Stanislav Kanareitsev (Estate) v. TTC Insurance Company Limited, 2010 ONFSCDRS 64

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2010 ONFSCDRS 64

FSCO A04-002373

BETWEEN:

STANISLAV KANAREITSEV (ESTATE)

Applicant

and

TTC INSURANCE COMPANY LIMITED

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Robert A. Kominar

Heard: September 11, 2009 and by written submissions last received on August 20, 2009

Appearances: Edward Goldentuler for Mr. Kanareitsev (Estate)

Karen McGuire for TTC Insurance Company Limited

Issues:

The Applicant, Stanislav Kanareitsev (Estate), was injured in a motor vehicle accident on July 12, 2001. He applied for and was awarded through arbitration various statutory accident benefits from TTC Insurance Company Limited (“TTC”), payable under the Schedule.¹ Subsequent to that arbitration decision Mr. Kanareitsev applied again for arbitration to determine whether he had suffered a catastrophic impairment as a result of this accident. The parties were unable to resolve the precise scope of the issue to be put before the hearing arbitrator in this case and requested a preliminary ruling on the matter.

The preliminary issue is:

Has the issue of the causation for the purposes of determining whether Mr. Kanareitsev was catastrophically impaired as a result of this accident been decided and, therefore, not able to be further raised within this arbitration.

Result:

The issue of causation for the purposes of determining whether Mr. Kanareitsev was catastrophically impaired as a result of this accident has not yet been determined and, therefore, the issue before the hearing arbitrator will be:

(a) Was Mr. Kanareitsev catastrophically impaired as a result of the automobile accident which occurred on July 12, 2001?

EVIDENCE AND ANALYSIS:

This case has had a long and complex procedural history. Arbitrator Killoran released her final decision in the original hearing, after 17 days of evidence, on July 7, 2005. She found that Mr. Kanareitsev had been impaired as a result of an automobile accident and awarded him non-earner benefits, various medical benefits, attendant care benefits, housekeeping and home maintenance benefits, section 24 expenses, interest, legal expenses and a special award. The TTC appealed Arbitrator Killoran’s decision and Director’s Delegate Makepeace overturned the original decision and ordered a new hearing via reasons released on November 2, 2006. The Applicant sought judicial review of the Director’s Delegate’s decision and the Divisional Court restored Arbitrator Killoran’s decision on February 6, 2008, clearly stating that her reasons were sufficiently thorough to rationally support her decision to accept some medical evidence and to reject other medical evidence put before her. Finally, the TTC sought leave to appeal the decision of the Divisional Court to the Ontario Court of Appeal, which application was denied by way of endorsement dated July 14, 2008.

There are two other events that warrant noting. Mr. Kanareitsev has died and this arbitration is now carried on under the authority of his personal representative and son Peter Kanareitsev. Also, Mr. Kanareitsev’s original legal counsel, Mr. Henry Goldentuler, has also died and the arbitration is now being conducted by his brother Edward Goldentuler.

The current issue in dispute between the parties relates to the procedural impact of the order made by Arbitrator Killoran in her decision dated July 7, 2005. However, this procedural dispute occurs within a broader, substantive application before the Commission to determine whether Mr. Kanareitsev was catastrophically impaired as a result of the accident or not.

The issue of catastrophic impairment was not dealt with by Arbitrator Killoran in her decision because it was not identified by the parties as an issue in dispute during the original pre-hearing phase of the arbitration process. Prior to his death, Mr. Kanareitsev underwent an assessment by a catastrophic impairment designated centre (CAT DAC), which resulted in a finding by the assessors that he had suffered an 87% whole person impairment, which would have entitled him to be designated as catastrophically impaired pursuant to the Schedule, other than for the fact that the CAT DAC assessors went on to opine that his impairments were 0% related to the motor vehicle accident in question.

During the original arbitration hearing, the TTC took the position that causation was the most salient disputed issue before Arbitrator Killoran; arguing that Mr. Kanareitsev’s pre-existing medical condition of polyneuropathy was the legally relevant “cause” of all his impairments and not the accident in question. It is completely clear from reading Arbitrator Killoran’s decision that she rejected the TTC’s position and made an explicit finding that the accident was causally related to the impairment in a legally significant manner.

