Neutral Citation: 2003 ONFSCDRS 114

FSCO A02-000593 and FSCO A02-000646

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

SYED IBRAHIM

Applicant

and

NON-MARINE UNDERWRITERS, MBRS. OF LLOYD'S

Insurer

REASONS FOR DECISION

Before:

Beth Allen

Heard:

April 7, 8 and 10, 2003, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Vladislav Simkhaev for Mr. Ibrahim

Jay Stolberg for Non-Marine Underwriters, Mbrs. of Lloyd's

Issues:

The Applicant, Syed Ibrahim, was injured in a motor vehicle accident on August 3, 2001. He applied for statutory accident benefits from Non-Marine Underwriters, Mbrs. of Lloyd's ("Lloyd's"), payable under the Schedule.¹ Lloyd's submits that the Applicant's accident was "staged" and that the Applicant is involved with a ring of persons pursuing fraudulent claims against insurance companies. Lloyd's argues that the Applicant failed to establish his entitlement to any accident benefits. The Applicant seeks entitlement to income replacement, medical and housekeeping benefits. Both parties request their arbitration expenses and Lloyd's seeks an amount not exceeding its assessment fee. The parties were unable to resolve their disputes through mediation, and Mr. Ibrahim applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

On April 10, 2003, the third day of the hearing, after the Applicant had completed his case, Mr. Simkhaev raised two preliminary issues. He requested an adjournment and asked to withdraw from the arbitration.

In this decision, I will decide the preliminary issues followed by a determination on the substantive issues.

Preliminary Issues:

The preliminary issues in this hearing are:

1. Is the Applicant entitled to an adjournment of the arbitration hearing pursuant to Rule 72 of the Dispute Resolution Practice Code² (the "Code")?

2. Is the Applicant permitted to withdraw his application for arbitration pursuant to Rule 70 of the Code?

Results on the Preliminary Issues:

1. The Applicant is not entitled to an adjournment.

2. The Applicant is not permitted to withdraw his application for arbitration.

Substantive Issues:

The substantive issues in this hearing are:

1. Did the Applicant sustain an impairment as a result of an "accident" within the meaning of section 2 of the Schedule?

2. Is the Applicant entitled to income replacement benefits pursuant to section 4 of the Schedule from August 10 to November 17, 2001?

3. If so, what is the correct amount of the Applicant's income replacement benefit pursuant to section 6 of the Schedule?

4. Is the Applicant entitled to a medical benefit of $1,200 pursuant to section 14 of the Schedule for chiropractic treatment associated with a treatment plan by Centre City Health Recovery dated January 2, 2002?

5. Is the Applicant entitled to the cost of housekeeping services pursuant to section 22 of the Schedule for the period August 4, 2001 to November 17, 2001?

6. Is Lloyd's entitled to rely on section 33 of the Schedule to suspend benefit payments because the Applicant failed to provide reasonably required information including the name of his family doctor, the particulars of his housekeeper, a conflict of interest declaration and his OHIP number?

7. Is Lloyd's entitled to rely on section 42 of the Schedule to suspend payment of accident benefits because the Applicant failed to attend an insurer's examination (IE)?

8. Are the Applicant and Lloyd's entitled to their respective arbitration expenses pursuant to subsection 282(11) of the Insurance Act?

9. Is Lloyd's entitled to an amount not exceeding its assessment fee pursuant to subsection 282(11.2) of the Insurance Act?

Results on the Substantive Issues:

1. The Applicant sustained an impairment as a result of an "accident" within the meaning of section 2 of the Schedule.

2. The Applicant is not entitled to income replacement benefits.

3. The Applicant is not entitled to a medical benefit of $1,200 for chiropractic treatment associated with a treatment plan by Centre City Health Recovery dated January 2, 2002.

4. The Applicant is not entitled to the cost of housekeeping services for the period August 4, 2001 to November 17, 2001.

5. I need not decide the issue of whether Lloyd's is entitled to rely on section 33 of the Schedule to suspend benefit payments.

6. I need not decide the issue of whether Lloyd's is entitled to rely on section 42 of the Schedule to suspend payment of income replacement benefits because the Applicant failed to attend an IE.

7. The Applicant is not entitled to his arbitration expenses. Lloyd's is entitled to $5,000 of its arbitration expenses under subsection 282(11) of the Insurance Act.

8. Lloyd's is entitled to $1,500 pursuant to subsection 282(11.2) of the Insurance Act.

PROCEDURAL MATTER

Combining Applications for Arbitration:

The Applicant filed applications for arbitration dated May 10 and 22, 2002. Under Rule 30 of the Code, an arbitrator may combine applications for arbitration under circumstances where the applications "have an issue or question of law, fact, or policy in common; or the application of this Rule will result in the most just, quickest, and least expensive means to deal with the Applications."

The parties consented, and I decided, to combine arbitration applications, FSCO A02-000593 and FSCO A02-000646, and to hear them together on the basis that the issues in these files concern the same applicant and insurer, and arise from the same accident and body of evidence. I find combining the applications will be the most just, quickest, and least expensive way to proceed. Lloyd's is, therefore, entitled to apply to the Commission for reimbursement of one of the $3,000 filing fees paid, pursuant to Section D, Fees and Assessments, Rule 2.7 of the Code.

PRELIMINARY ISSUES

Background on Preliminary Issues:

The hearing commenced on April 7, 2003. On April 10, 2003, after the completion of his case and just before Lloyd's was to call its first and only witness, the Applicant's representative, Mr. Simkhaev, brought a motion to withdraw the application for arbitration pursuant to Rule 70 of the Code. In the midst of this motion, he also requested an adjournment pursuant to Rule 72.

In support of the motion, Mr. Simkhaev filed with the Commission and served on Lloyd's copies of a fax cover sheet dated April 9, 2003; a letter dated April 9, 2003 requesting to withdraw the application for arbitration; copies of Statements of Service (Form F) dated April 9, 2003 and addressed to Arbitrator Beth Allen, Mr. Jay Stolberg and Case Administrator, Ms. Mary Szatcker, and a copy of Rule 70 excerpted from the Code. Mr. Simkhaev did not provide written notice of his request for an adjournment.

Mr. Stolberg objected to the Applicant's request for an adjournment and withdrawal of the application for arbitration. Mr. Stolberg indicated that he had no advance notice of the Applicant's intention to request an adjournment and a withdrawal. I therefore allowed a 45-minute recess to permit Lloyd's counsel to prepare submissions.

Request for an Adjournment

Without notice or preamble to the request, Mr. Simkhaev requested an adjournment of the hearing in the midst of his submissions on withdrawal. I found this request rather perplexing because it seems to have been made as an afterthought. In any event, Mr. Simkhaev stated that he wanted the adjournment in order to bring a motion to request a withdrawal from the arbitration.

Since the Applicant's request for an adjournment arose quite unexpectedly, it is understandable that Mr. Stolberg did not make full submissions on this issue. He did, however, submit that Lloyd's opposed the Applicant's request for an adjournment.

At the hearing, I denied the Applicant's adjournment request. My decision is for both procedural and substantive reasons.

From a procedural perspective, Mr. Simkhaev failed to comply with the requirements of Rule 72 of the Code. He did not put his request in writing with reasons for the adjournment, alternative hearing dates and advising whether the Insurer consented. Nor did Mr. Simkhaev comply with the time limits for service and filing set out in Rule 72.

For these reasons, I refused to grant the adjournment.

On the substantive side, Practice Note 9³ states that "adjournments are granted only sparingly..." and will only be considered: in cases of personal emergencies, such as serious illnesses or deaths in the family; for valid reasons relating to the hearing itself, such as an imminent settlement, or medical or other critical evidence that is unavoidably delayed; and if a lawyer has a scheduling conflict with a pre-set trial date. Mr. Simkhaev failed to clearly articulate the basis of his adjournment request, except to suggest that he needed time to bring the motion to withdraw from the arbitration. I find that the circumstances do not present any of the acceptable reasons for an adjournment enumerated in Practice Note 9.

