Neutral Citation: 2003 ONFSCDRS 25

FSCO A02-000493

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

DOLORES STRACHAN

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Tanja Wacyk

Heard:

January 13, 2003, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

No one appeared for Ms. Strachan

Darrell March for Wawanesa Mutual Insurance Company

Issues:

The Applicant, Dolores Strachan, was injured in a motor vehicle accident on April 28, 2001. She claimed and was denied statutory accident benefits from Wawanesa Mutual Insurance Company ("Wawanesa"), payable under the Schedule.¹ The parties were unable to resolve their dispute through mediation, and by Application dated March 26, 2002, Ms. Strachan applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing initially were:

Is Ms. Strachan entitled to receive a medical benefit totalling $3,975 for chiropractic, physiotherapy and massage treatment, detailed in a treatment plan prepared by Centre City Health Recovery Clinic ("Centre City") dated September 14, 2001, claimed pursuant to section 14 of the Schedule?
Is Ms. Strachan entitled to interest for the overdue payment of benefits pursuant to section 46(2) of the Schedule?
Is either party required to pay the other's expenses in respect of the arbitration under section 282(11) of the Insurance Act?

However, Ms. Strachan failed to attend the arbitration hearing scheduled for Monday, January 13, Tuesday, January 14, and Wednesday, January 15, 2003.

Consequently, the issues are now the following:

Should Ms. Strachan's application for arbitration be dismissed?
Is Ms. Strachan liable to pay an amount to Wawanesa that does not exceed the amount assessed against Wawanesa in respect of the arbitration, pursuant to subsection 282(11.2) of the Insurance Act because she commenced an arbitration that was frivolous, vexatious or an abuse of process?
Is Ms. Strachan liable to pay Wawanesa's expenses in respect of the arbitration under section 282(11) of the Insurance Act?

Result:

Ms. Strachan's application for arbitration is dismissed as abandoned.
Ms. Strachan must pay Wawanesa $3,000 pursuant to subsection 282(11.2) of the Insurance Act, because she commenced an arbitration that was an abuse of process.
Ms. Strachan is liable to pay Wawanesa's expenses pursuant to subsection 282(11) of the Insurance Act for its expenses thrown away in respect of the arbitration.

BACKGROUND:

The arbitration hearing in this matter was scheduled to begin at 10 a.m. on Monday, January 13, 2003. As neither Ms. Strachan or Mr. Mark DeWitt, her representative on the record, were present, the hearing was adjourned for one half hour in the event they were delayed. As they had still not arrived by 10:30 a.m., I asked Ms. Marva McLean, the Case Administrator on the file, whether she had heard from either. Ms. McLean replied she had not.

I then returned to the hearing room and conveyed this information to Counsel for the Insurer. Counsel for the Insurer indicated he wished to make submissions with regard to the disposition of this matter.

Several moments into Counsel's submissions, Ms. McLean entered the hearing room and advised she had located Mr. DeWitt at his office and that he had indicated that he had been advised by Ms. Mary Szatcker, Case Administrator/Scheduler, that the hearing would not proceed because Counsel for the Insurer was unavailable.

Ms. McLean also indicated she had spoken to Ms. Szatcker, who had indicated she had not advised Mr. DeWitt the matter was adjourned. Rather, she had advised him the prior week that she had been unable to schedule settlement discussions in the matter as Counsel for the Insurer was unavailable.

Counsel for Wawanesa indicated he had only advised that he was not available for settlement discussions on the previous Friday, January 10, 2003, and had not suggested he was unavailable for the hearing.

I then asked Ms. McLean to call Mr. DeWitt and indicate the hearing was proceeding. Ms. McLean returned a few moments later to indicate she had spoken to Mr. DeWitt, and had "conferenced" Ms. Szatcker into the conversation. Ms. McLean indicated that Ms. Szatcker had advised Mr. DeWitt that she did not tell him the hearing was adjourned but apologized if there had been a misunderstanding.

I asked Ms. McLean if she had advised Mr. DeWitt that the hearing was proceeding and she indicated she had. She indicated he had responded that he would appeal any determination I would make.

I asked Ms. McLean whether Mr. DeWitt had expressed any interest in participating and she indicated he had stated that if he were to attend it would only be for settlement discussions or for an adjournment.

