Court File and Parties

COURT FILE NO.: CV-23-00061409 DATE: 2024-03-18 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Simon Heathcote, Plaintiff – and – RBC Life Insurance Company and Anna Watroba, Defendants

COUNSEL: B. Sullivan, for the Plaintiff A. Valela, for the Defendants

HEARD: March 12, 2024

Motion Decision

J. R. Henderson

[1] This is my decision in the plaintiff’s motion for orders compelling the defendants to fulfill undertakings given at their examinations for discovery, and to answer questions that the defendants refused to answer.

[2] Anna Watroba (“Anna”) was examined for discovery on September 25, 2023, and Pamela Bowman (“Pamela”) was examined on behalf of RBC Life Insurance Company (“RBC”) on September 26, 2023.

[3] The plaintiff served this motion record in January 2024. Thereafter, counsel for the defendants fulfilled all of the outstanding undertakings and answered some of the refusals.

[4] Updated charts that list the remaining unanswered refusals have been filed as Exhibit 1 for Anna and Exhibit 2 for Pamela. There is some overlap between the two charts, but it is acknowledged that the refusals fall into six general categories, as set out below.

Leave Under Rule 48.04

[5] The defendants submit that the plaintiff requires leave to bring this motion pursuant to rule 48.04(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 because the motion was brought after the plaintiff set the action down for trial in October 2023. Further, the defendants submit that leave should not be granted in this case.

[6] I find that leave is not required for the plaintiff to bring the part of this motion that relates to the undertakings as there is a clear exception to rule 48.04(1) with respect to compliance with undertakings set out in rule 48.04(2)(a).

[7] Regarding the part of this motion that relates to refusals, I find that leave is also not required. Rule 48.04(2)(b)(iii) reads:

(2) Subrule (1) does not, …

(b) relieve a party from any obligation imposed by, …

(iii) rule 31.07 (failure to answer on discovery)

[8] In my view, this section should be interpreted to mean that the party who has set the action down for trial does not require leave to bring a motion to compel answers to proper questions that the opposing party has refused to answer at the examination for discovery. In that sense, I disagree with the decision in Jetport Inc. v. Global Aerospace Underwriting Managers, 2013 ONSC 2740, [2013] O.J. No. 2375.

[9] I find that by enacting rule 48.04(2)(a) and (b), the legislators intended to create exceptions to the general rule set out in rule 48.04(1). The only way to give any effect to the exception set out in subrule 48.04(2)(b)(iii) is to find that this subsection provides that leave is not required for a motion to compel answers to refusals. Any other interpretation of that section would render it meaningless.

[10] In the alternative, if the plaintiff requires leave to bring this part of the motion, I will grant leave as it is in the interests of justice to do so. The failure to fulfill undertakings given on an examination for discovery and the refusal to answer proper questions are closely related, often interconnected, topics. It would not be in the interests of justice to allow a motion for undertakings to proceed and not allow a motion for refusals to proceed in the same action. That approach would simply encourage manipulative parties to refuse to answer any questions, rather than provide an undertaking.

[11] Moreover, if a party declines to answer a proper question, it would not be in the interests of justice, barring unusual circumstances, to permit that party to withhold the answer to the question by hiding behind a procedural rule.

[12] Accordingly, I hereby declare that the plaintiff may proceed with this motion on its merits.

The Refusals

Category 1 – Contact Information

[13] Plaintiff’s counsel asked both Anna and Pamela for contact information for any RBC witnesses that may have left the employment of RBC. At the examination for discovery, defence counsel refused this request based on RBC’s policy and for privacy reasons. In oral argument, defence counsel advised that the defendants do not oppose this request, but do not consent to an order.

[14] I find that a party is required to provide contact information for any person who may have relevant information or who may be a witness at trial. In this case, if a person ceases to be an employee of RBC, the defendants are required to provide any available contact information for that person to the plaintiff. This requirement is not conditional upon compliance with RBC’s policy or upon obtaining the consent of the former employee.

[15] Therefore, I will order that the defendants answer the plaintiff’s questions for the provision of contact information. This order applies not only to the one person who currently falls into that category, but also applies to any witness who may in the future leave RBC’s employ.

Category 2 – I Make It Right

[16] Anna’s resume shows that she received training through the Royal Bank of Canada (the “Bank”) in accordance with the Bank’s I Make It Right guidelines. Plaintiff’s counsel requested a copy of the I Make It Right guidelines, and the defendants refused to provide same.

[17] Defence counsel submits that the I Make It Right document is a guideline prepared by the Bank, not the defendant insurer, RBC. The Bank is not a party to this action. Counsel submits that Anna’s training to deal with complaints about the Bank is irrelevant to her training to do her job as an adjuster at RBC.

[18] It is important to recognize that the plaintiff’s claim is a bad faith claim in which the plaintiff alleges, inter alia, that Anna did not follow RBC protocols and procedures, that Anna provided inaccurate and misleading information to the plaintiff, that Anna forced the plaintiff to engage in unnecessary procedures, and that Anna was not properly trained to handle these types of claims.

