Neutral Citation: 2011 ONFSCDRS 116 FSCO A10-003016

BETWEEN:

JULIAN HOTCHKISS Applicant

and

KINGSWAY GENERAL INSURANCE COMPANY Insurer

DECISION ON A MOTION

Before: Arbitrator John Wilson Heard: December 5, 2011, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Gregory Neinstein for Mr. Hotchkiss Shawn Stringer for Kingsway General Insurance Company

Issues:

The Applicant, Julian Hotchkiss, was injured in a motor vehicle accident on July 20, 2007. He applied for and received statutory accident benefits from Kingsway General Insurance Company (“Jevco” or “Jevco (Kingsway)”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Hotchkiss applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

At the commencement of the arbitration hearing on Monday, October 17, Mr. March appeared as counsel for Kingsway.

Both Mr. March and Mr. Neinstein tendered document briefs for use in this arbitration at the onset of the hearing. These were not yet marked as exhibits nor made part of the record, since counsel for Mr. Hotchkiss advised that he had several important preliminary issues to be raised, one of which involved whether the Insurer’s documents should be accepted due to non-compliance with the time limits under the Dispute Resolution Practice Code (“Practice Code”).

After the initial issues of conflict and the terms of the hearing adjournment had been addressed, it was agreed to hear the balance of the preliminary matters separately on December 5, 2011.

Both parties agreed that the Insurer’s Document brief, the surveillance evidence and the witness list had not been filed in a timely manner, and as such, did not conform with the Practice Code.

Since the Insurer was seeking relief from the provisions of the Practice Code, Mr. Stringer requested the following orders;

An Order granting leave to Jevco (Kingsway) to rely upon its Arbitration Brief.
An Order granting leave to Jevco (Kingsway) to rely upon surveillance.
An Order granting leave to Jevco (Kingsway) to call witnesses as noted in the pre-hearing letter.
An Order granting leave to Jevco (Kingsway) to call the individuals on its list of witnesses.

Mr. Stringer also advised that his client would be requesting the following further production order:

An Order requiring the Applicant to immediately provide production of Mr. Hotchkiss’ ODSP file, updated family doctor clinical notes and records from February 23, 2011, and an updated decoded OHIP summary from February 23, 2011.

Jevco also requested an order quashing the summons to witness served upon Ms. Chrislyn Alexander, the Jevco Claims Adjuster.

Result:

I decline to waive the service requirements for the arbitration brief. I see no reason to deviate from the provisions of Rule 39. Jevco (Kingsway) may still place reliance on documents in the Applicant’s Brief once they are entered into evidence by the Applicant.
The surveillance is not admissible in this arbitration.
Jevco (Kingsway) may call only those witnesses specifically identified in the pre-hearing letter provided that, in the case of experts, the requirements regarding production and service of the reports have been fully complied with.
Mr. Hotchkiss shall continue to make his best efforts to obtain the ODSP file on an expedited basis and to provide it to Jevco (Kingsway). I reserve on whether the documents should be admissible as evidence in this arbitration.
I decline to quash the summons to witness served on Ms. Chrislyn Alexander as it is on the face of it neither irrelevant nor scandalous.

EVIDENCE AND ANALYSIS:

While each of the Insurer’s requests deals with slightly different parts of the Dispute Resolution Practice Code, there is an element of commonality between most of them. In each case the Insurer is requesting a waiver of the governing time limit.

With regard to the admission of evidence at this arbitration, the question to be examined is whether a party should be held to the strict timelines for service provided for in the Practice Code or whether the requirements should be waived in the interests of having the most complete record before an arbitrator.

I will deal with the requests in the order they were put forward by the Insurer.

An Order granting leave to Jevco (Kingsway) to rely upon its Arbitration Brief.

The Dispute Resolution Practice Code is the starting point in any analysis of the procedural issues raised by the parties in this matter. Rule 1.1 sets out the goals expressed by the Practice Code:

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

Rule 39.1 deals specifically with documentary evidence.

EVIDENCE

39.1 Subject to Rule 39.2, all documents, reports (including experts’ reports) and assessments to be introduced at a hearing by either party must be served on the other party at least 30 days before the first day of the hearing.

39.2 In extraordinary circumstances, a party may seek an arbitrator’s permission to serve a document, report or assessment on the other party for use at a hearing less than 30 days before the first day of hearing.

