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

Neutral Citation: 2008 ONFSCDRS 33

FSCO A06-000399

BETWEEN:

Ms. T.N.

Applicant

and

PERSONAL INSURANCE COMPANY OF CANADA

Insurer

DECISION

Before: Arbitrator Suesan Alves

Heard: By telephone conference call on November 2, 2007. Written submissions were received by February 26, 2008

Appearances: Kevin Doan for Ms. N, Alan Rachlin for Ms. N Rita Bambers for the Personal Insurance Company of Canada The Applicant’s parents, Mrs. N and Mr. N, and her fiancé, Mr. T also attended

Issues:

Counsel for the Applicant, Mr. Rachlin, seeks an order under Rule 10.3 of the of the Dispute Resolution Practice Code—Fourth Edition, Updated October 2003, (“the Code”), that his client, Ms. T.N., presently lacks the capacity to instruct him, and that the Public Guardian and Trustee should be appointed to represent her interests and to instruct him in her place.

Mr. Rachlin submits that the Insurer should be excluded from this proceeding because it will involve the disclosure of material which is solicitor-client privileged. He further seeks leave to appear on his own Affidavit.

Counsel for the Personal, Ms. Bambers, agrees that a hearing should be conducted under Rule 10.3 of the Code, but objects to the proposed process. She submits that the Insurer should be permitted to participate in this hearing and seeks an adjournment to obtain an assessment of Ms. N’s capacity.

I decided that the Insurer would be permitted to participate in the Rule 10.3 hearing, adjourned the hearing to permit the Insurer to obtain an assessment of Ms. N’s capacity, and set timelines, with reasons to follow.

Unfortunately, the Insurer’s assessment did not proceed as scheduled and there is now a further dispute as to when the report of the Insurer’s assessment will be served, and a request to adjourn the hearing scheduled for April 21 and 22, 2008. These are my reasons about the process and my ruling and reasons with respect to the adjournment and the date for service of the report of the Insurer’s assessment.

The issues are:

1. Should the Personal be excluded from the hearing under Rule 10.3 of the Code?

2. Should counsel for the Applicant be permitted to appear on his own Affidavit at the hearing?

3. Should the Insurer’s request for a brief adjournment be granted? If so, by what date should the report of the Insurer’s assessment be served?

Result:

1. The Insurer should not be excluded from the hearing.

2. Counsel is not permitted to appear on his own Affidavit at the hearing.

3. The hearing scheduled for April 21 and 22, 2008 is adjourned. Counsel should contact the Case Administrator to schedule new dates. The report of the Insurer’s assessment is to be served at least thirty days before the new hearing date.

EVIDENCE AND ANALYSIS:

Background

The Applicant, T.N., was seriously injured in a motor vehicle accident on October 29, 2000. In this arbitration she claims statutory accident benefits from the Personal Insurance Company of Canada (“the Personal”), payable under the Schedule.¹

The Personal raised a limitation defence to some of Ms. N’s claims for benefits. Mr. Rachlin, counsel for Ms. N, submits that time never began to run against her because she was under a disability as a result of her injuries, and lacked the mental capacity to instruct counsel.

Rule 10.3

Rule 10.3 of the Code permits either party to request a hearing to decide if a party to the proceeding lacks the ability to proceed in the dispute resolution process. I find that the concerns which underlie Rule 10.3 of the Code are the protection of the interests of a party who may be unable to instruct counsel as well as the protection of the integrity of the arbitration process.²

Rule 10.3 is set out in Appendix A.

If I decide that Ms. M is unable to proceed in the dispute resolution process, then I must decide if her mother, father, fiancé or the Public Guardian and Trustee (“PGT”), should be asked to make arrangements to become the guardian of Ms. N’s property. That person would then instruct Mr. Rachlin and undertake that he or she would take the necessary steps to obtain court approval in relation to any settlement which may be reached in this case.

Should the Insurer be excluded?

The proposed process

Counsel for the Applicant proposes to provide his Affidavit which would address the disability grounds and refer to solicitor-client communications. That Affidavit would be given to the arbitrator hearing the Rule 10.3 application, but would not be served on the Insurer. Following the hearing, the Affidavit would be sealed, subject to the further order of an arbitrator, with a view to preserving solicitor-client privilege.

