The Personal Insurance Company v. Jia, 2020 ONSC 6361
CITATION: The Personal Insurance Company v. Jia, 2020 ONSC 6361
COURT FILE NO.: 763/18
DATE: 20201022
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D.L. CORBETT, DUCHARME and GOMERY JJ.
B E T W E E N:
THE PERSONAL INSURANCE COMPANY
Appellant
- and -
PEI YU JIA and LAN JIA
Respondents
Counsel:
Erik K. Grossman and Patrick M. Baker, For the Appellant
Ashu Ismail, for the Respondents
Heard at Toronto: November 20, 2019
REASONS FOR DECISION
D.L. Corbett J.:
[1] The appellant insurer appeals the Reconsideration Decision of Vice-Chair Trojek of the Safety, Licensing Appeals and Standards Tribunals Ontario (“SLASTO”) overturning the motion decision of Adjudicator Msosa of the Licensing Appeals Tribunal (“LAT”). At the conclusion of oral argument, the court dismissed the appeal with these reasons to follow.
Discussion
[2] On June 2, 2015, Xiu Zhe Xu was involved in a fatal collision. Her husband, Pei Yu Jia and her daughter, Lan Jia, (collectively the respondents) sought death and funeral benefits from the appellant insurer. These benefits were denied. The respondents disputed this decision before the LAT (the “benefits dispute”).
[3] In a separate proceeding under O. Reg. 283/95, the appellant insurer initiated a dispute with CAA Insurance over which insurer is responsible for the respondents’ accident benefits claims (the “priority dispute”).
[4] The appellant compelled the respondents to examinations under oath (referred to in the decisions below as “EUOs”) in connection with the priority dispute.
[5] The appellant used the same lawyer as its counsel in the priority dispute and the benefits dispute. That counsel filed transcripts of the respondents’ evidence compelled in the priority dispute on behalf of the appellant in the benefits dispute.
[6] It is established law that insurers may not use the same counsel in statutory benefits cases and in tort cases brought against them by the same insured. This is because the duties of an insurer (and therefore of its counsel) are different in these contexts, and as an accident benefits insurer, the insurer is entitled to receive, and is required to keep confidential, a great deal of sensitive personal information from claimants.
[7] In the case at bar, the respondents took the position that the requirement for separate counsel applies where an insurer is involved in a priority dispute with another insurer and a benefits dispute with the insured. The respondents took the position that the insurer was not permitted to use evidence compelled from them in the priority dispute in the benefits dispute and the appellant’s counsel’s filing of that evidence in the benefits dispute was in breach of the applicable statutory scheme.
[8] At first instance, the LAT dismissed the respondents’ motion, finding that there was no conflict in counsel acting in both proceedings, and that the filing of a transcript of evidence in non-compliance with the statutory scheme should not lead to exclusion of that evidence because the evidence is relevant and there is no prejudice to the respondents.
[9] SLASTO reversed on both decisions. It found that there is a conflict in counsel for the insurer acting in both the priority dispute and the benefits dispute. It found that breach of the statutory scheme was improper and prejudicial to the respondents, defeating the carefully balanced process prescribed by law.
Jurisdiction and Standard of Review
[10] Section 11(6) of the License Appeal Tribunal Act provides for an appeal to this court from LAT on a question of law.[^1] This applies to a reconsideration decision of SLASTO from a LAT decision and, as at the time that this appeal was heard and decided, the standard of review of the reconsideration decision was considered to be “reasonableness” in this court.[^2]
[11] The appellant argued that the appropriate standard of review in this case was correctness, because the issue of a lawyer’s conflict of interest “implicates professional responsibility and the legal profession in Ontario”. The court did not accept this submission: the conflict issue that arises in this case is contextually driven: the nature of conflicts that arise in accident benefits insurance cases, a context specifically within LAT’s mandate and expertise.
Analysis
[12] We agree with the appellant that the conflict alleged in this case is not so clear as the conflict that arises if counsel defends an insurer in both a statutory accident benefits case and a tort case arising from the same loss.[^3] However, we also agree with Vice-Chair Trojek that the situations are sufficiently analogous that the principle in the latter circumstance should apply in the former.
