Neutral Citation: 2000 ONFSCDRS 163

FSCO A98-000839

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

MANMOHAN SAKHUJA

Applicant

and

MARKEL INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Tanja Wacyk

Heard:

May 9, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto.

Written submissions received on July 6, 2000 from Markel Insurance Company of Canada

Appearances:

Mr. Sakhuja represented himself

Jeffery Gauze for Markel Insurance Company of Canada

Issues:

The Applicant, Manmohan Sakhuja, was injured in a motor vehicle accident on April 30, 1994. He seeks "other disability benefits," supplementary medical and rehabilitation benefits and the cost of examinations from Markel Insurance Company of Canada ("Markel"), payable under the Schedule.¹ The parties were unable to resolve their dispute through mediation, and Mr. Sakhuja applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Act")

The Insurer now brings a motion on two preliminary issues, pursuant to section 65 of the Dispute Resolution Practice Code, Third Edition, Apri1, 15, 1997, (the "Code").

The preliminary issues are:

Is Mr. Sakhuja precluded, pursuant to subsection 71.1(a), from proceeding to arbitration because he has failed to submit an Application for Benefits within 90 days of receiving the application forms, as required by subsection 59(3) of the Schedule?
Is Mr. Sakhuja precluded from proceeding to arbitration because his Application for Arbitration was filed beyond the limitation periods set out in subsection 281(5) of the Act and section 72 of the Schedule?

The following are also issues in this hearing:

Is Mr. Sakhuja liable to pay repay Markel an amount that does not exceed the amount assessed against Markel in respect of the arbitration, pursuant to subsection 282(11.2) of the Act, because he commenced an arbitration that is frivolous, vexatious or an abuse of process?
Is Mr. Sakhuja liable to pay Markel's expenses pursuant to subsection 282(11) of the Act?

Result:

Mr. Sakhuja is precluded, pursuant to subsection 71.1(a), from proceeding to arbitration because he has failed to submit an Application for Benefits within 90 days of receiving the application forms, as required by subsection 59(3) of the Schedule.
Mr. Sakhuja is also precluded from proceeding to arbitration because his Application for Arbitration was filed beyond the limitation periods set out in subsection 281(5) of the Act, and section 72 of the Schedule.
Markel is not entitled to an award in the amount of its assessment pursuant to subsection 282(11.2) of the Act, as amended.
Mr. Sakhuja is liable to pay Markel's expenses in respect of the arbitration under section 282(11) of the Act, although the determination of the quantum is deferred.

PRELIMINARY ISSUE:

Prior to proceeding with the merits of the preliminary issues, Mr. Sakhuja requested an adjournment so he could retain counsel.

Mr. Sakhuja indicated that he had recently spoken to Mr. G, who was willing to be retained, but was scheduled to be in court on another matter for May 9 and 10, 2000, the dates set for this hearing. Mr. Sakhuja conceded, however, that he had not yet retained Mr. G. and that, in part, he had called him to "get information."

Mr. Gauze, counsel for the Insurer, pointed out that this was the sixth time Mr. Sakhuja had sought or required an adjournment, and that on three prior occasions the reason had also been for the purpose of retaining counsel.

Mr. Gauze relied on the decision of Director's Delegate Susan Naylor in Peterson and Royal Insurance Company² to argue that when applied to the instant case, the same considerations lead to the conclusion that the adjournment should not be granted. These considerations are 1) whether the hearing date had been made peremptory 2) whether there was evidence of progress in the case, and, 3) whether there was a pattern of delay, history of non-compliance or suggestion of stalling.

A review of the file and submissions from the parties revealed the following.

Mr. Sakhuja's Application for Arbitration was dated June 1, 1998. At the time, he was represented by Sloan H. Mandel, from the firm of Thomson Rogers. The Financial Services Commission of Ontario (the "Commission") was subsequently copied on correspondence from Mr. Mandel to the Applicant, dated September 22, 1998, confirming that the firm had been instructed to take no further action on his behalf.