Practice Note 9 also provides the circumstances when adjournments will be refused. Adjournments will be denied in cases involving certain types of pre-hearing and hearing scheduling conflicts, production delays, witness availability problems and delays in scheduling medical assessments. Although Mr. Stolberg did not advance the Applicant's production delays as a basis for his objection to the adjournment request, I find that Mr. Simkhaev delayed in filing and serving the Applicant's productions until the eve of the hearing, and for this reason I also refuse the adjournment.

I therefore exercised my discretion to deny the Applicant's adjournment request on the basis that the request is not founded on any of the criteria set out in Rule 72 or Practice Note 9 of the Code.

Request for a Withdrawal

Mr. Simkhaev presented legal and procedural reasons for the Applicant's request to withdraw from the arbitration.

He argued that parties have the right to withdraw from an arbitration and, according to his reading of Rule 70, an arbitrator does not have the discretion to deny such a request.

Rule 70 states:

70.1 A party may seek permission to withdraw all or part of a dispute by:

(a) serving a request to withdraw on all parties; and

(b) filing the request to withdraw together with a Statement of Service in FORM F; or

(c) making an oral request to withdraw all or part of a dispute during a neutral evaluation, pre-hearing discussion, settlement discussion, preliminary conference or at a hearing.

70.2 The Registrar or an adjudicator may permit a party to withdraw where all parties agree.

70.3 Where a party does not agree to the withdrawal, an adjudicator may:

(a) permit the withdrawal on such terms and conditions as he or she considers just;

(b) award expenses to either party as permitted by Rule 75 and following, and the Expense Regulation under Section F of the Code;

(c) award an amount to the insurer, up to the amount of the assessment the insurer is required to pay to participate in the hearing, where the adjudicator is of the opinion that the insured person commenced an arbitration that was frivolous, vexatious or an abuse of process.

Mr. Simkhaev argued that Rule 70.3 pertains to the circumstances in this case. He submitted that Rule 70.3 addresses the situation where parties disagree on the withdrawal and, in his view, the Rule restricts the adjudicator's discretion to simply determining among the conditions she will impose, if any, if she allows the withdrawal. It does not, according to Mr. Simkhaev's argument, allow the adjudicator the discretion to prevent the moving party from withdrawing from the arbitration, where the parties disagree. Mr. Simkhaev submitted that the Applicant has a right to withdraw all applications for arbitration because, in his view, an arbitration was no longer required for the issues in this case. Mr. Simkhaev did not provide an explanation for that position.

Mr. Simkhaev further argued that an applicant has a right to withdraw from an arbitration and cannot be compelled by an arbitrator or the insurer to continue on with an arbitration.

Mr. Simkhaev asserted that the Applicant wanted to withdraw from the arbitration because he did not want Mr. Mark DeWitt to testify because he thought Mr. DeWitt would be "giving evidence not related to this particular file." Mr. DeWitt, who resigned his paralegal position at VBSK several months earlier, had previously represented the Applicant in that capacity. Mr. Simkhaev did not explain why his objection to Mr. DeWitt testifying is a reasonable ground for requesting a withdrawal. He objected to Mr. DeWitt testifying because, according to Mr. Simkhaev, Mr. De Witt caused the delay in the Applicant filing his productions because Mr. DeWitt did not file them with the Commission on time. Again, Mr. Simkhaev did not explain why I should consider this as a basis for allowing a withdrawal. He also asserted that he did not receive Lloyd's two tabbed binders of documents (filed as exhibits at the hearing) until the morning of the first day of the hearing. He did not explain why I should accept this as a basis for allowing a withdrawal.

Mr. Simkhaev also stated as a reason for requesting the withdrawal that he had taken carriage of the Applicant's file just before the settlement discussion⁴ that took place on April 3, 2003. Once again, Mr. Simkhaev did not explain why this would be a valid basis for a withdrawal from the arbitration.

Mr. Simkhaev also submitted that he thought the Applicant’s case was stronger than it turned out to be and, for this reason, I should allow the withdrawal.

Mr. Simkhaev also submitted that allowing the withdrawal would reduce arbitration expenses.

Mr. Stolberg submitted that Rule 70 grants the discretion to an arbitrator to determine whether or not to allow a party to withdraw from an arbitration. He argued that this is a case where I should deny the Applicant's request.

Mr. Stolberg submitted that it would thwart the interests of justice to allow the Applicant to withdraw from the arbitration because the Applicant's representative claims that he did not know what his case was about. Mr. Stolberg argued that the intention of Rule 70 is not to permit a party to withdraw from an arbitration to prevent the other party the opportunity to commence its case.

Mr. Stolberg challenged the assertions Mr. Simkhaev made in support of his request to withdraw.

In answer to Mr. Simkhaev's statement that he had only taken carriage of the Applicant's file around April 3, 2003, Mr. Stolberg pointed out that Mr. Simkhaev had been involved with the Applicant's file from a much earlier date. Mr. Stolberg stated, and the November 27, 2001 Report of Mediator confirms, that Mr. Simkhaev attended the mediation on November 27, 2001. As well, Mr. Stolberg referred to the fact, and the Commission's file confirms, that Mr. Simkhaev filed the application for arbitration dated May 10, 2002 on the Applicant's behalf. Mr. Stolberg further pointed out, as confirmed by the pre-hearing report dated March 26, 2003, that Mr. Simkhaev also attended the March 26, 2003 pre-hearing resumption where Mr. Simkhaev undertook, on behalf of the Applicant, to sat isfy the Applicant's production undertakings which were first requested by Lloyd's by letter dated September 4, 2001(filed as an exhibit by Lloyd's). Mr. Stolberg also pointed out that Mr. DeWitt had resigned from VBSK in February 2003 which would have left Mr. Simkhaev sufficient time to serve the Applicant's productions on Lloyd's within the Commission's prescribed time limits.

Regarding Mr. Simkhaev's assertion that Lloyd's had only provided the Applicant with the two tabbed binders of productions on the first day of the hearing, Mr. Stolberg pointed to a letter dated March 10, 2003 (filed as an exhibit by Lloyd's) couriered on that day to the Applicant’s representative, enclosing 172 tabbed productions. Mr. Stolberg indicated that he provided the Applicant's representative with a few additional documents in the week before the hearing, but this met with no objection from the Applicant's representative. This is not a case, Mr. Stolberg argued, where the Applicant was surprised or did not know the case he had to meet as he had the Insurer's productions since March 10, 2003. Mr. Stolberg submitted, moreover, that the Insurer did not object to the Applicant filing all of his productions on the first day of the hearing.

In response to Mr. Simkhaev's objection to Mr. DeWitt testifying, Mr. Stolberg submitted that Mr. DeWitt was being called by Lloyd's to testify on the issue, raised by Lloyd's under section 38 of the Schedule, of whether a conflict of interest exists between VBSK, where Mr. DeWitt had been employed for about two years, and Centre City Health Recovery ("Centre City"), where the Applicant attended for treatment. Section 38 requires a member of a health profession to provide a statement disclosing any conflict of interest relating to a treatment plan. Mr. Stolberg submitted, and documents filed as exhibits by Lloyd's confirm, that Lloyd's made numerous requests of the Applicant for a declaration of conflict of interest, which to date has never been forthcoming from the Applicant.

Mr. Stolberg submitted that Lloyd's should not be denied the opportunity to call Mr. DeWitt as its sole witness because it would not serve the interests of justice to allow the Applicant to withdraw from the arbitration before Lloyd's had the opportunity to present evidence.

On the issue of arbitration expenses, Mr. Stolberg argued that Lloyd's had already expended large sums defending this case and needless financial waste would result from permitting a withdrawal. He stated that Lloyd's had paid exorbitant fees to investigators to investigate the fraud ring issue.

