Financial Services Commission of Ontario

Neutral Citation: 2009 ONFSCDRS 66

FSCO A07-001223

BETWEEN:

T.S. Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA Insurer

**Minor errors on pgs. 4 and 20 corrected on June 23, 2009 in accordance with the Dispute Resolution Practice Code and section 21.1 of the Statutory Powers Procedure Act.

DECISION ON A MOTION FOR INTERIM RELIEF

Before: John Wilson

Heard: April 16, 2009, at the offices of the Financial Services Commission of Ontario in Toronto, with written submissions completed by May 20, 2009.

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

Issues:

The Applicant, T.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 Allstate terminated benefits. The parties were unable to resolve their disputes through mediation, and T.S. applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Although the arbitration hearing in this matter began on April 21, 2008, the matter has been adjourned several times, most recently sine die.

Allstate has brought forward a request that the adjournment order in this matter issued on September 26, 2008, be lifted.

T.S. has brought forward a request that a new date be set for this arbitration to be completed, and for the interim attendant care award that was a condition of the adjournment continue to be paid to her, and indeed, increased, pending the resumption of this hearing.

The issues on this motion and cross-motion are essentially:

1. Is the adjournment of this matter sine die to continue?

2. If so, is the adjournment subject to the ongoing conditions, including the order for payment of a limited attendant care benefit which expired on February 2, 2009?

Result:

1. The hearing of this arbitration will resume at the first opportunity. The parties shall participate in a case conference by telephone to fix the dates for the resumption of this hearing.

2. Allstate shall continue to pay T.S. an interim attendant care benefit of $400/ week, as a condition of the adjournment from February 2, 2009, until the date set for the resumption of this arbitration.

3. Any attendant care benefit paid by Allstate subsequent to April 16, 2009 shall be subject to repayment should T.S. be unsuccessful in her claim.

4. T.S. is not entitled to interest on any amounts payable under this order.

5. The issue of expenses is reserved until the conclusion of this arbitration.

EVIDENCE AND ANALYSIS:

The original adjournment hearing, giving rise to the order which Allstate now requests to be lifted, was held on September 23, 2008.

The purpose of the adjournment was to accommodate Allstate, which had advised that it had launched a judicial review application of my decision not to recuse myself as arbitrator in this matter.

I note that at that time Allstate advised that it believed that the judicial review could take place in a relatively short time-line, a prediction that has turned out to be unreliable.

Consequently, I adjourned this matter sine die but reserved on the terms and conditions of the adjournment order. In my decision which followed, I ordered an adjournment on the following terms:

1. Allstate shall, effective immediately, recommence paying to [T.S.] an attendant care benefit in the amount of $400 per week.

While [T.S.] has stated that she needs eight hours of care per day, five days a week, at the rate of $20 per hour, I have no evidence as to the skill or qualifications of the attendant, nor as to the going rate for such services. Therefore, I am reducing the amount claimed to $10 per hour for the purposes of this time-limited assistance.

2. The temporary benefit should be payable until February 2, 2009 or until the arbitration hearing in this matter recommences, whichever comes first.

3. If no decision in the judicial review or related proceedings has been made by February 2, 2009, either party may request a further hearing to decide whether the order for payment shall be renewed or varied. The parties should contact the case administrator to set up a date and time for any such further hearing.

4. [T.S.] is entitled to her out-of-pocket expenses related to the resumption of the hearing which was aborted by Insurer’s non-participation. [T.S.] should file a copy of the expenses claimed as well as providing a copy of same for the Insurer within 30 days of this order. The Insurer shall have a further seven days from receipt to serve and file any submission as to the expenses claimed, following which I shall make any necessary order.

5. In the event that no order is made prohibiting the continuance of this arbitration by February 2, 2009, the parties shall furnish proposed dates for the completion of the hearing to the case administrator. A brief case conference may be arranged to finalize dates. In the event that no agreement on the dates for the completion of the hearing is possible, then I will proceed to fix dates for the balance of the hearing.

Needless to say, the deadline of February 2, 2009 passed without much progress towards judicial review. Although Allstate has pointed an accusatory finger at counsel for FSCO for delay in submitting the record of the arbitration, and indeed myself for continuing to be involved in this process, suffice it to say that the court process has not moved with any expedition.

Following the expiry of my order, Allstate wrote to the Commission to request that the order be lifted. T.S. took the position that either the interim payment should be continued and indeed increased or that the arbitration should be resumed as soon as possible and completed.

Allstate also took the position that any hearing as to the adjournment order should take place before any another arbitrator but not before me.

