Ontario – adequate reasons serve to justify/explain result so losing party knows why it lost

In Wawanesa Mutual Insurance Company v. Renwick, 2020 ONSC 2226, Ontario’s Divisional Court determined that inadequate reasons fell short of their “very important purpose”, namely that “they justify and explain the result so that the losing party knows why they have lost and interested members of the public can satisfy themselves that justice has been done”.  The Court prioritized that purpose, listing it ahead of the more oft-cited purpose of allowing for meaningful review by a court.  Though not all parties prevail in their dispute resolution, they are entitled to know that their evidence and arguments were considered and why they did not prevail. As the Divisional Court added, “[h]owever, this does not mean that the decision maker must refer to every bit of evidence or argument before him. To be adequate, reasons do not have to be long or perfect”.

The dispute involved a claim by R. from her insurer Wawanesa Mutual Insurance Company (“Wawanesa”) for statutory accident benefits under Ontario’s Statutory Accident Benefits Schedule, O Reg 34/10 (“SABS”).

On March 20, 2017, the Financial Services Commission of Ontario arbitrator (“Arbitrator”) dismissed R’s claims.  R. appealed that decision to the Delegate of the Director of Arbitrations (“Director’s Delegate”) under the Insurance Act, RSO 1990, c I.8 which provided for appeals on questions of law.

On January 30, 2018, the Director’s Delegate allowed R.’s appeal because she determined that the Arbitrator’s reasons were inadequate.  Wawanesa appealed that determination, arguing that the Director’s Delegate’s determination should be quashed because it was unreasonable.

The appeal to the Divisional Court required application of two (2) standards of review: (i) the standard of review applied by the Director’s Delegate to the Arbitrator’s decision; and, (ii) the standard of review applied by the Divisional Court to the Director’s Delegate’s decision. 

In its decision, the Divisional Court identified the standard of review as correctness for (i) given that the issue before the Director’s Delegate was limited to a question of law. See para. 43. For (ii), despite the use of the label “arbitration”, the proceeding was an administrative one and subject to the rules applicable to judicial review, namely those recently clarified in the Supreme Court of Canada’s December 2019 Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. See para. 44.

The hearing conducted by the Arbitrator covered six (6) days in September and November 2016.  The decision was released in March 2017.

The Divisional Court prefaced its lengthy consideration of the Arbitrator’s decision and the Director’s Delegate’s decision with the following comment:

[16] My review of the hearing before the Arbitrator will include some detailed reference to the evidence that was before the Arbitrator, most of which was not referred to in his decision. My purpose in providing this detail is that some familiarity with this evidence is necessary to understand my conclusion that it was reasonable for the Director’s Delegate to conclude that the Arbitrator’s reasons were inadequate because they failed to meaningfully address the major points in issue”.

At paras 30-32, the Divisional Court summarized the Arbitrator’s decision, noted that the began his decision “by briefly summarizing the evidence and the positions of the parties” and “also set out the issues he had to decide and the relevant sections of the SABS”.  In anticipation of its eventual determination on the adequacy of the Arbitrator’s reasons, the Divisional Court then remarked that, on a key issue of entitlement to income replacement benefits, “the Arbitrator’s analysis consisted of the following three paragraphs” which the Court then reproduced at para. 31.

On appeal, the Director’s Delegate applied the criteria stated by the Divisional Court in its 2008 decision in Kanareitsev v. TTC Insurance Company Limited, 2008 CanLII 26262 (ON SCDC).

[33] The Director’s Delegate found that the Arbitrator erred in law by failing to provide adequate reasons for his decision. Relying on the Divisional Court’s decision in Kanareitsev v. TTC Insurance Company Limited (2008), 2008 CanLII 26262 (ON SCDC), 297 D.L.R. (4th) 373, the Director’s Delegate stated that:

(i) reasons must set “out the findings of fact and the principal evidence upon which those findings were based”;

(ii) reasons must also “address the major points in issue”;

(iii) “the reasoning process followed must set out and reflect consideration of the main relevant factors”; and

(iv) “it is insufficient for the decision-maker to summarize the parties’ positions and ‘baldly state its conclusions’” (Kanareitsev, supra at para. 28)”.

