Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2007 ONFSCDRS 85
FSCO A06-000880
BETWEEN:
CHANDRATHASAN SELLATHURAI
Applicant
and
MOTOR VEHICLE ACCIDENT CLAIMS FUND
Insurer
REASONS FOR DECISION
Before: John Wilson
Heard: November 24, 2006, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances: Nureen Sharif for Mr. Alon Rooz Lorraine Takacs for Motor Vehicle Accident Claims Fund No-one appeared for Mr. Sellathurai
Issues:
The Applicant, Chandrathasan Sellathurai, claimed to have been injured in a motor vehicle accident on June 28, 2005. He applied for statutory accident benefits from Motor Vehicle Accident Claims Fund ("MVAC Fund"), payable under the Schedule1 The parties were unable to resolve their disputes through mediation, and Mr. Sellathurai applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The claim wound its way slowly through the arbitration system. On August 10, 2006 at the first pre-hearing, Mr. Sellathurai did not make himself available. Ms. Nureen Sharif who appeared on behalf of Mr. Alon Rooz2, the counsel of record, advised that her firm was unable to reach Mr. Sellathurai. She stated that although she might be in a position to settle the treatment account she had no instructions from Mr. Sellathurai as to how to proceed in this matter.
Nor did Mr. Sellathurai appear for a second pre-hearing on October 13, 2006.
On November 24, 2006, Mr. Alon Rooz brought a motion to be removed as counsel of record for Mr. Sellathurai due to his inability to locate his client and obtain instructions. MVAC Fund (The Insurer) brought a motion returnable at the same time requesting that the arbitration be dismissed due to Mr. Sellathurai's failure to respond to notices or to attend at pre-hearings and other proceedings in this matter. Both motions were returnable on the same day.
On the day of the motion hearing I made an oral order releasing Mr. Rooz and his firm Mazin and Rooz as counsel of record, from that point forward.
I also made an order dismissing the arbitration, subject to a requirement that the Insurer publish a notice directed to Mr. Sellathurai advising him that his arbitration would be dismissed finally and that he should contact the Insurer and the Commission within 30 days of the notice, failing which the order dismissing the arbitration would be finalized without further notice.
What follows are the supplemental written reasons arising from the above orders.
The issues in this hearing are:
Should Mr. Alon Rooz be released as solicitor of record in this matter?
Should the Application for Arbitration filed on behalf of Mr. Sellathurai in this matter be dismissed based on his failure to appear at any pre-hearings and motion hearings in this matter?
Result:
Mr. Alon Rooz shall be released as solicitor of record in this matter effective November 24, 2006.
The arbitration shall be dismissed, but subject to the condition that the Insurer place an advertisement in a newspaper having general circulation in Hamilton, Ontario, the city where Mr. Sellathurai was supposed to have lived, advising him of the upcoming dismissal of his claim and his potential liability for an expense order payable to the Insurer.
EVIDENCE AND ANALYSIS:
In an arbitration hearing it is expected that production and other issues and will be clarified and resolved prior to pre-hearing. In other words, by the time the pre-hearing stage is reached and final dates set for the substantive arbitration hearing the Dispute Resolution Practice Code (Fourth Edition, Updated — October 2003) (the "Code") assumes that an arbitration is3 virtually ready for hearing within the next four months.
The pre-hearing stage is or ought to be a fairly advanced stage in the arbitration process. This matter progressed to the pre-hearing stage before counsel admitted that there were no current instructions from Mr. Sellathurai. It took several months and a further resumption of the pre-hearing for counsel to finally ask to be removed from the record.
Four months is an important time-span within the arbitration process. According to the Code it defines the period after the pre-hearing within which the substantive hearing in any arbitration ought to be completed. Consequently the request to be removed as counsel of record this late in the arbitration process should be taken as a serious matter. While pre-hearings and motion hearings have been held in the absence of Mr. Sellathurai, and apparently in the absence of his instructions to counsel, the substantive hearing in this matter has not taken place.
