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BINDING ARBITRATION - Practice and procedure - Hearings - Evidence - Appeals and judicial review

Monday, March 27, 2017 @ 8:48 AM | By John Carson

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Appeal by Federal Insurance Company of Canada (Federated) from an order overturning an arbitrator’s decision and finding that the abuse of process doctrine applied to preclude it from leading evidence as to the status of an insurance claimant. In 2010, the claimant was injured in a motor vehicle accident while a passenger in his father's vehicle. The vehicle collided with a truck, which was insured by Federated. The claimant claimed Statutory Accident Benefits. The vehicle had been insured by Intact Insurance Company (Intact), but Intact claimed that it had cancelled the policy five days before the accident for non-payment of premiums. The father had been convicted of driving without insurance at the time of the accident. As a preliminary issue, Intact argued before the arbitrator that the abuse of process doctrine applied to prohibit Federated to lead evidence that the father was insured by Intact at the time of the accident. Federated wanted to lead evidence that because Intact had not followed the required procedures when purporting to cancel the policy, the father was insured at the time of the accident. Intact maintained that the claimant’s father’s status as an insured or uninsured driver had been decided in the proceedings in which he was convicted of driving without insurance and that it would be an abuse of process to permit Federated to re-litigate the issue. Federated argued that the facts of this case fell within an exception to the abuse of process doctrine, namely, that fairness dictated that the original result should not be binding in the new context. The arbitrator held that the abuse of process doctrine should not prevent Federated from leading evidence that the driver was in fact insured at the time of the accident. On appeal, the application judge reversed the arbitrator’s decision, holding that the issue could not be re-litigated in the context of the arbitration. The appellant was granted leave to appeal from the application judge’s order.

HELD: Appeal allowed. The application judge confused the operation of s. 22.1 of the Evidence Act and the abuse of process doctrine. That confusion led him to error. Under s. 22.1, proof of the prior conviction constituted proof of all of the facts essential to that conviction absent evidence to the contrary. Unlike s. 22.1, the abuse of process doctrine was not an evidentiary rule. It precluded litigation when it would undermine the integrity of the adjudicative process. The abuse of process doctrine operated to foreclose a party from leading evidence to the contrary, to avoid the evidentiary rule established by s. 22.1, when to do so would constitute an abuse of the court’s process. Allowing Federated to lead evidence of the father’s insurance status would not be an abuse of the court’s process. Neither Federated nor Intact were parties to the prosecution of the father for driving without insurance. As Intact was not a party to the proceeding, it could not complain that re-litigation of the father’s insurance status in the arbitration forced it to re-prove a fact that it had already proven. There was no reason to doubt the fairness of the proceeding in which the father was convicted and the consequences of that proceeding were sufficiently serious to assume the father made a full and robust defence. The arbitration proceeding was particularly well-suited to a determination of whether the father was an insured driver at the relevant time. Both Intact and Federated had the means and the expertise to fully litigate the issue and had access to the information necessary to accurately determine whether the policy was properly cancelled. There was no danger to the overall integrity of the adjudicative process flowing from a re-litigation of the father’s insurance status in a private arbitration between Federated and Intact.

Intact Insurance Co. v. Federation Insurance Co. of Canada, [2017] O.J. No. 403, Ontario Court of Appeal, D.H. Doherty, J.C. MacPherson and P.D. Lauwers JJ.A., January 27, 2017. Digest No. 3644-001