In his submissions in this matter, counsel for Allstate made it clear that he viewed it as inappropriate for this matter to proceed at all. He was of the opinion that since his client had taken steps to challenge my decision not to recuse myself by means of judicial review before the Divisional Court that the process must inevitably grind to a halt. Mr. Grossman expressed the position as follows:

It is inappropriate, improper, and unprecedented for a decision-maker whose decision-making authority is being squarely challenged to ignore that fact and continue to make interim and ongoing decisions to affect the parties. It is an aberration on all that I understand about administrative law for this to happen. I am extremely concerned and troubled and I can only ask that you, at this moment find another arbitrator to hear these matters because it should not be you.

When questioned as to whether a stay had been granted either by the Director of Arbitrations or the courts, he was unable to point to any such order. Rather he pointed to the delay in perfecting the judicial review application, a delay which he attributed to my continued involvement in this matter.

Mr. Grossman elaborated:

So you should take it as a hint that FSCO’s legal counsel thinks that we can’t continue until you’re out of the way, but certainly it is not.

I’m sorry sir but this is beyond anything I’ve ever heard of or seen before. Any decision-maker whose authority is being challenged steps aside. Whether they do it for good or whether they do it on an interim basis, they do it. When they don’t do it, calamity ensues; and we’re in calamity stage.

Whatever the personal view of counsel for the Insurer in this matter, the appointment of an arbitrator under the Insurance Act has important consequences. Unlike a judge whose appointment to judicial office gives him or her the power to deal with any matters within the jurisdiction of the court, the scheme in the Act appoints each arbitrator from a roster on a case by case basis.

Like a private arbitrator, the FSCO arbitrator only has jurisdiction over those matters to which he or she is appointed by the Director of Arbitrations. Once that power of appointment has been used, the Director has no further jurisdiction to appoint further arbitrators to that matter unless the arbitrator withdraws, is removed for misfeasance or becomes otherwise incapable of completing the case.

The Insurance Act is clear that once appointed to an arbitration each arbitrator has exclusive jurisdiction to deal with all aspects of a case. Section 20(2) of the Act reads as follows:

A person referred to in subsection (1) has exclusive jurisdiction to exercise the powers conferred upon him or her under this Act and to determine all questions of fact or law that arise in any proceeding before him or her and, unless an appeal is provided under this Act, his or her decision thereon is final and conclusive for all purposes.

Such exclusive jurisdiction includes making determinations as to the jurisdiction of the arbitrator to deal with a matter at hand and is not terminated by a challenge by a party to that jurisdiction.

The scheme of the Act is supposed to encourage the prompt resolution of disputes over statutory benefits. Lane G.D. in Belair Insurance Co. v. McMichael citing Kennelly v. Wawanesa Mutual Insurance Co., noted “the statutory goal of prompt payment for necessary services”², a goal that is reinforced by section 20(3) of the Insurance Act.³

As well, section 283(6) of the Insurance Act provides that an appeal does not stay the order of an arbitrator, unless the Director decides otherwise. Taken together, these provisions encourage parties to proceed promptly through arbitration, and to wait until the matter is completed to have any recourse to the appeal process.

In this matter, Allstate has proceeded directly to the Divisional Court without a full appeal hearing before either the Director or his delegate. I am advised that at two separate points in this ongoing arbitration, delegates of the Director have refused to hear appeals of interim issues.

Although not unprecedented, it is unusual for a party to proceed directly to the Divisional Court, while an arbitration process is still in progress. Understandably, there have been procedural difficulties in preparing to deal with what is, in effect, a work in progress.

For Allstate, any delay in this arbitration is specifically due to delay by counsel for the Financial Services Commission to complete the record for the judicial review.⁴

Allstate expects that this arbitration will grind to a halt merely because it has begun the process for judicial review of various stages of the, as of yet, incomplete arbitration. As noted in my earlier adjournment decision, I was willing to temporarily suspend the proceeding, provided that no undue delay occurred, and that some effort was made to address any prejudice caused by the delay.

Given the delay to date, the lack of evidence of any progress, and the lack of orders or guidance from either in the internal appeal process, or a supervising court, I am no longer comfortable with allowing further delay to the arbitration.

Allstate is in the driver’s seat in the judicial review process. It must consequently accept the consequences of any delay that engaging that process entails for this arbitration.

As noted above, there are remedies available in the context of both internal appeals at FSCO and an application for judicial review under the Judicial Review Procedure Act (“JRPA”). Section 4 of the JRPA provides:

On an application for judicial review, the court may make such interim order as it considers proper pending the final determination of the application. R.S.O. 1990, c. J.1,

Likewise section 6(2) of the JRPA provides:

An application for judicial review may be made to the Superior Court of Justice with leave of a judge thereof, which may be granted at the hearing of the application, where it is made to appear to the judge that the case is one of urgency and that the delay required for an application to the Divisional Court is likely to involve a failure of justice.

It is clear that Allstate has made a decision not to avail itself of any such remedies potentially available to it.

Continuing to adjourn a matter sine die amounts to ordering a stay of process. In Guardian Insurance Company of Canada and Armstrong⁵, Delegate McMahon stated that a “stay is the exception rather than the rule …the drafters of the legislation recognized that the insurer is in a much better position than the insured person to bear the risks inherent in not staying the arbitrator’s order.”