By letter dated October 16, 1998, the Commission asked Mr. Sakhuja, to advise immediately whether he would be retaining new counsel to assist in the arbitration, or whether he would be handling the matter himself. The letter also requested that Mr. Sakhuja contact the Commission so that a pre-hearing date could be set.

The letter further stated that if Mr. Sakhuja or his representative did not attend the pre-hearing, the arbitrator may dispose of the case in his absence, and he would not be entitled to any further notice of the arbitration hearing.

A pre-hearing in this matter was scheduled for March 29, 1999. However, Mr. Sakhuja did not attend. Nor was he represented. Rather, Mr. Sakhuja simply left a voicemail message at the Commission asking that the pre-hearing be rescheduled.

The pre-hearing was rescheduled for May 19, 1999. The Commission notified Mr. Sakhuja of the new date for the pre-hearing by letter dated March 29, 1999, and advised him that the date was peremptory to him and his counsel.

However, on May 18, 1999, an adjournment request for the pre-hearing scheduled for May 19, 1999, was received from Mr. Sakhuja. The basis for the request was that Mr. Sakhuja had been scheduled for medical tests on that date.

The adjournment request was granted and the pre-hearing was again rescheduled to July 20, 1999. In a letter dated May 19, 1999, the parties were advised by Janice Mackintosh, Executive Coordinator/Registrar, that the rescheduled date of July 20, 1999 was peremptory to both parties, and that no further pre-hearing adjournment would be granted other than in extreme and unforeseeable circumstances. The letter also stated that the arbitrator who ultimately hears this matter may consider this adjournment request in the context of any award of expenses made.

On July 20, 1999, Mr. Sakhuja arrived at the pre-hearing 30 minutes late. He had not retained counsel but indicated he had spoken to one or two lawyers and was making headway. Mr. Sakhuja refused to agree to any production request without legal advice. Consequently, the pre-hearing was adjourned and scheduled to resume on September 24, 1999, in order to deal with outstanding production issues. This gave Mr. Sakhuja a little more than two months to retain counsel.

At the same time, the preliminary issues were scheduled to be heard on November 2 and 3, 1999.

Mr. Sakhuja was 40 minutes late for the resumption of the pre-hearing on September 24, 1999. He again arrived without counsel, and refused to address production matters without legal advice. In subsequent correspondence, dated October 18, 1999, Arbitrator Killoran, the presiding pre-hearing arbitrator stated:

...Although the resumption had been scheduled so that Mr. Sakhuja could participate with his legal representative, Mr. Sakhuja confirmed that he had not hired anyone to represent him. He was reminded that the hearing of the preliminary issues in this matter is scheduled for November 2 and 3, 1999 and was advised that if he intended to have representation, he should make arrangements before the scheduled dates, with adequate time for his representative to prepare submissions for the hearing.

I decline to make an order of costs at this time. Rather, I leave this as an issue to be determined by the arbitrator assigned to conduct the hearing in this matter.

On November 2, 1999, at the hearing of the preliminary issues, Mr. Sakhuja again appeared without counsel. He again requested and was granted an adjournment on the basis that he wished to retain counsel. In fact, he indicated he was about to retain Mr. G, the same counsel he suggested he was about to retain on May 9, 2000, the first day of the preliminary hearing before me.

The preliminary hearing scheduled for November 2 and 3, 1999 was adjourned to May 9 and 10, 2000, on the following terms, set out in correspondence, dated November 4, 1999, from Arbitrator Sone, the presiding arbitrator:

This date is peremptory to Mr. Sakhuja. No further adjournment will be granted to this party, other than in extreme and unforeseeable circumstances.
If Mr. Sakhuja fails to retain counsel by the hearing dates, he has undertaken to proceed with the preliminary hearing unrepresented.
It should be noted that the arbitrator who ultimately hears this matter may consider this adjournment request in the context of any award of expenses made. [emphasis added]

In support of his adjournment request before me, Mr. Sakhuja argued that he is at a serious disadvantage without legal representation, and that with representation, he would be better able to make his adjournment request. He stated he had no reason to deliberately delay the process, and that it had simply been bad luck that prevented him from retaining counsel, but now Mr. G seemed "very interested."

