Neutral Citation: 2002 ONFSCDRS 130

FSCO A01-000785

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

WEI HAN PANG

Applicant

and

KINGSWAY GENERAL INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

David Leitch

Heard:

May 14, 2002, at the offices of the Financial Services Commission of Ontario in Toronto, and July 15, 2002, by telephone.

Appearances:

Philip Yeung for Ms. Pang

Mark H. Fonseca for Kingsway General Insurance Company

Issues:

The Applicant, Wei Han Pang, was allegedly injured in a motor vehicle accident on March 28, 2000. She applied for statutory accident benefits from Kingsway General Insurance Company ("Kingsway"), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Ms. Pang applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Ms. Pang did not participate in the pre-hearing on October 17, 2001, but was represented on that occasion by Ms. Sue Chen, a paralegal with the firm of Royce, Young & Associates. The pre-hearing report, identified the following issues for arbitration:

1. Is Ms. Pang entitled to receive a medical benefit for acupuncture treatment in the amount of $5,735.20, claimed pursuant to section 14 of the Schedule?

The Insurer noted that Ms. Pang failed to attend a medical/rehabilitation DAC on June 1, 2000, and argues that it is not liable to pay for any treatment received after that date, pursuant to subsection 43(3). It also argues that the number of sessions attended prior to that date was excessive.

2. Is Ms. Pang liable to pay an amount to Kingsway that does not exceed the amount assessed against Kingsway in respect of the arbitration, pursuant to subsection 282(11.2) of the Insurance Act, because she commenced an arbitration that is frivolous, vexatious or an abuse of process?

3. Is Kingsway liable to pay Ms. Pang's expenses in respect of the arbitration under section 282(11) of the Insurance Act, R.S.O. 1990, c.I.8?

4. Is Ms. Pang liable to pay Kingsway's expenses in respect of the arbitration under section 282(11) of the Insurance Act, R.S.O. 1990, c.I.8?

5. Is Ms. Pang entitled to interest for the overdue payment of benefits pursuant to section 46(2) of the Schedule?

Result:

1. Ms. Pang is not entitled to receive a medical benefit in respect of the acupuncture treatment she received.

2. Ms. Pang is not liable to pay an amount assessed against Kingsway in respect of the arbitration, pursuant to subsection 282(11.2) of the Insurance Act.

3. Kingsway is not liable to pay Ms. Pang's hearing expenses.

4. Ms. Pang is liable to pay Kingsway's expenses in the amount of $1,500.00.

Request by Applicant's representative to withdraw:

The arbitration hearing was scheduled to proceed on Tuesday, May 14, Wednesday, May 15 and Thursday, May 16, 2002. These dates were set by the pre-hearing arbitrator with the knowledge and consent of Ms. Pang's representative at the pre-hearing, Ms. Chen. Nevertheless, on May 14, 2002, neither Ms. Pang nor Ms. Chen appeared at the hearing. Rather, Mr. Philip Yeung, another paralegal at the firm of Royce, Young & Associates, appeared but only to request an order that his firm be removed as Ms. Pang's representative because it had "lost contact" with her. Mr. Fonseca, legal counsel, appeared for Kingsway and requested an order that Ms. Pang's claim be dismissed on terms favourable to his client.

On questioning Mr. Yeung, I confirmed that Ms. Pang's claim had been handled primarily by Ms. Chen. I, therefore, requested that Ms. Chen be contacted. Through the use of a speaker telephone in the hearing room, Ms. Chen was able to provide information and answer questions.

Ms. Chen stated that she had last spoken to Ms. Pang by telephone about two months prior to May 14, 2002. Ms. Pang was not in Canada at that time. According to Ms. Chen, Ms. Pang was aware of the date of the hearing and indicated to Ms. Chen that she would try to obtain a student visa to return to Canada for the hearing. Ms. Chen reported telling Ms. Pang that if she could not return for the hearing, an adjournment would have to be arranged. Ms. Chen advised that since this conversation, Ms. Pang had not attempted to communicate with her and that her own attempts to communicate with Ms. Pang had been unsuccessful. Ms. Chen further indicated that she had no idea how to reach Ms. Pang.

After hearing submissions from the parties, I remained concerned that Ms. Pang's non-attendance at the hearing was the result of her inability to obtain a student visa to enter Canada. Of course, Ms. Pang should have communicated this fact, if true, to Ms. Chen. On the other hand, she may have assumed, based on her previous conversation with Ms. Chen, that if she did not show up at the hearing, Ms. Chen would simply request an adjournment.