The Director’s Delegate determined that:

(a) R. was unable to determine from the Arbitrator’s decision what factors he considered relevant to the issues of entitlement, now they were applied and which of her submissions he accepted.  As a result, his decision did not provide “the basis for meaningful appellate review and she has been denied her right to natural justice and procedural fairness”.

(b) the Arbitrator failed to “summarize, analyse or consider important evidence that was not supportive of the insurer’s position”.

(c) the Arbitrator misinterpreted evidence finding that R. had received a specific treatment every six (6) weeks whereas she had them weekly.

(d) the Arbitrator made “surprising” determinations on the evidence.

(e) the Arbitrator “briefly summarized two reports on the issue and then made a bald conclusion without any analysis” and ignored evidence.

(f) the Arbitrator wrongly faulted R.’s expert in not challenging the insurer’s expert as it was not the role of an expert to directly challenge the evidence of another expert.

The Director’s Delegate acknowledged that her limited role in the consideration of the facts.

[38] The Director’s Delegate noted that it was not her role to weigh the evidence and that not reciting all the evidence does not mean that the Arbitrator failed to consider it. However, in her view, the Arbitrator’s analysis on the claim for income replacement benefits was so inadequate as to amount to an error of law”.

On appeal to the Divisional Court, Wawanesa did not dispute that adequacy of reasons is a question of law: R. v. Sheppard, 2002 SCC 26 (CanLII), [2002] 1 SCR 869; Diamond Auto Collision Inc. v. The Economical Insurance Group, 2007 ONCA 487; and, Canadian Broadcasting Corporation Pension Plan v. BF Realty Holdings Ltd., 2002 CanLII 44954 (ON CA).  The Divisional Court elaborated.  “Reasons serve a very important purpose – they justify and explain the result so that the losing party knows why they have lost and interested members of the public can satisfy themselves that justice has been done. Reasons must also be sufficient to allow for meaningful appellate review”.

Wawanesa submitted that the Director’s Delegate’s jurisdiction was limited to a question of law and that there was no error of law in the Arbitrator’s decision.  Rather, it disputed the Director’s Delegate’s use of inadequacy of reasons as a “purported rationale for overturning the Arbitrator’s decision”.  The reliance on inadequacy of reasons “was imply a disguised justification for reweighing the evidence”.

[53] As found by the Director’s Delegate, to be adequate reasons must set out the findings of fact and the principal evidence upon which those findings were based. They also must address the major points in issue and set out the reasoning process that the decision-maker followed so that it is apparent that the decision-maker engaged with and considered the major points in issue. It is not enough for a decision maker merely to summarize the evidence and the positions of the parties and then to state a conclusion (see Via Rail Canada, supra and Kanareitsev, supra). However, this does not mean that the decision maker must refer to every bit of evidence or argument before him. To be adequate, reasons do not have to be long or perfect”.

The Divisional Court agreed with Wawanesa’s argument that litigants should not use adequacy of reasons to “reengage in a reweighing of facts”.  In the circumstances of the case before it, however, the Divisional Court found no application for the argument.  The “thrust” of the Director’s Delegate’s decision was not that that Arbitrator made factual errors but that he did not “engage with the issues and the evidence”.

The Divisional Court determined that the Arbitrator “did not conduct a meaningful analysis” on key issues and “simply concluded” on them.   The Arbitrator “did not say what evidence he was relying on to support this view (except for income tax returns which were not in dispute) and he made no attempt to deal with the evidence that did not support this view”.

On a more narrow issue involving medical benefits, the Divisional Court puzzled over what the Arbitrator meant when he asserted his conclusion.  Para. 62 lists the Court’s questions raised by that conclusion and, in listing those questions, illustrated how the reasons prevented meaningful appellate review.

The Divisional Court dismissed the appeal but varied the Director’s Delegate’s decision to remit the matter for a new hearing. In light of amendments to the process applicable to disputes overs SABS and concerns over delays to determine the matter due to COVID-19, the Court remitted the matter to the Licence Appeal Tribunal.  Doing so was made expressly subject to its awareness that it might not have the jurisdiction to reassign determination to another agency.

urbitral note – First, the decision provides meaningful guidance in consensual arbitration matters despite arising in an administrative law context.  Adequacy of reasons serves each of the two (2) key goals sought in issuing an award.  Adequate reasons serve to explain to the losing party that, having been heard, why it lost and ensure an enforceable award for the prevailing party, free of defects identified as valid grounds justifying court intervention.

