Claudia Suhanic-Knox v. Economical Mutual Insurance Company, 2009 ONFSCDRS 2

Financial Services Commission of Ontario

Neutral Citation: 2009 ONFSCDRS 2 FSCO A08-000767

BETWEEN:

CLAUDIA SUHANIC-KNOX Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY Insurer

REASONS FOR DECISION on PRODUCTIONS

*Minor errors on pgs. 3 and 9 corrected on February 19, 2009 in accordance with the Dispute Resolution Practice Code and section 21.1 of the Statutory Powers Procedure Act.

Before: Arbitrator John Wilson Heard: December 12 and 19, 2008, by teleconference Appearances: Theodore P. Charney for Mrs. Suhanic-Knox Daniel Strigberger for Economical Mutual Insurance Company

Issues:

The Applicant, Claudia Suhanic-Knox, was injured in a motor vehicle accident on March 30, 2006. She applied for and received statutory accident benefits from Economical Mutual Insurance Company ("Economical"), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mrs. Suhanic-Knox applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Is Ms. Suhanic-Knox entitled to the production of surveillance videos and reports in the hands of the Insurer?
2. Is Economical entitled to an order that Ms. Suhanic-Knox produce any photographs, or videos of herself in her possession, taken since the motor vehicle accident?
3. Is Ms. Suhanic-Knox entitled to the production of the particulars of any reports and investigations created by the Insurer since the commencement of this dispute?

Result:

1. Ms. Suhanic-Knox is entitled to the production of the surveillance evidence forthwith.
2. Economical is not entitled to an order that Ms. Suhanic-Knox produce any photographs, or videos of herself in her possession, taken since the motor vehicle accident.
3. Ms. Suhanic-Knox is not entitled to the production of the particulars of any reports and investigations created by the Insurer since the commencement of this dispute.

EVIDENCE AND ANALYSIS:

This dispute is principally about the production of surveillance video and accompanying reports in a situation where the party creating the surveillance has not officially advised as to its intention to use the documents in question at the arbitration hearing.

It is also about whether there is an obligation on a party who has provided information about the existence or not of surveillance to advise the other party when the answer is rendered incorrect by further information that has come to the attention of counsel.

In this matter, Mr. Charney had specifically requested the production of surveillance videos and related reports early on in the proceedings. He had not followed up with this request since Mr. Strigberger had advised at the initial pre-hearing that there was no surveillance undertaken by his client.

At a later resumption of the pre-hearing on December 11, 2008, Mr. Strigberger let it slip during discussion that there was surveillance of Ms. Suhanic-Knox, but advised that, in the absence of an intention by his client to rely upon it, he was not inclined to produce the surveillance.

In so refusing, Mr. Strigberger relied upon the decision of Director's Delegate Evans in Security National Insurance Company/Monnex Insurance Management Inc. & Morgan² as an absolute bar to any order for the premature production of video surveillance.

In that decision the Director's Delegate held that: "[R]ule 40.1 governs, ... it is determinative of when the insurer's obligation to disclose arises, and that the context in the DRPC 4th is identical to that in the DRPC 3rd. Accordingly, the arbitrator was bound by Puljic."

The notion that a decision of the Director binds arbitrators finds its source in Vo and Maplex General Insurance Company and Insurance Bureau of Canada³ which proposed that "decisions of the Director to the extent they cannot be distinguished, are binding on the arbitrators."⁴

While I agree that the decisions of Director's Delegates are important, and indeed may well be persuasive, they are, like the policy directives issued by the Superintendent; to be considered but may not bind an arbitrator.⁵

While to some this may sound counter-intuitive, it arises from the very nature of administrative justice and the constitutional enshrined powers of the superior courts. However persuasive, and indeed correct an appeals decision may be, the decisions in the superior courts alone remain important from the point of view of binding precedent. While potentially persuasive, arbitration decisions at any level, including appeal, are not binding on me. As Borins, J.A. observed:

Moreover, there is a well-accepted principle of administrative law that stare decisis does not apply to administrative tribunals. A tribunal is not bound to follow its own decisions on similar issues, although it may consider an earlier decision persuasive and find that it is of assistance in deciding the issue before it. See, e.g., Evans v. Public Service Commission Appeal Board, Domtar Inc. v. Québec (Commission d'appel en matière de lésions professionelles).⁶

On the other hand, one of the consequences of a decision by a section 96 court is that because of the doctrine of stare decisis, it is binding upon all inferior courts and tribunals. This binding power is an incident of the supervisory jurisdiction of superior courts over inferior courts and tribunals.

