Neutral Citation: 2005 ONFSCDRS 57

FSCO A03-001799

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ELLEN BORQUAYE

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before:

Robert A. Kominar

Heard:

August 30 and October 15, 2004, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

No one appearing for the Applicant

Jonathan B. Schrieder for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Ellen Borquaye, was injured in a motor vehicle accident on January 7, 2003. She applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company ("State Farm"), payable under the Schedule.¹ State Farm terminated weekly caregiver benefits effective April 28, 2003. The parties were unable to resolve their disputes through mediation, and Mrs. Borquaye applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.R.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Is Mrs. Borquaye entitled to receive weekly caregiver benefits to June 9, 2003, pursuant to section 13 of the Schedule?

2. Is Mrs. Borquaye entitled to payments for housekeeping and home maintenance services to June 9, 2003, pursuant to section 22 of the Schedule?

3. Is Mrs. Borquaye entitled to payments for the cost of the initial examination and report of Dr. Georgio Ilaqua in the amount of $2,078, pursuant to section 24 of the Schedule?

4. Mrs. Borquaye liable to repay benefits she received from State Farm pursuant to section 47 of the Schedule?

5. Is State Farm liable to pay Mrs. Borquaye's expenses in respect of the arbitration under subsection 282(11) of the Insurance Act.

6. Is Mrs. Borquaye liable to pay State Farm's expenses in respect of the arbitration under subsection 282(11) of the Insurance Act.

7. Is Mrs. Borquaye entitled to interest for the overdue payment of benefits pursuant to subsection 46(2) of the Schedule?

Result:

1. Mrs. Borquaye is not entitled to receive weekly caregiver benefits as claimed.

2. Mrs. Borquaye is not entitled to payments for housekeeping and home maintenance services as claimed.

3. Mrs. Borquaye is not entitled to the cost of the examination and report of Dr. Ilaqua.

4. Mrs. Borquaye is not liable to repay any benefits received from State Farm.

5. State Farm is not liable to pay Mrs. Borquaye's expenses in respect of the arbitration.

6. State Farm is entitled to its expenses, fixed in the amount of $4,307.02. Mrs. Borquaye and Mr. Glenn Bowie shall be jointly and severally liable for payment of these expenses.

7. Mrs. Borquaye is not entitled to interest for overdue payment of benefits.

EVIDENCE AND ANALYSIS:

Request for Adjournment

On August 26, 2004, Mr. Bowie, the Applicant's legal representative, wrote to the Commission requesting an adjournment of the arbitration hearing scheduled for August 30, 2004, on the grounds that he was not in contact with Mrs. Borquaye. Mr. Bowie's letter advised that he hoped to be able to locate her within the next several weeks. Mr. Schrieder opposed the adjournment on the grounds that the request was not in compliance with the Commission's policy on adjournments, which is set out in Practice Note 9 of the Dispute Resolution Practice Code, 4^th Edition. I declined to grant the adjournment in a letter dated August 27, 2004, which letter was faxed to Mr. Bowie's and to Mr. Schrieder's offices, based on my conclusion that the request was made at the very last minute and that the reason Mr. Bowie provided, that he was not in contact with Mrs. Borquaye, was not a sufficient reason to adjourn the hearing at this late date. If Mr. Bowie lost contact with Mrs. Borquaye he ought to have taken much earlier steps to deal with the upcoming arbitration.

In declining the request for an adjournment, I found that an applicant in an arbitration has responsibilities to participate in good faith in the process she commences. If Mrs. Borquaye was not willing or able to participate in the scheduled hearing, it was her responsibility, minimally, to communicate with her chosen representative or to contact the Commission directly and deal with the matter. It is manifestly unfair to State Farm in these circumstances to require them to respond to and prepare for a four-day arbitration hearing, and to incur significant costs in time and resources, only to have both the Applicant and her representative dismissively ignore the proceedings.

