Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2005 ONFSCDRS 123

FSCO A04-001877

BETWEEN:

ALEXANDER LYASHOV

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Denise Ashby

Heard:

Written submissions were received from July 18, 2005 to August 9, 2005.

Appearances:

Alon Rooz for Mr. Lyashov Sylvia A. Haak for ING Insurance Company of Canada

Issues:

The Applicant, Alexander Lyashov, was involved in a motor vehicle accident on June 23, 2003. He applied for and was denied statutory accident benefits from ING Insurance Company of Canada ("ING"), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Lyashov 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 are:

Should Mr. Lyashov's claim for benefits be dismissed without hearing or deemed to have been withdrawn?
Is Mr. Lyashov liable to pay ING's expenses pursuant to subsection 282(11) of the Insurance Act?
Should the law firm of Mazin & Rooz be permitted to withdraw as Mr. Lyashov's representative?
Is the law firm of Mazin & Rooz liable to pay ING's expenses pursuant to subsection 282(11.2) of the Insurance Act?

Result:

Mr. Lyashov's claim is deemed withdrawn.
Mr. Lyashov is liable to pay ING's expenses for the arbitration proceedings fixed at $750.00, inclusive of interest.
The law firm of Mazin & Rooz is permitted to withdraw as Mr. Lyashov's representative.
The law firm of Mazin & Rooz is not liable to pay ING's expenses.

INTRODUCTION:

ING seeks to have the arbitration proceeding dismissed without hearing. Its reasons are Mr. Lyashov has failed:

to make himself reasonably available for medical assessments which are reasonably required in the adjusting of the file;
to make himself reasonably available for DAC assessments pursuant to the Schedule; and
to participate in the arbitration proceedings.

Mr. Lyashov's counsel has responded to ING's request to have Mazin & Rooz held personally liable for its expenses but is silent in respect of the motion to dismiss, claiming he does not have instructions. Mr. Lyashov's counsel takes the position that his firm should not be held liable for ING's expenses.

EVIDENCE:

On August 30, 2004, Mr. Lyashov's counsel signed an Application for Arbitration.² The Commission issued a Notice of Pre-hearing for March 29, 2005 at the Commission's offices.³There is no evidence that this Notice was returned to the Commission.

Mr. Lyashov did not attend the pre-hearing which was convened on March 29, 2005. As a consequence, a resumption of pre-hearing was scheduled and took place on May 13, 2005.⁴Again, Mr. Lyashov did not attend. Notwithstanding Mr. Lyashov's absence, the issues for both a preliminary issue hearing and the hearing were agreed to by counsel. A date was set for the preliminary issue hearing.⁵ As well, ING brought a motion to dismiss Mr. Lyashov's claim. I determined that the motion was premature as the notice provisions of the Dispute Resolution Practice Code (Fourth Edition, updated October 2003) (DRPC) had not been complied with.

On May 13, 2005, following the resumption of pre-hearing, Mazin & Rooz sought to withdraw as representative of record because it was unable to obtain instructions from Mr. Lyashov.⁶

On June 8, 2005, I declined to permit the firm to withdraw. I ordered the firm to personally serve Mr. Lyashov its letter seeking to withdraw and other correspondence.⁷ The firm was unable to serve Mr. Lyashov and remains on the record.⁸

On June 30, 2005, ING's counsel served its motion record returnable July 15, 2005 seeking an order inter alia dismissing the Application for Arbitration.

On July 7, 2005, the Commission couriered a Notice of Motion to Mr. Lyashov at the two addresses noted on the file. The Notices were returned to the Commission on July 18 and 19, 2005 respectively.

ING submitted the following documentary evidence regarding Mr. Lyashov's non-attendance at medical examinations:

letter dated July 21, 2003, from Platinum Rehab Solutions Inc. to ING's adjuster which indicates it was copied to Mazin & Rooz and Mr. Lyashov;⁹
Notice of Insurer Examination, addressed to Mr. Lyashov, dated July 23, 2003 setting out the date, time and place of the scheduled medical examination which indicates it was copied to Mazin & Rooz;¹⁰
letter dated August 6, 2003, from ING's adjuster to Mr. Lyashov and copied to Mazin & Rooz, giving Mr. Lyashov notice that a Medical and Rehabilitation DAC assessment had been scheduled;¹¹
letter dated September 2, 2003, from ING's adjuster to Mr. Lyashov and copied to Mazin & Rooz, giving Mr. Lyashov notice that a further Medical and Rehabilitation DAC assessment had been scheduled;¹² and
letter dated Wednesday, September 3, 2003 from MDAC to Mr. Lyashov copied to Mazin & Rooz and ING's adjuster scheduling the DAC assessment for September 16, 2003 at 3:00 p.m.¹³