Counsel for the Applicant relies on the case of Poirier v. Archdiocese of London, as authority for that process. That process was approved by the Divisional Court in Soriano v. Laberakis [2006] O.J. No. 564.

In Poirier, Master Kelly permitted counsel for the Plaintiff to appear on her own Affidavit on a motion to appoint a litigation guardian for the Plaintiff. Master Kelly reasoned that the proper deponent was the lawyer, because she had direct knowledge of the facts and events. He stated: “A finding that an individual is a party under disability, and a consequent appointment of a litigation guardian, only has a direct effect on a disabled party and litigation guardian. Because a motion to appoint a litigation guardian does not generally affect the parties other than the party under disability, the Rules only anticipate the service of the Motion Record on the party under disability and the proposed litigation guardian.”³

I find that the circumstances of this case sufficiently different that in my view that procedure ought not to be followed in this case. One distinguishing factor relates to the shield Ms. N raises to the Personal’s limitation defence. The issue very much concerns the insurer, and unlike Poirier, cannot be said to be of concern only between counsel and his client.⁴ The second distinguishing factor relates to the availability of medical evidence in this case, unlike Poirier, where no medical evidence was available.

The capacity to instruct counsel involves the ability to understand financial and legal issues.⁵

Counsel for Ms. N has provided opinion evidence that her lack of capacity to instruct counsel stems from the accident, and has run from the time of the accident to the present.

The difference between the issue raised in relation to the Rule 10.3 hearing and the shield to the Insurer’s limitation defence is that different periods of time are involved.

In my view, the issue of Ms. N’s present capacity to instruct counsel is sufficiently similar to the shield she raises to the Insurer’s limitation defence that the question of whether Ms. N presently lacks capacity to instruct counsel should not be decided in a forum which excludes the Insurer. Instead, the Insurer should be permitted to participate in the Rule 10.3 hearing.

In the case of Barnes v. Kirk,⁶ the Ontario Court of Appeal held that the question of a party’s mental capacity “is essentially one to be decided upon medical evidence.” In Poirier, Master Kelly noted that “No medical or other expert evidence was tendered to the Court to address the issue of capacity. Ms. Poirier declined participation in a psychological assessment arranged by her counsel to address the issue of capacity.” Given counsel’s obligation to the court when a client appears to lack capacity, counsel in the Poirier case proceeded with the only available evidence – she set out her own difficulties in obtaining instructions from her client in an Affidavit.

Unlike Poirier, this is not a case in which there is a dearth of medical evidence in relation to the Applicant’s capacity. Ms. N attended at an assessment before Dr. A. Kaminska, a psychologist, who is also a designated capacity assessor under the Substitute Decisions Act. The assessment was arranged by Ms. Lindsey Kozack, Ms. N’s case manager at Rehabilitation Management Inc. Ms. N later attended an assessment by Dr. Z. Waisman, psychiatrist, arranged by her counsel. Both assessments call into question Ms. N’s capacity to instruct counsel from the time of the accident.

On February 7, 2007, Dr. Kaminska opined that Ms. N was incapable of managing property within the meaning of the Substitute Decisions Act, 1992, S.O. 1992, c.30. Section 6 of that Act states that: “A person is incapable of managing property if the person is not able to understand information that is relevant to making a decision in the management of his or her property, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.”⁷

Dr. Kaminska checked the tick box indicating that the assessment was completed under section 72 of the Substitute Decisions Act – to provide a statement to accompany an application for appointment of a guardian of Ms. N’s property by summary disposition under section 77 of the Substitute Decisions Act.

I note that in March 2006, I adjourned the pre-hearing until May 2006 to permit counsel for the Applicant, Mr. Doan, to make arrangements for the appointment of a guardian for Ms. N’s property. However, I am advised that the appointment of a guardian of Ms. N’s property did not take place.

It is important to appreciate that while I am authorized to conduct a Rule 10.3 hearing under the Code, I do not have the authority to appoint a litigation guardian. If Mr. Rachlin succeeds on the Rule 10.3 application, the Order made will be one which directs the proposed guardian to take the above step, perhaps under section 77 of the Substitute Decisions Act, and to require his or her undertaking to seek court approval of any settlement which may be reached.

