COURT FILE NO.: DC-060081917-00

DATE: 20080206

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

LANE, McCOMBS, and SEDGWICK J.J.

B E T W E E N:

STANISLAVE KANAREITSEV

Applicant

• and -

TTC INSURANCE COMPANY LIMITED and THE FINANCIAL SERVICES COMMISSION OF ONTARIO

Respondents

Edward Goldentuler, for the applicant

Norma Priday and Laura Qaqish for the respondent TTC Insurance Company Limited

Larissa Easson for the respondent The Financial Services Commission of Ontario

HEARD: September 19, 2007

endorsement

INTRODUCTION:

[1] Stanislave Kanareitsev applies for judicial review of an order of Director’s Delegate Makepeace of the Financial Services Commission of Ontario (“FSCO”). The Director’s Delegate ordered a new arbitration hearing of all disputed issues and revoked Arbitrator Killoran’s order on the basis that the Arbitrator’s reasons were inadequate.

NATURE OF THE PROCEEDINGS

Background

[2] Mr. Kanareitsev was aged 69 when he was injured in a motor vehicle accident on July 12, 2001. He was riding his bicycle when he was struck from behind by a Toronto Transit Commission streetcar. He was thrown to the roadway, sustaining injuries. He lost consciousness and was taken to hospital by ambulance. He was wearing a helmet at the time.

[3] Mr. Kanareitsev applied to the TTC Insurance Company Ltd. (TTC) for statutory accident benefits in accordance with the Statutory Accident Benefits Schedule – Accidents On or After November 1, 1996 (O.R. 403/96, as amended) (“Schedule”).

[4] The parties were unable to resolve their disputes through mediation. As a result, Mr. Kanareitsev applied for arbitration at the FSCO under the provisions of the Insurance Act, R.S.O. 1990, c. I. 8, s. 282(1), (as amended).[^1]

[5] The arbitration was heard over a seventeen day period between January 12, 2004 and March 31, 2005. On July 5, 2005, Arbitrator Killoran released her 55 page decision, ruling that TTC was to pay Mr. Kanareitsev a number of benefits which she specified in detail in her decision.

[6] TTC appealed the arbitration decision on a question of law under the provisions of the Insurance Act, s. 283(1).[^2] The appeal was heard by Director’s Delegate Makepeace on March 21, 2006. On September 18, 2006, the Director’s Delegate allowed the appeal, revoked the order of Arbitrator Killoran, and ordered a new arbitration hearing. On November 2, 2006, the Director’s Delegate released the reasons for her decision, holding that the Arbitrator had failed to provide adequate reasons for rejecting the evidence of the TTC and finding in favour of Mr. Kanareitsev.

[7] The applicant argues that the appropriate standard of review for the Director’s Delegate’s decision is correctness. The appeal to the Director’s Delegate was based on the adequacy of reasons and was a question of law. The applicant submits that the Arbitrator’s decisions met the test of adequacy and the Director’s Delegate erred in law when she ordered a re-hearing. The applicant also argues that Director’s Delegate Makepeace engaged in a re-arbitration of the matter which was inappropriate.

[8] The respondent FSCO in this matter limited its submissions to the standard of review of the Director’s Delegate decision, submitting it is patent unreasonableness. The respondent TTC also submits the standard of review is one of patent unreasonableness. Both of these submissions are primarily based on the presence of a privative clause and the relative expertise of the Director’s Delegate. The TTC argues that Director’s Delegate Makepeace’s decision is not patently unreasonable as the Arbitrator’s decision was deficient.

The Decision of the Arbitrator

[9] The Arbitrator found that it was probable the TTC streetcar rear-ended Mr. Kanareitsev’s bicycle causing him to “fly through the air and hit the ground hard on his right side.”

[10] Citing the evidence of two medical doctors and lay witnesses, she accepted that the accident materially contributed to Mr. Kanareitsev’s impairment. She preferred this evidence over that of the respondent’s medical expert owing to the former’s familiarity with Mr. Kanareitsev and his medical and lifestyle history.

[11] She went on to find that the impairment resulted in a complete inability to carry on a normal life. She compared his activities prior to the accident with those after the accident and said this determination was an “inescapable conclusion.”

[12] Based on these findings of material contribution and disability, she deemed the applicant entitled to a set of benefits and payments in accordance with the Schedule. Additionally, she determined TTC was liable to pay a special award pursuant to the Insurance Act, supra, s.282(10). TTC was also made liable to pay Mr. Kanareitsev’s expenses in respect of the arbitration.

