Bahram Anssari v. Wawanesa Mutual Insurance Company, 2016 ONFSCDRS 170

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2016 ONFSCDRS 170

FSCO A15-000544

BETWEEN:

BAHRAM ANSSARI

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

DECISION ON A MOTION

Before: Arbitrator Charles Matheson

Heard: By written submissions completed May 11, 2016

Appearances: Ms. Melissa Miller, lawyer, particpated for Mr. Bahram Anssari

Mr. Paul Barnes, lawyer, participated for Wawanesa Mutual Insurance Company

Issues:

The Applicant, Mr. Bahram Anssari, was injured in a motor vehicle accident on December 20, 2013. He applied for and received statutory accident benefits from Wawanesa Mutual Insurance Company (“Wawanesa”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Anssari applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this Motion are:

Is Wawanesa exempt from providing the Applicant with its Arcon Forensic Engineering Report (“the Report”), authored by Mr. King, after claiming litigation privilege?
Is Wawanesa or Mr. Anssari liable to pay the expenses in respect to this Motion?

Result:

Wawanesa is not exempt from disclosure due to litigation privilege and shall produce to the Applicant the Report, authored by Mr. King, forthwith.
I shall defer the issue of expenses to the final Hearing Arbitrator. In the event that a final Hearing is not necessary and should the parties become unable to resolve this issue, they shall subsequently schedule an Expense Hearing before me in accordance with the provisions of the Dispute Resolution Practice Code, no later than 30 days after they have settled all other Arbitration disputes between them.

EVIDENCE AND ANALYSIS:

Case Law considered

Wachmenko and Canada Life Casualty Insurance Company (FSCO A04-001086, December 16, 2004)

Jones and Jevco Insurance Company (FSCO A11-002794, January 21, 2013)

Background

During the Pre-Hearing discussion of February 23, 2016, it was communicated that as a result of the December 20, 2013 incident, where Mr. Anssari fell from a ladder, he suffered serious injuries. Mr. Anssari, the Applicant, did not see the vehicle which may have hit the ladder he was on at the time of the incident. The preliminary issue which is yet to be heard or decided is whether or not this accident was indeed a motor vehicle accident as described under the Insurance Act. It was also disclosed during the Pre-Hearing that the Insurer commissioned an engineering report from a company called Arcon Forensic Engineering.

Applicant’s counsel wishes to obtain a copy of the Report the Insurer commissioned. The Insurer is claiming litigation privilege for this document.

Decision

The parties agree that the onus of proof of establishing litigation privilege rests with the party who claims the privilege, in this case the Insurer.

The undisputed evidence as submitted within the party’s factums and affidavits show the following timeline of events:

An OCF-9 was issued by the Insurer on June 30, 2014, which suggested that the reasons for not paying the benefits was that there wasn’t a motor vehicle accident (“MVA”);
An OCF-9 was issued by the Insurer, dated August 1, 2014, suggested that the Insurer was waiting for the results of a pending Evidence Under Oath (“EUO”) before considering paying any benefits;
Further claims for other benefits were made on August 14, 2014;
The first Mediation was applied for on August 15, 2014;
The EUO was completed on September 12, 2014;
The Insurer commissioned the Report and Mr. King of Arcon Forensic Engineering inspected the ladder on October 15, 2014;
An OCF-9 was issued by the Insurer on December 31, 2014 which suggested that the benefits would not be paid as there was no MVA;
On January 7, 2015, the first Mediation occurred;
On January 15, 2015, the first Application for Arbitration was sent;
The Applicant applied for more benefits on January 21, 2015;
On February 11, 2015, the Insurer followed up with Arcon for the Report;
Counsel for the Applicant first requested a copy of the Report on February 19, 2015;
The second Mediation was applied for on March 27, 2015;
Adding issues letter to the Application for Arbitration was applied for on April 21, 2015;
The Insurer received the Report by Arcon on May 6, 2015.

Insurer’s counsel argues that the first Application for Mediation should be the “bright line” which separates the investigative stage from the litigation stage of an adversarial process, namely Arbitration.

