Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 96

FSCO A05-001772

BETWEEN:

ELIZABETH BOAMAH

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

DECISION ON EXPENSES

Before:

John Wilson

Heard:

September 11, and November 17, 2006 at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Murray Tkatch for Mrs. Boamah

Peter Yoo for ING Insurance Company of Canada

Issues:

The Applicant, Elizabeth Boamah, was injured in a motor vehicle accident on September 2, 2003. She claimed accident benefits available to her under her insurance policy. When a dispute arose with her insurer she retained Mr. Alan Leibovitch, a paralegal then registered with the Financial Services Commission, to pursue her claim against ING.

At the scheduled hearing on September 11, 2006, Mrs. Boamah represented herself. She was unaccompanied by her representative, Mr. Leibovitch, who apparently was answering neither telephone calls nor any other communication to him at his place of business. It would be safe to say that Mrs. Boamah was shaken and disturbed by the sudden and unexpected absence of her representative. She was also unprepared to proceed with her arbitration hearing without the assistance of her representative.

She stated at the hearing that having not received any communication from Mr. Leibovich in the days leading up to the hearing, she went to his office on Thursday, September 7 and was unable to see anyone there. There was no-one present and the office appeared to be abandoned.

Given the imminent hearing Mrs. Boamah attempted to retain Mr. Murray Tkatch, a lawyer with practice in the area of accident benefits. On behalf of Mrs. Boamah, Mr. Tkatch on Friday, September 8 requested an adjournment of the arbitration scheduled to commence on the following Monday.

The adjournment request was declined, apparently due to the inability of the arbitrator to reach Mr. Tkatch directly on Friday.

With the commencement of the hearing on Monday, September 11, counsel for the Insurer, Mr. Yoo, was there, ready to proceed, as was his client. As mentioned, Mrs. Boamah was there, without either Mr. Leibovitch or Mr. Tkatch. She was not ready to proceed, and desperately wanted an adjournment.

Documents in the Commission file appeared to indicate that Mr. Tkatch had assumed the role of solicitor of record. Indeed, the letter sent by Mr. Tkatch's office under his name on September 8, 2006 was unequivocal. It said: "I confirm that we have been retained by Mrs. Elizabeth Boamah with regard to the upcoming arbitration scheduled for Monday, September 11, 2006."

I called Mr. Tkatch's office and reached him. He was under the impression that his retainer was conditional upon the obtaining of an adjournment, and the adjournment request having failed, he was not retained. At my request, however, he agreed to speak to the issues of adjournment and whether or not he was the counsel of record. The matter was adjourned briefly to permit his appearance.

Mr. Tkatch appeared as promised and explained his involvement in the file. He elaborated that he had been approached by Mrs. Boamah soon after she realized that she was without a representative for the hearing. While he was not personally in the office on the Friday before the hearing, his law clerk was given the responsibility of advising FSCO of his involvement, and of confirming that there would be an adjournment.

What Mr. Tkatch did not count on was that the arbitrator responsible for adjournments that week would want direct submissions on the adjournment, and that as a result of Mr. Tkatch's unavailability the adjournment would be denied. Nor did he anticipate that his office would advise FSCO that he was retained unconditionally. While these explanations do not excuse Mr. Tkatch's failure to appear, they go some way towards framing the non-appearance and providing context.

Once Mr. Tkatch ultimately appeared, he confirmed that, as a result of the correspondence from his office, he could well be seen by FSCO as solicitor of record and, in retrospect, he conceded that he had an obligation to appear on Mrs. Boamah's behalf.

I adjourned this arbitration to allow Mrs. Boamah time to instruct counsel, and for counsel to prepare for the arbitration. Indeed, it was clear that with the disappearance of Mr. Leibovitch, neither Mrs. Boamah nor Mr. Tkatch had access to Mrs. Boamah's file, nor were they in a position to proceed with the hearing as scheduled.

As a condition of the adjournment I noted that ING was entitled to its costs thrown away. Whoever was responsible for the adjournment, it was not ING. Consequently, I ordered expenses payable in the amount of $1,500. Because of the unusual circumstances leading to the adjournment I reserved, however, on the question of who should be responsible for the expenses.

