Neutral Citation: 2001 ONFSCDRS 143
FSCO A00-001144
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
DROR GIK
Applicant
and
ZURICH INSURANCE COMPANY
Insurer
REASONS FOR DECISION
Before:
Eban Bayefsky
Heard:
July 6, 2001, at the offices of the Financial Services Commission of Ontario in Toronto.
Written submissions were received by August 1, 2001.
Appearances:
Edward Vaizberg for Mr. Gik
Adam A. Moras for Zurich Insurance Company
Issues:
The Applicant, Dror Gik, was injured in a motor vehicle accident on February 11, 2000. As part of a settlement reached between the parties, Mr. Gik received statutory accident benefits from Zurich Insurance Company ("Zurich"), payable under the Schedule.1 Mr. Gik subsequently applied for mediation, and then for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. At the pre-hearing conference, Mr. Gik indicated that he wished to withdraw his application for arbitration. The Insurer agreed that the matter should be withdrawn, but sought its expenses of the proceeding, in the amount of $500. In its written submissions, the Insurer also sought its $3,000 assessment fee.
The issues in this hearing are:
- Is Mr. Gik entitled to withdraw his application for arbitration and, if so, on what terms?
Result:
- Mr. Gik is entitled to withdraw his application for arbitration on the condition that, if Mr. Gik, Assessment Direct or either of their representatives seeks to bring this matter on again, Mr. Gik will pay Zurich's assessment fee, as well as its costs of the pre-hearing conference or conferences.
EVIDENCE AND ANALYSIS:
Background:
Mr. Gik was injured in a motor vehicle accident on February 11, 2000. On April 26, 2000, Mr. Gik was assessed by a kinesiologist at Assessment Direct. The cost of the assessment was $1,284. A few days later, Zurich received a treatment plan from the Universal Injury Rehab Centre recommending a series of chiropractic treatments at a cost of $2,880. Zurich and Mr. Gik's representative at the time, Mr. Vladimir Pavlovsky, subsequently entered into settlement discussions. On May 29, 2000, Mr. Gik executed a full and final release for "$3,000 plus outstanding treatments at Universal Injury Rehab up to May 26, 2000." The release was said to include "past, present and future claims" for statutory accident benefits. Mr. Pavlovsky forwarded this release to Zurich and stated in his letter that "we trust that any and all outstanding expenses incurred prior to this settlement will be covered by your company." On May 31, 2000, Zurich forwarded a cheque for $3,000 to Mr. Pavlovsky and stated that "this includes all past present and future claims" and that "his file for Accident Benefits is now closed."
In June 2000, Mr. Gik applied for mediation in respect of the $1,284 assessment by Assessment Direct. He was represented by Mr. Edward Vaizberg of Assessment Direct. The matter was not resolved and, in November 2000, Mr. Gik applied for arbitration. Mr. Vaizberg and Assessment Direct proceeded to arbitration on Mr. Gik's behalf on the basis of a document entitled "Authorization and Direction" and signed by Mr. Gik. Zurich maintained, among other things, that the matter of outstanding medical expenses had been resolved and should not proceed to arbitration.
A pre-hearing conference was initially held on May 15, 2001. Mr. Vaizberg attended on behalf of Mr. Gik, accompanied by Mr. Pavlovsky for the purposes of addressing the settlement issue. Ms. Mary Urquhart attended from Zurich, represented by Mr. Adam Moras. Mr. Gik did not attend. At the outset of the pre-hearing, an issue arose as to Mr. Gik's participation in the proceeding. He was contacted by phone and he indicated that he had no interest in the proceeding and did not wish to be contacted further. Mr. Vaizberg and Mr. Moras made submissions on whether the matter should proceed, as well as whether, in light of Mr. Gik's comments, Mr. Vaizberg could continue to act on Mr. Gik's behalf. By letter dated May 30, 2001, I ruled that Mr. Gik was to advise the Commission whether he wished to proceed with the arbitration and/or whether he wished Mr. Vaizberg to proceed on his behalf before the Commission. In compliance with this ruling, Mr. Gik advised the Commission that he wished to proceed with his arbitration. In turn, I notified the parties that the pre-hearing conference would resume on a date to be arranged with the parties and that Mr. Gik was required to attend, along with Mr. Vaizberg and Mr. Moras. The parties could then make submissions as to how the arbitration ought to proceed.