That an arbitration should not grind to a halt in the face of a challenge to its jurisdiction is also consistent with the general law in Ontario concerning administrative justice. As Arnup, J.A. stated:

It is also clear law that such a tribunal is not required to bring its proceedings to a halt merely because it has been served with a notice of motion for an order of certiorari or prohibition. It is entitled, if it thinks fit, to carry its pending proceedings forward until such time as an order of the Court has actually been made prohibiting its further activity or quashing some order already made by which it assumed jurisdiction.⁶

This principle has been judicially endorsed many times since it was first made in 1971. Wolder J. summarized the judicial consideration as follows:

In Director of Support and Custody Enforcement v. Drosos and Commercial Union Assurance Co. of Canada [footnote omitted], Provincial Judge Joseph C.M. James (as he then was) remarked:

Second, the fact that a litigant is contemplating or has launched proceedings before another tribunal does not deprive this court of its authority to continue with its proceedings, not unless there is a statute that demands a halt or the other tribunal has issued an interim staying order that would bind this court. No such statute exists and no such order was made in this case. This seems to be a principle of rather general application. For instance, in Re Cedarvale Tree Services Ltd. and Labourers’ International Union of North America, Local 183 [footnote omitted], the Ontario Court of Appeal held that there was no obligation upon an inferior tribunal to stay its proceedings just because one of the parties had embarked upon a motion for an order for certiorari, mandamus or prohibition from a superior court. And in Seeman v. Seeman [footnote omitted], the Ontario High Court stated that it did not lose its authority to vary a decree nisi merely because one of the parties was in the process of appealing that decree to the OntarioCourt of Appeal.⁷

Likewise Lane J. viewed the issue as follows:

In my view the Joint Board is the proper body to decide that issue. In Cedarvale Tree Services Ltd. and Labourers International Union [footnote omitted], the Court of Appeal held that when the jurisdiction of a Board is questioned, it is up to the Board to adopt such procedure as appears to it t be just and convenient. It is not obliged to bring its proceedings to a halt merely because it has been served with a Notice of Motion for certiorari or prohibition. In the present case it is up to the Joint Board to decide whether it will proceed or not.⁸

I find, therefore that notwithstanding the initial steps taken by Allstate towards judicial review of this matter, in the absence of a stay order, I retain jurisdiction to continue with this matter.

Mr. Grossman also takes issue with the provision of a limited interim benefit order as part of my earlier adjournment order. He asserts that by so ordering, I have in effect pre-determined the very substantive issue before me – whether T.S. is entitled to benefits as a catastrophically impaired-insured. I note that this issue was addressed in the original adjournment decision.⁹

While it may be that there is evidence, other than before this tribunal, that T.S. has exhausted her conventional medical, rehabilitation and attendant care benefits unless she has recourse to those available to the catastrophically impaired insured, I have only the bare assertion by Mr. Grossman that such is the case. As such there is no actual evidence that further benefits are not payable in the absence of a catastrophic determination.

In my original decision, I made the following comments:

In this case, I find that the conditions requested are appropriate to an adjournment and can be supported in that context, as discussed in the balance of this decision. The ordering of conditions is within the discretion of an arbitrator, a discretion that must be exercised lawfully, fairly or equitably. The discretion of an adjudicator is a judgement call in the context of each case that provides a wide range of options in the exercise of that discretion, provided only that the order is not based on “irrelevant factors”, a failure to consider “relevant factors” or if the condition itself was an “unreasonable conclusion.”

I accept, based on the submissions made to me with respect to the adjournment and the documents which form part of the record in this arbitration, that it would be reasonable to order an adjournment, subject to appropriate conditions, including a reinstatement of certain benefits.

More importantly however, it is the Insurer’s own questionable conduct in unilaterally withdrawing from the hearing process that has created the extraordinary need to make an award to [T.S.] at this time.

Allstate has failed to provide any evidence or support for its position that, absent a finding of catastrophic impairment, there can be no further entitlement for attendant care benefits. It should bear the consequences of its own actions.

Firstly, with regard to the assertion that a full hearing should be held on interim benefits, it hardly behoves Mr. Grossman to insist on a full interim benefit hearing when he and his client have absolutely refused to participate further in this arbitration process. Presumably such a global refusal includes participation in any preliminary benefits application. I note that, as the arbitrator duly appointed under the Act to determine all questions of fact or law that arise in this proceeding, an interim benefit application at this time would properly be before me.

Secondly, as discussed earlier, there is precedent for the proposition that a time-limited order for the restoration of benefits may at times be an appropriate condition of an adjournment. As such, the order would not necessarily come within the requirements of a self-standing application for interim benefits.

Thirdly, I do not accept that such an order would require a final determination as to the catastrophic issue.