[19] Thus, in my view, Anna’s background and training are very relevant considerations in this case. In my opinion, this would include her training to do her current job, as well as her prior training, education, and experience.

[20] Anna was not a neophyte who was hired by RBC to handle the job of an adjuster. The expertise that she brings to her duties as an adjuster is a combination of her prior training, education, and experience, as well as her on-the-job training at RBC.

[21] Accordingly, I will order that RBC produce a copy of the I Make It Right guidelines.

Category 3 – The RBC Claims Manual

[22] RBC has a Claims Manual that sets out the manner in which claims are to be handled. Plaintiff’s counsel requested a copy of the RBC Claims Manual at the examination for discovery, and defence counsel refused that request, alleging that the manual was not relevant.

[23] After the motion was served, defence counsel provided plaintiff’s counsel with the index to the Claims Manual, that consisted of 67 separate headings. Defence counsel then reviewed the 67 headings and provided plaintiff’s counsel with the text for five of these headings that defence counsel believed were relevant.

[24] In my view, it is not sufficient for defence counsel alone to vet a document and then decide to produce only what defence counsel feels is relevant. Without casting any aspersions in this case, I accept that there is a level of distrust between parties in insurance litigation cases, particularly in bad faith cases. It will never be perceived as fair if one side need only produce documents that they feel are relevant. Opposing counsel should have some input into the decision as to which documents are relevant.

[25] Moreover, relevance is an issue that will be more closely scrutinized at trial. At this stage, the issue is not about admissibility, but discoverability.

[26] I accept that certain headings of the Claims Manual are clearly irrelevant, such as the heading with respect to maternity claims. However, other headings are ambiguous and may or may not be relevant. I am not convinced that defence counsel is correct that there are only five headings that are possibly relevant.

[27] As this is a fairly short document as compared to other insurance documents, I will order that the defendants answer this question by producing the entire RBC Claims Manual to plaintiff’s counsel. Plaintiff’s counsel can then review the document as a whole. Ultimately, the issue of which headings are relevant will be decided by the trial judge.

Category 4 – Urine, Blood, and Hair Samples

[28] The plaintiff has been receiving monthly disability benefits from RBC since 2020. From the time the claim started to present, RBC has occasionally delayed or withheld the monthly benefit payments. Also, on occasion, Anna has requested, or threatened to request, that the plaintiff provide urine, blood, and hair samples for the purpose of drug testing.

[29] In the pleadings, the plaintiff alleges that it was improper and contrary to RBC’s policy for Anna to request drug testing. Therefore, on her examination for discovery, plaintiff’s counsel asked Anna to advise how many urine, blood, and hair sample requests were made on all of Anna’s files for the years 2020, 2021, and 2022. Defence counsel refused to answer that question on the ground that it was irrelevant.

[30] In my view, the information requested by the plaintiff has some relevance. The plaintiff is attempting to prove that Anna systemically ordered drug testing for no practical reason. If that is the case, the plaintiff may have some support for his argument that Anna acted in bad faith.

[31] The difficulty with the question posed at the examination for discovery is that it will take a great deal of time and work by Anna and/or RBC to answer the question. Each of Anna’s files must first be identified, and then carefully reviewed to determine if drug testing was ordered, how often it was ordered, and on what dates it was ordered.

[32] The Rules of Civil Procedure provide that discovery is not unlimited; discovery is governed by the principles of proportionality as set out in rule 29.2.03. In this case, I find that the amount of time required to answer the question posed is a factor that supports the defence position.

[33] Moreover, the answer to this question will have limited relevance as each RBC insurance claim will be unique. If Anna requested drug testing in another case, there may be a good and obvious reason for that request. Still further, if Anna in fact requested drug tests on a large number of cases, the defendants will have to carefully examine each case to determine whether the defendants can defend the plaintiff’s allegations of systemic abuse by showing that there were good reasons for the requests. This, in my view, will substantially increase the time and effort required from the defendants.

[34] Overall, I find that this request offends the principles of proportionality. Therefore, I will not order that the defendants answer this question.

Category 5 – The Tab 283 Chart

[35] Plaintiff’s counsel asked Anna on her examination for discovery how she generated a certain chart, referenced as the Tab 283 chart. Anna had provided this chart, at the plaintiff’s request, to show the disability payments that the plaintiff had received between September 2020 and May 2022. The chart is inaccurate, as the dates of the payments are not completely correct, although the total amount paid seems to be correct.

[36] When this question was asked at the examination for discovery, defence counsel answered the question by saying “You pull it off of a computer”. Defence counsel further stated, “It is not like you make it up… it depends what you ask for…”

[37] Plaintiff’s counsel submits that this answer is inadequate. I agree. A defendant cannot answer a question about the source of a document by stating that the source was the computer. That is, one cannot simply assign the responsibility for creating a document to a computer.

[38] I accept that a computer program was likely a tool that was used by Anna to create and print this document, but presumably the computer program provided Anna with some particulars which Anna used to cause the creation of the chart. To properly answer this question, Anna must explain the information she had available to her through the computer program and explain what actions she took to cause the computer program to create the chart.

