Neutral citation: 1999 ONFSCDRS 120

FSCO A98-001162

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ISABELLA FARELLA

Applicant

and

SECURITY NATIONAL INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Beth Allen

Heard:

March 8, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto

Written submissions received by July 11, 1999

Appearances:

Ms. Farella, unrepresented

Ted Charney for Security National Insurance Company

Issues:

The Applicant, Isabella Farella, was injured in a motor vehicle accident on February 5, 1998. An Application for Accident Benefits was submitted to Security National Insurance Company ("Security"). From shortly after the accident until about mid-March 1998, Ms. Farella received physiotherapy treatment from Metro Orthopaedic Rehab Centres ("Metro"), paid for by Security pursuant to the Schedule.¹ The dispute involves Security's refusal to pay the cost of an assessment conducted by Metro. An Application for Arbitration dated August 10, 1998 was filed with the Financial Services Commission of Ontario (the "Commission"). Ms. Farella asks to withdraw the Application for Arbitration and submits that the application was filed without her knowledge, authorization or consent. Security does not agree with the withdrawal of the application; however, it seeks under Rule 67 of the Dispute Resolution Practice Code (the "Code"), an order for Metro, Mr. Puritt² and/or Misir, Patterson law firm³ to pay its expenses of the arbitration on the basis that they commenced an arbitration that is an abuse of process. Security also seeks an order under Rule 63.5 of the Code against Metro and the lawyers to prevent future abuse of process. Security does not seek an order that Ms. Farella pay its expenses.

The issues in this hearing are:

1. Is Ms. Farella permitted to withdraw the Application for Arbitration under Rule 67 of the Code?

2. Do I have the jurisdiction to order Metro, Mr. Puritt and/or Misir, Patterson law firm to pay Security's expenses of the arbitration if I decide that an abuse of process has occurred and that Metro, Mr. Puritt and/or Misir, Patterson law firm are responsible?

3. Do I have the jurisdiction to make an order against or give a direction to Metro, Mr. Puritt and/or Misir, Patterson law firm to prevent an abuse of process if I decide that an abuse of process has occurred and that Metro, Mr. Puritt and/or Misir, Patterson law firm are responsible?

Result:

1. Ms. Farella is permitted under section 67 of the Code to withdraw the Application for Arbitration without conditions.

2. I have no jurisdiction to order Metro, Mr. Puritt and/or Misir, Patterson law firm to pay Security's expenses of the arbitration.

3. I have no jurisdiction to make an order against or give a direction to Metro, Mr. Puritt, and/or Misir, Patterson law firm to prevent abuse of process.

4. I decline to order Ms. Farella to pay Security's expenses incurred in respect of the arbitration.

Procedural matter:

Security sought to summons to the hearing Mr. Puritt and Mr. Misir or another representative from Misir, Patterson. Security sought their attendance to make available pertinent documents from Ms. Farella's file, subject to solicitor/client privilege concerns. Security did not successfully effect service and neither Mr. Puritt nor Mr. Misir testified.

Although Mr. Puritt, Mr. Misir (representing his firm) and Dr. Sidhu (representing Metro) are not parties to the proceeding, by correspondence following the hearing, I offered them the opportunity at a resumption of the hearing to respond orally to Security's submissions on the expense issue on the basis that Security's submissions raise matters that could affect their interests. Although Mr. Puritt undertook to present submissions, neither Mr. Misir nor Dr. Sidhu did so. With Security's and Ms. Farella's consent, I offered Mr. Puritt an opportunity to testify as to his personal knowledge at a resumption of the hearing. He declined, indicating that he would prefer to limit his participation to providing written submissions on the issues in dispute. I accepted this approach. Mr. Puritt prepared a statement with the assistance of the transcripts of the evidence and filed it with the Commission on May 20, 1999. In part, Mr. Puritt made submissions on evidence not before me at the hearing. In my decision, I considered only the evidence I received at the hearing and submissions based on this evidence. Ms. Farella and Security filed their replies to Mr. Puritt's statement on June 11, 1999.