As has been noted many times: "[U]nder the Constitution Act, 1867, only a section 96 judge (a superior court judge) has the supervisory jurisdiction at common law and equity..."⁷

The Insurance Act which creates the arbitration alternative, is provincial legislation. Superior courts are a product of section 96 of the Constitution Act 1867, and may not be unilaterally created by a provincial legislature. As Ruth Sullivan noted in Driedger on the Construction of Statutes: "it is presumed that legislation is enacted in compliance with the limits on jurisdiction imposed by constitutional law."⁸

In creating the arbitration system "The Legislature of Ontario does not have jurisdiction to usurp the historical function of a section 96 judge"⁹, and so cannot clothe an arbitrator, or Director's Delegate with the same jurisdiction as a section 96 judge. This would include the award of supervisory jurisdiction to a statutory tribunal, and the application of the doctrine of stare decisis to an administrative tribunal.

Indeed, the Insurance Act which creates both the arbitration system and its summary appeals system specifically does not grant any such powers to either the Director or his or her delegate.¹⁰

In an adjudication system that is legislative-based, and has no inherent powers, the absence of any such provision speaks volumes.

This lack of reference to any binding nature of appeal decisions is not a mere legislative oversight. Unlike the case with most administrative tribunals, claims for accidents benefits may be heard either before an arbitrator, or in the superior courts. There is no specific area of expertise that is unique to an arbitrator that is not also a subject matter heard by the courts. Consequently, it would make little sense to have a separate jurisprudence of accident benefit cases heard in arbitration, from those heard in the courts.

If there is to be consistency in accident benefit jurisprudence, the lead must come from the courts, not from within the arbitration system.¹¹ The choice of forum to hear a dispute should not itself determine the law to be applied nor the outcome of a case. Consequently, while I am bound to consider appeal decisions in making any decisions in an arbitration, I am not bound by them, especially in the face of law that runs to the contrary.

While the decision of the Director's Delegate in Morgan may well have been appropriate in the context of that specific case, there is an important difference in the matter before me. As noted earlier, Mr. Strigberger had appropriately responded to Mr. Charney's question as to the existence of surveillance with the simple answer that there was none. The answer was not hedged by conditions such as "at the moment" or "to date" but was a categorical statement that none existed.

As such, when to Mr. Strigberger's knowledge, the situation had changed, the failure to promptly advise as to the changed circumstances risked impairing Ms. Suhanic-Knox's ability to fairly advance her claim or have knowledge of all the potentially relevant evidence in the hands of her insurer, some of which could have been favourable to her.¹²

In arbitration, in the general absence of affidavits of production, there is an enhanced duty not to mislead the other party as to the absence or availability of evidence.

It was clear that Mr. Charney was relying on Mr. Strigberger's word as an officer of the court that no surveillance existed. As such Mr. Charney had backed off from any earlier attempt to obtain particulars of surveillance-related material, and ultimately its production. At the very least Mr. Strigberger, by withholding information about the surveillance, risked inadvertently or otherwise, misleading both counsel and the tribunal. Potentially, an abuse of process could have arisen had the situation continued, unremedied.

It goes without saying that section (1) of the Statutory Powers Procedure Act provides for an independent power to make orders "proper to prevent abuse of its processes." I accept that an order to produce documents could, in appropriate circumstances, be made under the aegis of preventing an abuse of process.

The principal jurisdiction, however, for an arbitrator to order the production of any documentary evidence arises from section 22(1) of the Insurance Act which states:

For the purpose of exercising the powers and performing their duties under this Act, the Director and every arbitrator has the same power to summon and enforce the attendance of witnesses and compel them to give evidence on oath or otherwise, and to produce documents, records and things, as is vested in the Superior Court of Justice for the trial of civil actions.

