Neutral Citation: 2004 ONFSCDRS 81

FSCO A03-001444

BETWEEN:

CHAK NG

Applicant

and

WESTERN ASSURANCE COMPANY

Insurer

DECISION ON INTERIM EXPENSES

Before:

Beth Allen

Heard:

April 28, 2004, at the Offices of the Financial Services Commission of Ontario in Toronto.

Oral submissions were heard on May 27, 2004 and written submissions were received on May 28, 2004 .

Appearances:

Jorge Pignalosa for Mr. Ng

Jamie Pollack for Western Assurance Company

The Applicant, Chak Ng, was injured in a motor vehicle accident on February 11, 2003. He applied for and received accident benefits under the Schedule.¹ Western Assurance Company ("Western") terminated the Applicant's income replacement benefits on August 24, 2003. The Applicant claims entitlement to income replacement and medical benefits and the cost of a medical examination pursuant to the Schedule. The parties were unable to resolve their disputes through mediation, and the Applicant applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issue before me is whether Western is entitled to its costs of the pre-hearing discussion scheduled for May 27, 2004, from both the Applicant and his representative, personally.

The issue in this preliminary hearing is:

Is the Applicant and his representative liable, pursuant to subsections 282(11) and 282 (11.2) of the Insurance Act, respectively, to pay Western's expenses thrown away in respect to the pre-hearing discussion that was scheduled to take place on May 27, 2004?

The Applicant and his representative are liable jointly and severally to pay Western's expenses thrown away fixed at $500, in respect of the pre-hearing discussion scheduled on May 27, 2004.

Non-Attendance of the Applicant and His Representative

A pre-hearing discussion in this case was scheduled to be held on May 27, 2004, at 10:00 a.m., at the offices of the Financial Services Commission of Ontario, before me, Arbitrator Beth Allen. Mr. Pollack attended as legal counsel for Western. Ms. Kim Thoms, Alternative Dispute Coordinator, attended on behalf of Western. Neither the Applicant nor his representative,

Mr. Pignalosa, attended the pre-hearing discussion. Neither the Applicant nor Mr. Pignalosa notified the Commission, Western or Mr. Pollack that they would not be attending the pre-hearing discussion.

By Notice of Pre-hearing Discussion, dated December 1, 2003, the Applicant and Mr. Pignalosa were notified at their contact addresses on record of the pre-hearing discussion. I heard nothing that indicated that they had not been notified of the pre-hearing discussion.

After about 15 minutes elapsed and neither the Applicant nor his representative arrived at the pre-hearing discussion, I requested that the Case Administrator on the file call Mr. Pignalosa's office to find out why he and his client were not present.

The receptionist at Mr. Pignalosa's office told the Case Administrator that Mr. Pignolosa had not been able to contact the Applicant and that was the reason Mr. Pignalosa did not attend the pre-hearing discussion. The receptionist advised the Case Administrator that Mr. Pignalosa would not be in his office on either May 27, 2004 or May 28, 2004.

I returned to the pre-hearing discussion and informed Mr. Pollack and Ms. Thoms of what I had learned from the Case Administrator. I then requested submissions from Mr. Pollack on how to proceed. As we were discussing this, we were advised by a Commission staff member that Mr. Pignalosa had called the Commission on the Arbitration Unit hotline. I eventually got

Mr. Pignalosa on the telephone conference line in the pre-hearing meeting room at about 10:45 a.m.

I expressed serious concern that neither he nor the Applicant had notified the Commission or Western and its counsel that they were not intending to attend the pre-hearing discussion.

Mr. Pignalosa proceeded to make a number of evasive and conflicting excuses for his and the Applicant's conduct, namely that:

He had transferred the Applicant's file to a lawyer, Brent Vickar, who he indicated, would be representing the Applicant at the pre-hearing discussion.
Mr. Pignalosa stated that he had spoken to the Applicant by telephone the previous day, May 26, 2004, about attending the pre-hearing on May 27, 2004, and, according to Mr. Pignalosa, the Applicant suddenly hung up on him and he had not spoken to the Applicant since that call. This suggests that on May 26, 2004, Mr. Pignalosa planned to attend the pre-hearing discussion on May 27, 2004, with the Applicant, which seems contrary to his previous statement.
Mr. Pignalosa indicated that he knew on May 26, 2004, that Mr. Vickar was otherwise engaged on May 27, 2004, and would not be available for the pre-hearing discussion, which contradicts Mr. Pignalosa's statement that Mr. Vickar would be representing the Applicant at the pre-hearing discussion.
Mr. Pignalosa first indicated that Mr. Vickar had the Applicant's accident benefits file and later stated that he had part of the file and could proceed with the pre-hearing discussion by telephone that day with the portion of the file he had in his possession.
Initially, Mr. Pignalosa was not clear as to whether the Applicant had retained Mr. Vickar to represent him. When I questioned him about this, Mr. Pignalosa stated that the Applicant had not retained Mr. Vickar; that he was still the Applicant's representative of record, and as such, he was responsible for the carriage of the matter.

Mr. Pignalosa could not clarify to my satisfaction the inconsistencies in his explanation for failing to give notice and to attend the pre-hearing. The Applicant did not contact the Commission at any time, even subsequent to the pre-hearing, to explain why he did not attend.

Expenses:

Mr. Pollack submitted that the Applicant and Mr. Pignalosa should be held accountable for Western's costs thrown away in respect to this pre-hearing discussion. He argued that a great deal of wasted expense and time might have been saved were the Applicant and Mr. Pignalosa to have notified the Commission and Western, with valid reasons, of their intention not to attend the pre-hearing discussion. Mr. Pollack requested that I award Western interim expenses for costs thrown away preparing for and attending the pre-hearing discussion.

