S.T. v. Wawanesa Mutual Insurance Company, 2018 CanLII 13160

Licence Appeal Tribunal

Date: 2018-02-06

Tribunal File Number: 17-003874/AABS

Case Name: 17-003874 v Wawanesa Mutual Insurance Company

In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c. I.8, in relation to statutory accident benefits

Between:

S.T.

Applicant

and

Wawanesa Mutual Insurance Company

Respondent

DECISION and ORDER

ADJUDICATOR: Deborah Neilson

APPEARANCES:

For the applicant: Marilyn Maxwell-Smith, Counsel

For the Respondent: Stephen Macaulay, Counsel

Held in-writing: November 27, 2017

I. OVERVIEW

[1]. The applicant was injured in an automobile accident on September 29, 2012, and sought benefits from the respondent pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010 (“Schedule”). The applicant submitted an application for dispute resolution services to the Licence Appeal Tribunal - Automobile Accident Benefits Service (“Tribunal”). The parties attended at a case conference before me on September 8, 2017. At that time, I ordered that a seven day hearing be scheduled, starting on February 26, 2018, to determine whether the applicant sustained a catastrophic impairment and if she is entitled to non-earner benefits, attendant care benefits, medical benefits, rehabilitation benefits, payment of cost of examinations, interest and a special award.

[2]. At the case conference, a dispute about production requests arose between the parties. I ordered that the parties serve and file written submissions in support of their respective production requests.

[3]. Prior to the date the parties’ submissions were due, the respondent agreed to the applicant’s production request. This means the only issue for me to determine is whether the applicant is required to produce a copy of the release and disclosure notice from the settlement of her accident benefits with another insurer, Economical Insurance, from an accident she had in 2010.

II. ISSUES

[4]. The Licence Appeal Tribunal (LAT) Rules of Practice and Procedure, Version 1 (“LAT Rules”) apply to the applicant’s appeal. Under LAT Rule 9.1, I may, at any stage in the proceeding, order any party to provide such further particulars or disclosure as I consider relevant and necessary for a full and satisfactory understanding of the issues in the proceeding. According to s.5.4(2) of the Statutory Powers Procedure Act¹, this does not mean that I have the authority to require a party to disclose privileged information.

[5]. The respondent claims the release and disclosure notice ought to be produced because they are relevant to the issues before the Tribunal. They are relevant because the applicant sustained a catastrophic impairment in her 2010 accident and her benefits from that accident are deductible from her accident benefits from this accident to prevent the applicant from being overcompensated for this accident. The respondent asserts that they need to know the amounts of the settlement to know what to deduct.

[6]. The applicant claims the release and disclosure notice are not relevant and, in any event, are protected from production by settlement privilege and, therefore, are not producible. The respondent claims that if the documents are subject to settlement privilege, that they come under a public policy exception and ought to be produced. This means the issues I must decide are as follows:

a. Are the release and disclosure notice relevant to the issues in the appeal?

b. Are the release and disclosure notice protected from production by settlement privilege?

c. If the documents are subject to settlement privilege, should an exception be made for them for public policy reasons - to prevent the applicant from being overcompensated?

II. RESULT

[7]. I find that that the disclosure notice is relevant to the issues in dispute. The applicant has failed to prove that the documents are protected by settlement privilege. I need not determine whether the public policy against double recovery provides an exception to the protection of the documents from production.

III. ANALYSIS

a. Relevance

The respondent submits that there is a public interest in preventing insured persons from being overcompensated as set out in Sable Offshore Energy Inc. v. Ameron International Corp.² I agree with this submission. The public interest against overcompensation or double recovery is supported by s.47 of the Schedule, which allows for the deduction of benefits available under other policies of insurance, benefit plans or laws.

[8]. The respondent states that the applicant has expanded coverage for medical, rehabilitation, or attendant care benefits under the 2010 accident because her insurer for that accident, Economical Insurance, determined that the applicant sustained a catastrophic impairment. The respondent submits that if any of the funds from the settlement with Economical were earmarked to be used for the applicant’s future medical, rehabilitation, or attendant care needs, the respondent should not be held responsible for paying those benefits in order to prevent the applicant from being overcompensated or double recovery. The respondent submits that it is unable to determine how much it may be required to pay the applicant if she is determined to be catastrophically impaired for this accident unless it knows how much of the settlement funds were allocated by Economical Insurance to each benefit. The respondent submits, and I agree, that the disclosure notice will set out how much of the settlement funds were allocated to each benefit.

