Quoc Nguyen v. TD Home and Auto Insurance Company, 2012 ONFSCDRS 147

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2012 ONFSCDRS 147

FSCO A04-002390

BETWEEN:

QUOC NGUYEN

By his litigation guardian Hoan Phan

Applicant

and

TD HOME AND AUTO INSURANCE COMPANY

Insurer

ADJOURNMENT DECISION

Before: Arbitrator John Wilson

Heard: By telephone conference call on October 12, 2012.

Appearances: Peter B. Cozzi for Mr. Nguyen

Christopher A. Caston for TD Home and Auto Insurance Company

Issues:

The Applicant, Quoc Nguyen, was injured in a motor vehicle accident on January 14, 2003. He applied for statutory accident benefits from TD Home and Auto Insurance Company (“TD Home”), payable under the Schedule.¹ TD Home disputed his claim.

The parties were unable to resolve their disputes through mediation, and Mr. Nguyen applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issue in this hearing is:

Is Mr. Nguyen entitled to a further adjournment in this matter?

Result:

Mr. Nguyen is entitled to an adjournment with conditions.

EVIDENCE AND ANALYSIS:

This dispute has had a long and complex history with many delays and adjournments which can be summarized as follows:

Mr. Nguyen, at the first pre-hearing in March 17, 2005, claimed various benefits including an income replacement benefit, housekeeping and the cost of certain reports. At that same pre-hearing, the then representative of Mr. Nguyen, Mr. Alan Leibovitch, raised the issue of capacity with the pre-hearing arbitrator.

Mr. Leibovitch subsequently obtained a report from Dr. Khoi Ba Nguyen stating that he showed “signs of severe cognitive impairment” and was unable to “provide instruction in an arbitration.”

By September 15, 2005, Arbitrator Alves wrote to both parties about the capacity issue, but also questioned “whether the CAT DAC had as yet been scheduled.”

On September 19, 2005, a letter from then insurance counsel confirmed that no CAT DAC had been scheduled because the “assessment centre requires further information.”

Also, on September 19, 2005, Mr. Leibovitch requested an adjournment based on the failure to complete a necessary CAT DAC.

TD Home (Liberty as it then was) opposed the adjournment and requested that the hearing proceed.

On October 4, 2005, I wrote to the parties declining to accept the adjournment request, but raising again the issue of capacity first discussed at the pre-hearing.

On October 15, 2005, Mr. Peter Cozzi first wrote to the Commission to advise that he had been retained by Mr. Nguyen’s wife to apply to have her appointed as a guardian of property under the Substitute Decisions Act, and thereafter represent Mr. Nguyen in the arbitration.

On October 19, 2005, I adjourned the arbitration sine die and stayed the arbitration pending the appointment of a litigation guardian or cogent evidence of Mr. Nguyen’s capacity.

On February 19, 2007, Mr. Cozzi wrote to the Commission enclosing a copy of the order of Justice Low appointing Ms. Hoan Phan, Mr. Nguyen’s wife, as guardian of property.

A resumed pre-hearing took place on September 14, 2007 involving both present counsel, Mr. Cozzi for Mr. Nguyen and Mr. Caston for what was now TD Home.

In my pre-hearing letter I noted that:

TD would be content to proceed by way of a CAT DAC assessment should there be no agreement on the catastrophic issue, and, indeed, one is requested by Mr. Nguyen.

New hearing dates were set to commence on September 8, 2008.

On June 27, 2008, with some earlier difficulties in obtaining some medical documentation and concerns about the timeliness of the catastrophic reports, the hearing dates were rescheduled on consent to begin on April 14, 2009.

On March 20, 2009, I noted that the Insurer had released surveillance evidence that counsel for Mr. Nguyen felt should be shown to the Applicant’s key medical witness, and that on consent the April hearing dates were once again adjourned sine die.