As indicated, rather than requesting an adjournment, Mr. Yeung requested an order that his firm be removed as Ms. Pang's representative. If I had granted this request and proceeded with the hearing, Ms. Pang would then have been deprived, perhaps unfairly, of the opportunity not only to present her claim, but to oppose Mr. Fonseca's request for an order dismissing her claim on terms favourable to his client.

I refused to proceed in this way. As I pointed out to Mr. Yeung, Rule 9.7 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001) (the "Code") required his firm to send Ms. Pang a "written request, with reasons" to withdraw as her representative. His firm had not followed, nor even attempted to follow, this procedure for withdrawing as Ms. Pang's representative. In addition, I was not satisfied that Ms. Pang had been made aware, through her conversations with Ms. Chen, that Royce, Young & Associates would be seeking to withdraw as her representative at the hearing on May 14, 2002.

I, therefore, adjourned the hearing to Monday, July 15, 2002, by telephone. In the intervening period, I required Mr. Yeung to:

1. Prepare a written request, with reasons, to withdraw as Ms. Pang's representative on July 15, 2002, and forward same to the address at which he believed the document would most likely come to Ms. Pang's attention; two versions of this document were to be sent, one in Cantonese and one in English.

2. Prepare, serve and file an Affidavit indicating why the address chosen was the one at which he believed the document mentioned above would most likely come to Ms. Pang's attention and attaching copies of the Cantonese and the English versions of the document sent to Ms. Pang.

At the resumption of the hearing on July 15, 2002, I read Mr. Yeung's Affidavit dated July 8, 2002 and the attached English version of a letter his Affidavit states he sent by regular and registered mail to 3735 Sheppard Avenue East, Apt. 100, Scarborough L3S 3C7, Ms. Pang's "last known address." Also attached to Mr. Yeung's Affidavit are what he describes as a "Chinese translation" of his letter to Ms. Pang and copies of two returned envelopes, apparently marked by the Post Office "not at this address." Finally, Mr. Yeung confirms in his Affidavit that Ms. Pang "has not made any attempts at communicating with my office nor [sic] myself prior to the date of this disposition."²

I found that Mr. Yeung's Affidavit and attachments complied with my order made May 14, 2002. I further found that what Mr. Yeung referred to as Ms. Pang's "last known address" was also the address last known to and recorded by the Commission for her in its file. According to Rule 9.1(b) of (the "Code"), the Dispute Resolution Group "is entitled to rely upon the last known address...contained in its records." Given Ms. Pang's failure to communicate with Royce, Young & Associates for a total period of approximately four months, I found that Mr. Yeung was entitled to forward his firm's written request for withdrawal to what was, both for his firm and for the Commission, Ms. Pang's last known address. Despite the return of the letters sent to Ms. Pang at this address, I am satisfied that it was still the only address known to Mr. Yeung at which these letters had any chance of coming to her attention. Since this request otherwise complied with Rule 9.7 of (the "Code"), I granted Mr. Yeung's request to remove Royce, Young & Associates as Ms. Pang's representative in this proceeding.

Dismissal of Applicant's claims:

In the absence of any supporting evidence or proof, I dismissed all of the claims made by Ms. Pang in her Application for Arbitration, including her claim for a medical benefit in the amount of $5,735.20 for acupuncture treatment received from Ming Fai Chan of the Chinese Medicine & Acupuncture Clinic for the period March 28, 2000 to June 17, 2000, her claim for interest under section 46(2) of the Schedule and her claim for hearing expenses made pursuant to section 282(11) of the Insurance Act.

This left two issues to be decided: Kingsway's claim for the return of its assessment, made pursuant to section 282(11.2) of the Insurance Act, and Kingsway's claim for hearing expenses, made pursuant to section 282(11) of the Insurance Act. After excusing Mr. Yeung and dismissing Ms. Pang's claims, I heard Mr. Fonseca's submissions with respect to these issues.

Kingsway's claim for the return of its assessment:

Section 282(11.2) of the Insurance Act reads 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.

