Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2016 ONFSCDRS 202

Appeal P15-00068

OFFICE OF THE DIRECTOR OF ARBITRATIONS

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Appellant

and

THOMAS WALDOCK Respondent

BEFORE: Richard Feldman

REPRESENTATIVES: Talaal Bond for State Farm Mutual Automobile Insurance Company Leonard H. Kunka for Mr. Waldock

HEARING: By written submissions received by July 13, 2016

DECISION ON A MOTION

Under section 283 of the Insurance Act, R.S.O. 1990 c. I.8 as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Regulation 664, R.R.O. 1990, as amended, it is ordered that:

The Respondent’s motion is denied.
Any claim for expenses related to this motion is deferred to the conclusion of this appeal.

July 27, 2016

Richard Feldman Director’s Delegate Date

REASONS FOR DECISION

I. NATURE OF THE MOTION

The Respondent has moved for an interim order excluding from the appeal record the following documents:

The Affidavit of Eric Grigg, sworn March 1, 2016;
The Affidavit of Randy Brown, sworn March 2, 2016; and
The interim decision of Delegate Blackman dated March 18, 2016.

The Respondent's submissions on this issue were received on June 20, 2016. The Appellant's responding submissions were received on June 29, 2016. The Respondent's reply submissions were received on July 13, 2016. I have considered those submissions and read the cases referred to therein but, for the sake of brevity, I will not be utilizing the numbering used by the parties and will be not be specifically referring to the cases cited.

Based upon my review of the record (both at appeal and at first instance), it is apparent that this case has had a rather complex history. At the heart of this appeal, however, are some fairly basic questions.

II. BACKGROUND

The original application for arbitration was, arguably, just about determination of whether or not the Applicant sustained a "catastrophic" impairment ("CAT") as a result of being struck by a vehicle in March 2008 and whether he was entitled to his reasonable legal expenses related to the arbitration proceeding. Even the Applicant's own written submissions (of July 10, 2014 at paragraph 43) acknowledge that, "...there are no monetary benefits at issue in the Arbitration, and ... the arbitration is merely for a declaration that Mr. Waldock's injuries should be deemed to be a 'catastrophic impairment'..."

After the original arbitration decision was released in November 2014, finding in favour of the Applicant (i.e., finding that he did sustain a catastrophic impairment as a result of the accident), a hearing was eventually scheduled to deal with the issue of the legal expenses (the Applicant had claimed "solicitor/client costs"). The Applicant also sought to add a claim for a Special Award. The Insurer contested the Applicant's right to add such a claim at that stage of the proceeding and sought a ruling on whether the Arbitrator would allow this issue to be added. After one day of oral hearing on these issues (June 25, 2015), the Arbitrator, apparently with the consent of both parties, directed that any further submissions would be in writing and a timetable was established for the filing of these written submissions. The parties were also directed to advise, in their submissions, if they desired the oral hearing (in person or otherwise) to be reconvened. With respect to the issue of the Special Award, the Arbitrator directed the parties to provide written submissions as to where in the Insurance Act it requires that, for a Special Award to be granted, it must first be claimed in the Application for Arbitration.

The Insurer restricted its written submissions to the issues of: (1) expenses; and (2) whether or not the Arbitrator ought to permit the Applicant to add a claim for a Special Award. Amongst other things, it argued that there could be no determination of the claim for a Special Award as no evidence had been led by the Applicant to establish the substantive benefits to which he was entitled, how long such benefits had been withheld and whether, in all the circumstances of this case, it was unreasonable for the Insurer to have relied on its CAT reports and to have withheld benefits pending the determination of the CAT issue at arbitration. The Applicant, in its supplementary factum, advised the Arbitrator that the parties were prepared to reconvene the oral hearing so that the adjuster could testify and be cross-examined. The oral hearing was not reconvened.

On November 16, 2015, the Arbitrator released his "Expense Decision", in which he awarded to the Applicant:

$361,520.30 for Attendant Care and Housekeeping and Home Maintenance Benefits;
Interest in respect of his overdue benefits, calculated at 2% per month, compounded monthly, commencing July 7, 2010;
Expenses of approximately $170,000.00; and
A Special Award of $108,456.09 plus interest at 2% per month, compounded monthly, commencing July 7, 2010, the date the benefits first became payable under the Schedule.