The pre-hearing resumed on July 6, 2001, at which time Mr. Vaizberg, Mr. Pavlovsky, Ms. Urquhart and Mr. Moras attended. Mr. Gik did not attend. Mr. Vaizberg advised that Mr. Gik could not attend as he was at work, but that he was available by phone. Mr. Gik was contacted at his work and he said that his shift as a manager at his workplace had recently changed, preventing him from attending at the Commission. The pre-hearing proceeded with Mr. Gik participating by phone. After various submissions from the parties, Mr. Gik and Mr. Pavlovsky (who now apparently spoke on behalf of both Mr. Gik and Mr. Vaizberg ) indicated that the matter should be withdrawn. Mr. Moras agreed that the matter should not proceed and sought his costs of $500. Mr. Moras submitted (both at the pre-hearing resumption and in written submissions following the pre-hearing, the latter to which Mr. Gik and his representatives did not respond) that costs should be ordered against Assessment Direct and not Mr. Gik personally. Mr. Moras submitted that arbitrators have the jurisdiction to order costs against a non-party. He stated that Assessment Direct, the real litigant in this proceeding, had abused the Commission's processes by initiating an arbitration in Mr. Gik's name without fully disclosing the nature of the proceeding or the potential cost consequences. Mr. Moras also noted that Mr. Gik had stated that he had no interest in the proceeding and that he sought nothing from Zurich. Mr. Moras submitted that, if I found I had no jurisdiction to order costs against Assessment Direct or its representatives, then costs should be ordered against Mr. Gik.
Mr. Gik maintained that he indicated a desire to proceed to the pre-hearing resumption because he was concerned about the potential cost consequences to him (based either on my letter dated May 30, 2001 or on two letters from Zurich dated June 18 and June 20, 2001). Mr. Gik said that he wanted no part of the proceeding and that if he had known there would be so much controversy over the case and the issue of costs, he would not have proceeded with this from the beginning. Mr. Pavlovsky stated that the costs issue was only explained to Mr. Gik between the first and second pre-hearing conference.
In his written submissions, Mr. Moras stated that in asking that the arbitration be dismissed, it was implicit that he was also requesting that Zurich receive its $3,000 assessment. Mr. Moras reiterated that Assessment Direct had abused the Commission's processes and that both pre-hearing conference attendances were "completely wasted." He maintained that Assessment Direct should be ordered to pay his costs and Zurich's assessment fee.
Findings:
I am prepared to permit the withdrawal of Mr. Gik's arbitration. Mr. Gik, Mr. Vaizberg and Mr. Pavlovsky have all indicated that no purpose would be served in proceeding further with this application. Mr. Moras submitted that the arbitration should not have been brought in the first place, given the full and final release executed by Mr. Gik. In the absence of further evidence on the issue and in light of the materials exchanged between the parties, I am not prepared to find that the release definitively disposed of the matter. However, I am satisfied that there would be no sense in forcing this matter on to a hearing. Neither Mr. Gik nor his representatives wish to proceed with the matter and there is sufficient doubt about their ability to do so to permit the withdrawal.
The issue is now on what terms the withdrawal should occur. I find that I do not have the jurisdiction to order costs or an assessment against either Mr. Gik’s representatives or Assessment Direct. Mr. Moras conceded in his written submissions that I did not have the jurisdiction to order these amounts against a party’s representative. In any event, I agree with those decisions which have held that an arbitrator does not have the jurisdiction to order expenses or an assessment against a representative or a non-party.2 For example, as pointed out in D'Angelo, section 282(11) of the Insurance Act and Ontario Regulation 664,3 taken together, provide for the awarding of expenses based on the conduct of the parties only, and as noted in Farella and Jelisic, the broad language of the Statutory Powers Procedure Act and the Dispute Resolution Practice Code concerning abuse of process4 do not specifically accord arbitrators the authority to award expenses or an assessment against representatives. I agree that despite the general authority of arbitrators to control their own processes and the specific authority to award expenses and an assessment, in the absence of an explicit power to order these amounts against representatives or non-parties, I have no jurisdiction to do so against Mr. Vaizberg, Mr. Pavlovsky or Assessment Direct.
Mr. Moras cited two court cases5 in support of his argument that arbitrators can and should award expenses against the "real litigant" in the proceedings (the "real litigant" here being Assessment Direct). While I acknowledge that Assessment Direct had the real interest in proceeding with the arbitration (to recover its fee for the assessment conducted on Mr. Gik in April 2000, and in light of Mr. Gik's statements that he had no desire to participate in the proceedings), I do not find the cases cited applicable to arbitrators operating under the Insurance Act, the SPPA and the Practice Code. Arbitrators are administrative tribunals bound by the terms of their constituent statutes. While they have broad authority to control their own processes, they do not have the inherent jurisdiction possessed by the courts (and exercised in the noted cases). I find that more specific authority would be required in the applicable legislation to permit me to award expenses against Assessment Direct as the "real litigant."
Should I then award expenses or an assessment against Mr. Gik personally? I am not prepared to do so. The relevant criteria in Regulation 664 for the awarding of expenses in this case are as follows:
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.
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.
Section 282(11.2) of the Act states as follows:
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 indicated, Mr. Gik stated during both pre-hearings that he had no wish to participate in this proceeding. While it would have been helpful for Mr. Gik to have participated more fully in the initial pre-hearing conference, I do not interpret his absence and abrupt manner on the telephone as an abuse of the Commission's process. He did not wish to proceed against Zurich in connection with Assessment Direct’s fees, he did not understand why he was being brought into the matter and he had not been informed of the potential cost consequences if his application were withdrawn. By my letter of May 30, 2001, I gave Mr. Gik the opportunity to confirm whether he wished to proceed with the arbitration and/or whether he wished Mr. Vaizberg to proceed on his behalf before the Commission. I further stated that, without making any ruling on the matter, Mr. Gik should be made aware of the potential cost consequences of his withdrawing his application. In light of the uncertainty under which Mr. Gik was operating at the time of the first pre-hearing, I am not prepared to find that his conduct was so unreasonable as to warrant an award of expenses.