[9]. The applicant submits that the documents are not relevant because the settlement funds are not deductible from the accident benefits she is claiming from the respondent. She relies on case law that has held that a tort or accident benefit settlement from one accident is not deductible from a tort claim for another accident or a non-motor vehicle negligence claim.³ The case law that the applicant relies on has held that there was no risk of double recovery in tort actions because of the methods the Court uses for assessing damages.⁴ I find that the applicant’s case law does not assist her because those cases dealt with whether settlement funds are deductible from tort damage awards, not accident benefits claims for similar treatment or attendant care. If the hearing adjudicator determines that the applicant sustained a catastrophic impairment in this accident, the hearing adjudicator may very well determine that the settlement funds from Economical should be deducted from the benefits payable by the respondent in order to prevent double recovery. In any event, it is not an issue I need to decide at this time, only whether it is a potential issue to be determined at the hearing and therefore affects whether the settlement documents may in fact be relevant.

[10]. The applicant submits that it was only after she settled her claim with Economical that she first applied for attendant care benefits from the respondent. The applicant’s evidence is that the 2010 accident benefit claim was settled in July 2015. According to her submissions, the applicant is seeking payment for the same or similar services that were funded by Economical. To the extent the applicant has not incurred attendant care because her settlement funds have covered the expense, the respondent may not be required to pay for that portion of those services that would be covered by the Economical policy if they are successful with their argument at the hearing. For these reasons, I find that information that indicates what Economical paid the applicant for future benefits has a semblance of relevance to the applicant’s claims.

[11]. The applicant submits that the principles of proportionality as applied by Vice Chair White in Annie Chen and Unifund Assurance Company⁵ ought to be applied in determining whether to order the release and settlement disclosure notice. The applicant also relies the appeal decision of the Financial Services Commission of Ontario (“FSCO”) Allstate Insurance Company of Canada and AI-Obaidi⁶ which essentially sets out a list of factors to consider when balancing relevance with proportionality as follows:

a) sensitivity of the information;

b) the practicalities of compliance;

c) and the timing of the request; and

d) the availability of the requested information through other sources.⁷

[12]. I agree that, in addition to relevance, proportionality is a factor that I should consider when making an order for the production of documents. While I am not bound by the FSCO decisions, I find that the factors considered in AI-Obaidi apply when proportionality is considered.

[13]. I find that the timing of the respondent’s request is reasonable as it was made about two months before the case conference.

[14]. The applicant submits the information in the release is sensitive, but she provided no evidence that it was sensitive or in what manner it was sensitive.

[15]. I find it would be very easy for the applicant to provide copies of the documents to the respondent. They are in the applicant’s possession. The typical release is usually no longer than two pages and the disclosure notice is usually no longer than seven pages.

[16]. The applicant submits that the information as to what benefits were paid out in a lump sum to her from Economical under the various headings is available through other sources, specifically through a review of the Economical accident benefit file. No evidence was filed by the applicant to support this submission. I am not convinced that the information is available in the file. Further, the resources required to go through the file to collect the information is disproportionate to the effort it would take to produce the disclosure notice and release.

[17]. The applicant submits the release and disclosure notice does not provide a breakdown of what was paid out before the settlement, how much was allocated for future benefits or what portion of the settlement was paid for outstanding claims. It may very well be the case that the respondent will have to deduce that information from both the disclosure notice and the information in the file or may even require further information from a representative from Economical Insurance. In either case, I accept that the information in the disclosure notice will make the process more efficient and accurate.

[18]. For these reasons, proportionality weighs in favour of the disclosure notice, which I find is relevant to the issues in dispute, being produced.

b. Settlement Privilege

[19]. The applicant submits that the release and disclosure notice are protected from production by settlement privilege. Settlement privilege was explained by the Supreme Court of Canada in Sable Offshore Energy Inc. v. Ameron International Corp. Settlement privilege protects the efforts parties make to settle their disputes by ensuring that communications made in the course of those negotiations are inadmissible. The protection is for settlement negotiations, whether or not a settlement is reached. Since the amount of the settlement is a key component of the negotiation communications, it too is protected by the privilege.⁸

[20]. The respondent referred me to an Alberta Court of Appeal decision, Bellatrix Exploration Ltd. v Penn West Petroleum Ltd. (2013) 358 D.L.R. (4th)⁹, which discusses the well-known conditions that must be met for settlement privilege to apply:

(a) the existence, or contemplation, of a litigious dispute;

(b) an express or implied intent that the communication would not be disclosed to the court in the event negotiations failed; and

(c) the purpose of the communication must be to attempt to effect a settlement.