EVIDENCE AND ANALYSIS:

Factual overview:

Ms. Farella, then aged 23, was involved in a minor car accident on February 5, 1998. Following the accident she missed only two days from work because, as she explained, she was anxious to return to her job as a manager in Corporate Credit Risk Management at CanadaTrust.

Shortly after the accident, Ms. Farella went to her mother's family doctor because she developed muscle spasms in her back. The doctor recommended physiotherapy and referred her to Metro for treatment. Ms. Farella received several weeks of treatment which Security funded until mid-March. On March 17, 1998, Dr. Sidhu, the chiropractor and director of Metro, conducted an assessment which determined that Ms. Farella needed no further treatment. The bill for the assessment was $330 and forms the subject matter of this dispute. Metro seeks payment of this bill. According to Security, the assessment was not reasonable and necessary, so it refused to pay the expense.

Ms. Farella testified that in February 1998, she signed a number of documents and forms. Among these documents was an authorization to retain legal representation dated August 10, 1998.

Neither party put into evidence the Application for Arbitration which was filed with the Commission, dated August 10, 1998 and marked as received August 13, 1998. I heard no direct evidence about whether or when she signed it, but I can reasonably infer that this was one of the documents Ms. Farella signed along with the authorization in February 1998. In the Application for Arbitration, Ms. Farella seeks payment of the outstanding account with Metro. In its Response to an Application for Arbitration dated September 29, 1998, Security submits that the assessment by Metro was not reasonably required as a result of the accident. It also requested that the arbitration be dismissed, with expenses to the insurer, on the basis that Metro brought the arbitration without proper authority from Ms. Farella.

Ms. Farella testified that she did not attend the mediation on July 17, 1998. However, Dr. Sidhu stated that he participated by teleconference as did Mr. Puritt and Security's representative. The mediation failed.

Ms. Farella did not attend the pre-hearing discussion on February 11, 1999. Ms. Fullerton, a lawyer with Misir, Patterson law firm, attended the pre-hearing and withdrew as Ms. Farella's representative. A representative from Security and its legal representative, Mr. Charney, also attended. Ms. Farella's request to withdraw from the arbitration was raised as an issue for the hearing. Following the pre-hearing, by an undated letter from Ms. Farella sent to the Commission by facsimile transmission on February 17, 1999, Ms. Farella stated, among other things, that she did not authorize the commencement of the arbitration.

Withdrawal of the Arbitration:

Ms. Farella attended the arbitration hearing pursuant to Rule 67 of the Code to orally request to withdraw the arbitration. Rule 67 of the Code⁴ provides that a party can seek permission, either in writing or orally, to withdraw a dispute, and further provides that the Commission or an arbitrator will permit the withdrawal if the other party agrees. Where the other party does not consent to the withdrawal, an adjudicator has the discretion to allow the withdrawal on terms and conditions and to award expenses to either party as permitted by Rule 73⁵ of the Code. Ms. Farella submitted that she should be allowed to withdraw the arbitration because she did not commence the proceeding or authorize anyone to do so on her behalf.

While Security did not consent to the withdrawal of the arbitration, it does not seek an order that Ms. Farella pay its filing fee or its expenses of the arbitration hearing. Security does not allege that Ms. Farella abused the Commission's process. It seeks an order that Metro, Mr. Puritt and/or Misir, Patterson pay these amounts because, according to Security, they actually brought the arbitration without Ms. Farella's knowledge or proper authorization and in doing so, abused the Commission's process.

After considering the circumstances of this case, I exercise my discretion under Rule 67 to permit Ms. Farella to withdraw the arbitration without conditions. I find the evidence (as discussed below) reveals that Ms. Farella did not abuse the Commission's process. However, for reasons also outlined below, I find I have no authority to order a non-party such as a past legal representative of an applicant or a service provider to pay an insurer's arbitration expenses.

