Neutral Citation: 2004 ONFSCDRS 71

FSCO A03-000974

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ANWAR KHAWAJA

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

REASONS FOR DECISION

Before:

Joyce Miller

Heard:

April 23, 2004, at the offices of the Financial Services Commission of Ontario in Toronto.

Written submissions were received on April 30, 2004.

Appearances:

Mr. Khawaja did not appear.

Corinne P. Habkirk for ING Insurance Company of Canada

Issues:

The Applicant, Anwar Khawaja, was injured in a motor vehicle accident on June 17, 2002. He applied for statutory accident benefits from ING Insurance Company of Canada ("ING"), payable under the Schedule.¹ ING denied his claim for benefits. The parties were unable to resolve their disputes through mediation, and Mr. Khawaja applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. At a pre-hearing on November 27, 2003 an arbitration hearing was set for May 17, 18, 19 and 20, 2004.

On March 24, 2004, ING requested that a Motion hearing be set up to compel a third-party employer to release its employment file. A hearing date was set for April 23, 2004. On March 30, 2004, ING filed its Motion Record for the scheduled motion on production. On April 6, 2004, solicitors for Mr. Khawaja, Capp, Shupak, requested to be removed as solicitors of record on the basis that there has been a breakdown in the solicitor-client relationship such that they cannot continue to act for Mr. Khawaja in the arbitration.²

Along with its request to be removed from the record Mr. Khawaja's solicitors filed an affidavit in support of its motion which was also provided to ING.

In part, the affidavit stated that on March 29, 2004, Mr. Khawaja had informed Mr. Wolf that he would not be provided with the income tax returns required for the arbitration and that he intended to return to India shortly and would not be present for the arbitration. Moreover, Mr. Khawaja told Mr. Wolf that he had no intention of returning to Canada in the near future and was not interested in the pending arbitration. The affidavit further stated that on April 6, 2004 Mr. Khawaja advised Mr. Wolf that he consented to the removal of Capp, Shupak as his solicitors of record in this matter.

After the receipt of the April 6, 2004 motion from Mr. Khawaja's solicitors, ING filed an amended Motion Record wherein it requested the dismissal of the arbitration proceeding pursuant to Rules 34, 67 and 68 of the Dispute Resolution Practice Code (the "Code") (4th Edition, Updated - October 2003).

Mr. Khawaja was not present at the hearing for this motion to dismiss, although he had received notice of this motion. No one appeared on Mr. Khawaja's behalf. I proceeded to hear the case.

Before the hearing began, Counsel for ING advised that it was not pursuing the motion for a third-party production order.

The issue in this hearing is:

Should Mr. Khawaja's arbitration hearing be dismissed?

Result:

The arbitration hearing is not dismissed.

SUBMISSIONS:

ING submits that the arbitration hearing should be dismissed pursuant to Rule 34.1(e) and/or Rule 68 of the Code. In addition, in its written submission it added Rule 65.7 as a ground for dismissing an arbitration without a hearing.

ING submits that Mr. Khawaja has failed to comply with any of the production undertakings and failed to comply with Rule 41 which requires the parties to an arbitration to provide a witness list 30 days before the first day of the hearing. As well, ING submitted that based on the sworn affidavit presented by Mr. Khawaja's solicitors, Mr. Khawaja will not be present at the arbitration hearing on May 17, 2004. Therefore, ING submits it is apparent that Mr. Khawaja has no intention of complying with the Rules of the Code and, as such, Rule 34.1 may be relied upon to dismiss the arbitration.

FINDINGS

For the following reasons the motion to dismiss the arbitration without a hearing is denied.

There is only one section in the Code which allows an arbitrator to dismiss an arbitration without a hearing - that is Rule 68.

Rule 68 provides:

68.1 Subject to Rule 68.2, an adjudicator may dismiss a proceeding without a hearing where the proceeding is frivolous, vexatious or is commenced in bad faith.

68.2 Before dismissing a proceeding under this Rule, an adjudicator shall deliver written notice to all parties of the intention to dismiss the proceeding on the grounds set out in Rule 68.1.

