Financial Services Commission des Commission services financiers of Ontario de l’Ontario
Neutral Citation: 2010 ONFSCDRS 96
FSCO A09-001985
BETWEEN:
MARGARET KELLAR
Applicant
and
INTACT INSURANCE COMPANY
Insurer
PRE-HEARING DECISION
Before: Arbitrator Suesan Alves
Heard: By telephone conference call on March 15 and July 9, 2010.
Appearances: Sandi Smith for Mrs. Kellar Katherine E. Kolnhofer for Intact Insurance Company
Issues:
The Applicant, Margaret Kellar, was injured in a motor vehicle accident on July 31, 1993. She applied for arbitration at the Financial Services Commission of Ontario. Mrs. Kellar claimed weekly income benefits and interest under the Schedule1 and her expenses and a special award under the Insurance Act, R.S.O. 1990, c.I.8, as amended. Intact claimed its expenses and denied that Mrs. Kellar was entitled to the relief she sought.
Intact alleged that Mrs. Kellar’s application for arbitration was out of time. Mrs. Kellar disagreed. At the pre-hearing discussions of this case held on March 15, 2010 and resumed on July 9, 2010, there was a dispute as to whether the limitation issue should be determined as a preliminary issue, and a dispute concerning the production of documents.
The issues are:
Should the limitation issue be decided at a preliminary issue hearing?
Should the Applicant be required to obtain files from various third parties at this time?
Result:
The limitation issue should be decided at a preliminary issue hearing.
The Applicant is not required to obtain the files from various third parties at this time.
EVIDENCE AND ANALYSIS:
Mrs. Kellar was injured in an automobile accident on July 31, 1993, and sought benefits pursuant to the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994 (the “Schedule”). In this arbitration, she claims weekly income benefits from August 23, 1996, interest, expenses and a special award.
The Insurer raised a limitation defence. It alleged that it terminated Mrs. Kellar’s weekly income benefits on August 23, 1996 and that she did not commence mediation within two years of the denial of her income replacement benefit as required by section 26 of the Schedule and section 281 of the Insurance Act. Intact alleges that the Applicant’s twelve year delay in asserting her claims for further income replacement benefits is seriously prejudicial to the Insurer. Counsel for the Insurer advised that the Insurer’s file has allegedly gone missing.
Attached to Mrs. Kellar’s Application for Arbitration is a document which states “Counsel for the insured have made numerous requests to the insurer for documentation supporting their decision to terminate benefits. To date, we have not been provided with any supporting documentation.”2
Should there be a preliminary Issue hearing?
There was a dispute as to whether there should be a preliminary issue hearing dealing with the limitation issue and which would be severed from the substantive issues of entitlement to income replacement benefits, interest, the expenses of both parties and the Applicant’s claim for a special award. The Applicant preferred a separate preliminary issue hearing; the Insurer preferred one hearing dealing with all issues. For the reasons which follow, I find that the limitation issue should be severed from the remaining issues and heard at a preliminary issue hearing.
In Hellinger and Royal and SunAlliance Company of Canada,3 I considered the rationale behind preliminary issue hearings and stated:
“Judicial economy is the rationale behind preliminary issue hearings. Preliminary issue hearings are held early in the arbitration process in order to determine a cardinal issue in the arbitration in an expeditious and efficient way. Such hearings usually deal with technical defences to claims, such as limitation periods or exclusions; or with the interpretation of a provision of the legislation.
Preliminary issue hearings can often be heard by way of documentary evidence, or with minimal oral testimony, with or without oral submissions. They are generally shorter and less costly to the parties than hearings at which several witnesses testify.
At times, with the benefit of an arbitration decision interpreting a provision of the legislation, the parties are able to resolve the remaining issues in dispute, and avoid a hearing on the merits.
If the moving party succeeds at the preliminary issue hearing, the arbitration will be brought to an end, or the disputes to be adjudicated at the hearing on the merits will be significantly limited. This saves time and expense for the parties, saves the time of potential witnesses, and makes efficient use of the Commission's resources where the arbitration is dismissed or the hearing on the merits has a more limited focus.
However, the process has disadvantages. When the moving party is unsuccessful, the period of time parties spend in the arbitration process is lengthened because two or more hearings have been scheduled. Parties bear the expense of two or more hearings. Where the applicant is ultimately successful at the substantive issues hearing, his or her remedy has been delayed, and the insurer is exposed to payment of increased interest.”
In this case, a determination of the limitation defence in the Insurer’s favour would put an end to the arbitration, save the parties the time and expense of obtaining and exchanging productions, preparing for a hearing on the merits and calling expert and other witnesses to deal with the Applicant’s entitlement to further weekly income benefits.
