Yousof H. Omar v. Pafco Insurance Company Limited, 1999 ONFSCDRS 191

FINANCIAL SERVICES COMMISSION OF ONTARIO

Neutral Citation: 1999 ONFSCDRS 191 FSCO A98-001140

BETWEEN:

YOUSOF H. OMAR Applicant

and

PAFCO INSURANCE COMPANY LIMITED Insurer

REASONS FOR DECISION

Before: Shemin Manji

Heard: July 15, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Mr. Omar did not appear and no one appeared on his behalf. Derek Wilson for Pafco Insurance Company Limited

Issues:

The Applicant, Yousof H. Omar, was injured in a motor vehicle accident on May 16, 1997. He applied to Pafco Insurance Company Limited ("Pafco") for payment of expenses incurred by him for chiropractic and physiotherapy treatment, further proposed chiropractic and physiotherapy treatment, and for the cost of the completion of a Health Practitioner's Certificate by his doctor, pursuant to the Schedule¹ Pafco paid for some but not all of the expenses incurred for treatment. It refused to pay for the proposed treatment. It paid part but not the full cost of the Health Practitioner's Certificate issued by Mr. Omar's doctor. The parties were unable to resolve their disputes through mediation, and Mr. Omar applied for arbitration at the Financial Services Commission of Ontario ("Commission") under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

After Mr. Omar applied for arbitration, he disappeared. His solicitors were not able to locate him. He did not attend at pre-hearing discussions or respond to Pafco's requests for production of documents. He also did not attend at the hearing.

At the hearing, Pafco sought an order dismissing the arbitration. It also sought its expenses of the proceeding and a return of its assessment fee of $3,000.

The issues in this hearing are:

1. Should this application be dismissed?
2. Is Mr. Omar entitled to payment in the amount of $355 for physiotherapy and chiropractic treatments received by him?
3. Is Mr. Omar entitled to payment of $1,700 for chiropractic and physiotherapy treatments recommended by Dr. Kam Filsoofi?
4. Is Mr. Omar entitled to an additional $25 for the cost of a Health Practitioner's Certificate by Dr. Donskoy?
5. Is Mr. Omar entitled to his expenses in respect of the arbitration?
6. Is Pafco entitled to an award in the amount of its assessment fee of $3,000?
7. Is Pafco entitled to its expenses in respect of the arbitration?

Result:

1. Mr. Omar's Application for Arbitration is deemed to have been withdrawn.
2. Pafco is entitled to an award in the amount of its assessment fee of $3,000. If Mr. Omar fails to pay this sum, he will be precluded from filing another application for arbitration in respect of the issues in dispute in this arbitration.
3. Pafco is entitled to its expenses in respect of the arbitration proceeding fixed in the amount of $670 plus GST.

EVIDENCE AND ANALYSIS:

Background, History of the proceedings and Issues:

Mr. Omar is 45 years old. On May 16, 1997, he was driving a motor vehicle when he collided broadside with a vehicle which turned into his path. His vehicle was written off.

Mr. Omar's immediate complaint following the accident was pain in the right knee and ankle. The next day he experienced pain in his lower back, neck and shoulder.

Mr. Omar saw Dr. Alex Donskoy, a general practitioner, about five days after the accident. Dr. Donskoy prescribed medication and referred Mr. Omar for physiotherapy. Mr. Omar started physiotherapy at Advanced Rehabilitation approximately 10 days following the accident, first for four days a week and later three days per week. He continued to attend for physiotherapy at this facility until the end of the third week in July.

At the time of the accident, Mr. Omar was employed as a press operator. Following the accident, he did not miss any time from work, apart from the day of the accident.

On June 30, 1997, Mr. Omar underwent an insurer's medical examination, apparently to determine his needs for ongoing treatment as a result of the accident. The examination was conducted by Dr. Ezra A. Silverstein, an orthopaedic surgeon. Dr. Silverstein concluded that Mr. Omar continued to have residual symptoms of a soft tissue neck or back sprain. However, he noted that there were no objective abnormalities and Mr. Omar was not suffering from any functional disability as a result of his neck or back problems. He was of the opinion that Mr. Omar's residual symptoms would continue for several weeks but would improve. He recommended that Mr. Omar continue with his physiotherapy treatment for the following two weeks with emphasis on exercises.

