Financial Services Commission of Ontario

Neutral Citation: 2013 ONFSCDRS 64 FSCO A12-004239

BETWEEN:

KELLY DEWING Applicant

and

UNIFUND ASSURANCE COMPANY Insurer

PRE-HEARING DECISION

Before: Arbitrator John Wilson Heard: May 6, 2013, by telephone conference call Appearances: Allan Wynperle for Ms. Dewing Mary Catherine Lill for Unifund Assurance Company

Issues:

The Applicant, Kelly Dewing, was injured in a motor vehicle accident on June 24, 2010. She applied for statutory accident benefits from Unifund Assurance Company (“Unifund”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Ms. Dewing 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 pre-hearing discussion of this case held on May 6, 2013, Mr. Wynperle, on behalf of Ms. Dewing, requested that Unifund disclose whether it had any surveillance in its possession.

He further requested that in the event that there was surveillance, that Unifund make the election of whether it intends to rely upon it within 60 days and that it disclose all surveillance within 60 days if it intends to rely upon any part of same.

The issues are:

1. Is Unifund required to disclose the existence of surveillance?

2. If so, can Unifund be required to make its election as to whether it will be used in the arbitration process at a time earlier than 30 days before the hearing?

Result:

1. Unifund is ordered to disclose forthwith whether or not it has any surveillance in its possession.

2. Should there be any surveillance, Unifund shall have 60 days from the date of this decision to make its election as to whether it intends to rely upon any of the surveillance, in which case it shall immediately disclose all surveillance in accordance with Rule 40 of the Dispute Resolution Practice Code.

EVIDENCE AND ANALYSIS:

This dispute is about whether an arbitrator retains the discretion to vary Rule 40.1 of the Dispute Resolution Practice Code and to order a party to disclose the existence of surveillance evidence, as well as to modify the deadline for its production should that be requested.

Unifund says no and refuses to divulge whether it possesses such information. Counsel for Unifund, Ms. Lill, relied upon the decision of Arbitrator Bujold in Suppa², who in turn echoed Director’s Delegate Evans in Security National Insurance Co./Monnex Insurance Mgmt. Inc. and Morgan³ as an absolute bar to any order for the premature production of video surveillance.

Counsel for Ms. Dewing takes a very different position and maintains that Ms. Dewing will be gravely prejudiced in a forum where she is required to produce all relevant information in her possession or control.

Without access to surveillance she will be unable to respond to potentially relevant information in the possession of the Insurer, and will not be in a position to show any video surveillance to be used to impeach her credibility to her experts for commentary.

Counsel argued that not only was the unilateral refusal to disclose the existence or not of surveillance prejudicial but it also ran contrary to the spirit and letter of section 8 of the Statutory Powers Procedure Act (SPPA), R.S.O. 1990, c. S.22.

The SPPA provides at section 8 that where the good character, propriety of conduct or competence of a party is an issue in a proceeding, that part shall be provided “with reasonable information of any allegations with respect thereto.”

The basic modern rule in all litigation, including arbitrations at the Commission, is that all relevant documents which are not subject to privilege are produceable. Master Macleod described the modern discovery process as follows:

The purposes of discovery have been variously described. The classical formulation is that found in the 1947 Court of Appeal decision in Modriski v. Arnold. There the court set out three purposes: to enable the examining party to know the case it has to meet; to procure admissions that will dispense with formal proof of the party’s own case; and, to obtain admissions that will destroy the opponent’s case. In Bowen v. Klassen, a case decided when the “new” rules had been drafted but not yet enacted, the court added to these the purposes of facilitating settlement, to facilitate pre-trial procedures and trials and to eliminate surprises at trial. Other courts have added such purposes as obtaining documents which may enable the party either to advance his own case or damage the case of the other understanding the legal arguments that will be advanced by the opposing party preventing the element of surprise and obtaining admissions or other information which will reduce the expense of preparing for and participating in the action.⁴

The Insurance Act, which creates the statutory arbitration scheme involving accident benefits, endows arbitrators with significant discretion with regard to the production of documents. Indeed, section 22 of the Act attributes the same powers as a judge of the Superior Court of Justice in dealing with witnesses and evidence.

