Neutral Citation: 2005 ONFSCDRS 89

FSCO A04-000521

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ASHOKH GEHI

Applicant

and

GUARANTEE COMPANY OF NORTH AMERICA

Insurer

DECISION ON EXPENSES

Before:

John Wilson

Heard:

Written submissions received by March 4, 2005.

Appearances:

Justin Mariani for Mr. Gehi

Adrian Willsher for Guarantee Company of North America

Issues:

The Applicant, Ashokh Gehi, was injured in a motor vehicle accident on January 10, 2003. In an adjournment decision dated February 22, 2005, I dealt with his request for an adjournment of his statutory accident benefit arbitration. I made the following orders, while reserving on the issue of expenses:

1. The Insurer has until Friday February 25 at 12:00 noon to serve and file its bill of expenses.

2. Mr. Gehi and Mr. Mariani shall have until Friday February 25 at 12:00 noon to serve and file any submissions and supporting materials on whether Mr. Mariani shall be personally responsible for payment of any expense order.

The issue in this further hearing is:

1. Is Mr. Mariani responsible for the expense order made in respect of this adjournment?

Result:

1. Mr. Mariani is responsible for the expense order made in respect of this adjournment

EVIDENCE AND ANALYSIS:

An adjournment was granted on February 22, 2005, on the basis of Mr. Mariani's claimed inability to proceed with the arbitration.

Although this adjournment request was not compliant with Rule 72 of the Dispute Resolution Practice Code, and "the unreadiness for hearing would appear to have been entirely a function of the conduct of the Applicant and his counsel", I accepted that Mr. Gehi would be severely prejudiced if the hearing were to proceed as scheduled. Consequently, the adjournment was granted subject to payment of the Insurer's expenses thrown away.

I remained seised of this matter to hear submissions on the amount of the expense order, and whether the expenses should be payable by Mr. Mariani personally, pursuant to section 282(11.2) of the Insurance Act.

The Commission's jurisdiction to consider the conduct of representatives appearing before arbitrators arises from several different sources.

The Commission sets minimum standards for the conduct of representatives during the arbitration process. The Superintendent's Code of Conduct for SABS Representatives sets out obligations of honesty, competency, and courtesy, among others. Rule 2.3 of this Code recognizes that a representative must have a "reasonable understanding" of the law and procedural requirements involved in a claim. It goes without saying that an understanding of the production process and adherence to the rules relevant to preparation for hearings would be encompassed by this requirement.

Likewise, Rule 2.4 sets out a requirement for "adequate skills, attributes and abilities appropriate to each matter." This Rule speaks for itself.

Although the Commission, as an administrative tribunal and a creature of statute, has no inherent jurisdiction, subsection 23(1) of the Statutory Powers Procedure Act (SPPA), R.S.O. 1990, c. S.22, also grants a mandate to control abuse.

In addition, the revised section 282(11.2) of the Insurance Act, now specifically gives an arbitrator the right to hold a representative liable for costs arising from such abuses. It is in this context that the issue of a potential award against a representative, pursuant to section 282(11.2), must be considered. That section reads as follows:

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.

Although the new provisions do not specify the type of conduct that constitutes "reasonable cause", the courts have long considered the issues raised by cost orders against lawyers or agents.

McLachlin J. stated in Young v. Young 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3 (S.C.C.):

The basic principle on which costs are awarded is as compensation for the successful party, not in order to punish a barrister. Any member of the legal profession might be subject to a compensatory order for costs if it is shown that repetitive and irrelevant material, and excessive motions and applications, characterized the proceedings in which they were involved, and that the lawyer acted in bad faith in encouraging this abuse and delay. It is clear that the courts possess jurisdiction to make such an award, often under statute and, in any event, as part of their inherent jurisdiction to control abuse of process and contempt of court. But the fault that might give rise to a costs award against Mr. How does not characterize these proceedings, despite their great length and acrimonious progress. Moreover, courts must be extremely cautious in awarding costs personally against a lawyer, given the duties upon a lawyer to guard confidentiality of instructions and to bring forward with courage even unpopular causes. A lawyer should not be placed in a situation where his or her fear of an adverse order of costs may conflict with these fundamental duties of his or her calling.