39.3 The hearing arbitrator will determine the relevance, materiality, and admissibility of evidence submitted at the hearing, but will not admit evidence at a hearing that:

(a) would not be admissible in a court by reason of any privilege under the law of evidence; or

(b) is not admissible under the Insurance Act; or

(c) was not served on the opposing party in accordance with Rules 39.1 and 39.2, unless the hearing arbitrator is satisfied that extraordinary circumstances exist to justify an exception.

The Practice Code does not define “extraordinary circumstances.” The Canadian Oxford Dictionary however includes the following under its definition of “extraordinary”:

1 unusual, remarkable, or out of the regular course or order. 2 exceeding what is usual in amount, degree, extent, or size, esp. to the point of provoking astonishment, admiration, or disapproval (an extraordinary talent) …

While certain aspects of this case may be highly unusual, it is the circumstances that surround the failure to be timely that must be construed as “extraordinary circumstances.”

In the absence of evidence as to the circumstances, I have only the suggestion in submissions that solicitor inadvertence on the part of the original solicitor may be the cause of the failure to serve the various documents.

Equally plausibly, as suggested by Mr. Neinstein, there could have been a tactical decision not to file further documents or call witnesses, putting the Applicant to the proof of his case. Either way, identifying the root cause can only be conjecture since the record contains no affidavit or other evidence to explain Jevco’s failure to serve these documents. That lacuna is a serious problem. An arbitrator cannot act on assertion or allegation; he or she can act only on evidence.

Rule 39.1 is mandatory. It sets a time limit and establishes the discretion of an arbitrator to vary that time limit. It also provides the criterion for such exceptions: that “extraordinary circumstances exist.” It pointedly does not refer to a jurisdiction to make any order “on such terms as are just” in such circumstances, as Jevco would have me do in this matter.

The differences between the Practice Code and the Rules for Civil Procedure may account for some of the confusion in this area. Indeed, most lawyers are familiar with the civil Rules and rarely need to consider the Practice Code in their litigation practice.

As Armstrong J.A., dissenting in part, said in Ontario (Motor Vehicle Dealers Act, Registrar) v. HOJ National Leasing Corp.² “[t]he phrase ‘on such terms as are just’ is an express indication that a judge may make whatever order is appropriate to ensure that a just result is achieved.”

The absence of that phrase in Rule 39(c) of the Practice Code in the context of the late service of documents suggests to me that the range of potential considerations begins and ends with the analysis of the specified “extraordinary circumstances.”

While the Practice Code provides that: “A defect in form or other technical breach will not make a proceeding invalid,” the comparable rule in the Rules of Civil Procedure goes on to state that a judge: “may grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute.”

Even if I accept that the Insurer’s decision not to serve and file documentation is a mere oversight, or a procedural irregularity, the Practice Code grants me a limited mandate in formulating a response to such a situation.

Mr. Stringer also argued that the arbitration had really not begun on October 17, and indeed has not yet commenced, since to date, all the time has been taken up with procedural problems. While I have yet to hear any evidence in this arbitration, the procedural issues were heard by me as a result of my appointment by the Director to hear this arbitration. While the arbitration is far from complete, and progress has been slow, there can be no doubt that the arbitration hearing commenced on October 17, 2011.

To give effect to Mr. Stringer’s submission, and to find that the arbitration will commence only with the start of evidence in January next year, with the consequence that the service of documents would be valid (since more than 30 days prior to the start of the hearing would have elapsed) would in Mr. Neinstein’s words reward Jevco for forcing an adjournment through its questionable conduct.

Lord Mansfield in Holman v. Johnson³ summarized a time-tested maxim as follows: “Ex dolo malo non oritur actio. No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act.” Such would be the situation if I were to give effect to Mr. Stringer’s submissions.

Although a basic rule is that justice requires that cases be decided on their merits wherever possible⁴, an order refusing leave to call certain evidence does not necessarily conflict with that maxim. A hearing will still be held on the merits, with the onus remaining on the Applicant and all witnesses still subject to cross-examination. The only difference is that some of the Insurer’s potential evidence will be excluded. This is clearly not a dismissal without hearing or noting the Insurer in default.

I should also note that although Mr. Stringer suggests that I should provide relief from the Rules based on the balance of prejudice, with the clear balance of prejudice from exclusion of its evidence lying with the Insurer, I have no evidence of the circumstances that led to such potential prejudice.

Indeed, given the acknowledgement that the proposed document briefs substantially overlap in content, it is not at all clear that the key documents required by the Insurer will be missing from the hearing.

Prejudice cannot be analyzed in isolation. It may form part of the “extraordinary circumstances” that are out of the regular course or order of things. The fundamental reasons for the prejudice must be looked at as well. If it was, as in this case, largely self-inflicted, some caution must be taken in performing the evaluation.