Mr. Sakhuja also protested that the dates of May 9 and 10, 2000 had been picked for the rescheduling of the preliminary hearing "by everyone else in the room." However, he conceded he had raised no objections to the dates at the time they were set.

If granted, this adjournment request would have constituted the sixth adjournment required by Mr. Sakhuja, and the fourth adjournment for the express purpose of retaining counsel.

In making his request, Mr. Sakhuja has not complied with Practice Note 8,³ which indicates that a written request for an adjournment, seven days in advance of the hearing, is generally required.

Furthermore, he had been warned, on at least two occasions, that no further adjournments would be granted. In particular, the last adjournment was peremptory to Mr. Sakhuja, and as indicated above, it was made clear that no further adjournment would be granted to him other than in extreme and unforeseeable circumstances. This is consistent with Practice Note 8, which states that the Commission is obliged to conduct arbitrations efficiently and speedily, and that adjournments are granted sparingly. Indeed, Mr. Sakhuja undertook to proceed with the preliminary hearing unrepresented if he failed to retain counsel.

Having considered the submissions of the parties, and applying the criteria from Peterson,⁴ I concluded at the hearing that Mr. Sakhuja's adjournment request should be denied for the following reasons.

The date of the hearing had been made peremptory to Mr. Sakhuja, other than in extreme and unforeseeable circumstances. He was given more than six months to retain counsel, and had not objected to the dates for which the preliminary issues hearing had been rescheduled. Consequently, I did not find that Mr. Sakhuja's failure to retain counsel within that somewhat generous time frame to constitute extreme and unforeseeable circumstances so as to support the granting of yet another adjournment. Rather, as I noted at the time, Mr. Sakhuja had ample opportunity to retain counsel, and was given clear warnings that he would be required to proceed with the preliminary hearing, even if unrepresented — which he undertook to do.

Furthermore, Mr. Sakhuja had a history of delay in this matter, caused by his refusal to proceed without representation, yet not taking the necessary steps to retain counsel. He was granted three adjournments for the express purpose of retaining counsel, but failed to do so.

Following my denial of his request for an adjournment, Mr. Sakhuja indicated he would not participate further in the hearing. I warned him that the matter would proceed in his absence, which may result in findings against him, including a ruling that he is precluded from proceeding to arbitration because of timeliness issues.

Mr. Sakhuja confirmed he understood this was the case and left. The hearing on the preliminary issues proceeded without Mr. Sakhuja.

EVIDENCE AND ANALYSIS:

Background:

The uncontested documents and submissions of the Insurer revealed the following, which I find to be an accurate reflection of the history of this matter.

Mr. Sakhuja, while a passenger on a bus, was involved in a motor vehicle accident on April 30, 1994.

Approximately one week later, Norman Biback, Q.C., counsel for the Applicant, sent a letter, dated May 6, 1994, to the Claims Department of the Toronto Transit Commission, requesting an Application for Benefits.

The requested Accident Benefits Package was mailed out under cover of a letter dated May 16, 1994. The letter stated "[t]he completed application must be returned to us within ninety (90) days."

Initially, the only contact the Insurer had regarding Mr. Sakhuja's claim was from third parties. Markel received an invoice from SGH Sports/Injury Rehab Clinic ("SGH") for $700, dated June 20, 1994, and a phone call on August 17, 1994, from a Dr. Belcastro's office, seeking payment for dental work the Applicant maintained was required because of the accident.

The Insurer advised the third parties it was refusing to pay for these benefits as the Applicant had not yet filed an application for benefits. Its letter to SGH, dated June 20, 1994, stated:

We have not received Mr. Sakhuja Manmohan's (sic) application completed for benefits nor have we received a referral from a physician to your establishment.

Please contact Mr. Manmohan (sic) and have a referral letter provided along with a detailed outline of the program in which he is enrolled.

