Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2010 ONFSCDRS 97
FSCO A08-002589
BETWEEN:
JULIA GORDYUKOVA
Applicant
and
DOMINION OF CANADA
GENERAL INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before: Robert Bujold
Heard: By telephone conference call on July 9, 2010
Written submissions were received on June 4, 11 and 18, 2010
Appearances: J.A. Michael Wolfe for Ms. Gordyukova
D’Arcy McGoey for Dominion of Canada General Insurance Company
Todd J. McCarthy for Certas Direct Insurance Company
Issues:
The Applicant, Julia Gordyukova, was injured in a motor vehicle accident on November 9, 2001. She applied for and received certain statutory accident benefits from Dominion of Canada General Insurance Company (“Dominion”), payable under the Schedule.1 Disputes arose regarding the payment of certain other benefits. In September 2002, Ms. Gordyukova brought an action in the Ontario Superior Court of Justice for payment of those benefits.
Subsequently, a dispute arose as to whether Ms. Gordyukova had sustained a catastrophic impairment as a result of the accident. In December 2008, Ms. Gordyukova filed an Application for Arbitration to have the issue of catastrophic impairment determined by an arbitrator at the Commission.
In the interim, Dominion disputed its obligation to pay accident benefits to Ms. Gordyukova on the basis that Certas Direct Insurance Company (“Certas”) was the priority insurer. In May 2008, Arbitrator Guy Jones found that Dominion was barred from disputing its obligation to pay accident benefits for failing to comply with the priority dispute regulation.2 In May 2009, MacDonnell, J. of the Ontario Superior Court of Justice granted Dominion’s appeal from the decision of Arbitrator Jones. The practical effect of the decision was to make Certas responsible for payment of accident benefits to Ms. Gordyukova. Certas sought leave to appeal Justice MacDonnell’s decision to the Ontario Court of Appeal. On December 24, 2009, the application for leave was denied.
Ms. Gordyukova now seeks to add Certas as a party to the arbitration. Certas opposes being added as a party on the basis that the arbitration should be stayed. Certas maintains that the single issue in the arbitration, the issue of catastrophic impairment, should be determined in the court action. Dominion seeks to be removed or replaced as a party to the arbitration.
The preliminary issues are:
Should Ms. Gordyukova’s arbitration proceeding for a determination of catatrophic impairment be stayed because the issue should be added to her outstanding court action?
If Ms. Gordyukova is permitted to proceed to arbitration, should the issues in the court action, namely medical and rehabilitation benefits, attendant care benefits and income replacement benefits, be added to the arbitration, or should the arbitration and the court action be permitted to proceed separately?
Should Certas be added as a party to the arbitration?
Should Dominion be removed or replaced as a party to the arbitration?
Result:
Ms. Gordyukova is permitted to proceed to arbitration on condition that she gives notice within 14 days that she has sought leave to withdraw or discontinue her court action.
The issues in the court action, namely medical and rehabilitation benefits, attendant care benefits and income replacement benefits, may be added to this arbitration once Ms. Gordyukova has confirmed that she has sought leave to withdraw or discontinue her court action.
Certas Direct Insurance Company is added as a party to the arbitration. Certas may respond to the added issues by raising any defence it feels appropriate, including any limitation defence.
Dominion of Canada General Insurance Company remains a party to the arbitration.
Ms. Gordyukova is entitled to her expenses of this preliminary issue hearing in an amount to be agreed upon or assessed in connection with the final disposition of the arbitration.
EVIDENCE AND ANALYSIS:
Background
The following is a chronology of some of the more notable events that inform the issues on this hearing:
Date of accident:
November 9, 2001
1st mediation:
On August 21, 2002, several disputes over entitlement to certain benefits proceed to mediation. A dispute regarding some prescription medications was resolved. A procedural agreement was also reached that Dominion would pay income replacement benefits (“IRBs”) at the rate of $200.00 per week until Dominion’s accountants had finalized the calculation of the quantum of Ms. Gordyukova’s income replacement benefit. The issues that were not resolved at the mediation were an orthopaedic mattress for $1,644.50 and attendant care benefits of $1,669.69 per month for dog walking services.
Statement of Claim issued:
On September 16, 2002, Ms. Gordyukova commenced a comprehensive claim for “damages for accident benefits and aggravated damages in the amount of $1,000,000” and “punitive damages in the amount of $1,000,000.” The claim is broadly drafted with specific reference to not only medical and rehabilitation and attendant care benefits, but also housekeeping and IRBs, although these were not, at the time, failed issues at mediation. (I note that only accident benefits issues remain in the court action as the tort claim was settled some time ago.)
IRBs terminated:
Dominion’s accountants eventually determined that the quantum of Ms. Gordyukova’s entitlement to income replacement benefits was $400.00 per week which it paid until June 17, 2005 when payments were terminated on the basis that Ms. Gordyukova no longer met the test of entitlement.
Non-catastrophic medical and rehabilitation limits reached:
On October 28, 2005, Dominion delivered notice that Ms. Gordyukova’s non-catastrophic medical and rehabilitation limits of $100,000 had been exhausted.
2nd mediation:
On February 16, 2007, the issue of the termination of Ms. Gordyukova’s income replacement benefits resulted in a failed mediation.