Fourthly, the questionable conduct of the Insurer in forcing this adjournment must inform any decision as to the appropriate conditions on this adjournment. If it cannot itself follow the appropriate rules as to stays and adjournments of arbitrations, it cannot hold the Applicant to a higher standard with regard to a request for interim benefits.

I note now that the argument put forward by Allstate in this round is essentially the same as that presented at the initial adjournment hearing. As such, in the absence of a request to formally vary my previous order, it is an attempt to re-litigate that which has already been decided.

The only significant difference now is that Allstate is now prepared to participate in an interim benefits hearing, provided that such a hearing takes place before a new arbitrator.

T.S., however does not want an interim benefits hearing. She wants to proceed with and complete the arbitration. It is only in the event that there is a further delay in the hearing process or a continued adjournment pending disposition of the judicial review that she wishes the limited order for attendant care expenses to be continued and indeed increased.

I do not accept that, having already decided the issue of recusal against Allstate, it should be able to force the issue by making my withdrawal a condition of its further participation in the arbitration process.

Once again it should be noted that the Insurance Act at section 20 is clear in providing for the jurisdiction of an arbitrator, once appointed:

20(2) A person referred to in subsection (1) has exclusive jurisdiction to exercise the powers conferred upon him or her under this Act and to determine all questions of fact or law that arise in any proceeding before him or her and, unless an appeal is provided under this Act, his or her decision thereon is final and conclusive for all purposes.

Mr. Grossman has suggested that I pass over consideration of the terms of an adjournment order, particularly the question of any interim benefits to another arbitrator.

I am aware of no statutory authority that permits an arbitrator, in the process of hearing a matter, to delegate any part of the decision-making process, including any single issue, to another person. It would fly in the face of the traditional maxim, delegatus non potest delegare. As Sara Blake noted in Administrative Law in Canada:¹⁰

There is a general rule that, unless expressly authorized, a tribunal may not delegate its powers to another. The Latin maxim states “delegatus non potest delegare”. Thus a tribunal must itself make all decisions it is empowered to make.

Consequently, I decline to delegate the hearing of an interim benefit issue to another arbitrator.

As noted earlier in this decision, both parties filed correspondence and submissions in the period leading up to the April 16, 2009 motion hearing.

Attached to T.S.’s documents was a copy of an affidavit sworn by Mr. DiDomenico, an employee of Allstate, which was prepared for the judicial review application. In that context, Mr. DiDomenico recounted Allstate’s impression of the events that led to its motion for recusal.

Among the matters addressed was a reference to alleged settlement numbers that may have been divulged by T.S. in the context of the hearing on June 12, 2008.

As I noted on the record during the hearing of this matter, I had serious concerns about the inclusion of references by T.S. to the very subject that earlier prompted an earlier motion for me to recuse myself from hearing this arbitration. My concerns arose principally from Mr. Grossman’s assertion that the affidavit was “sealed.” However, I was also open to concerns about the disclosure of the actual content of the affidavit.

In my earlier decision on the recusal issue I noted that while I had no specific recall of a settlement number, I would assume for the purposes of the decision that the specific settlement numbers were indeed mentioned during T.S.’s outburst.

In that decision, after considering the possible effect of the mention of a settlement position before an arbitrator, I declined to recuse myself.

I understand that my decision on recusal issued September 26, 2008 also forms part of Allstate’s application for judicial review.

When, at the April 16, 2009 hearing, Mr. Grossman raised the inclusion of Mr. DiDomenico’s affidavit he stated:

This letter of February 18, 2009, which is addressed to you, which you’ve seemingly read, causes great difficulty as I’m sure you are aware.

In support of the Judicial Review Application an Affidavit was prepared to be kept under seal and it was served on that basis, setting out the discussions leading up to the arbitration hearing, including settlement discussions. You will recall that one of the major problems in this case – I’m just – I’m smiling and laughing out loud because I’m – this is just so foreign to anything I’ve seen before.

He continued:

What [T.S.] has done is she’s put this number in this letter to you. If that doesn’t blow you out of the water, I don’t know what does because this February 18 letter sets out the contents of the affidavit which is supposed to be under seal.

Given this latter statement, notwithstanding the fact that Allstate had received T.S.’s documents well before the hearing date, with no objection raised, I characterized Allstate’s comments as “a very serious allegation raised and a serious problem raised.”

Consequently I gave both Allstate and T.S. more time to provide written submissions as to the “rules surrounding the provision of this Affidavit (are), the nature of any non-disclosure agreement that may have been made, and the nature of the confidentiality that was breached.”

I note that Allstate also attaches great importance in its submissions to the fact that its employee’s affidavit addresses the issue of attempts to settle the arbitration.

First of all it is important to note that the comments as to settlement numbers, although disclosed by T.S., were contained in a document filed by Allstate in support of a judicial review application.