Expenses:

The authority to award expenses is derived from powers granted an arbitrator under the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Act"). Subsection 282(11) of the Act authorizes an arbitrator to award expenses to either the insured person or the insurer. This provision states:

282(11) The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations. [emphasis added]

The Act, in subsection 224(1), defines the "insured" as "a person insured by a contract whether named or not and includes every person who is entitled to statutory accident benefits under the contract whether or not described therein as an insured person;"

Rule 73 sets out the criteria an arbitrator may consider when determining whether an award of expenses to a party is justified. Among these factors are: each party's success in the outcome of the proceeding; the conduct of the insurer or the insured person which tended to shorten or prolong the proceeding; whether the proceeding or a position taken by the insurer or insured person during the proceeding was manifestly unfounded, frivolous, vexatious or an abuse of process; and any other matter related to the proceeding that the arbitrator considers relevant to whether an award of expenses is justified.

Rule 63 of the Code provides an arbitrator with the general authority to make orders and give directions to control the arbitration process. Rule 63.5 states: "An adjudicator may make such orders or give such directions as he or she considers proper to prevent an abuse of the process. "

It is clear that Ms. Farella is the insured person for the purposes of entitlement to accident benefits. Although Ms. Farella contends that Mr. Puritt and Metro commenced the arbitration without her knowledge or consent, I find she, however unwittingly, signed the Application for Arbitration and for this reason is a party to the proceeding.

Security argued that Metro and the lawyers were the "driving force" behind this arbitration. According to this position, because Metro and Mr. Puritt started the arbitration without Ms. Farella's knowledge or involvement and refused to withdraw the arbitration when she so instructed, they thereby abused the Commission's process and accordingly should be ordered to pay Security's arbitration expenses.

Security submitted that an arbitrator has the authority to order expenses against a non-party under Rule 63.5 of the Code.

Mr. Puritt submitted that while there might be cases where an arbitrator can award expenses against a non-party, the facts of this case do not warrant this.

I find that the general power afforded arbitrators under this Rule to make orders cannot be interpreted so as to expand the specific power afforded under the enabling statute. Where a power provided under subordinate legislation is broader than that permitted under an empowering statute, the following principle is applicable:

Every regulation must conform to the intent and objects of its empowering statute. A regulation cannot conflict with nor amend its empowering statute unless the statute specifically permits. ...A regulation cannot change procedural rules prescribed by statute, nor may it effectively add to or alter substantive requirements set out in the Act. ...If there is any conflict between a regulation and a statute, the statute, being paramount, prevails.⁶

This principle, as applied to regulations, applies similarly to other subordinate legislation such as procedural guidelines and rules (such as the Code), orders-in-council and by-laws. Therefore, the general authority given arbitrators under the Code to make orders is subordinate to and restricted by the specific power provided under the Act.

Security also submitted that section 23 of the (Ontario) Statutory Powers Procedure Act (the SPPa)⁷ applies to expand an arbitrator's power under the Act to make orders. However, a general power in one statute cannot expand upon a specific power in another statute. An authority on the construction of statutes states:

Where two provisions are in conflict and one of them deals specifically with the matter in question while the other is of general application, the conflict may be avoided by applying the specific provision to the exclusion of the more general one. The specific prevails over the general; it does not matter which one was enacted first.⁸

While the relevant provisions in the Act and SPPA are not actually in conflict, I think the principle behind this rule of construction can be applied when considering a specific power under one statute and a general power under another. In these circumstances, the specific power under the Act to award expenses to an insured person and an insurer cannot be expanded upon by the general powers given adjudicators under the SPPA to make orders to control their processes.

Other arbitration decisions have considered an arbitrator's authority to award expenses against a party's (legal) representative. Looking at the authority under subsection 23(1), the Tallis and Royal Insurance Company of Canada arbitration decision held:

While the section is worded broadly, it does not specifically give a tribunal the power to require the costs be paid personally by anyone appearing as an agent on behalf of a party because of the agent's conduct in the proceedings. This is in contrast with the specific powers provided to the courts to order that the costs be paid by a solicitor, under section 131 of the Courts of Justice Act, R.S.O. 1990, c.C-43, as amended, and Rules 15.02 and 57.07 of the Rules of Civil Procedure, R.S.O. 1990. Reg. 194, as amended.⁹

