Neutral Citation: 2002 ONFSCDRS 27
FSCO A01-000463
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
KHALIL ASMAIL
Applicant
and
WAWANESA MUTUAL INSURANCE COMPANY
Insurer
DECISION ON A MOTION
Before:
John Wilson
Heard:
November 2, 2001, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
Brian Sherman on his own behalf
Mr. Asmail on his own behalf
Donald G. Cormack for Wawanesa Mutual Insurance Company
Issues:
The Applicant, Khalil Asmail, was involved in a motor vehicle accident on August 24, 1997. He applied for statutory accident benefits from Wawanesa Mutual Insurance Company ("Wawanesa"), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Mr. Asmail applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
Wawanesa in its Reply noted that the claims made by Mr. Asmail had not been mediated. It also claimed its expenses and an award equivalent to its assessment in this matter on the basis that it viewed Mr. Asmail's claim as being frivolous and vexatious.
At the pre-hearing in this matter, neither Mr. Asmail, nor his agent of record, Mr. Sherman appeared. I ordered that Mr. Asmail pay the expenses thrown away by Wawanesa due to this abortive pre-hearing.
Mr. Sherman subsequently requested to be removed as agent of record in this matter.
Wawanesa countered by filing a motion to strike out the Application for Arbitration, claim its expenses against Mr. Sherman and Mr. Asmail and to impose conditions on the release of Mr. Sherman as counsel of record.
These motions were heard together at a pre-hearing resumption on November 2, 2001. In my interim pre-hearing letter I made the following orders:
Mr. Asmail shall have two weeks to advise the Commission if he intends to retain counsel.
He (Mr. Asmail) is also ordered to pay the outstanding expense order within two weeks of today's date, failing which, I may order his application stayed.
Should Mr. Asmail wish to respond to the Insurer's motion, he must file his response with the Commission, and serve it on the Insurer at least seven days prior to the hearing of the Insurer's motion on November 30, 2001.
Prior to the hearing, I was advised that Mr. Asmail paid the outstanding expense award. He did not, however, advise the Commission of any new counsel, nor did he serve or file any response to the Insurer's motion.
The preliminary hearing issues are:
Is Mr. Asmail barred from proceeding to arbitration on the issues of housekeeping, attendant care, and medical benefits since only income replacement benefits were the subject of a failed mediation pursuant to section 281(2) of the Insurance Act.
Is Mr. Sherman entitled to withdraw as the representative of Mr. Amail?
Is Wawanesa entitled to its expenses against Mr. Sherman or Mr. Asmail?
Is Mr. Asmail required to pay an amount to Wawanesa, equivalent to its assessment fee in this matter?
Result:
Mr. Asmail is barred from arbitration.
Mr. Sherman is entitled to withdraw as the representative of Mr. Asmail.
Mr. Asmail shall pay Wawanesa $1,500 as its fixed costs in this matter.
Mr. Asmail shall pay $3,000, an amount equivalent to its assessment, to Wawanesa should he apply for mediation or arbitration of the same issues.
Withdrawal of a representative:
The rules contained in the Commission's Dispute Resolution Practice Code (the 'Code ": deal with the withdrawal of representatives or counsel. Rule 9.7 states:
A representative who seeks to withdraw from a proceeding must:
(a) provide a written request for withdrawal, with reasons, to the Dispute Resolution Group and all parties to the proceeding.
(b) provide the last known address, telephone number and electronic transmission address (if any) of the represented party.
Mr. Sherman provided written notice to the Commission and all parties requesting to be removed as representative on the basis that he was improperly retained, and was unable to obtain pertinent information from the client. Rule 9.8 provides:
Where the party represented provides written consent to the representative's request for withdrawal, the Registrar or an adjudicator shall permit the representative's withdrawal. Otherwise, an adjudicator may permit the representative to withdraw, subject to such terms as the adjudicator considers just.
While, in the light of Mr. Sherman's lengthy delay in requesting his removal as agent of record, I question the credibility of his assertions that he was never properly retained on this file, he has now made such a request.
Mr. Sherman has provided a signed consent to his withdrawal. Mr. Asmail has confirmed that he did sign the consent. Rule 9.8 is mandatory. I have no jurisdiction to impose conditions on Mr. Sherman's withdrawal.
