Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2008 ONFSCDRS 174

FSCO A07-002237

BETWEEN:

FATEMEH SUFI

Applicant

and

AVIVA CANADA INC.

Insurer

REASONS FOR DECISION

Before: Suesan Alves

Heard: By written submissions received by July 4, 2008.

Appearances: Rizwan Wancho for Ms. Sufi

Joseph Griffiths for Aviva Canada Inc.

Issues:

The Applicant, Fatemeh Sufi, was injured in a motor vehicle accident on July 13, 2004. She applied for and received statutory accident benefits from Aviva Canada Inc. (“Aviva”), payable under the Schedule.¹ Ms. Sufi applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Ms. Sufi’s representative sought to withdraw her arbitration application. Counsel for Aviva did not object to the withdrawal, provided it was reimbursed for expenses which it was caused to unreasonably incur. The Applicant’s representative disputes that an award of expenses should be made against him or the Applicant. The Applicant was given an opportunity to respond to the claim for expenses, but did not do so.

The issues in this hearing are:

1. Should Ms. Sufi be permitted to withdraw the arbitration application filed on October 4, 2007?

2. Should Aviva be awarded expenses unreasonably incurred? If yes, should they be paid by Ms. Sufi or by her representative?

Result:

1. Ms. Sufi is permitted to withdraw the arbitration application.

2. Aviva is awarded expenses unreasonably incurred in an amount to be agreed upon or assessed. The Applicant’s representative shall pay these expenses.

EVIDENCE AND ANALYSIS:

Background

Ms. Sufi applied for arbitration in relation to her claims for physical rehabilitation in the amount of $12,016, chiropractic treatment in the amount of $3,187.50, the cost of an examination in the amount of $1,969, interest, expenses and a special award. At the pre-hearing, her representative amended the claim for physical rehabilitation to $19,562.

Aviva disputed all of Ms. Sufi’s claims and claimed its arbitration expenses. Aviva alleged that her claims for physical rehabilitation had not been mediated and could not therefore be arbitrated. Aviva also alleged that her claim for the cost of examinations was time barred.

At the pre-hearing, the Applicant’s representative, Mr. Wancho, was adamant that the claims for physical rehabilitation had been mediated and that Ms. Sufi’s claim for the cost of examinations was not time barred. In light of those submissions and the Insurer’s submissions to the contrary, a hearing was scheduled to address the jurisdictional and time limits issues.

Aviva filed its written submissions on both issues. On the day after the Applicant’s submissions were due, the Applicant’s representative purported to withdraw the arbitration. Aviva did not oppose the withdrawal; however, it claimed its expenses which were unreasonably incurred.

Withdrawal

Rule 70 of the Dispute Resolution Practice Code—Fourth Edition, Updated October 2003 permits an adjudicator to allow a party to withdraw all or part of a dispute where all parties agree, and, where the parties do not agree, to permit the withdrawal on such terms and conditions as he or she considers just; and award expenses to either party as permitted by Rule 75, and following Rules.

Generally, adjudicators at the Financial Services Commission of Ontario have allowed applicants to exercise a great deal of control in relation to the issues they seek to have arbitrated and in relation to the withdrawal of an arbitration application. Withdrawals of arbitration applications have been permitted as late as on the day of an appeal hearing. Aviva did not object to the withdrawal, provided that it is reimbursed for its expenses unreasonably incurred. For these reasons, I permitted the Applicant to withdraw her arbitration application on May 16, 2008, subject to Aviva’s claim for expenses.

Entitlement to arbitration expenses

Rule 75 sets out the following criteria for an award of expenses

(a) each party's degree of success in the outcome of the proceeding;

(b) any written offers to settle made in accordance with Rule 76;

(c) whether novel issues are raised in the proceeding;

(d) the conduct of a party or a party's representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders;

(e) whether any aspect of the proceeding was improper, vexatious or unnecessary.

