Neutral Citation: 2007 ONFSCDRS 243 FSCO A06-000125

BETWEEN:

CLEMENT CHIGOZIE OGBUKE Applicant

and

KINGSWAY GENERAL INSURANCE COMPANY Insurer

REASONS FOR DECISION

Before: John Wilson Heard: October 29, 2007, at the offices of the Financial Services Commission of Ontario in Toronto. Appearances: Alan Leibovitch and Peter B. Cozzi represented Mr. Ogbuke in the earlier stages of this matter. No-one appeared for Mr. Ogbuke on the dismissal. Angela James represented Kingsway General Insurance Company.

Issues:

The Applicant, Clement Chigozie Ogbuke, claimed to have been injured in a motor vehicle accident on April 27, 2004. He applied for and received statutory accident benefits from Kingsway General Insurance Company ("Kingsway"), payable under the Schedule.¹ Kingsway terminated weekly income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mr. Ogbuke applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

Should Mr. Ogbuke's arbitration be dismissed?
By whom should expenses be payable in this matter?

Result:

Mr. Ogbuke's arbitration is dismissed, as the issues in the arbitration were the subject of a binding settlement agreement between Mr. Ogbuke and Kingsway.
Mr. Ogbuke and Mr. Leibovitch are jointly responsible for the first cost order of $2,095.65 arising from the December 2006 hearing of this matter. Mr. Ogbuke alone is responsible for a second cost order in the amount of $364.02 arising from the final dismissal of this matter.

EVIDENCE AND ANALYSIS:

This matter has a long and convoluted history. It involves an applicant who claimed to be injured in a motor vehicle accident, his insurer, and the case of a disappearing paralegal.

The arbitration history of this began with a scheduled pre-hearing in which Mr. Ogbuke was represented by Mr. Alan Leibovitch, a paralegal. This took place on May 8, 2006. At the pre-hearing the issues in dispute were identified and hearing dates, commencing December 4, 2006, were chosen by the parties.

Prior to the scheduled hearing date in December 2006, there was urgent correspondence noting that Mr. Leibovitch's telephone number appeared to be disconnected. There were also notes on the Commission file concerning the inability to contact him to set up settlement discussions.

When December 4, 2006, the date set for the hearing arrived, Mr. Leibovitch did not bother to attend. Neither, in fact, was Mr. Ogbuke present.

Ms. Angela James, counsel for Kingsway, was present. Ms. Danielle Goose, counsel, assisted Ms. James. Mr. Cecil Jaipaul was present on behalf of Kingsway. This was clearly a matter of some importance to Kingsway. As noted earlier, neither Mr. Ogbuke, nor his counsel were in attendance.

While it is not at all uncommon for parties to abandon an arbitration on the eve of a hearing and not show for the hearing's commencement, the absence of Mr. Leibovitch in this particular matter raised some further questions.

This was not the first problem with Mr. Leibovitch. Mr. Leibovitch in fact had not bothered to attend at a variety of matters before FSCO arbitrators, commencing as early as August 2006. As I noted in another matter:

Mr. Leibovitch's failure to present himself for the expense hearing was not a surprise. In addition to Mr. Ogbuke's claim, others in which Mr. Leibovitch was representative of record also suffered from his absence. It is my understanding that Mr. Leibovitch may not have appeared in the other matters in which he was also a representative of record.

The conclusion I had been asked to make the preceding August was that Mr. Leibovitch had abruptly abandoned his paralegal practice and left his clients in a lurch.

If this was the case, then it was not at all clear that I could assume that Mr. Leibovitch had passed on the necessary information concerning the hearing to Mr. Ogbuke, nor whether the contact information we had for Mr. Ogbuke was correct. This latter concern was amplified by the notes on file concerning disconnected telephone numbers, and the failure of Mr. Ogbuke to appear in this matter.

There may well have been a good reason for Mr. Leibovitch not to attend this arbitration. He was on notice that Kingsway intended to raise issues of fraud in the handling of the claim, and that police investigators were to be among the witnesses called.

While I was satisfied that Mr. Leibovitch's office had been given notice of the hearing, I was concerned whether Mr. Ogbuke was fully aware of the status of this proceeding. Ms. James advised that Kingsway had been unable to contact either Mr. Ogbuke or Mr.Leibovitch at the addresses given in the Application for Arbitration.

Mr. Leibovitch, who was a SABS agent, or paralegal as of the date of the hearing, is no longer on the list of approved agents maintained by FSCO and his office remains closed.

Following submissions from Ms. James, I made a conditional order dismissing Mr. Ogbuke's arbitration and an order that Kingsway is entitled to its costs which I fix at $1,730 plus the costs of advertising.

My order is conditional upon the Insurer inserting a notice in a newspaper having general circulation in the Toronto area that Mr. Ogbuke's arbitration will be dismissed finally within 30 days of the publication of the notice unless Mr. Ogbuke contacts either the Commission or the offices of Reisler Franklin within that 30-day period to advise that he intends to proceed with the matter.

I also noted that the:

Insurer has advised that it wishes the order to be payable by both Mr. Leibovitch and Mr. Ogbuke jointly and severally. Consequently, Kingsway shall include in its advertisement a reference to the above expense award and that both Mr. Leibovitch and Mr. Ogbuke will have an opportunity to speak to the issue of by whom it is payable provided that they advise the Commission or counsel for the Insurer within the 30 days referred to above.

Kingsway was found to be entitled to its costs which I fixed at $1,730 plus any costs of advertising.

Mr. Ogbuke evidently read the advertisements placed in a newspaper by the Insurer, and ultimately responded that he wished to pursue his claim. As a result of the advertisement, Mr. Ogbuke contacted the Commission on January 2, 2007, advising the Commission "that this case should as a matter of urgency be left open and a final conclusion should not be applied in this matter."

Consequently, the dismissal order was not finalized.

On January 19, 2007, Mr. Peter B. Cozzi wrote to counsel for Kingsway and FSCO advising that he had taken carriage of this matter and would be representing Mr. Ogbuke.

A case conference was held by teleconference between the parties on March 23, 2007. Mr. Ogbuke participated, as did his new counsel Mr. Cozzi.

On March 23, 2007, the case conference set out a timetable and a road map for the completion of the hearing.

Although the expense order payable to Kingsway was still in effect, I deferred any decision on the remaining issue of by whom it shall be payable, to a later date, possibly the resumption of the hearing itself.

Mr. Cozzi advised that he would endeavour to obtain the most recent address for Mr. Leibovitch whom he believed to be somewhere overseas.²

Mr. Cozzi also advised that the issue of income replacement benefits was withdrawn, effective immediately. Kingsway advised that the issue of housekeeping and a further medical expense were not formally mediated, and would have to be mediated prior to being added to the arbitration. Mr. Cozzi undertook to proceed to have those items mediated and an amended arbitration application filed without delay.

Ultimately, new dates were set for an arbitration of Mr. Ogbuke's claims. Prior to the scheduled hearing of the matter however, I was advised by counsel that the parties had reached a final agreement and that the arbitration was cancelled.

Subsequently, Ms. James advised the Commission that Mr. Ogbuke had apparently left a message with a representative of Kingsway indicating that he intended "putting a hold" on the settlement. There was nothing in the Commission file to indicate that Mr. Ogbuke gave any formal notice of any intention to dispense with the settlement and to proceed with the arbitration.

Therefore I wrote:

While I understand Kingsway's urgency to finally close this matter in the light of the apparent settlement, I am not willing to sign the dismissal order provided at this time. Rather, in the light of Mr. Ogbuke's apparent intention to resile from this settlement, I will ask that Kingsway bring a motion to dismiss this matter, on the basis of the apparent settlement of Mr. Ogbuke's claim.

Ms. James has since brought a motion to dismiss the arbitration on the basis of the settlement and has filed the various settlement documents as part of her motion materials.

Settlements of accident benefit matters are governed by the Settlement Regulation³, which provides a framework for agreements that finally dispose of a claim or a dispute in respect of a person's entitlement to Statutory Accident Benefits.⁴

The Regulation sets out requirements for an insurer to issue certain documents including a "disclosure notice" containing, inter alia, a description of the available benefits and the Offer to Settle made by the insurer, a statement recommending independent legal advice, and an acknowledgement by the insured that he or she read the disclosure notice and considered seeking independent legal, medical or financial advice before signing.

The insurer must also give written advice as to certain consequences of settlement and the availability of a right to rescind the settlement within two business days of the execution of the disclosure notice.⁵

If the requirements of section (3) of the Regulation are not complied with, an insured person may rescind the settlement at any time. In this matter there is nothing to indicate non-compliance with the Settlement regulations.

As noted earlier, the Settlement Regulation sets out clearly the time and the manner in which a settlement agreement can be avoided. These requirements are clearly set out in the disclosure documents signed by Mr. Ogbuke following the settlement.

From the materials filed by the Insurer it is apparent that a final settlement of the arbitration was reached between Mr. Cozzi and counsel for the Insurer. It is also clear that Mr. Ogbuke appears to have affixed his signature to the settlement documents and to have at the very least condoned the settlement of this matter.

There also seems to be no dispute that Mr. Ogbuke failed to inform the Insurer or its counsel of his decision to rescind the settlement within the time set out by the Regulation. He merely advised Kingsway at some time that he was dissatisfied with the settlement.

Given that the document package given to Mr. Ogbuke as a result of the settlement would have contained information about rescission and that he would have had legal advice available from his counsel, Mr. Cozzi, I do not accept that his roundabout message to the Commission constituted sufficient notice to avoid the enforcement of his settlement agreement.

Once the "cooling off period" has expired there is a presumption of regularity (omnia praesumuntur rite et solemniter esse acta donec probetur in contrarium - all things are presumed to have been rightly and duly performed until it is proved to the contrary), which must be displaced by some positive evidence if an insured wishes to re-open a settlement. In such a case Mr. Ogbuke must do more than merely allege something is wrong with the settlement. He has an onus to prove that an irregularity occurred, and to bring the settlement documents into question. There is no evidence to suggest that the settlement was irregular.

Obviously there are other potential grounds upon which a settlement can be rescinded, whether or not the formalities of the Settlement Regulation are observed. Mistake going to the root of the contract can provide broad grounds for setting aside any agreement or contract.

As Blackburn J. summarized in Kennedy v. Panama, etc. Royal Mail Co. (1867), L.R. 2 Q.B. 580:

The principle is well illustrated in the civil law, as stated in the Digest, lib. 18, tit. 4. De Contrahenda Emptione, leges 9, 10, 11. There, after laying down the general rule, that where parties are not at one as to the subject of the contract there is no agreement, and that this applies where the parties have misapprehended each other as to the corpus, as where an absent slave was sold and the buyer thought he was buying Pamphilus and the vendor thought he was selling Stichus, and pronouncing the judgement in such a case there was no bargain because there was "error in corpore, the framers of the digest moot the point thus: Inde quaeritur, si in ipso corpore non erretur, sed in substantia error sit, ut, puta, si acetum pro vino veneat, aes pro auro, vel plumbum proargento vel quid aliud argento simile; an emptio et vendito sit."

And, as we apprehend, the principle of our law is the same as that of the civil law; and the difficulty in every case is to determine whether the mistake or misapprehension is as to the substance of the whole consideration, going as it were, to the root of the matter, or only to some point, even though a material point, an error as to which does not affect the substance of the whole consideration.

If the parties were mistaken as to the terms of the agreement, then there may be grounds for the rescission or rectification of the contract. Mistakes as to terms may be mutual or unilateral. As Thompson J. noted in McMaster University v. Wilchar Construction Ltd. et al. 1971 CanLII 594 (ON HCJ), [1971] 3 O.R. 801: Although there is a generalized onus on the Insurer in this motion, there is also an onus on a person, such as Mr. Ogbuke, alleging that an agreement is not as it appears to be on its face. As Cheshire, Fifoot and Murchison note in Cheshire and Fifoot's Law of Contract, (8th edition, Butterworth's London, 1972) at p. 221:

It should also be emphasized that the burden of persuading the court to disturb what to outward appearances is a binding contract falls on the party who alleges the mistake. Moreover, the burden is not light, for the result of holding that there is no contract may seriously prejudice a third party who has in good faith made a bargain relating to the subject-matter of the apparent agreement.

Once again, there is absolutely no evidence to support the application of the law of mistake in this matter.

I note, as well that Mr. Ogbuke's counsel, Mr. Cozzi represented him in making the settlement agreement. Mr. Cozzi's letter of August 16, 2007, would suggest that he views this matter as settled, and states that neither he nor his assistant was contacted after the execution of the settlement documents. Clearly, Mr. Cozzi believes that he settled this matter on behalf of Mr. Ogbuke. There is no evidence or even a suggestion that Mr. Cozzi was not properly retained, or did not have instructions from Mr. Ogbuke, or that Kingsway was aware of any restriction on Mr. Cozzi's authority.

A solicitor acts not only as an advocate for a client, but also, in many ways as the agent for a client with regard to matters under his or her retainer. It is clear law that a solicitor, properly retained, may bind a client, or compromise proceedings, unless the client has limited the retainer, and the limitations in the retainer are known to the opposing side.

As Evans J.A. of the Ontario Court of Appeal noted in Scherer v. Paletta (1966), 1966 CanLII 286 (ON CA), 57 D.L.R. (2d) 532, at p. 534:

The authority of a solicitor arises from his retainer and as far as his client is concerned it is confined to transacting the business to which the retainer extends and is subject to the restriction set out in the retainer. The same situation, however, does not exist with respect to others with whom the solicitor may deal. The authority of a solicitor to compromise may be implied from a retainer to conduct litigation unless a limitation of authority is communicated to the opposite party.

The law of Agency, in this respect, has been consistent since the19th century. In Kirkstall Brewery Co. v. Furness Railway Co., (1874) L.R. 9 Q.B. 468, Cockburn C.J. stated:

Then, if Podmore was the agent of the defendants, and if it was within the scope of his duty and authority to do what the principal, if on the spot, would have done, what he says while he is so acting is equally admissible as if said by the principal himself.

As Evans J.A. further noted, somewhat more recently, in Scherer v. Paletta (supra):

A client having retained a solicitor in a particular manner, holds that solicitor out as his agent to conduct the matter in which the solicitor is retained. In general, the solicitor is the client's authorized agent in all matters that may reasonably be expected to arise for decision in the particular proceedings for which he has been retained. Where a principal gives an agent general authority to conduct any business on his behalf, he is bound as regards third persons by every act done by the agent which is incidental to the ordinary course of such business or which falls within the apparent scope of the agent's authority.

There is no question that Mr. Cozzi was Mr. Ogbuke's solicitor at the time of the supposed settlement, and that as such he would have been expected to have full authority to bind his client in any settlement discussions. Consequently, with respect to a third party at least, Mr. Ogbuke would be bound, even unwillingly, by his solicitor's apparent authority to resolve this matter.

Mr. Ogbuke has made a general allegation that he should not be bound by the settlement without providing either particulars or supporting evidence. Nor has he participated further in the arbitration process that he initiated and apparently wanted to continue.

There is absolutely no reason to find other than that there was a valid settlement entered into that binds both Mr. Ogbuke and Kingsway General, and consequently no remaining dispute to arbitrate.

Dismissal

Having found that Mr. Ogbuke is bound by the settlement that he entered into with Kingsway, it follows that there is no issue in dispute between an insured and an insurer, and consequentially no grounds for the continuation of an arbitration.

However, even in the event that I erred in finding that a settlement had been reached, I would still be inclined to dismiss this arbitration due to Mr. Ogbuke's failure to engage in the arbitration process.

In Mr. Ogbuke's case, there are at least three potential bases for a decision dismissing an arbitration found in the Statutory Powers Procedure Act (SPPA), a law which applies to all arbitrations. Section 4.6 of the SPPA contains the following provisions:

4.6 (1) Subject to subsections (5) and (6), a tribunal may dismiss a proceeding without a hearing if,

(a) the proceeding is frivolous, vexatious or is commenced in bad faith;

(b) the proceeding relates to matters that are outside the jurisdiction of the tribunal; or

(c) some aspect of the statutory requirements for bringing the proceeding has not been met.

Section 4.6 (2) provides some preconditions for a dismissal on this basis:

(2) Before dismissing a proceeding under this section, a tribunal shall give notice of its intention to dismiss the proceeding to,

(a) all parties to the proceeding if the proceeding is being dismissed for reasons referred to in clause (1) (b); or

(b) the party who commences the proceeding if the proceeding is being dismissed for any other reason.

(3) The notice of intention to dismiss a proceeding shall set out the reasons for the dismissal and inform the parties of their right to make written submissions to the tribunal with respect to the dismissal within the time specified in the notice.

7(1) Where notice of an oral hearing has been given to a party to a proceeding in accordance with this Act and the party does not attend at the hearing, the tribunal may proceed in the absence of the party and the party is not entitled to any further notice in the proceeding. R.S.O. 1990, c. S.22, s. 7;

The SPPA also provides at section 1.7(1):

Effect of non-attendance at hearing after due notice

7(1) Where notice of an oral hearing has been given to a party to a proceeding in accordance with this Act and the party does not attend at the hearing, the tribunal may proceed in the absence of the party and the party is not entitled to any further notice in the proceeding. R.S.O. 1990, c. S.22, s. 7; 1994, c. 27, s. 56 (14).

But for the un-answered questions concerning Mr. Leibovitch, Mr. Ogbuke's arbitration would have been finally dismissed when he failed to appear at the December 6, 2006 arbitration by reason of section 7(1) of the SPPA cited above.

Once again Mr. Ogbuke has failed to appear or to respond to the process that he initiated. This time there are no grounds for further indulgences. The matter should be dismissed once and for all.

Expenses:

As noted, the original adjournment was subject to an expense order for costs thrown away.

Following submissions from Ms. James, I made a conditional order dismissing Mr. Ogbuke's arbitration and an order that Kingsway was entitled to its costs which I fixed at $1,730 plus the costs of advertising. My order was conditional upon the Insurer inserting a notice in a newspaper having general circulation in the Toronto area that Mr. Ogbuke's arbitration would be dismissed finally within 30 days of the publication of the notice unless Mr. Ogbuke contacted either the Commission or the offices of Reisler Franklin within that 30-day period to advise that he intends to proceed with the matter.

The December 4, 2006 order for expenses thrown away was made in any event of the cause. The Insurer, however, advised that it wished the order to be payable by both Mr. Leibovitch and Mr. Ogbuke, since it was felt that Mr. Leibovitch's failure to appear and carry out his obligations as representative of Mr. Ogbuke had led to the expenditure of further costs. Such an order, pursuant to section 282 11.2 of the Insurance Act must be on notice to the agent or lawyer implicated, and allow that person an opportunity to speak to the costs order.

Therefore, I ordered that Kingsway should include in its advertisement a reference to the above expense award and that both Mr. Leibovitch and Mr. Ogbuke would have an opportunity to speak to the issue of by whom it is payable provided that they advise the Commission or counsel for the Insurer within the 30 days referred to above.

Ms. James' letter dated August 16, 2007, outlined her request that an order be signed dismissing Mr. Ogbuke's arbitration on the basis of a full and final release of his claims against Kingsway. The letter also mentioned Mr. Ogbuke's apparent attempt to resile from the settlement.

I gave Mr. Ogbuke time to advise the Commission in writing whether he intended to dispute the request to dismiss the arbitration and, if so, to file his responding materials. If he chose not to reply or participate, an order would go dismissing this arbitration.

In the meantime, pending the service of the necessary motion materials, I adjourned the hearing dates currently scheduled to commence on September 17, 2007, sine die.

Mr. Ogbuke did not reply or make submissions. Consequently, the dismissal order was confirmed, and Ms. James was asked to provide submissions as to costs. Once again, no response was received from Mr. Ogbuke. This further expense issue then also went on an unopposed basis.

On the face of it, Ms. James' Bill of Costs seems in order. Ms. James has billed for some two hours of time, and some $214.02 for disbursements, principally for the service of documents and motion materials. In total $364.02 is claimed. The amounts and times billed do not seem extraordinary, and indeed appear to be within the parameters set by arbitrators at the Commission. Given the failure of Mr. Ogbuke to provide submissions, I see no reason apparent on the face of the Bill of Costs to go behind the figures claimed by Ms. James. An expense order will go accordingly, for $364.02 payable by Mr. Ogbuke to Kingsway.

The original order arising from the adjournment will be made final as well. On December 4, 2006, I ordered that $1,730 plus the cost of the advertising notice be payable. An amount of $365.65 was subsequently claimed as the cost of the advertisements.

Neither Mr. Leibovitch nor Mr. Ogbuke made submissions as to by whom the order should be made payable, notwithstanding notice. I accept that both Mr. Ogbuke and Mr. Leibovitch have been properly served with notice of the expenses claim. Given the failure to appear by either, I find it appropriate that costs relating to the 2006 adjournment should be ordered payable jointly and severally by both Mr. Ogbuke and Mr. Leibovitch.

Consequently, an order will go ordering that the first cost order in the amount of $2,095.65 be payable by either or both of Mr. Leibovitch or Mr. Ogbuke.

A second expense order will go for the balance of the expenses claimed. This second order shall be payable by Mr. Ogbuke only, since however reprehensible Mr. Leibovitch's conduct may have been, his role was eclipsed by the involvement of Mr. Cozzi and Mr. Ogbuke acting on his own behalf. I note parenthetically that I have no reason to fix any expense award against Mr. Cozzi, whose conduct of this matter has not been reproached.

December 5, 2007

John Wilson Arbitrator

ARBITRATION ORDER

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

This arbitration is dismissed once and for all.
The first cost order in the amount of $2,095.65 shall be payable forthwith by either or both of Mr. Alan Leibovitch or Mr. Clement Ogbuke, jointly and severally.
A further expense order in the amount of $364.02 arising from this dismissal will be payable forthwith by Mr. Clement Ogbuke.