Financial Services Commission of Ontario Commission des services financiers de l’Ontario

Neutral Citation: 2008 ONFSCDRS 185

FSCO A06-000302

BETWEEN:

ARUDKUMARAN SEEVARATNUM Applicant

and

NORDIC INSURANCE COMPANY OF CANADA Insurer

Before: John Wilson

Heard: March 3, 2008 at the offices of the Financial Services Commission of Ontario in Toronto, together with further written submissions June 10, 2008

Appearances: No-one appeared for Mr. Seevaratnum Patrick Ho for Nordic Insurance Company of Canada Murray Tkatch on his own behalf and as “friend of the court”

Issues:

The Applicant, Arudkumaran Seevaratnum, was injured in a motor vehicle accident on August 30, 2003. He applied for statutory accident benefits from Nordic Insurance Company of Canada (“Nordic”)(now ING Insurance Company of Canada), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Seevaratnum 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. Tkatch be removed as counsel of record for Mr. Seevaratnum?
Should Mr. Seevaratnum’s arbitration be dismissed?
By whom are the expenses in this arbitration payable?

Result:

Mr. Tkatch is removed as counsel of record for Mr. Seevaratnum.
Mr. Seevaratnum’s arbitration is dismissed.
Mr. Seevaratnum is responsible for the Insurer’s costs in this matter.

EVIDENCE AND ANALYSIS:

This matter has an off-and-on history. It involves an applicant who claimed to be injured in a motor vehicle accident, made some claims, retained a solicitor, and then failed to keep in touch with the solicitor or to co-operate in advancing his accident benefit claims.

Ultimately his solicitor obtained an order removing himself from the record. Mr. Seevaratnum did not appear on the removal motion which went unopposed.

The arbitration history of this began with a scheduled pre-hearing in which Mr. Seevaratnum was represented by Mr. Rubin, a lawyer in Mr. Tkatch’s accident benefits practice. The pre-hearing took place on September 7, 2006, before Arbitrator Nastasi. At the pre-hearing, while the issues in dispute were identified and hearing dates set, Mr. Seevaratnum was not present and did not participate, nor was he available by telephone.

The arbitration hearing was first adjourned on March 19, 2007 to May 14, 15, and 16, 2007. As the May dates approached, Mr. Rubin of Mr. Tkatch’s office wrote on May 2, 2007 to request a further adjournment, since he was leaving the Tkatch law firm and would no longer handle the file. With the consent of the Insurer, new dates were set for the hearing to commence on March 3, 2008. To the date of the last adjournment, Mr. Seevaratnum had not participated in any way in any of the various case conferences leading to the adjournments or in the pre-hearing itself, or the mediation which preceded the Application for Arbitration.

Final settlement discussions were undertaken with Arbitrator Nastasi on February 10, 2008. At this point, Mr. Tkatch advised that he was unable to contact his client and that he wished to be removed as solicitor of record.

It was decided that, given the late date (the hearing was scheduled to begin March 3, 2008), the motion for removal as counsel of record would be heard at the same time as that scheduled for the arbitration hearing.

In his affidavit in support of the motion to withdraw as counsel, Mr. Tkatch swore that although he was solicitor of record in this matter, Michael Rubin, then of his office was actually retained by Mr. Seevaratnum. Mr. Rubin subsequently left the employ of Mr. Tkatch and ceased to represent the Applicant. It would appear that Mr. Tkatch may never have actually met Mr. Seevaratnum in person, although he made reference to at least one telephone conversation.

Mr. Tkatch also stated that “Mr. Seevaratnum did not attend the Mediation, failed to attend the Pre-Hearing and has failed to attend scheduled appointments at my office including an appointment last week for the settlement conference.”

It is of some note in the context of Mr. Seevaratnum’s serial non-attendance that the Insurer has maintained throughout this process that “the Applicant has materially misrepresented the facts surrounding his application for accident benefits.” Essentially, the Insurer is arguing that as a result of the misrepresentation, Mr. Seevaratnum’s claim for accident benefits is tainted with fraud.

While on a practical basis, material misrepresentation by an applicant, if proven, could relieve an insurer of the obligation to pay accident benefits, there are also other potential consequences arising from the same circumstances.

The Insurance Act provides for serious penalties for material misrepresentation. Section 447(2) reads as follows:

Every person is guilty of an offence who,

(a.1) knowingly makes a false or misleading statement or representation to an insurer in connection with the person’s entitlement to a benefit under a contract of insurance;

Likewise, the Criminal Code contains the following provision relating to fraud at section 380:

Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service,

(a) is guilty of an indictable offence and liable to a term of imprisonment not exceeding fourteen years, where the subject-matter of the offence is a testamentary instrument or the value of the subject-matter of the offence exceeds five thousand dollars; or

(b) is guilty

(i) of an indictable offence and is liable to imprisonment for a term not exceeding two years.

If the facts alleged by the Insurer in this matter are true, it is clear that Mr. Seevaratnum may well have a strong motive to distance himself from his arbitration proceeding. However, given the circumstances outlined by Mr. Tkatch, there is still a possibility that Mr. Seevaratnum’s absence from this arbitration process could also relate to a breakdown in communications between Mr. Seevaratnum and his nominal representative, and FSCO.

Even if notice for the various stages of this arbitration proceeding may have been compliant with the service requirements of the Dispute Resolution Practice Code (the “Code”), it may not have actually reached Mr. Seevaratnum. Certainly, there was no personal service, or acknowledgment of service by Mr. Seevaratnum.

Given that the accident in question occurred on August 30, 2003, a dismissal at this time will serve as a permanent bar to further access to many of the benefits potentially available to Mr. Seevaratnum under his insurance coverage.

When it became apparent that Mr. Seevaratnum would not turn up for either his own counsel’s motion, or the arbitration hearing that he instigated the available options were to proceed with the motion and the hearing in his absence, or to adjourn this matter yet again.

Mr. Ho advised that Nordic did not want this matter adjourned yet again, and, indeed moved for dismissal of this matter, based on the absence of the claimant and the failure to bring any evidence to support the claim.

Withdrawal of Counsel

Although Nordic did not oppose Mr. Tkatch’s withdrawal motion and Mr. Seevaratnum did not appear to put his views on the record, I still required Mr. Tkatch to proceed with his motion on withdrawal. At that time I observed that while Mr. Tkatch might possibly be seen to be “desert(ing) the client at a critical stage of a matter”, I made an oral ruling that allowed him to withdraw as solicitor of record in accordance with Rule 9 of the Code due to the evident breakdown in the confidence between the solicitor and his client.

Notwithstanding Mr. Tkatch’s casual attitude towards his need for contact with his client, and the consequent lateness of the request for removal as solicitor, Nordic did not insist on any conditions to the withdrawal, nor suggest that Mr. Tkatch should bear any personal responsibility for costs.

Under the circumstances, there was no utility in ordering Mr. Tkatch to continue to represent Mr. Seevaratnum.

I note in this context that the Commission’s record shows that, prior to the scheduled hearing date in March 2008, Mr. Seevaratnum’s telephone number appeared to have been disconnected and re-assigned to someone else. There were also notes on the Commission file concerning the inability to contact him to set up settlement discussions.

The Code allows an arbitrator considerable discretion as to any terms to be imposed on a withdrawal order. Given the absence of Mr. Seevaratnum, I made Mr. Tkatch’s withdrawal conditional upon his agreement to remain for the dismissal motion, and to speak to it as an amicus curiae. This Mr. Tkatch was content to do.

Dismissal Motion

Having heard the request to dismiss this matter made by Nordic, and having heard submissions by both Mr. Ho and Mr. Tkatch, I found at the time that there were grounds to dismiss this matter due to Mr. Seevaratnum’s consistent failure to proceed with the hearing and to attend scheduled proceedings in this arbitration.

The legal underpinnings for dismissal in a case like this are principally to be found in the Statutory Powers Procedure Act (“SPPA”), which governs much of the hearing practice at the Commission. Section 7(1) reads as follows:

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.

Section 4.6 of the SPPA also contains the following relevant provisions:

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.

In this matter I have no hesitation in finding that notice of all the various stages of this arbitration was sent to the address provided by Mr. Seevaratnum.

It should also be remembered that Mr. Seevaratnum, as the Applicant/claimant in this matter, bears the burden of proving his entitlement to benefits. Consequently, his failure to attend and to call evidence would mean almost certain dismissal, since no evidence was tendered on his behalf.

Given his failure to participate at any stage in this proceeding, I did not have any assurance that Mr. Seevaratnum actually intended to pursue his claim further or that he stood any chance of success in obtaining an order against Nordic, even if a further adjournment were to be granted.

The Schedule, however, and all motor vehicle insurance policies in Ontario which incorporate its accident benefit provisions have been characterized as “consumer protection legislation.”²

The arbitration system is designed to be a fair, but expedited means of resolving conflicts over accident benefits.

Consequentially, it was with some trepidation that I agreed to dismiss this matter without addressing Mr. Seevaratnam’s substantive claim. The dismissal order however was not absolute. It was subject to a specific condition which had to be performed before the order was to be finalized. This was the provision for inserting an advertisement in a newspaper of general circulation to alert Mr. Seevaratnum to the potential dismissal, and giving him thirty days to step forward and revive his action.

Although it is not central to my decision, I also accept that the continuation of Mr. Seevaratnum’s arbitration at this time could have been construed as “frivolous and vexatious”³ as that term is used in section 4.6(1) (a) of the SPPA, which in itself would be grounds for dismissal.

In such a case I would rely on Mr. Seevaratnum’s serial non-attendance given due to his apparent repudiation of a proceeding instituted in his name. As has been stated countless times, vexatious litigation includes situations where the court has no power to grant the relief sought⁴; if no reasonable person can possibly expect to obtain relief in it⁵, or if the applicant has no proper authority to pursue the remedy.⁶ It is also trite law that a vexatious case need not be so from its inception, but that its vexatious character may develop over time and changing circumstances.⁷

Since there has been no finding as to the allegation of fraud, I do not accept that there is evidence to support a finding that it was plain and obvious at the outset that Mr. Seevaratnum’s claim was totally devoid of merit. Rather I find that his total absence from the arbitration process, and his serial failure to advance his case in any way, that transformed a potentially viable claim into one that was vexatious as that term is understood in the law.

In the event that Mr. Seevaratnum had advised of his intention to continue this matter within the 30 day time limit, the arbitration would have been stayed pending a case conference to deal with a timetable for the matter, and the setting of dates for an arbitration, as well as any expenses arising from what would effectively be the adjournment of this arbitration. In fact, Mr. Seevaratnum made no effort to contact either FSCO or the Insurer.

Final Dismissal:

Having found that Mr. Seevaratnum was properly notified of the various stages of the hearing in this process, including the dismissal notice, and that the Insurer has, as ordered, inserted an advertisement in a newspaper of general circulation in Southern Ontario warning of the potential dismissal of this matter, without response from Mr. Seevaratnum or anyone acting on behalf of him, I can only conclude that Mr. Seevaratnum has effectively abandoned his arbitration.

Even if Mr. Seevaratnum was not actually aware of the notices sent to his last available address, he did not respond to the advertisement that was published by the Insurer, an advertisement that clearly advised him that his case would be dismissed if he did not appear.

In this matter there has been notice to the Applicant’s solicitor of record⁸, service by ordinary mail to the address given by the party, and a notice published in a newspaper of general distribution in Ontario. I accept that both FSCO and the Insurer have satisfied any notion of notice which may be a pre-condition to dismissal under section 7(1) of the SPPA.

Although it is not central to my decision, I also accept that the continuation of Mr. Seevaratnum’s arbitration at this time could be construed as “frivolous and vexatious” as that term is used in section 4.6(1) (a) of the SPPA, which in itself would be grounds for dismissal. In such a case I would rely on Mr. Seevaratnum’s serial non-attendance given due notice and, as a result of his non-participation, the almost complete impossibility of success should this matter proceed further.

For all the above reasons Mr. Seevaratnam’s claim for accident benefits arising out of the August 30, 2003 motor vehicle accident is dismissed.

EXPENSES:

Given Mr. Seevaratnum’s failure to proceed with his claim and the outcome of Nordic’s motion for dismissal, Nordic shall have its reasonable expenses in this arbitration, payable by Mr. Seevaratnum. Nordic shall have 30 days to serve and file its expenses as claimed together with brief written submissions as to costs, if so advised. It may serve Mr. Seevaratnum by ordinary mail to his last known address, if it is unable to directly contact the Applicant.

Mr. Seevaratnum shall have a further 14 days to respond, in writing, if he intends to challenge the amount of expenses claimed by Nordic in this matter.

November 14, 2008

John Wilson Arbitrator

Date