On May 8, 2009, the parties agreed on new hearing dates to commence on January 18, 2010, and to open discussions for a possible joint assessment. No CAT DAC assessment had yet taken place.

On December 7, 2009, Mr. Caston wrote requesting a resumption to deal with “the issue of conducting a catastrophic impairment assessment.” Those discussions took place and, on consent, the new hearing dates were set to commence on October 12, 2010.

On July 23, 2010, a new case conference was held to deal with the assessment question. At that time, Mr. Caston advised that TD Home was not satisfied that it had ever received the necessary forms to trigger a catastrophic assessment. Consequentially TD Home had taken no steps to begin the assessment process. On consent, new hearing dates were set to begin on January 31, 2011.

By the next conference call on September 10, 2010, no progress had been made in beginning the insurer’s assessment process. Mr. Cozzi confirmed that he had obtained a copy of the original form requesting a catastrophic determination. Since, however, Mr. Cozzi’s copy of the form was unsigned, TD Home suggested it had never been properly completed and did not recognize any need to commence the determination process.

On September 10, 2010, Mr. Cozzi supplied a signed copy of an Application for Determination of Catastrophic Impairment dated October 25, 2007.

On December 20, 2010, Mr. Cozzi again wrote to the Commission asking that the arbitration be re-scheduled since TD Home had only just scheduled CAT examinations, the last being scheduled some 13 days prior to the arbitration.

On January 26, 2011, Arbitrator Muzzi adjourned the arbitration due to the ongoing catastrophic assessments. The hearing was now scheduled to commence on September 19, 2011.

On July 15, 2011, Arbitrator Killoran held a resumed pre-hearing in which she adjourned the arbitration “to allow sufficient time for a catastrophic impairment assessment.” The new hearing dates were to commence on October 15, 2012.

As the date of the arbitration hearing approached there was a flurry of correspondence between Mr. Caston and Mr. Cozzi. Much of this dealt with normal administrative issues prior to a hearing, including the finalization of witness lists and the exchange of briefs.²

Mr. Cozzi, however, raised a question of more fundamental importance.

Despite the multiple references in correspondence and at pre-hearings to catastrophic impairment there had never been any explicit order confirming that the issue of catastrophic impairment formed part of the arbitration. This was a significant oversight that Mr. Cozzi wished to correct by having TD Home confirm, through its counsel, that the issue would indeed go before the hearing arbitrator.

Mr. Cozzi, in his letter of September 27, 2012, once again addressed the issue of catastrophic impairment and proposed a “reconvening of the pre-arbitration to deal with my request for an adjournment of the arbitration hearing from October 15, 2012 until a date when the catastrophic impairment assessment can be added to the arbitration.”

In his letter of the same date, Mr. Caston wrote:

Finally, in respect of adding the issue of catastrophic impairment at this late hour, we will absolutely not agree to same. [emphasis in original]

In a letter of October 2, 2012, Mr. Cozzi wrote to Mr. Caston, enclosing a complete and lengthy chronology of the determination of catastrophic impairment issue.

At a telephone conference that took place on October 5, 2012, Mr. Cozzi reiterated that he would seek a brief adjournment to allow Mr. Nguyen’s psychiatrist to respond to the Insurer’s catastrophic assessments which had only come to his attention in mid-August of this year.³ He reiterated that the catastrophic issue was at the core of the dispute between Mr. Nguyen and his insurer and that it would be both unfair and inefficient to proceed to a hearing just on the issues originally identified as being in dispute.

Mr. Caston maintains that at that time he consented to the addition of the catastrophic issue, but advised that he would continue to oppose any adjournment. Mr. Cozzi’s recall is that Mr. Caston agreed that he would take the request to his client for consideration. My understanding was that although Mr. Caston was more conciliatory than he had been in his correspondence, he still lacked instructions on the issue of catastrophic impairment.

Ultimately, Mr. Caston wrote on October 9, 2012, confirming that his client would accept that the issue of catastrophic impairment would form part of the arbitration and would be an issue before the arbitrator.