[21]. It is not uncommon for insurance companies to pay an insured person a lump sum for benefits without there being any disputes in exchange for the insured releasing the insurer from payment of any future benefits. In fact, regulations have been put into place prohibiting such a settlement from taking place within the first year after an accident.¹⁰ In this case, it is not clear whether Economical simply paid out a lump sum to the applicant in exchange for the release or whether the “settlement” was of litigation or contemplated litigation. The only indication that a litigious dispute existed or was contemplated between Economical Insurance and the applicant in this case is a letter from a legal assistant from the same law firm as the applicant’s counsel to the respondent’s counsel advising that there were a number of issues in dispute with Economical. It is not clear what the legal assistant meant in her statement that a number of the issues were in dispute, whether benefits were denied, whether litigation was contemplated or started, if she obtained this information from reviewing the file, from speaking to the applicant, or from something the applicant’s lawyer told her. The evidence before me was that Economical’s assessors determined in February 2015 that the applicant sustained a catastrophic impairment in her 2010 accident following which, in July 2015, the applicant and Economical settled the applicant’s claim. This evidence does not support the applicant’s submission that settlement privilege applies as I am unable to determine from this evidence that there was litigation or that litigation was contemplated.

[22]. If the settlement with Economical was because of actual or contemplated litigation, it would have been a simple matter for the applicant to produce either copies of Economical’s denial letters, a copy of her application to FSCO or her statement of claim against Economical rather than a letter from a legal assistant with a vague reference to a dispute. For these reasons, I find that the applicant has not established that the settlement privilege applies to the release and disclosure notice.

c. Exception to Settlement Privilege to Prevent Overcompensation

[23]. The respondent submits that there are exceptions to the privilege. To come within those exceptions, the respondent must show that, on balance, a competing public interest outweighs the public interest in encouraging settlement. One such public interest is preventing a plaintiff from being overcompensated.¹¹ I need not decide the issue because the applicant has not proven that settlement privilege applies to the release and disclosure notice. If I am wrong, however, I agree with the respondent that the public policy against double recovery or overcompensation would require the applicant to produce the disclosure notice in this case.

IV. ORDER

[24]. The applicant shall produce a copy of the disclosure notice and release to the respondent within five business days of the date of my Order.

Released: February 6, 2018

___________________________

Deborah Neilson, Adjudicator

Footnotes

1. 1Statutory Powers Procedure Act, RSO 1990, c S.22
2. 2Sable Offshore Energy Inc. v. Ameron International Corp., [2013] 2 SCR 623, 2013 SCC 37 at para. 19.
3. 3Pangburn v. Leeder-Kroyer (2003) O.J. No. 5025 (Ont. S.C.J.), Chappel v. Dysko (2008) O.J. No. 13 (Ont. S.C.J.), Anderson v. Cara Operations Limited (Montana's Cookhouse) (2009) CanLII 58608 ON SC
4. 4The method for determining damages in tort that eliminates the risk of double recovery was described in Anderson v. Cara Operations Limited (Montana's Cookhouse). The trial judge determines the value of the plaintiff’s injuries, assuming they are ongoing and overlapping, as of the day before the second accident. A determination is then made of the plaintiff’s global damages. The trial judge then deducts the first from the second to arrive at the proper award for the injuries in the second accident for which the tort defendants are responsible. The settlement amounts are not used to determine the damages.
5. 5Annie Chen and Unifund Assurance Company (2017) CanLII 59494 (ON LAT 17-001476/AABS)
6. 6Allstate Insurance Company of Canada and AI-Obaidi (FSCO Appeal P99-00009, May 2, 2000)
7. 7See Barlett and RBC Insurance General Insurance Company (FSCO A10-000013, August 31, 2011) where the Arbitrator expanded upon the list in AI-Obaidi
8. 8Sable Offshore Energy Inc. v. Ameron International Corp., supra.
9. 9Bellatrix Exploration Ltd. v Penn West Petroleum Ltd. (2013) 358 D.L.R. (4th) (Alta. C.A.). The decision has been relied on in a number of Ontario Superior Court decisions and simply lists the same conditions that the Ontario Divisional Court stated must exist in Inter-Leasing Inc. v Ontario (Minister of Finance), 2009 CanLII 63595 (Ont. Div. Ct.), [2009] OJ. No 4714.
10. 10See s.9(10)1 of Automobile Insurance, RRO 1990, Reg. 664
11. 11Sable Offshore Energy Inc. v. Ameron International Corp., supra., at paras.19-26