It is important to note that no other provision of the Insurance Act or its related regulations purports to otherwise restrict the wide range of production that can be ordered by an arbitrator. The only limitation on those powers would be the same limitations applying to judges in the superior courts and as suggested by Economical, the interpretation advanced in the Morgan decision of the effect of Rule 40.1 of the Dispute Resolution Practice Code (the "DRPC"). However, I do not accept that this provision of the DRPC can be seen to limit the wide-ranging powers granted under section 22(1) of the Insurance Act.

Unlike the Civil Rules governing procedures in the superior courts, which are a regulation under the Courts of Justice Act, the DRPC itself, is neither legislation nor subordinate legislation. Rather it derives its existence from section 21 of the Insurance Act which allows the Director to make rules for "practice and procedure" in arbitrations.

Whatever the exact effect of the Rules in the DRPC, they are not supposed to amend or restrict statutory provisions, rather they "are meant to work together not only with their own enabling legislation, but with other Acts and regulations as well..."¹³ Nor despite its nomenclature is the DRPC a comprehensive code. Indeed sections 1.1 and 1.2 specifically provide:

1.1 These Rules will be broadly interpreted to produce the most just, quickest and least expensive resolution of the dispute.

1.2 Where something is not specifically provided for in these Rules, the practice may be decided by referring to similar Rules in this Code.

Thus even the draughters of the DRPC understood that it was not comprehensive, and that different circumstances would require different solutions.

It is clear from the wording of section 40.1 that the provision is intended to speak to only one set of circumstances: "If a party intends to rely on any portion of surveillance or investigative evidence." [Emphasis mine]¹⁴ The provision clearly speaks to the pre-conditions to the admission of surveillance evidence only and is not exhaustive.

Thus, Rule 40.1 must be broadly interpreted in the context of section 22 of the Insurance Act and its interpretation must not unduly limit the powers of an arbitrator under that provision.

It is also clear that in circumstances when a party has not yet indicated whether or not it intends to rely on surveillance, then Rule 40.1 does not apply and reference may be made to Rule 1.2 to construct an appropriate guideline for those circumstances.

As can be seen from the above, the Insurance Act grants a wide-ranging power to arbitrators. If a judge can order production of a document record or thing, then an arbitrator also has the jurisdiction to do so in the context of an arbitration.

It is clear from the jurisprudence that, subject to an analysis of any claimed privilege, a judge would have the necessary power to order production of surveillance and related documentary evidence.¹⁵ In examining privilege, both solicitor-client and litigation privilege have to be considered.

Litigation privilege, on the other hand, is geared directly to the process of litigation. Its purpose is not explained adequately by the protection afforded lawyer-client communications deemed necessary to allow clients to obtain legal advice, the interest protected by solicitor-client privilege. Its purpose is more particularly related to the needs of the adversarial trial process. Litigation privilege is based upon the need for a protected area to facilitate investigation and preparation of a case for trial by the adversarial advocate. In other words, litigation privilege aims to facilitate a process (namely, the adversarial process), while the solicitor-client privilege aims to protect a relationship (namely, the confidential relationship between a lawyer and a client).¹⁶

Since the facilitation of litigation is one of the purposes of litigation privilege, the claim for privilege must be directly related to such litigation.

According to Master MacLeod, the link to litigation is important:

Not every investigation of facts will qualify however even if litigation was contemplated when the investigation was made and even if the document was intended to be given to counsel. There must be some connection between the creation of the document and the activities of the "adversarial advocate."¹⁷

There must also be some evidence as to the nature of the claim for privilege. As noted by Master Kelly: "a sweeping assertion by the party claiming privilege, that the documents are litigation-privileged is generally insufficient."¹⁸

Stinson J., in First Choice Foods Ltd. v. Royal Insurance Co. of Canada¹⁹ sets out the second stage of the process:

The party resisting production must establish that the dominant purpose for the preparation of documents for which litigation privilege is claimed is, in fact, for assistance in preparation for, or the conduct of that litigation.²⁰

Courts have accepted that insurers have a special relationship with their insured, characterized as utmost trust or good faith, one that can potentially have an effect on any claim for privilege. As Master Clark noted:

This is an accident benefit action. It is not a tort action. The plaintiff and defendant (insured and insurer respectively) are bound together by obligations and responsibilities until it can be said that to one or the other the prospect of litigation between them is clear.²¹

It is also important to remember by way of context that the courts, especially since the decision of the Supreme Court in R. v. Stinchcombe²² have been inclined to widen disclosure requirements over time.²³ This liberal approach was summed up by Cory, J.A. in Cook v. Ip et al.²⁴

There can be no doubt that it is in the public interest to ensure that all relevant evidence is available to the court. This is essential if justice is to be done between the parties.

