Neutral Citation: 2001 ONFSCDRS 3

FSCO A99-000797

BETWEEN:

DONATO D'ANGELO

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

William J. Renahan

Heard:

December 19, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Larry Levine for Mr. D'Angelo

Donald G. Cormack for Wawanesa Mutual Insurance Company

The Applicant, Donato D'Angelo, was injured in a motor vehicle accident on August 20, 1998. The main issue in his application for arbitration is whether his insurer, Wawanesa Mutual Insurance Company ("Wawanesa"), must pay him $1,230.50 pursuant to section 24 of the Schedule¹ for a functional capacity evaluation performed by DEAHY Medical Assessments Inc. Wawanesa asks for an order for the return of its assessment fee and both parties seek expenses. The parties were unable to resolve their disputes through mediation, and Mr. D'Angelo applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Mr. Roland Spiegel represented Mr. D'Angelo until September 21, 2000 when he claimed that Mr. D'Angelo dismissed him as his representative. I convened a hearing on September 28, 2000 to deal with Mr. Spiegel's purported withdrawal. Mr. D'Angelo claimed that he did not dismiss Mr. Spiegel and that he did not consent to his withdrawal. I stayed the main hearing and scheduled this preliminary issue hearing to deal with the terms of Mr. Spiegel's withdrawal. As a term of the withdrawal, Wawanesa seeks costs against Mr. Spiegel or Mr. D'Angelo.

The Financial Services Commission sent notice of this application to Mr. Spiegel but he has not responded.

The preliminary issue is:

What terms, if any, should be imposed against either Roland Spiegel or Donato D'Angelo as a result of the withdrawal of Mr. Spiegel as Mr. D'Angelo's representative?

Mr. Spiegel may withdraw as Mr. D'Angelo's representative upon the following terms:

On or before February 15, 2001, Mr. D'Angelo shall advise Wawanesa and the Commission in writing that he withdraws his application for arbitration.
Each party shall bear its own expenses of the arbitration proceeding.
Mr. D'Angelo shall pay $3,000 to Wawanesa if he commences an arbitration after February 15, 2001 which includes a claim for the cost of examinations or assessments arising out of the motor vehicle accident of August 20, 1998. If Mr. D'Angelo makes such a claim, the hearing arbitrator may vary or rescind this order.

If Mr. D'Angelo does not withdraw his application for arbitration on or before February 15, 2001, Mr. D'Angelo shall pay Wawanesa its expenses of the arbitration proceeding to date, after assessment.

Preliminary issue:

Mr. Spiegel recently wrote to me with respect to another file "I have formally declared you as a bias Arbitrator [sic]. . . . This is a formal request to you, to exclude yourself from any and all future matters/proceedings, in which I am the representative for the insured person/s."

I dismissed the allegation of bias in a written response and feel no need to deal with it further other than to note the circumstances surrounding the assignment of this file to myself. Another arbitrator conducted pre-hearings with the parties and made production orders and a second arbitrator dealt with an adjournment request. In view of the allegation of bias, I believe I should clarify that I had no role in the assignment of this file to myself.

Issue:

Section 9.5 of the Dispute Resolution Practice Code (Third Edition, April 15, 1997) provides:

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.

On September 28, 2000 I convened a teleconference to deal with the purported dismissal of Mr. Spiegel. Although I telephoned his office, Mr. Spiegel did not participate. Mr. Levine acted for Mr. D'Angelo. Mr. D'Angelo said that he did not dismiss Mr. Spiegel. I stayed the main hearing and convened this hearing to deal with the terms of Mr. Spiegel's withdrawal.

The issues are what terms, if any, I should impose as a consequence of Mr. Spiegel's withdrawal, and, if I find that I should impose terms against Mr. Spiegel, whether I have authority to do so.

Evidence:

The only witness was Mr. D'Angelo. He was involved in motor vehicle accidents on January 26, 1994, August 26, 1996 and August 20, 1998. Wawanesa is the first-party insurer responsible for statutory accident benefits arising out of the last accident. Mr. D'Angelo claims that he suffered compressed discs in his back and neck as a result of these accidents. He uses an electric scooter and two canes to get around. Mr. D'Angelo retained Daniel Daly, a lawyer, to represent him with respect to his tort claims and accident benefit claims arising out of these accident. Besides knowing that the claims were ongoing, Mr. D'Angelo was not sure about the status of his claims. He has not returned to his work as a real estate agent since August 1995.

In December 1998, Mr. D'Angelo's family doctor referred Mr. D'Angelo to DEAHY Medical Assessments Inc. for a functional assessment evaluation. The doctor's notes include "His lawyer Daly has suggested and I agree." I do not know who decided that DEAHY should do the assessment.

On December 16, 1998, Mr. D'Angelo attended at DEAHY for the assessment. On that day he signed an "Authorization" on DEAHY letterhead authorizing:

. . .R. Spiegel, a representative of DEAHY MEDICAL ASSESSMENTS INC., to act as my agent and to make binding decisions on my behalf in all matters connected with this mediation.

