H.K. v. The Commonwell Mutual Insurance Group, 2019 CanLII 43882

Tribunal File Number: 18-005647/AABS

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

Between:

H.K. Applicant

and

The Commonwell Mutual Insurance Group Respondent

MOTION DECISION

ADJUDICATOR: Amanda Fricot

APPEARANCES:

For the Applicant: Ian Furlong, Counsel

For the Respondent: Linda Matthews, Counsel

Case Conference Held on December 5, 2018 and Written Submissions on the Motion dated March 15, 2019, March 29, 2019 and April 5, 2019

OVERVIEW

1The applicant was involved in an automobile accident on August 25, 2013 and sought benefits pursuant to the Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10 (the "Schedule"). The applicant submitted an application and an amended application to the Licence Appeal Tribunal - Automobile Accident Benefits Service ("Tribunal") following a denial of certain benefits by the respondent.

2The parties participated in a case conference on December 5, 2018. A 7 day in-person hearing is scheduled to commence on June 18, 2019. At the case conference the applicant requested that the respondent provide copies of the adjuster's log notes from the date of the accident to the date the application was filed with the Tribunal on June 18, 2018, redacted for reserves and communications with counsel. The respondent refused. I heard submissions from the parties and determined that written submissions were required. Production of adjuster's log notes for the period from the date of the accident to August 14, 2015 is no longer in dispute.¹ Having reviewed the written submissions filed, this is my decision on the applicant's request.

ISSUES

3The issue before me is:

(i) Is the respondent required to provide the applicant with copies of the adjuster's log notes from August 14, 2015, the date the application to the Financial Services Commission of Ontario ("FSCO application") was filed, to June 18, 2018,[the date this application was filed with the Tribunal, redacted for reserves and solicitor-client privileged information?

4To determine this issue, I must answer the following questions:

(i) Are the adjuster's log notes created after the FSCO application was filed on August 14, 2015 relevant to the issues in dispute in this application?

(ii) If those adjuster's log notes are relevant to the issues in dispute, are they protected from disclosure by litigation privilege that arose on or after the date the FSCO application was filed? More specifically:

a) When was litigation contemplated for the purpose of this application to the Tribunal?; and

b) Were the adjuster's log notes that were created after this litigation was contemplated created for the dominant purpose of this litigation?

RESULT

5For the reasons that follow, I find:

(i) The adjuster's log notes sought, relating to the issues in dispute, are relevant.

(ii) Litigation with respect to the applicant's claims for income replacement benefits ("IRBs") and lost education expenses was contemplated as of August 14, 2015, when the FSCO application was filed. There is insufficient evidence to establish that litigation with respect to the other issues in dispute was contemplated prior to June 18, 2018.

(iii) The evidence does not establish that all adjuster's log notes created after August 14, 2015 were created for the dominant purpose of litigation, and accordingly not all such adjuster's log notes are subject to litigation privilege. Therefore:

a) The applicant's request for production of all adjuster's log notes from August 14, 2015 to the date this application was filed with the Tribunal on June 18, 2018, redacted for reserves and solicitor-client privileged information is dismissed.

b) The respondent shall, within 14 calendar days of the release of this Decision, provide the applicant with a copy of the adjuster's log notes from the date of the accident to August 13, 2015, subject to redactions for solicitor-client privilege and reserve information.²

c) The respondent shall, within 14 calendar days of the release of this Decision, provide the applicant with a copy of the adjuster's log notes from August 14, 2015 to the June 18, 2018, redacted for information not relevant to the claims currently in dispute; and for information that is subject to litigation privilege or solicitor-client privilege, or that is related to reserves.

d) The respondent shall, within 14 calendar days of the release of this Decision, provide the applicant with particulars with respect to the reasons for each redaction.

e) Any other issues regarding production of the adjuster's log notes shall be left to the hearing adjudicator.

ANALYSIS

6The adjuster's log notes sought by the applicant are the log notes created after August 14, 2015, the date a FSCO application was filed, and June 18, 2018, the date this application was filed with the Tribunal. Accordingly, I must determine if and when litigation privilege with respect to adjuster's log notes arose in the FSCO application, and whether that litigation privilege continues for the purpose of this application.

Are the adjuster's log notes requested by the applicant relevant to the issues in dispute?

7I find that the adjuster's log notes relating to the issues currently in dispute are relevant. I find that adjuster's log notes relating to issues that have been settled or withdrawn are not relevant.