Rule 68.04 (2) (c) of the Rules of Civil Procedure specifically provides that the record of an applicant for judicial review shall include: “a copy of all affidavits and other material served by any party for use on the application”. Affidavits filed in a judicial review form part of the record of the proceedings.

Section 137 of the Courts of Justice Act provides that, unless ordered sealed, the record of a proceeding is a public record.¹¹

While the record of any proceeding is open to examination by any member of the public, and hence neither confidential nor privileged, Allstate took the position that the provision of its own affidavit to an arbitrator so irrevocably tainted the adjudicator that there was no option but to withdraw from the matter.

I find it curious that Allstate did not take any precautions in obtaining either a confidentiality agreement or a court order actually sealing its own affidavit when it so clearly considers the contents of that document so dangerous to the arbitration process which it knew to be ongoing.

When asked whether there was a court order sealing the document, Mr. Grossman replied:

It’s part of the J.R. We’ve asked that it be kept under seal. We can’t get there before we get there.

When asked whether there was any agreement between parties concerning sealing the affidavit, Mr. Grossman stated “[t]here was an agreement” a statement that was swiftly denied by T.S.

In light of the position taken by Allstate with regard to the affidavit, I requested that counsel for Allstate provide further information with regard to the nature of any non-disclosure agreement, the nature of the confidentiality that was alleged to be breached by T.S., and submissions as to the consequences of the disclosure in the arbitration record of Mr. DiDomenico’s affidavit. T.S. was also given the opportunity to respond to Allstate’s position.

Before dealing with the status of the affidavit, whether it was sealed, confidential or privileged, I would note that, on the face of it, as evidence the affidavit is completely irrelevant to the issues on these motions. It deals with a description of matters that have already been the subject of my findings, and does not address whether this arbitration should be adjourned further, or ordered on, and whether there should be conditions attached to any further order, including the payment or not of an ongoing benefit stream.

However, because of the peculiar nature of this hearing, and the fact that the affidavit reiterates statements that were central to an earlier recusal motion, I will deal with the question in some depth.

Allstate’s submissions on the nature and context of the affidavit of Mr. DiDomenico was essentially that:

The Affidavit should not have been put before Arbitrator Wilson, given that the Affidavit was clearly prepared for use in the Application for Judicial Review of these same proceedings.

Allstate submits that the Affidavit was to be put under seal by the Divisional Court due to the confidential content, specific to settlement discussions between the parties, and therefore it was not to appear before Arbitrator Wilson.

Allstate further elaborated on the circumstances of the affidavit:

An Affidavit was commissioned on January 26, 2009 in the name of Ralph DiDomenico, representative for Allstate, and was to be used by Allstate in the judicial review proceedings. The Affidavit contained the facts supporting the basis for judicial review, and due to the nature of the evidence being central to the settlement discussions between the parties at FSCO in this matter, the Affidavit was to be put under seal pursuant to section 137 of the Courts of Justice Act.

The Affidavit was served upon Mr. Nemet at FSCO and [T.S.] under cover letter dated February 18, 2009.

The Affidavit had not yet been put under seal, as Allstate was waiting for FSCO to complete the Record, and therefore judicial review proceedings would move ahead.

In short, Allstate sent the affidavit to both T.S. and Mr. Nemet after consulting with Mr. Nemet, counsel for the Financial Services Commission. Allstate intended to apply to have the documents sealed by the court, but had taken no steps to do so, since it believed that such was not possible until the record had been completed by the Financial Services Commission.

I note that T.S. denies being consulted as to the affidavit, a position that was consistent with Allstate’s mention only of the consultation with Mr. Nemet. T.S. certainly did not understand that there was to be any confidentiality attached to the document that she received.

The confidentiality of a document may arise due to the nature of the document, as well as the circumstance in which it was created. It may also be privileged under the law of evidence, either due to litigation or solicitor-client privilege.

As Mr. Grossman has rightly pointed out there is a general rule, both in court and at arbitration that evidence of attempts to settle should not be available to a decision-maker hearing a substantive matter, except where included in a pre-hearing memorandum or an order by a pre-trial judge.

As noted by the High Court in Pirie v. Wyld, this rule was based on practical considerations:

The authorities seem, though not very numerous, to be clear upon the first point, that letters written or communications made without prejudice, or offers made for the sake of buying peace, or to effect a compromise, are inadmissible in evidence. It seemingly being considered against public policy as having a tendency to promote litigation, and to prevent amicable settlements.¹²

It is interesting to note that the court used the phrase “inadmissible in evidence”, and not that the trier of fact is barred from all contact with information related to settlement offers.

In addition, although the rule on its face appears clear, its application is dependent on the forum, the nature of the information revealed, and the circumstances in which the information is brought forward.

In terms of forum, on one extreme end of the spectrum is the mediation/arbitration process in which a mediator continues with the matter if mediation fails, and adjudicates the issues in dispute as an arbitrator, whose decision is enforceable. On the other end of the spectrum is a jury trial, where the lay jurors are expected to be susceptible to outside influences and irrelevant considerations.

