the trier of fact and, above all, trial fairness and the administration of justice."

Regarding whether these appeals are prima facie meritorious or raise a bona fide issue, the transcripts would be most pertinent to meet the Appellants' request that I review the evidence and substitute new findings of fact for those made by the Arbitrator. As stated in Housen, that is not my role as an appellate officer, and I decline to do so.

Nor am I persuaded that the issues which may require a copy of the transcript transcend the individual interests of the Appellants. Rather, the necessity of a transcript is largely urged on the basis of the Appellants' disagreement with the Arbitrator's assessment of the evidence, specifically regarding credibility and the weighing of medical evidence.

I do not accept the Appellants' proposed fettering of the role of an arbitrator, nor do I accept that an adjudicator, because he or she is not a medical doctor, has no choice but to accept a medical opinion in the alleged absence of an opposing expert view. The comments of Senior Arbitrator Rotter in Walker and State Farm Mutual Automobile Insurance Company, (FSCO A-009905, February 23, 1996) regarding DACs apply equally to this case:

… State Farm suggested that, as a DAC assessor, her opinion should be accepted, unless I have other evidence proving her to be clearly wrong.

I do not accept this submission of the Insurer. In my view, the evidence of a DAC assessor is and remains opinion evidence, which I must weigh carefully in coming to any conclusion. The weight to be accorded any such evidence must be in the discretion of the adjudicator, based on a careful evaluation of the thoroughness, relevance, neutrality and value of the opinion provided. Such factors as, for example, the familiarity with the details and history of a particular case, the length and thoroughness of the examination, and the particular area of expertise of the evaluator must all be carefully assessed. Ultimately, the arbitrator has the responsibility of considering all the evidence not just the evidence from the DAC and making a final determination based on his or her best judgement. It is not sufficient to simply accept or adopt the judgement of the DAC assessor, who does not have the legal responsibility or opportunity to hear and weigh all the available evidence in a particular case.

In his two decisions, which provided some thirty pages of reasons, the Arbitrator considered the disability certificates submitted by the Appellants and gave reasons why he was inclined to give them no weight. The Arbitrator also gave extensive reasons why he did not accept the Appellants' evidence regarding their employment and disability.

In any event, questions as to whether there was contrary documentary medical evidence can be determined by reference to the exhibits. Issues of whether it is an error of law to take judicial notice of a specific distance, if at all relevant, or whether a claim can be denied due to an absent tax return do not require the transcript.

Regarding the single alleged instance of bias, the Appellants do not propose ordering only that small portion of the transcript. In any event, it is difficult to see how one can be said to have prejudged the Appellants' claims when the alleged statement was made only after the Appellants had apparently finished putting in their respective cases.

In summary, I am not persuaded that the Appellants will be deprived of the opportunity to proceed with legitimate issues of law in the absence of a transcript or that the transcripts are reasonable and necessary for the conduct of these appeals. Accordingly, the Appellants' motion is denied.

IV. EXPENSES

The legal expenses of this motion are deferred to the final resolution of these appeals, subject to any further or other order of an appellate officer.

September 18, 2008

Lawrence Blackman Director's Delegate

Date