Application for Determination of Catastrophic Impairment:
An OCF-19 was prepared on December 19, 2007 by Dr. Veronica Kekosz, physiatrist. A section 42 assessment was conducted on June 25, 2008 which concluded that Ms. Gordyukova was not catastrophically impaired. A rebuttal report dated October 21, 2008 arrived at the opposite conclusion.
3rd mediation:
The issue of catastrophic impairment failed at mediation conducted on November 26, 2008.
Application for Arbitration:
Ms. Gordyukova brought an Application for Arbitration dated November 28, 2008 to have the issue of catastrophic impairment determined at the Commission. Ms. Gordyukova also brought a claim for a special award.
Hearing dates in the arbitration:
The pre-hearing in the arbitration took place on June 3, 2009. Hearing dates were set for March 29, 30, 31 and April 1, 2010. The hearing was subsequently adjourned to September 27, 28, 29 and 30, 2010 because Certas had not yet received Ms. Gordyukova’s accident benefits file from Dominion.
Hearing dates in the court action:
The trial in the court action is scheduled for three weeks in October 2011.
Priority Dispute:
The priority dispute between Dominion and Certas has been ongoing since prior to the commencement of the within arbitration. As noted above, a decision by Arbitrator Guy Jones in May 2008 found that Dominion was barred from proceeding with its priority dispute against Certas. That decision was overturned by Justice MacDonnell on May 27, 2009. The practical effect was that Certas became the priority insurer responsible for payment of accident benefits. Leave to appeal the decision of Justice MacDonnell to the Court of Appeal was denied on December 24, 2009. (There is no reference to the priority dispute or the pending court action in the pre-hearing letter dated June 3, 2009.)
Motion to add Certas/ Certas’s request for a stay of the arbitration/ Dominion’s motion to be removed or replaced:
With leave to appeal Justice MacDonnell’s decision denied, Ms. Gordyukova sought, by letter to the Commission dated February 24, 2010, to have Certas added to the arbitration. By letter dated March 2, 2010, Certas resisted being added to the arbitration on the basis that it was not appropriate that Certas should be added to a single issue arbitration when an earlier and more comprehensive court action was pending. This apparently caught Ms. Gordyukova by surprise and, together with some apparent scheduling miscommunication, the dates I initially proposed to hear Ms. Gordyukova’s motion (and Certas’s motion to have the arbitration proceeding stayed) became unworkable. The parties ultimately agreed to have the motion heard by telephone conference call on July 9, 2010 with written submissions being filed June. Dominion brought its own motion to be heard at the same time for an order that it be removed or replaced as a party to the arbitration.
Law
Insured person’s right to choice of forum
Where an insured person and insurer have a dispute in respect of the insured person’s entitlement to statutory accident benefits or the quantum thereof, and mediation has failed to resolve the dispute, the insured person may choose to commence a court proceeding or refer the issue to arbitration. Subsection 281(1) of the Insurance Act provides as follows:
281(1) Subject to subsection (2),
(a) The insured person may bring a proceeding in a court of competent jurisdiction;
(b) the insured person may refer the issues in dispute to an arbitrator under section 282; or
(c) the insurer and the insured person may agree to submit any issue in dispute to any person for arbitration in accordance with the Arbitration Act, 1991. 1996, c. 21, s. 37.
Jurisprudence on multiple proceedings
The leading arbitration case of Non-Marine Underwriters and Mangat3 examines the considerations that inform the question of whether to permit an insured person to advance two concurrent proceedings. In that case, Mr. Mangat had a pending court action for medical and rehabilitation benefits, income replacement benefits and a bad faith claim, when he commenced a subsequent arbitration proceeding for further medical and rehabilitation benefits. He also sought a special award at arbitration.
Director’s Delegate Draper noted the importance of avoiding multiple proceedings where possible:
The rule against multiple proceedings is one of the more basic common law principles. It is based on concerns that multiple proceedings will increase the cost and complexity of litigation, and lead to inconsistent results that undermine the credibility of the system. The common law is codified for Ontario’s courts in Rule 138 of the Courts of Justice Act, R.S.O. 1990, c.C43, which provides that: “As far as possible, multiplicity of legal proceedings is to be avoided.”
Looking to the wording of subsection 281(1), the Director’s Delegate also noted the more straightforward proposition that where mediation fails on a number of issues “the insured person is not entitled to take some issues to court and others to arbitration.” The insured person is, in effect, put to an election; proceed to arbitration or commence an action in the court.
As the Director’s Delegate then noted:
The more difficult question, as here, involves subsequent claims. It is inherent in this system that insured persons will submit claims at different times. As a result, insurers will often make a series of decisions that can be mediated and, indeed, must be mediated if they are to be taken further. If mediation is unsuccessful, the question is whether the insured person’s ability to choose arbitration is restricted by his or her previous election to go to court.
I accept that an election to go to court does not necessarily govern all future claims. The later issues may be sufficiently distinct, or the timing so problematic, that it would be unnecessary or unfair to insist that they be brought in the court action. It is not enough, however, to simply ask whether the new claim involves a different benefit. What is required is the kind of pragmatic balancing of interests seen in Gogna and King, and suggested in the recent appeal decision in Miller.