Insurer’s counsel also argues that the Applicant’s previous counsel must have had Arbitration in mind as he applied for Mediation even before the completion of the EUO. Therefore the Insurer was well within their rights to prepare documents for the Arbitration that was “coming down the pipe”.

In the alternative, if the “bright line” is determined to be the Arbitration application date of January 15, 2015, the Insurer did not receive the Report until May 6, 2015, and therefore the dominant purpose of the Report was to investigate the evidentiary threshold that the Applicant must meet in order to qualify for said claimed benefits.

Applicant’s counsel argues that the Report is relevant to her client’s claim for benefits as the Insurer is bringing forth the preliminary issue that there was not a MVA. The Applicant implies that the Insurer did commission the Report in the timeframe that the Insurer should still have been involved in the good faith investigation phase of the claim, therefore litigation privilege cannot be claimed.

Applicant’s counsel brings to my attention Wachmenko and Canada Life Casualty Insurance Company, where Arbitrator Wilson analysed the purpose of litigation privilege. The Arbitrator quotes Justice Sharpe J.A. of the Court of Appeal in its General Accident Assurance Co. v. Chrusz case, which reads, in part, as follows:

Litigation privilege is based upon the need for a protected area to facilitate …. preparation of a case for trial by an adversarial advocate

Further, Applicant’s Counsel brings to my attention the Arbitrator Susan Alves decision of Jones and Jevco Insurance Company. In Jones, the Arbitrator approvingly quoted Justice Allen in the appeal case of Master Graham’s decision. Justice Allen upheld the rejection of the Insurer’s submissions for a lack of evidence to support the Insurer’s position because the submissions would conflict with the Insurer’s duty of good faith in the conduct of an investigation. This reads in part as follows:

The duty of good faith in the assessment and investigation phase of a claim means that an insurer cannot to have reasonably anticipated litigation until it determines questions of coverage and liability. As Justice Allen stated, “Put another way, good faith during the claims investigation phase requires an open mind or neutrality on the part of the insurer, not an orientation toward litigation.”

Justice Allen continues to state:

26A party seeking litigation privilege is required to establish (a) that litigation was contemplated and b) that the documents for which privilege is being sought were created for the dominant purpose of litigation…

In this Motion, the Insurer argues in its factum that the Report was made for consultation purposes, and yet on the other hand also argues that the Report’s dominant purpose was to investigate the evidentiary threshold that the Applicant must meet in order to qualify for the claimed benefits. The Insurer also pleads that it is not prepared to use the Report during the Arbitration process.

In my view, the time frame in which the Insurer requested the Report was in its assessment phase. The balance of probabilities suggests in my view, that the Report was indeed consultative in nature and relative to the issues in dispute.

I don’t believe that the Report, although received on May 6, 2015, some nine months later, it should be protected by privilege as the commission date was clearly in the assessment stage of the claim. The commission date should bear significant weight when determining if the document is to be protected by privilege, especially when the commissioning time frame also overlaps the expectations time frame when the Insurer is adjusting a file in good faith.

Given the positive onus on the Insurer to establish the privilege, I am unable to accept that the “bright line” should be that of the first notice of Mediation in this case. Mediation should have been the beginning of a conversation to adjust the claim in earnest, as the Insurer has made it clear by its actions that more information was required by it. With the evidence before me, I remain unconvinced that litigation privilege can be extended to the Report.

Accordingly, for the above reasons, I now find and order that Wawanesa is not exempt from disclosure due to litigation privilege and shall produce to the Applicant the Report, authored by Mr. King, forthwith.

EXPENSES:

I shall defer the issue of expenses to the final Hearing Arbitrator. In the event that a final Hearing is not necessary and should the parties become unable to resolve this issue, they shall subsequently schedule an Expense Hearing before me in accordance with the provisions of the Dispute Resolution Practice Code, no later than 30 days after they have settled all other arbitration disputes between them.

June 13, 2016

Charles Matheson

Arbitrator

Date