S. S. v. Allstate Insurance Company of Canada, 2008 ONFSCDRS 159

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2008 ONFSCDRS 159 FSCO A07-001223

BETWEEN:

S. S. Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA Insurer

Before: Arbitrator John Wilson Heard: July 28, 2008 at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Mrs. S., on her own behalf Eric K. Grossman for Allstate Insurance Company of Canada

Issues:

The Applicant, S.S., was injured in a motor vehicle accident on November 21, 2001. She applied for and received statutory accident benefits from Allstate Insurance Company of Canada (“Allstate”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mrs. S applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

1. Should the arbitrator recuse himself from the hearing of this arbitration and declare a mistrial?

Result:

There are no grounds for recusal and consequently no mistrial will be ordered.

EVIDENCE AND ANALYSIS

On Monday, July 28, 2008, I heard a motion for a mistrial brought by Allstate in the above matter. Due to the fast-approaching hearing dates I decided to advise the parties by letter as to the outcome of the motion with full reasons for my decision to follow in due course.

The following are my complete reasons for this decision.

As both sides are well aware, the circumstances leading up to the motion arose out of events that took place at the end of the first set of hearing dates on June 12, 2008.

There is no dispute that during her cross-examination by Mr. Grossman, Mrs. S became quite upset, and in the words of her own attendant, Ms. Martin, became hysterical.

It is in the context of this episode that Mrs. S is alleged to have divulged information relating to an attempt to settle her dispute with Allstate. Specifically, she is alleged to have revealed the amount of a settlement offer that she had refused to accept.

There is some confusion about what exactly was said at the time. Neither Mrs. S nor Ms. Martin has a specific recollection of her having made the statement in question. The affidavit material filed by Allstate, however, suggests the contrary.

Although I certainly recall the confusion resulting from Mrs. S’s outbursts, and indeed recall certain other statements that gave rise to concerns about the safety of persons both inside and outside of the hearing room, I have no specific recollection of hearing the reference to a settlement offer allegedly made by Mrs. S at that time.

As noted in Allstate’s affidavit material, I had ordered the hearing adjourned at the onset of the outburst. As a consequence there was no official record of what may have been said at that time. In any event, my recollection of the situation is not dispositive of a finding of what was or was not said in those crucial minutes.

My lack of recall, however, is relevant as to whether the uttering of such remarks, if such was the situation, would have necessarily created a situation in which my neutrality as to the parties to this arbitration was compromised. In this context, I take some consolation from the decision of the Divisional Court in Authorson, which, in a case that tuned on the alleged utterances of the presiding judge, observed as follows:

² The allegations of bias against the Judge in acting in his case management judge role stem from comments apparently made during some of the sessions. There is no transcript, and there is some dispute amongst the parties, as to exactly what and how certain statements were made. In such circumstances, a certain degree of deference has to be given to a judge. We do not interpret the Judge’s reasons as concluding that he was the dispositive witness as can be seen by his advice that he “... would add that I have no recall of making such a statement. If I had ever made a statement anything like that, I would have remembered it, and I would not then have continued on with the case.”³

However, for the purposes of deciding this mistrial motion, I will assume that Mrs. S may well have disclosed the existence of a settlement offer, whether intentionally or by inadvertence, as well as considering the possibility that I may have unconsciously been compromised by the utterance, as Mr. Grossman has suggested.

Mr. Grossman submits that the mere fact of such a disclosure would be fatal to this arbitration process and would necessarily result in a mistrial.

It is trite law that a decision-maker must not favour the position of one side or another, and in hearing a matter and making his or her decision must keep an open mind as to the positions advocated by both the parties.

This common sense principle was further elaborated by Lord Denning in Metropolitan Properties:

There must be circumstances from which a reasonable man would think it likely or probable that the justice, or chairman, as the case may be, would, or did, favour one side unfairly at the expense of the other. The court will not inquire whether he did, in fact, favour one side unfairly. Suffice it that reasonable people might think he did. The reason is plain enough. Justice must be rooted in confidence: and confidence is destroyed when right-minded people go away thinking: “The judge was biased.”⁴

In Canada, the Supreme Court has also examined the principles raised by an allegation of bias. Bastarache J. stated in Arsenault-Cameron v. Prince Edward Island⁵:

... True impartiality does not require that the judge have no sympathies or opinions; it requires that the judge nevertheless be free to entertain and act upon different points of view with an open mind.

As also noted in Authorson,⁶ a request for recusal must be timely. Mrs. S has suggested that in the context of this hearing, the request for recusal is not timely. Mr. Grossman believes otherwise, pointing to the gravity of the situation and the need for serious consideration before bringing such a motion.

Although unsupported by any direct evidence as to this aspect, Mr. Grossman claims that steps were underway well before the formal request was made to bring a recusal motion, and that only the need to take due consideration delayed initiating this procedure.

