ACCIDENT BENEFITS NEWSLETTER - JULY 2004

Catherine Zingg

Although not an accident benefits case, an evidential ruling made in Ferenczy v. MCI Medical Clinics (2004) O.J. 1775, OSC with respect to the admission of video surveillance, is of interest as it considers the impact of PIPEDA. Ms. Ferenczy had sued Dr. G. Weinstein for professional negligence relating to his diagnosis and treatment of a ganglion cyst located on the inner aspect of her left wrist (p. 1). Ms. Ferenczy had indicated that it was very difficult for her to grip a cup with her left hand. The defendant was in possession of a video showing the plaintiff holding a Tim Horton’s coffee cup continuously in her left hand, something she had unexpectedly said in her evidence she could not do(p. 2).

Counsel for the plaintiff argued that PIPEDA was a bar to the use of the surveillance evidence which he alleged was collected in contravention of that Act. He argued that the private investigator (an organization) retained by the CMPA (an organization) was collecting and making a record (videotape) of the plaintiff’s personal information (images) during the course of commercial activity (while being paid), and that as the plaintiff did not consent to the collection and release of the information, the investigator and the CMPA were in contravention of the Act (p. 4). Judge Dawson rejected this argument and admitted the surveillance evidence. In his reasons, the judge stated:

The defendant through his representatives was employing and paying an investigator, to collect information for him. It is the defendant’s purpose and intended use of the information that one should have regard to in determining the applicability of the Act.

On the basis of this analysis, I conclude that the defendant is not collecting or recording personal information in the course of commercial activity. He, through his agents, was collecting information to defend himself against the lawsuit brought by the plaintiff. This is a personal purpose in the context of the civil action brought against him by the plaintiff. In my view, this conclusion is consistent with the overall purpose of the Act which is aimed primarily at information collected as part of commerce (p. 4).

In Estate of Shiraz Jiwa and Royal & Sunalliance Company of Canada, A03-000156, June 14, 2004 the deceased had been injured in a motor vehicle accident on May 15, 1998. Royal issued a cheque for $15,000 payable to Mr. Jiwa in settlement of his claims in December, 1999. This cheque was sent to SM Insurance Claims. In November, 2003 Mr. Jiwa passed away. His widow, acting on behalf of Mr. Jiwa’s estate, brought a proceeding at FSCO on the basis that her late husband had “never received the money he was entitled to”.

After the cheque was sent to SM Insurance claims, Mr. Jiwa had received two cheques from SM Insurance claims, each in the amount of $2,947.50, but both were returned “NSF”. Mr. Jiwa then turned to his brother, Mr. Ali Jiwa, for assistance. Ali Jiwa was able to obtain a cheque for $2,947.50 which was honoured, as well as two additional $1,000 cash payments. Bank records confirmed that these deposits were made to Mr. Jiwa’s account. Mr. Ali Jiwa also went to the Toronto Police Service and filed a criminal complaint against SM Insurance Claims. Constable Mitchell gave evidence that on April 24th 2001, Mr. Mendez pleaded guilty to 19 counts of theft over and was ordered to pay restitution to his many victims in the amount of $135,000 (p. 7). Arbitrator Leitch found that he had jurisdiction to deal with the matter as non-compliance with section 44 (1)(a) has the potential to raise issues concerning the “non-performance of a settlement agreement”. Arbitrator Leitch also found that it would be contrary to the objective of consumer protection to allow insured persons to contract out of section 44(1)(a). He found that the section was capable of providing a “bright line boundary” as described by the Supreme Court of Canada in Smith v. Cooperators General Insurance Company (2002) SCC 30, only if it was “interpreted as imposing a mandatory standard, one which cannot be waived through contracting out” (p. 2).

The Arbitrator acknowledged that Royal would not be liable for portions of the settlement funds which Mr. Jiwa had recovered from Mr. Mendez as that would amount to double recovery. The matter was adjourned in order for the parties to gather further evidence with respect to the existence and effect of any restitution order issued against Mr. Jiwa’s agent Mr. Mendez. Arbitrator Leitch had observed that an assignment of the restitution order to Royal would shift to Royal the burden and risk of the execution proceedings against Mr. Mendez, but found that he could not make such an order as this would involve an assignment of benefits, which are prohibited by section 65 (1) of the Schedule.

In Rizk and Isho and Allstate, A03-000562 and A03-001119 June 11, 2004, Arbitrator Skinner found that the applicants were not entitled to receive accident benefits because they willfully misrepresented material facts with respect to their applications for accident benefits. The Arbitrator found the applicants to be unreliable witnesses, given the inconsistency, vagueness and implausibility of their testimony. Lino Garcia, an engineer, who was an expert in the area of accident reconstruction and Scott Walters, an engineer and expert in forensic engineering in accident reconstruction, co-authored a report upon which Allstate relied. Arbitrator Skinner preferred their report to that of Mr. Raftery, an engineer who testified on behalf of the applicants. The Arbitrator noted that Mr. Raferty offered alternate theories of the accident without any supporting evidence and he had not examined either Mr. Isho’s or Mr. Jama’s car. The Arbitrator was satisfied that Mr. Rizk and Mr. Isho acted deliberately in representing that they were involved in an accident and that the occurrence of an accident was fundamental to their entitlement to accidents benefits. Accordingly, they were denied benefits and each was ordered to pay 50% of Allstate’s reasonable expenses.

In Ng and Western Assurance Company, A03-001444, June 1st, 2004, the insurer was awarded $500.00 for interim expenses after the applicant and his representative failed to appear at a pre-hearing without giving notice. Arbitrator Allen spoke to Mr. Pignalosa on the telephone with respect to his failure to appear at the hearing. She found that he gave a number of evasive and conflicting excuses for his and the applicant’s conduct. Although he had indicated that the applicant had retained Mr. Vickar to represent him, upon further questioning he stated that the applicant had not retained Mr. Vickar and that he was still the applicant’s representative of record. In awarding expenses, Arbitrator Allen relied upon sections 282 (11.1) and 282 (11.4) as authority for her order. Under 282 (11.4) a representative is to be given a reasonable opportunity to make representations to the Arbitrator before an order can be made for interim expenses under 282 (11.1). Although she had heard from Mr. Pignalosa over the phone, the Arbitrator allowed him a further time to make written submissions. The arbitrator also relied on Rule 75.2 (d) of the Practice Code which looks at whether a party’s conduct tended to prolong, obstruct or hinder a proceeding (p. 2). In his written submissions, Mr. Pignalosa took full responsibility for failing to attend, but requested that expenses not be awarded against him. Arbitrator Allen found that Mr. Pignalosa’s labelling the problem a communication failure did not explain or excuse his conduct (p. 7). The applicant and Mr. Pignalosa were jointly and severally liable pursuant to subsections 282 (11), (11.1) and (11.2) of the Insurance Act for Western’s expenses thrown away fixed at $500.

In Blum and Aviva Canada Inc., A02-001375, June 9, 2004 the insurer was ordered to pay $5,964.61 as fixed expenses, in any event of the cause, after requesting a “short adjournment” to accommodate an extended jury trial. Arbitrator Wilson found no fault on the part of the insurer’s lawyer or his firm. However, it appeared that no notice or warning had been provided to the applicant’s counsel in March 2004, when a jury trial scheduled for three weeks was postponed, ultimately until May 10, 2004. It was found that the inability of the insurer to proceed at the scheduled hearing date on May 31, “when taken in the context of the prior, serial, adjournments, all of which implicated the insurer, constituted a pattern of conduct that tended to prolong the proceeding unduly (p. 8)”.