Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2005 ONFSCDRS 59

Appeal P04-00022

OFFICE OF THE DIRECTOR OF ARBITRATIONS

IRAJ RASHIDI Appellant

and

WAWANESA MUTUAL INSURANCE COMPANY Respondent

Before: Nancy Makepeace

Representatives: Khalil Ismaeli for Mr. Rashidi; Ian D. Kirby for Wawanesa

Hearing Date: April 27, 2005

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

Mr. Rashidi’s appeal from the arbitrator’s orders of March 23, 2004 and June 16, 2004 is dismissed and the orders are confirmed.
Mr. Rashidi shall pay Wawanesa’s appeal expenses in the amount of $300.

May 4, 2005

Nancy Makepeace Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Neither Mr. Rashidi nor his SABS representative, Mr. Ismaeli, appeared at the arbitration hearing on February 24, 2004. On March 23, 2004, the arbitrator dismissed Mr. Rashidi’s application for arbitration and ordered Mr. Rashidi to pay Wawanesa’s arbitration expenses in the amount of $1,500. On June 16, 2004, the arbitrator ordered Mr. Ismaeli to pay personally the sum of $342 to Wawanesa.

Mr. Rashidi appeals from both orders.

At the conclusion of the appeal hearing on April 27, 2005, I gave an oral ruling dismissing the appeal and ordering Mr. Rashidi to pay Wawanesa’s appeal expenses in an amount to be determined. My reasons follow.

II. BACKGROUND

In June 2003, Mr. Rashidi applied for arbitration, claiming benefits in respect of an automobile accident on June 24, 2002.

An arbitration pre-hearing conference was held on October 23, 2003. Mr. Rashidi attended, along with Mr. Ismaeli. Mr. Dave Rosenberg participated on behalf of Wawanesa, represented by Mr. Kirby. The pre-hearing letter, dated the same day, identified the following issues: a medical benefit for the cost of a treatment plan under s. 14 of the SABS-1996,¹ attendant care benefits totaling $800 under s. 16, housekeeping and home maintenance benefits under s. 22, the cost of two examinations under s. 24, interest on overdue benefits under s. 46(2) of the SABS-1996, and arbitration expenses under s. 282(11) of the Insurance Act.

The pre-hearing letter indicates that the parties agreed on document production and undertook to file an agreed list of productions within 30 days after the pre-hearing and comply or provide proof of best efforts to comply within 60 days. Mr. Rashidi identified five witnesses he intended to call, and Wawanesa identified one witness.

The arbitration hearing was scheduled for February 24 and 25, 2004, and the Notice of Hearing was sent to both parties and both representatives on October 28, 2003.

On October 17, 2003, shortly before the pre-hearing conference, Mr. Kirby served and filed a request for production of certain documents: the accident report (if in Mr. Rashidi’s possession), a decoded OHIP summary from one year pre-accident; the clinical notes and records of Dr. R.F. Komeili, the chiropractor who prepared the treatment plan dated June 25, 2002, Dr. A. Hadian, who prepared the disability certificate dated June 27, 2002, Ms. Tovah Shoore, M.A. and her supervisor, Dr. A. Shaul (a registered psychologist), who prepared the January 27, 2003 psychological report for Mr. Rashidi, and Ms. Shoore’s curriculum vitae.

On November 26, 2003, Mr. Kirby served and filed the agreed productions letter, stating that Mr. Rashidi agreed to produce the documents requested and confirming there were no production requests on Mr. Rashidi’s behalf.

On December 3, 2003, Mr. Ismaeli asked for pre-payment of the third-party fees for preparation of the records of Dr. Hadian ($72) and Ms. Shoore ($40); invoices were provided. Mr. Kirby’s office forwarded a cheque for $112 on December 4, 2003.

A week later, Mr. Ismaeli asked for a further pre-payment of $80 for the OHIP records and $150 for Dr. Komeili, and a further $230 was paid by Mr. Kirby’s firm on December 23, 2003.