Mr. Tkatch, Mr. Leibovitch and Mrs. Boamah were put on notice that all or any of them could be found liable for the costs of the September adjournment. Mrs. Boamah is, of course, prima facie responsible for an order of expenses made in favour of ING, being one of the two statutory parties to this arbitration.

The substantive issues in this case have all now been settled with the exception of this remaining expense issue.

Issues:

The issue in this further hearing is:

1. Who is responsible for payment of the expenses as a result of the adjournment of this arbitration hearing?

Result:

1. Mr. Leibovitch is responsible for payment of the adjournment expenses.

EVIDENCE AND ANALYSIS:

Mrs. Boamah, as a statutory party to this arbitration, would normally be the obvious person to order to pay the Insurer's expenses in the adjournment. However, both Mr. Leibovitch and Mr. Tkatch are also potentially liable under section 282 (11.2) of the Insurance Act which allows costs to be awarded against representatives under certain circumstances. Those are as follows:

(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.

In this matter, the relevant provision would be that "the representative caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default."

At the hearing on the issue of expenses, which took place on November 17, 2006, Mrs. Boamah appeared, as did Mr. Tkatch. Mr Leibovitch did not appear although the notices were sent to him at his office address, the same address that he had furnished to the Commission upon registry as a SABS representative.

Mr. Leibovitch's failure to present himself for the expense hearing was not a surprise. In addition to Mrs. Boamah'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.

Mr. Yoo, counsel for the Insurer in this matter, confirmed some of the difficulties that he had in attempting to reach Mr. Leibovitch in the days prior to the originally scheduled hearing. Wherever Mr. Leibovitch was, it was apparently not at his offices in Toronto, where mail was backing up, and voice-mail boxes were noted as "full." The only reasonable conclusion is that Mr. Leibovitch precipitously abandoned his practice just prior to Mrs. Boamah's original hearing, and has made himself scarce ever since.

Although it is relatively new ground, there is precedent for holding paralegals such as Mr. Leibovitch to a minimum standard of conduct.

To date there is little case law discussing the standard of care applicable to a paralegal. In West v. Eisner[1999] O.J. No. 4705 (S.C.J.) Stinson, J. assessed damages for malpractice against a paralegal. Although liability was admitted in that case, Stinson, J. set out the basis for his finding that the paralegal had breached his duty of care.¹

Baltman J. further noted in her analysis of Stinson J.'s reasons that "He suggested that instead it made sense to apply a standard based on common sense and ordinary understanding."

As noted earlier, Mr. Leibovitch was a SABS representative, that is, a non-lawyer granted the privilege to represent insured persons for monetary gain in matters before arbitrators at the Financial Services Commission. In return for being granted this privilege, Mr. Leibovitch, in the same manner as other such representatives, had to obtain an appropriate level of insurance, and agree to practise in a manner consistent with the criteria set out by the Commission. These criteria are set out in the Code of Conduct for SABS representatives and include the following:

2.4 A representative must possess adequate skills, attributes and abilities appropriate to each matter undertaken on behalf of a claimant. A representative must only provide services in those cases for which he or she is competent.

2.5 A representative must prepare adequately for each step in the claims process and any dispute resolution proceeding.

2.6 At the claims stage, the representative must correctly and fully complete any forms required for making a claim or for taking any step in connection with the claim.

2.7 At the negotiation and dispute resolution stage, the representative must have a reasonable understanding of the facts and law, and the ability to present them in a reasonable and fair manner.

2.11 A representative must appear promptly for, and participate in good faith in, all dispute resolution proceedings for which he or she has received notification.

3.8 A representative must not commit an act or omission that is inconsistent with the Code of Conduct for Statutory Accident Benefit Representatives issued by the Superintendent and published in The Ontario Gazette, as it may be amended.

It is hard to think of a more egregious example of a failure to "appear promptly" by a representative than the abandonment of one's client a matter of days before a hearing.

Mr. Leibovitch had appeared at a number of previous matters before me. I can infer from Mr. Leibovitch's frequent appearances, a certain level of knowledge of how the arbitration and court system works. Notwithstanding that knowledge, Mr. Leibovitch chose to breach his obligations to his client, to_the arbitration process, and to the society that licenced him as a SABs representative. His conduct offends both the standards of practice put forward by FSCO and "common sense" as identified by Stinson J.