The Insurer has appealed this order. Although it alleges that this decision contains numerous errors of law, the primary allegation is that there has been a denial of natural justice. The Insurer alleges that it had no notice that the Arbitrator would be dealing with the substance of the claim for a Special Award¹ and no notice that the Arbitrator was even considering adjudicating the Applicant's entitlement to attendant care benefits or housekeeping and home maintenance benefits. The Insurer also questions the Arbitrator's jurisdiction to make many of the orders he did.² In addition, even if the Arbitrator did have jurisdiction to order payment of attendant care benefits, housekeeping and home maintenance benefits and interest thereon, there was information before the Arbitrator that, of all past benefits claimed by the Applicant (including interest), all but about $63,000 had been paid to him by the Insurer by the summer of 2015; thus, it is submitted that the Arbitrator seriously erred in ordering the Insurer to pay these same amounts a second time.

The Applicant's position, at the risk of oversimplifying, is that there was no denial of natural justice and no errors of law -- the Insurer, it is argued, had an opportunity to make written submissions and if it failed to address any or all of these issues in its submissions or misunderstood the Arbitrator's directions, that is its problem.

III. NATURE OF THE CONTESTED DOCUMENTS

The Affidavit of Eric A. F. Grigg sets out the chronology of events surrounding the "expense hearing", provides details of what occurred during the hearing on June 25, 2015 and details of communications between counsel following that hearing and before the issuance of the decision that is now under appeal.

The Affidavit of Randall Brown provides details of payments that have been made by the Insurer to the Applicant between March 2015 and February 2016 for attendant care benefits, housekeeping and home maintenance benefits and interest.

Both affidavits have already been accepted into evidence in this appeal in the Appellant's motion seeking a stay of the order under appeal. The Respondent did not oppose the admission of these documents and did not seek an opportunity to cross-examine the affiants; instead, the Respondent filed responding affidavits (by Carr Hatch and Carmen Spano).

That motion (along with other related motions) was heard and decided by Delegate Blackman. His decision was released on March 18, 2016. In deciding whether to exercise his discretion to grant the requested stay, Delegate Blackman had to consider the bona fides of the appeal, the substance of the grounds for appeal (i.e., its apparent strength) and the potential hardship to each of the parties if the stay were granted or refused. Ultimately, he granted a stay of the entire order under appeal except for the payment of a portion (about $62,000) of the legal expenses that had been awarded.

IV. RESPONDENT’S SUBMISSIONS

The Respondent objects to the inclusion in the appeal record of the affidavits of Randy Brown and Eric Grigg and the interim order of Delegate Blackman because they are not documents listed in Rule 56.4 of the Dispute Resolution Practice Code (the "Code") and because they constitute "new evidence" (or, in the case of the order, reference to new evidence) that was not before the hearing Arbitrator. The Respondent argues that this is an attempt by the Appellant to re-open the "expense hearing". Finally, the Respondent objects on the basis that these documents could unduly influence the Delegate who ultimately decides this appeal.

V. APPELLANT’S SUBMISSIONS

The Appellant contends that the disputed documents do not constitute "fresh" evidence. Furthermore, the order of Delegate Blackman is not "evidence". It is a public record and is properly considered to be a part of the appeal record.

The affidavit of Eric Grigg does not go to the substantive issues that were properly before Arbitrator Henry; rather, it details events at and surrounding the hearing of June 25, 2015 in order to provide a fuller context. It addresses issues of natural justice that cannot be discerned from the order under appeal or the existing record (due to the lack of a transcript or recording of the proceedings).

The affidavit of Randall Brown confirms the payments that have been made to the Respondent. The contents of this affidavit, it is submitted, could not have reasonably been put before the hearing Arbitrator since (as the Insurer will seek to prove on this appeal) the Insurer was unaware that the Arbitrator was contemplating granting a Special Award (without further evidence and submissions on the substance of that issue), or attendant care benefits, or housekeeping and home maintenance benefits or interest. The Insurer, it is submitted, was not notified of the issues that were to be adjudicated and, therefore, was unaware that evidence of payments that had been made to the Applicant in 2015 would be relevant at the "expense hearing".

