Neutral Citation: 1998 ONICDRG 75, 1998 ONFSCDRS 75

FSCO A97-000666

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

DIETER MULLER

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION

Issues:

Mr. Muller was injured in a car accident on January 5, 1996. After a dispute with the Insurer over weekly income benefits, he applied for arbitration. Shortly after that, he disappeared. He did not attend the pre-hearing or hearing, nor did he comply with production orders.

The issues in this hearing are:

1. Is Mr. Muller entitled to recover any further weekly income benefits?

2. Is Zurich entitled to a repayment of accident benefits due to error or fraud?

3. Is Zurich entitled to the return of its assessment fee of $2,000?

4. Is Zurich entitled to its expenses in respect of the arbitration?

Mr. Muller also claims interest on any amounts owing.

Result:

1. Mr. Muller's claim is stayed.

2. Zurich is not entitled to a repayment.

3. Zurich is entitled to the return of its assessment fee of $2,000.

4. Zurich is entitled to $500 in expenses.

Hearing:

The hearing was held at the offices of the Financial Services Commission of Ontario in North York, Ontario, on October 14, 1998, before me, Deena Baltman, Arbitrator. Neither the Applicant nor anyone on his behalf attended the hearing. Mr. Darrell March attended on behalf of Zurich.

Reasons:

Mr. Muller was injured in a motor vehicle accident on January 5, 1996. He received statutory accident benefits from Zurich Insurance Company ("Zurich"), payable under the Schedule.¹Zurich terminated weekly income replacement benefits on August 5, 1996. Mediation was unsuccessful. On March 21, 1997, Mr. Muller applied for arbitration at the Financial Services Commission of Ontario² under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Before the pre-hearing was scheduled, Mr. Muller moved, without advising his counsel or the Commission of his whereabouts. Both the Commission and his counsel made numerous unsuccessful attempts to locate him by phone and by mail. Correspondence sent to his last known address has been returned with an incomplete address notation. Mr. Muller did not attend the pre-hearing and his counsel was compelled to get off the record. He did not comply with production orders and did not attend the hearing.

The hearing was scheduled to begin at 10:00 a.m. on October 14, 1998. As of 11:15 a.m., Mr. Muller had not yet appeared. Section 7 of the Statutory Powers Procedure Act authorizes me to proceed with a hearing in the absence of the parties, where I am satisfied that they have been sent notice of the hearing. As Mr. Muller's address has been unknown for some time, I have no proof that he was aware of the hearing date, and therefore I did not proceed with a hearing. The result is that I make no order with respect to Mr. Muller's claim for further benefits.

I do, however, find that through his conduct, Mr. Muller has constructively withdrawn his application. Mr. Muller was advised that he was required to attend the pre-hearing. He then moved without notifying his lawyer and failed to attend the pre-hearing. He has made no efforts to keep the Commission advised of his whereabouts. He has essentially abandoned his claim. I find this amounts to a constructive withdrawal as described by Arbitrators Makepeace and Seife in Dubjic³ and Quattrocchi,⁴ respectively.

Mr. Muller's withdrawal of his claim does not deprive Zurich from pursuing a repayment. However, Zurich submitted no evidence in support of this claim, and it is therefore dismissed.

This leaves the matter of expenses. I find that Mr. Muller's conduct amounts to an abuse of process. Because he failed to provide notice that he was no longer proceeding with the claim, both the Commission and the Insurer have wasted time and money on phone calls, correspondence and a needless pre-hearing. Section 282 (11.2) of the Insurance Act gives an arbitrator discretion to award the insurer the amount of its assessment, where an applicant commences an arbitration that is "frivolous, vexatious or an abuse of process." Mr. Muller is required to pay the Insurer's assessment of $2,000 by November 30, 1998, whether or not he proceeds with the arbitration. If he fails to do so, he will not be permitted to proceed with this arbitration, and he will be precluded from filing another application with respect to the same matter.

Zurich claims its expenses in respect of the arbitration process. Recent amendments to the Insurance Act permit an arbitrator to award expenses in favour of the insurer. Rule 73 of the Dispute Resolution Practice Code sets out several criteria for the arbitrator's consideration. In particular, under 73(b), an arbitrator may consider any conduct of a party that "tended to prolong, obstruct or hinder the proceeding, including failure to comply with undertakings or orders;" and under 73 (c), an arbitrator may consider whether the proceeding was "manifestly unfounded, frivolous, vexatious, fraudulent or an abuse of process." For the reasons set out above, I find that Mr. Muller's conduct falls within both those criteria. The question is what is the appropriate amount of expenses. Counsel for Zurich requested expenses in the range of $5000, but had no dockets, records or other evidence to support that figure. He acknowledged that it was merely a "ballpark" suggestion.

As Mr. Muller did not attend at the pre-hearing or respond to any attempts at contact thereafter, Zurich's involvement in this file has been minimal. I find that a figure of $500 is sufficient compensation in this case.

Order:

1. Mr. Muller's application is stayed.

2. Zurich's claim for a repayment is dismissed.

3. Mr. Muller shall pay Zurich its assessment fee of $2,000 by November 30, 1998, whether or not he proceeds with the arbitration.

4. Mr. Muller shall pay Zurich $500 in expenses.

5. This arbitration (or any other relating to the same matter) will not proceed unless Mr. Muller has complied with paragraphs three and four of this order.

November 13, 1998

Deena Baltman

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94 and 463/96.
2. 2Effective July 1, 1998, the Ontario Insurance Commission was changed to the Financial Services Commission of Ontario, pursuant to the Financial Services Commission of Ontario Act, S.O. 1997, c.28.
3. 3Dubajic and State Farm Mutual Automobile Insurance Company (OIC A96-001133, October 21, 1997)
4. 4Quattrocchi and State Farm Mutual Automobile Insurance Company (OIC A-006854, June 11, 1996)