At the hearing, I delivered an oral decision to deny the withdrawal request and stated that full written reasons would follow. I ruled that Rule 70 of the Code allows the arbitrator the discretion to permit a withdrawal, with or without conditions, or to deny a request to withdraw, and that a party does not have an automatic right to withdraw. Arbitrators must assess the reasonableness of the request. I indicated that I found the bases presented by Mr. Simkhaev for the Applicant's request for withdrawal were not reasonable.

At this point, Mr. Simkhaev and the Applicant stood up and Mr. Simkhaev asserted angrily, "We are overruling your order!", and immediately thereafter he left the hearing room with the Applicant. In accordance with my ruling, the hearing proceeded in the absence of the Applicant and his representative.

After reviewing Mr. Simkhaev's stated reasons for requesting the withdrawal, I conclude he failed to raise reasonable bases for the request. For instance, I find unacceptable Mr. Simkhaev's request for a withdrawal based on his submission that he discovered the weakness of his case at the hearing. It would fly in the face of fairness and the tenets of the adversarial process if parties were permitted to withdraw from an arbitration because they did not like how their case was unfolding.⁵

I also find it an unacceptable reason to request a withdrawal on the basis of counsel seeking to deny an opposing witness an opportunity to testify. I accept Mr. Stolberg's submission, and find I can reasonably infer that Mr. Simkhaev's unstated reason for seeking to preclude Mr. DeWitt’s testimony was based on fear that Mr. DeWitt’s evidence would imperil the Applicant’s case and disclose unfavourable evidence on the conflict of interest issue.

Aside from the unreasonableness of the bases for the withdrawal request, I also find that certain of Mr. Simkhaev's stated reasons for the request are without merit. Mr. Simkhaev failed to satisfy me as to the legitimacy of many of his submissions. I accept Mr. Stolberg's submissions, and the evidence shows: that Mr. Simkhaev had not just recently obtained carriage of the Applicant’s file since he represented the Applicant at mediation on November 27, 2001; that Mr. Simkhaev had received the Insurer's productions on or around March 10, 2003, and not on the first day of the hearing as Mr. Simkhaev stated; and that Mr. Simkhaev knew that Mr. DeWitt would be testifying as to the matter of a possible conflict of interest between the Applicant's treatment provider and the treatment plan, since Lloyd's had requested on numerous occasions the declaration of conflict of interest required under section 38 of the Schedule.

I find it would impugn the integrity of the arbitration process to permit a withdrawal under these circumstances. The Applicant is therefore not permitted to withdraw from the arbitration.

The hearing proceeded with Lloyd's presenting its case and making its final argument, without the presence of the Applicant and Mr. Simkhaev.

SUBSTANTIVE ISSUES:

The Applicant's Evidence on the August 3, 2001 and other Accidents:

Mr. Simkhaev's examination-in-chief of the Applicant was very brief. The Applicant claims he was involved in a bona fide accident on August 3, 2001 in which he sustained injuries.

The Applicant testified that before the accident, he worked as a mover under verbal agreements obtained by his friend, Mr. Mazhar Raja, moving furniture from households. He testified that he rented a Dodge Ram 4 X 4 pick-up truck from the Thrifty car rental at the Toronto airport because that car rental office rented out large trucks that could be used for moving jobs. The Applicant was a passenger, and Mr. Raja the driver of the rented pick-up truck when the accident occurred on August 3, 2001. According to the Applicant, Mr. Raja was reversing the pick-up truck out of a parking spot and collided with another vehicle approaching from the rear. The Applicant stated that he did not know the name of the driver of the other vehicle. He stated that the pick-up truck was not seriously damaged so he and Mr. Raja drove from the scene of the accident.

The Applicant testified about two other accidents besides the August 3, 2001 accident - one in which involved a car that he owned at the time, and another in which he was involved. He testified that he did not make insurance benefits claims for these accidents. The Applicant testified that the first of these accidents happened before the August 3, 2001 accident in 1997 where his friend was driving his Mercury Cougar with his friend's fiancée as a passenger and the car was damaged.

The Applicant testified that the second accident happened about December 2001 when he was driving Mr. Raja's vehicle. That accident happened when another vehicle, leaving a Tim Horton's parking lot, drove toward Mr. Raja's vehicle and the Applicant tried to brake, but could not stop, resulting in a collision. The Applicant testified that the driver of the other car was a family friend named Raza Hussaini.

The Insurer's Allegation of a Staged Accident

Lloyd's contends that the August 3, 2001 accident was staged and that the Applicant is a participant in a staged accident ring. The Applicant denies this. Lloyd's submits that the Applicant did not suffer any impairments as a result of an accident and therefore is not entitled to any accident benefits under the Schedule.

In support of its allegation, Mr. Stolberg questioned the Applicant about a number of incidents involving various vehicles and parties that are, according to Lloyd's, connected in various ways to the Applicant. Mr. Stolberg summarized this information from investigators' reports, witness testimony, an Auto Plus search, car rental agreements, written statements and motor vehicle accident report documentation. These other incidents, according to Lloyd's, were also staged. Mr. Stolberg filed as an exhibit a chart of these incidents together with a written summary of the events. I find the contents of the chart and summary accord substantially with oral and other written evidence presented at the hearing. The Applicant did not object to Lloyd's filing the chart and summary as an exhibit.

Mr. Stolberg argues that the interconnections among certain persons in various accidents, the modus operandi and mechanics of the accidents, the use of rental vehicles, the locations of the accidents, and the places of employment and businesses of some of these persons, support Lloyd's theory that the Applicant was a participant with other people, namely, Mazhar Raja, Raza Hussaini and Mahboob Robani Arshad⁶, in a staged accident ring. Below I point out the most salient examples of the incidents and factors Lloyd's asserts as proof of its allegation. I have highlighted what Lloyd's has asserted are the common elements among the accidents.

• The 1997 accident occurred on a highway when the Applicant's friend, Mr. Raza Hussaini was driving the Applicant's Mercury Cougar with his (Mr. Hussaini's) fiancée as a passenger. The Applicant, who was not present during this accident, made a property damage claim.

• On August 30, 1999, Mr. Raza Hussaini was a passenger in a Chrysler Concorde rented and driven by his friend Mr. Nouman Mian from Thrifty car rental office (no evidence of which Thrifty office). The accident occurred when Mr. Mian was driving in a mall parking lot and struck an oncoming vehicle. Mr. Mian made an insurance claim.

• On December 15, 2000, while he was at a movie with Mr. Raza Hussaini, the Applicant's 1991 Ford Thunderbird was stolen and eventually found burned. He had previously had a new stereo installed by OK New and Used Auto Parts. The Applicant made a claim for damage to the vehicle and loss of the stereo. In a statement dated January 3, 2001, the Applicant indicated he was employed by High Tech Auto, owned by Mr. Mohammad Fayyez Arshad, the brother of Mr. Mahboob Arshad, the latter being the owner of OK New and Used Auto Parts.

• At the time of the August 3, 2001 accident, Mr. Mazhar Raja was driving a truck rented by the Applicant from the Toronto airport Thrifty car rental. Mr. Mazhar Raja was reversing the vehicle on a commercial parking lot and was struck by a vehicle driven by Mr. Mahmood Ahmed. At the time of this accident, the Applicant claimed to have had a contract of employment from OK Auto Parts, owned by Mr. Mahboob Arshad. The Applicant made an accident benefits claim. Mr. Mahmood Ahmed also made an accident benefit claim and in a statement dated September 6, 2001, he indicated that he had a contact of employment from HNR Cleaners (owned by Mr. Raza Hussaini ) with a similar interview date, job start date and pay arrangements as the terms of the Applicant's contract with OK Auto Parts.

• On November 12, 2001, Mr. Raza Hussaini was involved in an accident while driving a Dodge Ram pick-up vehicle rented from the Toronto airport Thrifty car rental. Mr. Hussaini was reversing the vehicle in a commercial parking lot and struck another vehicle driven by Mr. Mazhar Raja. Mr. Raja made a property damage claim.

