Neutral Citation: 2002 ONFSCDRS 189

FSCO A00-001061

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ROD HARE, in the name of ASHLEY PIOTTO

Applicant

and

KINGSWAY GENERAL INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: John Wilson

Heard: September 23, 2002, at the Offices of the Financial Services Commission of Ontario in Toronto

Appearances:

Rod Hare

Jamie Pollack for Kingsway General Insurance Company

Issues:

The named Applicant, Ashley Piotto, was injured in a motor vehicle accident on February 10, 2000. In a decision dated March 22, 2002, I dealt with the claims made in her name for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

1. Ms. Piotto's name shall be removed from the arbitration, and Mr. Rod Hare shall be noted as the applicant party in this matter.

2. Mr. Rod Hare shall have 30 days from the date of the service of the Insurer's Bill of Expenses in this matter to respond to the claim against him for expenses, failing which he may be found personally responsible for the expenses claimed by the Insurer.

The finding that Mr. Hare should be noted as the Applicant Party in this matter arose from the fact that Ms. Piotto, the originally named applicant, was a minor at the time the "retainer" was completed and "did not have the capacity to engage Mr. Hare, nor to launch the arbitration which was commenced in her name."

Mr. Hare did not respond within the time set out in the order. Instead, Mr. Rowe, a business associate of Mr. Hare, wrote to the Commission and stated that Mr. Hare could no longer be reached at Profile Evaluations. Around the same time, Mr. Pollack wrote to the Commission, noting that the 30 day period allotted to Mr. Hare to respond had expired. Mr. Pollack requested that, in light of his default, an order should be issued accordingly.

By a decision dated September 30, 2002, I further ordered that:

1. The Insurer may proceed with its motion for expenses against Mr. Hare only upon proof of service of all motion documents personally upon Mr. Hare.

None of the orders referred to above has been appealed, nor have any been subject to any request before the courts or the tribunal to request a judicial review or a stay, or any other remedy with respect to any aspect of the orders.

The issue in this further expense hearing is:

1. Is the Kingsway General Insurance Company entitled to its expenses against Mr. Hare in respect of this arbitration?

Result:

1. Mr. Hare is responsible for Kingsway's expenses in this matter.

EVIDENCE AND ANALYSIS:

The surface issues in this expense hearing are relatively straightforward. Following the dismissal of an application for arbitration, there is a question of whether a party should bear the insurer's expenses in this matter, and, subsequently, there is the question of the exact amount of the expense award, should there be a positive finding on the first question. These, relatively simple, issues arise, however, out of a novel finding that Mr. Rod Hare, the supposed agent who launched proceedings in the name of Ms. Piotto, was the actual applicant.

Although this finding has neither been appealed nor stayed, Mr. Hare challenges the jurisdiction of the Commission to make such a finding, and to order that he pay the Insurer's expenses in this matter. Indeed, his participation in this expense hearing was "under protest."

In addition, Mr. Hare challenges the fairness of a hearing, of which he claims to have had no proper notice. He also complains of being subject to "Loosey Goosey" made up "on the fly" procedures. He further argues that the Commission has no jurisdiction to hear this matter at all since "the matter of my past representation of a former client, (which) is a civil matter for the client to pursue should there be a dispute."

As noted in my previous decisions on the issue of expenses, the Insurer served a copy of its Notice of Motion on Rod Hare by delivering it to him at the offices of Profile Evaluations, with which Mr. Hare was then associated. Mr. Hare then wrote to Mr. Pollack, returning the Notice of Motion and accompanying documents. In the covering letter, Mr. Hare stated that he was no longer involved with the matter. At this expense hearing, Mr. Hare acknowledged having received and returned the documents, but denied any knowledge of their contents. Consequently, he had no notice that the Insurer was moving to find him personally responsible for its expenses in this matter.

The common law has long been that proper service of the parties to a proceeding is a fundamental part of the notice requirement. With the exception of ex parte matters, without valid notice there can be no subsequent proceedings.

As Lord Greene M.R. stated in Craig v. Kanssen [1943] 1 All E.R. 108 at p. 113:

In my opinion, it is beyond question that failure to serve process where service of process is required, is a failure which goes to the root of our conceptions of the proper procedure in litigation. Apart from proper ex parte proceedings, the idea that an order can be validly made against a man who has had no notification of any intention to apply for it... has never been adopted in this country.