The procedural quandary arises here. On the one hand, Arbitrator Killoran made an explicit finding, which has been confirmed on appeal and judicial review right up through the Ontario Court of Appeal, that the impairments which Mr. Kanareitsev suffered and which were the foundation of his claims for accident benefits were accident related and not simply the result of his pre-existing medical conditions. On the other hand, the CAT DAC assessors came to the conclusion that Mr. Kanareitsev met the medical test for catastrophic impairment pursuant to subsection (f) of the catastrophic definition set out in the Schedule, but utterly disagreed that these impairments had any connection with the accident. Their conclusion was that he was 87% whole person impaired, but that this was 0% caused by the accident in question.

Currently before the Commission is an Application for Arbitration requesting a finding be made that Mr. Kanareitsev’s impairment was catastrophic in nature, potentially entitling him to claim higher levels of benefits and compensation. The TTC argues that it should be recorded that the issue placed before the next hearing arbitrator is whether the accident was the cause of these impairments. Mr. Kanareitsev’s estate argues that the issue of causality has now been completely decided by Arbitrator Killoran and, therefore, the only issue that could properly be put before an arbitrator for decision at this point in time is whether the CAT DAC was correct in making its finding of 87% whole person impairment. I note that the TTC does not dispute the percentage findings made by the assessors. There is no dispute that Mr. Kanareitsev was very seriously impaired before he died.

In effect, the Applicant’s argument is that the issue of causation is now res judicata in that it is covered by the doctrine of issue estoppel.

Black’s Law Dictionary (5^th Edition) defines res judicata as follows (emphasis added):

A matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment. Rule that a final judgment rendered by a court of competent jurisdiction on the merits is conclusive as to the rights of the parties and their privies, and, as to them, constitutes an absolute bar to a subsequent action involving the same claim, demand or cause of action... The sum and substance of the whole rule is that a matter once judicially decided is finally decided.

The policy behind the rule relates to the value of achieving finality in legal disputes. At some point in time, after all avenues of appeal and review have been exhausted, a matter cannot be relitigated by the same parties. This policy rationale has been memorably articulated by Justice Robert Jackson of the United States Supreme Court when he said: “We are not final because we are infallible, but we are infallible because we are final.”² Adjudicative decision makers constantly strive to balance the competing values of fairness and finality. Fairness is a fundamentally important value in legal proceedings, but at some point in every dispute finality becomes the trump card.

Mr. Goldentuler pointed out in his submissions that the doctrine of res judicata manifests in two forms: issue estoppel and action estoppel. Issue estoppel, when it applies, precludes a party from relitigating an issue that has been decided in some previous proceeding. It does not necessarily bring an end to the whole legal process as there may be other issues in the proceeding which have not been previously judicially determined. Cause of action estoppel acts to prevent a litigant from disputing a decided cause of action again once it has been finally determined. In this case it is issue estoppel that is relevant.

The Applicant’s argument here is that it would be improper to put the issue of causation of Mr. Kanareitsev’s impairments before an arbitrator once again, as it has been determined as finally and authoritatively as it can be under Ontario law. Whether or not the TTC agrees with the various adjudicative decisions on the point is irrelevant. The legal process is not a quest for absolute epistemic truth. For legal purposes, the matter has been decided and it would be unfair, burdensomely expensive and oppressive to require the Applicant to reargue the matter and to risk the possibility of inconsistent decisions which would only lead to further rounds of legal proceedings. A vicious cycle could result wherein the two parties could endlessly reargue the same point before different adjudicators, reaching no closure ever.

The test of “causation” in this matter, it must be remembered, is a “legal” test. I have no basis to comment on what test the CAT DAC applied in making its comment about causality because it did not state any. However, that is not important. Arbitrator Killoran reviewed the law and made an explicit finding regarding the legal requirements for “causation” of the various impairments Mr. Kanareitsev presented with. She stated in her reasons for decision: “I find that Mr. Kanareitsev must establish that the accident significantly or materially contributed to his impairment... I find that the 2001 accident was the cause of his impairment, not any pre-existing condition.”

This finding on causation clearly contradicts the opinion reached by the CAT DAC assessment team. Even though the DAC system was designed to be an integral part of the dispute resolution process for automobile accident benefit claims, and not simply another medical assessment procured by one side or the other to bolster its case in legal proceedings, the reality is that DAC conclusions were made subject to further dispute via mediation, arbitration and litigation. The CAT DAC decision about catastrophic impairment may be disputed by the TTC if it disagrees with its findings about the quantification of whole person impairment, as that issue has not been tested before any adjudicative body either at FSCO or in the courts.