8The applicant submits that the adjuster's log notes sought are relevant to how the respondent adjusted the applicant's claims, and more particularly to the applicant's claims for IRBs and lost educational expenses, and to the applicant's claim for an award under Ontario Regulation 664. The respondent argues that the adjuster's log notes after August 14, 2015 are irrelevant.

9In order to determine whether a document should be produced, the Tribunal must consider whether the requested document is relevant and necessary for a full understanding of the issues in dispute.

10The issues that are currently in dispute and proceeding to a hearing are the following:

Preliminary Issues

(i) Is the applicant statute barred from pursuing his claims for IRBs and a lost educational expense, in accordance with section 56 of the Schedule?

(ii) If the applicant would otherwise be statute barred from pursuing his claims for IRBs and a lost educational expense, should an extension of time be granted pursuant to section 7 of the Licence Appeal Tribunal Act, 1999, S. O. 1999, c. 12, Sch. G?

Substantive Issues

(i) Has the applicant sustained a catastrophic impairment as defined by the Schedule?

(ii) Income Replacement Benefit (IRB):

a. Is the applicant entitled to receive IRBs for the period from September 2, 2013 to date and ongoing?

b. If the applicant is entitled to receive IRBs, what is the amount of that income replacement benefit?

(iii) Is the applicant entitled to a lost educational expense in the amount of $7,566.04 for tuition paid to York University plus interest, submitted on June 26, 2017, and denied on October 13, 2017?

(iv) Is the applicant entitled to interest on any overdue payment of benefits?

(v) Is the applicant entitled to an award under Ontario Regulation 664 because the respondent unreasonably withheld or delayed the payment of benefits?

11The applicant submits that adjuster's log notes arising from the consideration of the applicant impairment and the determination of his entitlement to benefits are relevant.³ The respondent submits that the applicant has failed to establish the relevance of the adjuster's log notes after August 14, 2015 and disputes the applicant's submission that they are relevant and necessary for the adjudication of the applicant's claim for an award.

12I agree with Pelaccia v. Wawanesa⁴ where the arbitrator notes the insurer's ongoing duty to adjust claims and concludes that the documents in an insurer's internal file that relate to that continuing obligation are prima facie relevant. I also agree with 17-005570 v. Wawanesa⁵ where the Tribunal notes that adjuster's log notes are presumptively relevant. Given the absence of any evidence that the adjuster's log notes related to the issues in dispute are not relevant in this case, I find that the adjuster's log notes relating to the issues currently in dispute are relevant. I find, however, that the adjuster's log notes relating to issues that have been settled or withdrawn are not presumptively relevant to the issues currently in dispute. As the applicant has not established that the same are relevant, I find that they are not.

If the log notes are relevant, are some or all of the log notes protected from disclosure by litigation privilege?

13Although the Tribunal may order production of any document that it considers relevant to the issues in dispute⁶, the Statutory Powers Procedure Act⁷ limits the Tribunal's powers and prevents the Tribunal from ordering disclosure of privileged information. Accordingly, I find that if the documents sought are subject to litigation privilege, I have no jurisdiction to order production of the same. I must, therefore, determine whether some or all of the relevant documents sought are subject to litigation privilege. For the reasons that follow, I find that the evidence does not establish that all adjuster's log notes created after August 14, 2015 are subject to litigation privilege. I further find that there is insufficient evidence to determine which, if any, of those adjuster's log notes are subject to litigation privilege.

14As noted by the Supreme Court of Canada in Blank⁸, litigation privilege is a limited exception to the general principle of full disclosure. The onus is on the party claiming the privilege to establish that litigation privilege applies. The respondent must, therefore, show both that there was a reasonable prospect of litigation at the time the documents sought were created, and that the dominant purpose for the creation of the documents was to assist in the contemplated litigation⁹.

(a) When was litigation contemplated?

15I find that, with respect to the applicant's claims for IRBs and lost educational expenses only, litigation was first contemplated on August 14, 2015. There is no evidence that litigation with respect to the other issues was contemplated at any time prior to the filing of this application on June 18, 2018.

16The applicant submits that "with regards to the litigation before the Tribunal", litigation privilege did not arise until June 18, 2018 when the application was filed with the Tribunal. The respondent submits that litigation was contemplated and litigation privilege arose on August 14, 2015 when the applicant applied to FSCO for mediation.