ING's counsel swore in her affidavit that Mr. Lyashov failed to attend the in-home assessment and the DAC assessment scheduled for September 16, 2003 which was rescheduled for November 9, 2004.¹⁴ She provided no explanation for her knowledge and belief. On the basis of the foregoing there is insufficient evidence to draw an inference that Mr. Lyashov unreasonably failed to attend the in-home assessment and the DAC assessment.

Mr. Lyashov has not participated in the pre-hearings; failed to communicate with his counsel and failed to provide the Commission with a current address to receive notices in respect of these proceedings. Therefore, I find that he has failed to participate in the arbitration process.

ANALYSIS:

Dismissal versus Deemed Withdrawal of the Application:

ING seeks the dismissal of this proceeding without a hearing. Rule 68.1 of the DRPC provides:

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;

Rule 68.2 requires the adjudicator to deliver written notice to all parties of the intention to dismiss pursuant to Rule 68.1. Rule 68.3 makes provision for a party to obj ect to the dismissal.

Rule 70.3 provides an adjudicator the authority to permit a withdrawal even in the face of a party's objection on such terms and conditions as he or she considers just and expenses may be awarded to either party.

ING's affidavit and documentary evidence fall far short of supporting a conclusion that Mr. Lyashov's Application was submitted in bad faith or that his claim is frivolous and vexatious. However, Mr. Lyashov has unreasonably failed to pursue his claim for benefits.

Commission adjudicators have historically deemed applications to have been withdrawn and have awarded expenses to insurers where an applicant has failed to pursue a claim.¹⁵ I adopt this approach for dealing with this application. Due to Mr. Lyashov's failure to provide a current address, meaningful service of notice pursuant to Rule 68.2 could not be effected. A deemed withdrawal of the application achieves the objective of Rule 1.1 of the DRPC which provides that the Rules must be interpreted broadly to produce the most just, quickest and least expensive resolution of the dispute.

Motion To Withdraw As Representative of Record:

I am satisfied that Mazin & Rooz has been unable to contact its client notwithstanding its efforts to do so. The firm has not been given meaningful instructions to pursue the application. Therefore, pursuant to Rule 9.8, I grant the firm's request to withdraw.

CONCLUSION:

The application for arbitration is deemed to be withdrawn because of Mr. Lyashov's failure to pursue his claim.

The firm's request to withdraw as Mr. Lyashov's representative is granted because he has failed to give the firm a current address and meaningful instructions.

EXPENSES:

Having regard to the expense criteria set out in section 12 of Ontario Regulation 664, I exercise my discretion to award ING its expenses incurred in these proceedings fixed at $750.00, inclusive of interest.

ING submits that Mr. Lyashov's representative, the firm of Mazin & Rooz, should be held liable for the expenses. Mazin & Rooz denies that it should be held liable for any award of expenses.

Section 282(11.2) of the Insurance Act provides:

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

Section 282(11.3) provides that (11.2)(a) does not apply to lawyers acting in the usual course of the practice of law. Mr. Lyashov's Application for Arbitration was signed by his counsel. A lawyer from Mazin & Rooz represented him at the pre-hearing and its resumption. Signing applications and attending at pre-hearings are within the normal ambit of a lawyer's role. Mr. Lyashov's representative assisted in making the pre-hearing process as efficient as possible in his absence. The firm took steps to contact Mr. Lyashov and obtain his instructions. These actions are consistent with a lawyer's ethical obligations to represent a client.

There is no evidence that the firm was acting beyond the normal scope of counsel retained to represent an applicant at the Commission. Having found that the evidence falls far short of supporting a conclusion that Mr. Lyashov has brought a frivolous and vexatious claim the test in 282(11.2)(b) does not apply. Therefore, the firm of Mazin & Rooz is not liable to pay all or part of the awarded expenses.

For the foregoing reasons, Mr. Lyashov shall pay the expenses awarded.

August 30, 2005

Denise Ashby Arbitrator

Date