In my interim decision of September 30, 2002, I found that Mr. Hare was properly served with notice of the expense claim and "whether he chose to read the motion documents or not, it is clear that Mr. Hare's December 12, 2001 letter is a confirmation of actual knowledge of the Insurer's motion."

The notice of motion that was served included, among the claims for relief a claim that the Insurer's expenses be fixed and paid forthwith by "Ashley Piotto, Rod Hare and/or Profile Evaluations to the insurer."

The affidavit of Stanley Tessis dated December 10, 2001, served and filed with the Notice of Motion, states:

I do verily believe that as Rod Hare and/or Profile Evaluations have commenced the applications for mediation and arbitration without proper authority they are the defacto applicant of both applications. As a result, I do verily believe that this is a proper case for the arbitrator to use his or her discretion to order expenses of the hearing payable by Rod Hare and/or Profile Evaluations to Kingsway General Insurance Company.

Mr. Hare, in order to ascertain that the documents he received related to the Piotto case (as he indicated in his letter to Mr. Pollack) would have had to, at the very least, open the envelope. Had he read something of the documents, he would have quickly realized that the Notice of Motion directly implicated him, as the above excerpts indicate. Mr. Hare, evidently, stopped short before reading anything that might result in knowledge being imputed to him of these, very, proceedings.

Sopinka J. in R. v. Hawkins 1995 CanLII 85 (SCC), [1995] 4 S.C.R. 55, at p. 111 discussed the issue of "wilful blindness," or turning a blind eye.

A finding of wilful blindness involves an affirmative answer to the question; Did the accused shut his eyes because he knew or strongly suspected that looking would fix him with knowledge?

Likewise, Lamer C.J.C. stated in R. v. Davis 1999 CanLII 638 (SCC), [1999] 3 S.C.R. 759:

In R. v. Sansregret, 1985 CanLII 79 (SCC), [1985] 1 S.C.R. 570 at p. 584, McIntyre J. held that "wilful blindness arises where a person who has become aware of the need for some inquiry declines to make the inquiry, because he does not wish to know the truth. He would prefer to remain ignorant."

Where there is a finding of wilful blindness, there may be knowledge imputed by law.

It should be remembered that Mr. Hare, although not a lawyer, has represented a significant number of applicants at the Commission. Someone, acting in the capacity of a legal representative, should be aware that a document addressed to him and served upon him, entitled Notice of Motion, might be of some importance to him, and should, at the very least, be read. I find that, even if Mr. Hare did not read the documents served upon him, the knowledge of the motion against him set out in those documents, should be imputed to him on the basis of wilful blindness.

The Insurer, in addition to serving the originating notice of motion and motion documents on Mr. Hare, also, in accordance with my order, personally served its claim for expenses and all relevant material on Mr. Hare, prior to this latest expense hearing.

Mr. Hare responded to the service of this latest motion material by writing a series of complaint letters addressed to the Senior Arbitrator at the Dispute Resolution Group of the Commission. Ultimately, on October 15, 2002, he wrote to the Commission requesting an adjournment of the matter to March of 2003. Although his letter to the Commission complained of the lack of consultation with him, he gave no reasons for the adjournment request, other than his non availability.

Since the adjournment request did not meet the criteria outlined in Rule 72 of the Dispute Resolution Practice Code, (4^th Edition, May 31, 2001) (the Practice Code), and was made at the last minute, I refused to grant the adjournment.

Mr. Hare did not serve or file any response to the Insurer's motion, nor did he file any evidence in support of his position. At the time scheduled for the expense hearing on Monday, October 21, 2002, Mr. Hare did not attend at the Commission offices. A message, however, was received from his office giving his cell phone number. Mr. Hare was contacted at that number, and participated in the expense hearing by cell phone.

Mr. Hare's participation in the expense hearing was subject to his fundamental objection to the jurisdiction of the Commission to draw him into its process, and to make any award against him for expenses in this matter. Mr. Hare also reiterated his request for an adjournment, this time to retain a lawyer. When questioned whether he wished to retain a lawyer to represent him in these proceedings, he replied that the lawyer would be for the purposes of suing the arbitrator and the Commission.

While an adjournment might well be both justifiable and productive if it were for the purposes of retaining counsel to deal with the matters presently before the Commission, I, once again, denied the adjournment request, since his stated reasons had nothing directly to do with the actual dispute being heard.

Having noted, but not decided, Mr. Hare's objections to the jurisdiction of the Commission, the expense hearing resumed.

