A FSCO preliminary issue hearing was conducted at ADR Chambers before Arbitrator Knox Henry to determine whether the claimant suffered a catastrophic impairment. Arbitrator Henry concluded that the claimant had sustained a catastrophic impairment as a result of the accident.

After a one-day oral hearing and subsequent receipt of written submissions, Arbitrator Henry issued a decision on the claimant’s entitlement to benefits, interest and a special award. The amounts awarded were considerable. There was no transcript of the proceedings leading up to Arbitrator Henry’s decision awarding benefits, interest and the special award. Although unclear from the decision, it would appear that State Farm was not given any notice that the arbitrator would be considering evidence on the substantive right to benefits rather than strictly addressing the catastrophic impairment qualification. As such, State Farm did not lead any evidence at the arbitration on the issue, and had no notice that evidence by the claimant was being considered by the arbitrator.

State Farm appealed, taking the position that the claimant’s entitlement to various benefits and the substantive merits of the special award were not properly before the Arbitrator and that his decision was made without notice to State Farm. State Farm argued that such a decision was made in breach of principles of natural justice and procedural fairness. The claimant brought a motion to strike the appeal. Delegate Blackman ordered a stay of the appeal halting the process, but chose not to dismiss the appeal entirely.

As part of the appeal, State Farm filed affidavits providing a chronology of events leading up to Arbitrator Henry’s decision and  information regarding the benefits already paid to the claimant by State Farm. The breakdown of benefits already paid to the claimant was information not before Arbitrator Henry when he made the decision awarding various amounts of benefits and a special award to the claimant. The claimant tried to strike out portions of the affidavits and failed.

The claimant then filed a motion before Arbitrator Henry seeking clarification regarding aspects of his decision. State Farm objected to this in taking the position that Arbitrator Henry was functus – or that Arbitrator Henry’s duty or authority had ended when he made his final decision awarding amounts of benefits, interest and the special award. On this basis, State Farm asked Director’s Delegate Evans to deny the claimant’s motion and succeeded.

The claimant commenced a judicial review application to:

1) reverse the decision of Director’s Delegate not to strike out portions of  State Farm’s affidavits;
2) reverse the Director’s Delegate’s decision denying the claimant’s motion seeking clarification on Arbitrator Henry’s decision; and,
3) obtain an Order for Arbitrator Henry to provide clarification regarding his decision awarding various amounts of benefits, interest and a special award to the claimant.

State Farm sought to quash the judicial review sought by the claimant.

The Divisional Court declined to strike out portions of State Farm’s affidavits and further declined to grant an Order to allow Arbitrator Henry to provide clarification regarding his decision.

The Divisional Court found that the information contained in State Farm’s affidavits would be useful to provide background or missing evidence with respect to the procedural fairness. Indeed, if information regarding benefits already paid to the claimant had been before Arbitrator Henry, this might have had a substantial bearing on the amounts of benefits awarded and the merits of the special award. The Divisional Court also noted that the claimant had the right to cross-examine State Farm on the affidavits and had not yet done so.

The Divisional Court did, however, allow the claimant’s judicial review application to proceed regarding the Director’s Delegate’s decision to deny the claimant’s motion seeking clarification of Arbitrator Henry’s final decision. The Director’s Delegate’s decision was made without providing notice to the claimant and without seeking formal submissions from the parties. The Divisional Court also stated that it could have been up to Arbitrator Henry to find that he was functus and that he could not hear the motion seeking clarification.

The issue to be heard on judicial review is whether Director’s Delegate Evans erred in denying the claimant’s motion to seek clarification from Arbitrator Henry. Despite the fact that the Divisional Court ordered the issue to be heard before a Divisional Court Panel on an expedited basis, Justice Molloy seemingly made a determination on the issue by stating that she had her doubts as to whether the Director’s Delegate had the jurisdiction to deny the claimant’s motion seeking clarification before Arbitrator Henry:

“Even if Delegate Evans had been asked to issue the Orders that he did, and even if he had done so after a full opportunity for Mr. Waldock to be heard, I have doubts as to his jurisdiction to grant such relief.

This is also a situation in which there has been a breach of natural justice and procedural fairness by Delegate Evans, and also likely a decision made by the Delegate without jurisdiction.”

The Divisional Court further commented that parties should be encouraged to complete proceedings in their entirety and to proceed on appeal rather than turning to judicial review on interlocutory Orders regarding procedural matters.

To this end, the correct procedure might have been for the parties to proceed with State Farm’s appeal of Arbitrator Henry’s decision to award benefits, interest and a special award. It is unclear whether Arbitrator Henry would have jurisdiction to provide clarification on his final decision when it was already under appeal by State Farm.

If Arbitrator Henry made a final decision regarding the amount of benefits, interest and a special award owed to the claimant without hearing responding evidence from State Farm – this would certainly be an appealable issue regarding procedural fairness and natural justice.

The 2015 Ontario Court of Appeal decision of Ontario (Provincial Police) v. Mosher, provides guidance on the principle of audi alteram partem where a party to a proceeding has the right to be heard by the decision-maker and, arising out of that right, the party also has the right to notice of the hearing sufficient in time and substance to enable the party to present their case on the issues to be decided.

Similarly, the Supreme Court of Canada commented on procedural fairness in the decision of Cardinal v. Director of Kent Institution:

… the denial of a right to a fair hearing must always render a decision invalid, whether or not it may appear to a reviewing court that the hearing would likely have resulted in a different decision. The right to a fair hearing must be regarded as an independent, unqualified right which finds its essential justification in the sense of procedural justice which any person affected by an administrative decision is entitled to have. It is not for a court to deny that right and sense of justice on the basis of speculation as to what the result might have been had there been a hearing.

The Waldock v. State Farm Mutual Automobile Insurance Company decision provides a comprehensible reminder regarding the overriding principles of natural justice and procedural fairness in tribunal matters. The impact of this decisions will provide guidance in forums such as the Licence Appeal Tribunal (LAT). While there is a push to have matters dealt with in the most cost effective and efficient way, resolving disputes quickly cannot come at the expense of providing fair and proper notice to the parties.

If you have any questions or comments about this blog or an appellate file, please contact Meredith Harper or our Appellate Practice Group.