I also note that although Dr. Kaminska made the necessary findings to support a certificate under subsection 16(3) of the Substitute Decisions Act, she did not complete the portion of the certificate, which once served on the Public Guardian and Trustee would have automatically made the Public Guardian and Trustee the statutory guardian of Ms. N’s property. Perhaps there are elements not mentioned in Dr. Kaminska’s report which led her to decline to issue the certificate, or perhaps this may have been due to inadvertence or other reasons.

Leave to appear on Affidavit

Mr. Rachlin seeks leave to appear on his own Affidavit at the Rule 10.3 hearing. I would permit counsel to appear on his own Affidavit on uncontroversial or undisputed evidence as I have no desire to increase expenses. However, in this case there is a live dispute between the parties on an important issue of Ms. N’s past capacity to instruct counsel, and sufficient similarity between the past and present capacity disputes that it would be unwise to grant leave for counsel to appear on his own Affidavit at the Rule 10.3 hearing. Mr. Rachlin has indicated that if leave were not granted, he would arrange for someone else from his office to attend as counsel.

Issues at the section 10 (3) preliminary issues hearing:

Accordingly, the issues to be determined at the preliminary issues hearing will be the following:

1. Does Ms. N have the mental capacity to proceed in the dispute resolution process? If no,

2. Is there an attorney with a valid continuing power of attorney over Ms. N’s property; or a suitable person who has made or intends to make arrangements for the appointment of a guardian over Ms. N’s property under the provisions of the Substitute Decisions Act? If no,

3. Is there a suitable person willing and able to proceed in the dispute resolution process to protect Ms. N’s rights and interests and to receive and administer Ms. N’s statutory accident benefits with or without reasonable and necessary conditions or restrictions, or should the Public Guardian and Trustee be asked to take appropriate steps pursuant to the provisions of the Substitute Decisions Act?

The persons to be served

The persons to be served by the Financial Services Commission of Ontario are counsel; the parties: Ms. N and the Personal; together with the persons who have been put forward as suitable persons to instruct Mr. Rachlin in the dispute resolution process namely, Ms. N’s mother, Mrs. N; her father, Mr. N; her fiancé Mr. T, and Mr. Donald Bur, litigation counsel with the offices of the Public Guardian and Trustee.

Adjournment & timelines

Counsel for the Applicant advised that he did not oppose the Insurer’s request to have his client’s capacity assessed. On this basis, and based on the desirability of determining the issue on medical evidence, I adjourned the Rule 10.3 proceeding tentatively scheduled for November 30, 2007, to allow the Personal to obtain an assessment in relation to Ms. N’s capacity as requested. I also ruled that if the Personal intended to have both Ms. N’s past and present capacity assessed, it should do so in the one assessment. New hearing dates were set for April 21 and 22, 2008 on consent.

The Insurer’s assessment did not take place in January 2008. Unfortunately, the Personal’s notice to Ms. N transposed the room number of the psychiatrist’s office, and his assessment did not take place. The appointment with the psychologist did not take place as the psychologist was unexpectedly unavailable. Early April dates for the assessment are now being canvassed, and the agreed upon hearing dates of April 21 and 22, 2008 are no longer realistic if the report of the assessment is to form part of the evidence at the hearing.

The Insurer seeks a brief adjournment of the hearing; however, counsel for the Applicant does not consent to a further adjournment because of his concerns with respect to urgency. I have considered the circumstances of the delay, the extensive medical brief in this case, the need for considered opinions, the length of time that earlier assessors appear to have had to prepare their assessments, the length of time the Insurer’s assessors requested to complete their reports, and the possibility that the pending assessment may result in the narrowing or resolution of the issues on two preliminary issues hearings. In these circumstances, I am prepared to grant a brief adjournment of the hearing. Counsel should contact the case administrator to schedule further the hearing dates in this matter. The report of the Insurer’s assessment is to be served at least thirty days before the hearing.

Counsel for the Applicant, Mr. Rachlin, has repeatedly expressed his concerns as to urgency of his application under Rule 10.3. In the circumstances of a further delay, I have written to counsel and proposed that I make an interim order under Rule 10.3 which will be in effect until the date of my decision following the Rule 10.3 hearing, or a further order of an arbitrator. I have invited the parties, counsel and the proposed guardians of Ms. N’s property, as persons who potentially have an interest in this matter, to provide brief submissions should they oppose such an Order.

February 29, 2008

Suesan Alves Arbitrator

Date

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

Neutral Citation: 2008 ONFSCDRS 33

FSCO A06-000399

BETWEEN:

Ms. T.N.

