Neutral Citation: 2000 ONFSCDRS 175

FSCO A98-001414

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

SUHUL MICHAEL TEDLA

Applicant

and

ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before:

Asfaw Seife

Heard:

March 6, 2000, in Kitchener, Ontario.

Additional oral submissions were received on June 23, 2000.

Appearances:

Basil F. McDonald for Mr. Tedla

Kerri Kamra for Royal & SunAlliance Insurance Company of Canada

Issues:

The Applicant, Suhul Michael Tedla, was injured in two motor vehicle accidents on December 14, 1995 and June 18, 1996. He applied for and received statutory accident benefits from Royal & SunAlliance Insurance Company of Canada ("Royal"), payable under the Schedule.¹ The parties were unable to resolve their disputes in respect of Mr. Tedla's claim for entitlement to ongoing income replacement benefits. Mr. Tedla applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

Should this application be dismissed?
Is Mr. Tedla entitled to receive further weekly income replacement benefits pursuant to section 7 of the Schedule? If so, what is the amount of the benefits?
Is Royal entitled to an award in the amount of its assessment fee of $3,000?
Is Royal entitled to its arbitration expenses?

Result:

Mr. Tedla's Application for Arbitration is deemed to have been withdrawn. Royal is entitled to an award in the amount of its assessment fee of $3,000.
Mr. Tedla will be precluded from filing another Application for Arbitration in respect of the issues in dispute in this arbitration, if he fails to pay Royal's assessment fee.
I make no orders in respect of Mr. Tedla's entitlement to income replacement benefits or the amount of the benefits.
Royal is entitled to its arbitration expenses in the amount of $750.

Background:

In his Application for Arbitration, Mr. Tedia claimed entitlement to income replacement benefits from July 4, 1996 and ongoing in respect of the December 14, 1995 accident, and from August 27, 1996 and ongoing in respect of the June 18, 1996 accident. Mr. Tedla also disputed the amount of the benefits.

A pre-hearing conference was held on June 2, 1999, by teleconference. Mr. Tedla did not attend; however, he was represented by Mr. McDonald who advised that he was unable to contact Mr. Tedla because he had moved without a forwarding address. During the pre-hearing discussions, the issues in the arbitration were identified and the parties agreed to exchange documents by November 1, 1999. The arbitration hearing was set for three days commencing March 6, 2000, in Kitchener. During the discussions, Mr. McDonald indicated that if he was not able to establish contact with Mr. Tedla by November 1, 1999, he would ask to be removed as Mr. Tedla's solicitor of record. On June 9, 1999, the pre-hearing arbitrator sent a letter to the parties confirming the substance of the pre-hearing discussions.

On December 6, 1999, Mr. McDonald wrote to the Commission stating:

Despite efforts to contact Mr. Tedla since the Pre-Hearing, I have been unable to contact him, nor has he contacted me. This is therefore to advise that I am removing myself from the record as Mr. Tedla's counsel. I trust this gives both the Commission and counsel for Royal & SunAlliance sufficient notice that I am no longer acting as counsel for Mr. Tedla. I do not believe that Mr. Tedla is aware of the scheduled dates for Arbitration, but unfortunately I cannot provide you with a forwarding address with which to notify Mr. Tedla.

On January 28, 2000, Ms. Kamra, counsel for Royal, wrote to the Commission indicating that Mr. Tedla had failed to comply with the production undertakings and that the arbitration hearing could not commence as scheduled.

The Commission advised that the issues of Mr. McDonald's withdrawal and Ms. Kamra's concerns should be raised at the arbitration hearing.

The hearing commenced on March 6, 2000, in Kitchener, as scheduled. Mr. Tedla did not attend. At the outset of the hearing, Mr. McDonald brought a motion seeking permission to withdraw from the arbitration as Mr. Tedla's counsel. He advised that he had been unable to contact Mr. Tedla since the filing of the Application for Arbitration on November 16, 1998 and had received no instructions from Mr. Tedla with respect to the arbitration proceeding.

Mr. McDonald explained that the location and telephone number of his office has not changed since he was retained by Mr. Tedla and that Mr. Tedla never called or attended at his office since the filing of the Application for Arbitration.

Mr. McDonald explained the efforts made to locate Mr. Tedla. A letter dated January 19, 1999 that Mr. McDonald sent to Mr. Tedla asking him to contact him was returned on February 4, 1999, with a Post Office stamp: "Moved. Address Unknown." On April 28, 1999, prior to the commencement of the pre-hearing, Mr. McDonald retained the services of Phoenix Process Serving Inc. to locate Mr. Tedla. On June 1, 1999, Phoenix reported that it was unsuccessful in locating Mr. Tedla. On June 21, 1999, after the pre-hearing, Mr. McDonald requested Phoenix to resume its search for Mr. Tedla. This attempt was also unsuccessful in contacting Mr. Tedla.

Two Notices of Hearing, dated November 15, 1999 and December 1, 1999², sent to Mr. Tedla setting out the place, date and time of the hearing, were returned as undeliverable with a Post Office stamp: "Moved. Address Unknown." The Notices were sent to the address provided in the Application for Arbitration. Mr. Tedla has not contacted the Commission since the commencement of the arbitration.