Since the arbitration was withdrawn before the preliminary issues hearing was concluded, the degree of success is not a relevant criterion. Similarly, I find there were no offers to settle which complied with the requirements of Rule 76. I also find there were no novel issues.

I find the applicable criteria are (d) and (e) of Rule 75: the conduct of the Applicant’s representative which tended to prolong the proceeding and whether any aspect of the proceeding was vexatious, in the sense that steps were taken to harass or annoy the insurer or cause it to incur expense.

Aviva submits that had Mr. Wancho been knowledgeable about basic arbitration procedures and had he taken the time to review the file before commencing the arbitration application, he would have appreciated that Ms. Sufi’s claim for physical rehabilitation benefits had not been mediated and could not therefore have been arbitrated. He would also have appreciated that her claim for the cost of examinations was time barred.

Rather than admitting to a lack of competence or a lack of knowledge of the arbitration process, or that he failed to review the file before commencing the arbitration application and before the pre-hearing, Mr. Wancho submitted that when he commenced the arbitration, in October 2007, he knew the issues were time barred. That submission, if accurate, contradicts his submission at the pre-hearing in February 2008, that there was no limitation issue.

Mr. Wancho blames both Aviva and Ms. Sufi for the time limits problem. Aviva, because it conducted so many section 42 “assessments, including the ones where she was mistreated by the assessor/and staff (she just didn’t want to pursue benefits due to angst of going through all that again). She just did not want to bother. Finally when we got her to come in and sign the arbitration forms the 90 days time line had already passed.”

There was no evidence advanced by Mr. Wancho that Ms. Sufi was mistreated during the course of any section 42 assessments. Nor was there any evidence proffered which would support a finding that such assessments were improper or abusive.

Mr. Wancho’s submission suggests that all of Ms. Sufi’s claims were out of time when her arbitration application was filed. However, this was not the case, as set out below on pages 6 and 7 of this decision.

There was no evidence to support the submission that the delay was due to Ms. Sufi. Mr. Wancho explained that the strategy was to file the arbitration application, considering that:

We expected that the time limitation would cause the case administrator to withhold the application until/unless we had spoken to the insurer and they had agreed to the extension of the time limitation barrier—in good faith.

In the event the Arbitration application was assigned without the above mentioned agreement (there had been in our experience examples where the insurer did not raise the time limitation period as the technical excuse). We hoped the insurer would not restrict the proceedings. In the absence of the above two possibilities the matter would have come to where we are now but at least we tried.

Given that strategy, it was clear in November 2007, when Aviva filed its Response that Aviva had raised a limitation defence with respect to the smallest of Ms. Sufi’s claims. However, at the pre-hearing Mr. Wancho submitted that there was no time limits problem.

I find the delay on the part of the Applicant’s representative in acknowledging the procedural defects in relation to two of the three claims he commenced on behalf of Ms. Sufi in this arbitration, prolonged the proceeding and caused Aviva to incur expenses unnecessarily.

In the absence of any submissions or argument that Aviva’s refusal had been equivocal or so defective that the limitation period did not begin to run, there was no hope that the Applicant would be permitted to arbitrate the claim for the cost of examinations.

According to the Report of Mediator which was filed with the arbitration application, Mr. Wancho had been Ms. Sufi’s representative at mediation. That Report indicated that Ms. Sufi’s claims for physical rehabilitation had been withdrawn at mediation, until she could provide particulars. Absent evidence that these claims had been mediated at a later date, or the insurer’s consent to these treatment plans being arbitrated without being mediated, there was no hope that the Applicant would be successful in having these claims arbitrated.

In Maryasin (The Estate of) and ING Insurance Company of Canada (FSCO A06-001645, February 22, 2008) Arbitrator Wilson held that a proceeding which serves no legal purpose other than to cause the Insurer to incur costs is one which is frivolous and vexatious. I find this to be the case in relation to Mr. Wancho’s insistence that a preliminary issues hearing be scheduled when there was no hope that Ms. Sufi’s claims could proceed to a hearing. He caused Aviva to incur the costs of preparing and filing written submissions instead of acknowledging the procedural problems at the pre-hearing.