Following the resumed pre-hearing no decision was made with regard to the adjournment request since I was advised that the two counsel would be meeting on the following Tuesday to discuss all matters including the possibility of resolution.

On October 9, 2012, Mr. Caston wrote to Mr. Cozzi concerning some ongoing production issues, and the request for an adjournment. He stated that TD Home would have sent the CAT reports to both Mr. Nguyen and Mr. Cozzi “on or about April 13, 2012” but maintained that TD Home “is technically only obligated to send a copy to your client.” Mr. Caston continued:

In light of our position that you and/or your client should have received the aforementioned report sometime in April 2012, it is our position that you have had ample time to apply for mediation and arrange a follow up with Dr. Mamelak, and for Dr. Mamelak to produce a report if necessary before the 30 day deadline. Instead you inexplicably waited until August or September to arrange for these things.

I wrote to the parties on October 9, 2012, stating that, with certain basic facts and circumstances surrounding the adjournment request in dispute, the parties should provide “an affidavit or other evidence in support setting out the facts and circumstances relied upon by the respective parties.”

A hearing on the adjournment was held by telephone conference call on October 12, 2012. Both counsel took part, as did Ms. Beth Jones, an official with TD Home.

Mr. Cozzi filed an affidavit from Emiliana Piccinini, a licensed paralegal in his office, in support of the adjournment request. Mr. Caston filed no supporting material. Nor did he call Ms. Jones or anyone else to testify as to TD Home’s understanding of the events in question. Likewise, he did not request to cross-examine Ms. Piccinini as to the content of her affidavit. Mr. Caston, however, made submissions.

Patently, submissions are not evidence, and, indeed it would be totally inappropriate for counsel to rely on his or her own evidence, in a controverted matter. In short, Mr. Nguyen supplied credible evidence in an admissible format. TD Home did not.

Adjournments at the Commission are provided for in the Dispute Resolution Practice Code at Rule 72 and at Practice Note 9. The Practice Code generally takes a hard line against unnecessary adjournments, stating in the Practice Note that adjournments will only be considered in three circumstances:

in cases of personal emergencies, such as serious illnesses or deaths in the family
for valid reasons relating to the hearing itself, such as an imminent settlement, or medical or other critical evidence that is UNAVOIDABLY delayed
when a lawyer is involved in a trial or other proceeding that was scheduled to conclude before the start of FSCO proceeding and which has continued or been held over into the time scheduled for FSCO proceeding.

Although this adjournment request could well be considered under the second criterion listed, it is also important to note that the courts have had much to say about adjournments at administrative tribunals in general and at FSCO in particular.

In Certas Direct Insurance Co. v. Gonsalves⁴, the Divisional Court reviewed a decision by the Director’s Delegate, reversing an arbitrator’s decision to grant an adjournment. Finding that the doctrine of fairness trumps the specific provisions of the Practice Code, Lederer J. stated:

Fundamental to any administrative process, is the requirement that it be fair. At its most basic, procedural fairness requires that a party have an opportunity to be heard and that it be able to respond to the position taken against it.

Lederer J. continued:

The arbitrator had a wide discretion to ensure a fair hearing. Neither the Dispute Resolution Practice Code, first edition updated October 2003, (the “Code”) nor Practice Note 9 can interfere with that overarching responsibility. Although the arbitrator did not specifically refer to the provisions of the Code or Practice Note 9, the finding of fact by the arbitrator was sufficient to explain why those provisions were not germane to the issue she was deciding.

The Court of Appeal has also reminded us⁵ that the comments of Laskin J. in Khimji v. Dhanani⁶ apply equally to adjournments at administrative tribunals:

Under our modern Rules non-compensable prejudice plays a pivotal role in deciding whether to grant an amendment or an adjournment. For example, under Rule 26.01 a court shall (not may) grant leave to amend a pleading “at any stage of an action” - on the eve of or even during a trial – “unless prejudice would result that could not be compensated for by costs or an adjournment.” Here, the prejudice to Mr. Khimji from the denial of an adjournment is obvious: his action was dismissed without an adjudication on its merits.