22.(1) For the purpose of exercising the powers and performing their duties under this Act, the Director and every arbitrator has the same power to summon and enforce the attendance of witnesses and compel them to give evidence on oath or otherwise, and to produce documents, records and things, as is vested in the Superior Court of Justice for the trial of civil actions.

The Statutory Powers Procedure Act also grants certain powers and provides certain guidelines to all administrative tribunals covered by the Act, statutory arbitrators under the Insurance Act included.

Section 23.1 allows a tribunal, including an arbitrator, to make such orders or give such directions in proceedings before it as it considers proper to prevent abuse of its processes.

The SPPA at section 5.4(1) also allows the tribunal to make orders dealing with disclosure at any stage in a proceeding, providing that the tribunal has rules dealing with disclosure.

The SPPA also provides some further evidentiary guidance by stating at section 15(2) that:

Nothing is admissible in evidence at a hearing,

(a) that would be inadmissible in a court by reason of any privilege under the law of evidence; or

(b) that is inadmissible by the statute under which the proceeding arises or any other statute.

Unifund has not argued that any surveillance would be privileged or otherwise inadmissible.

There is no question that the Commission has issued Rules covering productions and that consequently an arbitrator may rely on section 5.4 of the SPPA in making orders for the production of documents and things. As noted above, however, section 22(1) of the Insurance Act, the governing statute for statutory accident benefit arbitrations, provides a potentially wider-ranging power specifically to arbitrators.

It is important then to look at the discretion and powers of a superior court judge with respect to the discovery of evidence in order to ascertain just what discretion is accorded to arbitrators under the Insurance Act.

In addition to the far reaching powers inherent in the position arising out of law and equity, a superior court judge has the powers summarized in the Rules of Civil Procedure, (itself a regulation under the Courts of Justice Act). Rule 30.02 sets out the general principles covering documentary discovery in the courts:

(1) Every document relevant to any matter in issue in an action that is or has been in the possession, control or power of a party to the action shall be disclosed as provided in rules 30.03 to 30.10, whether or not privilege is claimed in respect of the document.

Likewise, 30.01(1) makes it clear that documents include “a sound recording, videotape, film, photograph, chart, graph, map, plan, survey, book of account, and data and information in electronic form.”

If a judge can order production of a document record or thing, then an arbitrator also has the jurisdiction to do so in the context of an arbitration. This power would appear to include the power to order the production of surveillance where appropriate.

It would also by necessary implication encompass the power to order the disclosure of the existence or not of any surveillance evidence, since, as stated by Morden J.A.:

The requirement merely to disclose the existence of a document in an affidavit of documents does not involve a breach of privilege (MacPhayden v. Employers Liability Assurance Corporation, 1933 CanLII 128 (ON CA), [1933] O.W.N. 72 (H. Ct.) and Williston and Rolls, op. cit., at p. 897). It is an essential step to enable claims to privilege to be determined in an orderly and fair way.⁵

The Dispute Resolution Practice Code, which is “a user’s guide to resolving disputes between consumers and insurers involving statutory accident benefits claims under the Insurance Act and the Statutory Accident Benefits Schedule”, is published by the Director of Arbitrations. It is neither law nor subsidiary law (regulation). It is in the words of the Insurance Act to provide for rules for “the practice and procedure⁶” in arbitrations.

Rule 1.1 of the Code provides as follows:

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

Rule 32.2 recognizes that the generalized production obligations apply equally to arbitration as to litigation while Rule 32.3 confirms the wide discretion of an arbitrator to order productions:

32.2 Subject to the time lines under Rule 39, the parties have an ongoing responsibility to ensure the prompt and complete exchange of documents that are reasonably necessary to determine the issues being arbitrated, including updates to the information previously exchanged and any additional documents obtained.

32.3 Subject to Rule 39, an arbitrator may at any time order the production of documents or the giving of information that he or she considers relevant to the determination of the issues in the arbitration, on such terms as he or she considers appropriate.