The Hearing

The arbitration was scheduled to be heard on August 30, 31, September 1, 2, 2004, at 10:00 a.m., at the offices of the Financial Services Commission of Ontario (the Commission) in North York. This date was agreed to by all parties at a pre-hearing conference held on April 28, 2004 at the offices of the Commission. At that time the pre-hearing arbitrator recorded that both Mrs. Borquaye and her legal representative, Mr. Glenn Bowie, were in attendance, along with Mr. Jonathan Schrieder, counsel for State Farm, and Mr. Chris Hunter representative of State Farm. In reviewing the Commission's file, I note that a formal Notice of Hearing was sent to both Mrs. Borquaye and Mr. Bowie on April 29, 2004, as well as to State Farm and its counsel. There is no evidence in the Commission's file of the correspondence to either Mrs. Borquaye or Mr. Bowie being returned to the Commission. The pre-hearing letter, dated April 28, 2004, confirming the hearing date agreed to, was also sent to the same parties and there is no evidence in the Commission's file of it being returned either.

On August 30, 2004 at 10:00 a.m., no one was in attendance on behalf of Mrs. Borquaye. Upon my enquiry, Mr. Schrieder advised me that he had not heard from either the Applicant or Mr. Bowie. Mr. Schrieder further advised that State Farm requested that the arbitration proceed in the absence of the Applicant and her representative. I briefly adjourned the hearing at 10:15 a.m. to allow extra time for the possible attendance of the Applicant or her representative. During the adjournment I personally telephoned Mrs. Borquaye's phone number noted in the Commission's file and learned that it was not in service. I also telephoned Mr. Bowie's office twice and was only able to get through to a voice mail message. I left a message advising Mr. Bowie that I was waiting to hear whether he would be in attendance, and if so when, and that I would proceed to consider Mr. Schrieder's submission that the hearing continue in the absence of Mrs. Borquaye and himself if I did not receive a response from someone at his office. At 10:35 a.m. no reply from Mr. Bowie was received and the arbitration resumed. No one participated on behalf of Mrs. Borquaye.

Rule 37.7 of the Dispute Resolution Practice Code provides as follows:

Where notice of hearing has been sent to a party and a party does not attend at an oral or electronic hearing, or participate in a written hearing, the arbitrator may proceed with the hearing in the party's absence or without the party's participation, as the case may be, and the party is not entitled to any further notice of the hearing.

I find that notice of the hearing was sent to Mrs. Borquaye as well as to her legal representative of record. Further, although I have no information as to why Mrs. Borquaye was not in attendance, I find that Mr. Bowie was clearly aware of the hearing date, based on his request for an adjournment of the hearing made on August 26, 2004. I believe that the only reasonable inference I can draw from Mr. Bowie's non-attendance at the arbitration is that he made an explicit choice not to appear and represent his client's interests. In these circumstances, and in the complete absence of any explanation for Mr. Bowie's or Mrs. Borquaye's absence, the arbitration proceeded.

The burden of proof in this arbitration rests upon Mrs. Borquaye and her legal representative to present the arbitrator with evidence which establishes entitlement to the benefits claimed. No evidence was presented, and no submissions were made to support any of Mrs. Borquaye's claims. She has failed to meet the burden of proof on her and, therefore, her claims for caregiver benefits, housekeeping and home maintenance benefits, funding for cost of examinations and interest on overdue payments are dismissed.

State Farm chose not to offer any evidence on the issue of repayment of benefits and therefore did not meet its burden of proof in respect to this issue. Not having any evidence that Mrs. Borquaye was overpaid and that State Farm is entitled to a repayment, the claim for a repayment of benefits is also dismissed.

EXPENSES

As of October 1, 2003, an arbitrator will consider only the criteria in the Expense Regulation in determining whether to make an order that one party pay the other party's expenses. The Expense Regulation, found in Section F of the Code, specifies that the criteria are:

Each party's degree of success in the outcome of the proceeding.

Any written offers to settle that were made in accordance with the rules of practice and procedure applicable to the proceeding after the conclusion of mediation and before the conclusion of the arbitration.

Whether novel issues are raised in the proceeding.

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.

Whether any aspect of the proceeding was improper, vexatious or unnecessary.

In addressing each of these criteria I find as follows:

1. Mrs. Borquaye was unsuccessful in all of the claims she advanced in this arbitration. In the circumstances, I believe it to be a reasonable inference that Mrs. Borquaye's claim had little chance of succeeding even if she were in attendance, absent some plausible explanation for the apparent lack of cooperation with the document production process.

State Farm also was unsuccessful on its claim for a small repayment of benefits. However, I find that Mr. Schrieder's decision not to present evidence on this issue in the face of the Applicant not appearing saved time and thus further expense in the arbitration.

2. I was not advised of any written offers to settle.

3. My review of the file material provided by State Farm leads me to the inference that there were no novel issues that would have been raised in this proceeding.

