Neutral Citation: 2009 ONFSCDRS 123 FSCO A07-002110

BETWEEN:

DAOUD SEYED Applicant

and

FEDERATION INSURANCE COMPANY OF CANADA Insurer

and

GARY MAZIN

INTERIM DECISION ON EXPENSES

Before: Richard Feldman Heard: Written submissions received by September 1, 2009 Appearances: Alon Rooz for Gary Mazin Nicholaus de Koning for Federation Insurance Company of Canada ("Federation")

Issues:

The Applicant, Daoud Seyed, claimed that he was injured in a motor vehicle accident on February 12, 2006. In a decision dated June 8, 2009, I dealt with his claims for statutory accident benefits under the Schedule.¹ I dismissed his application in its entirety, while reserving on the issue of expenses.

On July 27, 2009, the Financial Services Commission received a request from counsel for Federation requesting a hearing on the issue of expenses. Mr. de Koning indicated that Federation would be seeking an order for its expenses as against both Mr. Seyed and Gary Mazin, personally.

I directed the parties to file any material they wished me to consider as it was my intention, to the extent practicable, to deal with the issue of expenses by way of a written hearing. Federation filed its written material by August 21, 2009 and indicated that there was no evidence upon which it intended to rely other than the material that it had provided to me and the substance of my decision of June 8, 2009. Mr. Rooz, on behalf of Gary Mazin, filed responding material by September 1, 2009 but, before Mr. Seyed was put to the expense of retaining new counsel and before Mr. Mazin was forced to disclose privileged solicitor-client information in order to defend himself, Mr. Rooz requested (by way of motion for summary judgment) that I determine whether there really was any case for Mr. Mazin to meet. That is the subject of this interim decision.

Result:

Mr. Mazin's motion is granted and the Insurer's request for expenses as against Gary Mazin is summarily dismissed.

EVIDENCE AND ANALYSIS:

Gary Mazin is the solicitor of record for the Applicant. He began representing the Applicant several months after the accident and assisted the Applicant by advancing claims for accident benefits and, when certain benefits were denied, by initiating mediation and then this arbitration proceeding. Michelle Whiteman, a student from the firm of Mazin Rooz Mazin, represented the Applicant at the three-day hearing before me in March 2009.

According to Federation, Gary Mazin should be held jointly and severally liable to pay any expenses awarded to Federation with respect to this arbitration proceeding for reasons which generally fall into one of the two categories listed below:

He assisted the Applicant in advancing claims for accident benefits that Mr. Mazin knew or ought to have known were fraudulent or that were frivolous, vexatious and devoid of merit; and
Certain claims were not added to the proceeding or were not clarified until late in the process, which resulted in wasted time.

Pursuant to section 282(11.2) of the Insurance Act, an arbitrator may make an order requiring a person representing an insured person to personally pay all or part of any expenses awarded against a party if the arbitrator is satisfied that either the representative caused expenses to be incurred without reasonable cause by advancing a frivolous or vexatious claim on behalf of the insured person, or the representative caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default.

The Supreme Court of Canada has cautioned against awarding costs against a solicitor:

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 are involved, and that the lawyer acted in bad faith in encouraging this abuse and delay …[but] 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 cases. 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. (emphasis added)²

Some of Federation's complaints relate to events that transpired before the commencement of this Application for Arbitration (filed September 24, 2007). Any expenses incurred by Federation prior to its receipt of the Application for Arbitration would not be expenses incurred in respect of an arbitration proceeding as contemplated by section 282(11) of the Insurance Act.

While it is true that I found that the Applicant lacked credibility and that many of his claims were tenuous, I did not make a finding that this application was frivolous or vexatious. There is also no evidence that Gary Mazin knowingly participated in the misrepresentations that were made by the Applicant and his friends and relatives. Based upon the evidence before me, there is no way of knowing what explanation, if any, the Applicant may have offered to his solicitors with respect to apparent discrepancies in the documents and in statements taken from the Applicant and his spouse.

The three cases that Federation relies upon are distinguishable from the facts of the present case. In Maryasin and ING Insurance Company of Canada³, expenses were awarded against the solicitor for commencing an application on behalf of a party (an estate) that the arbitrator found had no legal status. Obviously, that is not the case here. In Children's Aid Society of Huron County v. T.V.⁴, a lawyer was held responsible for costs where he repeatedly advised his client that they would be immune from any cost consequences and where the lawyer failed to properly advise his client of the potential risks. There is no evidence of such conduct by Mr. Mazin in this case. Finally, in Standard Life Assurance Co. v. Elliott⁵, costs were ordered against a solicitor who abused the rules of procedure in order to "wage a war of attrition" against the Insurer for an ulterior purpose rather than as a mechanism for obtaining a fair and just result for his client. There is no evidence upon which I can find that, in this case, Mr. Mazin is guilty of the type of conduct described in the Elliott case.

With respect to the allegation that Ms. Whiteman was 45 minutes late in arriving at the Commission, my records indicate that on March 24, 2009 the parties agreed that closing arguments would commence on March 25 at 10:30 a.m. and that Ms. Whiteman arrived on March 25 at 10:45 a.m. (i.e., 15 minutes late). I considered it to be de minimus and, since Mr. de Koning did not make an issue of it, I did not require Ms. Whiteman to provide an explanation for that brief delay.

While I ultimately rejected Ms. Whiteman's argument that Mr. Seyed should be awarded accident benefits solely as a result of Federation's alleged failure to comply with all procedural requirements set out in the Schedule, there was at least some case law to support this position (Kong and Personal Insurance Company of Canada⁶), she ought not to be blamed for trying to advance her client's interests and making this argument did not unduly lengthen the proceedings.

There is no evidence before me of any substantial delay or expense that is attributable solely to the default of Mr. Mazin. In the absence of evidence to the contrary, I assume that at all relevant times Mr. Mazin and those under his direction were acting with the instructions of Mr. Seyed and in a good faith attempt to protect the interests of Mr. Seyed. The fact that Mr. Seyed's case was ultimately dismissed (due largely to his own lack of credibility) and that some of his claims were tenuous (at least based upon the evidence as presented at the hearing) does not justify holding his solicitor personally responsible for the Insurer's expenses.

CONCLUSION

In all of the circumstances, I find that there really is no case for Mr. Mazin to meet. Mr. Mazin's motion is hereby granted and the Insurer's request for expenses as against Gary Mazin is summarily dismissed.

September 10, 2009

Richard Feldman Arbitrator

Financial Services Commission of Ontario