[13] Even if it was thought that the conflict identified by the Vice-Chair is not inevitable and should not, as a matter of general practice, preclude an insurer using the same counsel in a priority proceeding and a subsequent liability proceeding, in this case the potential conflict came to pass when the insurer misused transcripts gathered in the priority dispute in the subsequent benefits dispute.
[14] In this regard, Vice-Chair Trojek found that requirements set out in s.33 of the SABS Schedule[^4] cannot be circumvented by reliance on a transcript obtained during a priority dispute. Otherwise the procedural protections afforded to an insured in the SABS Schedule would be frustrated. Although not relied upon by the Vice-Chair, we note that principles underlying the implied undertaking that applies to compelled disclosure in civil proceedings also militate against an insurer being able to file a transcript compelled in the priority dispute in a subsequent liability proceeding without first obtaining leave to so do. The Vice-Chair found that the specific protections provided in the SABS Schedule cannot be avoided by the general discretion granted to an Adjudicator under s.15 of the SPPA.[^5] Otherwise the protections enacted in s.33 of the SABS would be largely illusory. This decision is reasonable.
[15] Finally, both aspects of the Vice Chair’s decision are interlocutory. This court will not ordinarily hear an appeal from interlocutory decisions of LAT, unless the consequences of the decision cannot be rectified on appeal from a final decision. We would exercise our discretion to hear an appeal from the conflict decision, because it is evasive of appeal and it is potentially a matter of general practice important in proceedings before LAT. We would not, however, exercise our discretion to hear the appeal in respect to whether the EUOs ought to be received in evidence.
[16] In conclusion, I would find:
a. The Vice-Chair’s finding that the appellant’s lawyer was in conflict of interest acting in both the priority dispute and the liability dispute was reasonable;
b. The Vice-Chair’s finding that the EUOs obtained by the insurer in the priority dispute should not be permitted to be used in the liability dispute because they were not obtained in compliance with s.33 of the SABS Regulation was reasonable.
c. This appeal was in any event premature as it relates to the use of the impugned transcripts.
[17] This appeal was heard and decided prior to release of the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov. Our reasons are framed on the basis on which this decision was reached on November 20, 2019, when it was rendered. We considered and decided against conducting a re-hearing on the basis of Vavilov because our decision would be the same in any event. Even if we had concluded that SLASTO erred as a matter of law on whether there is an inherent conflict in the same lawyer acting for an insurer in a priority dispute and a benefits dispute arising from the same events, on the facts there was a conflict in this case. This misuse of evidence obtained in the priority dispute in the benefits dispute, contrary to the checks and balances prescribed in the statutory scheme, placed the appellant’s lawyer in a position where he could not continue to represent the insurer in the benefits dispute.
[18] I would also find that it is not necessary to re-hear this appeal or to receive supplementary submissions on the effect of Vavilov because of the improper filing of the EUO transcripts. The improper use of the transcripts arose because of the dual role played by counsel for the insurer in the two proceedings. These facts raise a conflict of interest in this case, as a matter of fact. No purpose would be served by reconsidering the parties’ arguments in this case through the correctness lens brought to bear on questions of law as a result of the Vavilov decision.
___________________________ D.L. Corbett J.
I agree: ___________________________ Ducharme J.
I agree: ___________________________ Gomery J.
Date of Release: October 22, 2020
CITATION: The Personal Insurance Company v. Jia, 2020 ONSC 6361
COURT FILE NO.: DC 551/16
DATE: 202010xx
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
D.L. Corbett, Ducharme and Gomery JJ.
BETWEEN:
The Personal Insurance Company
Appellant
– and –
Pei Yu Jia and Lan Jia
Respondents
REASONS FOR DECISION
D.L. Corbett J.
Date of Release: October 22, 2020
[^1]: License Appeal Tribunal Act, SO 1999, c.12, s.11. [^2]: Taylor v. Aviva Canada Inc., 2018 ONSC 4472 (Div. Ct.). [^3]: Dervisholli v. Cervenak, 2015 ONSC 2286. [^4]: Statutory Accident Benefits Schedule, O. Reg. 34/10 [^5]: Statutory Powers Procedures Act, RSO 1990, c. S.22, s.15.