As previously stated, this hearing followed on the finding, made in March 2002, that Mr. Hare did not have the authority to bring an application in the name of Ms. Piotto, and that, consequently, he was to be viewed as the instigator of this process, and the actual applicant.

Whatever Mr. Hare may think of this finding, he has made no effort to appeal the order.

While it is inappropriate for Mr. Hare to attempt to relitigate a matter that has already been decided, and has not been appealed, it would also be inadvisable for the Commission to proceed in this matter if it patently lacked jurisdiction to provide the relief claimed.

Consequently, I will address Mr. Hare's concerns about the jurisdiction of an arbitrator to make an expense or costs order against him.

Without statutory authority, there is no provision for an administrative tribunal to make a costs order. The Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 ("SPPA"), provides that a tribunal may make rules as to the conduct of proceedings before a tribunal. Pursuant to this power, the Financial Services Commission has issued the Dispute Resolution Practice Code. Section 79 of the Practice Code allows an arbitrator, where parties cannot agree on entitlement to, or the amount of expenses in a proceeding, to decide the issue.

Rule 75.1 of the Practice Code provides that:

An adjudicator may award expenses to a party if the adjudicator is satisfied that the award is justified having regard to the criteria set out in Rule 75.2...

Rule 75.3 sets out various criteria including a party's success, the conduct of an insured or an insurer, whether any position taken by the insured or insurer was manifestly unfounded, and "any other matter related to the proceeding that the adjudicator considers relevant."

Subsection 1.5 of the Practice Code notes that the rules are made pursuant to section 21 of the Insurance Act and section 25.1 of the SPPA. Subsection 282(11) of the Insurance Act provides that:

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 regulations.

Section 17.1 of the SPPA provides that:

Subject to subsection (2), a tribunal may, in the circumstances set out in a rule made under section 25.1, order a party to pay all or part of another party's costs in a proceeding.

As noted previously, the rules contained in the Practice Code are made pursuant to section 25.1 of the SPPA.

A key consideration here is the use of the word "parties" in the context of Rule 75.1 of the Practice Code, rather than the words "insured" or "insurer" used in the Insurance Act.

Subsection 281(1)(b) of the Insurance Act provides that the insured person may refer the issues in dispute to an arbitrator under section 282. Although an insured and an insurer are implicitly necessary parties to an arbitration, nowhere does the Insurance Act specify that an insured and an insurer are the only possible parties to an arbitration proceeding. As noted, arbitrations at the Commission are subject to both the Insurance Act and the SPPA.

Section 5 of the SPPA provides that:

The parties to a proceeding shall be the persons specified as parties by or under the statute under which the proceeding arises or, if not so specified, persons entitled by law to be parties to the proceeding.

As noted, since the Insurance Act does not provide a specific definition of parties, the definition of parties to a proceeding before the tribunal includes "persons entitled by law to be parties to the proceeding."

In such cases, the common law provides a clear idea of who should be a party in any matter. As stated by Reid J. in Re Collins et al. and Pension Commission of Ontario et al. (1986 CanLII 3913 (ON HCJDC), 56 O.R.(2d) 274):

The object of requiring notice would be, of course, to give the union or plan members an opportunity to defend their interest. They could not do this without knowing what the application was based on, so they would have to be furnished with the documents supporting the application.

Clearly, persons requiring notice of a proceeding must also be considered potential parties to a proceeding. Without the possibility of being added as a formal party the "opportunity to defend their interest" would simply not arise.

The practice at the Commission that implicitly recognizes parties other than merely the "insured" or "insurer" is readily apparent from the Practice Code itself. The Practice Code at Rule 9.7 contemplates motions to withdraw as a representative. Patently, the representative him or herself is a necessary party to such a motion. The Practice Code at Rule 67.7 also provides for the production of documents by third parties. In such cases, the third party must be served with notice of the requested order, and is clearly permitted to respond to such a claim. For the purposes of such a motion, the third party is a party.

It is also not unusual for the Commission to hear matters in which the standing of the applicant is, in itself, an issue. Such matters necessarily arise when there is a question whether an applicant is covered by a valid insurance policy, or whether a previous policy was cancelled or was in force. Such an applicant is heard, and accepted as a party to an arbitration, notwithstanding that a negative finding on insurance coverage would make the applicant, technically at least, not an insured as defined by the Insurance Act.