• At the time of the December 17, 2001 accident, the Applicant was driving Mr. Mazhar Raja's vehicle, who was a passenger in his car at the time. The driver of the other car in this accident was Mr. Raza Hussaini who was driving a vehicle he rented from Alamo car rental company. Mr. Raza Hussaini's vehicle was emerging from a commercial parking lot when his vehicle struck the vehicle occupied by the Applicant and Mr. Raja. Mr. Raja made an insurance claim. Mr. Raza Hussaini, owner of HNR Cleaners, is the same person who the Applicant claims provided the housekeeping service which is the subject matter of the Applicant’s claim in this arbitration.

• On April 8, 2002, Mr. Raza Hussaini was a driver and Mr. Mazhar Raja was a passenger in a Chrysler Sebring rented from the Toronto airport Thrifty car rental when Mr. Raza Hussaini reversed the vehicle in the parking lot and hit a glass door at OK New and Used Auto Parts causing damage to the door. In a June 10, 2002 statement about this incident, Mr. Hussaini indicates that he owned HNR Cleaners and that Mr. Mazhar Raja worked with him at the time.

After hearing Mr. Stolberg's arguments and reviewing the documentation filed in support of the allegation, I am not prepared to conclude, on the strength of the evidence before me, that the Applicant's August 3, 2001 accident was staged and part of a staged accident ring.

I accept that the evidence tends to show interrelationships and connections amongst the Applicant, Mr. Mazhar Raja, Mr. Raza Hussaini and Mr. Mahboob Arshad, in what appear to be interchanging roles at different times, in accidents spanning from 1997 to 2002. I accept there are certain common features in the accidents in terms of the similar mechanics and modus operandi, similar locations for the accidents, the involvement of rental vehicles in many of the accidents, the filing of insurance claims by accident participants and the involvement of the owners of housekeeping and auto parts businesses in claims made by accident participants. I also accept that these connections and common features appear to be more than coincidental. However, looking for instance at the interrelationships among the Applicant and the others, I find their seemingly interchanging involvement with each other in accidents and in business and employment interactions might, at least in part, be reasonably explained, by the evidence that some of the participants were friends and acquaintances and from a common homeland, and by the reality that people from common cultural heritages interrelate in their daily business and social lives.

To make its case, I find Lloyd's would have had to prove the existence of a conscious, planned or even conspiratorial element in the interrelationships among the Applicant and the others, which I find Lloyd's failed to do. Moreover, Lloyd's did not succeed in persuading me that the other similar features of the accidents amount to proof that the Applicant’s August 3, 2001 accident was staged and that he was acting as part of a staged accident ring. I find that Lloyd's might have made a more persuasive case on this issue were it to have called oral evidence from, for instance: Mr. Mazhar Raja, the driver in the August 3, 2001 accident; from participants in the other accidents; from personnel at the Toronto airport Thrifty's car rental office; and from investigators who conducted investigations into the accidents.

Allegations that amount to fraud are to be regarded very seriously and, as such, a party making such an allegation against another party has an onerous burden of proof. I find that Lloyd's has failed to discharge this burden.

Did the Applicant Suffer an Impairment?

The Applicant stated that immediately following the August 3, 2001 accident, he did not think he had sustained any injuries. However, he indicated that he got a little dizzy that night and suffered a migraine headache. He stated that the next day he experienced lower back and upper shoulder pain. The Applicant's first attendance for medical treatment was at Centre City on August 23, 2001, 20 days after the accident. The Applicant explained that he attended Centre City because he did not have a family physician. He explained, and I accept, that he delayed in attending because he thought the migraines, nausea and back pain would go away, but these conditions persisted so he sought medical help.

The Applicant underwent assessments by Centre City and a Med/Rehab DAC. Based on their findings, I find that the Applicant suffered an impairment in the August 3, 2001 accident.

On August 23, 2001 at Centre City, the Applicant complained of headaches, neck pain with associated shoulder pain and low back pain. In a report dated August 24, 2001, Dr. Jong Oh, a chiropractor, diagnosed WAD II associated with cervical sprain and strain and lumbar strain. He recommended passive and active modalities. The Applicant underwent treatment recommended by Dr. Zahir N. Nazarali from August to November 2001.

In their March 27, 2002 report, the DAC assessors diagnosed residual myofascial syndrome.

Due to the Applicant's failure to produce medical records before the DAC assessment, the DAC assessors had no background or current medical data to refer to in conducting their assessments. They had to rely on the self report of the Applicant. Although I recognize from the Applicant's conduct at the hearing that he is not a reliable witness, I find more likely than not that he did sustain an impairment in the August 3, 2001 accident.

I therefore find that the Applicant meets the threshold requirement under section 2. of the Schedule in that he suffered an impairment as a result of an accident.

The Applicant must next establish that he meets the requirements of the income replacement, medical and housekeeping provisions under the Schedule in order to establish entitlement to those benefits.

Income Replacement Benefits:

The Contract of Employment:

Entitlement:

The Applicant's claim for income replacement benefits is based on an alleged contract of employment for a sales representative position with OK New and Used Auto Parts, a company owned by Mr. Mahboob Arshad. His claim for income replacement benefits is of restricted duration from August 10 to November 17, 2001 because, as the Applicant explained, he got a job in February or March 2002.

Section 4 of the Schedule sets out the eligibility criteria for entitlement to income replacement benefits. The relevant portion of this provision states:

4. The insurer shall pay an insured person who sustains an impairment as a result of an accident an income replacement benefit if the insured person meets any of the following qualifications:

5. The insured person,

i. was entitled at the time of the accident to start work within one year under a legitimate contract of employment that was made before the accident and that is evidenced in writing, and

ii. as a result of and within 104 weeks after the accident, suffers a substantial inability to perform the essential tasks of the employment he or she was entitled to start under the contract.

Section 4 requires that the Applicant first establish that before the accident he had a legitimate, written contract of employment. If he succeeds in proving the existence of a legitimate contract, he must then show that his accident-related impairment has rendered him substantially unable to perform the essential tasks of the sales representative position with OK New and Used Auto Parts.

I find significant discrepancies and inconsistencies in the evidence pertaining to the purported contract of employment - problems which I conclude go to the heart of the credibility and reliability of that evidence. I find for the following reasons that the Applicant failed to satisfy me that he had a legitimate contract of employment.

Lloyd's asserts that the Applicant’s contract of employment is not bona fide. A letter bearing the letterhead "OK New and Used Auto Parts", dated July 24, 2001 and signed by Mr. Mahboob Arshad, forms the basis of the purported contract of employment. The letter indicates: that the Applicant’s interview about the job with Mr. Mahboob Arshad was on July 13, 2001; that the hourly wage would be $12.55 plus commissions; that the work week would be 40 hours; and that the start date would be August 13, 2001.

Mr. Stolberg questioned the Applicant about the date on the letter and when the Applicant obtained the letter. The Applicant testified that after the August 3, 2001 accident, the insurance adjuster asked the Applicant to provide proof of the contract of employment. The Applicant testified that Mr. Mahboob Arshad prepared the letter after the accident and back dated it to July 24, 2001. He testified that even though the interview was on July 13, 2001, July 24, 2001 was the date the employment contract was entered into.

In testimony, Mr. Mahboob Arshad gave evidence inconsistent with that of the Applicant and with his own written statement about the contract of employment. Contrary to the Applicant, Mr. Mahbood Arshad stated that he wrote the letter around the date of the interview, on the day the letter is dated, July 24, 2001. However, in his January 8, 2002 written statement, Mr. Mahboob Arshad said he wrote the letter after the August 3, 2001 accident. His responses to questions about this discrepancy added to the confusion in this area of the evidence. He stated that the date on the letter is not really the date it was drafted and he disagreed with the Applicant's evidence that it was drafted after the accident.