4. Mr. Schrieder advised that, in addition to not attending the arbitration proceedings, Mrs. Borquaye and her representative failed to honour production agreements and undertakings made in the pre-hearing conference on April 28, 2004. Mr. Schrieder noted that his office followed up in writing with Mr. Bowie, in an attempt to complete the production process, on April 29, June 2, July 6, July 21, and August 4, 2004, and that Mr. Bowie did not produce the required material or authorizations to obtain the information directly. Copies of this correspondence is in the Commission's file. Mr. Bowie apparently also did not have the professional courtesy to respond to any of Mr. Schrieder's correspondence. This correspondence was copied to the Commission.

The purpose of criteria 4 of the Expense Regulation is to recognize that the dispute resolution process at the Commission, including arbitration, aims at achieving the quickest and least expensive resolution of disputes possible. Although arbitration is a process that requires parties to present evidence and argument to the arbitrator, it is not intended to be overtly adversarial. Thus, the production process is intended to begin at the initiation of the proceedings and continue throughout. The goal is to promptly have the parties exchange relevant information both to facilitate early and informed settlement discussions and, if those discussions fail, to prepare for an early and organized hearing.

I find that Mr. Bowie's persistent pattern of non-engagement with the production process, his lack of professional courtesy in not communicating with Mr. Schrieder during the pre-arbitration period, and especially the disrespect he demonstrated for the arbitration process in failing to attend on August 30, 2004 very troubling.

As of November 2003, all Statutory Accident Benefit Representatives who are not lawyers and who are representing people for compensation are required to abide by a Code of Conduct. A search of the Commission's website on August 30, 2004 revealed that Mr. Glenn Bowie filed the appropriate declaration with the Commission to act as a SABS representative. Although the Code is not directly enforced by arbitrators, it does set out generally accepted standards of professional conduct arbitrators, as well as others, can reasonably expect representatives to comply with. Among the more salient sections of the Code as it relates to this case are:

Part 2: Standards of Conduct: Honesty, Competence, Courtesy, Representation Obligations

Section 2.5

A representative must prepare adequately for each step in the claims process and any dispute resolution proceeding.

Section 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.

Section 2.13

A representative must comply with all procedural requirements that apply to the proceedings, including the procedural requirements contained in the Dispute Resolution Practice Code, and with any orders or directions given by a mediator or adjudicator.

Section 2.14

A representative must not engage in conduct that is an abuse of the claims process or dispute resolution process by instituting claims or proceedings, or taking any action in the course of a claim or proceeding, for the dominant purpose of harassing the insurer or causing expenses to be incurred without reasonable cause.

Part 3: Regulatory Requirements: Errors and Omissions Insurance, Catastrophically Impaired Claimants, Unfair or Deceptive Acts or Practices, Obligations to FSCO

Section 3.8 - (Unfair or Deceptive Acts or Practices)

A representative must not commit an act or omission that is inconsistent with the Code of Conduct for Statutory Accident Benefit Representatives issued by the Superintendent and published in The Ontario Gazette, as it may be amended from time to time.

As general guidelines articulating the standards of professional conduct expected of representatives, I find that the above sections of the Code of Conduct support an inference that Mr. Bowie's conduct in this arbitration obstructed and hindered the proceedings. Reading the Code of Conduct in its entirety, and especially the sections reproduced above, I find that Mr. Bowie's representation of Mrs. Borquaye's claims fell significantly below what is now expected of paralegal representatives.

5. No evidence was presented to me that would support a conclusion that these proceedings were vexatious, i.e. that were contrived only to harass or annoy the insurer. However, I am persuaded that the setting of a four-day hearing and the concomitant requirement that State Farm prepare for and attend the hearing was both improper and unnecessary. Mr. Bowie was, or reasonably ought to have been, aware that if he disregarded his obligations in the production process, this matter was likely to stall. In addition, I find it reasonable to infer that Mr. Bowie knew some time ago that he was having difficulty in contacting Mrs. Borquaye and that he ought to have taken steps at that time to deal with the problem to prevent the needless incurring of expenses on the part of State Farm. At a minimum, I believe he ought to have prepared his file adequately enough to have addressed his mind to applying for an adjournment in a timely fashion.

Taking into account the five criteria in the Expense Regulation, I find that it is just and reasonable to award State Farm its reasonable expenses in this arbitration.