Returning to section 282(11.2) of the Insurance Act, it is apparent that the application of this provision, as well, is contingent upon some serious default by the representative of an insurer or an insured. It is not meant to be a routine sanction for counsel or representatives whose practices offend an adjudicator. It is meant to apply to egregious cases where the conduct of a representative, if unchecked, would tend to bring the arbitration system and the administration of justice into disrepute, as enunciated in the Young case.

Unlike the courts, the arbitration system is designed to work on strict time discipline.¹ Hearing dates are set on the consent of both parties, and are subject to revision only in cases of personal emergencies, the prospect of imminent settlement, or the unforeseen unavailability of critical evidence, or the involvement of counsel in an ongoing proceeding that was scheduled to conclude before the time scheduled for the arbitration.

Mr. Mariani requested the adjournment because his medical witnesses were not available, and he had not been able to prepare his case due to his client’s unforeseen absence in India. At the adjournment hearing, he admitted that his medical witnesses had not been summonsed in a timely manner, nor, indeed, put on notice as required by the Practice Code.

Rule 41.2 of the Practice Code provides that "each party must notify a potential witness of the intention to call him or her to give evidence at the hearing at least 30 days before the first day of the hearing."

In his submissions which were filed prior to this decision, Mr. Mariani attempted to shift the blame for his lack of preparedness to his then client, Mr. Gehi.²

Mr. Gehi was absent from Ontario in the weeks prior to the scheduled arbitration date due to a family emergency in India. His absence extended from January 16, 2005 until February 18, 2005.³ Apparently, however, Mr. Gehi and Mr. Mariani were in touch by telephone and e-mail during his absence. In addition, Mr. Gehi met with Mr. Mariani on February 20, 2005, prior to the scheduled arbitration date.⁴

Notwithstanding Mr. Gehi's absence, Mr. Mariani made no effort to obtain an early adjournment, nor even to mention the absence to counsel for the Insurer.

At the pre-hearing, which took place on July 21, 2004, Mr. Mariani had indicated his intention to call Drs. Chan, Chow and Charandoff. Notwithstanding this early decision, Mr. Mariani had taken no steps to notify the potential witnesses nor serve them with a summons to witness prior to the February 10, 2005 "memo to a process server."

Had Mr. Mariani kept in touch with his witnesses, or notified them in a timely manner, as required by the Practice Code, either they would have been available for the scheduled hearing, or Mr. Mariani could have requested an adjournment at an earlier date, before counsel for the Insurer began in-depth preparation.

Whether or not Mr. Gehi was available for assisting in the preparation of the case, Mr. Mariani could have been in serious trouble, had the hearing proceeded, due to his failure to notify and arrange for the attendance of his key medical witnesses. Given the timing of the notice, even those issued with a summons could have been excused by the hearing arbitrator under Rule 41.3.

Understandably, Mr. Mariani now attempts to shift the focus of the adjournment from his own preparation of the case to the availability of his now former client. He states in his own submissions:

Under the circumstances, I do not agree that costs should be awarded against me but in fact should be as against Mr. Gehi as he did not make himself available to prepare as previously agreed...

To Mr. Mariani, the adjournment and its costs order had everything to do with Mr. Gehi's non-availability, and nothing to do with his own responsibility to prepare his client's case for arbitration.

This contrasts with the letter dated February 21, 2005, requesting an adjournment where Mr. Mariani lists the non-availability of witnesses as the primary reason for the adjournment.

Mr. Willsher, counsel for Guarantee, wrote to the Commission on February 21, 2005, in response to Mr. Mariani’s request for an adjournment.

1. Mr. Mariani has had several months in order to deliver summonses to his witnesses. There is no evidence to date indicating why he would have any problems in delivering them. Further, we note that during last week’s telephone settlement conference Mr. Mariani did not refer to any problem relating to the attendance of witnesses.