Mr. Leibovitch's abandonment of his client and failure to appear directly led to a further adjournment and "caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default."

While it has been suggested that expense orders should not be made lightly against lawyers and agents, there are situations where such an action is not only reasonable but necessary. I find that Mr. Leibovitch's unexplained withdrawal from this process amounts to an affront to the fairness of the arbitration process. As such, it is appropriate to consider "the common law doctrine of abuse of process invoking the common law power of courts to protect the integrity of the administration of justice from disrepute"², a power that has been imported into this tribunal by section 23 of the SPPA.

While I take note of the words of McLachlin J. in Young v. Young, I find that Mr. Leibovitch's conduct takes him outside of the parameters set by her.

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.³

In this case, it is not a question merely of long and acrimonious proceedings. It is not a question of confidentiality. Rather, it is a question of whether a person who has repudiated his obligations to his client and the arbitration process should be able to hide behind a public policy intended to protect the sanctity of the solicitor/client relationship.

I find that an expense award against Mr. Leibovitch personally is the only way to express condemnation of his irresponsible and unethical breaches of the trust placed in him by his client as well as his abuse of the process of this tribunal.

I find, as well that the actions of Mr. Leibovitch in abandoning his clients on the eve of an arbitration, while repugnant in themselves, also constitute action that "caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default" and so justify an award of expenses personally against Mr. Leibovitch as representative of Mrs. Boamah.

Murray Tkatch

As noted, Mr. Tkatch's letter to the Commission, albeit signed by someone else in his place, unequivocally stated that he had undertaken to represent Mrs. Boamah at the upcoming hearing. Whether Mr. Tkatch intended it or not, certain consequences flow from becoming solicitor of record.

Once on the record, Mr. Tkatch had a positive obligation to appear at Mrs. Boamah's arbitration, unless excused by the tribunal. This is not a novel concept. As Nelson J. put it quite succinctly: "If a counsel cannot attend, then, except in an emergency, it is counsel's responsibility to retain an agent to address the court with respect to the matter."⁴ Indeed, such a failure to appear has been seen as so egregious as to merit contempt proceedings against counsel.⁵

I find that, whatever Mr. Tkatch may have intended to do, the letter sent on his behalf by his office indicated unequivocally that he was solicitor of record.

There was no condition to his retainer relating to the adjournment, as he seemed to have believed.

Once he was retained, he could just not slip away. The Dispute Resolution Practice Code provides the prerequisites for the removal of counsel as solicitor of record. Rule 9.7 provides:

9.7 A representative who seeks to withdraw from a proceeding must:

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

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

There is no dispute that Mr. Tkatch did not follow the procedure outlined above. In addition the Code of Professional Conduct of the Law Society of Upper Canada provides as follows:

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.

2.09 (8) When a lawyer withdraws, the lawyer shall try to minimize expense and avoid prejudice to the client and shall do all that can reasonably be done to facilitate the orderly transfer of the matter to the successor lawyer.

There is no evidence that Mr. Tkatch provided adequate notice of his withdrawal to Mrs. Boamah, nor that he did anything to "minimize expense and avoid prejudice" to his client.

To his credit, however, Mr. Tkatch upon receiving my telephone call rearranged his schedule and appeared within the hour, acknowledging, in retrospect, his error in not realizing that he had become, perhaps by inadvertence, solicitor of record.

While Mr. Tkatch's humility in ultimately accepting his responsibilities as counsel of record is commendable, it does not answer the critical issue of by whom should the costs order be paid. Clearly, Mr. Tkatch was in default of his obligations to his client and the tribunal. However, did that default cause expenses to be incurred unnecessarily?

The costs order, it should be remembered, is for costs thrown away due to the hearing not proceeding. Even had Mr. Tkatch appeared in a timely manner, the hearing could not have proceeded, except perhaps as a travesty of an arbitration. Mr. Tkatch had a client, but he had no file, no documentation, and no idea which witnesses could or would be called for the hearing and whether they were prepared to testify.

Mr. Leibovitch had all the documentation, and had attended at the pre-hearing, but his office was locked-presumably with all the files and documentation within. Given the analysis of the Divisional Court in Kalin v. Ontario College of Teachers⁶ an adjournment would not have been refused, whether or not Mr. Tkatch appeared at the hearing.