Mr. Stolberg pointed out discrepancies in the evidence among the Applicant's testimony, the written statement of Mr. Mahboob Arshad, and the July 24, 2001 letter. In his written statement, Mr. Mahboob Arshad indicated that he and the Applicant discussed that the pay would be $7.00 or $8.00 per hour which conflicts with the $12.55 figure stated in the letter and in the Applicant's testimony. Mr. Stolberg asked Mr. Mahboob Arshad to explain the discrepancy between his written statement and the July 24 letter in regards to the rate of pay. Again, his response was confusing. He replied that the figure in the letter was a first offer. When Mr. Stolberg asked Mr. Mahboob Arshad to explain why the written statement, which was written much after the July 24 letter, does not mention the $12.55 per hour figure stated in the letter, Mr. Mahboob Arshad indicated that he did not know the answer to that question.

The Applicant testified that he found out about the job through a "Help Wanted" sign and that he was also told about the position by Mr. Mahboob Arshad's brother, Mr. Mohammad Arshad, the owner of High Tech Auto, where the Applicant apparently worked before the accident. Mr. Mahboob Arshad gave confusing and conflicting evidence on that point also. He testified that he had a Help Wanted sign posted advertising the job he offered the Applicant, and yet he stated in his written statement that he did not have a posting. When questioned about this discrepancy, he said he did have a posting for the job and his written statement is incorrect.

In his written statement, Mr. Mahboob Arshad indicated that he did not know the Applicant previously, and that the Applicant just walked in off the street to inquire about a job. In response to questioning about these statements by Mr. Mahboob Arshad, the Applicant reiterated his version of the arrangement and stated that he could not account for Mr. Mahboob Arshad's conflicting statements. In testimony, Mr. Mahboob Arshad admitted that the statements in his written statement that no previous relationship existed between the Applicant and himself and that the Applicant just walked in off the street, are inaccurate. He stated that his brother Mohammad Arshad of High Tech Auto had referred the Applicant.

I accept Lloyd's position and I find that Applicant failed to establish he had a legitimate contract of employment from OK New and Used Auto Parts. The Applicant and Mr. Mahboob Arshad were not in agreement about the basic terms and arrangements of the contract. I find that the conflicting evidence as to the date the agreement was entered into, the date of the contract, the terms of remuneration and how the Applicant came to know about the job, call into question whether an employment arrangement for the Applicant to work for OK New and Used Auto Parts ever existed at all between the Applicant and Mr. Mahboob Arshad.

The Applicant provided little, if any, evidence about the tasks involved in a sales representative position with OK New and Used Auto Parts. If I understood his evidence correctly, the Applicant testified that in addition to doing sales for an hourly wage plus commissions, his duties would also involve "customer service and cleaning." In testimony, he provided no details of what his prospective job would entail. The medical assessments dealing with the Applicant's pre-accident activities focussed on the Applicant's household tasks without assessing the effect, if any, that his accident-related injuries might have had on the tasks required of him as a sales representative.

I therefore find that the Applicant is not entitled to an income replacement benefit under section 4, paragraph 3 of the Schedule since he has not established that, as a result of the accident, he suffers a substantial inability to perform the essential tasks of a sales representative position.

Quantum:

I need not deal with the issue of the quantum of the Applicant's income replacement benefit under section 6 of the Schedule since he has not succeeded on the entitlement issue.

The Applicant's Medical Benefits Claim:

Section 14 of the Schedule provides that an insurer is required to pay all reasonable and necessary medical expenses to an insured person if he can establish he suffered an impairment as a result of an accident that prevents him from performing his normal housekeeping and home maintenance duties. The relevant portion of section 14 provides:

14. (1) The insurer shall pay an insured person who sustains an impairment as a result of an accident a medical benefit.

(2) The medical benefit shall pay for all reasonable and necessary expenses incurred by or on behalf of the insured person as a result of the accident for,

(b) chiropractic, psychological, occupational therapy and physiotherapy services;

It was not clear from the documents filed with the Commission for this hearing which treatment plan for medical benefits is in dispute in this hearing. The parties agreed that the Applicant is disputing Lloyd's refusal to pay $1,200 for the chiropractic treatment associated with a treatment plan dated January 2, 2002, prepared by Dr. Nazarali of Centre City. This treatment plan recommended chiropractic treatment three times per week for four weeks and then an additional two times per week for two weeks.

The Applicant provided very little oral evidence about his need for medical treatment.

A Med/Rehab DAC report dated March 27, 2002 considered the reasonableness and necessity of the treatment recommended in the January 2, 2002 treatment plan, among other matters. At the DAC assessment, the Applicant reported ongoing low back and occasional right shoulder pain and the DAC assessors diagnosed residual myofascial syndrome.

The opinion of the DAC was that the Applicant had likely sustained at worst a WAD II neck injury which would have, in the assessors' opinion, resolved by the time of the assessment. They opined that the lower back injury would be of a similar or lesser nature. According to the DAC assessors, this type of injury would normally have been significantly resolved within three to six months after the accident.

The DAC report states that by the time the January 2, 2002 treatment plan was recommended by Centre City, the Applicant would have already undergone 40 sessions of chiropractic treatment. The DAC concluded that it would not be reasonable or necessary for the Applicant to undergo the chiropractic treatment recommended in the January 2, 2002 treatment plan since maximum therapeutic benefit would have already been achieved.

The Applicant did not present a medical opinion to challenge that of the DAC and little, if any other evidence to support his entitlement to further chiropractic treatment. I therefore rely on the DAC report in arriving at my conclusion that the Applicant is not entitled under section 14 of the Schedule to a $1,200 medical benefit to cover the treatment recommended in the January 2, 2002 treatment plan.

The Applicant's Housekeeping Claim:

Mr. Raza Hussaini's Failure to Comply with a Summons

Mr. Raza Hussaini, who the Applicant claims provided housekeeping services to him after the August 3, 2001 accident, failed to appear at the hearing in response to one summons and knowingly avoided being served with a second summons. The Insurer sought Mr. Hussaini's attendance at the hearing and personally served a summons dated March 25, 2003 on him on April 2, 2003 at his last known address, requesting his attendance at the hearing at the offices of the Commission on April 7, 8, 9 and 10, 2003. The summons and affidavit of service, dated April 2, 2003, were filed with the Commission. Mr. Hussaini failed to appear.

On April 7, 2003, Mr. Stolberg on behalf of Lloyd's submitted that Mr. Hussaini’s evidence is important to the Applicant’s housekeeping claim and he required his attendance for cross-examination. He asked that I issue a further summons and an order compelling him to attend. The Applicant did not speak to this matter. I agreed that this would be an appropriate manner to proceed.

I prepared an order to attend dated April 7, 2003, compelling Mr. Hussaini to attend for the hearing at the offices of the Commission on April 7 to 9, 2003 and a further summons dated April 7, 2003 was prepared.

An investigator, Mr. W. L. Herrington of Albright Investigations Ltd., who attended the hearing on behalf of Lloyd's, undertook to serve the second summons and the order on Mr. Hussaini. His attempt to serve Mr. Hussaini failed. Mr. Herrington reported that he attended at the last known address of Mr. Hussaini. A man identifying himself as Mr. Hussaini’s roommate, told Mr. Herrington that Mr. Hussaini was not there, but gave Mr. Herrington Mr. Hussaini’s cell phone number.

Mr. Herrington called the cell phone number and a man identifying himself as Mr. Hussaini answered and, upon being informed of the summons and order to attend, indicated that he was not going to attend the hearing.

Mr. Hussaini did not attend the hearing.