Likewise the nature and circumstances to be considered vary in accordance with the facts of each case, from absolute privilege to confidential but subject to disclosure when waived or ordered, to general public knowledge that however embarrassing or prejudicial to a party, cannot be controlled.

It goes without saying that otherwise confidential or private information can be publicly disclosed in the context of litigation.¹³ It is also clear that both confidentiality and privilege can be waived by a party, either explicitly or implicitly.

In S & K Processors Ltd. v. Campbell Ave. Herring Producers Ltd.¹⁴ McLachlin, J. spoke of waiver as follows:

Waiver of privilege is ordinarily established where it is shown that the possessor of the privilege: (1) knows of the existence of the privilege; and (2) voluntarily evinces an intention to waive that privilege. However, waiver may also occur in the absence of an intention to waive, where fairness and consistency so require.

In this matter the mere possession of the affidavit by T.S. is not enough for it to lose any confidentiality it may have had. In Tilley v. Hails¹⁵, the court refused to allow a party to use a communication addressed to counsel and that was clearly not intended for his eyes:

It is an established principle of law that a person who has obtained confidential information is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication: Slavutych v. Barker, [footnote omitted]; Schauenburg Industries Ltd. v. Borowski [footnote omitted].

Justice Belobaba stated in Chan v. Dynasty Executive Suites Ltd., ¹⁶

Whether or not privilege has been waived through inadvertent disclosure depends on the circumstances and requires the court to consider three factors – whether the error was in fact inadvertent and thus excusable; whether an immediate attempt has been made to retrieve the documents; and whether preservation of the privilege in the circumstances would cause unfairness to the receiving party.

I note that in this matter there is no evidence that the disclosure of the affidavit to T.S. was inadvertent. Rather, the context of the disclosure suggests otherwise. It was disclosed, intentionally, as part of the record in the judicial review. Once again, there was no evidence provided as to any confidentiality agreement between Allstate and T.S.

Allstate admitted that although it had intended to seal the affidavit, it had taken no steps to do so, because, in its understanding of the process, FSCO had never perfected the record of the arbitration proceeding.¹⁷

I find no evidence that the affidavit in question was ever sealed by any court nor can it be found subject to a confidentiality or a privilege that has not been waived by voluntary disclosure.

I note for completeness that that although the implied undertaking rule would likely inhibit any use made of material by T.S. received in the context of litigation in another matter, such is not the case in this arbitration.¹⁸

In The Law of Civil Procedure¹⁹ Williston and Rolls set out the principle governing the use of documents produced for discovery:

There is an implied undertaking by a party to whom documents are produced that he will not use them for collateral or ulterior purpose; any such use of documents is a contempt of court.

Mr. DiDomenico’s affidavit was not provided as part of some discovery process. Nor is T.S.’s intended use collateral or ulterior. Her use of the document, although highly unorthodox does not offend Lord Denning’s observation that:

Compulsion [to disclose] is an invasion of a private right to keep one’s documents to oneself. The public interest in privacy and confidence demands that this compulsion should not be pressed further than the course of justice requires.²⁰

Nor would I suggest that the proposed judicial review of this arbitration is another, unrelated process.

Rather, the actual problem with the use of affidavit is that it is neither relevant nor probative as to the issues it is supposed to address. As noted earlier, I would not accept it as evidence capable of being considered in this matter.

As noted in my decision on recusal, the disclosure of inappropriate information to an adjudicator is not necessarily fatal to the process. Indeed there need necessarily be no prejudice to any party if the decision-maker disregards, or is instructed properly to disregard the offending material.

In any event, it would in my opinion be unfair to both parties to declare a mistrial after 11 days of evidence. This is particularly so since, in my view, any harm done to the defendant can be rectified at the end of the trial by a limiting instruction to the jury advising them of the use that can be made of Mr. Croth’s evidence concerning the Reinhardt offer.²¹

On appeal of this matter, Armstrong, J.A. clarified:

In my view, the jury should have been instructed that the offer of settlement was a without prejudice communication, and should be disregarded by it as a factor in considering whether to make an award of punitive damages. An instruction of this kind was not given by the trial judge.²² [Emphasis added]

It is clear that even before a lay jury, communication of an offer of settlement need not irrevocably taint a decision-maker, provided that an appropriate caution as to the use of the information is given.

In my previous decision on the issue of recusal I made the following conclusion:

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.

Allstate, while it has never accepted my original conclusion that I can carry on with this arbitration, has re-asserted its claim that I am irrevocably tainted by the disclosure of the affidavit.

While I respect the bona fides of Allstate’s position, and accept the unusual aspects of the disclosure of this affidavit in the arbitration process, I believe that my original comments remain appropriate:

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.

I am not certain how much, if at all the release of the affidavit has changed things.