Looking at the authority afforded arbitrators under Rule 63.5 to give directions, I conclude I have no power to give directions to Metro, Mr. Puritt and/or Misir, Patterson to prevent future abuses of the Commission's process. Neither the Act or Regulations grant arbitrators the jurisdiction to make decisions, issue orders or give directions to affect future events. Arbitrators have jurisdiction to exercise their authority only in respect to cases before them — that is, to exercise this authority from the time of their appointment as arbitrators in particular matters until they are functi in respect of those matters. The intention behind Rule 63.5 is to give arbitrators the power to make orders and give directions to prevent abuses in respect of the particular proceeding before them.

In conclusion, I find I have no authority to award Security's expenses against Metro, Mr. Puritt and/or Misir, Patterson. Security submits that Ms. Farella did not abuse the Commission's process or bring a frivolous or vexatious arbitration and accordingly, does not seek its expenses from her. I accept this submission and do not award expenses against Ms. Farella.

Abuse of Process:

Background:

Security and Ms. Farella allege that Metro, Mr. Puritt and Misir, Patterson abused the Commission's process. Mr. Puritt submitted that this is not the case. Because of the seriousness of these allegations, I find they warrant examination. The evidence disclosed at the hearing reveals that each of the above-named has in some capacity been involved with this arbitration. In testimony, Mr. Justin Mariani, office manager and law clerk with Misir, Patterson, testified that Mr. Puritt was, at the relevant time and is currently counsel to the law firm, not a partner, and is contracted to do cases for the firm. Mr. Mariani indicated that Mr. Puritt was "involved with Metro" for two years ending last summer. Dr. Sidhu described Mr. Puritt as a lawyer who Metro hired on behalf of patients "to go after money from insurance companies." Mr. Mariani stated that Mr. Misir is a partner of the law firm and a shareholder of Metro.

Chief among Ms. Farella's and Security's allegations about Metro's, Mr. Puritt's and Misir, Patterson's conduct is their alleged improper practice around the generation of the authorization and the Application for Arbitration.

Ms. Farella argued that she did not authorize Mr. Puritt to represent her at arbitration. She contended that she has never at any time communicated with, spoken to (either in person or over the telephone) or met with Mr. Puritt. She testified that she was satisfied with how Security handled her claim. Ms. Farella stated that she did not see any bills nor did Metro or the lawyers inform her of any costs for Metro's treatment.¹⁰ Nor, according to Ms. Farella, did Metro, Mr. Puritt or Misir, Patterson inform her at the outset of the possibility of having to pay Security's expenses.

Ms. Farella testified that at her first attendance at Metro in February 1998, Metro’s receptionist presented her with a number of documents and forms for her signature. She testified that among these documents and forms was an authorization,¹¹ requiring her signature and containing an agreement to retain legal representation. She stated that she hesitated when she saw reference to legal representation and asked the receptionist about the purpose of the document. According to Ms. Farella, the receptionist assured her there was nothing to worry about and that the document was just to facilitate Metro collecting its bill for the treatment in the event that the insurer refused to pay. Ms. Farella insisted that neither the receptionist nor anyone else at Metro explained the possibility that the authorization could be used to commence an arbitration proceeding on her behalf without further instructions from her. Both Ms. Farella and Dr. Sidhu testified that he (Dr. Sidhu) was not present when she signed the documents.

Security filed a photocopy of the authorization which it pointed out, is printed on Ontario Insurance Commission letterhead, although I heard no evidence as to why Ontario Insurance Commission letterhead was used for the authorization. Ms. Farella described the authorization as being "blank" when she signed it. She testified that when she signed the form, none of the handwritten information was there. It was brought out in evidence that the titles referring to the particular information on the form are typewritten. Also typed is the information directing the form "To The Ontario Insurance Commission" and in handwriting, the "Arbitration department". The subject line, "Ms. Isabella Farella's arbitration", is also in handwriting. The date, claim number, policy number, date of loss and file number are in handwriting. At the bottom left side of the authorization is a single line, above which a signature appears. Ms. Farella confirmed that the signature is hers. She stated that none of the other handwriting on the authorization is hers. The authorization purportedly authorizes Mr. Jeffrey Puritt to represent Ms. Farella at mediation or arbitration. The pertinent typewritten portion of the authorization states:

I authorize Mr. Jeffrey Puritt to act as my agent and to make binding decisions on my behalf in all matters connected with this mediation and /or arbitration which shall be limited to collection of outstanding expenses of Metro Orthopaedic Rehab Clinics.