We are now faced with the withdrawal of counsel for Mr. Sellathurai at an advanced stage in the proceediings. Fish J.A. commented on the withdrawal of counsel during a proceeding:
Permission to withdraw at the outset or in the course of a trial is not lightly granted by the courts. Withdrawal will normally be permitted only where counsel and client are irreconcilable. So fundamental is the disagreement, that counsel is presumed incapable of properly representing the accused.4
Although the withdrawal of counsel should be of concern to a court or a tribunal, actually dealing with issues between a solicitor and his or her client in the presence of opposing counsel in an an adversarial process is less than ideal. Macdonnell, J. once observed:
I accept as obvious that any inquiry of the lawyer's reasons must necessarily be framed with care and with sensitivity to the confidentiality of the communications which have passed between the lawyer and the client.5
Clearly when a solicitor and his client become adverse in interest in the context of arbitration, there must be a concern that information and evidence that is clearly relevant and perhaps crucial to that dispute not be introduced into the arbitration process where it might be highly prejudicial to the party in the larger dispute between an insurer and an insured.
At times it may be necessary to ask opposing counsel to withdraw from the hearing room while the issue is dealt with. In this case, since the reasons outlined for the breakdown involved only the apparent disappearance of the Applicant, no such special measures were required.
There is no lack of overall framework and guidance for the withdrawal of lawyers as representatives to a party to litigation or arbitration. The Practice Code, the Rules of Professional Conduct of the Law Society of Upper Canada ("Rules of Professional Conduct") and jurisprudence all deal with this issue.
The Code sets out the general provisions for the withdrawal of representatives including counsel.
9.7 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.
9.8 Where the party represented provides written consent to the representative's request for withdrawal, the Registrar or an adjudicator shall permit the representative's withdrawal. Otherwise, an adjudicator may permit the representative to withdraw, subject to such terms as the adjudicator considers just.
The Rules of Professional Conduct also provide some guidance as to the conduct of solicitors faced with the need to withdraw from a process:
2.09(1) A lawyer shall not withdraw from representation of a client except for good cause and upon notice to the client appropriate in the circumstances.
Commentary
Although the client has the right to terminate the lawyer-client relationship at will, the lawyer does not enjoy the same freedom of action. Having undertaken the representation of a client, the lawyer should complete the task as ably as possible unless there is justifiable cause for terminating the relationship.
No hard and fast rules can be laid down as to what will constitute reasonable notice before withdrawal. Where the matter is covered by statutory provisions or rules of court, these will govern. In other situations, the governing principle is that the lawyer should protect the client's interests to the best of the lawyer's ability and should not desert the client at a critical stage of a matter or at a time when withdrawal would put the client in a position of disadvantage or peril.
Ms. Dimple Verma, a lawyer in the office of Mazin and Rooz submitted an affidavit in support of her employer's application. Ms. Verma had no direct involvement in Mr. Sellathurai's case as counsel, but provided her sworn statement primarily based on "information and belief" and her review of records.
Ms. Verma noted that Mr. Sellathurai had not turned up at the pre-hearing of this matter which took place on August 10, 2006. She also noted that the notices for the pre-hearing were sent to the address in Hamilton provided by Mr. Sellathurai when he first retained Mr. Rooz as counsel.
Ms. Verma also noted many attempts to reach Mr. Sellathurai by telephone at the numbers provided to Mazin and Rooz, including his cellular phone. The home telephone number was no longer in service and Mr. Sellathurai did not respond to messages left on his cell-phone voice-mail.
In my second pre-hearing letter of October 13, 2006, I wrote to all the parties:
As I noted at the pre-hearing, this is a somewhat unusual, if not irregular arbitration.
The Application for Arbitration in the Commission file is not signed by Mr. Sellathurai, only Alexander Mazin, who is noted as the solicitor for Mr. Sellathurai. Mr. Sellathurai has not appeared at two different proceedings. A lawyer appearing on his behalf stated that she had no instructions from Mr. Sellathurai but could obtain instructions from Downsview, although she represented that she was not retained by them. Notwithstanding Mr. Sellathurai's non-attendance at two proceedings she was willing to proceed with the pre-hearing and obtain instructions from the treatment facility.
What is notable about Ms. Verma's affidavit is that, notwithstanding the above concerns I had expressed in the pre-hearing letter she did not address the source of the information contained in Mazin and Rooz's files, nor whether anyone from her firm had ever met Mr. Sellathurai in person.