The Rule relating to surveillance evidence promulgated by the Director of Arbitrations provides 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

On the face of it, the use of “at least” before 30 days in Rule 40.1 would suggest that the Director contemplated situations where the disclosure would take place more than 30 days prior to the hearing. Otherwise the insertion of “at least” would be redundant.

The Code also provides, at Rule 81.1, a further discretion in an arbitrator to waive compliance or to deem a rule to be inapplicable. Consequently, imputing such a liberal meaning to “at least” makes the section more coherent with this further discretion. The discretion to change the timelines in the Rule is also consistent with another aspect of the discovery process as identified by Master MacLeod:

The court has the power to restrict discovery that is onerous or abusive or to expand discovery rights if the ends of justice require it. That power is specifically enunciated in various rules empowering the court to grant or withhold leave but also in the general override contained in Rule 2.03 and the general interpretive direction in Rule 1.04. The Rules of Civil Procedure are not ends in themselves but exist to ensure the “just, most expeditious and least expensive determination of every civil proceeding on its merits.”⁷

The interpretation of the Rule advanced by Unifund, that the 30-day timeline is inflexible and mandatory and that there is no discretion to modify it, is not without some arbitral support, however. Unifund relied upon Suppa, a decision of Arbitrator Bujold in which he found based upon an examination of the Code provisions in isolation that there was no power to order early production or disclosure of surveillance. Arbitrator Bujold observed:

I also agree with Arbitrator Slotnick in Graham that there is nothing in the Code that compels MVAC Fund to disclose whether it has undertaken surveillance. Further, and apart from the fact that there is no positive obligation in the Code, it seems to me that if surveillance or investigative evidence need not be disclosed unless the insurer intends to rely on some portion of it, then the existence of such evidence would also be subsumed by the same requirement. I see no point of making it a requirement that an insurer disclose the existence of surveillance when there is no concomitant requirement to produce it.⁸

What is common with the decisions cited, as pointed out by Mr. Wynperle, is that they dealt only with the Code provisions, not the interaction of the Code with section 8 of the SPPA. Nor it might be added with the provisions of section 22 of the Insurance Act.

The Dispute Resolution Practice Code stipulates clearly that where there is any conflict between the Code and the Insurance Act the latter prevails.⁹ While this may be no more than a reiteration of the fundamental principle of the hierarchy of legislation, it is important to note that the Code is not legislation at all. Consequently it cannot modify legislation or common law, and in particular it cannot modify the discretion specifically granted to arbitrators by the Insurance Act to make any order with regard to productions that could be made by a justice of the Superior Court.

In essence, interpreting Rule 40.1 narrowly to disallow the discretion to alter timelines granted by section 22(1) of the Insurance Act (and indeed recognized by Rule 81 of the Code) is not only beyond the scope of the Code but would fetter the jurisdiction of an arbitrator to make case-appropriate orders.

Since Suppa was written, the Divisional Court has come down strongly on the application of FSCO policies that are seen to fetter an arbitrator’s jurisdiction. In Gonsalves, it was the application of the Code provisions relating to adjournments that acted as a lightning rod. Lederer J. observed:

In doing so, the Director's Delegate unreasonably fettered the discretion of the arbitrator by requiring “extraordinary circumstances” or “unavoidable delay” as conditions precedent to the adjournment.¹⁰

Such would also be the case if I was bound by Suppa and the cases cited by Arbitrator Bujold including the decision of the Director’s Delegate in Morgan.

Rather, I would reiterate the position taken in Suhanic-Knox¹¹ that the arbitration scheme has not been constructed with any intention to impose stare decisis amongst administrative adjudicators of any level.

While it is possible to impose policy on adjudicators through legislation,¹² this is not yet a feature of the Insurance Act based arbitrations. Stare Decisis itself is an attribute of the Superior Courts who alone have the power to supervise administrative tribunals and create binding precedent.

Returning to section 8 of the SPPA, which Mr. Wynperle has relied upon in his submissions, this predates any of the current rules regarding disclosure now contained in the Act. Although now rarely referred to in that context, the provision set the stage for statutory tribunals to enforce fairness in the hearing process by setting out in a statute the basic principle that a person is entitled to know the case he or she has to meet, and should not be taken by surprise at a hearing.