The Decision of the Director’s Delegate

[13] TTC appealed the Arbitrator’s decision. The Director’s Delegate allowed the appeal and ordered a re-hearing. She concluded that the Arbitrator gave insufficient reasons for concluding that the accident caused injuries which “materially contributed to the immediate disability and subsequent onset of chronic pain and deterioration of his polyneuropathy [a pre-existing condition]”.

STANDARD OF REVIEW

[14] The Supreme Court of Canada has mandated that to determine the standard of review, the pragmatic and functional approach must be used. It is a contextual analysis of four factors: the presence or absence of a privative clause or statutory right of appeal; the expertise of the tribunal relative to that of the reviewing court on the issue in question; the purposes of the legislation and the provision in particular; and the nature of the question. The standard of review will either be one of correctness, reasonableness, or patent unreasonableness. See: Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 982; Dr. Q. v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226; Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247; Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77; Voice Construction Ltd. v. Construction & General Workers' Union, Local 92, 2004 SCC 23, [2004] 1 S.C.R. 609.

[15] The presence of a "full" privative clause is “compelling evidence that the court ought to show deference to the tribunal's decision, unless other factors strongly indicate the contrary as regards the particular determination in question”: Pushpanathan v. Canada (Minister of Citizenship and Immigration), supra, at para 30. Appeals from an Arbitrator’s decision to the Director are specifically provided for in section 283. The Insurance Act also contains a general privative clause.[^3]

[16] The Financial Services Commission of Ontario Act, 1997, S.O. 1997, c. 28, includes in its purpose the protection of the public interest and confidence in regulated sectors. The legislation creates a comprehensive adjudicative and legislative regime for the settlement of claims to accident benefits: Royal & SunAlliance Insurance Co. of Canada v. Volfson, 2005 38902 (ON SCDC), [2005] O.J. No. 4523 (Div. Ct.), at para 13.

[17] Determining the expertise of a tribunal is relative. Where the decision-making body is more expert than the courts and the question under consideration falls within the scope of this expertise, more deference will be given: Dr. Q. v. College of Physicians and Surgeons of British Columbia, supra, at para 28. If the decision-maker deals with a more diffuse set of issues, this will tend towards more deference. If the disputed issue and context arise in a model more similar to courts, this will militate against curial deference. See: Pushpanathan v. Canada (Minister of Citizenship and Immigration), at para 36.

[18] The FSCO is a specialized body and its members have expertise in the interpretation and application of many areas under its jurisdiction. Where, however, the decision involves the application of general principles of law not particular to their jurisdiction, their expertise is necessarily less relative to the courts.

[19] The Director’s Delegate allowed TTC’s appeal on the basis of the insufficiency of the Arbitrator’s reasons. Adequacy of reasons involves the application of general principles of law and in these circumstances, the standard of review will generally be correctness: Royal & SunAlliance Insurance Co. of Canada v. Volfson, supra, at para 14.

[20] No one factor in the pragmatic and functional analysis is dispositive: Pushpanathan v. Canada (Minister of Citizenship and Immigration), supra, at para 27. Here, two factors, the privative clause and the purpose of the legislation, lend their weight towards more deference. On the other hand, the nature of the question and the relative expertise of the decision-maker tend towards less curial deference.

[21] On a number of occasions this Court has held the appropriate standard of review for decisions of the FSCO Director (or Director’s Delegate), when acting within jurisdiction, is that of patent unreasonableness. See for example: Liberty Mutual Insurance Company v. Young, 2006 7286 (ON SCDC), [2006] O.J. No. 952 (Div. Ct.); Hernandez v. Zurich Insurance Company (Div. Ct., Nov. 22, 2000); Kumar v. Coachman Insurance Co., 2004 11702 (ON SCDC), [2004] O.J. No. 2494 (Div. Ct.); leave to appeal to Ont. C.A. denied October 26, 2004; leave to appeal to S.C.C. denied [2002] S.C.C. No. 195.

[22] However, the contextual nature of the pragmatic and functional approach means that, absent other factors, one standard of review cannot uniformly be applied to a decision-making body. This is evidenced by decisions of this Court which have found the standard of review of correctness applicable to decisions of a FSCO Director’s Delegate. See: Turner v. State Farm Mutual Automobile Insurance Co., 2004 13402 (ON SCDC), [2004] O.J. No. 731 (Div. Ct), at para 15; reversed on other grounds 2005 2551 (ON CA), [2005] O.J. No. 351 (C.A.); H’Ng v. Allstate Insurance Co. of Canada, [2000] O.J. No. 3589 (Div. Ct.), at para 26; Royal & SunAlliance Insurance Co. of Canada v. Volfson, supra, at para 14.