The chronology of events in Gogna is somewhat convoluted, but, in short, there were separate proceedings brought by the insured person and the insurer. The insurer had brought an action for repayment of benefits on the basis of fraudulent misrepresentation, after the insured person withdrew his application for arbitration. The insured person then reapplied for arbitration. After determining that the insurer could proceed with its court action, Madam Justice Macdonald then considered which proceeding should go first. In deciding that the insurer’s court action should proceed, she adopted the following criteria:
which action began first;
who has the chief burden of proof;
which is the most comprehensive in scope.
The Director’s Delegate in Mangat noted that the issue has arisen somewhat differently in the arbitration context and, simply put, “[those cases] deal with situations where the insured person elects to go to court on some accident benefits claims, but pursues others in arbitration.” After reviewing the evolution of approaches in the arbitral context, the Director’s Delegate settled on the “pragmatic balancing of interests” taken in King and Royal Insurance Company of Canada4 which, itself, distilled principles garnered from the arbitration case law. In King, the arbitrator summarized the principles to be considered as follows:
Does the arbitration involve issues substantially similar to those in the civil action?
How far along has the civil action proceeded (for example, have discoveries taken place on the issues before the court)?
Is the civil action broader in scope than the arbitration, both in terms of the issues involved and the relief sought?
Is there any serious impediment to having the issues in the arbitration dealt with in the court proceeding?
Would permitting the Applicant to proceed with the arbitration unduly duplicate proceedings, leading to greater costs and delays and raising the spectre of inconsistent results?5
The Director’s Delegate approved of the criteria identified in both Gogna and King, with the following proviso:
These criteria, however, must be applied against the backdrop of the insured
person’s right to choose arbitration. Where the insured person elects to pursue statutory accident benefits through arbitration, that choice should be respected to the greatest extent possible. Judges and arbitrators should be slow to force an unwilling insured person into court.
However, he then continued:
The situation is fundamentally different if, as here, the insured person first elects to go to court. While a subsequent mediation may offer a further choice of forum, the insured person may not be allowed to proceed in arbitration if the claims could reasonably have been added to the court action, and allowing both proceedings to continue would result in both forums dealing with evidence or issues that substantially overlap.
With all of these considerations in mind, the Director’s Delegate concluded that Mr. Mangat’s court action should proceed and his arbitration proceeding should be stayed. He listed the following reasons:
The court action was started before this application for arbitration and is broader in scope.
The same parties are involved in both proceedings, with Mr. Mangat having the chief burden of proof in both forums.
The court action includes a broad claim for supplementary medical and rehabilitation benefits that is broad enough to include the benefits claimed in the arbitration proceeding.
The court action includes a claim for punitive damages based on Lloyd’s refusal to pay supplementary medical and rehabilitation benefits, likely resulting in the need for the same evidence in both forums.
The court action includes a claim for ongoing weekly income benefits. As Lloyd’s is challenging the connection between the accident and Mr. Mangat’s ongoing problems, the same evidence will be required in both forums.
There is no obvious impediment to Mr. Mangat adding the issues to the court action.
The two proceedings will require substantially overlapping medical evidence, inflating the overall cost of litigation.
The overlapping factual and legal issues create a real possibility of inconsistent findings. Alternatively, if issue estoppel is going to be used to preclude the parties from revisiting findings in the later proceeding, those findings are better made in the more comprehensive proceeding.
Subsequent to Mangat, the Director’s Delegate had the opportunity to revisit the “balancing of interests” approach in the appeal decision of CGU Insurance Company of Canada and Bolger.6
In Bolger, the applicant had commenced a court action in December 2001 for medical and rehabilitation benefits, attendant care benefits and housekeeping expenses. He also claimed damages for CGU’s alleged bad faith. The Statement of Claim was drafted in broad terms.
An arbitration proceeding was subsequently commenced in April 2002 for medical and rehabilitation benefits and case manager services contemplated in a treatment plan. After a determination of catastrophic impairment in January 2003, Mr. Bolger filed a supplementary application for arbitration seeking post-104 week attendant care benefits. He also claimed attendant care benefits at the higher rate permitted in catastrophic cases.
The issue for the arbitrator in Bolger was, first, whether to permit Mr. Bolger to proceed with his arbitration proceedings, given that the prior pending court action was broader in scope and sought benefits also claimed in the arbitration proceedings. If so, the arbitrator then had to determine whether the claims in the supplementary application for arbitration should be combined with the claims in the first arbitration application which, at the time of the issuance of her decision, was scheduled to be proceed to hearing in just over one month.
On the first issue, the arbitrator concluded as follows:
Based on the criteria set out in previous decisions such as King and Mangat, it seems more appropriate at first glance to proceed solely with the court action in this case. For example, the court action was commenced first; the court action has proceeded to the examination for discovery stage; Mr. Bolger has the burden of proof in both proceedings; and the court action is more comprehensive in
scope.
However, there are other factors to consider. Mr. Bolger has agreed to withdraw any overlapping court proceedings within 14 days of the issue of this decision. This withdrawal eliminates most concerns regarding duplication of costs and the possibility of inconsistent results. Even if there is some duplication caused by leaving Mr. Bolger’s bad faith claim in court, the duplication is minor since there is no claim for a special award being sought at the arbitration. Further, given the reports stating the urgency of dealing with this claim, the additional delay of approximately one year required for the court proceedings could lead to tragic consequences in Mr. Bolger’s case.