There should also be an examination of whether there are alternative means of obtaining redress for the prejudice which will have a lesser impact on the opposing (not at-fault) party. In this case, the suggestion of “solicitor inadvertence” by an earlier counsel suggests that Jevco may well have recourse for any losses against that solicitor, if that indeed was the case.

In the absence of cogent evidence describing the circumstances in which its default occurred, or showing that the prejudice claimed exists and is not merely the result of a now regretted litigation strategy, I find that the Insurer has not met its burden to set aside the normal timelines for the production of documentary evidence.

An Order granting leave to Jevco (Kingsway) to rely upon surveillance.

Rule 40.1 of the Practice Code deals with surveillance evidence. Its terms are clear and mandatory. Unlike Rule 39.2, there is no relief provision in the event of “extraordinary circumstances.” Rule 40.1 reads as follows:

40.1 If a party intends to rely on any portion of surveillance or investigative evidence, including videotapes, photographs, reports, notes and summaries of surveillance observations or investigations, at least 30 days before the hearing, the party shall provide:

(a) the names and qualifications of the persons who secured the investigative or surveillance evidence, the dates, times and places where any surveillance or investigation was undertaken; and

(b) copies of all videotapes, photographs, investigative reports, notes and summaries taken or prepared in connection with the issues in dispute.

Although the treatment of surveillance under Rule 40.1 differs substantially from the court Rules, the significance is justified by the nature of arbitration proceedings at the Commission.

Whereas in the civil courts in Ontario surveillance films are treated much as any other physical document, the same cannot be said for the requirements of Rule 40 of the Practice Code.

Under Rule 30.09 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, anyone seeking to use a document such as a surveillance video on which privilege has been claimed at trial must give notice in writing and provide a copy of the document or producing it for inspection at least 90 days before the commencement of the trial, failing which the party may not use the document at trial, except to impeach the testimony of a witness or with leave of the trial judge.

Even if the document cannot be used as substantive evidence at trial for lack of disclosure, the court Rule leaves open its admission in cross-examination for the purposes of impeaching credibility.

For practical reasons, relating to the first-party nature of accident benefits, the absence of formal examinations for discovery, the principle of full and early disclosure and the perceived need to make the arbitration process timely and efficient, the Practice Code has taken a very different approach to surveillance.

Rule 40 does not distinguish between different uses for surveillance. It sets up a universal disclosure obligation that includes not only timeliness but completeness. Any reliance triggers an obligation to produce all “videotapes, photographs, investigative reports, notes and summaries taken or prepared in connection with the issues in dispute.”

Clearly, Jevco’s proposed surveillance evidence, while possibly relevant, does not meet the criteria set out in Rule 40 primarily due to failure to file the surveillance and related documents within the time limits set by the Rule.

The Rule is not absolute. Rule 81 recognizes a substantial discretion on the part of an arbitrator to decide whether a particular rule does or does not apply to a particular proceeding, and to vary or suspend procedural time limits. Discretion however is not exercised in a vacuum. There should be cogent reasons to depart from both an established practice, and the expectations of parties to an arbitration. In the absence of evidence, those cogent reasons are lacking in this matter.

While difference in practices between courts and arbitration perhaps go some distance to explaining a failure to comply with the requirements of Rule 40, they do not justify suspending the underlying rationale for the Rule.

Consequently, the surveillance is not admissible in this arbitration and I so order.

An Order granting leave to Jevco (Kingsway) to call witnesses as noted in the pre-hearing letter

and

An Order granting leave to Jevco (Kingsway) to call the individuals on its list of witnesses.

The relevant portions of the Dispute Resolution Practice Code are as follows:

WITNESSES

41.1 Each party must provide the other parties with the names of witnesses that the party intends to call and the names of persons the party requires to attend for cross-examination on a report, at least 30 days before the first day of the hearing.

41.2 Every party must notify a potential witness of the intention to call him or her to give evidence at the hearing at least 30 days before the first day of the hearing.

41.3 An arbitrator may:

(a) excuse a witness from attending at the hearing, if the witness was not identified at the pre-hearing under Rule 33, or notified at least 30 days before the first day of hearing under Rule 41.2; or

(b) make such other order as the arbitrator considers just.

41.4 An arbitrator has the power to summon and enforce the attendance of a witness and require him or her to give evidence on oath or otherwise, and to produce documents, records, and things.

41.5 A party may require the attendance of a witness by serving a Summons to Witness in FORM N, in accordance with Rule 73.