On August 8, 1997, Mr. Omar, again at Pafco's request, underwent a Medical and Rehabilitation Disability Assessment Centre ("DAC") assessment to determine his ongoing treatment needs as a result of the accident. Dr. Barry W. Malcolm, an orthopaedic surgeon, and Ms. Jodi Herold, a physical therapist, performed the assessment. Dr. Malcolm concluded that Mr. Omar had sustained a soft tissue or musculoligamentous strain to his cervical and lumbar regions in the accident. He also concluded that Mr. Omar had also sustained an acromioclavicular joint strain, right mid-foot strain probably as a result of his foot slipping off the brake at the time of impact, and a right anterior knee contusion which had essentially resolved. The DAC assessors were of the opinion that while Mr. Omar had done extremely well, given his residual right shoulder, low back and right foot symptoms, he would benefit from four to six additional sessions with a physiotherapist.

In mid October 1997, Mr. Omar started receiving treatment at the QueensMed Chiropractic Clinic ("QueensMed") and Dr. Kam Filsoofi, M.D., D.C., at QueensMed submitted a treatment plan dated October 17, 1997 to Pafco, on behalf of Mr. Omar, for eight weeks of "(a)ctive (r)ehabilitation and conservative chiropractic" treatment from October 14, 1997 to November 14, 1997 to be provided to Mr. Omar and supervised by Dr. Filsoofi. Dr. Filsoofi estimated the cost of the treatment to be $1,700.

Pafco rejected the treatment plan on the basis that it was considerably different from the recommendations of the Medical and Rehabilitation DAC assessors and the recommended treatment was not reasonable.

In early December 1997, Pafco received an invoice from QueensMed dated November 13, 1997, in the amount of $270, for six sessions of "active therapy" undergone by Mr. Omar for the period October 28, 1997 to November 11, 1997. Pafco paid this bill. Pafco received a further invoice dated December 16, 1997, in the amount of $355, for treatment received by Mr. Omar for an earlier period — October 14, 1997 to October 27, 1997. This bill was not paid by Pafco.

Following Pafco's refusal to pay for the treatments provided by QueensMed, Mr. Omar applied for mediation. The mediation took place between April 14 and June 10, 1998. At mediation, Mr. Omar claimed $2,055 for "incurred chiropractic care and further proposed treatment." He also claimed $25 "above and beyond the insurer's payment of $75.00 for the cost of the completion of a Health Practitioner's Certificate from Dr. Donskoy." Mediation failed and on September 3, 1998, Mr. Omar applied for arbitration.

The pre-hearing discussion in this matter was scheduled for January 21, 1999 at the Commission. Mr. Omar was notified of the pre-hearing discussion, but did not attend; however, he was represented by the law firm of R.C. Lofranco Barristers. On that day, the pre-hearing discussion was adjourned to April 20, 1999. The main reasons for the adjournment were Mr. Omar's failure to attend the pre-hearing discussion and his failure to contact or respond to his solicitors prior to the pre-hearing. A "Notice of Rescheduled Pre-Hearing Discussion" setting out the date, time and location of the rescheduled pre-hearing discussion was sent to Mr. Omar by the Commission on January 22, 1999.

On April 13, 1999, the Commission received a letter dated April 8, 1999 from Mr. Omar's solicitors advising the Commission that since January 21, 1999, they had made additional efforts to locate Mr. Omar, but to no avail. Mr. Omar's solicitors advised that the most recent address that they had for Mr. Omar was as it appeared on the Application for Arbitration. They advised that they had confirmed this address in a driver's licence search conducted at the Ministry of Transportation on February 2, 1999. They advised that their letters to Mr. Omar's last known address had not been answered. They advised that in the circumstances they were seeking to withdraw as Mr. Omar's solicitors.

On April 16, 1999, the Commission advised Mr. Omar's solicitors that they could withdraw as Mr. Omar's solicitors providing, first, they delivered a letter both by regular and registered mail to Mr. Omar's last known address advising him that they were withdrawing as his solicitors and, second, they provided the Commission with an affidavit outlining the steps they had taken to locate Mr. Omar. The Commission sent a copy of this letter to Mr. Omar at his address noted on the Application for Arbitration. However, this letter was returned to the Commission with a notation that it had not been claimed and Mr. Omar had moved.