Ms. Verma's affidavit outlined further attempts to reach Mr. Sellathurai through contact with the property managers of his various former addresses and through his workplace, without success. Given the Commission's apparent lack of success in obtaining a response from the various letters and notices of hearing addressed to Mr. Sellathurai at the addresses supplied by Mazin and Rooz, I accept Ms. Verma's contention that her firm was unable to contact Mr. Sellathurai at those addresses and telephone numbers and to consequently obtain instructions to carry on with this matter.
A lawyer is ultimately an agent of his or her client. Without instructions from the principal, a lawyer has no authority to proceed, and if he or she does so, it is at the risk of being found liable as an agent operating without instructions from a principal.
Halsbury's Laws of England makes the following observations on the relationship between an agent and a third person:
Where an agent in making a contract discloses both the existence and the name of a principal on whose behalf he purports to make it, the agent is not, as a general rule, liable on the contract to the other contracting party, whether he had in fact authority to make it or not; but a personal liability may be imposed upon him by the express terms of the contract, by the ordinary course of business, or by usage, and he will be liable for breach of warranty of authority in cases where he had no authority.
Further, the agent is personally liable on the contract if it is shown that he is the real principal, or that the principal named by him is non-existent, or incapable of making the contract in question, or is not the real principal although there might be another principal in existence.
There would clearly be some potentially serious ongoing consequences for Mr. Rooz if he were to remain as counsel of record and carry on in the complete absence of instructions from Mr. Sellathurai.
As noted in the affidavit, Mr. Sellathurai did not show up for the original pre-hearing, its resumption or the motion hearing itself. This information is confirmed by the Commission's record.
Patently a lawyer cannot represent a party without receiving some sort of competent instructions. While it is puzzling to understand how Mr. Rooz and his firm were able to proceed to the pre-hearing stage without their client, it would be completely unrealistic to expect them to remain on the record beyond that point.
It is clear that, if I accept Ms. Verma's affidavit at face value, her firm had little or no possibility of obtaining instructions, competent or otherwise, from Mr. Sellathurai. It is also unclear however the extent to which her firm was ever able to obtain instructions from Mr. Sellathurai.
Provided, of course that the information in Mazin & Rooz's files concerning Mr. Sellathurai's address and contact numbers was accurate, I am free to accept that he has been given a chance to respond to the reasons Mazin & Rooz puts forward to support its withdrawal. Leaving aside the misgivings about whether Mazin and Rooz should have proceeded to the pre-hearing stage without instructions, I accept that the lack of response to their attempts to contact Mr. Sellathurai subsequent to the pre-hearing means that: "there is justifiable cause for terminating the relationship". Plainly, for whatever reason, they have no instructions.
The applicable test for removal is whether there is a breakdown in solicitor-client relations. Whatever Mr. Sellathurai may think of this matter, there is presently not a functioning solicitor/client relationship between Mazin and Rooz, or Mr. Alon Rooz and Mr. Sellathurai. I find therefore that Mr. Rooz and his firm should be removed as solicitors of record in this matter, as their continued presence will neither advance Mr. Sellathurai's cause nor assist the parties or the tribunal in disposing of this matter.
I note however, that the removal order is prospective and only affects responsibility for anything that may happen from November 24, 2006 onwards.
Dismissal of the Arbitration:
It is unusual to dismiss an arbitration prior to a full hearing on the merits, absent the consent of both parties to a dismissal. There are, however rare instances when the circumstances suggest that a matter should not be forced to proceed through the system to a formal arbitration hearing, such as when the outcome is a foregone conclusion and there is absolutely no possibility of success.
The easy route to take is to let this arbitration proceed, unopposed, to the final hearing with the opposing party accumulating costs all the way. In this matter, I think such an approach is inappropriate, a waste of resources, and potentially unfair to both parties.
A consideration in invoking an arbitrator's discretion to dismiss is contained in the Introduction to the Code, which governs arbitrations at the Commission. That passage notes that our procedural rules aim to promote "timely, cost-effective and fair dispute resolution services."
On the face of it, it would be a travesty of such a principle if there was no way to terminate an arbitration in circumstances where there was no possibility of success at a hearing. Certainly if a party bringing the arbitration is unwilling to participate in the process, even to the degree of providing instructions to counsel, let alone appearing for pre-hearings, motions, and hearings as required, such would likely be the case.
An early dismissal of an arbitration relies on more than just an interpretation of the general principles of the arbitration system. At least three potential bases for an early decision dismissing an arbitration are 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; 1994, c. 27, s. 56 (14).
Following the pre-hearing of August 10, 2006 the pre-hearing letter contained the following notice:
All the parties, including Mr. Sellathurai shall be present for the resumption of the pre-hearing.
The SPPA 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).
The parties are advised that this resumption constitutes "an oral hearing" and a failure to attend the resumption of the pre-hearing as ordered, without a reasonable excuse, may result in consequences including, ultimately, the dismissal of the arbitration. [Bolded in original]
This notice was repeated in the second pre-hearing letter. I am satisfied that the inclusion of this notice met with the pre-condition set by section 4.6(2), and that both the pre-hearing format and the motion hearing potentially allowed Mr. Sellathurai sufficient opportunity to speak to the issue of a possible dismissal.
On the basis of this notice, and the non-appearance of Mr. Sellathurai at two subsequent events, I would have power to dismiss this arbitration.
As noted earlier, section 4.6(1)(a) also provides for dismissal on the grounds that "the proceeding is frivolous, vexatious or is commenced in bad faith".
While I have no evidence about the commencement of the arbitration, nor about the factual foundation of Mr. Sellathurai's claim, there are grounds to consider that the continuation of this arbitration would be "vexatious".
"Vexatious" is not a common term. Rather it is a term of art used in legal decisions and law for centuries to describe a specific manner of conduct. Lord Blackburn observed in Metropolitan Bank Ltd. et al. V. Pooley (1885) 10 App. Cas. 210:
(T)he Court had inherently in its power the right to see that its process was not abused by a proceeding without reasonable grounds, so as to be vexatious and harassing.
The courts have often examined the meaning of "vexatious" in the context of "hopeless" litigation. Vexatious litigation includes situations where the court has no power to grant the relief sought (see Dreyfus v. Peruvian Guano Co. (1889) 41 Ch.D. 151); if no reasonable person can possibly expect to obtain relief in it, (see Lawrance v. LordNorreys et al. (1888) 39 Ch. D. 213); or if the applicant has no proper authority to pursue the remedy (see R. ex rel. Tolfree v. Clark et al. [1943] O.R. 314). In this case the most relevant consideration would be whether Mr. Sellathurai "can possibly expect to obtain relief" by means of this arbitration as it currently stands.
As Cameron, J. remarked recently: "the categories of vexatious proceedings are never closed and must be determined by an objective standard."6 He further noted that: "(A)n action that initially had some merit might be rendered vexatious through subsequent conduct."
Lord Diplock said:
'My Lords, this is a case about abuse of the process of the High Court. It concerns the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nonetheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people.'7
Bowen, L.J. in Willis v. EarlBeauchamp [1886-90] ALL E.R. Rep. 515 characterized vexatious litigation as a process that "can really lead to no possible good".
Apart from providing more employment to arbitrators, lawyers, court reporters and support staff, the continuation of this arbitration, in the face of the virtual disappearance of Mr. Sellathurai "can really lead to no possible good." In addition, it is likely that the continuation of a pointless procedure without the presence or involvement of an applicant would bring the administration of justice and the arbitration system into disrepute.
Given that Mr. Sellathurai bears the burden of proving his claim, without Mr. Sellathurai to testify or provide some support for his claim, it is virtually impossible that he will succeed in his claim. Ultimately, even if the matter is left to proceed, he will not succeed.
As such I find that this arbitration, without the participation of Mr. Sellathurai has become vexatious as the law knows that term. Although it is a bit circular, it is trite law that vexatious proceedings in themselves are an abuse of process.
Given such a finding, I would be correct in dismissing this arbitration under section 4.6 1(a) of the SPPA. I also have, pursuant to section 23(1), a separate and wide-ranging power to deal with an abuse of process. Section 23(1) reads as follows:
23(1) A tribunal may make such orders or give such directions in proceedings before it as it considers proper to prevent abuse of its processes.
Since maintaining a vexatious proceeding amounts to an abuse of process, I also have jurisdiction to fashion an appropriate remedy to address such abuse, including, ultimately, dismissal.