EXPERT WITNESSES

42.1 If a party intends to introduce a report by an expert, the full name and qualifications of the expert who prepared the report must accompany the report.

42.2 If a party intends to call an expert witness to present evidence at a hearing, that party must serve and file a document setting out the following:

(a) the full name, address and qualifications of the expert witness;

(b) the subject matter of the testimony to be presented; and

The timelines and requirements set out under Rule 39 and Rule 41 apply.

42.3 Where a party does not comply with the requirements of this Rule, an arbitrator may exclude a witness from the hearing or make such other order as the arbitrator considers just.

Once again it is agreed that if the hearing commenced on October 17, 2011 (as I have found), then neither Jevco’s witness lists nor its service of the documentation related to the expert opinions was timely.

Once again, I emphasize that Jevco has provided no evidentiary foundation to explain this tardiness other than a reference to possible solicitor oversight on the part of an earlier counsel.

The purpose of the notice provisions in the Practice Code is not only to prevent trial by ambush, but also to encourage the “most just, quickest and least expensive resolution of the dispute.”

The decision as to which witnesses a party chooses to call has repercussions beyond that party’s case.

An opposing party, knowing that no experts in a certain field are being called, may decide simply to file a report and not call a witness, or to forgo tendering any witnesses or evidence relating to that part of a case.

There are two ways of officially communicating witness lists. The first, and most important, is through the exchange of witness lists at least 30 days prior to the hearing.

The second, although less satisfactory, is communication at the pre-hearing. I say less satisfactory because the pre-hearing is often up to a year before the arbitration hearing and takes place at a time that the issues in dispute are often in flux. There is consequently a tendency to list every possible witness, whether needed or not, or to simply guess as to whom might be needed.

The pre-hearing letter in this matter listed the following as Jevco’s (Kingsway’s) witnesses:

Dr. McFadden

an OT

possibly others

The Rule 33.1 of the Practice Code identifies the following as one of the key roles of a pre-hearing:

(e) identifying the expert and lay witnesses to be called at the hearing and determining the length of hearing;

I find that there is little point in excluding Dr. McFadden simply because the required witness list was not filed. Dr. McFadden’s name was clearly identified in the pre-hearing and there can be no surprise if that witness is called to testify.

However, given the failure to provide a witness list on a timely basis, those other potential witnesses who have not been specifically identified in the pre-hearing letter may not be called as witnesses in this arbitration.

Neither the words “an OT” nor “possibly others” could possibly be described as “identifying the expert and lay witnesses.” Dr. McFadden on the other hand is identifiable.

The purpose of identifying witnesses in advance is so that the other party will know the case it has to meet, and consequentially make decisions as to the witnesses to be called and the preparation that will be necessary for the hearing. The information is also helpful from the point of view of trial scheduling, since the number and type of witnesses will directly affect the length of the hearing process.

These goals are thwarted when a party seeks to add witnesses at the last minute and to change the nature of the arbitration itself.

In this matter, while Jevco may call those witnesses specifically identified in the pre-hearing letter, it is important that, in the case of experts, the remaining requirements regarding production and service of the reports be fully complied with.

General observations re time limits:

It has been observed that:

Counsel are expected to comply with the schedules set by the court. This is no less true in criminal matters than in civil matters.⁵

The time limits set out in the Practice Code are the default time limits that are set for this hearing. Until now there has been no request to amend the time limits. Whether extraordinary circumstances are specifically a named criterion in any relief or not, it is incumbent upon those who would have us deviate from the Rules to demonstrate cogent reasons to justify their requests. There are none in evidence in this matter.

While prejudice takes many forms and should be a consideration in evaluating such extraordinary circumstances, any prejudice must also be considered contextually.

While I accept that some significant prejudice may be inferred where a party has potential evidence that is largely excluded, I have noted that in this matter there may well be other avenues open to address that prejudice that will not have an effect on Mr. Hotchkiss.

In the absence of evidence I am not inclined to speculate as to whether such recourse is either available, appropriate or sufficient. Likewise, I cannot leap to a conclusion that the Practice Code’s time limits should be abandoned completely just because either a party decided to change its litigation strategy at the last minute or a party’s solicitor missed an important deadline.

Neither situation, however, explains away the failure of the Insurer to request leave to file documents out of time as soon as it realized that a crucial deadline had been missed. Rather, former counsel merely waited until the hearing date and purported to file his document brief without either an explanation nor a request for leave.

