Neutral Citation: 2004 ONFSCDRS 29
FSCO A03–000850
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
ZINAT ALLADINA
Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before:
David Muir
Heard:
February 19, 2004, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
Janet S. Young for Ms. Alladina
Todd J. McCarthy for State Farm Mutual Automobile Insurance Company
Issues:
The Applicant, Zinat Alladina, was injured in a motor vehicle accident on December 2, 2000. She applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company ("State Farm"), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Ms. Alladina 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 preliminary issue hearing revolved around an allegation that Ms. Alladina was prevented from proceeding to arbitration because she had settled her claim on a full and final basis, and had not rescinded the settlement in accordance with the Settlement Regulation.2 The matter first came on for a hearing on December 4, 2003, but as set out below was adjourned to February 19 and 20, 2004.
At the resumption of the hearing the parties advised that they had resolved the substantive issues between them with the following result:
- On consent, the arbitration is dismissed with costs payable by Ms. Alladina to State Farm fixed at $500.
A further issue arose on the first day set for this preliminary issue hearing in December 4, 2003. In a letter subsequent to the hearing, I recorded what had transpired as follows:
At the outset of the hearing I advised the parties that the Commission had received a letter dated December 3rd, 2003, from Romina Mazzara on behalf of Mr. Phil Bouranov, advising that Mr. Bouranov would be unable to attend the hearing due to illness. This letter was not copied to counsel for State Farm or counsel for
Ms. Alladina. Mr. Bouranov is under summons to appear at this hearing issued pursuant to section 12 of the Statutory Powers Procedure Act.
After some informal discussion the parties agreed to adjourn the hearing to be resumed on February 19th and 20th 2004 at 10:00 a.m. at the Financial Services Commission of Ontario.
The parties jointly indicated their intention to seek and order requiring Mr. Bouranov to pay their expenses of this day thrown away pursuant to section 282(11.2) of the Insurance Act. This letter constitutes notice to Mr. Bouranov as required by section 282(11.4) of the Act, of the parties intention to seek such an order. I will hear submissions from the parties on this issue, including Mr. Bouranov, when the hearing resumes in February. (Emphasis added)
All that is left to resolve is the motion of the parties seeking an expense order against Mr. Bouronav personally. For purposes of this motion, Mr. Bouranov gave evidence and made submissions.
The evidence tendered establishes the following material facts:
Mr. Bouranov was Ms. Alladina's representative for a period of time and, apparently at the time of the purported settlement giving rise to this preliminary issue hearing.
State Farm had Mr. Bouranov under summons to appear at the Commission on December 4, 2003, properly served on him on October 17, 2003. He understood that he was required to attend in accordance with the summons. Mr. Bouranov became ill on December 3, 2003 the day before the first day of hearing. When he determined that he would be unable to attend because of his illness, he called his office to arrange that notice of these facts be sent to the Commission. A letter was sent to the Commission at approximately 4:30 p.m. on December 3. It is was not copied to either Mr. McCarthy or Ms. Young, counsel for the Insurer and Applicant respectively. Mr. Bouranov conceded that he should have advised, at least, counsel for the party which placed him under summons that he could not attend. No real explanation was offered for this failure. As regards Ms. Young, Mr. Bouranov had no communication with Ms. Alladina's new representative and did not know how to contact her.
The wrong done by Mr. Bouranov is in not having notified either counsel that he would not be able to attend. As a result, although it is not entirely clear that Mr. Bouranov would have known this, the hearing was adjourned, and as a result the parties have suffered some loss in costs of the day thrown away.
They each are seeking $750 for costs associated with December 4, 2003.
Although sympathetic to their circumstance, I find that I am unable to make an award of expenses against Mr. Bouranov personally. The section of the Insurance Act initially relied upon by both parties provides as follows:
Section. 282(11.2) An arbitrator may make an order requiring a person representing an insured person or an insurer for compensation in an arbitration proceeding to personally pay all or part of any expenses awarded against a party if the arbitrator is satisfied that,
(a) in respect of a representative of an insured person, the representative commenced or conducted the proceeding without authority from the insured person or did not advise the insured person that he or she could be liable to pay all or part of the expenses of the proceeding;
(b) in respect of a representative of an insured person, the representative caused expenses to be incurred without reasonable cause by advancing a frivolous or vexatious claim on behalf of the insured person; or
(c) the representative caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default.
Opportunity to make representations
(11.4) An order under subsection (11.2) shall not be made unless the representative is given a reasonable opportunity to make representations to the arbitrator.
State Farm essentially abandoned its argument based on section 282(11.2) noting that the section provided that the order against the representative be in respect of an award of expenses against the party seeking it. I am inclined to agree with that view, and, on the wording of the provision, that is a reasonable interpretation-however, it may not be the only reasonable interpretation.
State Farm argued instead that an arbitrator has an inherent jurisdiction to control the process and by inference, at least, may discipline by the use of expense awards improper conduct of persons appearing before the Commission. This is in part correct. The difficulty is in extending that proposition to non-parties. This is well trodden ground and, I find, that this aspect of the argument is determined by the appeal decision in Volfson and Shuster and Royal & SunAlliance Insurance Company of Canada (FSCO P02-00028, August 7, 2003,), wherein the Appeals Delegate found that there is no authority to make an award of expenses against a non-party to the proceeding.3
For her part Ms. Alladina concurred in the submissions of State Farm but also relied upon the language of paragraph 282(11.2)(c) in seeking an order requiring Mr. Bouranov to pay some or all of the expense award of $500 made in favour of State Farm.
My concern here, and the reason I find that I am not authorized by the statute to make the order sought, relates to Mr. Bouranov's status on December 4, 2003. Although he had been Ms. Alladina's representative, at the time that he was served with the summons in October 2003 and on its return date in December 2003, this was not the case at the time of the hearing instead, he was a witness in the proceeding summonsed by one of the parties.
The language of the section is clear in this regard. It refers only to representatives in respect of their conduct. To put it squarely, it does not refer to former representatives. To my mind, it would stretch the intent and purpose, not to mention the plain meaning of the provision, to use it to impose expense sanctions on a former representative, for conduct otherwise meeting the requirements of the provision, after and unconnected to their former status of representative of one of the parties.
I would only add to this, that if I had jurisdiction to make an award of expenses in such circumstances, I would have made it. Although Mr. Bouranov did contact the Commission late in the day prior to the hearing, he apparently made no real effort to contact the Insurer or their counsel. As was pointed out by State Farm, Mr. Bouranov is an experienced representative of insured applicants at the Commission, and knows its procedures quite well. Indeed, he conceded that he should have contacted Mr. McCarthy to let him know of his problem. In my view, the fact that it was so late in the day, only increased the obligation to make an effort to advise as many of the participants as possible of his illness and the fact that he would not be able to attend.
The parties will bear their own expenses of their joint motion seeking an award of expenses payable by Mr. Bouranov.
March 8, 2004.
David Muir
Arbitrator
Date
Neutral Citation: 2004 ONFSCDRS 29
FSCO A03–000850
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
ZINAT ALLADINA
Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- On consent, the arbitration is dismissed with costs payable by Ms. Alladina to State Farm Mutual Automobile Insurance Company fixed at $500.
March 8, 2004.
David Muir
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 2, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96, 303/98, 114/00 and 482/01.
- O. Reg. 664, R.R.O 1990, as amended by O. Reg. 275/03.
- See also Tanzos and State Farm (FSCO P01-00017, November 21, 2001)