If the Insurer is unsuccessful at the preliminary issue hearing, a further hearing can then be scheduled to deal with Mrs. Kellar’s claims for entitlement to further weekly income benefits. At that time, the parties can prepare fully for a hearing on the merits and incur the expense associated with that hearing.
As the Insurer’s file has allegedly gone missing, there was some suggestion that the Insurer intends to rely on other evidence to establish that it properly terminated Mrs. Kellar’s income replacement benefits. Despite that suggestion, I decided that the issue of whether Mrs. Kellar’s claim for weekly income benefits was barred because she failed to apply for mediation and arbitration within the prescribed times should be heard separately from the substantive issues. In my view, a bifurcated hearing would result in the most just, efficient and least expensive resolution of the dispute.
Production disputes
Counsel for the Insurer sought an Order requiring counsel for the Applicant to obtain and preserve the files of various third parties relating to the Applicant, such as the files in the possession of the Applicant’s employers, ten doctors, clinics and pharmacies, bank statements, LTD carrier if any, and copies of any health benefit files. She advised that the Insurer is prepared to pay the reasonable disbursements associated with obtaining the files. She submitted that the Applicant had delayed bringing her claim forward for some twelve years, that there would be a breach of natural justice if documents were lost due to the passage of time and the Insurer would suffer prejudice.
Counsel for the Applicant advised that she provided counsel for the Insurer with extensive production, and had agreed to provide key documents, such as a copy of the accident benefit file in the possession of the Applicant’s former counsel.4 Counsel for the Applicant advised that she also agreed to obtain copies of the accident benefits file as it existed in the possession of both counsel in the tort action; the clinical notes and records of the family doctor; and an OHIP summary. She questioned the relevance of further production at this time in relation to a preliminary issue hearing which deals with a limitation question. She submitted that at a certain point a line must be drawn with respect to the reasonableness of requiring the Applicant to produce further documents at this juncture.
Counsel for the Applicant submitted that she has addressed the Insurer’s concern that documents presently in existence not be lost due to the passage of time. She submitted that rather than spend the additional time and expense at this stage to obtain the files, she has written to the third parties in question, namely, employers, ten doctors, clinics and pharmacies, asked them to preserve their files and requested that if they intended to destroy them, that they notify her office before doing so. She does not believe that there are collateral benefit policies, noting that any LTD benefits which may have been paid would be shown on the Applicant’s income tax returns, but agreed to make inquiries.
Relevance is determined by the issues in dispute. Having bifurcated the hearing, the dispute at this point is a purely procedural one. The preliminary issue hearing will determine whether the Applicant is able to proceed to arbitrate her claims for weekly income benefits. The focus at that hearing will be whether the Insurer can establish that it validly terminated the Applicant’s weekly income benefits in 1996. The relevant documents, if they exist, should be found in the accident benefits file.
In light of a bifurcated hearing, I find it is premature to order the Applicant to obtain and produce the requested files which relate to the Applicant’s substantive entitlement to weekly income benefits. To order the Applicant to obtain and hold onto those documents at this time will cause her to incur what may be unnecessary legal fees and thus defeat, at least in part, the economies created by having a preliminary issue hearing.
In my view, the steps taken by counsel for the Applicant save time and expense, while addressing the Insurer’s concern that records are preserved, should they be required. For these reasons, I dismiss the Insurer’s request for an Order that the Applicant obtain and retain the requested files at this time. It follows, that if the Insurer is unsuccessful at the preliminary issue hearing, that the Applicant should then obtain and produce the requested documents.
EXPENSES:
I leave the expenses of these motions in the discretion of the hearing arbitrator.
July 29, 2010
Suesan Alves Arbitrator
Date
Financial Services Commission des Commission services financiers of Ontario de l’Ontario
Neutral Citation: 2010 ONFSCDRS 96
FSCO A09-001985
BETWEEN:
MARGARET KELLAR
Applicant
and
INTACT INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
The limitation issue should be decided at a preliminary issue hearing.
The Applicant is not required to obtain the files from various third parties at this time.
The expenses of these motions are in the discretion of the hearing arbitrator.
July 29, 2010
Suesan Alves Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule - Accidents Before January 1, 1994, Regulation 672 of R.R.O. 1990, as amended.
- Schedule A to Mrs. Kellar’s Application for Mediation
- (FSCO A07-002359, June 6, 2008)
- The Applicant’s former counsel participated in the resumed pre-hearing. She advised that she was prepared to go through her copy of the accident benefits file, provide a detailed listing identifying each document in that file, produce copies of the documents which she did not object to produce and identify those which she objected to produce. She anticipated that she would be able to do this by September 30, 2010.