Current counsel, Mr. Stringer, points out that his client has been “punished” by a substantial order for costs on the conflict issue, as well as an order for interim benefits, and that essentially the book should be closed on that part of the hearing. However, upholding the requirements of the Practice Code is not punishment.

I find that Jevco has simply not made out a case for deviating from the Rules governing arbitrations, and, in any event has not addressed the issue of relief in a timely manner.

The balance of the requests made by Jevco are dealt with below:

An Order requiring the Applicant to immediately provide production of Mr. Hotchkiss’ ODSP file, updated family doctor clinical notes and records from February 23, 2011, and an updated decoded OHIP summary from February 23, 2011.

Mr. Neinstein admitted that he had agreed to make his best efforts to obtain the ODSP file relating to Mr. Hotchkiss and that steps had already been undertaken to that end. Understandably there were delays in dealing with a bureaucracy, including the need to provide payment for the file before release could be contemplated. As well, Mr. Neinstein has commented that, given the controversies surrounding this hearing, there was also some doubt as to whether the documents would ever be needed.

At present, neither party knows what exactly is in the ODSP file. It appears to have some potential relevance, to be actually available, and could possibly be in the hands of both parties prior to the resumption of this hearing.

Jevco is entitled to at the very least see the documents it has requested, provided they are available now to Mr. Hotchkiss.

Jevco has provided the funds for the release of the file. It is incumbent upon Mr. Neinstein to follow through with his earlier agreement and obtain the file. Given, however, my ruling on the Insurer’s Document brief, there may be some concern as to whether the ODSP file may be properly admissible in this hearing. Since I heard no argument on this aspect of the issue, I will reserve on it until the resumption of the hearing.

I will however grant an order that Mr. Hotchkiss continue to make his best efforts to obtain the ODSP file on an expedited basis and to provide it to Jevco, while specifically reserving on whether it should be admissible as evidence in this arbitration.

As for the updated decoded OHIP summary, Mr. Stringer conceded that he could not be certain that sufficient time remained before the resumption of the hearing. As well, the new request has been made only recently with Mr. Stringer’s assumption of the file. The current decoded OHIP summary has been in the hands of Jevco for some time, without any requests for further production until now. Mr. Neinstein has stated that his belief is that the summary was up to date until the time requested which would have been this past April.

I have been given no information to suggest that there is any change in circumstances that would now make an updated OHIP summary a key piece of evidence in this arbitration.

Given that there is little likelihood of the document being obtained prior to the resumption of the hearing, and the fact that this is a late request, indeed, after the commencement of the arbitration, I decline to make the requested order.

Likewise, I decline to order Mr. Hotchkiss to update the clinical notes and records already provided to Jevco.

An order quashing the summons to witness served upon Ms. Chrislyn Alexander, the Jevco Claims Adjuster.

The Evidence Act, R.S.O. 1990, c.23, the Statutory Powers Procedure Act and section 22 of the Insurance Act provide a foundation for the issuance of a summons to witness by this tribunal. As well, in the courts, further powers are granted in Rule 53.04 of the Rules of Civil Procedure.

The general rule in both courts and tribunals is that where the evidence sought to be elicited from the witness is relevant, there is a prima facie right to require the attendance of that witness by means of a summons to witness.⁶

A witness, however, can only be required to testify at trial where the evidence sought to be elicited is relevant.⁷

It goes without saying that the right to a summons to witness must not be exercised in such a fashion as to abuse the process of the tribunal.⁸

While the setting aside of a summons to witness is drastic relief, a court or tribunal which has issued a summons to witness has an inherent jurisdiction to set aside a summons where a witness has no direct knowledge of the events or relevant evidence to offer.

While there is currently no special award requested in this matter, the conduct of an insurer is always a live issue, and can, in appropriate circumstances, be raised independently by the arbitrator.

There is as well a likelihood that the adjuster, the person responsible for file-handling, would have first-hand knowledge of the referral to assessment, notices given to the insured, and other information potentially relevant to the issues in arbitration.

It is not prima facie scandalous or an abuse of process to call an employee of an opposite party as a witness.

In the absence of an abuse of process, and the likelihood of relevant knowledge, I see no reason to bar Mr. Hotchkiss from obtaining the testimony of Ms. Alexander at this point.

Should it turn out that her evidence is of little value, then I can count on Mr. Stringer to make the appropriate objections at that time.

EXPENSES

The issue of expenses incurred in the hearing of this motion will be deferred until the arbitration hearing is complete.

December 16, 2011

John Wilson Arbitrator

Financial Services Commission of Ontario