I am now aware that Allstate may well have made a settlement offer that is different than the nil offer noted in the mediator’s report which is attached to the Application for Arbitration. (I note that Allstate did not challenge the mediator’s reference to a settlement offer in that report.)

I understand as well that there is some conflict between the parties as to what offers of settlement were actually made. I am not however party to either party’s settlement strategy or frank evaluation of the risks inherent in either’s claim.

I am also aware that none of the above information is relevant to the decision that I have been asked to make, and will exclude it from evidence in this proceeding.

What is principally at issue in this arbitration is whether T.S. meets the statutory test for catastrophic impairment set by the Schedule. This is a highly technical threshold usually established through expert evidence.

As Mr. Grossman has been at pains to point out, if T.S. does not meet this significant test, then most of the benefits claimed in this matter, whether reasonable and necessary or not, are not payable.

Following the April 16, 2009 hearing, I gave the parties a significant period of time to provide submissions and law related to the provision of Mr. DiDomenico’s affidavit, and its actual status.

While I have some difficulty interpreting all of T.S.’s submissions, the party suggesting that the affidavit was “sealed” or otherwise confidential was Allstate, and the burden rests upon it to substantiate those allegations.

What I actually received from Allstate was a reiteration of earlier submissions on the issue of whether the affidavit was sealed or otherwise confidential, and a lengthy further submission on my original decision not to recuse myself from this arbitration.

What was missing was documentation showing how the impugned affidavit changed in some way the problems and issues dealt with in my decision of September 26, 2008. Without such information I am left with my original conclusion. Allstate’s supplementary submissions do not incline me to re-visit that decision.

Matters involving unrepresented individuals, whether before the courts or in other forums are rarely neat and tidy. Without competent counsel to guide and advise, unrepresented individuals may take steps that are inappropriate and at times may tax the patience of both the adjudicator and opposing counsel. That being said, there is a right to appear unrepresented, and such a party still has a right to access the justice system and be heard.

As P. S. Rouleau J.A. stated in Ndem²³, a case involving a self-represented litigant:

The motion judge’s comments might be read as suggesting that the appellant’s criticisms amounted to an allegation of bias. However, criticism of a judge or an allegation of bias should not necessarily lead to the conclusion that a judge cannot preside, especially when this would lead to the loss of the right to a bilingual proceeding. Instead, a judge faced with such an allegation should receive supporting evidence and then decide, on a case by case basis, whether to recuse himself or herself.

A decision of an arbitrator to recuse him or herself from a matter is a serious one. I accept that Allstate has concerns about my objectivity and continues to express them.

To this end I reiterate my comments in the original decision:

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 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.

Ultimately it may well be an issue for an appeal, if this matter is not resolved to the satisfaction of Allstate or T.S. For now, the mandate of this tribunal is to proceed with, and indeed to expedite the substantive arbitration hearing.

Unlike the traditional rule in the courts, the arbitration system is designed to work on strict time discipline. Barring the occurrence of emergencies and extraordinary circumstances the parties are expected to be able to proceed within the agreed time frame. This is consistent with a system that is designed to be “quicker, less expensive and less formal” than the courts.²⁴

To date this arbitration has not lived up to its mandate of timeliness.

It has now been more than a year since this matter first came before me. For a variety of reasons both T.S. and Allstate have missed an opportunity to have a determination of just what services constitute necessary services in the context of T.S.’s claim against Allstate. I note as well that T.S. appears to be retaining caregivers on an ongoing basis in the expectation that Allstate will reimburse her at the end of this process. If that expectation is incorrect, as Allstate’s counsel insists, then any further delay will only encourage her in needless expenditures.

Although, initially, I was prepared to give Allstate the benefit of the doubt and to delay the arbitration pending judicial review, the inability of the parties to that process to move matters along on a timely basis has caused me to reconsider that approach.

Given that no stay has been ordered in this matter either by the Director or his delegate, or a court having jurisdiction over this matter, it is time to move this matter on to its completion before delay impairs justice. Therefore, I accept T.S.’s request that the hearing be recommenced as soon as possible.

To that end, I will ask that the parties participate in a case conference to deal with scheduling the balance of this arbitration. While I will attempt to accommodate both parties in the scheduling process, I will reserve the right to fix timely dates if no reasonable agreement is possible.

Since the temporary suspension of the arbitration has always been in the context of accommodating Allstate’s move to deal with interlocutory orders before the Divisional Court, it is appropriate that it continue to bear some of the cost of that delay. To that extent I order that the interim payment of attendant care expenses, fixed at $400 per week continue to be payable from the expiry of the original order until the date set for the re-commencement of this arbitration.

Given the temporary nature of this order, I decline to amend the amount of the payment, as requested by T.S.