I find that Mr. Sherman has validly removed himself as representative of Mr. Asmail, in accordance with the Code.
Jurisprudence at the Commission has accepted that there is no jurisdiction to award expenses against other than the Insured or the Insurer. (See Armstrong and Personal Insurance Company of Canada, (FSCO A97-001844, May 14, 1999), and Tallis and Royal Insurance Company of Canada, (OIC A-007109, May 1, 1995). There was no evidence that Mr. Sherman acted unilaterally, without authority, or otherwise stepped into an applicant's shoes in the conduct of this matter. I find that, under the circumstances, he is neither a party nor an insured or an insurer and I have no authority to order expenses against him, even if such an award were appropriate.
Failure to mediate:
The Report of the Mediator is filed with the Application for Arbitration. It lists "income replacement benefits" as remaining at issue.
Although the burden of proof in this motion is with the Insurer, which alleges that Mr. Asmail is barred from proceeding to arbitration, the mediator's report is prima facie evidence that the issues in this arbitration were not mediated. I have no evidence that Mr. Asmail disputed the mediator's report .Without an explanation from the Applicant, or evidence that the report was incomplete or erroneous in some way, I am unable to conclude that the Report of the Mediator should not stand.
I accept that the issues contained in Mr. Asmail's Application for Arbitration have not been mediated. Consequently, I find that pursuant to section 281(2) of the Insurance Act, Mr. Asmail is barred from proceeding to arbitration.
Award pursuant to section 282 (11.2) of the Insurance Act.
Wawanesa submits that Mr. Asmail should compensate it for its $3,000 assessment fee, since the application for arbitration was frivolous and vexatious and an abuse of process.
Subsection 282 (11.2) of the Insurance Act reads:
If an insured person commences an arbitration that, in the opinion of the arbitrator, is frivolous vexatious or is an abuse of process, the arbitrator may award an amount to be paid by the insured person that does not exceed the amount assessed against the insurer in respect of the arbitration
Mr. Asmail's arbitration was filed, accompanied by a cheque from "Top Defence." The application is signed by someone, presumably Mr. Asmail, although the signature is indecipherable. Presumably, "Top Defence" drafted and filed the application, putting Mr. Sherman down as the ultimate representative.
At the time the application was made, it should have been apparent to anyone that it was not in compliance with the mediation pre-condition for arbitration. The Report of the Mediator is attached to the application. On the face of the report is the statement by the mediator that the only issue which failed mediation was that of income replacement benefits. The application contains no explanation for this apparent and potentially fatal discrepancy.
I find that the person who filled out this application should have been aware of the discrepancies between the mediator's report and the application for mediation. Furthermore, he or she should have been aware that an application of arbitration of issues that have not been mediated is a nullity.
Under such circumstances, I find that the application for arbitration filed on behalf of Mr. Asmail was a patent nullity and the filing of such an application can be characterized as frivolous and vexatious.
Although Mr. Asmail may not have personally been aware that his application was a nullity, it is clear that he may have authorized it to go ahead without making any serious enquiry into the potential consequences.
Mr. Asmail appeared personally at both motion hearings. He professed an intention to retain counsel and continue with his application. He has done nothing to realize his stated intention, despite specific time limits provided to him.
There was some evidence given by Mr. Sherman that the Application for Arbitration may have been made under circumstances where he was not consulted before being listed as agent for the Applicant. If this is true, it is also possible that the authors of the application were also not totally forthcoming in their dealings with Mr. Asmail.
It is, at times, difficult for an unrepresented applicant to understand the dispute resolution system, and to function effectively within a formal, legalistic environment. Consequently, Mr. Asmail has been given adjournments and time to obtain further advice and retain counsel.
Decisions at the Commission have stressed the need to remain open to unrepresented applicants, and not to discourage applicants through unnecessarily punitive awards. However, an unrepresented applicant cannot perpetually hold hostage both the dispute resolution system and the Insurer by countless delays and applications which are totally without merit.
I find that Mr. Asmail's application for arbitration was totally without merit, and, as such, it was frivolous, vexatious, and an abuse of process.