Rule 9.5 of the Dispute Resolution Practice Code - Third Edition (the Code), states:

A representative who wishes to withdraw from an adjudicative proceeding shall notify the Commission and the parties, in writing. Where the party represented consents to the withdrawal, the Registrar shall permit the withdrawal. Otherwise, an adjudicator may permit the representative to withdraw subject to such terms as the adjudicator considers appropriate.

In all of the circumstances, I was satisfied that Mr. McDonald had made reasonable efforts to contact Mr. Tedla, that he did not have instructions and that he therefore could not continue to represent him in this proceeding. I exercised my discretion under Rule 9.5 of the Code and permitted Mr. McDonald to withdraw from the arbitration.

Should Mr. Tedla's Application be dismissed?

Rule 34.5 of the Code states:

Where notice of hearing has been sent to a party and a party does not attend at an oral or electronic hearing, or participate in a written hearing, the arbitrator may proceed with the hearing in the party's absence or without the party's participation, as the case may be, and the party is not entitled to any further notice of the proceeding.

The Notices of Hearing sent to Mr. Tedla were returned as undeliverable. It is likely that Mr. Tedla is not aware of the date and place of the arbitration hearing. However, the Dispute Resolution procedures do not require that the Notice of Hearing be received by the party in order for the hearing to proceed in the absence of that party. The hearing may proceed in the party's absence if it is established that a Notice of Hearing was sent to the party. In this case, I am satisfied that two Notices of Hearing were sent to Mr. Tedla at his last known address. In addition, I have heard evidence of the unsuccessful efforts made by Mr. McDonald to contact Mr. Tedla. I, therefore, exercised my discretion under Rule 34.5 of the Code and proceeded with the hearing in Mr. Tedla's absence.

I agree with Arbitrator Manji's statement in Omar and Pafco Insurance Company (FSCO A98-001140, September 30, 1999) that an arbitrator may only issue orders that he or she is authorized to make by statute and that the arbitrator has no authority to dismiss the arbitration solely because the applicant failed to attend or participate in the hearing. I agree with her view that the Statutory Powers Procedure Act only gives the arbitrator authority to proceed with a hearing and consider the merits of a party's case in the party's absence where the arbitrator is satisfied that notice of hearing has been given to the party.³

In this case, I am not satisfied that Mr. Tedla was effectively notified of the hearing or that he was even aware that a hearing had been scheduled. Mr. Tedla has not contacted his lawyer or the Commission since the filing of the Application for Arbitration. Both Notices of Hearing were returned to the Commission as undeliverable.

This case is different from Polus and Royal Insurance (OIC A-002392, August 18, 1995) in which I permitted counsel for Mr. Polus to withdraw from the proceedings and I proceeded with the hearing in Mr. Polus' absence, considered the merits of his case and dismissed his claim. In Polus, unlike this case, I was satisfied that proper notice of the hearing had been given to the applicant.

Since I am not satisfied that proper notice of the hearing had been given to Mr. Tedla, I do not have the authority to hear evidence and make orders in respect of his claims for benefits as set out in his Application for Arbitration.

However, I find the evidence is sufficient to conclude that Mr. Tedla has abandoned this proceeding. He has not contacted his lawyer or the Commission since filing the Application for Arbitration. He moved from his last known address without informing his lawyer or the Commission of his new address or providing another method by which he could be contacted. As I stated in Quattrocchi and State Farm Mutual Automobile Insurance Company,⁴ an applicant who commences an arbitration proceeding and fails to pursue it with due diligence and interest may be considered to have "constructively" withdrawn his/her application for arbitration. In that decision, I also stated that the provisions of Rule 67 of the Code, with respect to requests for withdrawal of a dispute, apply to "constructive withdrawals" by analogy. I adopt the same approach in this case.

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. The adjudicator may 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 he/she 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.

Arbitration decisions which interpreted the word "commences" in section 282(11.2) have stated that it does not restrict the focus of the inquiry to the commencement of the arbitration application, and that subsequent steps in the arbitration process could also be considered in deciding whether the applicant "commenced" an arbitration proceeding that is frivolous, vexatious or an abuse of process.⁵

In this case, I find that an abuse of process has occurred. Mr. Tedla's failure to pursue his 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, Royal and Mr. Tedla's own solicitors have wasted their resources needlessly in attempting to contact him and in preparing for and attending the pre-hearing and the hearing.

I therefore order Mr. Tedla to pay to Royal $3,000, the amount that Royal was required to pay to participate in this arbitration. If Mr. Tedla 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:

Under subsection 282(11) of the Insurance Act, as amended in November 1996, I have the discretion to award expenses to an insurer or insured person, as prescribed in Ontario Regulation 664, as amended⁶.

Royal claimed its arbitration expenses in the amount of $750. I exercise my discretion to award Royal the expenses it claimed. I find these expenses to be reasonable and that they were incurred by Royal needlessly in defending a claim which Mr. Tedla was not prepared to pursue.

September 26, 2000

Asfaw Seife Arbitrator

Date