68.3 Where a party objects to a dismissal of the proceeding pursuant to Rule 68.1 or seeks to make written submissions with respect to the dismissal, the party must:

(a) provide the grounds upon which the party objects to the dismissal of the proceeding, or set out any other issues or concerns, in writing; and

(b) serve the material upon the other parties and file it within 20 days of the date of the notice provided under Rule 68.2.

68.4 An adjudicator will consider any written objections or submissions received and may make an order on such terms as he or she considers just.

Succinctly, before dismissing an arbitration without a hearing, a number of steps must be taken within a specific time line. As noted above, the arbitration hearing date in this case is scheduled for May 17, 2004. I advised counsel for ING, Ms. Corinne Habkirk, that the motion on April 23, 2004 was too close to the arbitration date for the time lines to be adhered to. Given the fact that Mr. Khawaja has advised that he will be out of the country at the time of the arbitration hearing and that he has no intention to pursue the arbitration, I advised Ms. Habkirk it would be more efficient to obtain a dismissal of the arbitration at the hearing, where the Applicant had the burden of proof as opposed to using Rule 68 where ING had the burden of proof.

Ms. Habkirk then advised that in the alternative ING wished to rely on Rule 34.1(e) as a basis for the dismissal.

Rule 34.1 provides:

34.1 Where a party fails to comply with a time requirement established by these Rules or by order or agreement, or fails to produce documents in compliance with an order or agreement, an arbitrator may:

(a) order a party to pay expenses (including interim expenses), or deny expenses to a party;

(b) exclude a document filed;

(d) draw an adverse inference against a party; and

(e) make such other order as the arbitrator considers just.

34.2 Either party may make a written request for the resumption of a pre-hearing discussion where a party fails to comply with a time requirement established by these Rules or by order or agreement, or fails to produce documents in compliance with an order or agreement.

34.3 The Dispute Resolution Group will attempt to accommodate a party’s written request for resumption of the pre-hearing discussion where practicable.

ING submits that I have the authority to dismiss the arbitration without a hearing pursuant to Rule 34.1(e). ING submits that Rule 34.1(e) is unambiguous and that "where there is a finding that, >a party has failed to comply with the time requirement established by Rules or by Order or agreement, or has failed to produce documents in compliance with an Order or agreement, the Arbitrator may make any such Order he or she deems just." ING submits that it is "just" in this case to make an order dismissing the arbitration. [emphasis in original]

At the oral hearing, ING submitted that the Rules of Civil Procedure has numerous sub-rules which are virtually identical to Rule 34.1(e) and which allows an adjudicator to dismiss an action without a hearing. The motion on April 23, 2004 was adjourned for written submissions in order for ING to provide cases either under civil proceedings or arbitration hearings which support its position that, pursuant to the wording in 34.1(e), an arbitrator has the jurisdiction to dismiss an arbitration without a hearing.

ING did not provide any cases from civil proceedings that support its position. ING did file one arbitration decision, Shalchi-Amirkhiz v. Belair Insurance Company Inc.,³ which in fact does not support its position.

In that case, a motion was brought by the insurer to dismiss the applicant's arbitration pursuant to Rules 34.1, 65.7 and 68.1 of the Code on the bases of his failure to provide any of the documents ordered to be produced at the original pre-hearing conference and of his failure to comply with certain orders made in the proceeding since that time.

In his decision Arbitrator Bayefsky stated:

I am not prepared to dismiss Mr. Shalchi-Amirkhiz's arbitration. As in the arbitration decision of Lyght and Allstate Insurance Company of Canada (FSCO A01-000749, May 14, 2002), in which the Applicant repeatedly failed to comply with undertakings and orders, I find that the "specific notice prerequisites required by Rule 68 of the Code (for the dismissal of a proceeding without a hearing)" have not been met....

It is clear from both the Shalchi-Amirkhiz and Lyyght decisions Rule 34.1(e) cannot be relied on to dismiss an arbitration without a hearing where an applicant has failed to provide documents. Rule 68 is the requisite rule for an order to dismiss without a proceeding.