The Practice Code also makes a clear distinction between the words "insurer," "insured" and "party." While the word "insured," for example, is quite properly used in the context of the commencement of an arbitration (Rule 11.2, Rule 25), the Practice Code refers to a "party" in the context of most other procedural sections.

Black's Law Dictionary defines party as:

A person concerned or having or taking part in any affair, matter, transaction, or proceeding, considered individually. A "party" to an action is a person whose name is designated on record as plaintiff or defendant.

While the definition would clearly encompass an insured as a necessary party to an arbitration, it would also include the wider range of persons taking part in a proceeding, or having an interest in a matter before a tribunal.

One of the principles of statutory interpretation is the rule against tautology. As Viscount Simons wrote in Hill v. William Hill (ParkLane Ltd.) [1949] A.C. 530:

When the legislature enacts a particular phrase in a statute the presumption is that it is saying something which has not been said immediately before. The rule that a meaning should, if possible be given to every word in the statute implies that, unless there is good reason to the contrary, the words add something which would not be there if the words were left out.

The rule would suggest that the use of the word "party" in the Practice Code is not simple careless usage, but was intended, at least in the context of Rule 75, to provide for a wider basis for the awarding of costs than foreseen in the Insurance Act. Such a conclusion is also consistent with the origins of the Practice Code, itself. It owes its authority to both the Insurance Act and the SPPA. Indeed, the use of the word party mirrors the language used in the SPPA.

Subsection 25.1(5) of the SPPA provides that the rule-making authority created by subsection 25.1(1) of the SPPA is "in addition to any power to adopt rules that the tribunal may have under another Act."

Furthermore, the expense power under Rule 75 of the Practice Code specifically incorporates by reference the criteria set out in the Expense Regulation, a statement that would be redundant if the Practice Code merely reiterated the expense authority of subsection 282(11) of the Insurance Act.

Consequently, it may be seen that the Practice Code applies a power to order costs or expenses payable to an insured or an insurer, pursuant to the Insurance Act, and a concurrent power over parties to a matter before the Commission, which draws its authority from the SPPA.

This overlapping power does not, in itself, create a problem. There is no need for the scheme under either the Insurance Act or the SPPA to be paramount. Subsection 282(11.2) provides for the payment by an insured of an amount equal to the insurer's assessment, by way of penalty, if certain criteria are met.

The Insurance Act at subsection 282(11) provides for costs penalties payable to either the insured or the insurer. The Rules of the Practice Code made pursuant to the SPPA simply provide for costs to be payable to parties generally. There is clearly some overlap between the different positions, such as that noted by Ruth Sullivan (Driedger on the Construction of Statutes, 3rd edition, Toronto: Butterworths, 1994, at p. 177),

Where two provisions are applicable without conflict to the same facts, it is presumed that each is meant to operate fully according to its terms. So long as the overlapping provisions can apply, it is presumed that they are meant to apply.

Consequently, arbitrators may properly exercise the complementary authority under the Rules, the Insurance Act and the SPPA to order that parties pay the expenses of a hearing to either an insured or an insurer, or a party, as the case may be.

In Tanzos (Tanzos and State Farm Mutual Automobile Insurance Company, FSCO P01-00017, October 22, 2002) appeal order, David Draper, the Director of Arbitrations, stated:

According to s. 282(11) of the Insurance Act, expenses can be awarded "to the insured person or the insurer." This wording is also used in the regulation-making authority in s. 121(1)26 of the Act and in the regulation itself. Although these provisions do not specify who is to pay the expenses, they do not confer any authority to make an order, particularly an order for the payment of money, against a non-party.

In Television Real Estate Ltd. v. Rogers Cable T.V. Ltd. (1997), 1997 CanLII 999 (ON CA), 34 O.R. (3d) 291, the Court of Appeal considered the following cost power in the Courts of Justice Act, R.S.O. 1990, c. C.43:

131.(1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

Even with the additional authority to determine "by whom" costs are to be paid, the Court confirmed previous jurisprudence that this section does not authorize an award against someone who is not a party to the proceedings. If this section does not confer authority to award costs against a non-party, the provisions in the Insurance Act certainly do not.

The Practice Code, however, does not purport to award expenses to anyone other than a party. As noted, Mr. Hare in this matter has been found to be a party to the proceeding, by reason of the law of agency, which provides for an agent to be personally responsible for any actions taken in the name of a principal without proper authority. By law, Mr. Hare stepped into the shoes of the insured by so acting without authority.