A memo to the file, dated August 17, 1994, regarding the phone call on August 17, 1994 from Dr. Belcastro's office stated:

I located the file, spoke to Darlene and told her we have no medical information with respect to his damaged teeth. and we were not in a position to consider them based on the medical information, we had not attributed to the TTC accident. (sic) Second of all, that he should get in touch with his solicitor and have the forms submitted, as we have nothing on file as of yet.

The Insurer subsequently sent a letter, dated September 16, 1994, to Mr. Biback, indicating that more than 90 days had passed since its letter of May 16, 1994, and a completed application for Mr. Sakhuja had still not been received.

The letter also advised that the Insurer had paid $3,000 on a "without prejudice basis" to SGH for the period May 25 through to July 14, 1994, and that additional invoices from SGH and Dr. Garber & Associates were enclosed. The Insurer indicated that these would be held in abeyance until the application package was received.

On December 7, 1994, the Insurer wrote again to Mr. Biback as follows:

I note that our letters of May 16th and September 16, 1994 have gone unanswered and I would ask that you take a few minutes and review Section 59 of the Ontario Regulations 776/93 under the Insurance Act, The Statutory Accident Benefits Schedules, accidents on or after January 1, 1994. (sic) It quite clearly sets out, your client must submit an application for benefits to the insurer within ninety (90) days of receiving the application forms.

Since ninety (90) days has now passed, we are taking the position of non compliance and we will not be entertaining any claim in this matter. (sic) [emphasis added]

At some subsequent point, the Applicant retained Sal Grillo as counsel. Approximately one year and four months after the Insurer had communicated that it would not entertain any claim from Mr. Sakhuja, Mr. Grillo, acting for the Applicant, applied for mediation. The Application for Mediation, dated April 30, 1996, indicated the disputed claim was for "other disability benefits" and interest only.

The Insurer took the position, communicated to the Commission by letter dated May 27, 1996, that the mediation could not commence because the Applicant had not complied with subsection 71.1(a) of the Schedule. That subsection provides that no insured person shall commence a mediation unless he or she has complied with section 59 of the Schedule —which requires, amongst other things, that an application for benefits be submitted to the insurer within 90 days of receiving the application forms.

The letter also stated: "After many attempts we are still not in receipt of any part of the Accident Benefits Package. This claim was denied in its entirety on December 7, 1994."

An Application for Benefits, dated June 19, 1996, was subsequently received by the Insurer on June 27, 1996.

The claim was denied on July 8, 1996, and the reason stated on the Explanation of Assessment Form was: "CLAIM FOR BENEFITS DENIED - APPLICATION SUBMITTED OUTSIDE 90 DAYS OF RECEIPT." Mediation took place between the parties and the mediator's report, dated July 30, 1996, noted the parties had agreed that dental services would also be addressed, although they were not included in the Application for Mediation. The mediation failed.

There was no further communication from the Applicant for more than one year. Then, Mr. Mandel, who had replaced Mr. Grillo as counsel for the Applicant, wrote the Insurer a letter, dated August 19, 1997.

In the letter, Mr. Mandel requested a complete copy of the Applicant's file and made a number of inquiries regarding Mr. Sakhuja's claim. The Insurer responded by letter dated October 8, 1997. Further correspondence of a similar nature occurred between the parties until an Application for Arbitration, dated June 1, 1998 was received. The issues in dispute were identified as other disability benefits, supplementary medical and rehabilitation benefits, and the cost of examinations.

A second Application for Mediation, also dated June 1, 1998 was also filed. The issues in dispute in that document were identified as medical/rehabilitation benefit, cost of "medico-legal reports," interest and production.

The Insurer, in its response to the Application for Arbitration, dated July 9, 1998, took the position that no arbitration proceedings could take place, as the arbitration had not been commenced within two years from the Insurer's refusal to pay benefits, as required by subsection 72(1) of the Schedule.

In its response to the Applicant's second application for mediation, also dated July 9, 1998, the Insurer again challenged the right of the Applicant to proceed to mediation as he had failed to comply with section 71.1(a) of the Schedule, in that the Applicant did not submit an application for benefits within 90 days of receiving the application forms.

