Neutral Citation: 2000 ONFSCDRS 206

FSCO A96-000619

BETWEEN:

FERNANDO MALHAO

Applicant

and

YORK FIRE & CASUALTY INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before: K. Maine Palmer

Heard: May 29, 2000 at the Financial Services Commission of Ontario, Toronto. Final written submissions received September 8, 2000.

Appearances: Tony Afecto for Mr. Malhao Harry P. Brown for York Fire & Casualty Insurance Company

Fernando Malhao claims he was injured in motor vehicle accidents on January 17 and February 14, 1994. He applied for benefits from York Fire & Casualty Insurance Company ("York Fire"), payable under the Schedule.¹ The parties were unable to resolve their dispute about Mr. Malhao's entitlement to benefits through mediation, and Mr. Malhao applied for arbitration in September 1996 at the Ontario Insurance Commission (now 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:

Is the Applicant entitled to caregiver benefits pursuant to section 18 of the 1994 Schedule from January 25, 1994.
Alternatively, is the Applicant entitled to "other disability benefits" pursuant to section 19 of the 1994 Schedule beyond September 30, 1994?
Is the Applicant entitled to supplementary medical expenses pursuant to section 36 of the 1994 Schedule for medication and transportation?
Is the Applicant entitled to attendant care benefits pursuant to section 47 of the 1994 Schedule?
Is the Applicant entitled to dependant care expenses pursuant to section 54 of the 1994 Schedule?
Is the Applicant entitled to housekeeping expenses pursuant to section 55 of the 1994 Schedule?

This arbitration is dismissed.
Fernando Malhao shall pay to York Fire & Casualty Insurance Company $849.75, as ordered by Arbitrator Bayefsky, in his letter of September 8, 1999, together with interest on that amount from May 17, 1999 at the bank rate in effect as of today's date.

Background:

This matter has a long, complex history. The initial prehearing discussion was held in November 1996, almost four years ago. Arbitration hearings were set for May 1997, then December 1997, May 1999, and finally May 2000. Over this time, Mr. Malhao had several lawyers represent him. On April 24, 2000, Mr. Malhao faxed a letter to the Commission asking that the hearing scheduled to begin May 29th be "cancelled" because he would not be attending. This communication was not sent to his own lawyer, who at that time was Mr. J. David Sloan. Mr. Sloan attended at the Commission for a settlement conference on May 26, 2000 and again at the opening of the hearing on May 29, 2000. Mr. Malhao did not attend. At the hearing, Mr. Sloan requested to be allowed to withdraw as Mr. Malhao's lawyer, after detailing his numerous recent attempts to contact his client by letter and telephone. Mr. Sloan submitted that he had been successful in speaking with Mr. Malhao once by telephone since Mr. Malhao's letter to the Commission of April 24, 2000. Mr. Sloan submitted that he had delivered a final letter to Mr. Malhao on May 26, 2000. I permitted Mr. Sloan to withdraw as Mr. Malhao's lawyer.

At the hearing on May 29, 2000 the Insurer moved to dismiss Mr. Malhao's claims and requested its expenses. Alternatively, the Insurer submitted that Mr. Malhao's application for arbitration could be viewed as withdrawn, as suggested by his letter. In that case York Fire requested its expenses of $849.75 which had been ordered by Arbitrator Bayefsky to be paid in September 1999 and $500 for its expenses of the day. It also requested that Mr. Malhao not be permitted to re-file an application for arbitration with the Commission.

I was concerned that Mr. Malhao's letter requesting a cancellation of the hearing was ambiguous. It was not clear whether he was seeking yet another adjournment or whether he intended to abandon his claims. After nearly four years of proceedings, I concluded that Mr. Malhao should be given one last opportunity to explain his conduct. On May 29, 2000 I issued an order giving Mr. Malhao notice that his arbitration would be dismissed on June 13, 2000 unless by 4:45 p.m. on June 12, 2000 he had made written submissions to the Commission with respect to the dismissal.