I exercise my discretion to order Mr. Asmail to pay an assessment equivalent to the Insurer's assessment of $3,000, payable only if Mr. Asmail intends to apply for mediation and proceed again on the issues contained in his Application for Arbitration. Mr. Asmail may not access the dispute resolution system on these issues without providing proof that he has paid this assessment.
Expenses:
Having found that Mr. Asmail's application constituted an abuse of process, its continuation, in the face of its patent weaknesses should also attract sanction. While I understand Mr. Asmail's frustration in being caught up in a confusing situation, he could, at any time, have withdrawn his application, without forcing the Insurer to incur further unnecessary costs.
I find that, in addition to being party to an abuse of process, Mr. Asmail, and his counsel of record, unnecessarily delayed this matter, and increased costs to all concerned by not promptly addressing the failure to comply with subsection 281(2) of the Insurance Act.
I have already ordered that Mr. Asmail pay the fixed costs of the Insurer, thrown away at the abortive pre-hearing in August. I now find that he should pay the expenses of the Insurer in the balance of this matter.
In addition to that pre-hearing, there have been two other days devoted to this matter, together with the Insurer's filings with regard to both the arbitration and this motion. The Insurer claims its overall expenses in this arbitration, to date.
Mr. Cormack has submitted a bill of costs on behalf of Wawanesa The items include fees for Mr. Cormack calculated at $150 per hour, the fees for a court reporter, and the services of a solicitor, a student-at-law and a law clerk, as well as various disbursements. A total of 40.2 hours has been billed by the various players in this matter. The total claimed for fees and disbursements, including GST is $3,859.94.
Given the relatively straightforward issue that the Insurer succeeded on, and the manner in which it resolved, the investment in hours, while possibly prudent, would not be found to be reasonable in any detailed assessment of this case.
Although it may not reflect commercial reality, Mr. Cormack's expenses are limited to the hourly rate set in the legal aid tariff by Rule 78 of the Code, not the $150 claimed.
Court reporters are a discretionary expense that is not required for a hearing. Rule 74 states that "Parties who want a record of the proceedings must make their own arrangements for the attendance of a reporting service, and must pay for this service." Mr. Asmail should not have to bear this expense, which was at the discretion of the Insurer.
Wawanesa had mixed success in this motion. It was unsuccessful in forcing Mr. Sherman to remain on the file, to be responsible for costs, or to have conditions placed on his withdrawal.
I note that Mr. Asmail has paid the previous award of costs, and that he has appeared, virtually without assistance at the pre-hearing and motion hearing. Mr. Asmail, indeed, may not be personally implicated in this abuse of process, since others drafted and filed the claim on his behalf, and the circumstances surrounding the claim appear somewhat murky.
However, if Mr. Asmail's dilemma is the result of the misfeasance or negligence on the part of his own representatives, then he has the alternative of pursuing a claim against them in the courts. That burden should not fall on the Insurer.
The Code and the Settlement Regulations give an arbitrator significant discretion in the awarding of costs. While I accept that Mr. Asmail should bear responsibility for matters undertaken in his name, I think that the circumstances do not justify assigning the entire burden of expenses to him. Rather than assessing the actual costs, I believe it would be more appropriate to fix an amount that will communicate the inappropriateness of meritless claims, while not penalizing access to arbitration by unrepresented parties. I, therefore, order that Mr. Asmail pay Wawanesa $1,500 as its fixed expenses in this matter. In addition, Mr. Asmail shall bear his own expenses.
February 1, 2002
John Wilson
Arbitrator
Date
Neutral Citation: 2002 ONFSCDRS 27
FSCO A01-000463
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
KHALIL ASMAIL
Applicant
and
WAWANESA MUTUAL 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:
Mr. Asmail is barred from arbitration.
Mr. Sherman is entitled to withdraw as the representative of Mr. Asmail.
Mr. Asmail shall pay Wawanesa $1,500 as its fixed costs in this matter.
Mr. Asmail shall pay $3,000, an amount equivalent to its assessment, to Wawanesa should he apply for mediation or arbitration of the same issues.
February 1, 2002
John Wilson
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.