An arbitrator's authority to make an interim award of expenses is derived from subsection 282 (11.1) of the Insurance Act which states:

282 (11.1) The arbitrator may at any time during an arbitration proceeding make an interim award of expenses, subject to such terms and conditions as may be established.

I indicated that I was inclined to make an order of expenses against the Applicant and Mr. Pignalosa for their conduct. Subsection 282 (11.4) of the Insurance Act r equires that arbitrators allow representatives a reasonable opportunity to make representations under these circumstances. That provision states:

282 (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.

Although Mr. Pignalosa made oral representations over the telephone, I allowed him until Friday, May 28, 2004, at 5:00 p.m. to provide written representations on whether an award of expenses should be imposed against him.

Regarding the expense award against the Applicant, subsection 282 (11) authorizes an arbitrator to award all or part of expenses against an insured person or an insurer as may be prescribed in the Regulation. Section 12 of Regulation 664 as amended², prescribes the criteria that may be considered by an arbitrator when deciding the expense issue. Rules 75 and 76 of the Dispute Resolution Practice Code (the Code)³ repeat the criteria in section 12 of Regulation 664. Rule 76 is not relevant here. The criteria to be considered under Rule 75.2 are: (a) each party's degree of success in the outcome of the proceeding; (b) any written offers to settle made in accordance with Rule 76; (c) whether novel issues are raised in the proceeding; (d) the conduct of a party or a party's representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders; (e) whether any aspect of the proceeding was improper, vexatious or unnecessary.

I find it is appropriate to apply Rule 75.2 (d) of the Code which looks at whether a party's conduct tended to prolong, obstruct or hinder a proceeding. In considering the Applicant's conduct in this case, I find there was unnecessary delay caused by his failure to give prior notice to the Commission and the Insurer that he would not be attending the pre-hearing, which in turn caused the pre-hearing participants to wait, not knowing whether he would appear or not. This hindered the progress of the arbitration process in that it was not reasonable under the circumstances to hold the pre-hearing discussion in the absence of one of the parties, making it necessary to schedule a future date for the pre-hearing. Regarding awarding expenses against a representative, subsection 282 (11.2) of the Insurance Act, authorizes an arbitrator to award expenses against a person representing an insured person (who is not a lawyer) and an insurer under certain circumstances.

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.

In considering whether to make an order against Mr. Pignalosa, I looked to subsection 282 (11.2) (c). I find Mr. Pignalosa caused expense to be incurred and wasted by unreasonable delay without reasonable cause. He failed to be forthright in explaining his conduct, which together with his failure to attend, is conduct that I find cannot be condoned.

In his written submissions dated May 28, 2004, Mr. Pignalosa, on one hand, took "full responsibility for what transpired on May 27, 2004", but requested that I not award expenses against him. In considering Mr. Pignalosa's written submissions, I find that he again made excuses for his non-attendance at the pre-hearing discussion, but failed to explain why he did not notify the Commission and the Insurer in advance. His labelling the problem a communication failure does not explain or excuse his conduct.

I also took into consideration that financial resources were wasted by Western and its counsel in preparation for the pre-hearing discussion and attendance at the Commission, under circumstances where the matter was ultimately adjourned and resumed to a future date.

I also remind Mr. Pignalosa of the obligations of paralegals in the dispute resolution process at the Commission, as set out in the Code of Conduct for Statutory Accident Benefit Representatives⁴. I refer particularly to clause 2.11 which reads as follows:

2.11 A representative must appear promptly for, and participate in good faith in, all dispute resolution proceedings for which he or she has received notification.

I agree with Mr. Pollack and I find that an award of expenses would be appropriate in the circumstances.

I therefore find the Applicant and Mr. Pignalosa jointly and severally liable pursuant to subsections 282 (11), (11.1) and (11.2) of the Insurance Act for Western's expenses thrown away, fixed at $500.

Resumption of the Pre-Hearing Discussion:

As noted above, rather than attempt to proceed on May 27, 2004, it was decided that it would be more fruitful to schedule a face-to-face pre-hearing resumption to deal with the issues in dispute, productions and to set a date for the hearing. I ordered the resumption of the pre-hearing discussion to be held, peremptory to the Applicant, at the offices of the Financial Services Commission on Friday, June 4, 2004, at 2:00 p.m.

I set out the following requirements as to what is expected of Mr. Pignalosa and the Applicant in respect to the pre-hearing resumption:

that both the Applicant and his representative are required to attend the pre-hearing resumption.
If the Applicant retains a new counsel or representative, the Commission, Western and Western's counsel must be advised by Mr. Pignalosa in writing in advance of the pre-hearing resumption.
If Mr. Pignalosa is unable to contact the Applicant before the pre-hearing resumption (to confirm the Applicant's attendance), Mr. Pignalosa must advise the Commission, Western and Western's counsel in advance of the pre-hearing resumption.

June 01, 2004

Beth Allen Arbitrator

Date

Neutral Citation: 2004 ONFSCDRS 81

FSCO A03-001444

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

CHAK NG

Applicant

and

WESTERN ASSURANCE COMPANY

Insurer

ARBITRATION ORDER

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

Mr. Ng and his representative, Mr. Pignalosa, shall jointly and severally pay to Western a portion of its expenses thrown away, fixed at $500.