By a faxed letter received at the Commission at 5:30 p.m. on June 12, 2000 Mr. Tony Afecto advised he had been retained by Mr. Malhao that afternoon. He requested an extension of the deadline set out in my order to enable him to become acquainted with the issues in dispute. I granted Mr. Afecto's request and allowed him until July 7, 2000 to provide written submissions as to why the arbitration should not be dismissed. I asked Mr. Afecto to review the voluminous file, to have reference to the provisions of the Dispute Resolution Practice Code and the Statutory Powers Procedure Act and to deal with the issue of costs or expenses in his submissions. Mr. Afecto provided his submissions on July 7, 2000. Mr. Brown provided his responding submissions on September 8, 2000. I did not receive any reply submissions from Mr. Afecto.

Mr. Afecto's submissions:

Mr. Afecto's submissions were received in a letter just over four pages long. On the fourth page of the letter, Mr. Afecto begins what I would characterize as his submissions—the first pages of the letter being a history of the proceedings related to both Mr. and Mrs. Malhao's accidents and their respective court and arbitration cases. Mr. Afecto submitted that Mr. Malhao may have thought that his former lawyer, Mr. Sloan, intended to stop representing him in this arbitration when Mr. Sloan served him with documents in early April 2000 about his intention not to continue to represent him in the court case.

Despite Mr. Malhao's letter to the Commission dated April 24, 2000 indicating his wish to cancel the arbitration, Mr. Afecto submitted that he does not think that Mr. Malhao "appreciated what the consequences could be" if he did not attend at the Commission for the hearing on May 29, 2000.

Mr. Afecto submitted that one last indulgence should be granted to Mr. Malhao. Considering the court motion to ascertain the validity of settlements of Mrs. Malhao's claims arrived at on March 5, 1999 was set for August 3, 2000, Mr. Afecto submitted that Mr. Malhao's arbitration should be adjourned, with whatever conditions the Commission imposed, until after that date. In the event Mrs. Malhao's settlement was not approved, then her arbitration hearing could proceed simultaneously with Mr. Malhao's and avoid a multiplicity of proceedings. Mr. Afecto opposed any award of costs, despite acknowledged inconvenience and expense to the Insurer, due to the "dire financial straits" of the Malhao family. He submitted that costs should be left to the hearing arbitrator.

Mr. Afecto then submitted that this arbitration appeared to have returned to the same situation as in May 1999, when Arbitrator Bayefsky reluctantly granted another adjournment of this hearing, with conditions.

In his submissions, Mr. Afecto made no reference to the provisions of the Dispute Resolution Practice Code, the Statutory Powers Procedure Act, or any case law at the Commission.

Insurer's submissions:

The Insurer submitted that Mr. Malhao responded to the hearings arranged for May 17, 1999 and May 29, 2000 by sending letters to the Commission. In 1999, he said he did not have a lawyer. In 2000, he said he wanted the hearing to be cancelled because he would not be attending.

The Insurer submitted that Mr. Afecto's submissions do not provide any reasonable grounds for why Mr. Malhao's claim has not proceeded. Mr. Malhao's arbitration claims were not dependent on the resolution of Mrs. Malhao's claims. Mr. Malhao cannot be under any illusion after reading all the orders made by various FSCO arbitrators and the Notices of Hearing that his arbitration could be dismissed if he did not attend at the hearing.

Mr. Malhao's attitude toward the proceedings is displayed in his contravention of Arbitrator Bayefsky's order of May 20, 1999 that he should make himself reasonably available for an insurer's physical and psychiatric examination. Although Mr. Malhao did attend on a psychiatric examination, he refused to attend on a physical examination. Two cancellation fees were incurred by York relating to his failure to attend in March and May 1999. The Insurer referred to the case law in the following Commission arbitration decisions: Quattrocchi and State Farm Mutual Automobile Insurance Company, (OIC A-006854, June 11, 1996), Cassman and Wawanesa Mutual Insurance Company, (FSCO A96-000419, August 14, 1998), and Mesihovic and Canadian Surety Company, (OIC A-009579, May 18, 1995).

Outcome of court motion:

On August 3, 2000 Mr. Justice LaForme dealt with numerous matters in two court cases involving both Mr. Malhao and his wife. In his endorsement he made some preliminary comments about Mr. Malhao:

…Mr. Malhao has demonstrated over an extended period of time, a lack of full appreciation for the import and consequences of events and his decisions. He has done so in spite of having the benefit of at least seven different lawyers.