The second mediation proceeded, and the mediator issued her report, dated August 7, 1998, indicating that supplementary medical benefits and the cost of a jacket and eye glasses were in dispute. The report also recognized that the preliminary issue of compliance with the time limitations in the Schedule remained in dispute.

The Insurer, by letter to Mr. Mandel dated August 10, 1998, then requested production of the following:

Decoded OHIP summary from two years pre-accident, onwards.
Copy of the family doctor's complete clinical notes and records from five years pre-accident, onwards.
Copy of the complete clinical notes and records of all dentists or dental surgeons who have treated your client from five years pre-accident, onwards.
Complete file of Mr. Norman Biback, the former solicitor for your client (sic).
Complete copy of any notes and records kept by your client regarding communications with Mr. Norman Biback.

The Insurer, although acknowledging that the documents were potentially privileged, indicated that in asking for Mr. Biback's file and information regarding communications with him, it was seeking to determine whether the Applicant had a reasonable excuse for non-compliance with the 90-day requirement for submission of the application for benefits. The Insurer submitted that counsel, on behalf of the Applicant, would be in a position to determine which, if any of the documents in that file, may be of assistance to Mr. Sakhuja in this regard, as well as those for which privilege should be claimed.

The Insurer was subsequently copied on the letter, dated September 22, 1998, from Mr. Mandel to Mr. Sakhuja, referred to earlier, confirming Mr. Sakhuja's instructions that Mr. Mandel's firm was to take no further action on his behalf, and indicating the file would be closed.

Submissions and Findings:

Subsection 59(3) states that a person shall submit an Application for Benefits to the insurer within 90 days of receiving the application forms from the insurer.

Subsection 59(4) provides, inter alia, that a failure to comply with the time limit does not preclude a person from claiming benefits if the person has a reasonable excuse.

Subsection 7.1(a) states that no person shall commence a mediation proceeding under section 280 of the Act unless he or she has complied with section 59.

Subsection 281(2) of the Act provides that no person may bring a proceeding in any court or refer a matter to arbitration unless mediation has first been sought and has failed.

It was the Insurer's position that Mr. Sakhuja had not complied with subsection 59(3) of the Schedule, as he had failed to file his Application for Benefits within 90 days of having received the application forms from the Insurer.

Markel also argued that Mr. Sakhuja had failed to demonstrate that he had a reasonable excuse for his non-compliance, so as to entitle him to relief pursuant to subsection 59(4).

As a result, the Insurer maintained that Mr. Sakhuja was precluded, by subsection 71.1(a), from commencing a mediation proceeding — the consequence being that he was also precluded, by subsection 281(2) of the Act, from proceeding to arbitration.

As indicated above, the veracity of the documents filed on behalf of the Insurer was not contested.

Consequently, I find that the accident benefits package was sent to the Applicant by the Insurer on or about May 16, 1994. Allowing one week for receipt by Mr. Sakhuja, I find this would make the date of receipt May 23, 1994. Subsection 59(3) requires that the Application for Benefits be submitted by an insured within 90 days of receipt. Mr. Sakhuja's Application for Benefits, dated June 19, 1996, was received by the Insurer on June 27, 1996. Even assuming it was mailed on or about June 19, 1996, this was more that two years after it was received by Mr. Sakhuja and well outside the 90-day limit.

His failure to comply with the 90-day requirement would not automatically disqualify Mr. Sakhuja from pursuing benefits if, as provided by subsection 59(4), he has a reasonable excuse. The onus is on the Applicant to demonstrate this is the case.⁵ However, there was no evidence of a reasonable excuse before me. Having been warned that I may find he is precluded from proceeding with the arbitration, Mr. Sakhuja chose to leave rather than make his case.

As a result, I can only conclude that Mr. Sakhuja had no reasonable excuse for not filing an Application for Benefits within the 90 days as required by subsection 59(3).