Mr. Hare has suggested that the Commission has no business enquiring into the relationship between him and his "client," and certainly no right to make a finding that he is the true applicant in this matter.

Mr. Justice Winkler (in Smith v. Canadian Tire Acceptance Ltd. (1995) 1995 CanLII 7163 (ON CTGD), 22 O.R. (3d) 433 (Gen.Div.)) aff'd (1995), 26 O.R. (3d) 94 (C.A.) Leave to appeal to S.C.C. denied) ordered that costs of a failed class action be payable by the instigator and promoter of a law-suit, who was not a named party. In his decision, he dealt specifically with the policy reasons that justify an investigation into the identity of the true parties to an action. Winkler J. framed the questions to be addressed as follows:

The issue for determination on this motion is whether costs should be awarded against the Society and Mr. Whaley as non-parties to these proceedings. Whether this question should be answered in the affirmative depends on whether the Society and Mr. Whaley, while not the named plaintiffs in the action, were the actual plaintiffs, and whether their conduct in instigating, promoting, controlling and raising funds to support this lawsuit was improper.

The judge then considered the ability of the courts to enquire into the identity of parties:

The seminal case, Sturmer v. Beaverton (Town) (1912), 1912 CanLII 588 (ON DIVCT), 25 O.L.R. 566, 2 D.L.R. 501 (Div. Ct.), leave to appeal refused, stands for the proposition that "where the real party litigant puts forward another person in whose name proceedings are taken, the Court has jurisdiction to impose costs against the real litigant" (Sturmer, p. 505). At pp. 508-09, Mr. Justice Middleton stated, for the court:

In this case it is not said that Hamilton "merely has an interest in the suit." It is said and shewn that it is his suit and that he has been guilty of something in the nature of barratry and maintenance, because, desiring to try his own right, he has procured this man of straw to allow the litigation to be brought in his name. This, as the cases shew, is an abuse of the process of the Court, and I think a contempt of a most serious character, because the Court, which is called into existence to administer justice, is being used as a tool and instrument by which an injury is inflicted, which, it is said, it can in no way redress.

He concluded that there were sound policy reasons to go behind the nominal plaintiff in this matter, namely that the scheme was set up to avoid the potential cost consequences resulting from an adverse finding.

The Commission, as with any tribunal governed by the SPPA, has authority under section 23(1) of that act to "make such orders or give such directions in proceedings before it as it considers proper to prevent abuse of its processes."

The finding that Mr. Hare was the actual party applicant in this matter was a proper use of the powers granted under section 23(1) of the SPPA.

In the case before me, there are at least three cogent policy reasons why the Commission should look behind the nominal applicant in this arbitration.

The first was outlined in the original decision, namely that Mr. Hare had no legal authority to launch this arbitration on behalf of a minor.

The second is that this action is set up in a manner that is intended to defeat the purposes of subsection 282(11) of the Insurance Act, which provides for costs sanctions against unsuccessful or unworthy applicants.

The third reason is that the scheme whereby Mr. Hare, or others, provide services to an insured and then, independently of the insured, launch a claim for reimbursement from the insurer in the name of the insured, is a clear attempt to avoid the rule against the assignment of benefits under the Schedule.

In Gurevich and Royal & Sunalliance Insurance Company of Canada (FSCO A01-000936, April 29, 2002), I reviewed the problems raised by proceedings launched in this manner.

At Common Law, the right to bring an action, or to recover a debt or money, a chose in action was not assignable. The Courts of Equity, however, recognized and enforced assignments of choses in action with some significant exceptions. Among the exceptions were mere rights of action, contracts which expressly exclude assignment, assignments void by public policy, and assignments prohibited by statutory provisions. As noted previously, the assignment of benefits pursuant to the Schedule is specifically prohibited.

In the case of a legal chose in action, Equity could still be of assistance to an assignee. As Morden J. noted in DiGuilo v. Boland 1958 CanLII 92 (ON CA), [1958] O.R. 384:

Chancery would compel the assignor to collaborate with the assignee in asserting his claim in the Common Law Courts. If the assignment of an equitable chose was not absolute, then both the assignor and assignee were necessary parties to a suit in equity.

The purpose of including the assignor as a party was to ensure that all the relevant parties and their evidence were available to the tribunal. Their addition, however, did not change the fundamental characterisation of the transaction as an assignment.