There was no further communication from Mr. Ismaeli before the hearing. Mr. Ismaeli did not respond to Mr. Kirby’s follow-up production demand on January 30, 2004.

Wawanesa’s Medical Brief and Document Brief had been served on Mr. Ismaeli on October 17, 2003, shortly before the pre-hearing conference. On February 17, 2004, one week before the scheduled hearing, the Insurer served its Document Brief – Volume II.

Neither Mr. Rashidi nor Mr. Ismaeli appeared at the arbitration hearing on February 24, 2004. In his decision, dated March 23, 2004, the arbitrator found that Notice of Hearing had been served, then stated, “In the absence of any evidence on behalf of Mr. Rashidi, his Application for Arbitration is dismissed.”

The remainder of the arbitrator’s decision concerns Mr. Kirby’s request for arbitration expenses of $5,000, including the $3,000 assessment fee Wawanesa paid to respond to the application. The arbitrator dismissed the claim with respect to the assessment fee, noting that the section of the Insurance Act that authorized that remedy was repealed effective October 3, 2003. Of the $2,000 remaining, the arbitrator ordered Mr. Rashidi to pay $1,500 to Wawanesa, having regard to the criteria in the expenses regulation in effect when the arbitration was commenced and the relatively small amount of benefits involved.

Mr. Kirby also sought repayment, from Mr. Ismaeli personally, of the $342 paid in respect of Wawanesa’s production requests, none of which had been forthcoming. The arbitrator deferred his decision in accordance with s. 282(11.4) of the Insurance Act, which requires that a representative be given a reasonable opportunity to make submissions before expenses are ordered against him personally. He gave Mr. Ismaeli 30 days to make written submissions on the issue, and Mr. Kirby another 14 days to respond.

On June 16, 2004, having received no communication from Mr. Ismaeli, the arbitrator made the order requested, finding that Mr. Ismaeli caused Wawanesa to incur expenses of $342 without reasonable cause. This order was authorized by s. 282(11.2)(c), which states:

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, . . . the representative caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default.

On appeal, Mr. Rashidi asks me to revoke the arbitrator’s orders and order a new arbitration hearing. Wawanesa submits the appeal does not identify a question of law. I acknowledged the appeal because FSCO has no specific rules for setting aside what is essentially a default judgement, and so the question raises a novel procedural issue. In the end, I am not persuaded the arbitrator erred in law or denied Mr. Rashidi or Mr. Ismaeli a fair hearing. I agree with his disposition of the arbitration.

Two weeks before the appeal hearing, Mr. Ismaeli asked for an adjournment on the basis that Mr. Rashidi was out of the country. No further details were provided. I denied the request, noting that the hearing date was scheduled after consultation with Mr. Ismaeli and a Notice of Rescheduled Hearing was issued on March 22, 2005. I gave Mr. Ismaeli a choice – proceed on the basis of the written submissions already filed or attend the scheduled hearing without Mr. Rashidi. He elected to proceed with the hearing.

III. ANALYSIS

In his written submissions on Mr. Rashidi’s behalf, Mr. Ismaeli offered three explanations for his client’s failure to appear at the arbitration hearing: Mr. Rashidi was in the process of moving to an address not previously known to FSCO; he was in the process of getting married and was in and out of the country for marriage celebrations (and was married in late January 2004); and he did not receive any notice of hearing and did not know what day the hearing was to take place.

Mr. Ismaeli explained his own failure to appear by stating he was out of the country on a family emergency. With respect to the production issue, he stated he was responsive to Wawanesa’s requests.

In oral submissions, Mr. Ismaeli provided yet a third address for Mr. Rashidi and explained that his own family emergency related to an earthquake in Iran (presumably the earthquake on December 26, 2003). Confronted with the fact that both he and his client were present when the hearing date was arranged at the pre-hearing, he offered a new explanation for failing to appear or request an adjournment: he had failed to diarize the date, and so had his office staff.