Applicant

and

PERSONAL INSURANCE COMPANY OF CANADA

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Personal Insurance Company of Canada is permitted to participate in the Rule 10.3 hearing.

2. Counsel for the Applicant is not permitted to appear on his own Affidavit at the hearing.

3. The hearing scheduled for April 21 and 22, 2008 is adjourned. Counsel should contact the Case Administrator to schedule new dates. The Insurer’s assessment is to be served at least thirty days before the new hearing dates.

February 29, 2008

Suesan Alves Arbitrator

Date

Appendix A

Section 10.3 of the Dispute Resolution Practice Code—Fourth Edition, Updated October 2003.

10.3 Where an adult party has not been declared mentally incapable under the provisions of the SDA, but exhibits signs of mental difficulty during the course of a mediation, settlement discussion, neutral evaluation or proceeding, either party may request a hearing on a preliminary issue, or the Dispute Resolution Group may direct a hearing on a preliminary issue to determine whether:

(a) the party has the mental capacity to proceed in the dispute resolution process;

(b) there is an attorney with a valid continuing power of attorney over the party’s property; or

(c) there is a person such as a spouse, same sex partner, near relative, close friend or a professional such as a doctor, lawyer or business entity, such as a trust company, who has made or intends to make arrangements for the appointment of a guardian over the party’s property under the provisions of the SDA.

10.4 Parties shall be given written notice of the hearing on a preliminary issue to inquire into a party’s mental capacity to proceed in the dispute resolution process.

10.5 Where an adjudicator is not satisfied that a party has the mental capacity to proceed in the dispute resolution process, and there is no attorney or person such as described in Rule 10.3(b) and (c), the adjudicator may appoint a spouse, same sex partner or near relative of the party to act on the party’s behalf if that person, in the adjudicator’s opinion, is suitable, willing and able to proceed in the dispute resolution process and to receive and administer statutory accident benefits on behalf of the party who has exhibited signs of mental difficulty. The adjudicator may place such conditions or restrictions upon appointments pursuant to this section, as the adjudicator considers reasonable and necessary to protect the interests of the person exhibiting mental difficulty, the other parties to the proceeding and the dispute resolution process.

10.6 Where there is no person such as described in Rules 10.2, 10.3 or 10.5 available to act, the adjudicator may notify the Public Guardian and Trustee to request that appropriate steps be taken pursuant to the provisions of the SDA.

10.7 The representative of a person under a disability under Rule 10.2 or the representative of a party who has been found to lack the mental capacity to proceed in the dispute resolution process under Rule 10.5, shall comply with the approval of settlement requirements of Rule 7.08 of the Rules of Civil Procedure.

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2In Poirier v.Archdiocese of London, Court File No. 94-CQ-055262 CM, released May 18, 2008, Master Kelly held that the purpose of proceedings under Rule 7.01 is “to protect the interests of the client.” The Rule seeks “to protect the integrity of the judicial process for all participants in the litigation, including the Court.”
3. 3Similarly, in Soriano v. Laberakis, Justice Jennings held that he would admit medical evidence of the defendant’s disability on appeal even though it had been available at the time of the hearing before the Master but not provided, in part because “The determination that someone is or is not a person under disability does not resolve any outstanding issues in the action.”
4. 4Although the Insurer has the right to be present for the capacity issues, they may wish to use their discretion and absent themselves if otherwise privileged material comes before the tribunal.
5. 5Re Calvert, by her Litigation Guardian, Stephen M. Grant and Calvert, 1997 CanLII 12096 (ON CTGD), 32 O.R. (3d) 281 [1997] O.J. No. 553 Ontario Court (General Division), Benotto, J., 32 O.R. (3d) 281 at 295 (Gen. Div.) upheld on appeal on other points. Leave to appeal to SCC refused.
6. 61968 CanLII 389 (ON CA), [1968] 2 O.R. 213 (C. A.))
7. 7Dr. Kaminska stated in her narrative report that although she had requested documentation for review, she had only been provided with three documents. Counsel for the Applicant then sent a medical brief containing more than 40 documents to Dr. Kaminska, and on October 15, 2007, Dr. Kaminska opined that on a balance of probabilities Ms. N had been unable to instruct counsel from the date of the accident in October 2000 until the time of her assessment in February 2007.