I note that in the context of the April 16, 2009 hearing Allstate first raised the issue of whether the order should be made specifically repayable, in the event that T.S. is not successful in her arbitration claim. Allstate’s request is reasonable. However, given the failure of Allstate to raise the issue on a timely basis, I will make the order that only any interim benefits accruing after April 16, 2009 shall be specifically repayable in the event that T.S. is unsuccessful in her claim.

EXPENSES:

Although I will defer the question of expenses until the arbitration is completed, I will note for the record that both parties should be especially sensitive to those parts of the Expense Regulation²⁵ which provide that in awarding expenses an arbitrator should consider:

The conduct of a party or a party’s representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders. Whether any aspect of the proceeding was improper, vexatious or unnecessary.

May 29, 2009

John Wilson Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2009 ONFSCDRS 66

FSCO A07-001223

BETWEEN:

T.S. Applicant

and

ALLSTATE 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. The hearing of this arbitration will resume at the first opportunity. The parties shall participate in a case conference by telephone to fix the dates for the resumption of this hearing.

2. Allstate shall continue to pay T.S. an interim attendant care benefit of $400/ week, as a condition of the adjournment from February 2, 2009, until the date set for the resumption of this arbitration.

3. Any attendant care benefit accruing subsequent to April 16, 2009 shall be subject to repayment should T.S. be unsuccessful in her claim.

4. T.S. is not entitled to interest on any amounts payable under this order.

May 29, 2009

John Wilson Arbitrator

Date

20(3) An application for judicial review and any appeal from an order of the court on the application does not stay the decision made under this Act.

137(1) On payment of the prescribed fee, a person is entitled to see any document filed in a civil proceeding in a court, unless an Act or an order of the court provides otherwise. Sealing documents (2) A court may order that any document filed in a civil proceeding before it be treated as confidential, sealed and not form part of the public record. Court lists public (3) On payment of the prescribed fee, a person is entitled to see any list maintained by a court of civil proceedings commenced or judgments entered.

“An application for judicial review may be made to the Superior Court of Justice with leave of a judge thereof, which may be granted at the hearing of the application, where it is made to appear to the judge that the case is one of urgency and that the delay required for an application to the Divisional Court is likely to involve a failure of justice.”

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 22007 CanLII 17630 (ON SCDC), [2007] O.J. No. 1972
3. 3Decisions, etc., not stayed
4. 4Allstate has taken the position that “for you to suggest that we have remedies is fanciful, in my respectful submission, because to the extent that we have our remedies, they’re being frustrated by the administrative body to whom you report”.
5. 5(FSCO P00-00037, July 20, 2000), Appeal
6. 6Cedarvale Tree Services Ltd. and Labourers’ International Union of North America, Local 183 Arnup, J.A. 1971 CanLII 341 (ON CA), [1971] O.J. No. 1719
7. 7Ontario (Director of the Family Responsibility Office) v. Kitching [2006] O.J. No. 4187 155 A.C.W.S. (3d) 354, Milton Registry No. F261/00, Ontario Court of Justice, T. Wolder J.
8. 8Niagara Escarpment Commission v. Embee Properties Ltd. [2005] O.J. No. 1988, G.D. Lane
9. 9See Allstate Insurance Company of Canada v. Brownet al. 1998 CanLII 18877 (ON CTGD), 40 O.R. (3d) 610 with regard to preliminary finding in the context of an interim benefit.
10. 102nd Edition, Butterworths, Toronto, 1997 at page 128
11. 11Documents public
12. 12Pirie v. Wyld, 11 O.R. 422, Ontario High Court of Justice, Common Pleas Division
13. 13Cook v. Ip et al. [1985] O.J. No. 2653 Cory J.A.
14. 14S& K Processors Ltd. v. Campbell Ave. Herring Producers Ltd., (1983), 1983 CanLII 407 (BC SC), 45 B.C.L.R. 218 (S.C.)
15. 15Tilley and Hails et al (No. 2) 1993 CanLII 8557 (ON CTGD), [1993] O.J. No. 333, Chapnick, J.
16. 16Chan v. Dynasty Executive Suites Ltd., [2006] O.J. No. 2877
17. 17As earlier noted, section 6(2) of the JRPA provides for a timely remedy:
18. 18See Laufer v. Merit Investment Corp., [1999] O.J. No. 5175 - Case Management Master Birnbaum
19. 19(1970)
20. 20Riddick v. Thames Board Mills Ltd. [1977] Q.B. 881, 896
21. 21Plester v. Wawanesa Mutual Insurance Co. [2003] O.J. No. 1008, Jenkins J.A.
22. 22Plester v. Wawanesa Mutual Insurance Co. 2006 CanLII 17918 (ON CA), [2006] O.J. No. 2139 R.P. Armstrong J.A.
23. 23Ndem v. Patel 2008 ONCA 148, [2008] O.J. No. 748
24. 24Dispute Resolution Practice Code, Introduction at p. 10
25. 25Regulation 664, R.R.O. 1990