Security and Ms. Farella pointed out discrepancies with respect to the dates on the authorization. The form is dated "August 10, 1998" and Ms. Farella insisted in testimony that she did not sign the authorization on that date. She explained that she only signed forms on one occasion, the first day she attended at Metro in February 1998. She stated that she last attended Metro in mid-March 1998 and has never returned since then. Dr. Sidhu confirmed that Ms. Farella's file does not record an attendance by her after March 1998. Security also pointed out that the date of loss on the authorization has been "whited out". On top of the white out is the handwritten date "February 5, 1998" Under the white out it appears that the date March 31st, 1998 is also handwritten.

Further adding to the confusion was another version of the authorization which Dr. Sidhu, Metro's representative, pulled from his file during his testimony.¹² This copy contained essentially the same information as Exhibit 3, with the exception of what appeared beside "Date of Loss". This version contains the handwritten date "March 31st, 1998", which date is crossed out with blue ink, and the date "February 5, 1998" is handwritten in blue ink beside the original date. Dr. Sidhu could not explain the two versions of the authorization or the date change on Exhibit 4. He affirmed in cross-examination that this was a mistake.

Security and Ms. Farella advanced similar concerns about the Application for Arbitration. As noted earlier, I find that Ms. Farella signed the Application in February 1998 along with other documents. I find in reviewing the Application, Ms. Farella’s signature is written in a different colour of ink than appears to have been used in other parts of the form and in what appears to be a different writing style than Ms. Farella’s signature. Below Ms. Farella’s signature, above the line for "Representative Name" is handwritten "Puritt Jeffrey", and immediately to the right above the signature line for Representative is "per" and an indistinguishable signature. In Section 2 of the application under "Medical Benefits" the following is in handwriting:

The insured is claiming payment of all outstanding invoices for therapy services rendered at Metro Orthopaedic Rehab Clinics - Please see attached mediators report.

Dr. Sidhu testified that Metro was responsible for completing Ms. Farella’s application and paying the $100 filing fee. He testified that he instructed Mr. Puritt to file for arbitration because he (Dr. Sidhu) thought the $330 expense was reasonable and necessary. Dr. Sidhu admitted that the information contained on the application was filled in after Ms. Farella signed the form, in anticipation of a future arbitration and possible difficulty finding her if the insurer refused to pay an expense. He indicated that this was Metro’s usual practice with patients. Dr. Sidhu also stated that Metro did not provide Ms. Farella with copies of the application and other forms completed at Metro. Contrary to Ms. Farella’s evidence, Dr. Sidhu testified that it is Metro’s policy for the receptionist to fully explain the forms and documents and their purpose to applicants.

Ms. Farella testified that neither Mr. Puritt nor Metro provided her with copies of important documents generated up to the hearing date. She explained that she never considered when she signed the forms at Metro that she was entering into a business transaction, but thought she was dealing with the medical profession. She indicated that this was the first time she had ever made a claim against an insurance company or undergone physiotherapy treatment.

Ms. Farella stated that the claim was pushed on for arbitration without her knowledge or participation. She testified it was not until early September 1998, when she received the Commission’s correspondence about the upcoming pre-hearing discussion, that she became aware of the Commission's arbitration process. While Dr. Sidhu stated that he participated at mediation on July 17, 1998, Ms. Farella indicated that she had not. I heard no evidence in the hearing whether Ms. Farella was notified of the mediation. Ms. Farella stated that up to September 1998, having heard nothing about treatment expenses nor outstanding bills, she assumed that Metro and Security had dealt with these matters. When she received the Commission's correspondence, she immediately called Dr. Sidhu and inquired as to what was going on.