The rationale for timeliness was outlined by the Supreme Court in Curragh:

The contrary view runs counter to the rule of law and the practical functioning of our judicial system. For example, if this view were to hold, parties perceiving bias could lie in the weeds and long after the trial judge rules against them, have the entire proceeding invalidated ab initio. A party who was not prejudiced by the bias could move to have the proceedings and verdict set aside on the ground of nullity. Persons affected by a court order would look to see whether there is some bias on which the Judge’s jurisdiction could be impugned and decide accordingly whether to obey the order or not.⁷

As noted, Mrs. S attaches some importance to what may just be a coincidence of timing.⁸ Allstate’s first communication on the recusal issue came immediately after I released my ruling denying Allstate’s request to waive the time limit for an expert report and to admit Dr. Brigham’s report on catastrophic impairment. While I admit that the coincidence of timing is certainly suggestive of an ulterior motive behind the recusal request, I accept Mr. Grossman’s word as an officer of the court that neither he nor Allstate had any such ulterior motive.

I would prefer, in any event, to analyze the allegations of potential bias or appearance of bias on the grounds put forward by Allstate, since it must be admitted that even a finding of improper purpose, or lack of timeliness by a party bringing a motion would not preclude a finding of actual bias on the part of an adjudicator.

Mr. Grossman has cited my decision in Webber⁹ as standing for the assertion that as a matter of principle, settlement discussions and the hearing process cannot co-exist. In that case, it was alleged that critical details of the settlement position and a party’s evaluation of its own case might have been inadvertently disclosed to the arbitrator by that party. Such is not the case here.

Settlement offers, it should be remembered, are part and parcel of the accident benefit scheme. Every arbitration goes through settlement discussions as part of normal procedure at the Commission. Everyone, including the arbitrator, is in a position to surmise that settlement offers were made and rejected on virtually every file that goes to arbitration.

Nor is there any magic in the mere mention of settlement numbers. Indeed, section 281(3) of the Insurance Act provides for the insurer to pay benefits pending arbitration on the basis of their last settlement offer.¹⁰ In such cases, the existence and value of a settlement offer can hardly be a secret once evidence as to the quantum of the benefit claimed by the insured or the repayment requested by the insurer has been tendered.¹¹

I do not accept that the necessary outcome of a mention of settlement offers in itself must always be a mistrial and the recommencement of the arbitration process. Rather, the outcome is fact dependent, based on the nature of the prejudice caused by such statements, the nature of the legal process, and the possibility that safeguards can be erected to prevent any possibility of a miscarriage of justice.

Arbitration is not a jury trial. Much of the jurisprudence surrounding mistrials arose from the perceived need to avoid the possibility of lay jurors making decisions based on extraneous criteria, or having their decision-making capability impaired by the disclosure of inappropriate or scandalous information, with the aim of avoiding a miscarriage of justice.¹²

I am not convinced that even if the amount of a settlement proposal was inadvertently disclosed during this arbitration process that prejudice to Allstate and a miscarriage of justice would necessarily result from a continuation of the hearing process.

The arbitration process, in addition to being less formal and more efficient, is also necessarily more robust. While a jury might well be tainted by a reference to insurance or influenced by irregularities, an arbitrator, as a professional adjudicator, is alert to the need to direct his or her attention only to the relevant facts, and to exclude extraneous considerations.

One such “extraneous consideration” might well be Mr. Grossman’s concern that I might possibly be influenced by having witnessed the behavior of a party, outside of the formal hearing, the effect of which, either consciously or unconsciously I would consider when evaluating Mrs. S’s claim for catastrophic impairment.

While I do not accept that Mr. Grossman’s fears in this regard are credible, the British Columbia Supreme Court in McQueen’s Boat Works ¹³ has suggested that an arbitrator may well consider direct demonstrative evidence outside of the hearing room (in this case inspecting damaged fiberglass panels during a “viewing” – damage that may well have gone to the heart of the case in arbitration…) without being irrevocably tainted. It further suggested that where such concerns were raised, it would be appropriate for the opposing party to be given the opportunity to address the “evidence” in cross-examination and in submissions.

Clearly, the arbitration process is somewhat more resilient than imagined by Mr. Grossman. A professional adjudicator or an arbitrator is in a position to weigh the evidence, to disregard improper or irrelevant evidence, and to provide a fair process to all parties.

Just as an arbitrator may hear evidence as part of a voir dire that may not be admitted as evidence in the arbitration, and still be capable of hearing the balance of the substantive dispute, so the mention of information relating to settlement that does not betray a party’s litigation strategy, or its own evaluation of its case, cannot in itself impair partiality. The courts recognize both the common sense and the judicial awareness of arbitrators and professional adjudicators, and have been reluctant to support a finding of mistrial in such cases. Even the disclosure of the details of settlement discussions has been found not to taint an arbitrator.

The arbitrator, like a trial judge, will receive in evidence relevant background information provided by the parties which will help him/her to understand the issues and decide the dispute. In this case, it cannot be said that the arbitrator received any information which is unlikely to be provided to him by the parties either through motions or in evidence in support of their case. There was no breach of confidence by the mediator or by the applicant of the sort that would taint the arbitration process.¹⁴

In this matter, Mr. Grossman has yet to complete his cross-examination of Mrs. S. It is precisely Mrs. S’s conduct that is at the heart of Mr. Grossman’s concerns. I see no reason that Mrs. S’s conduct at the close of the hearing could not form part of Mr. Grossman’s ongoing cross-examination.