The principal reason given for this particular adjournment is that Dr. Mamelak, Mr. Nguyen’s psychiatrist, and Dr. Nguyen, a Vietnamese consulting psychiatrist, need to examine Mr. Nguyen in light of the Insurer’s catastrophic assessment. The evidence is that Dr. Mamelak can examine Mr. Nguyen in conjunction with Dr. Nguyen as early as November 12, 2012.

As noted earlier, TD Home has consistently taken the position that Mr. Nguyen’s responding examinations could and should have been completed long ago, the catastrophic reports having been sent to Mr. Nguyen on April 12, 2012.

While Mr. Nguyen may have been sent copies of the report, the uncontradicted evidence in this matter was that his counsel did not receive any notice of the reports.

There is no dispute that Mr. Cozzi had long been retained by Mr. Nguyen’s guardian when the assessments took place. There is no dispute that TD Home knew that Mr. Nguyen has been found incapable of managing property by the Superior Court and that a guardian of property was appointed by that court, yet the only copy of the TD Home letter to Mr. Nguyen provided to me is addressed solely to Mr. Nguyen and shows no indication of having been copied to either his counsel or the guardian of property who is acting as his litigation guardian in this process.

Mr. Caston’s assertion that his client can discharge its obligations by serving the reports only on Mr. Nguyen, without copying either counsel or the guardian of property, ignores the legal effect of a court finding of incapacity and the consequent appointment of a guardian of property. It also ignores the well-established practice that requires communication between solicitors when legally represented parties are involved in a dispute.

In the absence of evidence or testimony from someone with knowledge of the affair from TD Home’s point of view, I find that TD Home did not send a copy of the CAT reports to either the Guardian of Property or Mr. Cozzi. In so doing, TD Home took a calculated risk that the documents would not be passed on to Mr. Cozzi in a timely manner or indeed at all.

I note also that both Mr. Caston and TD Home knew that Mr. Nguyen’s interests were represented by Mr. Cozzi, and, notwithstanding Rule 6(7) of the Code of Professional Conduct, did not make the necessary efforts to ensure that communication between the parties in litigation included counsel.

Having accepted that the reports were not delivered to counsel in a timely manner, and, indeed that it was not until August 2012 that they were ever received by counsel, I agree with Mr. Cozzi that it would have been hard, not to say impossible for him to arrange responding reports in a more timely manner than he did.

Like Certas in Gonsalves, Mr. Nguyen had a right to respond to the reports that were to be used against him in the arbitration process and should be given a reasonable time to have those reports completed.

The prejudice to Mr. Nguyen of being refused an adjournment would be the loss of an opportunity to respond to the Insurer’s CAT reports, putting at risk a substantial portion of the benefits claimed by him. The Insurer’s potential prejudice would appear to be entirely monetary − the extra costs incurred, and, potentially, extra interest payable on any benefits found owing. Any such prejudice, if suffered, would be entirely compensable.

Thus, whether one approaches the adjournment from the point of view of fairness, justice or from the unavoidable delay in medical evidence arising from the late and faulty provision of the Insurer’s CAT reports, there are reasons for granting the adjournment.

Mr. Cozzi only asked for a short adjournment on behalf of his client. Mr. Caston is, however, not available until April 2013. Therefore, the adjournment cannot be as short as requested.

The right of an arbitrator to grant an adjournment includes the discretion to order conditions as part of the adjournment. Whatever the conditions are, they must be relevant and appropriate to the adjournment, and they must be fair.⁷

Having decided to adjourn this matter yet another time, I do not wish to see this matter adjourned again.

Firstly, this adjournment will be peremptory to both parties.