However, Mr. DeWitt did not attend. Nor was there any indication Mr. DeWitt had expressed a desire or intention to request an adjournment.

SUBMISSIONS:

At the pre-hearing in this matter, Ms. Strachan had been represented by Mr. Vaskevich, Clinical Director for Centre City, the provider of the services for which benefits were claimed. Mr. Simkaev, from VBSK Monolith & Associates, Ms. Strachan's representative in relation to her other accident benefit claims, was also in attendance.

Wawanesa advised that at the pre-hearing, Ms. Strachan had undertaken to produce a number of documents. However, Ms. Strachan failed to comply wi th her undertakings and this remained the case, despite letters from Wawanesa to Mr. Vaskevich, dated August 19, 2002² and to Mr. Simkhaev, dated August 22, 2002,³ reminding them of the undertakings.

Wawanesa also indicated that further correspondence regarding the undertakings, dated December 13, 2002, had been sent with no response.

Consequently, by letter dated January 3, 2003, sent to the Commission and copied to Mr. Vaskevich, Wawanesa requested a resumption of the pre-hearing to deal with the outstanding productions. Unfortunately, it appears there was no response to this request either.

Wawanesa indicated the production sought was critical to proceeding with the arbitration as it involved information regarding Ms. Strachan's collateral benefits carrier.

Wawanesa pointed out that not only did the productions remain outstanding, but that it had not been served with any documents to be relied upon by Ms. Strachan in the arbitration.

Furthermore, although Ms. Strachan had indicated she intended to have Dr. Stants and Dr. Ball testify at the hearing, none of the required documentation had been provided regarding these witnesses.

Wawanesa also advised that in addition to having brought this application for arbitration, Ms. Strachan has brought a Small Claims Court Action claiming $1,200, the cost of another treatment plan from Centre City for massage therapy. That Statement of Claim⁴ is dated August 16, 2002.

Wawanesa maintained that when combined with Ms. Strachan's failure to appear at the arbitration, the above factors indicate a strategy by Ms. Strachan to harass the Insurer into payment for a treatment plan that is not reasonable or necessary.

Wawanesa argued that consequently, Ms. Strachan must pay Wawanesa $3,000 pursuant to subsection 282(11.2) of the Insurance Act, because she commenced an arbitration that is vexatious and an abuse of process.

Wawanesa also argued that pursuant to subsection 282(11) of the Insurance Act it should be awarded its expenses thrown away in respect of the arbitration, with full indemnification.

Finally, Wawanesa argued that Ms. Strachan's claim should be dismissed on its merits as she had provided no supporting evidence. On the other hand, Wawanesa indicated that a DAC assessment and an Insurer's Examination had both found Ms. Strachan's claim unreasonable.

In support of its position, Wawanesa relied on the decision of Arbitrator Blackman in Suliman and Economical Mutual Insurance Company.⁵ In that decision, Centre City had submitted 14 treatment plans on behalf of Mr. Suliman, all dated between January and June 2002, with an outstanding disputed account of $11,637.97. In February 2002, Mr. Suliman applied for mediation on a $1,700, January 16, 2002 treatment plan. In June 2002, he applied for mediation on two April 11, 2002 treatment plans ($1,200 for chiropractic treatment and $1,150 for physiotherapy).⁶

In that instance, Mr. Suliman, by his representatives, agreed to proceed only on those three treatment plans which had been mediated, submitting it was his right to pursue payment of the other plans at a further date and possibly in a different forum.

Arbitrator Blackman disagreed.

At the pre-hearing discussion, Arbitrator Blackman had required the applicant's representatives, Mr. DeWitt, Mr. Vaskevich and Mr. Simkhaev to prepare and return, by September 20, 2002, a signed acknowledgment, in accordance with the appeal decision in Glinka and Dufferin Mutual Insurance Company (FSCO P01-00002, March 7, 2001) that (subject to evidence to the contrary regarding the status of the representatives) Messieurs Dewitt, Vaskevich and Simkhaev:

are not lawyers;
are not members of the Law Society of Upper Canada and are not subject to the supervision or discipline of a professional body;
are not required to carry insurance as legal agents or representatives;
have advised Mr. Suliman that he is personally potentially liable to pay a portion of the Insurer's legal expenses;

and that Mr. Suliman, having been informed (in both English and in Arabic, having requested an interpreter in the latter language for the hearing) of the above, wishes Mr. DeWitt, Mr. Vaskevich and Mr. Simkhaev to act as his agents.⁷