Ms. Farella testified that Dr. Sidhu informed her that he filed for arbitration on principle because he thought the insurance company should pay the bill. According to Ms. Farella, he assured her that "she was only a footnote in this whole hearing." Ms. Farella said she told Dr. Sidhu that she was not aware of the hearing and that she was not interested in being a part of the process. Ms. Farella testified that Dr. Sidhu then assured her in early September 1998 that he would withdraw the arbitration. Ms. Farella stated that after this she thought "the whole matter was dropped" and she felt relieved at the time.

Ms. Farella testified that she did not think about this matter until early February 1999 when she received the Notice of Pre-Hearing dated November 10, 1998, notifying parties of a pre-hearing on February 11, 1999. Security filed into evidence a letter from the Commission dated November 9, 1998, requesting counsel to select pre-hearing dates. It appears from the letter that counsel chose February 11, 1999. This letter was directed to Mr. Charney, Security's counsel, and to Mr. Puritt as Metro's counsel, and not to Ms. Farella. Nor was it copied to Ms. Farella. According to Ms. Farella, Dr. Sidhu called her advising her that Mr. Puritt would be calling her about the pre-hearing and that she should do what Mr. Puritt instructed her to do.

On February 10, 1999, the day before the pre-hearing, Ms. Fullerton, a lawyer with Misir, Patterson, telephoned Ms. Farella. Ms. Farella testified that this call upset her terribly. Ms. Farella testified that when she told Ms. Fullerton that she would not attend the pre-hearing with her because she had not retained either her or Mr. Puritt, Ms. Fullerton became "very confrontational," insisting that she (Ms. Farella) must attend the pre-hearing or she would be charged the $350 [sic] owed to Metro and the insurer’s $3,000 filing fee. Ms. Farella indicated that this was the first time she had heard the amount in dispute. Ms. Fullerton told Ms. Farella that she had a copy of the authorization she signed, authorizing Misir, Patterson to represent her at arbitration. Ms. Farella testified that she repeatedly told Ms. Fullerton that she did not sign an authorization on August 10, 1998 and had never met the lawyers in her firm. She told Ms. Fullerton that she would neither attend nor make herself available by telephone "because she did not want to be linked with that law firm" or be seen to condone their representation. Ms. Fullerton then said she would attend the pre-hearing and request to be released as counsel of record, which Ms. Farella testified she agreed to. Ms. Farella did not attend the pre-hearing but received the pre-hearing correspondence confirming the hearing would proceed on March 8, 1999.

In his submissions, Mr. Puritt argued that Security schemed with the assistance of Ms. Farella to bring about the arbitration in order to confront Metro, Mr. Puritt and Misir, Patterson on the conflict, standing and authority issues. Contrary to Ms. Farella’s evidence, Mr. Puritt further submitted that Ms. Farella was fully aware of the dispute resolution process as it moved from mediation through to arbitration.

Conclusion:

I accept Ms. Farella’s evidence that she approached Metro in good faith on her mother’s doctor’s recommendation for a short course of treatment for a minor car accident injury. I also accept her evidence that on the first day she arrived at the Metro facility she became caught up in a process with which she was not familiar and did not understand. However, I do not find her totally blameless in the situation. She testified that she was somewhat doubtful when she saw reference on the authorization to legal representation, but she went ahead and signed anyway. Ms. Farella admitted in retrospect that she had made a regrettable mistake. In allotting some of the responsibility for the situation to her, I considered that she is an intelligent, articulate person who, as a credit manager with a bank, would be accustomed to dealing with legal documents and might have exercised more caution in the circumstances. However, having said this, I understand that she was unfamiliar with the context in which she signed the documents since she stated, and I accept, that she had not been in a car accident nor made an insurance claim before. In these circumstances, I find reasonable her testimony that she did not understand that she was entering a business transaction that day in the context of obtaining treatment.

