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

Neutral Citation: 2014 ONFSCDRS 103

FSCO A13-003753 and A13-007041

BETWEEN:

DALEA NAAMO

Applicant

and

AXA INSURANCE (CANADA)

Insurer

Before: Arbitrator Richard Feldman

Heard: May 22, 2014, at the offices of the Financial Services Commission of Ontario (“FSCO”) in Toronto

Appearances: Ryan Caesar for Ms. Naamo Matthew J. Sutton for AXA Insurance (Canada) (“AXA”)

Issues:

The Applicant has brought a motion to have Matthew J. Sutton of Laxton Glass LLP removed as solicitor of record for the Insurer (due to a conflict of interest allegedly arising from Mr. Sutton representing AXA on both of these arbitration proceedings).

Result:

The motion is denied.

BACKGROUND:

The Applicant, Dalea Naamo, made claims for statutory accident benefits from AXA with respect to motor vehicle accidents that occurred on February 9, 2011 and October 26, 2011. In 2013, the Applicant commenced two applications for arbitration at FSCO with respect to AXA’s denial of claims for statutory accident benefits: one application with respect to her disputed claims arising from the February 9, 2011 accident (File Number A13-002753) and a second application with respect to her disputed claims arising from the October 26, 2011 accident (File Number A13-007041). In both applications, the Applicant is represented by Sokoloff Lawyers. Similarly, the Insurer chose to retain one law firm (Laxton Glass LLP) to represent it on both applications.

The Applicant objects to AXA having the same lawyer (or law firm) represent it on these two applications and seeks an order for the removal of that firm from the record on both matters (essentially, forcing AXA to hire two different law firms to represent it -- a different firm for each of the two applications). A pre-hearing conference for both matters was scheduled to be held on February 25, 2014. At that time, the Applicant objected to proceeding with the pre-hearing discussion in either matter until she obtained a ruling on her motion for an order removing Matthew J. Sutton of Laxton Glass LLP as solicitor of record for the Insurer in both applications.

EVIDENCE AND ANALYSIS

The parties filed their motion materials in advance of the date set for the hearing of the motion and I had an opportunity to read that material prior to hearing oral arguments on May 22, 2014 from Mr. Caesar (on behalf of the Applicant) and from Mr. Sutton (on behalf of the Insurer).

Having considered both the written and oral submissions, I am not persuaded that the Applicant has demonstrated either a conflict of interest or an abuse of process that would warrant an order removing Matthew J. Sutton of Laxton Glass LLP as solicitor of record for the Insurer in both applications (or in either of these applications). While I do not doubt that I have the power to grant such a remedy in the appropriate circumstances, there is no evidence before me to justify such an order in the current circumstances.

The cases relied upon by the Applicant are all distinguishable on the facts from the case before me. The main case relied upon by the Applicant, Dervisholli v. Cervenak,¹ was one in which the same law firm was defending the insurer (State Farm) on both the applicant’s claims for accident benefits and on the tort claim. Justice Hambly felt that, given the difference between the duty owed by State Farm to the applicant in the accident benefits claim and its duty in the tort claim and given that, by having the same law firm representing it in both claims, the insurer might gain access to information in one case to which it would not normally have access in the other, there was at least a potential for the appearance of impropriety.

The decision in Dervisholli is not binding upon me. There are contrary decisions from the Divisional Court and from a Director’s Delegate that are binding upon me and that put into question the value of the Dervisholli decision as a precedent. Nevertheless, even if I assume that Dervisholli was correctly decided and even if I found it to be persuasive, it remains of little relevance to the present situation. In the case before me, both claims are for accident benefits and both are proceeding at FSCO (i.e., this is not a case in which the same law firm is representing AXA on both an accident benefits arbitration and a tort claim). Unlike the situation in Dervisholli, the duty owed by AXA to the Applicant is the same in both claims. There is no conflict and no appearance of impropriety.

Furthermore, it appears to me that there may be related legal or factual issues raised in the two applications and it is quite possible that some or all of the issues raised in the two applications will be ordered to be heard together, both for the sake of efficiency and in order to avoid the possibility of inconsistent findings (for instance, regarding questions of causation). In such circumstances, it would make no legal or practical sense to force AXA to be represented by two different lawyers.

The Applicant also raised concerns that information or documents produced with respect to one of her accidents might be used by AXA in defence of claims for accident benefits arising from the other accident. There is currently no convincing evidence before me that, to date, information has been used inappropriately by AXA. With respect to disclosure of documents going forward, I do not see how, in the circumstances of this case, AXA will be gaining some unfair advantage (as suggested by counsel for the Applicant) if it is permitted access to relevant medical and other records that may go back more than one year prior to the date of the second accident. Nevertheless, it is always open to the Applicant to object to producing a particular document or information that the Applicant feels is irrelevant to the issues in dispute or is otherwise not producible and to obtain a ruling from the pre-hearing arbitrator concerning production issues.

Finally, with respect to the suggestion that AXA may have acted unreasonably in the past in the adjusting of the Applicant’s claims or may do so in the future, it is open to the Applicant to seek appropriate relief (such as a special award) should there be evidence that AXA has unreasonably denied or delayed payment of a benefit. The Applicant has failed to satisfy me that, by having the same lawyer or firm representing the Insurer, this somehow prejudices the Applicant or increases the risk of unreasonable conduct on the part of the Insurer.

In conclusion, the Applicant has failed to prove that having AXA represented by the same firm in responding to claims for accident benefits arising from two accidents constitutes either a conflict of interest or an abuse of FSCO’s process. For these reasons, the Applicant's motion is denied.

June 20, 2014

Richard Feldman Arbitrator

Date