Brijmohan Ramrattan v. Motor Vehicle Accident Claims Fund, 2012 ONFSCDRS 10

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2012 ONFSCDRS 10

FSCO A09-003266

BETWEEN:

BRIJMOHAN RAMRATTAN

Applicant

and

MOTOR VEHICLE ACCIDENT CLAIMS FUND

Insurer

MOTION

Before: Joyce Miller

Heard: February 15, 2011, at the offices of the Financial Services Commission of Ontario in Toronto.Written submissions were received on March 10, 2011

Appearances: Maurice Benzaquen for Mr. Ramrattan

Robert W. Kerkmann for Motor Vehicle Accident Claims Fund

Issues:

On October 28, 2006, Mr. Brijmohan Ramrattan, a pedestrian, was injured in a hit-and-run motor vehicle accident. He applied for and received statutory accident benefits from Motor Vehicle Accident Claims Fund (“MVAC Fund”), payable under the Schedule.¹ MVAC Fund denied Mr. Ramrattan housekeeping benefits and terminated his attendant care benefits on February 9, 2007. The parties were unable to resolve their disputes through mediation, and Mr. Ramrattan applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

An arbitration hearing was scheduled to commence on February 15, 2011. At the start of the hearing, Mr. Ramrattan’s counsel advised that he was bringing a motion to have the Motor Vehicle Accident Claims Fund’s counsel, Mr. Robert Kerkmann and his law firm Loudon & Sterling LLP, removed as solicitors of record by reason of a conflict of interest. The motion was heard partially on February 15, 2011 and completed by written submissions on March 10, 2011. Both parties provided very fulsome submissions for this motion.

Unfortunately, I was unable to provide my formal decision at that time. Accordingly, I provided the parties with a very detailed letter decision. In my letter decision, dated May 19, 2011, I advised the parties that I had considered their full submissions in coming to my decision. I further advised the parties that I would include fuller reasons in my formal decision.

I have reviewed the parties’ submissions and have concluded that my letter decision had provided sufficient reasons for my decision and no additional reasons are needed. Accordingly, I have incorporated the letter decision into this formal decision.

The issues in this hearing are:

Should Mr. Robert Kerkmann and the law firm of Loudon & Sterling LLP be removed as solicitors of record by reason of a conflict of interest?

Result:

I find that there is no conflict of interest that would result in the removal of Mr. Kerkmann and the law firm of Loudon & Sterling LLP as solicitors of record for MVAC.
If the parties cannot agree on expenses, I can be spoken to within 30 days of this decision.

BACKGROUND

On October 20, 2008, Mr. Ramrattan commenced a tort action in the Ontario Superior Court of Justice against the Superintendent of Financial Services. In accordance with the provisions of the Motor Vehicle Accident Claims Act, MVAC appointed the law firm of Loudon & Sterling LLP to defend the tort action. Mr. Robert Kerkmann was the solicitor assigned to handle the tort claim.

An Application for Arbitration was submitted to the Commission on December 22, 2009.² Mr. Kerkmann, on behalf of MVAC, filed a response on January 23, 2010.

Mr. Ramrattan takes the position that Mr. Kerkmann cannot represent MVAC on both the Tort claim and the Statutory Accident Benefit claim.

EVIDENCE

There were two affidavits filed in this case. One affidavit on behalf of Mr. Ramrattan was by Olga Zemlinsky, a lawyer at the firm of Graves Richard Harris LLP. The other affidavit on behalf of MVAC was by Devyn Pawley, a claims administrator for MVAC. There was no request for either of the deponents to be cross-examined on their affidavits.

SUBMISSIONS

Mr. Ramrattan’s Submission

Mr. Ramrattan submits that MVAC in choosing the same counsel to defend both the accident benefit case and the tort case has created a conflict of interest pursuant to Rule 2 of the Rules of Professional Conduct, pursuant to section 62.(0.1) of the Law Society Act. Rule 2 defines a “conflict of interest” or “conflicting interest” to mean an interest “that would be likely to affect adversely a lawyer’s judgment on behalf of, or loyalty to, a client or prospective client,” or an interest “that a lawyer might be prompted to prefer to the interests of a client or prospective client.”

Mr. Ramrattan submits that MVAC as the accident benefit insurer is the first-party insurer and owes a duty of good faith towards him, whereas a tort defender does not. Pursuant to Rule 4.01 of the Rules of Professional Conduct, Mr. Ramrattan submits that the commentary notes for Rule 4.01 states that a lawyer defending a tort case has a duty to the client to raise fearlessly every issue, advance every argument, and ask every question, however, distasteful, which will help the client’s case.

Mr. Ramrattan submits that there are two different duties owed here and that it is a conflict of interest for the same counsel to defend both an accident benefit claim and a tort claim.

Mr. Ramrattan submits that Mr. Kerkmann’s conflict of interest is further manifested by:

(1) not allowing Mr. Ramrattan to accept an acceptable settlement in the tort action without having to accept an unacceptable settlement in the accident benefit matter; and (2) by ordering various reports from assessors without disclosing the above conflict including but not limited to, two supplementary reports from Dr. Ladowsky-Brooks and the report of Dr. Selchen.

Mr. Ramrattan submits that MVAC, by choosing the same counsel to defend both actions, has breached the “Chinese Wall” as articulated in a bulletin (General 184) by the Insurance Bureau of Canada in 1997 wherein it states the reason for a “Chinese Wall.” The bulletin notes that Rule 13 of the All Industry Claims Agreement states:

Insurers agree, as a matter of corporate policy, that they shall not gather medical information from doctors or their employees, without the written consent of the patient, subject only to any right to such information under law or rules of practice.