This fundamental principle of justice remains applicable to this day and should inform the practice and procedures before administrative tribunals in Ontario. Consequently, it should also inform how Rule 40 of the Code is interpreted.

Mr. Wynperle is right. Ms. Dewing is expected to provide all her evidence to the Insurer, whether she intends to rely upon it or not, quite early in the hearing process. She must obtain the opinions of doctors or other experts to support her claim without knowing until almost the eve of the hearing whether there is photographic or other surveillance evidence that should have been shown to those experts for their comment. It is unbalanced. It is unfair. It is also unnecessary.

In this particular situation, Unifund made much of the fact that they wanted a resumption to take place in the presence of Ms. Dewing. They specifically wanted a further settlement discussion, which I have ordered for January of 2014.

It makes no sense to proceed to settlement discussions without both parties being fully up to speed on both their own respective cases and that of their opponent. To do otherwise is a waste of time for the parties and the tribunal.

Consequently, I find that there are grounds to exercise my discretion under both the Insurance Act and Rule 81 of the Code to alter the timing provisions of Rule 40 in order to make certain that neither party is taken by surprise at the settlement discussions.

Unifund is therefore ordered to disclose forthwith whether or not it has any surveillance in its possession.

Should there be any surveillance, Unifund shall have 60 days from the date of this decision to make its election as to whether it intends to rely upon any of the surveillance, in which case it shall immediately disclose all surveillance in accordance with Rule 40 of the Dispute Resolution Practice Code.

EXPENSES:

I leave the issue of any expenses to the hearing arbitrator.

May 16, 2013

John Wilson Arbitrator

Financial Services Commission of Ontario

Neutral Citation: 2013 ONFSCDRS 64 FSCO A12-004239

BETWEEN:

KELLY DEWING Applicant

and

UNIFUND ASSURANCE COMPANY Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Unifund is ordered to disclose forthwith whether or not it has any surveillance in its possession.

2. Should there be any surveillance, Unifund shall have 60 days from the date of this decision to make its election as to whether it intends to rely upon any of the surveillance, in which case it shall immediately disclose all surveillance in accordance with Rule 40 of the Dispute Resolution Practice Code.

May 16, 2013

John Wilson Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule - Effective September 1, 2010, Ontario Regulation 34/10, as amended.
2. 2Suppa and Motor Vehicle Accident Claims Fund (FSCO A08-002241, August 11, 2009)
3. 3(FSCO Appeal P07-00002, October 29, 2007)
4. 4Andersen v. St. Jude Medical Inc [2007] O.J. No. 5383 Master C.U.C. MacLeod
5. 5Ontario (Human Rights Commission) v. Dofasco Inc. 2001 CanLII 2554 (ON CA), 57 O.R. (3d) 693 Morden, J.A.:
6. 6Essays on the Conflict of Laws. By J. D. Falconbridge, Canada Law Book Co., Ltd., Toronto. 1947. Falconbridge tried to differentiate procedure from substantive as follows: “Broadly speaking, it is customary in the conflict of laws to characterize as procedural such matters as forms of action, parties to an action, venue, rules of practice and pleading, proof of facts, admissibility of evidence, rebuttable presumptions and burden of proof; and it has been suggested that the line between substance and procedure should be drawn on the basis of the general distinction between procedural rules which concern methods of presenting to a court the operative facts upon which legal relations depend, and substantive rules which concern the legal effect of those facts after they have been established.”
7. 7Andersen v. St. Jude Medical Inc supra
8. 8Suppa and Motor Vehicle Accident Claims Fund (FSCO A08-002241, August 11, 2009)
9. 9“If any provision of the Code is found to be contrary to the Insurance Act or any other law, then that law will prevail.”
10. 10T.R. Lederer J., Certas v. Gonsalves 2011 ONSC 3986, [2011] O.J. No. 3290
11. 11Suhanic-Knox and Economical Mutual Insurance Company (FSCO A08-000767, November 25, 2008)
12. 12Bell Canada v. Canadian Telephone Employees Assn. 2003 SCC 36, [2003] 1 S.C.R. 884