Accordingly, I permit Mr. Bolger to continue his Application for Arbitration and his Supplementary Application for Arbitration, on the condition that he confirms in writing within 14 days of the date of this decision that he has amended his statement of claim, issued December 12, 2001, to withdraw all claims that may potentially overlap with the claims being decided at the arbitration hearing.
On the second issue, the arbitrator permitted the claims in the supplementary arbitration to be combined with the claims in the arbitration that was scheduled to proceed in one month. She noted that Mr. Bolger was “at a significant, ongoing apathy and suicide risk.” She also concluded that hearing the applications together would result in the quickest and least expensive means of dealing with the applications and would avoid the possibility of inconsistent results.
In short, the arbitrator in Bolger permitted the arbitration proceedings to be combined on condition that the Statement of Claim be amended to withdraw all claims that potentially overlapped with the claims in the combined arbitration proceeding. The arbitration and the court action could then each proceed separately.
On appeal, CGU argued that the arbitrator’s order was inconsistent with arbitral case law, particularly Mangat. In refusing to accept the appeal of the arbitrator’s preliminary order, Director’s Delegate Draper noted as follows:
I accept that multiple proceedings are to be avoided. As stated in Mangat, the insured person’s right to choose court or arbitration does not convey an unfettered right to split claims between the two forums. However, this does not create a fixed rule in the opposite direction. The insured person’s initial decision to go to court or arbitration does not necessarily determine the forum for all future claims. What is required is a “pragmatic balancing of interests.”
As I read the Arbitrator’s decision, that is precisely what she did. She considered the criteria identified in Mangat and the arbitration decision in King and Royal Insurance Company of Canada, (FSCO A98-000234, March 24, 1999), but noted there were other factors. Most significantly, Mr. Bolger agreed to withdraw any overlapping claims from his court action. This was a relevant consideration. While the Arbitrator had to weigh CGU’s claim that Mr. Bolger’s concession was insufficient and came too late in the day, I find no suggestion that she failed to do so.
Ms. Gordyukova also referred me to the case of Murphy and Certas Direct Insurance Company.7 The case is not directly relevant to her main argument that she should be permitted to proceed with both her court and arbitration proceedings separately. The case is put forward in support of her alternative argument that, in the event I find the proceedings should be consolidated, I should permit Ms. Gordyukova to add the issues in the court action to the within arbitration that is currently scheduled to proceed to hearing in approximately two months on September 27, 2010.
In Murphy, the applicant had commenced a court proceeding in March 2004 for medical and rehabilitation benefits, attendant care benefits, caregiving and housekeeping benefits and also a claim for punitive damages. An arbitration proceeding was subsequently commenced for a determination of catastrophic impairment in May 2007 and the Statement of Claim in the court action was amended shortly thereafter, in August 2007, to claim at the increased rates and for the increased time periods available only in the event of a determination of catastrophic impairment.
The issue in Murphy was not whether Ms. Murphy should be permitted to advance concurrent proceedings in both the court and at the Commission. Ms. Murphy conceded that there would be “overlapping issues and similar factual determinations.” The arbitrator framed Ms. Murphy’s position as follows:
What Mrs. Murphy really seeks is a consolidation of all her accident benefits claims before an arbitrator at FSCO. She also requests that she be permitted to have those accident benefit claims already commenced in the court action added to the Application for Arbitration.
Although Ms. Murphy was not seeking to proceed in two different forums, the analysis was still framed under the rubric set out in Mangat. The arbitrator considered that “all issues of overlapping evidence and inconsistent decision making would be obviated by the withdrawal of the claim before the courts.” He also noted and weighed that the arbitration proceeding could be heard before the court action (possibly by several months or more) and found “evidence of significant and recent changes in [Ms. Murphy’s] home life necessitating a swift resolution of her accident benefits dispute.” The arbitrator also recognized and accepted that Ms. Murphy wished to avail herself of arbitration, not to accrue any tactical advantage, but to access the less expensive process offered at the Commission. Ms. Murphy also agreed that transcripts from examinations for discovery and defence medicals in the court action could be used by Certas in the arbitration.8 Upon balancing the various interests, the arbitrator concluded that Ms. Murphy should be permitted to add the issues in her court action to her arbitration proceeding on the condition that she seek leave to withdraw or discontinue her court action.
I note that Certas gave notice in Murphy that it would raise a limitation defence in the event that Ms. Murphy was permitted to add her court claims to the arbitration proceeding. The arbitrator permitted Certas to raise any preliminary or other defence in regard to the added issues.
I also note that a different arbitrator heard a preliminary issue brought by Ms. Murphy to determine whether her claims would be statute-barred, if she were to add them to the arbitration proceeding. In that decision,9 the arbitrator found that he did not have jurisdiction to decide the limitation defence until after the issues were added to the arbitration. Until then, the issues were still before the court and there was no dispute to be heard with respect to these issues at arbitration.