However, Arbitrator Blackman found, at page 8, that:

The Applicant's representatives failed to provide the signed acknowledgement. They failed to provide written submissions. Their oral submissions indicated, at best, a superficial understanding of this process and were non-responsive to my questions. The representatives' actions, on their face, suggest a deliberate attempt to harass this Insurer by the implicit threat of multiple proceedings being brought at various times in various forums on intertwined, if not identical, issues. I am further concerned as to whether these representatives, hiding behind the named Applicant, seek to advance the broader financial interests of Centre City (of which Mr. Vaskevich is Clinical Director) at the possible personal jeopardy of their client, Mr. Suliman. (emphasis added)

Wawanesa relied on the above passage to support its argument that in this instance, the bringing of the small claims court action constituted "harassment" which would entitle it to be compensated for the $3,000 filing fee it had been required to pay.

The Arbitrator, for reasons which included his concern that their actions were a "deliberate attempt to harass" the Insurer, subsequently excluded Messieurs DeWitt, Vaskevich and Simkhaev from the proceeding, in a decision dated December 16, 2002.

ANALYSIS:

The pre-hearing letter sent to the parties, dated August 13, 2002, states as follows:

Documents to be Exchanged:

Rule 32 of the Dispute Resolution Practice Code [the "Code"] sets out the parties' obligations to exchange documents prior to the pre-hearing. The parties have agreed on production exchange subject to any issues arising out of the documents to be exchanged. The parties undertake to:

Prepare a joint list of agreed productions and file it with the Financial Services Commission of Ontario within 30 days of this pre-hearing; and,
Comply with the undertakings given (or provide proof of best efforts to comply, in the case of documents not in a party's possession, control, or power) within 60 days of this pre-hearing.

Rule 34.1 sets out the consequences where a party fails to comply with a time requirement established by the Rules or by order or agreement, or fails to produce documents in compliance with an order or agreement. These include an award or denial of expenses, exclusion of documents, imposition of a new timetable and drawing of an adverse inference. Furthermore, if a party does not comply with the requirements set out in this letter, any request to adjourn the hearing from that party due to production issues will likely be refused.

In addition, with regard to expert witnesses, the letter states:

I confirm that under the Code, ...[a] party who intends to call an expert witness to testify at the hearing must serve and file a document setting out the full name, address and qualifications of the expert witness, the subject matter of the testimony to be presented, and the substance of the facts and opinion to be presented by the expert, not less than thirty (30) days before the first day of the hearing. Where a party does not comply with the requirements of this Rule, an arbitrator may exclude a witness from the hearing or make such other order as the arbitrator considers just.

Ms. Strachan did not comply with either of the above requirements.

The Notice of Hearing sent to the parties states:

You may attend this hearing in person and/or be represented. If you or your representative do not attend at the hearing, the arbitrator may dispose of the case in your absence and you will not be entitled to any further notice of the arbitration proceedings.

This notice incorporates the provisions of Rule 37.7 of the Dispute Resolution Practice Code (Fourth Edition, May 31, 2001) (the "Code"), and section 7 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, ("SPPA").

Section 7 of the SPPA gives an adjudicator the authority to proceed with a hearing in a party's absence where the adjudicator is satisfied that proper notice of the hearing has been given to the party in accordance with the SPPA.

In this instance, there was no issue regarding notice. Rather, Mr. DeWitt took the position that he had been advised by Ms. Szatcker that the hearing had been adjourned because Counsel for the Insurer was not available. This is contrary to Ms. Szatcker's recollection.

The correct process for an adjournment request is set out in Rule 72.1 of the Code. It requires that a request for the adjournment of an arbitration be made in writing, setting out the reasons for the adjournment, and indicating whether all parties consent to the adjournment. The latter requirement indicates the party seeking the adjournment is to seek consent from the other party prior to the request, and provide alternative dates that are acceptable to all parties.

Rule 72.2 of the Code requires that a request for an adjournment be served on the other parties and filed seven days before the scheduled proceeding, or in such lesser period as is permitted.