I find, therefore, that Mr. Sakhuja is precluded from proceeding to mediation as a result of subsection 71.1(a), which states that no person shall commence a mediation proceeding under section 280 of the Act unless he or she has complied with section 59.

Consequently, as stated in Opatowski and Wawanesa Mutual Insurance Company⁶ and adopted by Arbitrator Blackman in Bissoon and Pilot Insurance Company⁷ because Mr. Sakhuja "may not commence a mediation proceeding, it follows that he may not refer this matter to arbitration pursuant to section 281 of the Act."

The Insurer also argued that in any event, Mr. Sakhuja is precluded from proceeding to arbitration as he also failed to comply with the time limits set out in subsections 72(1) and (2) of the Schedule.

Subsection 72(1) requires that a mediation proceeding under section 280 of the Act or an arbitration or court proceeding under section 281 of the Act be commenced within two years from an insurer's refusal to pay the amount claimed.

Subsection 72(2) states that despite subsection (1), an arbitration or court proceeding under section 281 of the Act may be commenced within 90 days after the mediator's report.

The first issue to be determined is whether, and when, there was a refusal to pay benefits. The onus in this regard lies with the Insurer.

I accept the Insurer's submission that there was a clear and unequivocal refusal to pay benefits in the Insurer's letter, dated December 7, 1994, to Mr. Biback, counsel for Mr. Sakhuja. In that letter, the Insurer denied "any claim in this matter" as a result of Applicant's non-compliance with section 71.1(a) of the Schedule. The denial was clear and unambiguous.

This means that Mr. Sakhuja had until December 7, 1996 to apply for mediation or arbitration. While Mr. Sakhuja first filed for mediation on April 30, 1996, he did so without having complied with section 59. As set out above, subsection 71.1(a) prohibits the commencement of a mediation proceeding in such circumstances. Consequently, the Application for Mediation cannot be considered to be in compliance with the two-year time limit set out in subsection 72(1).

This is also the case regarding Mr. Sakhuja's second application for mediation, filed on June 1, 1998. While the Application for Benefits had been filed by that time, it was well outside the time limits set out in section 59, and therefore not in compliance with that section. In any event, that Application for Mediation was filed more than three years after the denial of benefits and is not in compliance with the two-year time limit set out in subsection 72(1).

Nor can it be said that Mr. Sakhuja complied with subsection 72(2) in that he applied for arbitration within 90 days of the mediator's report.

Mr. Sakhuja's Application for Arbitration, dated June 1, 1998, referred to the mediator's report of July 30, 1996, issued almost two years prior. So even if the Application for Mediation were valid, then Mr. Sakhuja's Application for the Arbitration of his claim for Other Disability Benefits and the cost of dental services would be significantly out of time and precluded from proceeding by subsection 281(5) of the Act.

Nor does the second Application for Mediation, brought the same day as the Application for Arbitration, assist the Applicant. As found earlier, it too is precluded from proceeding by subsection 71.1(a) as the Applicant had not complied with section 59. Furthermore, section 281(2) of the Act, provides that a matter cannot be referred to arbitration unless mediation has first been sought and has failed. In this instance, the Application for Arbitration was brought at the same time, and prior to the mediation having failed.

As a result, I find that the Application for Arbitration regarding claims arising out of Mr. Sakhuja's accident has not been filed within two years of the denial of the claim by the Insurer on December 7, 1994 or within 90 days of the mediator's report. Consequently, it is outside the time limits set out in subsection 281(5) of the Act, and section 72 of the Schedule.

Therefore, even if Mr. Sakhuja could have demonstrated that he had a reasonable excuse for non-compliance with section 59, he would still be precluded from proceeding to arbitration because of his failure to file for arbitration in a timely manner. Unlike section 59, which allows for discretion to grant relief from the failure to comply with those time limits if a reasonable excuse is demonstrated, there is no discretion to grant relief from a breach of the limitation period contained in subsection 281(5) of the Act.⁸

EXPENSES:

Markel argued that the Application for Arbitration was so flawed it should not have been brought forward. Consequently, the Insurer seeks a repayment of its $3,000 assessment fee, pursuant to subsection 282 (11.2) of the Act.