Although the arbitrator refused to consider the limitation defence prior to the issues being added to the arbitration, he concluded with the following obiter remarks:
The denial of Mrs. Murphy’s motion does not mean I am inclined to accept Certas’ position on its time-limits defence. Mrs. Murphy apparently filed her Court lawsuit in 2004, thereby putting Certas on notice she contested the denial of her claims for accident benefits. I do not understand the rationale why immediate transfer of her claims from Court to this action somehow negates her 2004 notice of legal action, and remain seized of this preliminary issue.
The Parties’ Positions
Certas
Relying on Mangat and other case law, Certas maintains that it is not enough to simply look at the catastrophic determination issue in the arbitration proceeding as being distinct from the medical and rehabilitation, attendant care and IRB issues in the court action.
Certas notes that the court action was commenced before the arbitration proceeding and is broader in scope. Certas does not object to being made a party to the court proceeding nor does it object to the issue of catastrophic impairment being added to the court action. Certas maintains that it will be in a position to fairly defend the action on all issues when it goes to trial in October 2011. Certas also notes that Dominion would remain a party to the court action, given the claim for aggravated and punitive damages based on Dominion’s handling of Ms. Gordyukova’s file.
Most importantly, Certas maintains that cases like Bolger are distinguishable because, unlike the case at hand, causation and credibility were not central to the issues in both the court action and the arbitration proceeding.
Here, the issue in the arbitration is whether Ms. Gordyukova sustained an impairment that, in accordance with the American Medical Association’s Guides to the Evaluation of Permanent Impairment, 4th edition, 1993, results in a class 4 impairment (marked impairment) or class 5 impairment (extreme impairment) due to mental or behavioural disorder. Certas intends to rely on a March 2008 assessment by Dr. Zaretsky, psychiatrist,10 wherein he opined that, while Ms. Gordyukova’s self-reports and level of functioning suggested a “marked impairment” in as many as three of the four realms of assessed functioning, he did not believe “that the stated motor vehicle accident on November 9, 2001 has had any causative role in her current presentation.” Instead, Dr. Zaretsky found Ms. Gordyukova to be a “poor historian” and noted “inconsistencies in her presentation and behaviour [that] may well represent conscious secondary gain.” Dr. Zaretsky also found that Ms. Gordyukova’s behavioural impairment was “not reflective of a specific motor vehicle accident-related psychopathology.” As a result, Certas submits that causation and credibility are not merely boilerplate defences, but are the underlying issues for the trier of fact in the arbitration.
Likewise, Certas maintains that causation and credibility will be central to the IRB, attendant care and medical and rehabilitation issues currently before the court. The extent, if at all, that any impairments or disabilities, physical or mental, that Ms. Gordyukova may currently suffer from were caused or contributed to by the accident of November 9, 2001 will again be the focus of its defence, and Ms. Gordyukova’s credibility will again be the focus of the causation inquiry.
Accordingly, Certas submits that there are factual questions central to both the court action and the arbitration, and permitting both matters to proceed separately would create a significant risk of inconsistent results.
With respect to Ms. Gordyukova’s alternative relief, i.e., that she be permitted to add the issues in the court action to the arbitration, Certas denies that I have the jurisdiction to make such order. Further, as in the Murphy case, Certas put Ms. Gordyukova on notice that it would raise a limitation defence, in the event the court issues were added to the arbitration.
Ms. Gordyukova
Ms. Gordyukova agrees that the pragmatic balancing of interests set out in Mangat should govern the determination of whether an applicant should be required to combine subsequent claims with an existing court action or be permitted to proceed by separate arbitration proceeding. However, Ms. Gordyukova emphasizes that the balancing of interests must be done against the backdrop of an insured person’s right to choose arbitration and where that choice is made, it should be respected to the greatest extent possible. Further, Ms. Gordyukova maintains that all factors must be considered and no one factor should be given undue weight. With these considerations in mind, Ms. Gordyukova submits that the criteria in Mangat support a finding that she should be permitted to proceed with both the current arbitration for a determination of catastrophic impairment as well as her court action for payment of specific accident benefits. In the alternative, should it be found that the issues in the two proceedings should be consolidated in one proceeding, then Ms. Gordyukova asks that the issues in the court action be brought into the arbitration.
Looking at the Mangat criteria, Ms. Gordyukova acknowledges that the court action was commenced first and that she has the burden of proof in both proceedings. Beyond that, Ms. Gordyukova denies that the criteria favour Certas’ position.
Ms. Gordyukova submits that it is debatable which proceeding is broader in scope. On the one hand, the court action has more issues but, on the other, the impact of the catastrophic impairment determination is far-reaching. If Ms. Gordyukova is found to be catastrophically impaired, she will be able to pursue claims for attendant care and housekeeping beyond two years post-accident. The maximum limits for attendant care benefits and medical/rehabilitation benefits will each increase to $1,000,000.
Similarly, while the court action has proceeded beyond examinations for discovery, Certas has yet to be added as a party and the hearing is not scheduled to be heard until October 2011, well after the arbitration which is scheduled to be heard in two months.
Ms. Gordyukova denies that the issues in the two proceedings are substantially similar or would result in a duplication of proceedings.
