Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2005 ONFSCDRS 147

FSCO A05-000201

BETWEEN:

NGOC MY TRANG

Applicant

and

GUARANTEE COMPANY OF NORTH AMERICA

Insurer

DECISION ON A MOTION

Before:

Richard Feldman

Heard:

By telephone conference call on September 14, 2005.

Appearances:

Hung Tan Truong for Mrs. Trang Rose Bilash for Guarantee Company of North America

Background and Issues:

The Applicant, Ngoc My Trang, was allegedly injured in a motor vehicle accident on October 17, 2003. She applied for and received statutory accident benefits from Guarantee Company of North America ("Guarantee"), payable under the Schedule.¹ Ultimately, disputes arose concerning Mrs. Trang's claim for statutory accident benefits. The parties were unable to resolve their disputes through mediation.

On January 28, 2005, Mrs. Trang applied for arbitration at the Financial Services Commission of Ontario (the "Commission") under the Insurance Act, R.S.O. 1990, c.I.8, as amended. On February 25, 2005, Guarantee filed its Response. In April 2005, Mrs. Trang filed another application for mediation (of issues not specifically raised in this application). On June 13, 2005, Mrs. Trang commenced an action against Guarantee (Court File No. 05-18605) in the Superior Court of Justice in Hamilton for damages and for accident benefits to which she may be entitled as a result of the October 17, 2003 accident. On June 15, 2005, Mrs. Trang advised the Commission that she wished to withdraw her application for arbitration. On August 5, 2005, Guarantee advised the Commission that it was not consenting to the requested withdrawal and would be seeking its costs.

Mrs. Trang brought a motion, to be heard by telephone conference on September 14, 2005, for an order permitting her to withdraw this application for arbitration. Counsel for Mrs. Trang filed a motion record containing written submissions and the material upon which Mrs. Trang relies with respect to this motion. Guarantee filed a responding motion record. Guarantee opposes the Applicant's motion but, in the event that the motion is granted, Guarantee is requesting that certain terms be imposed, including an order for the payment of the legal expenses Guarantee incurred in responding to this application for arbitration and in preparing for and attending on this motion and that said expenses be paid, in whole or in part, personally by Hung Tan Truong, solicitor for Mrs. Trang.

On September 14, 2005, I conducted the motion by telephone conference and heard the submissions of counsel for both parties. Although I suggested to Mr. Truong that the Applicant might wish to participate (and, to that end, the Commission had made an interpreter available), Mr. Truong requested that I not add Mrs. Trang to the telephone conference.

The issues to be determined on this motion are as follows:

Is Mrs. Trang permitted to withdraw this application for arbitration pursuant to Rule 70 of the Dispute Resolution Practice Code (the "Code"), (4th edition, Updated October 2003)?
If Mrs. Trang's motion is granted, pursuant to Rules 70.3 and 75 of the Code, what expenses (if any) is Guarantee entitled to recover as a term of the order granting Mrs. Trang permission to withdraw her application?
If Guarantee is entitled to an order for expenses, should some or all of those expenses be paid by Mr. Truong personally pursuant to paragraph 282(11.2)(c) of the Insurance Act?
What other terms, if any, ought to be included in the order pursuant to Rule 70.3?

Result:

Mrs. Trang is permitted to withdraw her application for arbitration.
Guarantee is entitled to its costs of this arbitration, fixed in the sum of $500.00 (inclusive of fees, disbursements and any applicable taxes).
The expenses set out above shall be paid by the Applicant.
It is a term of granting the Applicant's motion that she will not be able to re-apply to the Commission for arbitration of the same issues raised in the application for arbitration that is now being withdrawn.

ANALYSIS:

The Applicant's stated reasons for now wishing to pursue her claims in court (instead of before the Commission) can be summarized as follows:

Guarantee's conduct has shown a lack of good faith; and
The Superior Court of Justice is the "fairer and or better forum."

Mr. Truong also took the position, on behalf of the Applicant, that the Commission has no statutory authority to refuse to permit the requested withdrawal.² Finally, Mr. Truong pointed out that it was still very early in the process (the parties have done little more than file the equivalent of pleadings - the Application and the Response) and that there is little, if any, prejudice to Guarantee in the application being discontinued at this juncture.

Guarantee argues that the Applicant has not demonstrated any valid grounds for this motion.

With respect to the allegation that Guarantee has been acting in bad faith, Ms. Bilash made the following submissions:

the fact that Guarantee terminated payment of benefits or declined to pay certain accident benefits is not evidence of a lack of good faith, especially where the termination or denial of benefits was based upon the assessment of the Applicant's condition by medical professionals who examined her (at insurer's examinations or at designated assessment centres, or both);
Guarantee was within its legal rights to decline the Applicant's invitation to participate in neutral evaluation and no negative inference should be drawn from that decision; and
the fact that mediation did not resolve the disputes between the parties cannot be taken as evidence of bad faith on the part of the Insurer and any settlement discussions that may have taken place are confidential.