In my view, the appropriate principle of statutory interpretation to be applied in this case is the "Implied Exclusion Rule" expressio unius est exclusio aterius.

Driedger on the Construction of Statutes explains the implied exclusion rule as follows:

An implied exclusion argument lies whenever there is reason to believe that if the legislature had meant to include a particular thing within the ambit of its legislation, it would have referred to that thing expressly. Because of this expectation, the legislature's failure to mention the thing becomes grounds for inferring that it was deliberately excluded. Although there is no express exclusion, exclusion is implied. The force of the implication depends on the strength and legitimacy of the expectation of express reference. The better the reason for anticipating express reference to a thing, the more telling the silence of the legislature.

An expectation of express reference can arise in a number of ways. Most often it is grounded in presumptions relating to the way the legislation is drafted or to the policies it is likely to express. However, it can arise in any assumption or observation that the court feels entitled to make about legislation.⁴

The Code specifically addresses the issue of dismissing a proceeding without a hearing in Rule 68. Rule 34.1 deals specifically with "Failure to Comply" with production undertakings. Paragraphs (a) to (d) of Rule 34.1 provide specific examples of what an arbitrator can order where a party has failed to produce documents in compliance with an order or agreement. These include: making an expense order, excluding a document, impose a timetable for compliance or draw an adverse inference. Paragraph (e) allows an arbitrator to "make such other order as the arbitrator considers just."

In my view, had the drafters of the Code wished to provide an extraordinary remedy such as dismissing a proceeding pursuant to Rule 34.1 it would specifically have stated so rather than permitting such a remedy to be inferred in paragraph (e). The fact that there is a specific rule, namely, Rule 68, which allows for the dismissing of a arbitration without a hearing, reinforces this interpretation.

Succinctly, I find that where the drafters of the Code did not specifically mention that one of the remedies for non-compliance of production orders was a dismissal of the arbitration pursuant to Rule 34.1, and where there is a rule which specifically allows for the dismissal of a proceeding, the drafters meant to exclude this remedy under Rule 34.1.

Similarly, I also find that Rule 65.7 of the Code which states that an arbitrator "may make such orders or give such directions as he or she considers proper to prevent an abuse of process" cannot be interpreted to mean that an arbitrator can dismiss an arbitration without a hearing based on Rule 65.7. That is, the "Implied Exclusion" principle applies in this case.

Accordingly, for all these reasons I find that the motion to dismiss the arbitration hearing on May 17, 2004, pursuant to Rules 34.1(e), 65.7 and 68 of Code, is dismissed.

EXPENSES:

Before Counsel for ING began her oral submissions on the motion to dismiss the arbitration, I advised her that the burden of proof on the motion to dismiss rests with ING and that it was a difficult burden to meet. As well, Rule 68 which deals with "Dismissal of Proceeding Without Hearing" had specific time lines which had not been adhered to. In light of the fact that the arbitration hearing was set for less than a month away, on May 17, 2004, it would be more pragmatic and efficient if she requested a dismissal of the arbitration at the arbitration hearing where the burden of proof rests with Mr. Khawaja.

Ms. Habkirk submitted that she would have to prepare for a full arbitration hearing on the chance that Mr. Khawaja would appear and proceed with his case and that this would be expensive for her client. She therefore preferred to proceed on the motion to dismiss pursuant to the Rules 34.1 and 68 of the Code.

In my view, it was very clear from the affidavit presented by Mr. Khawaja’s solicitors in their motion to be removed from the record that Mr. Khawaja was out of the country and was not intending to follow up on the arbitration hearing. It was also clear that the time lines required by Rule 68 had not been met. I advised Ms. Habkirk of this fact and the fact that, without Rule 68, I could not dismiss an arbitration pursuant to section 34(1)(e). In my view, the motion to dismiss on April 23, 2004 and the additional written submissions on April 30, 2004 were not the most expeditious way to have proceeded on this case and this fact should be taken into consideration when the hearing arbitrator deals with the issue of expenses.

May 10, 2004

Joyce Miller Arbitrator

Date