VI. ANALYSIS

Although Rule 56.4 of the Code lists the documents that usually make up the appeal record, it is not exhaustive. It states that the appeal record includes the Notice of Appeal, the Response to Appeal, the written submissions of the parties, the record of the arbitration hearing and, if it is filed, the transcript of the arbitration hearing. The most just interpretation of this provision is that the documents listed in Rule 56.4 are the usual ones that make up the appeal record but there may well be circumstances where other documents are also included in the appeal record. Those documents may include materials related to interlocutory motions that are brought during the course of an appeal.

Contrary to the submission of the Respondent, the motion for a stay was not "separate and distinct" from the issues on this appeal. As an integral part of that motion, Delegate Blackman had to decide the apparent strength (i.e., merit) of this appeal. The Appellant's uncontested submission is that the Respondent did not object to these documents being filed by the Appellant. In such circumstances, I am not persuaded that the Respondent should now be able to object to these affidavits remaining part of the record.

As for the order of Delegate Blackman, it is not "evidence". The Respondent has not explained to my satisfaction what power I have to expunge that order from the record or, even if I had such power, why I ought to do so in this case.

With respect to the two affidavits, I find the arguments of the Appellant to be more persuasive.

This is not an attempt by the Appellant to re-open the "expense hearing." While the record suggests that the parties consented to a process, it is less clear what that process was and what issues it was meant to address. Thus, while the Insurer may have consented on June 25, 2015 to filing written submissions, it is hotly contested whether the Arbitrator's oral and written directions to the parties were clear and unequivocal so that all parties knew the issues they were to address in those written submissions and whether there would be an opportunity later for a reconvening of the oral hearing.

In circumstances where at least a prima facie case of procedural unfairness has been established, it is unlikely that details of procedural irregularities will appear on the face of the impugned decision. That evidence will often have to come from other sources, such as: a transcript (if the proceedings were recorded); correspondence between the parties or between the tribunal and one or both parties; or, sworn evidence from persons who were involved. Thus, whether the affidavit of Eric Grigg can remain part of the appeal record is not properly characterized as a question of whether "fresh" evidence ought to be admitted on appeal. It is evidence that is relevant to the Insurer's allegation that it was denied a fair hearing and was not given proper notice of the issues in dispute and a fair opportunity to address those issues. Seen in this context, I believe that the case law upon which the Respondent seeks to rely about the circumstances under which fresh evidence can be adduced on appeal is irrelevant with respect to this affidavit.

The affidavit of Randall Brown, on the other hand, does contain information that was available in the summer and fall of 2015. Given that the Applicant's Supplementary Factum of July 13, 2015 advised Arbitrator Henry that about $534,000 of the $597,000 claimed by Mr. Waldock had been paid, I am not sure how it is prejudicial to Mr. Waldock that, on appeal, we have access to a slightly more detailed breakdown of those figures. I suspect that little will turn, on appeal, on the precise amounts that remained owing in the summer of 2015. It appears from the Respondent's own submissions to the Arbitrator that far less was owing to the Applicant than the amount awarded to him by the Arbitrator and, of course, there are other allegations of errors in law concerning the award to the Applicant of over $360,000 in attendant care benefits and housekeeping and home maintenance benefits. In any event, it is submitted that this evidence could not have been adduced at the hearing through the exercise of due diligence, because the Insurer was not advised of the issues that were being adjudicated to which this information (i.e., details of payments made to the Applicant) might be relevant.

I think that it is sufficient, at this stage, to note that the affidavit of Randall Brown has been part of the appeal record since March 2016, is reasonably capable of belief and contains evidence that is relevant to at least some of the issue under appeal and could affect the result. While this affidavit may not be crucial, it is also hard to see how it is prejudicial to the Respondent and the information contained therein may be helpful in deciding what orders may be necessary to prevent an abuse of process.

While the Respondent argues that it is unfair that these affidavits remain on the record because the Respondent has not had an opportunity to cross-examine the affiants, there is no indication that the Respondent previously specifically objected to the filing of these affidavits or sought an opportunity to cross-examine the affiants prior to the issuance of the decision of Delegate Blackman. In terms of having an opportunity to respond, the Respondent was permitted to file affidavits in response to those filed by the Appellant.

VII. CONCLUSION

For the reasons set out above, the Respondent's motion is denied.

VIII. EXPENSES

Any expenses related to this motion can be addressed at the conclusion of this appeal.