A claim for catastrophic impairment, such as that put forward by Mrs S in this matter, is a highly technical claim involving a complex rating system and based on expert evidence of disability within the criteria set out by the AMA guides. While an arbitrator certainly has expertise in interpreting legislative criteria as to catastrophic impairment, it would be unusual for any adjudicator to substitute his or her own assessment of disability, based solely on witnessing the behaviour or demeanour of a party in a hearing room setting.

Allstate’s speculative suggestion that I might somehow unconsciously use information not on the record in deciding this case does not meet the high threshold for this motion nor satisfy the onus of demonstrating a real likelihood or probability of bias.

Mr. Grossman also takes exception to my actions in remaining in the hearing room after having adjourned the matter due to the ongoing commotion. Arbitrators also sit alone, without the panoply of supporting personnel to be found in a court. If a problem arises during the hearing process, it is the responsibility of the hearing arbitrator to control the process during the hearing and to maintain decorum and security. Although the Statutory Powers Procedure Act (“SPPA”)¹⁵ provides for calling on the support of a peace officer to maintain order in a hearing room, this is perhaps the ultimate step in the security continuum.

Security during a hearing is a proper concern for both judges and adjudicators. The SPPA recognizes this need. Even though courts may have more elaborate security protocols, and security resources provided by other branches of government, ultimate responsibility for the activities in the court or hearing rooms lies with the judge or adjudicator. As the Australian Federal Court of Appeal noted in Skuse¹⁶:

…Judges, not the Executive or the Legislature, control activities within their Courts. They control the conduct of proceedings within them and the behaviour of those who are before them.

This stems directly from the principle of the independence of the judiciary from the executive and the legislature, an independence that also extends to adjudicators in a court-like system such as arbitration.¹⁷

Obviously an adjudicator must use his or her powers to control the process sparingly and judiciously. What is proper and judicious depends on the specific circumstances of the case. Threatening, without cause, to find someone in contempt, continually correcting minor defaults in behavior, or consistently interrupting a party or counsel might justifiably give rise to a perception of bias. Such was not the case in this matter.

My recollection of the incident, which appears to coincide with that in the affidavit material file by Allstate, is that during the outburst, Mrs. S uttered what could only be interpreted as threats against certain politicians and others she held responsible for her situation and what she evidently perceived as the unfairness of the accident benefit system.

In addition, during her outburst Mrs. S precipitously took out a bottle of pills with the obvious risk in her agitated state that she might indeed take an overdose of medication.

This was a serious situation, and in the absence of formal security measures, I would have been remiss in my duty towards those in the hearing room, and the arbitration process, if I merely left the room, as advocated by Mr. Grossman, without first ascertaining whether I felt that there was any risk to Mrs. S or others arising from her conduct.

Once I was satisfied that the situation was under control, I left the room and reported my concerns to the administration. In the context of this arbitration, and the highly unusual circumstances that occurred during Mrs. S’s cross-examination, that was the appropriate route to take.

It should be remembered that a mistrial, the relief requested by Allstate in this motion, is an extraordinary remedy in the context of an arbitration hearing. It should only be granted if the prejudice to the moving party, once established, cannot be addressed in any other way. Abbey J. commented as follows in an analogous matter:

No matter which of these approaches is adopted, essentially, as I see it, the Court must weigh all of the circumstances of the particular case and determine whether the disclosure which has been made would likely result in real prejudice such that it would be unjust to continue the trial as presently constituted. ¹⁸

Likewise, Nordheimer J. observed:

The declaration of a mistrial, like the declaration of a stay, should be granted only as a last resort, in the clearest of cases and where no remedy short of that relief will adequately redress the actual harm occasioned. None of the other options I have mentioned were explored by the trial judge prior to declaring the mistrial. ¹⁹

Other than perhaps a delay of a few hours to the hearing process, I do not accept that Allstate was irrevocably prejudiced by Mrs. S’s outburst.

That is not to say that I find Mrs. S’s conduct in any way excusable. She was clearly wrong to behave as she did on June 12, 2008, especially in a formal hearing setting.

I am, however, not convinced that her behaviour, however unacceptable, constituted outright contempt, especially given the description of her outburst as “hysterical.”

The proper remedy however for her misconduct, in the context of this arbitration, is in the consideration of an award of costs or expenses, not in an order for a mistrial, which would waste the significant time and effort that has been spent in getting this hearing underway.

When this arbitration is completed Allstate may address the conduct issue as part of its submissions on expenses in this arbitration.

In summary, I do not accept that a reasonable, fully informed person would believe that by possibly hearing a reference to settlement, and remaining in the hearing room until I determined that there appeared to be no risk to the parties or others, I compromised my ability to continue to hear this matter and to impartially adjudicate the issues referred to arbitration.

Nor do I accept that this arbitration process has been so compromised that the only practical alternative is to declare a mistrial.

For the reasons noted above I dismiss the Insurer’s motion.

EXPENSES:

I leave the consideration of expenses to the end of the hearing process.

September 26, 2008

John Wilson Arbitrator

Date