17In accident benefits cases there are often, as there are in this case, numerous claims arising out of the same accident that are advanced and denied at different times. The date at which litigation was first contemplated, may therefore, be different for different claims arising out of the same accident. In this case the issue of determining when litigation was first contemplated is further complicated by the FSCO application filed on August 14, 2015 in respect of IRBs and lost educational expenses¹⁰. The applicant filed this application with the Tribunal on June 18, 2018 in respect of those same issues, and in respect of claims for non-earner benefits and medical benefits. This application was later amended November 28, 2018 to add the issue of whether the applicant sustained a catastrophic impairment. The applicant also seeks an award under Ontario Regulation 664.

18As the same IRB and lost education expenses claims were filed with FSCO on August 14, 2015 and then again with the Tribunal on June 18, 2019, I find that litigation with respect to the applicant's claims for IRBs and lost education expenses was contemplated as of August 14, 2015. I find, however, that with respect to the other issues included in the June 18, 2018 application and in the amended application, there is insufficient evidence to establish that litigation with respect to those issues was contemplated on August 14, 2015 or at any other time prior to the filing of the application with the Tribunal on June 18, 2018.

(b) Were the log notes sought created for the dominant purpose of litigation, rather than for the dominant purpose of adjusting the applicant's claims?

19I find that the evidence does not establish that all adjuster's log notes created after August 14, 2015 were created for the dominant purpose of litigation, and that there is insufficient evidence to determine which, if any, were, for the following reasons.

20The applicant submits that the dominant purpose of each document created after litigation was contemplated must be determined separately, in order to determine which documents are subject to litigation privilege. The applicant relies on the Mamaca decision¹¹. In that case, the insurer had accepted and was paying a number of ongoing claims and was only defending against an income replacement benefit claim.

21The respondent submits that in the accident benefits context, the "bright line" test that was generally accepted by FSCO arbitrators should be applied¹². Pursuant to the "bright line" test, adjuster's log notes were not ordered produced after that date an application was filed for mediation, "subject to submissions by either side as to why the production period or scope in a particular case should be narrowed or broadened"¹³. In Vaitheeswaran¹⁴ the arbitrator described the "bright line" test as reflecting "a presumption, which is rebuttable", that after the date of the filing of the Application for Mediation with FSCO, the insurer's "focus might reasonably shift to preparing for litigation". In that case the arbitrator went on to find that the applicant had not demonstrated that a broader scope of production was appropriate.

22The respondent also relies on the Tribunal's decision in PJ v. Aviva¹⁵ and submits that the Tribunal "has adopted its own 'well-established' version of the bright line rule for log notes, holding that litigation privilege generally arises on the filing of an application with the Tribunal". That case did not, however, address the issue in this case, namely whether litigation privilege for the purposes of the Tribunal application commenced at the date of the filing of a prior FSCO application with respect to some of the same claims. In any event, I do not interpret PJ v. Aviva as finding that the filing of an application with the Tribunal automatically or in all cases gives rise to litigation privilege that attaches to all adjuster's log notes and other documents created after the filing of an application.

23Relying on Blank¹⁶, and on the Tribunal's decision in R.D. v Wawanesa¹⁷, the respondent further submits that litigation privilege arose in this case when the FSCO application was filed on August 14, 2015, and that it continues for the purpose of this application because some of the same issues that were in dispute in the FSCO application are in dispute in this application. I find that the FSCO application and the current application are sufficiently related, such that any litigation privilege that attached to adjuster's log notes related to the IRB and lost education expenses in the FSCO application continues for the purposes of this application. I do not agree, however, with the respondent's assertion that from August 14, 2015 onwards all adjuster's "log notes begin to be produced for the dominant purpose of litigation"¹⁸ for the following reasons.