On April 20, 1999, the pre-hearing discussion was resumed at the Offices of the Commission. Mr. Omar did not attend and no one appeared on his behalf. Mr. Allan Marron, counsel from the law firm of R.C. Lofranco Barristers, attended to formally request to withdraw as Mr. Omar's counsel. Mr. Marron filed with the Commission an affidavit sworn by him on April 19, 1999, in support of his request. In the affidavit, Mr. Marron deposed as to his and his law firm's unsuccessful efforts to contact and seek instructions from Mr. Omar in preparation for the pre-hearing discussions.

The pre-hearing arbitrator was satisfied with the efforts made by Mr. Marron and his law firm to locate Mr. Omar as set out in Mr. Marron's affidavit and permitted the law firm of R.C. Lofranco Barristers to withdraw as solicitors for Mr. Omar. The pre-hearing arbitrator then proceeded to identify the issues in dispute in the arbitration. Since Mr. Omar did not attend the pre-hearing discussion, the pre-hearing arbitrator suggested to Pafco that it forward a letter to Mr. Omar setting out its production requests for the hearing and file a copy of the same with the Commission. The arbitration hearing was scheduled for July 15, 1999 at 10:00 a.m. at the Offices of the Commission.

The pre-hearing letter dated April 29, 1999 confirmed the above discussions at the pre-hearing. The letter also confirmed that the arbitration hearing was scheduled for July 15, 1999. A copy of the pre-hearing letter was sent to Mr. Omar at the address shown on the Application for Arbitration. However, as was the case with the Commission's letter of April 16, 1999, the pre-hearing letter was returned with a notation that Mr. Omar had moved.

On May 5, 1999, a Notice of Hearing was sent to Mr. Omar informing him that the arbitration hearing would take place on Thursday, July 15, 1999, at 10:00 a.m. at the offices of the Commission, 5160 Yonge Street, 14th Floor, North York. The Notice of Hearing included the following paragraph, in compliance with subsection 6(3) of the Statutory Powers Procedure Act, R.S.O. 1990, Chap. S.22, as amended:

You may attend this hearing in person and/or be represented. If you or your representative do not attend at the hearing, the arbitrator may dispose of the case in your absence and you will not be entitled to any further notice of the arbitration proceedings.

However, as was the case with the Commission's letter of April 16, 1999 and the pre-hearing letter of April 29, 1999, the Notice of Hearing to Mr. Omar was returned to the Commission with a notation that Mr. Omar had moved.

On May 13, 1999, the Commission received a copy of Pafco's production request letter to Mr. Omar, dated May 10, 1999.

The hearing commenced as scheduled on July 15, 1999 at 10:00 a.m. Mr. Omar did not appear at the hearing and no one appeared on his behalf. Mr. Kevin Valovich from Pafco attended, represented by Mr. Wilson. At the commencement of the hearing, Pafco requested an order dismissing the arbitration. It also requested an order, under subsection 282(11.2) of the Insurance Act, requiring Mr. Omar to pay its assessment fee, incurred as a result of the filing of the application for arbitration and a further order requiring Mr. Omar to pay Pafco's expenses in respect of the arbitration.

Should this application be dismissed?

As an arbitrator I may only issue orders that I am authorized to make by statute. I do not believe that I have the authority to dismiss the arbitration solely because Mr. Omar failed to attend or participate in the hearing. Further, in this case, I do not believe that I have the authority to dismiss the arbitration even after considering the merits of the case, as presented by Pafco, in Mr. Omar's absence. Although I proceeded with the hearing in Mr. Omar's absence and heard evidence from Pafco on the issues in dispute in the arbitration, on reflection, I am not satisfied that I had the authority to do so. Section 7 of the Statutory Powers Procedure Act only gives me authority to proceed with a hearing and consider the merits of a party's case in the party's absence where I am satisfied that notice of hearing has been given to the party in accordance with the Statutory Powers Procedure Act. In this case, I am not satisfied that Mr. Omar was effectively notified of the hearing or that he was even aware of the hearing date. Mr. Omar did not attend at the pre-hearing on April 20, 1999. Both the pre-hearing letter and the Notice of Hearing confirming that the arbitration hearing was scheduled for July 15, 1999 at 10:00 a.m. at the Offices of the Commission were returned to the Commission, unclaimed.