I find the burden of responsibility for the problems with this arbitration and the consequent expense rests with Metro and Mr. Puritt (and Misir, Patterson, if Mr. Puritt was also representing the law firm).

Ms. Farella was the only witness with knowledge of the particular circumstances under which she signed the documents at Metro, and I accept her evidence in this area as credible. I find that she signed them in February 1998 and not on August 10, 1998. While Ms. Farella's signature might appear on the authorization and Application for Arbitration, I accept her evidence, and find that the two documents were essentially blank when she signed and that they were actually completed and dated by Metro, after the fact. I find this practice, where Metro completed and dated documents after the fact, rather irregular and should be discouraged. Furthermore, I received no explanation for the existence of two versions of the authorization or for the alterations to the authorizations, again a questionable practice. As well, I received no evidence to explain why the two versions of the authorization were printed on Ontario Insurance Commission stationery. Whatever the reason, I also find this to be a misleading and improper practice and one into which the Commission might be interested in inquiring.

I accept Ms. Farella's evidence that after she signed the documents at Metro in February 1998, Metro and Mr. Puritt moved the dispute resolution process ahead. I find the evidence reveals that Metro and Mr. Puritt commenced the arbitration on Ms. Farella's behalf without her knowledge and that many of the steps in the process leading up to the arbitration were effected without her involvement. I believe Ms. Farella's evidence that she never met, instructed, or received legal advice from Mr. Puritt and that neither Metro nor Mr. Puritt provided her with copies of documents pertinent to the dispute resolution process. As well, Ms. Farella testified credibly about the overly forceful manner in which Ms. Fullerton dealt with her during the phone call on the day before the pre-hearing. I find it is not conducive to dispute resolution for counsel to attempt to attend a pre-hearing on an applicant’s behalf without the counsel (or her predecessor) ever having met or communicated with the applicant.

I conclude from the evidence that the manner in which Metro and Mr. Puritt conducted themselves in connection with this arbitration amounts to an abuse of the Commission’s process. I also apply this finding to Misir, Patterson if Mr. Puritt was also representing the law firm. The evidence is unclear as to the capacity in which he was acting in this case. The conduct of Metro, Mr. Puritt and the law firm has effectively blocked a key player from involvement in a dispute resolution process which has set settlement as its goal. I find that Mr. Puritt’s submission that Security and Ms. Farella colluded to bring about the arbitration "to attack" Metro, Mr. Puritt and Misir, Patterson on the standing, conflict and authority issues, is without foundation. The evidence simply does not support this allegation. Furthermore, the evidence does not support a finding that Ms. Farella had knowledge of the progress of her claim through the dispute resolution process. I believe that she was not kept properly apprised by her legal representative.

The evidence indicates that were it not for Ms. Farella’s lack of knowledge and understanding of the process, this matter would have been resolved before arbitration. She testified that if she had understood the process and known the amount of the outstanding bill sooner, she would have personally satisfied the account with Metro rather than allow a dispute to develop. This would have obviated the need for this arbitration and the associated time and expense.

I am persuaded that Ms. Farella has been very frustrated by this process. However, regardless of how improper or irregular I might find Metro s, Mr. Puritt’s and Misir, Patterson’s practices, as indicated above, I do not have the authority to censure those who created her predicament.

Ms. Farella might more effectively seek redress for any harm she suffered before other appropriate professional, judicial or disciplinary bodies.

June 25, 1999

Beth Allen Arbitrator

Date

FSCO A98-001162

BETWEEN:

ISABELLA FARELLA

Applicant

and

SECURITY NATIONAL INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. I permit Ms. Farella to withdraw the application for arbitration without conditions.

2. I have no jurisdiction to order Metro, Mr. Puritt and/or Misir, Patterson law firm to pay Security's expenses of the arbitration.

3. I have no jurisdiction to make an order against or give a direction to Metro, Mr. Puritt, and/or Misir, Patterson law firm to prevent abuse of process.