[23] The issue of the adequacy of reasons involves the application of general principles of law. Accordingly, no deference is owed to the analysis and conclusions reached by the Director’s Delegate. Having considered all the factors, the appropriate standard of review in this instance is one of correctness.

ADEQUACY OF REASONS

[24] In Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817, L'Heureux-Dubé J. discussed the provision of reasons by administrative decision-makers with reference to the duty of procedural fairness. The importance of a person knowing the reasons as to why a result was reached is an integral part of the duty of fairness: Baker, supra, at para 43.

[25] Determining the adequacy of reasons is a contextual exercise: Lawson v. Lawson, 2006 26573 (ON CA), [2006] O.J. No. 3179 (C.A.), at para 13. The essential question is whether the reasons provide “the basis for meaningful judicial review”: International Brotherhood of Electrical Workers, Local 1739 v. International Brotherhood of Electrical Workers, (2007) 2007 65617 (ON SCDC), 86 O.R. (3d) 508 (Div. Ct.), at para. 88.

[26] The comments of Binnie J. in R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, at para 24, are instructive:

In my opinion, the requirement of reasons is tied to their purpose and the purpose varies with the context. At the trial level, the reasons justify and explain the result. The losing party knows why he or she has lost. Informed consideration can be given to grounds for appeal. Interested members of the public can satisfy themselves that justice has been done, or not, as the case may be.

[27] While based on appellate review of a criminal proceeding, the holding in R. v. Sheppard, supra, is equally applicable to the civil context, with necessary modifications: Diamond Auto Collision Inc. v. Economical Insurance Group, 2007 ONCA 487, [2007] O.J. No. 2551 (C.A.), at para 10. See also: Canadian Broadcasting Corp. Pension Plan v. BF Realty Holdings Ltd. (2002), 2002 44954 (ON CA), 214 D.L.R. (4th) 121 (Ont. C.A.)

[28] The recent decision of this Court in Kalin v. Ontario College of Teachers, (2005) 2005 18286 (ON SCDC), 75 O.R. (3d) 523 (Div. Ct.), at paras 58-60, summarized the factors to be considered in determining the adequacy of reasons. These include the decision-maker setting out its findings of fact and the principal evidence upon which those findings were based. The reasons must address the major points in issue; it is insufficient for the decision-maker to summarize the parties’ positions and “baldly state its conclusions”; and the reasoning process followed must be set out and reflect consideration of the main relevant factors. See also: Fisher v. Moir, [2005] O.J. No. 4479 (Div. Ct.).

[29] Particularly when results turn on the first instance decision maker’s view of the credibility of witnesses and involves a fact-driven analysis, appellate review must take “proper account of the distinct advantage” of the first-instance decision maker’s assessments. The appeal judge must not try the case de novo or simply substitute his or her views for those of the trial judge: R. v. G. W. 1996 427 (ON CA), [1996] O.J. 3075 (C.A.) at paras. 18 and 57.

ANALYSIS

[30] The Director’s Delegate ordered the matter re-heard because, in her view, “the reasons for decision do not adequately explain the Arbitrator’s rejection of the insurer’s case.” She concluded that the Arbitrator had not adequately addressed the differences between the parties’ medical witnesses and their proffered evidence. She emphasized the Arbitrator’s treatment of Dr. Devlin’s evidence, called by the TTC. The Director’s Delegate found that while the Arbitrator was entitled to accept or reject Dr. Devlin’s evidence, “she was not entitled to dismiss it only on the basis of Mr. Kanareitsev’s functional decline after the accident.” The purported “gaps in the Arbitrator’s reasoning on the underlying causation question” led the Director’s Delegate to the conclusion that a new hearing had to be ordered.

[31] The Arbitrator heard this matter over seventeen days. The nature of the proceedings was highly fact-intensive. There was a significant amount of documentary evidence tendered, and a number of witnesses testified. The credibility and reliability of the evidence were very much in issue, and the arbitrator was charged with the responsibility of determining these issues.

[32] The Arbitrator’s decision reviewed much of the evidence that had been placed before her and offered conclusions as to which evidence she accepted and why. In our view, it was well-reasoned and addressed the factors relevant to the issue in dispute. While she may not have engaged in a detailed analysis of each and every aspect of the major points in issue, her reasons refer to the principal evidence she relied upon and provide a justification for her conclusions.