This case is different from other cases such as Hersi and American Home Assurance Company.² In Hersi, I proceeded with the hearing in Mr. Hersi's absence and considered the merits of his case because I was satisfied that proper notice of the hearing was given to Mr. Hersi. In that case, I had every reason to believe Mr. Hersi received the Notice of Hearing. In addition, I had reason to believe that he received the pre-hearing letter which confirmed the location, time and dates for the hearing.

The result in this case, therefore, is that I make no orders in respect of Mr. Omar's claims for benefits as set out in his Application for Arbitration.

I do, however, find that there is sufficient evidence to conclude that, after filing his Application for Arbitration, Mr. Omar essentially abandoned this proceeding. He did not respond to his solicitors' letter and phone calls prior to the initial pre-hearing discussion on January 21, 1999, advising him of the date, time and place of the pre-hearing and asking him to contact them. He did not respond to his solicitors' letters following the initial pre-hearing advising him of the rescheduled pre-hearing and asking him to contact them. On October 22, 1998, a notice of pre-hearing discussion, setting out the date, time and place of the pre-hearing discussion of January 21, 1999 was sent to Mr. Omar, by the Commission, however, he failed to attend the pre-hearing on that date. On January 22, 1999, a notice of the re-scheduled pre-hearing, setting out the date, time and place of the rescheduled pre-hearing, was sent to Mr. Omar by the Commission, however, he failed to show up for the rescheduled pre-hearing.

While Mr. Omar has not asked to withdraw his application, I find that through his conduct he has constructively withdrawn his application. I agree with Arbitrator Seife's view in Quattrocchi and State Farm Mutual Automobile Insurance Company³ that for an application to be considered withdrawn, it is not necessary that the applicant expressly make a request to that effect. An application may be "constructively" withdrawn when the applicant has abandoned the claim through lack of due diligence or interest in pursuing his or her application.

Is Pafco entitled to an award in the amount of its assessment fee of $3,000?

As noted by Arbitrator Seife in Quattrocchi, the Dispute Resolution Practice Code — Third Edition (the "Code") does not specifically address situations where, as in this case, an applicant has abandoned or "constructively" withdrawn his or her application. However, the Code provides that "(w)here something is not specifically provided for in (the) Rules, the practice may be decided by referring to similar Rules in (the) Code."⁴

Rule 67.3 of the Code provides that where a party moves to withdraw all or part of a dispute, and the other party does not agree to the withdrawal, the adjudicator may permit the withdrawal on such terms and conditions as the adjudicator considers appropriate, award expenses to either party and 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.

Further, subsection 282(11.2) of the Insurance Act provides that if an insured person commences an arbitration that, in the opinion of the arbitrator, is frivolous, vexatious or an abuse of process, the arbitrator may award an amount to be paid by the insured person to the insurer that does not exceed the amount assessed against the insurer in respect of the arbitration under section 14. As noted by Arbitrator Alves in Cassman and Wawanesa Mutual Insurance Company,⁵ in Gawronski and Allstate Insurance Company,⁶ Director's Delegate Draper considered whether the word "commences" in section 282(11.2) restricts the focus of the inquiry to the commencement of the arbitration application, or whether later steps in the arbitration process could also be considered. He concluded that the section should not be interpreted so restrictively as to limit the focus of the inquiry to the time of the commencement of the arbitration.

In this case, I find that an abuse of process has occurred. Mr. Omar's failure to follow through on his initial application for arbitration and his failure to provide notice that he was no longer proceeding with his claims amount to an abuse of process. The Commission, Pafco and Mr. Omar's own solicitors have wasted time and money on correspondence, phone calls and preparation for and attendance at two needless pre-hearings. The Commission and Pafco have also wasted time and money on preparation for and attendance at the hearing on July 15, 1999. I find, therefore, that Mr. Omar is required to pay to Pafco the amount that Pafco was required to pay to participate in this arbitration — $3,000. If Mr. Omar fails to pay this sum, he will be precluded from filing another Application for Arbitration in respect of the issues in dispute in this arbitration.