It was of particular concern that while purporting to represent Ms. Sufi, Mr. Wancho at the same time blamed his client for the arbitration being out of time. I find that at least some of the errors and omissions are demonstrably those of Mr. Wancho.

Mr. Wancho did not particularize the physical rehabilitation claims he was advancing on behalf of Ms. Sufi. Although the picture is somewhat confused, it would appear that at the time he commenced the arbitration, two treatment plans were out of time,² three would have been timely had he reviewed the Report of Mediator and applied for mediation at the time he commenced the arbitration in October 2007. Indeed, had he heeded the contents of the Response in November 2007, which stated that the claims had not been mediated, these claims could have been mediated and included in the arbitration in a timely manner.³ I find that Mr. Wancho cannot credibly attribute the limitation period problem in relation to these plans to his client.

I do not have a copy of the Application for Mediation which Mr. Wancho states he filed on April 1, 2008 in relation to Ms. Sufi’s claims. It would appear that of the $19,562 claimed for physical rehabilitation, only one treatment plan in the amount of $2,440 can still be arbitrated if he applied for mediation with respect to this claim on April 1, 2008.⁴

A teleconference resumption of the pre-hearing was scheduled on May 16, 2008 for Mr. Wancho to clarify whether he intended to withdraw the entire arbitration application, or only the issues which Aviva submitted were procedurally barred. I find that in withdrawing the entire arbitration application, Mr. Wancho created still another limitation problem for the Applicant with respect to the only claim in this arbitration which was not procedurally defective.

Before the resumption of the pre-hearing, Mr. Wancho wrote a letter stating that if the Insurer was prepared to accept the issue of the medical invoices, then he would want to continue with the arbitration. I understood this to mean that if Aviva would waive the requirement that he mediate the physical rehabilitation claims, he would proceed to have them arbitrated as part of this arbitration application. In the context of the arbitration, this would save both parties the additional arbitration filing fees. For the Applicant, it would mean a saving of $100; for the Insurer a saving of $3,000.

At the resumed pre-hearing on May 16, 2008, counsel for the Insurer was prepared to accept this proposal, noting however, that further claims had become time barred since they had not been mediated.

The Applicant’s representative submitted that he wished to give the process of mediation a fair chance and in “good faith” attempt to resolve the matter and would instead commence a fresh arbitration. Counsel for the Insurer advised that he would be appearing on behalf of Aviva at the mediation and at any subsequent arbitration and would take the same approach with respect to the merits of the Applicant’s claims.

Mr. Wancho then withdrew the entire arbitration application. On June 10, 2008, a few weeks after the withdrawal, Mr. Wancho wrote “I do understand why he would want to continue with the file however it is contrary to the interest of my client.” There was no conceivable benefit to the Applicant in commencing a fresh arbitration. Tactically, it could cause Aviva to incur a further filing fee in relation to the same claim. However, in this case, by withdrawing the entire arbitration application, Mr. Wancho effectively torpedoed the one viable claim the Applicant had in this arbitration, namely her claim for the cost of chiropractic treatment in the amount of $3,187.50. Aviva denied that claim on December 5, 2005 following a DAC assessment. It had been mediated and included in an arbitration application on October 4, 2007, within the two year time period. However, as the limitation period tolled on December 5, 2007, any further arbitration application with respect to this claim would be out of time. In compromising Ms. Sufi’s claim, he may have saved Aviva the cost of a further arbitration.

As the arbitration application has been withdrawn, my findings with respect to the timeliness of Ms. Sufi’s claims are done for purposes of determining whether Ms. Sufi or her representative should pay Aviva’s expenses.

I conclude that Aviva is entitled to its expenses unnecessarily incurred as a result of the conduct of the Applicant’s representative which tended to prolong the proceeding between the date of the pre-hearing on February 25, 2008 and May 16, 2008 when the arbitration application was withdrawn. I also find that as a term of the withdrawal, Aviva is entitled to its expenses with respect to the preparation of submissions on expenses.