Secondly, I will confirm by order the parties’ understanding that the issue of catastrophic impairment has been added to this arbitration.

Thirdly, since the new assessments by Drs. Mamelak and Nguyen are to take place in early November, I will order that all related reports must be served and filed by January 30, 2013 at the latest.

Since the parties have already served their respective arbitration briefs, with the exception of the above reports, no further additions may be made to the briefs without leave of an arbitrator.

Lastly, given the long history of this matter and the role the Insurer has played in the delay and this adjournment, an expense order (discussed below) is also an appropriate part of the adjournment order.

Date of the new Hearing:

The parties agreed at the telephone conference that April 2013 would be the first time when both counsel would be available. In granting the original adjournment request on Friday, October 12, 2012, I specified that the parties had until October 18 to agree on the exact dates of the hearing, failing which I would proceed to set a date. In the absence of timely submissions by the parties, I order that the Arbitration hearing take place in Toronto on April 15, 16, 17, 18, 22, 23, 24 and 25, 2013.⁸

If this matter is not resolved in the interim I expect both parties to be ready to proceed by that date. There should be no further adjournments.

EXPENSES:

Both sides have requested that the expenses “thrown away” be compensated by an award of expenses in this adjournment. It goes without saying that both parties have prepared for a hearing that will not take place until next year. Some of those preparations, such as the preparation of witnesses, will have to be re-done as the new hearing dates approach. Others, such as the document briefs, will be useable without substantial extra expense.

While the general conditions for an award of expenses are set out in the Expense Regulation, which governs the awarding of costs at the Commission, the prime considerations at this stage in the process will be whether the conduct of a party or a party’s representative tended to prolong or hinder the proceeding, as well as any party’s success or otherwise on a strongly contested motion to adjourn.

In this matter, the timing of the addition of the issue of catastrophic impairment has played a significant role in this and previous adjournments. Although from the chronology of this case it is apparent that both sides were aware of the critical role that catastrophic impairment plays in Mr. Nguyen’s claim, it is also evident that TD Home placed innumerable road blocks to the crystallization of that issue. Indeed, it took almost seven years for TD Home to get around to performing the assessments, and even then it fumbled the delivery of the reports.

While Mr. Cozzi ought to have been more proactive in ensuring that the issue of catastrophic assessment was formally included in this arbitration, the continual references to that issue in correspondence and as reasons for consent adjournments, not to mention the passage of time, may well have lulled him into complacency and the assumption that the formal amendment of the Application had been dealt with. All the same, he bears some responsibility for not ensuring that a core element of his client’s claim was properly referred to arbitration.

From the overall point of view of delay, although I find that TD Home repeatedly delayed this process and frustrated the evolution of the catastrophic issue over a period of years, it was equally Mr. Cozzi’s responsibility to make sure that his client’s critical issue was clearly agreed to be part of this arbitration. Both elements contributed to the delay and consequent adjournment. I will leave the costs implications of that conduct to the arbitrator hearing the substantive arbitration.

With regard to this actual adjournment however, once TD Home learned that its reports had not been properly provided to counsel within a reasonable time frame, it should have recognized the necessity of a short adjournment and should have agreed to the request. Likewise, it should not have stonewalled on the formal addition of the issue of catastrophic impairment. At the latest, with the October 2, 2012 chronology of the catastrophic issue sent by Mr. Cozzi, TD Home should have realized this fact.

The result is that Mr. Nguyen requested an adjournment and, after a resumed pre-hearing and a further telephone hearing, there was a finding that he was entitled to it. He is entitled to his expenses if only for that reason.

In the absence of a detailed cost breakdown by either party⁹, I will simply fix the amount payable by TD Home at a nominal $750¹⁰, to reflect some of the time necessary to prepare for and participate in the various stages of this adjournment saga which began almost a month ago. I leave all other aspects of the expense award to the hearing arbitrator.

October 26, 2012

John Wilson

Arbitrator

Date