[33] The Arbitrator summarized Dr. Devlin’s evidence regarding what he opined to be Mr. Kanareitsev’s injuries and the cause of his impairments and disabilities and noted differences between the factual basis for his opinion and the objective evidence. For instance, Dr. Devlin disputed that there was any evidence that Mr. Kanareitsev had hit his head during the accident. However, the Arbitrator noted that the hospital registration record for the hospital Emergency ward belied that assertion. The record contained an entry showing that health care workers had a concern about head injury. The record read: “explain (sic) to the patient regarding head injury that he needs to stay with a friend.” Moreover, as explained by the Arbitrator, Dr. Devlin changed his opinion during testimony regarding the potential for nerve damage occurring from a depression of the shoulder, similar to the blow Mr. Kanareitsev received.

[34] Implicit in the Arbitrator’s reasons is that Dr. Devlin’s insistence that Mr. Kanareitsev’s disability was caused by his pre-existing polyneuropathy was at odds with the objective evidence, and the balance of the medical evidence of the other witnesses. The Director’s Delegate stated that the Arbitrator was not entitled to dismiss Dr. Devlin’s evidence only on the basis of Mr. Kanareitsev’s functional decline after the accident. With respect, it is clear from the Arbitrator’s reasons that her basis for rejecting Dr. Devlin’s evidence was much broader than the functional decline after the accident.

[35] After her eight-page review of what she considered to be the most relevant medical evidence on the issue of causation, the Arbitrator made the following findings regarding causation:

“I prefer the evidence of Dr. Donskoy, Dr. Alpert and the lay witnesses to that of Dr. Devlin. Due to his ongoing treatment of Mr. Kanareitsev, Dr. Donskoy was more familiar with his particular circumstances, including the chronic pain from which he suffered following the 2001 accident. I accept the evidence of Mr. Kanareitsev and his witnesses that, prior to the accident, Mr. Kanareitsev was a very healthy, fit 69 year old man who rode his bicycle frequently and participated in a full, satisfying social life while living independently. I am not persuaded that if Mr. Kanareitsev were suffering from disabling symptoms from his polyneuropathy that he would have continued to lead such a vigorous, active life prior to the accident, including riding his bicycle. While Mr. Kanareitsev had some prior accidents and medical problems, I find that the 2001 accident was the cause of his impairment, not any pre-existing condition. The testimony was fairly consistent that Mr. Kanareitsev was struck from behind by a streetcar while riding his bicycle. He sustained serious injuries which deteriorated and worsened over time so that he relied on a walker and a wheelchair for mobility. There was not only a change in his physical condition but also his psychological condition. Mr. Kanareitsev demonstrated by his evidence that the accident caused physical and psychological injuries. These injuries materially contributed to the immediate disability and subsequent onset of chronic pain and deterioration of his polyneuropathy. I find that the accident materially contributed to his impairment.”

[36] In the passage reproduced above, the Arbitrator identified a number of factors that militated against the view taken by Dr. Devlin. Earlier, as seen in paragraphs 33 and 34 above, the Arbitrator pointed to other frailties in Dr. Devlin’s opinion. In our view, it simply cannot be said that the Arbitrator’s reasons were inadequate to allow for meaningful appellate review. On the contrary, the Arbitrator’s reasons were sufficiently thorough to make clear her basis for rejecting the evidence of Dr. Devlin and accepting the evidence offered on behalf of Mr. Kanareitsev.

CONCLUSION

[37] The Director’s Delegate was incorrect to conclude that the Arbitrator’s reasons were inadequate. It follows that she was incorrect to set aside the arbitral ruling and order a new hearing.

[38] In the result, the appeal is allowed, the decision of the Director’s Delegate is set aside, and the decision of Arbitrator Killoran is restored.

LANE J.

McCOMBS J.

SEDGWICK J.

Released: February 6, 2008

[^1]: Section 282(1) of the Insurance Act provides:

"An insured person seeking arbitration under this section shall file an application for the appointment of an arbitrator with the Commission." R.S.O. 1990, c. I.8, s. 282 (1); 1996, c. 21, s. 38 (1).

[^2]: Section 283(1) of the Insurance Act provides:

"A party to an arbitration under section 282 may appeal the order of the arbitrator to the Director on a question of law." 1996, c. 21, s. 39 (1).

[^3]: The privative clause is contained in the following section: 20. (1) This section applies with respect to proceedings under this Act before the Tribunal, the Superintendent and the Director and before an arbitrator.

(2) A person referred to in subsection (1) has exclusive jurisdiction to exercise the powers conferred upon him or her under this Act and to determine all questions of fact or law that arise in any proceeding before him or her and, unless an appeal is provided under this Act, his or her decision thereon is final and conclusive for all purposes.