Should Mr. Wancho or Ms. Sufi pay Aviva’s expenses

Generally, the parties to an arbitration bear the expenses of the proceeding. However, section 282(11.2) of the Insurance Act permits an arbitrator to order a party’s representative who is being compensated for those services, to personally pay all or part of any expenses awarded against a party in certain circumstances. Section 282(11.2) provides.

Liability of representative for costs

(11.2) 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. 2002, c. 22, s. 127.

Mr. Wancho and Ms. Sufi were given an opportunity to respond to Aviva’s claim for expenses. Ms. Sufi did not respond.

Aviva submits that Mr. Wancho, the Applicant’s representative, should pay its expenses, rather than the Applicant. Mr. Wancho submits that it is too early in the arbitration process to award expenses as a hearing has not taken place. He also submits that making the Applicant pay would create an injustice; making him pay “would be penalizing him, to protect the rights of a helpless claimant to whatever extent it was possible.” I agree with Mr. Wancho that making the Applicant pay would create an injustice.

Generally, expenses are awarded following a hearing under section 282(11) of the Insurance Act. However, an arbitrator has the authority to make an expense award at any stage of the process under section 282(11.2) of the Act. Rules 70-75 of the Dispute Resolution Practice Code provide that expenses may be awarded following a withdrawal of an arbitration application.

Copies of section 282 of the Act and of Rules 70-79 of the Code were sent to Mr. Wancho by the Financial Services Commission, once he sought to withdraw the arbitration application and Aviva requested that he be ordered to pay its expenses.

Mr. Wancho’s submission that it was too early in the process to make an expense award, as a hearing had not been held, suggests that it is unlikely that he advised Ms. Sufi that she could be liable to pay all or part of the expenses of this proceeding, contrary to paragraph (a) of section 282(11.2) of the Insurance Act.

In the case of McCormack and Aviva Canada Inc., (FSCO A04-002722, June 13, 2006), Arbitrator Wilson held that expenses were not to be used as a routine sanction for 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. He then went on to determine whether the representative in question had breached the Code of Conduct which statutory accident benefits representatives are obliged to follow.

In Mazin and Personal Insurance company of Canada and Luskin, (FSCO P07-00028 September 8, 2008), Director’s Delegate Blackman agreed with Arbitrator Wilson’s approach, and held that expense awards against representatives should be made only in cases involving a higher “inexcusable misconduct standard” requiring reproof.

I find that Mr.Wancho’s conduct in causing Aviva to incur further expenses amounts to inexcusable misconduct.

At the time he filed Ms. Sufi’s arbitration application in October 2007, Mr. Wancho was governed by The Code of Conduct for Statutory Accident Benefit Representatives issued by the Superintendent of Financial Services (November 1, 2003). In McCormack, Arbitrator Wilson described some of the requirements of that code as follows: the Code of Conduct “sets out obligations of honesty, competency, and courtesy, among others. Rule 2.3 recognizes that a representative must have a ‘reasonable understanding’ of the law and procedural requirements involved in a claim.”

Arbitrator Wilson noted that “Rule 2.4 sets out a requirement for ‘adequate skills, attributes and abilities appropriate to each matter.’” This rule speaks for itself. Failure to meet the minimum standards set by the Commission can result in administrative penalties imposed by the Commission itself. In the context of a single arbitration, such a failure can result in the barring of the individual from appearing at the arbitration pursuant to section 23(3) of the Statutory Powers Procedure Act (SPPA) or cost consequences.

Effective May 1, 2008, the Law Society of Upper Canada assumed responsibility for the regulation of paralegals. As of that date, Mr. Wancho’s conduct was governed by the Paralegal Rules of Conduct. Those Rules also require paralegals to perform services undertaken on behalf of a client to the standard of a competent paralegal. Rule 3 is set out as Appendix A.