4. I decline to order Ms. Farella to pay Security's expenses incurred in respect to the arbitration

June 25, 1999

Beth Allen Arbitrator

Date

SCHEDULE

DISPUTE RESOLUTION PRACTICE CODE

(Third Edition, April 15, 1997)

SECTION 67 - WITHDRAWAL

67.1 A party may seek permission to withdraw all or part of a dispute:

(a) in writing by serving on the parties a request to withdraw and by filing the request to withdraw together with a Statement of Service in FORM E; OR

(b) orally during a neutral evaluation, pre-hearing discussion, a preliminary conference or at a hearing.

67.2 The Commission or an adjudicator, as the case may be, will permit a party to withdraw if the other parties agree.

67.3 Where a party does not agree to the withdrawal, an adjudicator may:

(a) permit the withdrawal on such terms and conditions as the adjudicator considers appropriate;

(b) award expenses to either party as permitted by Rules 73 and following, and the Expense Regulation under Section F of the Code;

(c) award an amount to the insurer, up to the amount the insurer is required to pay to participate in the hearing, if the adjudicator decides an abuse of process has occurred or the proceeding is frivolous or vexatious.

SECTION 73 - AWARD OF EXPENSES

73.1 An adjudicator may award expenses to a party if the adjudicator is satisfied that the award is justified having regard to the criteria set out in Rule 73.2. The items and amounts which may be awarded are found in Rule 76 and the Schedule to the Expense Regulation found in Section F of the Code.

73.2 The adjudicator will consider the criteria referred to in the Expense Regulation found in Section F of the Code. These criteria are:

(a) each party's degree of success in the outcome of the proceeding;

(b) conduct of the insurer or the insured person that tended to shorten or facilitate the proceeding or that tended to prolong, obstruct or hinder the proceeding, including failure to comply with undertakings or orders;

(c) whether the proceeding or any position taken by the insurer or the insured person during the proceeding was manifestly unfounded, frivolous, vexatious, fraudulent or an abuse of process;

(d) the degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding;

(e) at the request of either party, any written offer to settle made in accordance with Rules 74 and 75, having regard to the outcome of the proceeding;

(f) any other matter related to the proceeding that the adjudicator considers relevant to the issue of whether an award of expenses is justified.

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 266, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96 and 303/98.
2. 2The evidence reveals that at the time the Application for Arbitration was filed, Mr. Puritt was both counsel to Metro and to the law firm, Misir, Patterson.
3. 3See page 11 of this decision where I deal with the relationships of Dr. Sidhu and Mr. Puritt to Metro and Mr. Misir's, Mr. Puritt's and Ms. Fullerton's relationship to Misir, Patterson law firm.
4. 4Rule 67 of the Code is set out in its entirety on the Schedule appended to this decision.
5. 5Rule 73 of the Code is set out in its entirety on the Schedule appended to this decision.
6. 6Blake, Sara, Administrative Law in Canada, (Toronto:Butterworths, 1992) at 327.
7. 7Statutory Powers Procedure Act, R. S. O., c.S.22 as amended.
8. 8Sullivan, Ruth, Driedger on the Construction of Statutes (Toronto:Butterworths, 1994) at 186.
9. 9Tallis and Royal Insurance Company of Canada (OIC A-007109, May 1, 1995), followed in Armstrong and Personal Insurance Company of Canada (FSCO A97-001844, May 14, 1999). See also Lopez and Commercial Union Assurance Company (FSCO A98-001223, April 13, 1999).
10. 10As the evidence later reveals, a lawyer from Misir, Patterson law firm called Ms. Farella the day before the pre-hearing and told her that $350 was owed to Metro.
11. 11See Exhibit 3.
12. 12Dr. Sidhu found Exhibit 4 when searching through Ms. Farella's file during his testimony. It was described for the record and marked as an exhibit. Security cross-examined Dr. Sidhu on it. I added it to the other exhibits before me. Immediately after the conclusion of the hearing while organizing my file, I discovered Exhibit 4 was missing from my file. From an evidentiary point of view Exhibit 4 contained essentially the same information and deficiencies as Exhibit 3, and so the loss of Exhibit 4 has had little if any impact on my ultimate decision.