Mr. D'Angelo has not met Mr. Spiegel. He thought he was a lawyer because his letterhead identifies him as an ADR specialist. He has not paid any money to Mr. Spiegel. None of Mr. Spiegel’s correspondence identifies him as a lawyer and I have no evidence that he is a lawyer licensed to practice law in the Province of Ontario.

Mr. Levine and Mr. Cormack advised me that the DEAHY assessment concluded that Mr.D'Angelo could not work as a real estate agent and that it made no comment on the cause of that disability.

On February 19, 1999, Wawanesa wrote to Mr. Spiegel that it would not pay for the assessment because it dealt with Mr. D'Angelo's ability to engage in employment which was irrelevant to any claim Mr. D'Angelo had for accident benefits from Wawanesa since he was not employed at the time of the third accident.

At pre-hearing discussions, the pre-hearing arbitrator made a number of orders against Mr. Spiegel personally, dealing with production of material from Mr. Daly's files which would clarify why Mr. Daly arranged for the referral to a functional abilities assessment and dealing with information relating to the two previous motor vehicle accidents. Mr. Spiegel has not complied with these orders.

Mr. Spiegel's request for an adjournment of the hearing scheduled to commence June 13, 2000 was granted. Mr. Spiegel did not tell Mr. D'Angelo that the hearing was adjourned. Mr. D'Angelo appeared at the Commission on June 13th and remembers getting soaked on his scooter because it was raining. The receptionist told Mr. D'Angelo that his hearing was adjourned to October 10, 2000.

On September 21, 2000, about two weeks before the scheduled hearing, Mr. Spiegel wrote to Mr. Cormack and the Financial Services Commission.

Please be advised that Mr. D'Angelo has dismissed me as his representative on this matter and will have another representative take over.

He did not copy this letter to Mr. D'Angelo.

On receipt of this letter, Mr. Cormack wrote to the pre-hearing arbitrator and objected to Mr. Spiegel's non-compliance with production orders and non-compliance with Rule 9.5. He forwarded a copy of this letter to Mr. D'Angelo.

Mr. D'Angelo testified that he did not learn of Mr. Spiegel's purported withdrawal until he received a copy of Mr. Cormack's letter. He immediately started telephoning Mr. Spiegel. When he contacted Mr. Spiegel later that night, Mr. Spiegel told him that the law firm of Henry Goldentuler and Associates was taking over the file. Mr. D'Angelo testified that he did not consent to Mr. Spiegel's withdrawal.

Mr. D'Angelo went to Mr. Goldentuler's office. Mr. Levine of that office accepted the retainer. He said that Mr. Spiegel did not contact Mr. Goldentuler's office with respect to referring this file.

Findings:

I accept Mr. D'Angelo's explanation that he was anxious to have representation in this proceeding and that he did not consent to Mr. Spiegel's withdrawal. I find that Mr. Spiegel misrepresented to the Commission that Mr. D'Angelo had dismissed him. I find that Mr. Spiegel misrepresented to Mr. D'Angelo that Mr. Goldentuler's office had taken over his file.

Mr. D'Angelo expressed no real interest in these proceedings. He learned what was happening from receiving Notices and correspondence from the Commission and copies of letters from Mr. Cormack. He signed authorizations Mr. Spiegel left for him to sign and appeared at the hearing initially scheduled for June 13, 2000 because Mr. Spiegel did not tell him that it was adjourned. He went to Mr. Goldentuler's office when Mr. Spiegel told him to. He went to DEAHY on the recommendation of either Mr. Daly or his family doctor. Mr. Daly represents his interests in all his tort and accident benefit claims arising out of three motor vehicle accidents other than his claim for the assessment performed by DEAHY.

Mr. Spiegel uses DEAHY Medical Assessments Inc. letterhead for correspondence. The authorization Mr. D'Angelo signed identifies Mr. Spiegel as a representative of DEAHY.

I find that DEAHY is the real litigant in this arbitration and Mr. Spiegel represents DEAHY's interests. Mr. D'Angelo expressed no interest in collecting DEAHY's account. His interest is protecting himself against an award of expenses.

Analysis:

So long as an insured person understands the procedures and risk, and wishes to co-operate with the service provider, I see nothing wrong in a service provider using this forum to collect an account for reasonable and necessary services. The expectation that it can claim its account in a cost-effective and expeditious manner before a tribunal that has expertise in the area, may result in an injured insured receiving necessary treatment or other services he or she would not otherwise receive.

Mr. Spiegel, a representative of the real litigant, has withdrawn from the proceeding. I conclude that the real litigant, DEAHY, wishes to withdraw from this proceeding. If the matter goes ahead, Mr. Cormack wants to review Mr. Daly's files to support his allegation that the DEAHY assessment was irrelevant to the third motor vehicle accident. Mr. D'Angelo wants to protect himself against an award of expenses. I see no reason why this application for arbitration should proceed and the parties incur additional expenses where the real litigant has withdrawn.