The Insurer, relying on the delays resulting from the Applicants actions, also seeks an award of the expenses it has incurred in respect of this proceeding, which it estimates as approximately $2,500 to $3,000.

Subsection 282(11.2) of the 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, in other words, not more than $3,000.

In this instance, I find an abuse of process has occurred.

Mr. Sakhuja demonstrated a consistent indifference to the process which he had initiated and to the cautions directed to him. His repeated failure to take the steps necessary to facilitate a fair exchange of information, and an expeditious process was egregious and resulted in additional and unnecessary costs to Markel.

His conduct, combined with the fact his Application for Arbitration was so clearly out of time on all the critical time limits, makes it difficult to find any element of good faith in Mr. Sakhuja having brought this matter forward. This is particularly the case as he made no effort to explain the numerous delays and instances of non-compliance.

However, it appears the Insurer had not given notice to the Applicant that it would be seeking an order pursuant to subsection 282(11.2). The first indication such an order was sought was during Markel’s closing argument.

Arbitrator Manji, in the case of Jelisic and Guarantee Company of North America⁹ and Arbitrator Miller, in the case of Athanasiadis and Zurich Insurance Company¹⁰ denied such an order when the insurer, in those instances, omitted to advance the claim prior to and during the course of the arbitration. The basis for denial was, essentially, that had the applicant been notified the insurer was going to advance such a claim, the applicant may not have proceeded with the hearing, or may have adduced evidence to respond to the claim.¹¹

These cases were not raised at the hearing and consequently, Markel was given an opportunity to make submissions with regard to the appropriateness of applying that reasoning to the instant case. Mr. Sakhuja was given an opportunity to reply to the Insurer's submissions but did not do so.

Markel, in its submissions, distinguished the facts in Jelisic and Athanasiadis, by arguing that in the instant case:

The abuse of process continued up to, and including, the hearing date;
The Applicant refused to participate in the hearing; and
The order pursuant to subsection 282(11.2) was requested at the hearing, not later.

However, subsection 282(11.2) raises a substantive issue and the potential for an extraordinary remedy. That being the case, it is important and necessary that notice be given when such a remedy is being sought. As suggested in Jelisic and Athanasiadis, this may result in an applicant altering his or her conduct, or at the very least, adducing evidence to respond to a claim that the applicant has commenced an arbitration that is frivolous, vexatious or an abuse of process.

Notice that such an remedy is being sought is a particular concern in this instance, as Mr. Sakhuja was unrepresented and may have been unaware of the risk created by his behaviour.

While it is correct that Mr. Sakhuja refused to participate in the hearing, Markel could have indicated to him that it would be seeking an order pursuant to subsection 282(11.2) when Mr. Sakhuja announced his intention to leave. However, Markel did not do so, and waited until final argument to request the order.

Markel is also correct that its request for an order pursuant to subsection 282(11.2) was made during the hearing, in that it was raised in final argument. However, each case must be assessed on its own merits. In this instance, I find that the circumstances give rise to the same concerns expressed in Jelisic and Athanasiadis. In other words, the notice came too late for the Applicant to alter his behaviour, take preventative measures, or enter evidence with regard to the request.

Markel also argued that Mr. Sakhuja had, in fact, received prior notice of a possible order pursuant to subsection 282(11.2), in that Arbitrator Killoran, in her pre-hearing letter of August 9, 1999 had warned Mr. Sakhuja, at page 4, as follows:

In a small number of cases, arbitrators have found the arbitration frivolous, vexatious, or an abuse of process. In such circumstances, an applicant may be ordered to pay up to three thousand dollars ($3,000) to the insurer, being the cost of the assessment levied against an insurer required to participate in the arbitration.

However, the portion of the letter in which the above paragraph appears is part of the general information that is sent out in each pre-hearing letter, and is to be distinguished from that portion which sets out the specific issues in dispute between these particular parties. In that section, there is no reference which may be construed as putting Mr. Sakhuja on notice that Markel would be seeking an order pursuant to subsection 282(11.2).