24To the extent that the "bright line" test applied by FSCO arbitrators has been interpreted as giving rise to a rebuttable presumption that shifts the onus to the party requesting adjuster's log notes created after the date an application was filed, I disagree. As noted by the Court in Mamaca¹⁹, and by the Tribunal in 17-005570 v. Wawanesa²⁰, the onus is on the party asserting the privilege to establish the evidentiary basis for the privilege. Although an appropriate starting point for determining when litigation privilege arises is generally the date of the filing of an application with the Tribunal, that is only a starting point. If either party disagrees, the onus remains on the party seeking to rely on litigation privilege to establish when litigation was contemplated, and that the documents created after that date were created for the dominant purpose of litigation. As noted in Mamaca, however, "in some cases it will be appropriate to infer, from the evidence in the case, that litigation privilege applies to documents prepared after litigation was reasonably contemplated²¹. I have concluded, therefore, that a determination of whether the inference can be drawn that litigation privilege applies to all adjuster's log notes created after an application is filed with the Tribunal, must be made based on the facts and evidence in each particular case. The onus of establishing that production beyond the date an application is filed is appropriate does not shift to the applicant, but rather the onus remains on the respondent to establish that production after that date is prevented because of litigation privileged.²²

25Adjuster's log notes created for the dominant purpose of satisfying the respondent's continuing obligation to adjust claims are not litigation privileged even after litigation is contemplated. The onus is on the respondent to demonstrate that adjuster's log notes created after litigation was contemplated are either irrelevant to the issues in dispute or were created for the dominant purpose of litigation, in order to justifying refusing production of the same. It is particularly so in this case where a number of new issues that did not form part of the August 14, 2015 FSCO application were included in the June 18, 2018 application and in the November 28, 2018 amended application. Litigation privilege could not, therefore, have arisen on August 14, 2015 with respect to adjuster's log notes relating to those new issues added on or after June 18, 2018.

26Additionally, the applicant submits that the adjuster "continued to request information pursuant to Section 33" of the Schedule²³. No dates or details with respect to the same are provided. The respondent notes, however, that it conducted an examination under oath ("EUO") of the applicant on December 15, 2016²⁴. The Schedule specifically authorizes the respondent to make Section 33 requests and require EUOs for the purpose of assisting the respondent to adjust claims and determine an insured's entitlement to benefits²⁵. Accordingly, adjuster's log notes relating to any Section 33 and EUOs, are, pursuant to the Schedule, prepared for the purpose of adjusting the applicant's claim, and not for the dominant purpose of litigation. It is not clear from the submissions or evidence whether the post August 14, 2015 Section 33 requests and the EUO were related, in whole or in part, to the applicant's IRB and lost educational expenses claims and/or to the determination of whether the applicant sustained a catastrophic impairment. To the extent any relate to any of these issues that are currently in dispute, they are relevant and not subject to litigation privilege.

27Finally, in this case the applicant seeks an award under Ontario Regulation 664 and alleges that the respondent has unreasonably withheld the payment of his IRB's and lost educational expenses. The applicant submits that he will be relying on the respondent's handling of those claims and that the "log notes will show that the Respondent continued to adjust" the applicant's file "and that no clear and unequivocal denial of his claims occurred"²⁶. Adjuster's log notes relating to these issues are therefore relevant and necessary for a full understanding of the applicant's claim for an award and should be produced unless they are privileged.

28For the reasons outlined above, I find that there is insufficient evidence to establish that any or all adjuster's log notes created after August 14, 2015 were created for the dominant purpose of litigation. As discussed above, some of those adjuster's notes are clearly not litigation privileged and the same should be produced, subject to redactions for irrelevancy, solicitor-client privilege and reserves. To ensure a fair process and a determination of the issues in dispute based on a consideration of all relevant non-privileged evidence, the applicant is entitled to production of adjuster's log notes to the date requested, namely June 18, 2018. The respondent is entitled, however, to make redactions for irrelevancy, privilege and reserves. As there is insufficient evidence to determine which, if any, of the adjuster's log notes created after August 14, 2015 are irrelevant, privileged or relate to reserves, the order below requires the respondent to provide particulars regarding any redactions to the adjuster's log notes that are ordered to be produced.

CONCLUSION

29The adjuster's log notes from August 14, 2015 to June 18, 2018 relating to the claims currently in issue are relevant. As the respondent has not established which adjuster's log notes, if any, created after August 14, 2015 were created for the dominant purpose of litigation and which, if any, are therefore subject to litigation privilege, I order that:

(i) The applicant's request for production of all adjuster's log notes from August 14, 2015 to the date this Application was filed with the Tribunal on June 18, 2018, redacted for reserves and solicitor-client privileged information is dismissed.

(ii) The respondent shall, within 14 calendar days of the release of this Decision, provide the applicant with a copy of the adjuster's log notes from the date of the accident to August 13, 2015, subject to redactions for solicitor-client privilege and reserve information.