The Bulletin then goes on to state that for Rule 13 to be effective, the insurer should set up “Chinese Walls”:

...so that information gathered by [an accident benefit adjuster] regarding the accident benefits claim does not become available to the tort adjuster, unless the insured so authorizes. The tort adjuster must rely solely on the rules of civil procedure to obtain the information on the plaintiff’s medical condition or on amounts s/he has received as accident benefits.

Mr. Ramrattan relies on the case of Klingbeil (Litigation guardian of) v. Worthington Trucking Inc. 1997 CanLII 12191 (ON CTGD), [1997] O.J. No. 4946 (Gen. Div.) to support his position.

In this case, Mr. Justice Ferrier held that any insurer being the insurer for the no-fault benefits and for a tort claim should follow the policy expressed in general bulletin 184 and that further:

...if solicitors are to be retained, separate firms of solicitors should be retained to deal with the respective claims. Only with the consent of the claimant of the no-fault benefits could an insurer transfer of information from one file to the other.…

In Klingbeil, Mr. Justice Ferrier concluded that there was no evidence that the solicitors for the law firm retained by the insurer to defend both the tort and accident benefits cases did not have access to both files. Accordingly, he held that “The firm ought to be prohibited from acting on both files henceforth.”

Mr. Ramrattan submits that for all these reasons Mr. Robert Kerkmann and the law firm of Loudon & Sterling LLP should be removed as solicitors of record by reason of a conflict of interest.

MVAC’s Submissions

MVAC submits that there is no evidence whatsoever to substantiate or support any degree of conflict of interest as alleged by Mr. Ramrattan.

MVAC submits that Rule 2 deals specifically with solicitor-client relationships. In this case, Mr. Kerkmann has only one relevant client, that is, MVAC. There is no conflict of interest because Mr. Kerkmann does not have any personal interest of his own that conflicts with MVAC. Nor does Mr. Kerkmann have a relationship with any client, past client, or other person, whose interest conflicts with those of MVAC.

MVAC further submits Klingbeil, was reversed on appeal (1999 CanLII 19927 (ON CTGD), [1999] O.J. No. 867) and is the present law to date.

In a unanimous decision by the Divisional Court, the Court held:

There is no need to require an insurer to retain separate solicitors to represent its interests in matters relating to the statutory no-fault accident benefits claim and those relating to the defence of the tort action, where the plaintiff claims statutory no fault benefits from the defendants’ insurer and the insurer is or may be obliged under the provisions of the Insurance Act to act in both capacities. We agree with Matlow J. in Stratton v. Senger, op.ct.; that there is no “appearance of impropriety” or “possibility of unfairness” in permitting the same law firm to represent the insurer in both capacities in these situations.

MVAC further submits that it is manifestly erroneous to suggest that Mr. Kerkmann allowed or disallowed any settlement. A lawyer speaks on behalf of his or her client as the client’s advocate and representative, and any settlement position is the client’s position, not the lawyer’s position. Devyn Pawley, who attended at the mediation with MVAC’s senior manager, confirms in his affidavit that all settlement positions taken at the mediation were the position of MVAC.

Moreover, there was nothing untoward or improper about MVAC’s settlement position. The case of Stokes v. Desjardins Groupe D’Assurances Géneralés, 2009 CanLII 45320 (ON SC), [2009] O.J. No. 3608, makes it clear why tort and accident benefit claims must be considered together in any settlement discussions to avoid duplication of payments.

Regarding Mr. Ramrattan’s submission that Mr. Kerkmann ought not to have obtained a paper review report from Dr. Selchen and addendum reports from Dr. Ladowsky-Brooks without disclosing the (alleged) conflict of interest, MVAC submits that for reasons stated in the Klingbeil appeal, Mr. Kerkmann did not have any conflict of interest to disclose. These reports were updates in preparation for litigation and were not section 42 insurer’s examinations.

Accordingly, MVAC submits that there is no conflict of interest that should result in Mr. Kerkmann and the law firm of Loudon & Sterling LLP to be removed as solicitors of record for MVAC in this arbitration hearing.

ANALYSIS AND FINDINGS

The burden of proof rests with Mr. Ramrattan to prove on a balance of probabilities that Mr. Kerkmann and the law firm of Loudon & Sterling LLP should be removed as solicitors of record by reason of a conflict of interest. For the following reasons, I find that Mr. Ramrattan has not met his burden of proof.

I completely agree with the very detailed written submissions provided by MVAC.

Mr. Ramrattan’s reliance on Rule 2 of the Rules of Professional Conduct of the Law Society of Upper Canada is not applicable to this case. Mr. Ramrattan is not Mr. Kerkmann’s client. MVAC is Mr. Kerkmann’s client. There is no evidence to show that there is any conflict of interest in respect of Mr. Ramrattan as per Rule 2.

I agree with MVAC’s submission that the appeal decision in Klingbeil is applicable in this case. The Insurance Bureau of Canada’s policy in Bulletin 184 is specific for adjusters and not for lawyers who are defending actions in relation to accident benefit and tort claims. While insurance companies are required to maintain a “Chinese Wall” when adjusting their files, there is nothing based on law that requires that there be a “Chinese Wall” which disallows an insurer from retaining one counsel to defend both a claim for accident benefits and tort.

I agree with MVAC that in settlement discussions counsel does not act independent of instructions from his client. I also agree with MVAC’s submissions on the facts in this case that in preparation for litigation, counsel requesting a paper review and an addendum report from its medical assessors did not have to reveal a conflict of interest where there is no conflict of interest.

Accordingly, for these reasons I find there is no conflict of interest that would result in Mr. Kerkmann and the law firm of Loudon & Sterling LLP to be removed as solicitors of record.

EXPENSES:

If the parties cannot agree on expenses, I can be spoken to within 30 days of this decision.

February 9, 2012

Joyce Miller

Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario