Financial Services Commission of Ontario

Neutral Citation: 2006 ONFSCDRS 161 FSCO A06–000741

BETWEEN:

NADEJDA ALMALIAH Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY Insurer

DECISION ON A MOTION

Before: Jeffrey Rogers Heard: September 21, 2006, at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions were completed on: October 2, 2006.

Appearances: Ajay Kapur for Kronis, Rotsztain, Margels, Cappel, solicitors for Ms Almaliah Joan Takahashi, solicitor for Dominion of Canada General Insurance Company

Issues: Ms Almaliah’s solicitors filed this Application for Arbitration on her behalf on March 30, 2006. The pre-hearing was scheduled for September 21, 2006. The solicitors for Ms Almaliah brought a motion on that date for an order removing them from the record as her solicitors, on the grounds that they have been unable to contact her. Dominion opposed the motion and sought an order for expenses, payable by Ms Almaliah’s solicitors personally, on the grounds that they filed the Application without her authorization and the Application is frivolous.

Result:

1. The law firm of Kronis, Rotsztain, Margels, Cappel is removed from the record as Ms Almaliah’s solicitors.

EVIDENCE AND ANALYSIS:

On July 25, 2006 Ms Almaliah’s solicitors wrote to the Commission advising that they were “withdrawing from this proceeding as the solicitors of record” because they had been unable to contact her. Since they did not have Ms Almaliah’s consent, they required an arbitrator’s permission to withdraw, pursuant to Rule 9.8 of the Dispute Resolution Practice Code.

On August 25, 2006, Dominion’s solicitors wrote to the Commission in response to the request for removal. Dominion’s letter alleges “repeated instances of casual disregard for the insurer’s rights” by Ms Almaliah’s solicitors, questions whether they had their client’s authorization to file the Application, seeks further information on the efforts they made to contact their client, seeks copies of all communication with caregivers, assessment facilities and service providers, and seeks proof of their authority to act on her behalf. In its letter, Dominion also requests an award of expenses, payable by Ms Almaliah’s solicitors personally.

Does Dominion Have Standing at the Motion?

Ms Almaliah’s solicitors did not respond to the letter of August 25, 2006. They submitted at the hearing that they were not obliged to respond because Dominion has no standing to appear at the motion. They argued that the issue of their removal was purely an issue between themselves and their client, subject to the exercise of discretion by an arbitrator. They relied on Rule 9.7 and 9.8 and sections 282(11.2) and 282(11.3) of the Insurance Act to support that position.

Rule 9.7 provides as follows:

A representative who seeks to withdraw from a proceeding must:

(a) provide a written request for withdrawal, with reasons, to the Dispute Resolution Group and all parties to the proceeding;

(b) provide the last known address, telephone number and electronic transmission address (if any) of the represented party.

Rule 9.8 provides that withdrawal shall be permitted, where the client provides written consent. Rule 9.8 also provides that, where the client does not consent, an arbitrator may permit withdrawal, and may impose terms.

I ruled that, because Rule 9.7 requires that Dominion be provided with the request for withdrawal, Rules 9.7 and 9.8, when read together, must be interpreted to confer standing on Dominion, rather than limit it.

Section 282(11.2) of the Insurance Act gives an arbitrator jurisdiction to make an order for expenses against a representative personally, as a result of specified conduct, including commencing or conducting a proceeding without authority and advancing a frivolous claim. Section 282(11.3) provides that the jurisdiction to make an award on the grounds of lack of authority does not apply “to a barrister or solicitor acting in the usual course of the practice of law”.

Ms Almaliah’s solicitors submitted that, because Dominion’s claim for expenses appeared to be based entirely on an allegation of lack of authority, Dominion had no standing at the motion. I ruled that this submission raised no issue of standing. I ruled that the submission addressed the issue of whether Dominion was entitled to expenses, not whether it has standing to make the claim.

Solicitor-Client Privilege

Ms Almaliah’s solicitors at first refused to provide Dominion with the correspondence between themselves and their client, asking that she contact them, based on their position that Dominion had no standing. When I ruled that Dominion had standing, they claimed that solicitor-client privilege attached to the correspondence. For that reason, they proposed to provide me with the correspondence, but not Dominion. They submitted that privilege attached to all correspondence between themselves and their client, throughout the course of the Application, regardless of the subject matter or content of the correspondence. The correspondence should therefore not be produced unless the privilege was waived.

I ruled that the purpose of solicitor-client privilege is to protect from disclosure, correspondence and communication in which a solicitor provides advice to a client. Since the letters at issue simply asked their client to contact them, solicitor-client privilege did not attach.

Upon that ruling Ms Almaliah’s solicitors provided Dominion with 13 letters they sent to their client between October 25, 2004 and June 1, 2006, asking her to contact them. The last letter informed their client that they would seek an order removing them from the record.

Removal and Expenses against Solicitors Personally

The letters show that Ms Almaliah’s solicitors had lost contact with their client long before they filed the Application for Arbitration on March 30, 2006. Ms Almaliah’s solicitors indicated that they filed the Application because they believed they had an obligation to protect their client against the expiry of the limitation period.

Upon review of the letters, Dominion conceded that they showed that Ms Almaliah’s solicitors had made reasonable efforts to contact her at her last known address. Dominion maintained that the letters supported its position that it was entitled to an order for expenses because Ms Almaliah’s solicitors acted without her authority. Dominion also raised a new issue. It now argued that, because Ms Almaliah had not been in touch with her solicitors since before the Application was filed, they should have been questioning their retainer. They should have known that their client had lost interest in pursuing her claim. Ms Almaliah’s solicitors had therefore filed a frivolous Application. Dominion submitted that it was therefore entitled to an order against the solicitors personally, on the basis of their filing of a frivolous claim as well.

Dominion was granted leave to provide written submissions in response to the cases that Ms Almaliah’s solicitors delivered at the hearing, to support their request for removal. Having conceded that the letters showed that Ms Almaliah’s solicitors had made reasonable efforts to contact her at her last known address, Dominion retreated somewhat from that position, seeking leave to deliver written submissions on what other efforts they might have made to contact their client. Leave was granted.

In its written submissions, Dominion indicated that it does not object to an order for removal. It simply seeks an order for expenses against Ms Almaliah’s solicitors. The written submissions also state that Ms Almaliah’s solicitors could have done more to contact their client. They suggest such things as attempting to reach her by telephone or e-mail, writing to her in care of her boyfriend who allegedly provided caregiving services, and calling her at her boyfriend’s telephone number. Since Dominion was now not opposing an order for removal, the purpose of these suggestions is unclear.

Based on the 13 unanswered letters to her last known address, I am satisfied that, despite their reasonable efforts to contact her to obtain further instructions, Ms Almaliah has failed to provide her solicitors with instructions. They should therefore be removed from the record. The issue is not whether they made every conceivable effort to obtain instructions, but whether they made reasonable efforts to do so. The responsibility for maintaining solicitor-client contact is not just placed on the solicitors. Ms Almaliah also has an obligation to maintain contact. I find that, with no information from their client that she had moved, and no indication that their letters were not being delivered, it was reasonable for Ms Almaliah’s solicitors to continue to seek instructions by writing to her at her last known address.

I am not satisfied that Ms Almaliah’s solicitors filed a frivolous Application. Dominion’s submission is that the Application is frivolous because Ms Almaliah’s solicitors should have known from her failure to contact them that their client had lost interest in pursuing her claim and that a review of the arbitration file supports a finding that the solicitors acted without their client’s instructions.

For a finding to be made that the Application is “frivolous”, as the term is used in section 282(11.2) of the Insurance Act, I must be satisfied that the Application, when filed, was groundless or had little prospect of success. That finding necessarily involves assessing the merit of the claims made. The merit of the claims was not addressed on this motion. Section 282(11.3) of the Insurance Act specifically excludes lack of authority as grounds for making an award of expenses against a solicitor personally. For that reason, lack of authority cannot be included in an assessment of whether a solicitor filed a frivolous claim. I am therefore not prepared to consider whether Ms Almaliah’s solicitors should have known that their client would not pursue the Application, because that necessarily includes review of what she instructed them to do.

Other Issues

Dominion included in its written submissions a request that I give Ms Almaliah Notice, pursuant to Rule 68 of the Dispute Resolution Practice Code, of the intention to dismiss the arbitration without a hearing. I decline that request for several reasons.

First, that issue was not raised before me and I did not request written submissions on that issue. Second, the basis set out in Rule 68 for dismissing without a hearing is that the “proceeding is frivolous, vexatious or commenced in bad faith”. Dominion’s request does not expand on its allegation that I have already addressed, that Ms Almaliah’s solicitors filed a frivolous Application.

Third, where the impetus for invoking Rule 68 is the expectation that the applicant will not attend, no procedural economy is achieved. The arbitration can be summarily concluded by setting a date for the hearing, upon proper notice to the applicant. If the applicant fails to appear, the hearing can proceed in her absence. Arguably, that process is less cumbersome than engaging in an assessment of whether the Application was frivolous, vexatious or filed in bad faith, because it avoids the necessity of assessing the prospect of success of the Application and the applicant’s motive for filing it.

CONCLUSION

In the result, I have made an order removing Ms Almaliah’s solicitors from the record. This matter may now proceed to a pre-hearing.

October 18, 2006

Jeffrey Rogers Arbitrator

ARBITRATION ORDER

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

1. The law firm of Kronis, Rotsztain, Margels, Cappel is removed from the record as Ms Almaliah’s solicitors.

October 18, 2006

Jeffrey Rogers Arbitrator