I asked for submissions from the parties about how to proceed. I referred to an arbitrator's power under section 13(1) of the Statutory Powers Procedure Act⁷ (the SPPA) which states:

13. (1) Where any person without lawful excuse,

(a) on being duly summoned under section 12 as a witness at a hearing makes default in attending at the hearing; or

(b) being in attendance as a witness at an oral hearing or otherwise participating as a witness at an electronic hearing, refuses to take an oath or to make an affirmation legally required by the tribunal to be taken or made, or to produce any document or thing in his or her power or control legally required by the tribunal to be produced by him or her or to answer any question to which the tribunal may legally require an answer; or

(c) does any other thing that would, if the tribunal had been a court of law having power to commit for contempt, have been contempt of that court,

the tribunal may, of its own motion or on the motion of a party to the proceeding, state a case to the Divisional Court setting out the facts and that court may inquire into the matter and, after hearing any witnesses who may be produced against or on behalf of that person and after hearing any statement that may be offered in defence, punish or take steps for the punishment of that person in like manner as if he or she had been guilty of contempt of the court.

Rule 41.4 of the Code sets out an arbitrator's authority to compel the attendance of witnesses:

An arbitrator has the power to summon and enforce the attendance of a witness and require him or her to give evidence on oath or otherwise, and to produce documents, records and things.

Mr. Stolberg made brief submissions on the matter. Mr. Simkhaev made no submissions. Mr. Stolberg submitted that while Mr. Hussaini's evidence would be of assistance in assessing the Applicant's housekeeping claim, he would be content for an adverse inference to be drawn from Mr. Hussaini's failure to attend.

Initially, I reserved my decision on the matter until I had heard further evidence. After considering Mr. Stolberg's submissions, I exercised my discretion not to initiate the procedure set out under section 13 of the SPPA.

I am mindful of the disrespect displayed by Mr. Hussaini through his cavalier refusal to attend when advised by Mr. Herrington that he was subject to a second summons and an order to attend by the arbitrator. As the hearing proceeded and I heard further evidence, it became clear to me that the Applicant’s claims, including his housekeeping claim, contained serious credibility problems. This raised a question as to whether Mr. Hussaini’s oral evidence would assist in clarifying the housekeeping evidence or not. I considered that I had other evidence on the housekeeping issue to review to arrive at a decision, including a written statement by Mr. Hussaini, the Applicant's testimony, and certain invoices prepared by Mr. Hussaini purportedly evidencing housekeeping charges. As will be seen below, because of the nature of the conflicts in the housekeeping evidence before me, I find that Mr. Hussaini’s oral testimony would have more likely than not failed to assist in clarifying the evidence.

In deciding not to exercise my authority to enforce the summons, I took Mr. Stolberg's submissions into consideration as well as the likely limited value of Mr. Hussaini’s oral evidence. I accept Mr. Stolberg's submission and I find that an adverse inference about the Applicant's housekeeping claim must be drawn from Mr. Hussaini's failure to attend the hearing to give evidence.

I will take Mr. Hussaini’s conduct into account when deciding the expense issue.

Basis of the Claim:

The Schedule requires an insurer to pay an insured person’s reasonable and necessary housekeeping and home maintenance expenses if, as a result of an accident, the insured person sustains an impairment that results in him being substantially disabled from performing his housekeeping and home maintenance activities. The relevant portion of section 22 of the Schedule provides:

22. (1) The insurer shall pay for reasonable and necessary additional expenses incurred by or on behalf of an insured person as a result of an accident for housekeeping and home maintenance services if, as a result of the accident, the insured person sustains an impairment that results in a substantial inability to perform the housekeeping and home maintenance services that he or she normally performed before the accident.

The Applicant claims that his accident-related injuries have substantially prevented him from performing his housekeeping chores. The Applicant provided little oral evidence of his household tasks, except to say the tasks were shared between him and his roommate. An Activities of Daily Living Questionnaire indicates that after the accident, the Applicant required assistance with carrying heavy items, remembering tasks/errands, following directions, carrying heavy items, dusting high and low areas, sweeping, washing the kitchen floor, using a dust pan, using a vacuum cleaner, carrying water in a pot and putting the ironing board up and down. However, he provided no persuasive evidence that these were his normal responsibilities before the accident and, if they were, what part of these tasks were performed by his roommate and what part by himself.

The Applicant testified that Mr. Raza Hussaini (who operates a company called HNR Cleaners) provided housekeeping services. According to the Applicant, Mr. Hussaini’s company cleaned the Applicant’s house two or three times per week, for ten hours per week for a couple of months, because, according to the Applicant, his accident-related injuries disabled him from performing this work. The Applicant indicated that he had a roommate in his two-bedroom apartment who did his own housekeeping and that Mr. Hussaini was retained to do only his (the Applicant's) part.

Mr. Stolberg challenged this claim by pointing to discrepancies between the Applicant’s evidence and the information on the invoices signed by Mr. Hussaini. The first invoice indicates that Mr. Hussaini provided services from August 4, 2001 (a day after the accident) to August 17, 2001. The Applicant denied that he received housekeeping services the day after the accident. Mr. Stolberg asked the Applicant why the assessor stated in a Functional Abilities Evaluation Report dated November 8, 2001: "Syed states that his roommate has been doing most of the chores since the accident." The Applicant indicated that the assessor did not mention when it was that the roommate was doing most of the chores. In answer to a question as to why the report does not indicate that the Applicant had told the assessor about his housekeeping services, the Applicant responded that he had actually addressed this with the assessor.

The Applicant testified that he paid Mr. Hussaini about $400 to $500 in cash. Mr. Stolberg pointed to an unsigned statement by Mr. Hussaini dated June 10, 2002 which, according to Lloyd's, he refused to sign until he spoke to the Applicant. In this statement, Mr. Hussaini states that he charged the Applicant $100 per visit and that he cleaned his apartment 7 or 8 times in September, October and November 2001 and that the Applicant did not pay him for every visit. He indicated that he works in cash and has no records of his services to the Applicant which he indicated he stopped sometime in 2001.

As well, the Applicant could not explain why the five invoices submitted total $1,000. The Applicant testified on one occasion that he paid Mr. Hussaini $1,000 and at another time, that he was charged $400 or $500. He did not explain why Mr. Hussaini’s written statement indicates that he started the housekeeping services in September 2001 and the first invoice indicates August 4, 2001.

I find that the Applicant has not succeeded in proving his entitlement to housekeeping benefits. He did not provide sufficient evidence of his normal pre-accident housekeeping chores. Nor did he present evidence as to how, if at all, his accident-related injuries rendered him substantially unable to perform his housekeeping tasks.

I find other significant problems with the Applicant’s housekeeping claim which, as with the contract of employment evidence, go to the heart of the credibility and reliability of that claim. There is conflicting evidence between the Applicant and Mr. Hussaini as to the period of Mr. Hussaini’s services; the amount paid for the services; the number of times Mr. Hussaini provided services; and as to whether the services were even needed since there is some evidence that the Applicant's roommate did most of the chores after the accident. The Applicant could not clarify these problems in the evidence. I also draw an adverse inference from Mr. Hussaini's failure to attend the hearing that his evidence would not have assisted the Applicant, but would rather have contributed to the unreliability of the evidence.

The Applicant's Failure to Provide Information:

I have made substantive determinations on the issues of the Applicant's entitlement to income replacement benefits, medical benefits, and housekeeping benefits. I decided in respect to each of those benefits, that the Applicant failed to meet the entitlement requirements provided under the Schedule. In arriving at my determinations, I found remarkable credibility problems and a failure on the part of the Applicant to present even the most basic evidence to support his claims. It was in large part due to his failure to provide critical documentation that the Applicant did not succeed on a substantive level.

I therefore find I need not decide the procedural issue under section 33 which allows an insurer to suspend accident benefits for any period during which the Applicant has failed to provide information reasonably required for the Insurer to establish entitlement to benefits.

Conflict of Interest - Mr. DeWitt's Evidence:

Lloyd's called Mr. DeWitt to testify on the conflict of interest issue as it relates to VBSK and Centre City's involvement in providing medical benefits to the Applicant.