In an arbitration hearing which has no provision for formal discoveries, the exchange of documents provides one of the principal means of gathering relevant information.

Arbitrators have routinely ordered the production of otherwise confidential, but non-privileged, material such as extensive clinical notes and records of treating physicians, where a reasonable argument was made by one of the parties that the documents would be relevant to the matters in issue at the arbitration.

In this matter I have no doubt that the surveillance documents could well be relevant and potentially probative to the issues in this arbitration. Indeed, that part of the test for production was not seriously at issue in this matter.

With regard to solicitor-client privilege it would appear that Mr. Strigberger, counsel for Economical may not have been involved in commissioning the surveillance. Given his professed lack of knowledge of the particulars of the surveillance it is not at all clear whether the surveillance in question related to creating evidence for the arbitration, or whether it was merely part of the ongoing adjustment of the file.

I am not convinced that the surveillance documents are necessarily protected by either solicitor-client or litigation privilege. Although Economical, through its solicitor, has asserted privilege with regard to those documents, and was given time to formulate a response to the request for production, it did not see fit to file an affidavit in support of its claim for privilege. It is not at all self-evident from the circumstances, without supporting evidence, that the surveillance evidence must be necessarily privileged.

Bearing in mind Master Kelly's words that "a sweeping assertion by the party claiming privilege is not enough", Economical was obliged to adduce evidence in support of its claim to privilege. It did not.

Consequently, I find that Economical has not met its evidentiary burden to support its claim for privilege as to the surveillance and surrounding documentation. Consequentially I order that the surveillance be produced forthwith.

Economical also requested an order that Ms. Suhanic-Knox produce any photographs, or videos of herself in her possession, taken since the motor vehicle accident. While they may well be relevant to the issues in this arbitration, the request, unlike the request for surveillance documents, was only made at the last minute.

Practice Note 4 of the DRPC, on the exchange of documents, contains the following guidelines on the timeliness of production requests:

The exchange of documents should be worked out between parties and their representatives as soon as possible, and in any event, well before the pre-hearing discussion.

Indeed, requests for production are supposed to accompany the pleadings, that is the application for arbitration and the insurer's response. At the very least they are to be made by the date of the first pre-hearing. In this case, no reference was made to the requested documents until almost a month prior to the scheduled hearing date. Given that there is no evidence of unusual or changed circumstances at this late stage in the process, I decline to make the order requested by counsel for Economical.

Ms. Suhanic-Knox also requested the production of the particulars of any reports and investigations created by the Insurer since the commencement of this dispute.

In Mr. Charney's mind, his original request for the production of surveillance and reports in the hands of the insurer would have encompassed not just reports related to the surveillance reports, but any investigative reports commissioned on behalf of the insurer, whether for litigation purposes or otherwise. I do not accept that the use of the word "reports" in the context of a request for surveillance should be understood to have such a wide scope. Consequently, I find that the request for all investigative reports to be a new request, one that is not timely. Therefore, I decline to order such a wide-ranging production.

EXPENSES:

I leave the issue of expenses to the hearing arbitrator.

January 6, 2009

John Wilson Arbitrator

ARBITRATION ORDER

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

1. Ms. Suhanic-Knox is entitled to the production of the surveillance evidence forthwith.
2. Economical is not entitled to an order that Ms. Suhanic-Knox produce any photographs, or videos of herself in her possession, taken since the motor vehicle accident.
3. Ms. Suhanic-Knox is not entitled to the production of the particulars of any reports and investigations created by the Insurer since the commencement of this dispute.