With regard to preparation for the hearing Mr. Willsher stated:

2. Mr. Mariani notes that the claimant has been abroad for the last several weeks. Mr. Mariani and his client have had several months in order to prepare for the arbitration, and there is no reason why they were required to do so last week...

I agree with Mr. Willsher, and adopt his comments.

Mr. Mariani's unpreparedness may have been due to a fervent wish that the matter would settle before arbitration. It may have been compounded by his client's absence in India. Whatever the reason, I find that the need for an adjournment still stemmed principally from the fact that Mr. Mariani had failed to take the necessary steps to be ready for arbitration at an appropriate time.

While there is no Rule providing for a formal setting down for trial, the fact that hearing dates at arbitration are set on consent, and that adjournments are only granted in extraordinary circumstances means that, as the hearing date nears, all parties are expected to be, as in the courts, "ready for a pre-trial conference and a trial."⁵

Although Mr. Mariani may have been ready for the pre-trial settlement discussions, he was clearly not ready for the "trial" or arbitration.

I have no hesitation in finding that Mr. Mariani’s lack of timely preparation "caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other fault" as provided for in section 282(11.2) of the Insurance Act. It is clear that both representatives and lawyers have a positive obligation to be prepared for hearings as scheduled and to not waste each other’s and the Commission’s time unnecessarily.⁶

Lack of preparedness, to the extent that it necessitates adjournments also has the potential to bring the arbitration process into disrepute if allowed to proceed unchecked. As noted in my letter, it also prejudiced the Applicant’s right to have his case heard on a timely basis. As Rapson D.C.J noted in Dobud et al. v. Herbertz⁷

The plaintiffs should not be penalized as a result of what I view as inept handling of their case, nor should the defendant be faced with any portion of her counsel’s costs. Unless the plaintiff’s solicitor can persuade me differently I believe that the instant case is one where costs sanctions should be invoked. This is an appropriate case where the successful respondent should be awarded costs of this application on a solicitor-client basis payable by the plaintiff’s solicitor personally, unless he can persuade me otherwise.

Consequently, pursuant to section 282(11.2) of the Insurance Act, I order Mr. Mariani to be responsible to pay, personally the costs of the adjournment of February 22, 2005.

In his letter of February 24, 2005, Mr. Willsher outlined his costs thrown away relating to the adjournment. They total some $819.96 at the legal aid tariff. I accept that this amount is a conservative estimate of costs thrown away at that late stage in the arbitration process. Therefore, I order Mr. Mariani to pay $819.96 forthwith as assessed expenses in this adjournment.

June 24, 2005

John Wilson

Arbitrator

Date

Neutral Citation: 2005 ONFSCDRS 89

FSCO A04-000521

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ASHOKH GEHI

Applicant

and

GUARANTEE COMPANY OF NORTH AMERICA

Insurer

ARBITRATION ORDER

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

1. I order Mr. Mariani to pay $819.96 forthwith to the Guarantee Company of North America as assessed expenses in this adjournment.

June 24, 2005

John Wilson

Arbitrator

Date

Footnotes

1. 1Even the courts under case management have adopted a more stringent attitude towards time. A plaintiff chooses the "track" for the litigation. Once something is fast-tracked "the parties will have to provide very compelling reasons before a case management judge will permit any changes of track or to the timetable." Introduction -Case Management Rules Ontario Annual Practice. It is important that Rule 77 - Case Management -prevails over any preceding Rule.
2. 2"I met with my client on Sunday, February 20, 2005 as a result of my letter of February 18, 2005 and discussed my displeasure with his conduct and my concerns about not being able to proceed on Tuesday..." Page 2 of faxed submissions dated February 24, 2005.
3. 3Letter dated February 20, 2005 from Ashokh Gehi to Mr. Mariani
4. 4Submission of Justin Mariani filed February 25, 2005.
5. 5See Rule 48 of the Rules of Civil Procedure
6. 6See Children's Aid Society of Huron County v. V. (T) (2002) 116 A.C.W.S. (3d)
7. 7Dobud v. Herbertz [1985] O.J. No. 1839