I find this appeal has no merit. Neither Mr. Rashidi nor Mr. Ismaeli gave sworn evidence or even a signed statement as to the reasons for their failure to appear. FSCO was not even given the courtesy of an oral explanation from Mr. Rashidi. The explanations offered through Mr. Ismaeli are inherently unconvincing because of their number and lack of detail. For example, the flight documents appended to Mr. Ismaeli’s written submissions show, at best, that Mr. Ismaeli flew from Tehran to Toronto on January 10, 2004 and then flew from Toronto to Amsterdam on February 11, 2004. No return date was provided for the latter trip. Anyway, since these documents suggest that Mr. Ismaeli was in Toronto between January 11 and February 10, they do not explain his failure to request an adjournment if necessary.

In any event, the main point is that the February 2004 hearing dates were arranged at the pre-hearing conference on October 23, 2003, which was attended by both Mr. Rashidi and Mr. Ismaeli. The Notice of Hearing was issued the following week, and sent to both Mr. Rashidi and Mr. Ismaeli at the addresses they had provided. At no time did FSCO receive a notice of change of address for Mr. Rashidi or a request for an adjournment. In fact, Mr. Ismaeli seems to have been entirely unresponsive to Wawanesa after the pre-hearing except for seeking and obtaining $342 to pay for the requested third-party productions.

A month passed after the arbitration hearing, with still no word from Mr. Rashidi or Mr. Ismaeli. The arbitrator’s decision of March 23, 2004 decision was mailed the same day, in accordance with FSCO practice. If Mr. Rashidi’s copy were sent to the wrong address, or Mr. Ismaeli now realized he had forgotten to diarize the hearing date, one would expect Mr. Ismaeli to notify FSCO as soon as possible. Instead, there was no communication from Mr. Ismaeli, not even with respect to the arbitrator’s invitation for submissions with respect to the order against him personally. It has not been suggested that Mr. Ismaeli has moved. Absent proof, I am not prepared to accept that Mr. Rashidi and Mr. Ismaeli were both out of the country for this extended period of time.

I can imagine situations that might warrant setting aside an arbitrator’s default order based on new evidence that, for example, an emergency occurred en route to the hearing and timely communication with FSCO was not reasonably practicable. Because such things can happen, it is the general FSCO practice to give the absent parties a short grace period at the outset of the hearing and to attempt to reach a party or representative before disposing of the matter. In this case, the arbitrator’s order was issued a month after the hearing date, leaving Mr. Rashidi and Mr. Ismaeli lots of time to explain their non-appearance. No explanation was forthcoming.

In my view, Mr. Rashidi and Mr. Ismaeli have treated FSCO’s proceedings with disregard approaching contempt. I agree with the arbitrator’s disposition of the case.

At the appeal hearing, Mr. Ismaeli did not dispute Mr. Kirby’s contention that the requested medical records have never been produced, but stated that Dr. Komeili and Dr. Shaul have moved to new offices. I am not prepared to accept this without proof, and in any event, this does not explain the non-appearance of the OHIP records or Dr. Hadian’s records. The arbitrator was correct in ordering Mr. Ismaeli personally to repay to Wawanesa the $342 it paid for production of third-party medical records.

The appeal is dismissed. This means that the consent stay of the arbitrator’s order is lifted, and the expenses ordered – $1,500 from Mr. Rashidi and $342 from Mr. Ismaeli – are payable forthwith.

IV. EXPENSES

Wawanesa is entitled to its appeal expenses. It was entirely successful in resisting the appeal. Though the appeal raised a novel procedural issue, this factor does not vitiate the impropriety of the appeal, which had no merit.

Mr. Kirby requested appeal expenses in the amount of $1,000. Considering the relatively nominal response required, the prescribed legal aid rate for insurer’s counsel, and the $1,500 already ordered by the arbitrator, I find an award of $300 to be a reasonable amount.