These arbitrations, although commenced by the treatment provider, are in the names of the insured persons, presumably to avoid the prohibition of assignment. I find, however, that the mere addition of the names of the insured does not change the overall character of the transaction as an assignment of the right to claim from the Insurer.

Thus, there are strong policy considerations, going to the root of the Commission's jurisdiction, that may arise from the identity of the applicant in any matter.

In this matter, however, the motion to dismiss and to find that Mr. Hare was the actual party behind the application was brought by the Insurer, and not at the instance of the Commission. The Insurer alleged that it was brought into the forum by Mr. Hare, and incurred expenses in defending this application by reason of the actions of Mr. Hare.

As noted, Mr. Hare was properly served with the Insurer's motion, and could well have responded to its allegations that he was the true applicant and a proper party to this matter. Needless to say, he did not.

While, as Mr. Hare submits, a civil court has jurisdiction, and may hear a claim against Mr. Hare for breach of warranty of authority, the same circumstances may also be of interest to the Commission in the context of a claim for expenses by the Insurer.

Originally, expense awards could be made payable only to an "insured person." Indeed, prior to the 1996 revisions of the Insurance Act, an applicant could reasonably expect to receive compensation for his or her expenses, regardless of the success or failure of the claim.

Gradually the system changed, permitting an insurer to claim its costs as well, albeit at a potentially lesser scale than an applicant.

Since these revisions, jurisprudence at the Commission has generally expressed concerns about preserving access to the dispute resolution process. As Director's Delegate Draper observed in Gray and Zurich Insurance Company (FSCO P98-00047, June 11, 1999):

the criteria, specifically clause 6, leave room for concerns about the access to the dispute resolution system. One aspect of accessibility is that insured persons should have a reasonable opportunity to raise novel issues of interpretation, particularly those of general importance.

Consequently, it is not unusual for expense awards at the Commission to consider access issues, rather than to slavishly adhere to the principle of costs following the cause, as outlined in subrule 75.2(a) of the Practice Code. Generally in making an expense order, an arbitrator will balance the specific criteria contained in the Expense Regulation with subrules 75.2 (d) and (f) of the Practice Code with the view of not unnecessarily discouraging parties from referring significant factual or legal issues to arbitration.

In many ways, the Commission's expense provisions are more similar to cost provisions under the Class Proceedings Act (S.O. 1992, c.6).

Winkler J. in Smith (supra), summarized some the considerations under that act.

In exercising its discretion with respect to costs under subsection 131(1) of the Courts of Justice Act, the court may consider whether the class proceeding was a test case, raised a novel point of law or involved a matter of public interest. Hence, in a case of a novel nature, and absent any circumstances which militate to the contrary, the court may exercise its discretion and decline to award costs to the successful party. This was done in the instant case on the motion for summary judgment in respect of the named plaintiffs.

The similarity to the policies enunciated by Director's Delegate Draper in Gray (supra) is striking.

The Expense Regulation (Regulation 664, R.R.O. 1990, as amended) further provides at subsection 12(2):

An arbitrator may award expenses to an insurer or insured person under subsection 282 (11) of the Act if the arbitrator is satisfied that the award is justified, having regard to the following criteria:

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

2. Conduct of the insurer or 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.

Both the Expense Regulation and the Practice Code make abuse of process an important consideration in any award of expenses. An abuse of process is not defined in the Schedule, the Regulations or in the Insurance Act. The phrase, however, has a long history of judicial interpretation, especially in the context of vexatious proceedings.

Lord Blackburn observed in Metropolitan Bank Ltd. et al. V. Pooley (1885) 10 App. Cas. 210:

(T)he Court had inherently in its power the right to see that its process was not abused by a proceeding without reasonable grounds, so as to be vexatious and harassing.

Although the Commission, as an administrative tribunal and a creature of statute, has no inherent jurisdiction, subsection 23(1) of the SPPA specifically grants a mandate to control abuse.

Consequently, the Commission has a real interest, especially in the context of a claim for expenses, in determining whether an application is frivolous or vexatious, and whether it constitutes an abuse of the process of the Commission.