I accept in general terms Mr. Goldentuler’s argument that for the doctrine of issue estoppel to apply, three conditions must normally be met: 1) the same question must be before the respective adjudicators and that the issue must have been “fundamental” in the earlier decision;³ 2) the adjudicative decision that is claimed to have generated the estoppel must be final; and 3) the parties to the decision or their privies must be the same as those in the original decision.⁴

With regard to these criteria, I find that criteria 2 and 3 are clearly satisfied in this case. However, the general question of establishing a causal nexus between the accident and various discrete accident benefit claims is not identical to the question of whether any or all of the disabilities that are totalled up to produce a whole person impairment score under the AMA Guidelines were caused by the motor vehicle accident. Clearly the general issue of “causation” was explicitly dealt with by Arbitrator Killoran and there can be no reasonable argument that this was not a “fundamental” issue in the original arbitration but rather some obiter comment made in passing by the arbitrator. It was central to Arbitrator Killoran’s decision. However I find that it is quite possible for an adjudicator to decide that an automobile accident affected someone with pre-existing medical conditions in a way to give rise to entitlement to various statutory accident benefits but also find that the person does not meet the test for being catastrophically impaired as a result of various impairments caused by the accident. The catastrophic impairment definitions in the Schedule raise the issue of legal causation in a very specific way that is not completely captured by a finding that an auto accident sufficiently exacerbated or otherwise contributed to a person’s subsequent disability or need for medical treatment so as to entitlement them to accident benefits.

I am not making any finding as to whether the TTC is correct, or whether the CAT DAC assessors were correct when blithely opining that Mr. Kanareitsev’s impairment rating arose solely from his pre-existing polyneuropathy and not the motor vehicle accident. The issue before me is purely the procedural one of whether the TTC should be allowed to argue its case before an arbitrator, rather than being stopped at this point in time by a finding that the matter of causation of impairments is res judicata. If I were to make such a finding it would, de facto, bring an end to the arbitration proceeding. In effect, the Applicant is asking for a form of summary judgment.

As a result of my finding that the discrete issue of causation, solely as it relates to assigning a percentage of whole person impairment, has not yet been adjudicated, it is unnecessary to deal with the case law which both counsel provided me with dealing with the complex legal history and doctrines of res judicata and issue estoppel. I do acknowledge that both counsel presented very thorough briefs on the law, which I appreciated and found helpful in coming to this decision.

The ultimate purpose of arbitration is to provide a fair hearing to both parties. Issues for an arbitration hearing must therefore be framed in a fair and reasonable way. Legal procedure is designed to be the road to fairness, even though at times it can be a very long road. I understand that with the deaths of both Mr. Kanareitsev and Mr. Henry Goldentuler, this case has become even more complicated to finalize. The parties and counsel should carefully consider whether this really needs to be the case any longer.

The question of whether Mr. Kanareitsev was catastrophically impaired as a result of this accident is not an insignificant one. The fact that the parties are still litigating the issue is emblematic of the potential consequences of its resolution either through settlement or adjudicated decision.

Arbitration is also intended to be expeditious and cost effective. Even though my decision may protract these proceedings and add significantly to the parties’ expenses, these criteria cannot, I find, trump the right of the TTC to present its case to an adjudicator. If the TTC fails to persuade the hearing arbitrator, the remedy of the Applicant lies in an award of expenses, and even potentially a special award.

The stakes are high for both parties here and this case for various reasons is unusual. I encourage the parties in the strongest terms that I can to consider resolving this matter without further adversarial proceedings. I am prepared to assist in bringing about a resolution of the catastrophic issue through non-adversarial means. If the parties wish my assistance they can contact the case administrator to set up a settlement discussion at a mutually convenient time.

If the parties choose not to bring this matter to a negotiated end then they should contact the case administrator to set up a resumption of the pre-hearing to finalize the dates for a hearing on the substantive issue of catastrophic impairment.

EXPENSES

I exercise my discretion to leave the issue of expenses of this preliminary issue motion to the ultimate hearing arbitrator in the event that the parties cannot resolve expenses between themselves.

May 18, 2010

Robert A. Kominar

Arbitrator

Date