To support his submission that Ms. Pang's Application for Arbitration was an abuse of process, Mr. Fonseca pointed to the following: her failure to attend a medical/rehabilitation DAC assessment on June 1, 2000, her failure to explain her non-attendance at the DAC or to respond to requests to reschedule the DAC assessment, her failure to participate in the mediation on April 12, 2001, her failure to participate in the pre-hearing on October 17, 2001, her failure to participate in the resumption of the pre-hearing discussion on May 3, 2002 and, finally, her failure to appear at the hearing on May 14, 2002. In Mr. Fonseca's submission, this pattern of "time-wasting" conduct established that Ms. Pang had never intended to participate in the dispute resolution process and that she had, therefore, abused that process.

In the case of Richard and Lombard General Insurance Company of Canada,³ Arbitrator McMahon held that section 282(11.2) is intended to return to the insurer the filing fee which it should not have been required to pay because the Application for Arbitration was "so devoid of merit" that it should not have been filed in the first place. Using the same logic in the case of Nguyen and Scottish & York Insurance Company Limited,⁴ I found that, unless it is established that the Application for Arbitration was frivolous, fraudulent, vexatious or an abuse of process when commenced or filed, the Applicant should not be liable to pay an award under section 282(11.2) of the Insurance Act.

In my opinion, the evidence in this case does not support a finding that Ms. Pang's Application for Arbitration was frivolous, fraudulent, vexatious or an abuse of process when commenced or filed. Ms. Pang's failure to present supporting evidence at the hearing led to the dismissal of her claims. However, neither that failure, nor any of the others mentioned by Mr. Fonseca, establishes that no supporting evidence existed or that Ms. Pang was abusing the dispute resolution process to advance claims which were frivolous, fraudulent or vexatious from the outset. Such a conclusion would involve speculation based on post-accident conduct which may have been either explainable or unrelated to the merits of Ms. Pang's claims. Based on the very limited evidence before me, I am not able to describe Ms. Pang's Application for Arbitration as one which should never have been commenced in the first place. Accordingly, I reject Kingsway's request for the return of its assessment.

Kingsway's claim for hearing expenses:

Expense awards must balance the need for access by insured persons to the dispute resolution system with the need to discourage undeserving claims and undesirable behaviour.⁵ In addition, arbitrators must consider the following criteria as stipulated in the Expense Regulation:

1. Each party's degree of success in the outcome of the proceeding.

2. 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.

3. 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.

4. The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.

5. If the insurer or the insured person requests, any written offers to settle made after the conclusion of mediation and before the conclusion of the arbitration in accordance with the rules of practice and procedure applicable to the proceeding, including the terms of the offers, the timing of the offers and the responses to the offers, having regard to the result of the proceeding.

6. Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.

Ms. Pang was more than simply unsuccessful in this proceeding. In terms of the evidence presented at the hearing, all of her claims were "manifestly unfounded." Kingsway is, therefore, entitled to an award of expenses in relation to the hearing on May 14, 2002 and July 15, 2002.

However, correspondence and records in the Commission's file confirm that Kingsway had prior knowledge that Ms. Pang would probably not appear and that Mr. Yeung would be requesting an order removing his firm as Ms. Pang's representative. Considering that the truncated nature of this proceeding was highly predictable and excluding the DAC cancellation fee which is not recoverable as an arbitration expense⁶, I fix Kingsway's expenses at $1,500.00.

August 21, 2002

David Leitch

Arbitrator

Date

Neutral Citation: 2002 ONFSCDRS 130

FSCO A01-000785

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

WEI HAN PANG

Applicant

and

KINGSWAY GENERAL 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:

1. Ms. Pang is not entitled to receive a medical benefit in respect of the acupuncture treatment she received.

2. Ms. Pang is not liable to pay an amount assessed against Kingsway in respect of the arbitration, pursuant to subsection 282(11.2) of the Insurance Act.

3. Kingsway is not liable to pay Ms. Pang's hearing expenses.

4. Ms. Pang is liable to pay Kingsway's expenses in the amount of $1,500.00 pursuant to section 282(11) of the Insurance Act.

August 21, 2002

David Leitch

Arbitrator

Date

Footnotes

1. 1The 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, 303/98, 114/00 and 482/01.
2. 2Exhibit 1.
3. 3(OIC A97-001526, April 29, 1998)
4. 4(FSCO A00-000136, May 10, 2001)
5. 5Allison andMarkel Insurance Company of Canada (OIC P-001231, August 21, 1996).
6. 6Williams and Guarantee Company of North America, (FSCO A00-000020, October 24, 2000); Hart and Allstate Insurance Company of Canada, (FSCO A98-000988, July 6, 2000).