EXPENSES:

In his Application for Arbitration, Mr. Omar seeks an award of the expenses he has incurred in respect of this arbitration proceeding. Under subsection 282(11) of the Insurance Act, I have the discretion to award Mr. Omar his expenses, as prescribed in Ontario Regulation 664. However, I decline to exercise my discretion to award Mr. Omar his expenses of this proceeding because I find that his use of the arbitration system to advance claims which he was not prepared to pursue to be vexatious and an abuse of process. As I noted earlier, his failure to pursue his claims has caused both Pafco and the Commission to needlessly expend time and resources on this arbitration.

Pafco seeks an award of the expenses it has incurred in respect of this arbitration proceeding. Subsection 282(11) of the Insurance Act was amended in November 1996 to allow an arbitrator to award expenses to either the insured person or the insurer. Mr. Omar's Application for Arbitration was filed after the amendment came into effect, and therefore, I have authority to consider Pafco's claim for expenses. Ontario Regulation 664, as amended,⁷ sets out the criteria for the arbitrator's consideration. In particular, under subsection 12(2)2 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 subsection 12(2)3 an arbitrator may consider whether the proceeding was "...manifestly unfounded, frivolous, vexatious, fraudulent or an abuse of process." In my view, Mr. Omar's conduct in this case entitles Pafco to an award of expenses.

Pafco seeks to recover legal fees for preparation for and attendance at the two pre-hearings and the hearing. It claims ten hours for work performed by its counsel at the base hourly rate established under the Legal Aid Act⁸ of $67 — an hour for preparation for each of the pre-hearings in January and April 1999, an hour for attendance at each pre-hearing, four hours for preparation for the hearing in July 1999 and two hours for attendance at the hearing in July 1999. Arbitration decisions have held that the overriding consideration for an arbitrator in fixing expenses is the reasonableness of the expenses claimed.⁹ The number of hours claimed by Pafco for the work performed by its counsel is reasonable. In coming to this conclusion, I have considered the maximum time allowed under the Regulation made under the Legal Aid Act for a comparable service.¹⁰ Accordingly, I order Mr. Omar to pay Pafco $670 plus GST ($46.90).

September 30, 1999

Shemin Manji Arbitrator

Date

Neutral Citation: 1999 ONFSCDRS 191 FSCO A98-001140

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

YOUSOF H. OMAR Applicant

and

PAFCO INSURANCE COMPANY LIMITED Insurer

ARBITRATION ORDER

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

1. Mr. Omar's Application for Arbitration is deemed to have been withdrawn.
2. Mr. Omar shall pay Pafco $3,000. If Mr. Omar fails to pay this sum, he will be precluded from filing another application for arbitration in respect of the issues in dispute in this arbitration.
3. Mr. Omar shall pay Pafco its expenses in respect of the arbitration proceeding in the amount of $716.90 inclusive of GST.

September 30, 1999

Shemin Manji Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96 and 303/98.
2. 2(FSCO A97-001405, February 9, 1999)
3. 3(OIC A-006854, June 11, 1996)
4. 4Part I, General Rules, Rule 1.2)
5. 5(OIC A96-000419, August 14, 1998)
6. 6(OIC P98-00004, May 18, 1998)
7. 7R.R.O. 1990, as amended by Ontario Regulation 464/96 made under the Insurance Act.
8. 8R.S.O. 1990, Chap. L. 9
9. 9Ahmadi-Nadoushan and Allstate Insurance Company of Canada - Expenses Assessment (OIC A-008488, May 14, 1996), and Milevski and State Farm Mutual Automobile Insurance Company (OIC A-010292, February 7, 1997)
10. 10Schedule 3 to the Regulation made under the Legal Aid Act, R.R.O. 1990, Reg. 710 - Table Part II, Item 5, Preparation for a pre-trial conference, case conference or an issues hearing and attendance on a pre-trial conference, case conference or an issues hearing.