With respect to the allegation that the Court is the 'fairer and or better forum", Ms. Bilash made the following submissions:

the Commission often resolves these types of disputes faster and with less legal expense than the Superior Court of Justice;
contrary to Mr. Truong's assertion, the Commission also holds hearings in Hamilton;
in applications for relief under the Schedule, the Court has no power to award relief that is greater than or different from the relief that can be granted by the Commission;³ and
even if the Court was in some way superior to the Commission, the Applicant could have elected to proceed in Court from the outset and avoided putting Guarantee to the unnecessary expense of responding to this application.

Guarantee acknowledges, however, that an insured person generally has the right to choose the forum in which their dispute is heard and that the primary factors usually considered on motions such as this are: (1) the stage of the process; and (2) the prejudice to the insurer. Guarantee further acknowledges that it is very early in the process and that the only real prejudice to Guarantee is in the legal expenses it has incurred in responding to this application.⁴

I do not agree that the Commission lacks authority to refuse to allow an applicant to withdraw an application. The Commission has inherent and statutory power⁵ to control its process and to make such orders as are necessary to prevent an abuse of process. There have been cases where the Commission has refused to allow a party to withdraw a claim, usually where the request is made at the hearing.⁶ In the vast majority of cases, however, the Commission will grant its consent and the only real issue is with respect to what terms, if any, ought to be contained in the Commission's order. Such an approach is also appropriate here. Given the fact that this case is still at a very early stage and that Guarantee will not be seriously prejudiced if the application is discontinued at this point, I shall grant the Applicant's motion and permit her to withdraw her application, on certain terms.

Rule 70.3 of the Code provides that, where a party does not agree to the withdrawal, an adjudicator may: (a) permit the withdrawal on such terms and conditions as he or she considers just; and (b) award expenses to either party as permitted by Rule 75 and following.

I advised Mr. Truong that, if I were to grant this motion, it would be a condition of my order that Mrs. Trang will not be able to re-apply to the Commission for arbitration of the same issues raised in the current application for arbitration.

In addition, Guarantee requested an order for its expenses related to this application (as outlined at Tab 5 of the Responding Party's Motion Record). Guarantee is seeking $914.10 in legal fees (representing about 5.5 hours for counsel to review and respond to the Application for Arbitration and to communicate with Guarantee and with Mr. Truong plus about 5.5 hours related to this motion) and $60.00 in disbursements; the total of the expenses claimed is $974.10. Guarantee also requests that some or all of this amount be ordered against Mr. Truong personally (pursuant to paragraph 282(11.2)(c) of the Insurance Act), based upon the following:

The decision to start an application before the Commission and then switch to a court proceeding was made by, or upon the advice of, Mr. Truong and it was Mr. Truong, therefore, who caused Guarantee to incur the expenses of this arbitration without reasonable cause; and
Mrs. Trang is, according to her affidavit (filed in support of this motion), applying for social assistance and may be impecunious and unable to pay any amount ordered against her.

Mr. Truong opposes any order for expenses, either against himself or his client. With respect to Mrs. Trang, it is submitted that she has done nothing wrong and that, given her difficult financial circumstances, no further economic burden ought to be placed upon her. With respect to Mr. Truong's own conduct, he submits that there is no evidence that any action on his part caused Guarantee to incur any expenses without reasonable cause.

On this last point, I agree with Mr. Truong. Although Guarantee may suspect that it is Mr. Truong who has been making the decisions (or the recommendations) as to the forum in which to pursue these claims, there is no evidence as to how these decisions have been made. In the absence of evidence or an admission by Mr. Truong to the effect that he was responsible for first commencing proceedings before the Commission and then deciding to move to the Court, I am not prepared to make an order for expenses against him personally. Furthermore, the fact that Mrs. Trang may have applied for social assistance does not necessarily mean that she does not have any assets or income or that she will not have assets or income in the future. In any event, I am not convinced that the fact that the Applicant may be impecunious is a valid reason to force her counsel to personally pay the Insurer's expenses. Therefore, any order for expenses that I may grant will be against the Applicant. Since only Mrs. Trang and her counsel know how the strategic decisions concerning this case have been made, the two of them can sort out between themselves who ultimately will bear any such expense.

The decision as to whether or not to make an order for the payment by one party of the other party's expenses is an exercise of discretion. The only criteria that can be considered are set out in the Expense Regulation (found in Section F of the Code) and also in Rule 75.2. This application was never adjudicated upon its merits so neither party can be called "successful." No evidence was presented of any written offers to settle. There do not appear to be any novel issues raised in the proceeding. Based upon the evidence presented, I find that there was no conduct by either side to this dispute that tended to prolong or obstruct the proceeding. The real issue is whether any aspect of the proceeding was unnecessary.

Guarantee argues that, given the Applicant's choice to proceed in Court and the fact that that choice could have been made before this application was commenced, this entire application has been unnecessary and Guarantee ought to be awarded its legal expenses related to responding to this application. I agree. The Applicant has failed to provide any cogent reason for first commencing this application and then deciding to change venues and there is no evidence that Guarantee's conduct since it received this application for arbitration could reasonably be seen as a valid justification for such a decision. I shall therefore order that Mrs. Trang pay to Guarantee its costs of this arbitration, fixed in the sum of $500.00 (inclusive of fees, disbursements and any applicable taxes).

In all of the circumstances (and given that the success of the parties on this motion was mixed), there shall be no award to either party of the expenses of this motion.

October 17, 2005

Richard Feldman Arbitrator

Date