DEAHY, through Mr. Spiegel, has commenced an arbitration and then abandoned it, leaving Mr. D'Angelo exposed to an award of expenses. Mr. Spiegel also misrepresented to the Commission that Mr. D'Angelo had dismissed him. He misrepresented to Mr. D'Angelo that his file was transferred to a lawyer. He failed to advise Mr. D'Angelo that his hearing had been adjourned.

He failed to follow the proper procedure for withdrawing as a representative. He failed to appear at this proceeding.

In these circumstances, Mr. Spiegel should pay Wawanesa's expenses.

Authority to award expenses against a representative:

Arbitrators have held that they do not have authority to award expenses against a representative.²The authority to award expenses is set out in subsection 282(11) of the Insurance Act as follows:

The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulation.

The criteria are set out in Ontario Regulation 664, R.R.O. 1990 as amended by Ontario Regulation 464/94. In this case, the most relevant criteria are numbers 2 and 3.

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.

The criteria refer to conduct or positions taken by the "insurer or the insured person." Frequently, the conduct or position under consideration is not that of the insurer or the insured person but that of the representative. However, the regulation only refers to the conduct or position of the insurer or insured person. None of the criteria refer to a representative. I conclude that the legislation intends that the conduct or position of the representative is that of the party he or she represents and that my jurisdiction to award expenses is limited to making an award against the party. I am not satisfied that I have authority to award expenses against a representative.

Whether I should award expenses against Mr. D'Angelo:

Mr. D' Angelo relies on Mr. Daly to advance his other claims arising out of three motor vehicle accidents, without too much knowledge of the status of those claims. When he found out that he was unrepresented in this application, he quickly found Mr. Levine to represent him, despite his mobility problems. I find Mr. D'Angelo to be a trusting and dependent person. I find very little fault on the part of Mr. D'Angelo. The pre-hearing arbitrator made the production orders against Mr. Spiegel, not Mr. D'Angelo. I heard no evidence that Mr. D'Angelo failed to cooperate in satisfying the production orders against Mr. Spiegel. Although Wawanesa had to pay a $3,000 assessment fee and retain counsel to respond to a claim for $1,250, which the real litigant has abandoned, I find it unfair to order expenses against Mr. D'Angelo when he placed his trust in Mr. Spiegel to represent his interests and Mr. Spiegel betrayed that trust. It is also unfair that Wawanesa should have incurred unnecessary expenses.

However, Wawanesa was not completely without a remedy. Subsection 23(3) of the Statutory Powers Procedure Act, R..R.S.O. 1990, section 22 provides:

A tribunal may exclude from a hearing anyone, other than a barrister and solicitor qualified to practise in Ontario, appearing as an agent on behalf of a party or as an adviser to a witness if it finds that such person is not competent properly to represent or to advise the party or witness or does not understand and comply at the hearing with the duties and responsibilities of an advocate or adviser.

If Wawanesa had asked for such an order earlier in this proceeding, an arbitrator may have excluded Mr. Spiegel from the proceeding and Wawanesa would have minimized its expenses. In these circumstances, I order each party to bear its own expenses of the arbitration proceeding.

Assessment against insured person:

Subsection 282(11.1) of the Insurance Act allows an arbitrator to order an insured person to pay an amount that does not exceed the insurer's assessment fee, in this case $3,000, where the insured has commenced an arbitration that is frivolous, vexatious or an abuse of process. Here, although Mr. D'Angelo is the insured person and nominal applicant, he is not the real litigant. I find that an abusive arbitration has been commenced by virtue of the real litigant's withdrawal on the eve of the hearing. Mr. D'Angelo did not cause the withdrawal.

In my view, the fair way to deal with the request that Mr. D'Angelo pay Wawanesa the $3,000 assessment fee is to prevent Mr. D'Angelo from being a party to this kind of application again. I therefore order Mr. D'Angelo to pay $3,000 to Wawanesa if he commences an arbitration after February 15, 2001 which includes a claim for the cost of examinations or assessments arising out of the motor vehicle accident of August 20, 1998. This order is subject to any further order by an arbitrator.

Conclusion:

Although Mr. Cormack did not ask that this arbitration be dismissed and Mr. Levine did not seek permission to withdraw the application for arbitration, I see no point in the parties incurring additional expenses to prepare for an arbitration where the real litigant has withdrawn. I see no point in Wawanesa proceeding to an arbitration where it cannot recover expenses against Mr. Spiegel. I believe the interests of the parties are best served if Mr. D'Angelo withdraws this application for arbitration with each party bearing its own expenses. If Mr. D'Angelo does not withdraw this application, he shall pay Wawanesa its expenses of the proceeding to date, forthwith after assessment.

January 5, 2001

William J. Renahan Arbitrator

Date