Mr. Justice LaForme indicated that no party took issue with any finding that Mr. Malhao resiled from his settlement of his accident benefit claims, so he did not decide the matter. However, he noted that Mr. Malhao was not under a disability when he agreed and executed a settlement of his tort claims, and he had the benefit of legal counsel at the time of the settlement agreement and its execution. Accordingly, he approved that settlement and ordered Mr. Malhao to provide full and final releases. He dismissed the action.

Conclusion:

Mr. Malhao resiled from a settlement of this arbitration in March 1999, as is his right under the so-called "Settlement Regulation" (O.R.664, R.R.O. 1990, as amended by O.R. 780/93).

However, he has since then failed to pursue the arbitration in any conscientious fashion. He failed to appear at the arbitration on May 29, 2000 after, once again, sending a letter to the Commission. When he received my order made the same date, he retained another lawyer on June 12, 2000, the afternoon when his right to make submissions to the Commission would expire.

Mr. Malhao's new counsel made written submissions to the Commission on July 7, 2000. The Insurer's counsel responded on September 8, 2000. Although Mr. Malhao's counsel was afforded an opportunity to reply to the Insurer's submissions, he did not. I am troubled by this failure to respond, because in his reply submissions, Mr. Malhao's counsel might have amplified his client's reasons for his failure to attend on May 29, 2000, his reasons for and the meaning of his request to "cancel" the hearing for that date, or otherwise have responded to the Insurer's argument.

I am not persuaded by the submissions of Mr. Malhao's counsel that I should reopen the hearing in order to allow his client to bring forward his evidence with respect to the issues in dispute with this Insurer arising from the accidents of January and February 1994. I am not persuaded that granting his request "for the Commission's indulgence one last time" would result in this case being heard on the fifth occasion it would be set for a hearing. I am not persuaded that there are any special or extenuating circumstances that prevented Mr. Malhao's participation at the hearing on May 29, 2000. As Practice Note 8 of the Dispute Resolution Practice Code points out, the Commission is charged with the obligation to conduct arbitrations efficiently and speedily. Parties are contacted and agree to pre-hearing and hearing dates well in advance of the dates set. In this case, Mr. Malhao's case had come up for hearing three times prior to May 29, 2000, twice following orders making the hearing date peremptory to him.

Mr. Malhao offered no evidence at the hearing on May 29, 2000. The Insurer agreed to treat this arbitration as withdrawn, according to the provisions of Rule 67 of the Dispute Resolution Practice Code, provided certain conditions were met. In the alternative, the Insurer offered no evidence and requested that the arbitration be dismissed. I gave notice of my intention to dismiss the arbitration unless written submissions were received by a given date. Written submissions have been received from a lawyer acting on Mr. Malhao's behalf, but they are not persuasive. Accordingly, I dismiss this arbitration.

EXPENSES:

At the hearing on May 29, 2000 the Insurer asked for its expenses of $849.75 as ordered by Arbitrator Bayefsky on September 8, 1999 and its expenses of the day of $500. In its written submissions, the Insurer repeated its request for its expenses. Mr. Malhao's counsel submitted that costs should be left to the hearing arbitrator and that any award of costs without hearing the merits of the claim would not accord with the principles of natural justice and procedural fairness.

Arbitrator Bayefsky's award of expenses was a condition of the adjournment granted in May 1999. Mr. Malhao's lawyer at that time agreed to the figure of $849.75 as the costs thrown away by the Insurer in preparation for the hearing. Arbitrator Bayefsky's order read as follows:

Mr. Malhao shall pay to the Insurer its reasonable expenses of preparing for and attending at the May 17, 1999 hearing (in the amount of $849.75 plus interest— without interest if no amount is found to be owing by the Insurer to Mr. Malhao) within thirty days following the first arbitration ruling or the settlement of this matter.

On principle, I would award the Insurer its expenses of its attendance on May 29, 2000, as it requested, and its further expenses in preparing its written submissions with respect to the dismissal of this arbitration. However, in considering this matter further and reviewing the Commission file, I find that this Application for Arbitration was filed in September 1996. Prior to November 1, 1996 arbitrators had no authority to award expenses to an Insurer. The case law after the amendments has taken the position that an arbitrator should not award expenses to insurers for arbitrations commenced prior to that date and I agree.²

November 15, 2000

K. Julaine Palmer Arbitrator

Date