Regarding the second pre-hearing conference, I accept that Mr. Gik was unable to attend due to the recent change in his shift as a manager at his workplace. He made himself available by telephone and we were able to address the relevant issues in this way. Mr. Gik indicated that he participated as a result of his concern about costs, which Mr. Pavlovsky stated had been explained to Mr. Gik for the first time following the initial pre-hearing conference. While Mr. Gik reiterated his original position that he did not wish to participate in these proceedings, this was after various submissions had been made by Mr. Pavlovsky, Mr. Vaizberg and Mr. Moras, and after private discussions among Mr. Gik, Mr. Vaizberg and Mr. Pavlovsky. I do not find that Mr. Gik sought to hinder or abuse the Commission’s process. I find that he was legitimately unclear as to his role in these proceedings and as to his options and the possible consequences. I am not prepared to find that Mr. Gik's conduct was such as to warrant an award of expenses.
I understand the frustration of Zurich in having to attend twice to address what it felt was an unmeritorious arbitration. However, as indicated above, I do not find it obvious that the release executed by Mr. Gik (and at the heart of this dispute) definitively disposed of the matter. Nor do I find that Mr. Vaizberg and/or Assessment Direct were without authority to proceed before the Commission on Mr. Gik's behalf. I am, therefore, not prepared to find that the arbitration was frivolous, vexatious or an abuse of process. If the matter had proceeded to an arbitration (or, at least, to a preliminary issue hearing), an arbitrator would still have had to determine whether the release, in itself and in the context of the surrounding correspondence, as well as in light of any further evidence called at the hearing, precluded Mr. Gik and/or Assessment Direct from attempting to recover the costs of the relevant assessment from Zurich. In any event, while two brief appearances were required by Zurich, the end result of this process was the avoidance of either a preliminary hearing or a hearing on the merits. The parties were also not required to address or respond to any production requests or orders. I do not agree with Mr. Moras' suggestion that the two pre-hearing appearances were "completely wasted." While they ultimately resulted in the withdrawal of the arbitration, they were necessary to sort out the relevant issues and to clarify Mr. Gik's position on the matter. As noted above, it would have been preferable for Mr. Gik and his representatives to have sorted this matter out at (or even before) the initial pre-hearing conference. However, the pre-hearing process often results in parties re-assessing their case and clarifying the manner in which they will proceed (something for which pre-hearing conferences were, in part, designed). I am not prepared to find that Mr. Gik should bear the burden of Zurich's costs because he and his representatives had not definitively determined how they would proceed. In any event, this was achieved through the two pre-hearings and it ultimately avoided even lengthier proceedings. In these circumstances, I am not prepared to order Mr. Gik to pay either Zurich's expenses or its $3,000 assessment.
However, given that Mr. Gik’s arbitration has now been withdrawn and given the legitimate concerns of Zurich concerning both the merits of the application and the proceedings required to date, I find it reasonable to allow the withdrawal on the condition that, if Mr. Gik, Assessment Direct or either of their representatives seeks to bring this matter on again, Mr. Gik will be responsible for covering Zurich's assessment fee, as well as its costs of the pre-hearing conference or conferences.
October 4, 2001
Eban Bayefsky
Arbitrator
Date
Neutral Citation: 2001 ONFSCDRS 143
FSCO A00-001144
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
DROR GIK
Applicant
and
ZURICH 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:
- This arbitration is withdrawn on the condition that, if Mr. Gik, Assessment Direct or either of their representatives seeks to bring this matter on again, Mr. Gik shall pay Zurich's assessment fee, as well as its costs of the pre-hearing conference or conferences.
October 4, 2001
Eban Bayefsky
Arbitrator
Date
Footnotes
- The 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.
- For example, Farella and Security National Insurance Company (FSCO A98-001162, June 25, 1999), Jelisic and Guarantee Company of North America (FSCO A98-000029, October 21, 1999) and D’Angelo and Wawanesa Mutual Insurance Company (FSCO A99-000797, January 5, 2001).
- R.R.O. 1990, as amended by Ontario Regulation 464/94.
- Section 23(1) of the SPPA and Rules 63.1 and 63.5 of the Practice Code.
- Ridgely (in trust) v. Ridgely Design Inc. (1991), 1991 CanLII 7343 (ON CTGD), 3 O.R. (3d) 695 (Ont. Ct. Gen. Div.) and 931473 Ontario Ltd. v. Coldwell Banker Canada Inc. (1992), 5 C.P.C. (3d) 271 (O.C.J. Gen. Div.).