Section 38 of the Schedule deals with the conflict of interest issue. In its relevant part, this section provides that, before the expenses involved in a treatment plan for medical or rehabilitation treatment are payable by an insurer, the health professional who prepared the treatment plan must submit a declaration disclosing any conflict of interest on the part of himself, the person who referred the insured person to the health professional or the lawyer or representative of the insured person, in relation to any of the goods or services contemplated by the treatment plan.

As noted earlier, Lloyd's never received a conflict of interest declaration from Centre City or the health professional who prepared the January 2, 2002 treatment plan.

Mr. Stolberg asked Mr. DeWitt a number of questions about VBSK and Centre City and their practices in the generation and handling of treatment plans. I find Mr. DeWitt was not able to provide evidence on a conflict of interest. Mr. DeWitt testified that he did not have personal knowledge on a general level, or in specific regard to the Applicant's case, as to whether VBSK and Centre City had a practice of generating numerous treatments to bolster claims for financial rather than for medical reasons.

I therefore find that Mr. DeWitt’s evidence did not assist in the determination of any of the issues in dispute in this hearing.

EXPENSES:

Mr. Stolberg made submissions on expenses on behalf of Lloyd's and filed a Bill of Costs. He requested an order for his full expenses of the arbitration. Mr. Simkhaev left the hearing before its conclusion and provided no submissions or evidence on the Applicant's arbitration expenses. I will therefore consider Lloyd's submissions and evidence in the absence of the Applicant and his representative.

Arbitration Expenses:

Entitlement:

Arbitrators have the authority to order expenses under the Insurance Act, the Expense Regulation⁸ and Rule 75 of Code.

Subsection 282(11) of the Insurance Act authorizes arbitrators to award arbitration expenses to the parties of an arbitration hearing in accordance with criteria prescribed by section 12(2) of the Expense Regulation which contains essentially the same wording as Rule 75 of the Code.

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.

Applying these criteria, Mr. Stolberg argued that the circumstances of this case meet the requirements for an award of expenses in Lloyd's favour. In summary, he argued that Lloyd's was fully successful on both the preliminary and substantive issues in dispute. In support of his submission, Mr. Stolberg pointed out the considerable delay caused by the Applicant's and Mr. Simkhaev's conduct at the hearing; the unfounded nature of his claims as reflected by the credibility problems in the Applicant's evidence; the Applicant’s conduct in failing to produce critical documentation and concealing information; his failure to cooperate in attending assessments; and his failure to provide accurate information to assessors.

I accept Mr. Stolberg's submissions and find that Lloyd's is not liable to pay any of the Applicant's expenses and is entitled to its expenses from the Applicant.

I have taken into account that in the end result, Lloyd's was successful on both the preliminary and substantive issues. While Lloyd's did not succeed in establishing that the Applicant's August 3, 2001 accident was staged, Lloyd’s was successful in proving that the Applicant was not entitled to accident benefits.

I am particularly concerned about the egregious conduct of both the Applicant and Mr. Simkhaev during the arbitration process leading up to the hearing and at the hearing.

Despite many notices from Lloyd's adjuster, the Applicant delayed, and in many cases, failed to produce many documents that were critical to a determination of the issues in dispute. Dealing with these matters at the hearing resulted in delay. For instance, the Applicant delayed in producing his OHIP number making it impossible to obtain critical medical records in time for assessments and for the hearing; he delayed in producing the clinical notes and records of his treating health practitioner until four days before the hearing and, as it turns out, the identity of the author of these notes was never disclosed; he delayed until just before the hearing in producing the contact particulars for Mr. Hussaini, the housekeeper, making it difficult for Lloyd’s to call him as a witness and causing delays in the proceeding while this was dealt with; and the Applicant never produced a conflict of interest declaration.

Despite numerous notices from Lloyd's adjuster, the Applicant also failed to attend an IE scheduled by Lloyd’s for September 25, 2001 and to pay the cancellation fee. He also failed to respond to numerous attempts to set up subsequent appointments. He also delayed for several months before attending the March 27, 2002 Med/Rehab DAC to complete the assessment, originally scheduled in November 2001. The Applicant provided no reasonable excuse for his lack of cooperation with regards to attending assessments.

The Applicant’s and Mr. Simkhaev’s conduct at the hearing was reprehensible. I conclude that the Applicant was complicit with the behaviour of Mr. Simkhaev. The Applicant struck me as a relatively intelligent, well-spoken young man who did not seem at all critical of or dismayed by Mr. Simkhaev's conduct at the hearing. When Mr. Simkhaev became unruly and rose up shouting before he left the hearing room, the Applicant went along with him, without hesitation. I find that the Applicant must surely have known that Mr. Simkhaev was acting improperly in a legal proceeding and I find his complicity cannot simply be explained by him unknowingly following the direction of his representative. To my knowledge, the Applicant never approached the Commission after the hearing to express disapproval of Mr. Simkhaev’s conduct and to advise that he might wish to retain another representative.

I find disturbing Mr. Simkhaev’s disruptive attempt to highjack and terminate the proceedings after he had presented his case, admittedly because he did not like how his case had unfolded, and because he did not want Lloyd’s to call the evidence of Mr. DeWitt. I am most troubled by Mr. Simkhaev's and the Applicant's departure from the hearing in high-handed disregard for my orders disallowing the adjournment request and the request to withdraw from the arbitration.

I find the conduct of the Applicant and Mr. Simkhaev was an abuse of the Commission’s process and should most certainly attract an expense award. I find that if the type of conduct displayed by the Applicant and Mr. Simkhaev should go uncensured, the integrity of the arbitration process will be impugned.

Were I to have the authority to do so, I would award expenses personally against Mr. Simkhaev because of his conduct at the hearing. However, I heard no submissions on that point and, like the Director’s delegate in the Dhawan⁹ appeal, I am not prepared to depart from the prevailing Commission case law which holds that the power to award expenses applies only to the parties to the proceeding, not their representatives.

The Director’s Delegate in the Dhawan appeal exercised her authority under subsection 23(3) of the SPPA and excluded the applicant’s representative from the appeal for his incompetent representation of the applicant. Subsection 23 of the SPPA authorizes adjudicators to make orders to prevent an abuse of its process, and in particular to exclude agents in appropriate circumstances. Other appeal and arbitration decisions¹⁰ have also looked at the conduct of representatives and considered whether to exercise that authority in relation to a representative.

I find Mr. Simkhaev’s conduct most certainly warranted an order excluding him from the hearing. However, he left the hearing preempting consideration as to whether to exclude him or not.

I have also taken into account the positions the Applicant took in regard to his income replacement and housekeeping claims.

I find his claim to having obtained a contract of employment from OK New and Used Auto Parts to be manifestly unfounded. Without repeating the concerns I raised above, the credibility problems with this evidence have lead me to doubt that such an arrangement was ever made.

The Applicant’s claim for housekeeping benefits is equally troublesome. Again, the credibility problems in evidence before me, including those revealed in the Applicant’s testimony, in the written statement Mr. Hussaini refused to sign, and in the invoices for housekeeping services, combined with the fact that Mr. Hussaini refused to attend the hearing to testify, lead me to doubt whether Mr. Hussaini provided housekeeping services.

I find that, although Lloyd’s did not ultimately succeed in establishing that the August 3, 2001 accident was part of a staged accident ring, it put some effort, time and expense into investigating that matter. Although I did not decide in Lloyd’s favour, I did not find the allegation totally devoid of merit. The fact this type of allegation is difficult to prove, I find, makes that issue by its very nature a complex issue to bring to a hearing. I have also taken this into account in my award of expenses.

I received no offers of settlement to consider in my decision on expenses.

Because the Applicant was not present at the hearing at its conclusion and made no submissions and produced no evidence on expenses, I need not consider whether to award him his expenses. However, were I required to decide this matter, I would exercise my discretion to deny him his expenses under subsection 282(11) of the Insurance Act, for the reasons I have outlined above.