January 6, 2009

John Wilson Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2(FSCO P07-00002, October 29, 2007), Appeal
3. 3(OIC P-002777, December 12, 1997), Appeal
4. 4Ibid.
5. 5From a very practical point of view, the Director and his delegates act as a filter between any arbitration decision and judicial review, creating at least an impression of arbitral consistency with appeal decisions. This informal filtering effect cannot, however be equated with the principle of stare decisis.
6. 6TransCanada Pipelines Ltd. v. Beardmore (Township) 2000 CanLII 5713 (ON CA), [2000] O.J. No. 1066
7. 7Nolan v. Ontario (Superintendent of Financial Services), 2006 CanLII 7513 (ON SCDC), [2006] O.J. No. 960
8. 83rd Edition, Ruth Sullivan, Toronto 1994
9. 9Nolan (supra)
10. 10It does, however, address the issue of legal consistency on important issues by providing at section 285(1) of the Act a provision for the Director to state a case to the Divisional Court, with the added proviso that the court shall hear any such request.
11. 11The ability of the internal Appeal function to provide consistent jurisiprudence is limited since, at present, in addition to the Director of Arbitrations, there are two Delegates who hear appeals, none of whom claim to be bound by the other's decisions. See Coachman Insurance Company & Beata Hejnowicz (P05-00024, August 3, 2006), Appeal
12. 12In Corporacion Transacional de Inversiones S.A. de C.V. v. Stet International S.p.A. 1999 CanLII 14819 (ON SC), [1999] O.J. No. 3573 Lax J. commented: Likely, we would regard it as serious if a Tribunal deliberately concealed documents from a party, or if it obtained its own evidence on which it relied, but failed to disclose the evidence to one or both of the parties. These are the kind of circumstances in which courts elsewhere have set aside arbitral awards and they are referred to at paragraphs 141 and 143-145 of COTISA's Factum.
13. 13Driedger (supra)
14. 14The French version of the rule, using the conjunction "lorsque" which roughly translates as "when", makes the case specific nature of the rule even more apparent.
15. 15Niederle v. Frederick Transport Ltd.(1985), 50 C.P.C. (Ont. H.C.J.); Devji et al. v.Longo Brothers Fruit Markets Inc. 1999 CanLII 15071 (ON CTGD), 45 O.R. (3d) 82
16. 16R. J. Sharpe, "Claiming Privilege in the Discovery Process" contained in Law in Transition: Evidence Law Society of Upper Canada Special Lectures, DeBoo, Toronto 1984
17. 17Kennedy v. McKenzie [2004] O.J. No. 4129
18. 18Sathiyapalan v. Citadel General Insurance Co. 2003 CanLII 47728 (ON SC), [2004] O.J. No. 364
19. 19First Choice Foods Ltd. (c.o.b. as First Choice Gifts) v. Royal Insurance Co. of Canada 89 A.C.W.S. (3d) 31
20. 20Master MacLeod in Whatman v. Selley [2000] O.J. No. 3155 stated: I am of the view that the plaintiff ought ordinarily to file appropriate affidavit evidence testifying as to the circumstances in which the report was created and the basis for asserting the dominant purpose was the litigation in question. Having failed to do so, unless the description in the affidavit of documents bolstered if necessary by inspection of the documents is persuasive on the point, the onus is not met.
21. 21Nikeas (supra)
22. 22(1991), 1991 CanLII 45 (SCC), 68 C.C.C. (3d) 1
23. 23Although Stinchcombe was a criminal matter, specifically invoking Charter protections, it has served as a stimulus to more open disclosure in the civil courts. Given the mandatory government imposed nature of the statutory accident benefit scheme (albeit administered by private players) and its social welfare aspect, it is also arguable that a more rigourous disclosure obligation should follow in this field. In Eldridge v. British Columbia (Attorney General) 1997 CanLII 327 (SCC), [1997] S.C.J. No. 86, La Forest, J. has noted: The Charter applies to private entities in so far as they act in furtherance of a specific governmental program or policy. In these circumstances, while it is a private actor that actually implements the program, it is government that retains responsibility for it.
24. 24(1985), 1985 CanLII 163 (ON CA), 52 O.R. (2nd) 289