Although Mr. DeWitt is not a lawyer, he has represented a significant number of applicants in arbitration proceedings at the Commission. Furthermore, as Ms. Strachan's representative, Mr. DeWitt should be aware of the procedures by which the arbitration process is governed.

Consequently, even if Mr. DeWitt had misunderstood Ms. Szatcker regarding the hearing having been adjourned, and I make no such finding, the apparent lack of compliance with the procedural requirements for seeking an adjournment should have indicated to Mr. DeWitt that he had misheard Ms. Szatcker. At the very least, this would have triggered a duty to inquire further. However, this did not occur.

When combined with the failure to comply with the undertakings given, and the failure to serve Wawanesa with any documents in preparation for the arbitration, I can only conclude that Ms. Strachan's lack of preparedness and failure to attend the arbitration was reflective of her lack of intention to proceed with the arbitration, rather than a mistaken belief the matter had been adjourned.

Rather, it appears that her strategy, or at least the one executed by her representatives, Messieurs DeWitt, Vaskevich and Simkhaev, was to simply bring the application for arbitration in an attempt to pressure Wawanesa into settling the claim.

This view is further supported by the bringing of a subsequent small claims court action for another treatment plan, requiring Wawanesa to defend its refusal to pay for the treatment plans in two different forums. It is not always the case that applicants, having selected one forum, are expected or required to bring all subsequent disputes to the same forum. However, when the issues or evidence substantially overlap, as appears to be the case here, the disputes should be dealt with in the same forum.⁸

Consequently, I find that Ms. Strachan’s commencement of the arbitration, while perhaps not vexatious, was an abuse of process - as I find Ms. Strachan did not intend to actually challenge Wawanesa's refusal of her claim through an Arbitration hearing.

Having been unsuccessful in compelling Wawanesa to settle the matter, I find that Ms. Strachan abandoned her application for arbitration, while still attempting to engage Wawanesa in settlement discussions.

Consequently, I dismiss Ms. Strachan’s application for arbitration as abandoned.

Assessment Against the Applicant:

Section 282(11.2) of the Insurance Act provides that if an insured person commences an arbitration that, in the opinion of the arbitrator, is frivolous, vexatious, or an abuse of process, the arbitrator may award an amount to be paid by the insured person to the insurer that does not exceed the amount assessed against the insurer in respect of the arbitration.

In this instance, I have found that Ms. Strachan commenced an arbitration process with no intention of proceeding, and that this is an abuse of process.

I agree with Arbitrator Seife's comments in Polus⁹ where he states:

The dispute resolution scheme is designed to facilitate the applicant's access to relatively inexpensive, speedy and informal adjudication of disputes. The abuse of this process seriously undermines the effectiveness of the process, and must be discouraged.

Accordingly, I find it appropriate to order Ms. Strachan to pay Wawanesa $3,000, pursuant to section 282(11.2) of the Insurance Act, being the amount assessed against Wawanesa in respect of this arbitration. In light of my finding that Ms. Strachan had no intention of proceeding with the arbitration, Wawanesa should not be required to bear the costs of Ms. Strachan's strategy. Rather, those costs should be borne by Ms. Strachan as a disincentive to initiate arbitration proceedings as a method of pressuring insurers to settle cases.

Expenses of the Arbitration:

As an arbitrator, I have the discretionary authority under subsection 282(11) of the InsuranceAct to award an insured person or an insurer such arbitration expenses as are prescribed in the Regulations.

Pursuant to Rule 75 of the Code, an arbitrator may award expenses to a party if satisfied the award is justified because the proceeding or any position taken by the insurer or the insured person during the proceeding was frivolous, vexatious, or an abuse of process.

In addition to finding that Ms. Strachan’s initiation of the arbitration was an abuse of process, I further find that her failure to advise she would not be proceeding with the arbitration is a further abuse of process. Her failure to do so resulted in further costs thrown away - as Wawanesa was required to prepare for and attend the pre-hearing and the arbitration.

Consequently, I find that Ms. Strachan should pay Wawanesa’s expenses in this matter.

In the event the parties are unable to agree about the arbitration expenses, Rule 79 of the Code sets out the process for requesting an assessment of expenses.

February 28, 2003

Tanja Wacyk Arbitrator

Date