Amount of Expenses Under Subsection 282(11) of the Insurance Act:

Mr. Stolberg submitted a Bill of Costs dated April 16, 2003. Lloyd's bill is: $23,062.91 for legal fees (with GST), $10,672.83 for disbursements (with GST) for a total of $33,735.74 for legal fees and disbursements.

The Expense Regulation under the Insurance Act permits expenses to be awarded for legal fees for preparation for and attendance at pre-hearings, motions, arbitration hearing and for attendance to matters after the hearing and for disbursement.

Regarding the legal fees, I find the hourly rates charged for the services of the lawyers, law clerks and students-at-law are within the rates prescribed by the Expense Regulation.

The hearing, although scheduled for four days, took place over three days. Three witnesses testified during the proceeding. I accept Mr. Stolberg's submission that there are two arbitration files and that a rather large number of documents were produced for the hearing. However, many of these documents involved procedural rather than substantive matters, namely, numerous pieces of correspondence and notices delivered by the adjuster to the Applicant, his representative and his treatment provider. These were generated in large measure due to the Applicant’s and his representative's failure to respond to production requests and notices to attend assessments. However, because of the Applicant’s failures to produce many medical and employment documents and to attend IEs and other assessments, there were not large numbers of medical and employment documents filed in this case involving the substantive issues. I find in this way the complexity of the case is limited. This, however, does not detract from my finding that Lloyd’s allegation of a staged accident in itself was a difficult issue to prove.

Mr. Stolberg did not have to prepare for the preliminary issues in this case because, unfortunately, Mr. Simkhaev raised these issues at the hearing without notice.

I find for this reason that excessive legal expenses have been charged. I take into account that four lawyers, two law clerks and an articling student worked on the file. I therefore reduce the $23,062.92 bill for legal fees by 25% to $17,250 (25% of $23,000).

With regard to disbursements charged, I find the investigator's fee to be excessive. Mr. Stolberg used the investigator's services principally to investigate the staged accident allegation. Lloyd's did not succeed on this issue. Mr. Stolberg did not call the investigator as a witness and, as I found above, it might have been helpful to hear his oral evidence. The investigator prepared a report that was not relied on extensively at the hearing. It appears that the investigator was also employed to serve summonses. The total investigator's fee is $8,891.37 and I reduce that amount by 75% to $2,225.00 (75% of $8,900.00).

The total reduced bill is $19,475 ($17,250.00 + $2,225.00).

Based on my findings, I exercise my discretion under subsection 282(11) to award Lloyd’s $5,000 of its expenses.

Lloyd’s Claim for an Amount not Exceeding its Assessment Fee

Lloyd’s also makes a claim pursuant to subsection 282(11.2) of the Insurance Act which allows an arbitrator the discretion to order the Applicant to pay an amount no higher than the amount of the insurer’s $3,000 assessment fee (arbitration filing fee) if it is found that the Applicant commenced an arbitration that was frivolous, vexatious or an abuse of process.

Mr. Stolberg submits that the Applicant commenced an arbitration that was frivolous, vexatious and an abuse of process. He argues that the Applicant was not involved in a bona fide accident on August 3, 2001 and that the claims arising from that accident amount to frivolous and vexatious claims that have abused the arbitration process.

Looking at the contract of employment issue, Mr. Stolberg argues that this claim is frivolous and vexatious because the claim lacks substance. He submits that because of the myriad of inconsistencies in the evidence, it is incomprehensible what transpired between the Applicant and OK New and Used Auto Parts. He argues, moreover, that the very substance of the income replacement benefits claim is lacking because the Applicant brought no evidence as to the essential tasks of the sales representative job nor as to substantial inability.

With regard to the housekeeping claim, Mr. Stolberg submits that this claim is frivolous and vexatious because of the many fundamental discrepancies and inconsistencies in the evidence, which, according to Mr. Stolberg, call into question the legitimacy of the housekeeping claim. Mr. Stolberg also pointed out that the Applicant’s claim lacks substance because he failed to provide basic evidence of his pre-accident housekeeping tasks. The fact that Mr. Hussaini refused to attend the hearing to testify, according to Mr. Stolberg, further attests to the frivolous and vexatious nature of this claim.

Mr. Stolberg pointed out that the Applicant abused the arbitration process on a procedural level: by his failure to produce critical medical documents in a timely fashion, thereby concealing this information, preventing the Med/Rehab DAC from performing an effective assessment; by failing to attend an IE to allow Lloyd’s to assess his claim; and by failing to ever file a conflict of interest declaration.

I accept Mr. Stolberg's submissions that the Applicant commenced an application for arbitration that was frivolous, vexatious and an abuse of process. I find this to be the case particularly with his income replacement and housekeeping benefits claims. I agree that the Applicant's failure and delay in producing medical and other critical documentation and his delays and refusals to attend assessments without a reasonable explanation, amount to procedural abuses. I find, moreover, that the evidence presented by the Applicant at the hearing in relation to these claims was devoid of the basic elements to establish the claims and lacking in credible evidentiary value. I am fortified in this conclusion by the fact that Mr. Simkhaev tried to bring an end to the hearing and fled the hearing room with the Applicant when he did not succeed in withdrawing from the arbitration.

I therefore conclude that Lloyd's is entitled to an award pursuant to subsection 282(11.2) of the Insurance Act and I order the Applicant to pay $1,500.

July 24, 2003

Beth Allen Arbitrator

Date

Neutral Citation: 2003 ONFSCDRS 114

FSCO A02-000593 and FSCO A02-000646

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

SYED IBRAHIM

Applicant

and

NON-MARINE UNDERWRITERS, MBRS. OF LLOYD'S

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

Preliminary Issues:

1. I dismiss the Applicant’s request for an adjournment

2. I dismiss the Applicant's request to withdraw from the arbitration.

Substantive Issues

1. I dismiss the Applicant's claim for income replacement benefits.

2. I dismiss the Applicant’s claim for a medical benefit for chiropractic treatment.

3. I dismiss the Applicant’s claim for housekeeping expenses.

4. I need not decide whether Lloyd's is entitled to rely on section 33 of the Schedule to suspend the Applicant accident benefits.

5. I need not decide whether Lloyd’s can rely on section 42 of the Schedule to suspend the Applicant’s accident benefits.

6. I make no order pursuant to subsection 282(11) of the Insurance Act as to the Applicant’s expenses.

7. I order the Applicant to pay $5,000 of Lloyd's expenses pursuant to subsection 282(11) of the Insurance Act.

8. I order the Applicant to pay to Lloyd’s $1,500 pursuant to subsection 282(11.2) of the Insurance Act.

July 24, 2003

Beth Allen 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. 2(4th edition, May 31, 2001).
3. 3Under Section C of the Code.
4. 4Mr. Simkhaev referred to the meeting as a pre-hearing resumption, when in fact it was a settlement discussion.
5. 5Ahanin and Allstate Insurance Company of Canada (FSCO A01-000521, January 9, 2002) and Alexander and Zurich Insurance Company (FSCO A00-000535, November 14, 2001)
6. 6Mr. Mahboob Robani Arshad is variously referred to in documents as M. Robani Arshad, Robani Arshad and Mahboob Arshad. For the purposes of this decision, I will refer to him as Mr. Mahboob Arshad. This will distinguish him from his bothers, Mohammad Arshad and Mohammad Fayyez Arshad who own similarly named auto parts businesses.
7. 7R.S.O. 1990, c. S 22.
8. 8Regulation 664, R.R.O. 1990 as amended.
9. 9Dhawan and State Farm Mutual Automobile Insurance Company (FSCO P01-00025, February 1, 2002)
10. 10For example, Glinka and Dufferin Mutual Insurance Company (FSCO A99-00849, November 21, 2000) upheld by appeal (FSCO P01-00002, March 7, 2001); Hezavian and Allstate Insurance Company of Canada (FSCO A01-000164, February 8, 2002), heard and upheld on appeal on an allegation of bias by appeal (FSCO P02-00006, March 5, 2003)