Markel maintained that "[b]y refusing to participate in the hearing and by leaving the premises, Mr. Sakhuja knowingly denied himself the opportunity to respond to all issues raised, including that of the insurer's entitlement prior to his leaving the hearing room." Markel further argued that I had warned Mr. Sakhuja of this risk immediately prior to his leaving the hearing room.

It is true that I warned Mr. Sakhuja that the matter would proceed in his absence, which may result in findings against him, including a ruling that he is precluded from proceeding to arbitration. However, in my view, this cannot be interpreted to constitute a warning that issues of which he was unaware may also proceed. As indicated earlier, had Markel indicated that it would pursue an order pursuant to subsection 282(11.2) prior to Mr. Sakhuja leaving, that would have been sufficient, in this instance.¹² However, this was not done.

Finally, Markel relied on the case of Monney and Dominion of Canada General Insurance Company¹³ to support its request for an award pursuant to subsection 282(11.2). In that case, Arbitrator Miller found the applicant had abused the process by "failing to provide significant and relevant production requests, by forcing an adjournment of the arbitration hearing and then by withdrawing his Application for Arbitration close to the date of the second hearing, without any explanation. "As a result, Arbitrator Miller granted the insurer's request for a $3,000 award pursuant to subsection 282(11.2).

There is no indication in Monney, however, that notice by the insurer that it was seeking such an order was at issue. As a result, I find the case does not assist the Insurer in this regard.

Consequently, for the reasons set out above, Markel’s request for an order pursuant to subsection 282(11.2) is denied.

I do find, however, that this is a situation in which an award of the Insurer's costs is appropriate.

Subsection 282(11) of the Act was amended In November 1996 to allow an arbitrator to award expenses to either the insured person or the insurer. Mr. Sakhuja’s Application for Arbitration was filed after the amendment came into effect, and therefore, I have authority to consider Markel’s claim for expenses.

Subsection 12(2) of Ontario Regulation 664, as amended,¹⁴ sets out the criteria for an arbitrator's consideration of an order of expenses. In particular, the arbitrator may consider each party's degree of success in the outcome of the proceeding, any conduct of a party that "...tended to prolong, obstruct or hinder the proceeding, including failure to comply with undertakings or orders," and whether the proceeding was "...manifestly unfounded, frivolous, vexatious, fraudulent or an abuse of process."

As indicated above, I am of the view the Applicant has engaged in an abuse of process. The Insurer has wasted time and resources on preparation and/or attendance at several proceedings which were adjourned as a result of either the Applicant failing to attend, or his repeated lack of preparedness to proceed.

Nor can it be said that Mr. Sakhuja was not warned about the potential consequences of his actions.

Janice Mackintosh, Executive Coordinator/Registrar, in her correspondence to Mr. Sakhuja of May 19, 1999, Arbitrator Killoran, in her pre-hearing letter of October 18, 1999, and Arbitrator Sone in her letter to Mr. Sakhuja, dated November 4, 1999, all advised that the Arbitrator who ultimately heard this case could consider Mr. Sakhuja's lack of preparedness to proceed in determining the issue of expenses.

Yet with apparent disregard for the consequences of his actions, Mr. Sakhuja did not alter his course.

Arbitration decisions have held that the overriding consideration for an arbitrator in fixing expenses is the reasonableness of the expenses claimed.¹⁵

The Insurer did not give a specific breakdown of the expenses it was claiming. Consequently, while I am prepared to make an order awarding reasonable costs to the Insurer, I require more detailed submissions in this regard.

Furthermore, while the Insurer requested that I deal with the issue of expenses in this award, as it was unlikely the parties would be able to agree, I am not certain this is the case.

However, if the parties cannot agree on the quantum of expenses owed to the Insurer they may make submissions within 60 days from the date of this decision.

September 6, 2000

Tanja Wacyk Arbitrator

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