(iii) The respondent shall, within 14 calendar days of the release of this Decision, provide the applicant with a copy of the adjuster's log notes from August 14, 2015 to the June 18, 2018, redacted for information not relevant to the claims currently in dispute; and for information that is subject to litigation privilege or solicitor-client privilege, or that is related to reserves.

(iv) The respondent shall, within 14 calendar days of the release of this Decision, provide the applicant with particulars with respect to the reasons for each redaction.

(v) Any other issues relating to the production of the adjuster's log notes shall be left to the hearing adjudicator.

Footnotes

1. 1At the Case Conference the respondent opposed the applicant's request for log notes from the date of the accident to June 18, 2018. In the Applicant's Written Submissions, dated March 15, 2019 ("Applicant's Submissions"), at paragraph 2, the applicant states that the respondent has indicated that it will not provide the requested documents beyond August 14, 2015, the date of the applicant's FSCO application for mediation. In its written Responding Submissions, dated March 29, 2019 ("Respondent's Submissions"), the respondent, at paragraph 1, states that it opposes the applicant's motion for production of its log notes after August 14, 2015. As the period from the date of the accident to August 14, 2015 is no longer in dispute, the issue in dispute has been revised accordingly.
2. 2In the Respondent's Submissions at paragraph 46, the respondent requests an Order relating to the period prior to August 14, 2015 with respect to which the respondent agrees to produce adjuster's log notes.
3. 3Applicant's Submissions, at paragraph 31.
4. 4Applicant's Submissions, Tab 3, Pelaccia v. Wawanesa Mutual Insurance Co., 2015 CarswellOnt 4902 (FSCO) at paragraph 35.
5. 5Applicant's Submissions, Tab 6, 17-005570 v. Wawanesa Mutual Insurance Company, 2018 CarswellOnt 204546.
6. 6Safety, Licensing Appeals & Standards Tribunals Ontario, Common Rules of Practice & Procedure, October 2, 107, Rule 9.3(e).
7. 7Statutory Powers Procedure Act, R.S.O. 1990, c. S. 22, section 5.4(2).
8. 8Respondent's Submissions, Tab 1, Blank v. Canada (Minister of Justice), 2006 SCC 39.
9. 9Applicant's Submissions, Tab 2, Mamaca (Litigation Guardian of) v. Coseco Insurance Co., 2007 CarswellOnt 8133, at paragraphs 16-23.
10. 10Respondent's Submissions, Tab 1.
11. 11Applicant's Submissions, Tab 2, Mamaca (Litigation Guardian of) v. Coseco Insurance Co., 2007 CarswellOnt 8133, at paragraphs 16-23.
12. 12Respondent's Submissions, footnote 8, at paragraphs 26-29.
13. 13Respondent's Submissions, Tab 4, Campeau v. Liberty Mutual Insurance Co., [2001] OFSCID No. 37 at paragraph 86(d).
14. 14Respondent's Submissions, Tab 5, Vaitheeswaran v. State Farm, [2010] OFSCD No. 92 at paragraphs 18 and 30.
15. 15Respondent's Submissions, Tab 20, PJ v. Aviva Insurance Company, 2018 CanLII 132577 (ON LAT) at paragraphs 11-12.
16. 16Supra, footnote 8, at paragraphs 34, 38-39.
17. 17Respondent's Submissions, Tab 8, RD v. Wawanesa Insurance, 2019 CanLII 22203 (ON LAT), paragraphs 11-12.
18. 18Respondent's Submissions, at paragraph 34.
19. 19Applicant's Submissions, Tab 2, Mamaca (Litigation Guardian of) v. Coseco Insurance Co., 2007 CarswellOnt 8133, at paragraphs 16-23.
20. 20Applicant's Submissions, Tab 6, 17-005570 v. Wawanesa Mutual Insurance Company, 2018 CarswellOnt 204546, at paragraph 3, citing General Accident Assurance Co. v. Chrusz (1999), 1999 CanLII 7320 (ON CA), 45 O.R.(3d) 321 (Ont. C.A.).
21. 21Ibid, at paragraph 21.
22. 22Ibid, at paragraph 18.
23. 23Applicant's Submissions, at paragraph 6.
24. 24Respondent's Submissions, at paragraph 12.
25. 25Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10, s. 33(1)1 and s. 33(5).
26. 26Applicant's Submissions, at paragraphs 11-16.