Ms. Gordyukova submits that the court action and the arbitration involve very different inquiries. The court action will look at her ability to work at any job for which she is reasonably suited by education, training and experience, as well as the level of assistance, if any, she requires with self-care. The inquiry into these issues will require evidence of vocational assessors, occupational therapists and service providers. Unlike the catastrophic impairment issue, physical impairments stemming from physical injuries, such as evidence of a disc herniation, will be germane to the inquiry. The catastrophic determination, on the other hand, is the discrete issue of whether Ms. Gordyukova suffers from a Class 4 marked impairment due to a mental or behavioural disorder and will turn largely on two competing psychiatric opinions.
As far as the risk of inconsistent results is concerned, Ms. Gordyukova again emphasizes that the issues in the arbitration and the court action are sufficiently distinct that different results do not necessarily equate with inconsistent results. As she notes, there is nothing inherently inconsistent with Ms. Gordyukova being found not catastrophically impaired yet still being found unable to work at any job for which she is reasonably suited. I also note that Ms. Gordyukova undertook to withdraw her claim for a special award in the arbitration, if she is permitted to proceed with both the court action and the arbitration. She concedes that the claim for a special award and the bad faith claim not only involve substantially the same inquiry, but raise the spectre of inconsistent results if they were both permitted to proceed.
On the prospect of inconsistent results on causation and credibility, Ms. Gordyukova submits there is no genuine issue. Dominion paid income replacement benefits for 3 ½ years and non-catastrophic policy limits on medical and rehabilitation benefits. The only suggestion that the accident may not be the cause of Ms. Gordyukova’s impairments is Dr. Zaretsky’s assessment conducted seven years post-accident. In his report, Dr. Zaretsky concluded that the accident did not have any causative role in her illness because she was a “poor historian.” Ms. Gordyukova denies that, even if she is a poor historian, that it follows that her impairments were not caused by the accident. Ms. Gordyukova maintains that Certas cannot simply rely on a bald allegation that causation is an issue; that it must point to cogent evidence that the applicant’s condition was caused by some other incident or pre-existing condition. Certas must point to some other likely cause. Ms. Gordyukova maintains that there is no such evidence here. In fact, the evidence of the other assessors, including Dr. Berry, a psychiatrist retained by the defence in the related tort action, found Ms. Gordyukova’s mental illness to be the result of the accident.11
With respect to the other criteria in Mangat, Ms. Gordyukova submits that it would be a serious impediment for the catastrophic impairment determination issue to be heard in the court proceeding because the issue is inherently complex and arbitrators at the Commission have special expertise in this particular area of the law. Ms. Gordyukova contends that the same cannot be said of a judge and jury of the Ontario Superior Court of Justice.
Ms. Gordyukova also submits that permitting both matters to proceed separately could reduce both costs and delays. Ms. Gordyukova speculates that determining the issue of catastrophic impairment in advance of the court proceeding could enhance the prospects for settlement. Further, unless the catastrophic impairment issue is determined first, the court proceeding will need to include her claims for post-104 week attendant care and housekeeping benefits as well as medical and rehabilitation benefits denied beyond the $100,000 non-catastrophic limits. Otherwise, a finding of catastrophic impairment could still leave Ms. Gordyukova with the prospect of a further trial to determine entitlement to these benefits beyond 104 weeks and/or at the higher limits.
Finally, Ms. Gordyukova points to urgency as a reason to permit her to continue with her arbitration proceeding. It has been five years since Ms. Gordyukova has received accident benefits and the financial difficulties she has experienced are documented in the medical evidence. Certas did not dispute Ms. Gordyukova’s submission that she went from an active and entrepreneurial woman with two condominiums and multiple jobs to being financially destitute, relying on food banks. She apparently relies on the benevolence of friends for shelter and, at times, has lived on the streets. Ms. Gordyukova submits that she simply cannot afford to wait until October 2011 for the issue of catastrophic impairment to be determined with even further delays should a finding of catastrophic impairment be appealed. Again, Ms. Gordyukova believes that a determination of catastrophic impairment at arbitration could promote settlement of the court action and provide her with access to long awaited benefits.
Dominion
Dominion took no position on the question of whether the issues in the arbitration and court action should be joined.
Dominion accepts that if all issues are consolidated in either the court action or the arbitration proceeding, it will need to remain a party to defend the bad faith claim or the special award claim, as the case may be. If the matters are allowed to proceed separately, Ms. Gordyukova, as stated, has undertaken to withdraw her claim for a special award in the arbitration. Therefore, regardless of the result, Dominion will remain a party to one proceeding or the other, but only one proceeding.
Analysis
My analysis is framed by considering two questions: 1) Should the arbitration and the court action be permitted to proceed separately? and, 2) If not, should the issues be consolidated in the court action or the arbitration proceeding?
For the reasons that follow, I am persuaded by Certas that the issues in the arbitration and the court action should not be heard by two different triers of fact in two separate proceedings. However, on a pragmatic balancing of interests, I agree with Ms. Gordyukova’s alternative position that she should be permitted to consolidate all issues in the arbitration.
Should the arbitration and the court action be permitted to proceed separately?
I agree with Ms. Gordyukova that all factors must be considered when determining whether to permit an arbitration and a court action to proceed separately. However, a balancing of interests does not mean that all considerations are given equal weight.