[39] Therefore, I will order that Anna provide a further and better answer to this question.

Category 6 – The Profitability of RBC

[40] Defence counsel has now answered one of the questions posed by plaintiff’s counsel by acknowledging that RBC made a profit from October 2019 to present; however, the defendants have refused to answer the plaintiff’s questions as to the amount of profit that RBC made during this period. The defendants also refused to answer the plaintiff’s suggestion that RBC’s profit exceeded $15 billion in 2022.

[41] It is the position of the plaintiff that if RBC is systemically acting in bad faith, the triers of fact must consider the profitability of RBC in determining the quantum of damages. In response, defence counsel submits that the amount of RBC’s profit is irrelevant to the plaintiff’s claim for bad faith, that the profitability of a corporate defendant is a confidential and sensitive topic, and that profitability will only become relevant if and when the plaintiff establishes that the defendants acted in bad faith.

[42] There are two competing principles with respect to this request, both of which were dealt with by the Supreme Court of Canada in the case of Whiten v. Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595.

[43] The first principle is set out at para. 72 of the Whiten decision. That principle is that it is proper to consider the profitability of a corporate defendant in a claim for punitive damages because “it is rational to use punitive damages to relieve a wrongdoer of its profit where compensatory damages would amount to nothing more than a license fee to earn greater profits through outrageous disregard of the legal or equitable rights of others.”

[44] Therefore, I accept that the profitability of a defendant insurance company that has systemically acted in bad faith is a relevant factor for consideration in determining the quantum of damages.

[45] The second principle is set out at para. 121 of the Whiten decision. That principle is that financial information for a corporate defendant should not be disclosed to the trier of fact before liability is established. As set out in para. 121, “disclosure of detailed financial information before liability is established may wrongly influence the jury to find liability where none exists.”

[46] I find that these two principles conflict with one another. That conflict raises a question as to the proper procedure for conducting a jury trial on a bad faith claim where the jury will be asked to determine both liability and damages; that is, based on the current state of the law, the jury will be told that the profitability of the corporate defendant is one factor for their consideration in assessing the quantum of damages, but the jury will not be told the particulars of the profitability of the corporate defendant until the jury has established that there is liability.

[47] In the case of Plester v. Wawanesa Mutual Insurance Company, [2006] O.J. No 2139, the Ontario Court of Appeal upheld and confirmed the Whiten warning against the premature disclosure of financial information for a corporate defendant before liability has been established. The Court of Appeal found in that case that the trial judge erred by admitting evidence as to the insurance company’s net income and assets, even where counsel for the insurance company may have opened the door to that issue. Therefore, I accept that the warning set out at para. 121 of Whiten, as confirmed in Plester, is binding on a trial court in this province.

[48] On this motion, plaintiff’s counsel reminds me that my decision today relates to discoverability, not admissibility at trial. I accept that whether, and to what extent, an insurance company’s financial information is admissible at trial will be determined at a later stage of the case. However, at this stage, I question why RBC should be ordered to produce information as to its profitability if the law is clear that this information cannot be introduced at a trial unless and until liability has been established.

[49] In my view, it may be necessary to bifurcate this trial. If so, profitability evidence will not be relevant at the liability stage of the trial, although it may be relevant at a later stage. I will not decide that procedural issue today.

[50] For today’s purposes, I find that the plaintiff is entitled to some very cursory information as to RBC’s financial status. RBC is a public corporation, and therefore there is some financial information that is publicly available. Moreover, defence counsel has already answered other questions posed by the plaintiff by acknowledging that RBC is in fact a profitable corporation. I find that the defendants need not provide any further information on this topic at this stage.

Conclusion

[51] In accordance with the aforementioned reasons, I make the following orders about the remaining refusals, using the numbers set out in the charts marked as Exhibit 1 and Exhibit 2.

Exhibit 1 – Anna Watroba

• Refusal 1 – Defendant to answer this question on an ongoing basis.
• Refusal 2 – Defendant to provide a copy of the I Make it Right guidelines.
• Refusal 3 – Defendant to provide the complete RBC Claims Manual.
• Refusal 5 – Defendant need not answer this question.
• Refusal 6 – Defendant to provide a further and better answer.

Exhibit 2 – Pamela Bowman

• Refusal 1 – Defendant to answer this question on an ongoing basis.
• Refusal 3 – Defendant to provide the complete RBC Claims Manual.
• Refusal 6 – Defendant need not answer this question.
• Refusal 7 – Defendant need not answer this question.

Costs

[52] If either party wishes to make submissions as to costs, I direct that the party seeking relief shall contact the trial co-ordinator within 20 days of the release of this decision and arrange a costs hearing by Zoom for a date within 60 days of the release of this decision. The parties shall file their costs outlines and written costs submissions, no longer than five pages, through CaseLines at least 7 days prior to the hearing. If no arrangements are made for a costs hearing within this time frame, the parties will be deemed to have settled all of the costs issues as between themselves.

Justice J. R. Henderson Date Released: March 18, 2024