Second, the case departs from the more familiar approach in the case law by giving priority to the role of reasons from the point of view of a party to the dispute and not the courts on appeal.  Most case law asserts the role reasons serve in allowing a court to perform its appellate role.  That role is key but can mask the important role reasons serve for the party reading the decision in first instance. 

Yes, a party dissatisfied with the result will eventually invoke the role of reasons for meaningful appellate review but, upon receipt, the initial and key purpose is to let the party know that its evidence and argument were considered but did not prevail for the reasons given.  As the Divisional Court added, “[h]owever, this does not mean that the decision maker must refer to every bit of evidence or argument before him. To be adequate, reasons do not have to be long or perfect”.

Third, the Divisional Court referred to the Director’s Delegate’s reliance on Kanareitsev v. TTC Insurance Company Limited, 2008 CanLII 26262 (ON SCDC) as her source for the purposes served by adequate reasons.  Paras 24-29 of that decision are worth reproducing for ease of reference:

[24] In Baker v. Canada (Minister of Citizenship and Immigration), 1999 CanLII 699 (SCC), [1999] 2 S.C.R. 817, L’Heureux-Dubé J. discussed the provision of reasons by administrative decision-makers with reference to the duty of procedural fairness.  The importance of a person knowing the reasons as to why a result was reached is an integral part of the duty of fairness: Baker, supra, at para 43.  

[25] Determining the adequacy of reasons is a contextual exercise: Lawson v. Lawson, 2006 CanLII 26573 (ON CA), [2006] O.J. No. 3179 (C.A.), at para 13. The essential question is whether the reasons provide “the basis for meaningful judicial review”: International Brotherhood of Electrical Workers, Local 1739 v. International Brotherhood of Electrical Workers, (2007) 2007 CanLII 65617 (ON SCDC), 86 O.R. (3d) 508 (Div. Ct.), at para. 88.

[26] The comments of Binnie J. in R. v. Sheppard, 2002 SCC 26 (CanLII), [2002] 1 S.C.R. 869, at para 24, are instructive:

In my opinion, the requirement of reasons is tied to their purpose and the purpose varies with the context. At the trial level, the reasons justify and explain the result. The losing party knows why he or she has lost. Informed consideration can be given to grounds for appeal. Interested members of the public can satisfy themselves that justice has been done, or not, as the case may be.

[27] While based on appellate review of a criminal proceeding, the holding in R. v. Sheppard, supra, is equally applicable to the civil context, with necessary modifications:  Diamond Auto Collision Inc. v. Economical Insurance Group, 2007 ONCA 487 (CanLII), [2007] O.J. No. 2551 (C.A.), at para 10. See also: Canadian Broadcasting Corp. Pension Plan v. BF Realty Holdings Ltd. (2002), 2002 CanLII 44954 (ON CA), 214 D.L.R. (4th) 121 (Ont. C.A.)

[28]  The recent decision of this Court in Kalin v. Ontario College of Teachers, (2005) 2005 CanLII 18286 (ON SCDC), 75 O.R. (3d) 523 (Div. Ct.), at paras 58-60, summarized the factors to be considered in determining the adequacy of reasons. These include the decision-maker setting out its findings of fact and the principal evidence upon which those findings were based.  The reasons must address the major points in issue; it is insufficient for the decision-maker to summarize the parties’ positions and “baldly state its conclusions”; and the reasoning process followed must be set out and reflect consideration of the main relevant factors. See also: Fisher v. Moir, [2005] O.J. No. 4479 (Div. Ct.).

[29] Particularly when results turn on the first instance decision maker’s view of the credibility of witnesses and involves a fact-driven analysis, appellate review must take “proper account of the distinct advantage” of the first-instance decision maker’s assessments. The appeal judge must not try the case de novo or simply substitute his or her views for those of the trial judge: R. v. G. W. 1996 CanLII 427 (ON CA), [1996] O.J. 3075 (C.A.) at paras. 18 and 57”.