In this case, Ms. Gordyukova denies that the two proceedings involve similar lines of inquiry or give rise to a real prospect of inconsistent results. I disagree. While the determination of catastrophic impairment is a discrete issue, quite distinct from the issues in the court action, Certas is responding in both matters on the basis that Ms. Gordyukova’s impairments, if any, are not as a result of the accident. In taking this position, Certas does not focus on any pre-existing or subsequent conditions that may explain Ms. Gordyukova’s level of impairment. The real underlying issue for Certas is Ms. Gordyukova’s credibility and whether her self-reports, including vague responses, are motivated by conscious secondary gain or other factors not related to the accident. This requires findings of fact that will impact the assessment of the medical and other evidence in both proceedings.
Ms. Gordyukova argues that the fact that she may be a poor historian is, in itself, consistent with her psychological impairments. She notes that even some defence medicals have found her impairments to be accident-related. She further notes that Dominion has paid non-catastrophic policy limits for medical and rehabilitation benefits, as well as 3 ½ years of income replacement benefits, and she argues that it would not have done so if causation were a genuine issue.
The difficulty with this argument is that it invites me to assess the relative strength of the parties’ positions in the event the issues proceed to hearing. As I see it, that is not a proper consideration on this preliminary issue hearing. As long as there is an evidentiary foundation for a party’s position, it is not my role to determine whether the party is likely to succeed at hearing. There is a distinction between whether an issue is genuine and the likelihood that a party will be successful on the issue. In this case, causation, based largely on Ms. Gordyukova’s credibility, is a genuine issue that will affect her claims in both proceedings. Indeed, for Certas, it is appears to be the core issue. Inconsistent findings on issues as fundamental as causation and credibility go beyond the merits of Ms. Gordyukova’s claims. It also risks putting the administration of justice into disrepute.
I also note that causation and credibility issues were not identified in Bolger and, though causation is given passing reference in King, there is no mention of credibility concerns. Those cases, while helpful, are distinguishable on that basis.
I therefore conclude that there would be an unacceptable risk of inconsistent results if Ms. Gordyukova were permitted to proceed with both her arbitration and court action.
Should the issues be consolidated in the court action or the arbitration proceeding?
Apart from the prospect of inconsistent results, other criteria outlined in Mangat appear to favour Certas’s position that all issues should proceed in the court action.
There is the fact that the court action was commenced first. Also, the court action is broader in scope. While I agree with Ms. Gordyukova that the implications of the catastrophic impairment determination are far-reaching, I understand this criterion as involving an inquiry into which proceeding is more broadly framed in terms of issues and relief, so as to more easily embrace the issues to be added. In that regard, the Statement of Claim in the court action is drafted in broad terms seeking “damages for accident benefits and aggravated damages in the amount of $1,000,000” as well as “punitive damages in the amount of $1,000,000.” On the other hand, the determination of catastrophic impairment, as Ms. Gordyukova herself admits, is a discrete issue that does not, in itself, afford her any benefits. It simply permits access to certain benefits at enhanced rates, increased limits and/or for longer periods. I therefore find the court action to be broader in scope.
Nevertheless, I am persuaded on consideration of the remaining criteria that Ms. Gordyukova should be permitted to add the issues in the court action to the arbitration. In short, I find that consolidating the issues in the arbitration is more likely to result in the most just, quickest and least expensive resolution of Ms. Gordyukova’s accident benefits disputes.
The court action, although commenced first, is not scheduled to proceed to hearing until October 2011. The late September 2010 arbitration will allow Ms. Gordyukova’s long-standing disputes to be heard much sooner. I accept that Ms. Gordyukova’s circumstances have deteriorated significantly, indeed tragically, over the years. Certas did not dispute this point. I do not find it reasonable that Ms. Gordyukova should have to wait another 15 months for her claims to be heard when an arbitration proceeding is only two months away.
I recognize that two months is not a long time for the parties to prepare for hearing on the issues currently in the court action. Still, I note that in Bolger issues were added when the arbitration was only one month away. More importantly, the court issues in this matter have been in dispute since May 2002, when those issues went to mediation, and Certas has been the insurer obligated to respond to Ms. Gordyukova’s accident benefits claims since December 2009. In other words, these are old issues with which Certas should now be well-acquainted.
There is also the potential efficiency that the September dates could still be used to hear the catastrophic impairment issue first. The fact that the issues are combined in one proceeding for hearing by one trier of fact does not necessarily mean that the issues cannot be bifurcated. A hearing on entitlement to benefits could be scheduled before the same arbitrator after the decision on catastrophic impairment is released. This would not only allow the parties more time to prepare for the issues currently in the court action but, as noted by Ms. Gordyukova, the outcome of the catastrophic determination issue may promote settlement of those issues. At minimum, the catastrophic determination would refine whether the second stage of the hearing needed to include issues and evidence only relevant to persons with catastrophic impairments.