The courts have also examined the meaning of "vexatious" in the context of frivolous and vexatious litigation, which has, in turn, been seen as an abuse of process. Vexatious litigation includes situations where the court has no power to grant the relief sought (see Dreyfus v. Peruvian Guano Co. (1889) 41 Ch.D. 151), if no reasonable person can possibly expect to obtain relief in it, (see Lawrance v. Lord Norreys et al. (1888) 39 Ch. D. 213), or if the applicant has no proper authority to pursue the remedy (see R. ex rel. Tolfree v. Clark et al. [1943] O.R. 314). In the first decision dismissing this arbitration, I made the following finding:

Having found that Ms. Piotto did not validly authorize the application for arbitration, and, indeed was incapable of authorizing it, and that the agent was aware of Ms. Piotto's incapacity at the time he purported to bring an action on her behalf, I find that, in accordance with the common law of agency, as accepted in Ontario, the agent, Mr. Hare of Profile Evaluations is the actual party who brought this matter, and not an agent for Ms. Piotto.

Following R. ex rel. Tolfree v. Clark et al. (supra), I find that the act of bringing an arbitration application that he knew, or ought to have known was without proper authority, constituted frivolous and vexatious litigation, and was an abuse of the process of this tribunal.

Winkler J. in Smith (supra) clearly identified policy reasons for a court's concern with the identity of a litigant.

It must be recognized that, in a class proceeding, there is a real vulnerability that an impecunious representative plaintiff will be put forward with this purpose in mind. Such a plaintiff is, strictly speaking, a real plaintiff in the sense of having an interest the same as others in the class, while at the same time being immune from costs sanctions. In such circumstances, the court must exercise its supervisory jurisdiction with vigilance and, where circumstances dictate, apply the appropriate principles of law. In a proper case, a court may examine the role of counsel.

A tribunal, as well, must, from time to time, exercise such a jurisdiction if it is to safeguard both its process and the appearance of fairness. To do otherwise would be to countenance an abuse of its process pursuant to subsection 23(1) of the SPPA.

Having pre-empted the rights of an insured and availed himself of the process of the Commission, Mr. Hare should be prepared to accept the due consequences of his abuse of that process. As I noted in Gurevich (supra),

To order otherwise would, in effect, make the Commission a party to a potential abuse of process by a treatment provider and require the insured to bear the full responsibility for the malfeasance of another. In this case, I do not find that to be the appropriate result.

The Insurer has made a good case for its expenses. The application was without authority, and an abuse of the process of the Commission. The Insurer was completely successful in its defence of the matter.

An award of expenses has both a compensatory and a punitive aspect. A finding that those expenses should be born by the nominal applicant, Ms. Piotto, would make a travesty of justice, and leave the key player in this matter untouched. It would result in a situation where the tribunal, in the words of Middleton J. cited by Winkler J. in Smith (supra) (which is) called into existence to administer justice, is being used as a tool and instrument by which an injury is inflicted, which, it is said, it can in no way redress.

The alternative, a finding that, Mr. Hare, the applicant in law should pay the Insurer's expenses addresses the issue of fair compensation to the insurer, and penalty to the person responsible for this abuse of process.

Consequently, I am satisfied that the finding that Mr. Hare was the applicant in this matter was both appropriate, and one that was open to the tribunal to make by reason of both the common law and the application of section 23(1) of the SPPA. I find, therefore, that Mr. Hare, as the party initiating this arbitration in the name of the insured, should be liable to pay the Insurer's expenses in this matter.

Mr. Pollack served a Bill of Expenses on Mr. Hare. The amount totals $4,925.38, including G.S.T. Although Mr. Hare did not address this issue at the expense hearing, it appears that both the rates, and the time expended by Mr. Pollack and his staff are within the guidelines approved by the Commission. I find, therefore that the expenses claimed by Mr. Pollack are reasonable, and should be paid by Mr. Hare.

Mr. Pollack also, in his materials, raised the issue of a return of the Insurer's assessment, pursuant to subsection 282(11.2) of the Insurance Act as part of his claim for expenses. This does not form an appropriate part of any claim for expenses, and should have been dealt with as part of the motion to dismiss. I therefore decline to make any such order.

November 29, 2002

John Wilson Arbitrator

Date

Neutral Citation: 2002 ONFSCDRS 189

FSCO A00-001061

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ROD HARE, in the name of ASHLEY PIOTTO

Applicant

and

KINGSWAY GENERAL INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, and section 17.1 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended, it is ordered that:

1. Mr. Rod Hare shall pay forthwith to Kingsway General Insurance Company the amount of $4,925.38, being the expenses assessed in this matter

November 29, 2002

John Wilson 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.