The adjournment was specifically due to Mr. Leibovitch's precipitous abandonment of his client and his failure to ensure that Mrs. Boamah had her files, and access to the evidence and the documentation necessary to proceed with the scheduled arbitration.

Whether Mr. Tkatch's conduct in not turning up for the beginning of Mrs. Boamah's hearing was excusable or not, I find that his conduct itself did not cause "expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default." Consequently, there are no grounds to order Mr. Tkatch to pay the expense order personally.

Mrs. Boamah

As mentioned earlier, Mrs. Boamah appeared at the original hearing for this matter. She had attended at her representative's office when he didn't return her calls concerning the hearing. She made efforts to retain competent alternative counsel when it appeared that Mr. Leibovitch had disappeared. In short, she was an engaged, responsible, applicant who did her best in circumstances which were clearly beyond her control.

Notwithstanding the above, Mrs. Boamah is prima facie responsible for any order of costs made in favour of the Insurer. She is a statutory party. She initiated the arbitration and retained both Mr. Leibovitch and Mr. Tkatch, and can be found responsible for their conduct, as any principal may be responsible for the actions of his or her agent.

At the time I awarded the expenses to the Insurer, I was not satisfied that the award should necessarily be payable by Mrs. Boamah. As noted, she seems to be a victim of circumstances and a rogue SABS representative. Although she made the decision to retain Mr. Leibovitch, it is also important to note that FSCO had given its imprimatur to his practice as a SABS agent by appointing him to the approved list of SABS representatives. It was not unreasonable for Mrs. Boamah to retain Mr. Leibovitch.

Mrs. Boamah was injured in an accident. She tried to obtain compensation for her injuries. The arbitration process that she undertook was part of that claims process. Gonthier J., in Smith v. Co-operators General Insurance Co. (2002 SCC 129), a decision of the Supreme Court, stated:

There is no dispute that one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance.

Punishing an insured with an order for expenses for reasons that were independent of her own actions seems an unusual sort of consumer protection. In this context, it is important to consider the cautionary words of the Court of Appeal:

(M)any, if not most, individuals who retain paralegals are particularly vulnerable because of their social and/or economic circumstances" and that "individuals who need the services may have little or no idea of the work involved in bringing a particular matter to resolution.⁷

Mrs. Boamah appears to be one such vulnerable person whose trust was abused by a paralegal. Given the availability of the alternative of ordering that the burden of the costs thrown away by the perpetrator of the actions that gave rise to the costs, and the fact that Mr. Leibovitch's repudiation of his obligations was clearly outside the scope of his retainer by Mrs. Boamah, I find it appropriate that he, rather than his client, absorb the full costs arising from the adjournment, and I order accordingly.

May 16, 2007

John Wilson

Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 96

FSCO A05-001772

BETWEEN:

ELIZABETH BOAMAH

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.1.8, as amended, it is ordered that:

1. Mr. Alan Leibovitch shall forthwith pay the amount of $1,500 to the ING Insurance Company as fixed expenses in this matter.

May 16, 2007

John Wilson

Arbitrator

Date

Footnotes

1. 1Elliot v. Chiarelli (c.o.b. Total Property Management) [2006] O.J. No. 4118 D.F. Baltman J.
2. 2Neill et al. v. The Attorney General of Canada 2006 CanLII 35004 (ON SC), 82 O.R. (3d) 241
3. 3Young v. Young 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3 (S.C.C.)
4. 4Baird v. Taylor 2000 CanLII 28470 (ON SC), [2000]OJ. No. 3980
5. 5See Regina v. Hill 1975 CanLII 935 (BC SC), [1975] 6 W.W.R. 395 and 73 D.L.R. (3d.) 621 B.C.C.A., R. v. Anders (1982)1982 CanLII 3320 (ON CA), 136 D.L.R. (3d) 316 Ont C.A.
6. 6Kalin v. Ontario College of Teachersl5 O.R. (3d) 523 "the interests of fairness must at least be addressed and seriously considered before a Tribunal embarks on a hearing with serious consequences for the person affected."
7. 7Koliniotis v. TriLevel Claims Consultants Ltd., 2005 CanLII 28417 (ON CA), [2005] O.J. No. 3381.