The dismissal of an action prior to a full hearing in the court system is not an ordinary event. The Rules of Civil Procedure provide a virtually complete code of practice for the courts, and indeed the court rules deal with all manner of dismissals. The Dispute Resolution Practice Code which applies to arbitration is not as comprehensive. While there is no specific foundation for a motion to dismiss in the Code, I find that such is not a barrier to dealing with the Insurer's motion.
Rule 1.2 specifically addresses this issue. It provides:
Where something is not specifically provided for in these Rules, the Practice may be decided by referring to similar Rules in this Code.
In addition, Rule 81.1(b) provides that an arbitrator may "decide that any Rule does not apply in respect of a proceeding". There is then, in the hands of the arbitrator, considerable discretion to fashion an appropriate procedure and result for every problem that may develop in arbitration.
Having regard to the spirit of Rule 1.1 of the Code that promotes a process that is "most just, quickest and least expensive", I find that the Insurer would be prejudiced by any continuation of the arbitration process beyond this point. In addition Mr. Sellathurai, as his case stands presently, would not likely benefit either. Indeed he stands to be prejudiced by the continuation of this matter. Unless he emerges from obscurity to prosecute his claim with vigour, he will be faced with a claim to reimburse the Insurer for its further expenses in this matter, a claim which, based on the present circumstances, would be likely to succeed.
In Mr. Sellathurai's case, orders were made specifically to attend at the pre-hearings and the motion hearing. These were not obeyed. In the words of Master Dash: "(F)or orders of the court to have any meaning they must be enforced."8 If Mr. Sellathurai was ever engaged in this arbitration process, it is now clear that he no longer is. Consequently, I am comfortable that it is in the spirit of the dispute resolution system to dismiss Mr. Sellathurai's arbitration claim at this stage in the proceedings, on the basis of an ongoing abuse of process.
Secondarily, in the event that Mr. Sellathurai's conduct does not amount to an abuse of process, I would also rely on Mr. Sellathurai's non-attendance given due notice, and, as a result of his non-participation the almost complete impossibility of success should this matter proceed.
At the motion hearing I made an oral ruling that the matter be dismissed, but subject to the condition that the Insurer place an advertisement in a newspaper having general circulation in Hamilton, Ontario, the city where Sellathurai was supposed to have lived, advising him of the upcoming dismissal of his claim and his potential liability for an expense order payable to the Insurer. If Mr. Sellathurai did not respond to the advertisement within 30 days of publication the order was to be made final. To date this order has not been made final.
EXPENSES:
At the same time as I made the conditional order dismissing the arbitration, I also made an expense order in favour of the Insurer in the amount of $1500. Although an expense order is prima facie payable by one of the statutory parties, in this case Mr. Sellathurai, I specifically left the identity of the payor of the expense open until such time as the dismissal order is finalized. This further condition reflects the absence of a signature from Mr. Sellathurai on any of the documentation in this arbitration, and the unanswered questions raised by his total absence from this process.
May 4, 2007
John Wilson Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2007 ONFSCDRS 85
FSCO A06-000880
BETWEEN:
CHANDRATHASAN SELLATHURAI
Applicant
and
MOTOR VEHICLE ACCIDENT CLAIMS FUND
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Mr. Alon Rooz shall be released as solicitor of record in this matter effective November 24, 2006.
The arbitration is dismissed conditionally, subject to the proviso that the Insurer place an advertisement in a newspaper having general circulation in Hamilton, Ontario, advising him of the upcoming dismissal of his claim and his liability for any expense order payable to the Insurer. If Mr. Sellathurai does not respond to the advertisement within 30 days, of publication, the order shall be made final.
May 4, 2007
John Wilson Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- Although Mr. Alexander Mazin signed the Application for Arbitration, the record was amended to show his law partner Mr. Alon Rooz as solicitor of record.
- There are some similarities to the stage covered by Rule 48 of the Rules of Civil Procedure which deals with the setting down of a matter for trial.
- R. v. Steele(1991), 63 C.C.C. (3d) Fish, J.A.
- R. v. Zuckerman [1992] O.J. No. 2303
- Canada (Attorney General) v. Hainsworth [2004] O.J. No. 2730
- Hunter v. Chief Constable of the West Midlands Police [1982] A.C. 529, at p. 536
- Baksh v. Sun Media 63 O.R. (3d) 5