In McCormack, Arbitrator Wilson went on to hold that “… incompetence or a failure to abide by the standards of a lawyer or representative could, if the result of the incompetence is delay or increased costs to the other party” could support such an award of expenses.

I find Mr. Wancho has demonstrated that he lacks a knowledge and understanding of the law relevant to this case and of the arbitration process. I find Mr. Wancho fell below the minimum standards of competence for a paralegal under each of the codes of conduct which governed him during the course of this arbitration. His submissions before this tribunal have been disingenuous. In addition to causing increased costs to Aviva, he failed to advance Ms. Sufi’s interests. I also find it would be unfair to require Ms. Sufi to pay Aviva’s expenses in this case.

Amount of Expenses:

If counsel for the Insurer and Mr. Wancho are unable to agree on the amount of expenses within thirty days, they should contact the Case Administrator to schedule an assessment of expenses.

October 29, 2008

Suesan Alves

Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2008 ONFSCDRS 174

FSCO A07-002237

BETWEEN:

FATEMEH SUFI

Applicant

and

AVIVA CANADA INC.

Insurer

ARBITRATION ORDER

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

1. The Applicant is permitted to withdraw this arbitration application.

2. Aviva is entitled to its arbitration expenses from the date of February 25, 2008 to May 16 2008 when the arbitration application was withdrawn. As a term of withdrawal, Aviva is also entitled to the costs of preparing submissions on expenses. The amount of expenses is to be agreed upon or assessed. The expenses shall be paid by Rizwan Dean Wancho, the Applicant’s representative.

3. If the parties are unable to agree on the amount of expenses within 30 days, they should contact the case administrator to schedule an assessment of expenses hearing

October 29, 2008

Suesan Alves

Arbitrator

Date

Appendix A

Rule 3 of the Paralegal Code of Conduct states:

3.01 (1) A paralegal shall perform any services undertaken on a client's behalf to the standard of a competent paralegal.

(2) A paralegal shall be alert to recognize any lack of competence for a particular task and the disservice that would be done to the client by undertaking that task and shall not undertake a matter without being competent to handle it or being able to become competent without undue delay or expense to the client.

(3) If a paralegal discovers that he or she lacks the competence to complete the task for which he or she has been retained, the paralegal shall either decline to act or obtain the client's consent to retain, consult or collaborate with another licensee who is competent and licensed to perform that task.

Who is Competent

(4) For the purposes of this rule, a competent paralegal is one who has and applies the relevant skills, attributes, and values appropriate to each matter undertaken on behalf of a client including

(a) knowing general legal principles and procedures and the substantive law and procedures for the legal services that the paralegal provides;

(b) investigating facts, identifying issues, ascertaining client objectives, considering possible options, and developing and advising clients on appropriate courses of action;

(c) implementing, as each matter requires, the chosen course of action through the application of appropriate skills, including,

(i) legal research,

(ii) analysis,

(iii) application of the law to the relevant facts,

(iv) writing and drafting,

(v) negotiation,

(vi) alternative dispute resolution,

(vii) advocacy, and

(viii) problem-solving ability;

(d) representing the client in a conscientious, diligent, and cost-effective manner;

(e) communicating with the client at all stages of a matter in a timely and effective manner that is appropriate to the age and abilities of the client and engaging the services of an interpreter when necessary;

(f) answering reasonable client requests in a timely and effective manner;

(g) ensuring that all applicable deadlines are met;

(h) managing one's practice effectively;

(i) applying intellectual capacity, judgment, and deliberation to all functions;

(j) pursuing appropriate training and development to maintain and enhance knowledge and skills;

(k) adapting to changing requirements, standards, techniques and practices; and

(l) complying in letter and in spirit with these Rules.

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2The treatment plans denied on June 9, 2005 in the amount of $5,160 and denied on August 25, 2005 in the amount of $1,720.
3. 3The treatment plan denied on December 20, 2005 in the amount of $4,175, and another denied on March 2, 2006 in the amount of $695.
4. 4The treatment plan in the amount of $2,440 denied on June 16, 2006