I asked Mr. Schrieder to make submissions on who should be liable for payment of the expenses. His submission was that both Mrs. Borquaye and Mr. Bowie were accountable for the wasted time and expense in this matter. As a result, I asked Mr. Schrieder to prepare a Bill of Costs in this matter and to serve the same on Mr. Bowie, as I am required to give him notice of my intention to consider making an expense order against him personally and allow him to make representations on the matter. I have before me a statement of service indicating that Mr. Bowie was served with Mr. Schrieder's Bill of Costs and submissions on who should pay the expenses on September 14, 2004.

A Notice of Assessment of Expenses was sent by the Commission to Mr. Bowie and to Mrs. Borquaye, scheduled for October 15, 2004. Neither Mrs. Borquaye nor Mr. Bowie responded to the Notice or participated in the assessment hearing.

Liability of representative to pay expenses

In addition to my decision to make an expense order in this arbitration in favour of State Farm, I was requested to make an order that Mr. Bowie, due to his conduct in this matter, be held liable to pay some or all of the arbitration expenses personally.

Subsections 282(11) and (11.2) of the Insurance Act set out the power of arbitrators to award expenses, the relevant subsections being:

(11) - Expenses

The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.

(11.2) - Liability of representative for costs

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.

(11.4) - Opportunity to make representations

An order under subsection (11.2) shall not be made unless the representative is given a reasonable opportunity to make representations to the arbitrator.

Pursuant to subsection 282(11.2)(c), my conclusions in this case have caused me to prima facie conclude that Mr. Bowie caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default.

Pursuant to subsection 282 (11.4), I wrote to Mr. Bowie on September 1, 2004 and advised him that I was considering making an expense order against him personally. I invited him to make representations regarding this matter on October 15, 2004 at the Expense Hearing. In preparation for that hearing I requested that Mr. Schrieder arrange to personally serve Mr. Bowie with his Bill of Costs well in advance of October 15, 2004 so that Mr. Bowie could be in a position to respond properly.

No one appeared for the Applicant on October 15, 2004 and no responding material was filed by Mr. Bowie.

Since neither Mrs. Borquaye nor Mr. Bowie appeared for the arbitration hearing or the hearing of the assessment of expenses, I have no grounds to meaningfully allocate their respective responsibilities for the outcome of this arbitration. What is clear is that State Farm was required to incur significant legal expense for no apparent reason. In the circumstances, I find that the most reasonable and just result is to hold Mrs. Borquaye and Mr. Bowie jointly and severally liable for the payment of these expenses. I do not believe that it is reasonable to expect State Farm to expend any more effort or expense in allocating responsibility for the expenses it incurred. This is something that is best left to be personally sorted out between Mr. Bowie and Mrs. Borquaye.

QUANTUM OF EXPENSES

Mr. Schrieder submitted a Bill of Costs as follows, supported by detailed time dockets:

Fees:

Johathan B. Schrieder

35.60 hrs x $87.50

$3,115.00

Suzanne Blanchette (law clerk)

15.10 hrs x $25.00

377.50

• 7% GST

244.48

Disbursements:

Court Reporting re attendance at

Day 1 of the arbitration

$ 251.45

Photocopies re arbitration briefs:

1191 copies x .25/page

297.75

7% GST

20.84

TOTAL Fees and Disbursements

$4,307.02

I find that these expenses are reasonable given the time that counsel for State Farm was required to devote to defending this matter, including efforts made to have Mr. Bowie comply with production agreements, and that the disbursements are recoverable pursuant to the Expense Regulation. I therefore award State Farm its expenses, fixed at $4,307.02, payable forthwith. The expenses are payable jointly and severally by Mrs. Borquaye and Mr. Bowie.

May 3, 2005

Robert A. Kominar Arbitrator

Date

Neutral Citation: 2005 ONFSCDRS 57

FSCO A03-001799

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ELLEN BORQUAYE

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

ARBITRATION ORDER

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

1. Mrs. Borquaye's claims in this arbitration are dismissed in their entirety.

2. State Farm's claim for a repayment of benefits is dismissed.

3. State Farm is entitled to its expenses in this arbitration, fixed in the amount of $4,307.02, payable forthwith, jointly and severally by Mrs. Ellen Borquaye and Mr. Glenn Bowie.

May 3, 2005

Robert A. Kominar Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96, 303/98, 114/00 and 482/01.