I did not hear submissions on whether Certas would find it sufficient to have all issues heard by the same trier of fact, but in a bifurcated process. If Certas believes that findings on causation and credibility require that all evidence on all issues be heard at the same time, I note that the arbitration is currently scheduled for only four days while the court action provided for three weeks. However, I would not be disposed to grant any adjournment request to secure more consecutive hearing dates, so that all issues may be heard at the same time, unless it was for a relatively brief period. The Commission is able to accommodate short adjournments. Counsel are expected to do the same. Arbitration is intended to be a less costly and more expedient alternative to proceeding in the courts. Expedience must remain an important consideration here. In the event of an adjournment, I expect the arbitration would still take place several months before the court action is currently scheduled to begin. If the parties are unable to resolve how to proceed, I am prepared to resume the pre-hearing to discuss such case management matters.
With respect to the submission that I do not have jurisdiction to permit the issues in the court action to be added to the arbitration, Certas provided no authority in support of its position. However, I note that arbitrators frequently add issues from failed mediations to existing arbitration proceedings involving the same parties and the same accident. New issues would likely be combined with an existing arbitration in any event, if they were the subject of a separate application for arbitration, through the operation of Rule 30 of the Code. Adding failed issues directly to an existing arbitration simply represents a broad interpretation of Rule 30 that is consistent with the goal of producing the most just, quickest and least expensive means of dealing with the dispute. It may also be viewed as a waiver of a procedural requirement permitted by Rule 81.1(b).
Therefore, I do not accept that I have no jurisdiction to permit the issues in the court action to be added to the arbitration. As I see it, Certas’s real concern is with preserving its right to argue that the issues in the court action are statute-barred from proceeding to arbitration because Ms. Gordyukova did not commence an arbitration in respect of those issues within two years after the insurer’s refusal to pay, as set out in subsection 281(5) of the Insurance Act and subsection 51(1) of the Schedule. Certas’s right to raise that defence is preserved. If Ms. Gordyukova wishes to proceed with her arbitration proceeding, this is a risk she will need to assume.
Conclusion
Ms. Gordyukova is not permitted to proceed to arbitration and also continue with her court action. There are common issues related to causation and credibility which present a real risk of inconsistent findings if the matters were permitted to proceed separately.
Ms. Gordyukova is permitted to proceed to arbitration on condition that she gives notice within 14 days that she has sought leave to withdraw or discontinue her court action and, on fulfillment of that condition, the issues in the court action can be added to the arbitration.
Applying the criteria set out in Mangat to the facts of this case, I conclude that proceeding in the manner outlined above results in the most just, quickest and least expensive resolution of Ms. Gordyukova’s accident benefits disputes, as it:
- removes the spectre of inconsistent results;
- provides for an earlier resolution of the accident benefits disputes, responding to factors suggesting the need for a swift resolution;
- mitigates against delays that have been caused, at least in part, by the priority dispute between Certas and Dominion;
- provides for a less expensive process for resolution of the accident benefits disputes; and
- respects Ms. Gordyukova’s preference to have the determination of catastrophic impairment decided by an arbitrator.
As the insurer obligated to pay accident benefits to Ms. Gordyukova, Certas is added as a party to this arbitration proceeding. Certas may respond to the added issues from the court action by raising any defence it feels appropriate, including any limitation defence.
Dominion remains a party to the arbitration proceeding to respond to Ms. Gordyukova’s claim for a special award.
EXPENSES:
I exercise my discretion to award Ms. Gordyukova her expenses of this preliminary issue hearing in an amount to be agreed upon or assessed in connection with the final disposition of the arbitration.
July 30, 2010
Robert Bujold Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2010 ONFSCDRS 97
FSCO A08-002589
BETWEEN:
JULIA GORDYUKOVA
Applicant
and
DOMINION OF CANADA
GENERAL 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:
Ms. Gordyukova is permitted to proceed to arbitration on condition that she gives notice within 14 days that she has sought leave to withdraw or discontinue her court action.
The issues in the court action, namely medical and rehabilitation benefits, attendant care benefits and income replacement benefits, may be added to this arbitration once Ms. Gordyukova has confirmed that she has sought leave to withdraw or discontinue her court action.
Certas Direct Insurance Company is added as a party to the arbitration. Certas may respond to the added issues by raising any defence it feels appropriate, including any limitation defence.
Dominion of Canada General Insurance Company remains a party to the arbitration.
Ms. Gordyukova is entitled to her expenses of this preliminary issue hearing in an amount to be agreed upon or assessed in connection with the final disposition of the arbitration.
July 30, 2010
Robert Bujold Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- Ontario Regulation 283/95 - Disputes Between Insurers
- (FSCO P00-00020, August 1, 2000), Appeal
- (FSCO A98-000234, March 24, 1999)
- I note that, in King, the arbitrator permitted the applicant to continue with both his court action and his arbitration, as the two proceedings were “substantially different” and involved “significantly different lines of inquiry.” As well, it was found that there was little danger of inconsistent results, and greater costs and delays would likely result if Mr. King were required to consolidate all of his disputes into the court action.
- (FSCO A02-000668, May 9, 2003); (FSCO P03-00018, May 29, 2003), Appeal
- (FSCO A07-000984, March 25, 2008)
- I did not hear any submissions on whether a similar undertaking was given or even sought in the present case.
- (FSCO A07-000984, August 12, 2008)
- Applicant’s Document Brief, Tab 5
- Applicant’s Document Brief, Tab 11