Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2009 ONFSCDRS 153

Appeal P08-00011

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ALEXANDER MARYASIN (THE ESTATE OF)

Appellant

and

ING INSURANCE COMPANY OF CANADA

Respondent

BEFORE:

Delegate Lawrence Blackman

REPRESENTATIVES:

Mr. Gary Mazin for Alexander Maryasin (The Estate of)

Ms. Katie Sharpe for ING Insurance Company of Canada

HEARING DATE:

June 12, 2009

Additional written submissions were received on October 9, 2009

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The Arbitrator’s decision of February 22, 2008 is confirmed and the Notice of Appeal dated March 14, 2008 is dismissed.
2. If the parties are unable to agree on the legal expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003).

November 6, 2009

Lawrence Blackman

Director’s Delegate

Date

REASONS FOR DECISION

I. BACKGROUND

In his February 22, 2008 decision, Arbitrator Wilson (the “Arbitrator”) dismissed the claim by the Appellant, Alexander Maryasin (The Estate of), without prejudice to the right of any legitimate claimant to advance an accident benefits claim within the legislated time-limits. The Arbitrator further ordered that Mr. Gary Mazin, counsel of record for the Appellant, pay ING Insurance Company of Canada (the “Respondent”) its legal expenses, assessed at $4,256.37.

This appeal concerns (1) the Arbitrator’s award of legal expenses personally against counsel and (2) changing the name of the claimant to that of the deceased’s daughter, Ms. Faina Maryasin.

The late Mr. Maryasin was injured in an October 29, 2005 motor vehicle accident and applied to the Respondent for statutory accident benefits under the Schedule.¹ A dispute arose as to Mr. Maryasin's entitlement to certain benefits. Mr. Maryasin applied for mediation by application dated January 25, 2006. The Report of Mediator, issued June 20, 2006, noted the remaining issues in dispute as attendant care, medical and housekeeping benefits, and interest.

Mr. Maryasin, however, had passed away on April 1, 2006. By Application dated May 6, 2006, Ms. Faina Maryasin applied to the Respondent for payment of death benefits (noting the deceased's dependence on her) and funeral expenses. By a January 24, 2007 Explanation of Benefits, the Respondent denied the $35,000 death benefit and $6,000 funeral benefit claims, stating that "[t]he proof of Death Certificate does not indicate the cause of death. The hospital records do not support an mva related cause of death. The benefits are not payable."

In the interim, an Application for Mediation dated August 23, 2006 was filed with the Financial Services Commission of Ontario. The Application, under the name of Ms. Faina Maryasin, was signed by Mr. Mazin as representative. A Report of Mediator issued January 5, 2007 indicated that the issues remaining in dispute were Ms. Maryasin's entitlement to a death benefit of $35,000 pursuant to section 25 of the Schedule, $6,000 for funeral benefits under section 26 of the Schedule and interest on overdue payments.

Mr. Mazin thereafter filed with the Commission a July 19, 2006 Application for Arbitration, solely in the name of Alexander Maryasin, seeking both the benefits personal to Mr. Maryasin listed in the June 20, 2006 Report of Mediator as well as death benefits. The Application for Arbitration did not provide any specifics as to the basis of the death benefit claim.

The arbitration was pre-heard on January 25, 2007 by a different arbitrator. August 2007 hearing dates were set. The Applicant was noted in the January 26, 2007 pre-hearing letter as Mr. Alexander Maryasin (The Estate). The issues in dispute were identified and agreed to as only being entitlement to unspecified death and funeral benefits, interest, legal expenses and a special award claimed pursuant to subsection 282(11) of the Insurance Act.

By letter dated July 6, 2007, Mr. Mazin requested an adjournment of the arbitration hearing because “the representative of the Estate of Alexander Maryasin, Faina Maryasin, is out of town and will not be returning for a few months.”

An adjournment hearing and case conference was held on July 20, 2007 before the Arbitrator. The Arbitrator’s July 24, 2007 letter confirmed that the primary issues for arbitration were death benefits and funeral expenses, but that only the latter had the potential of directly involving the estate. The Arbitrator noted that entitlement to a death benefit under subsection 25(2) of the Schedule appeared to be personal to the dependant person making the claim and did not form part of a deceased’s estate.

The Arbitrator’s letter further noted, in part, that:

• Although the arbitration was brought in the name of the estate, no attempt had been made to appoint anyone as either trustee or administrator. While Mr. Mazin initially advised that a grant of administration was imminent, he later conceded that he was unaware of the status of any application to appoint an estate representative and was not involved in the appointment process;

• Mr. Mazin’s office had not been able to contact Ms. Maryasin since at least June 7, 2007 and that she had disappeared without trace; and,

• Mr. Mazin had no instructions, other than his original retainer.

Over the Respondent’s objections, the Arbitrator granted the requested adjournment, sine die, to permit Mr. Mazin to obtain instructions from Ms. Maryasin. The adjournment was subject to conditions, including a possible award of expenses, of which the Arbitrator remained seized. Mr. Mazin was given until September 30, 2007 to advise whether he had reached Ms. Maryasin and obtained further instructions, “as well as take the necessary steps to amend the Application for Arbitration to properly reflect the claims and the identity of the claimants in this arbitration, and the authority under which that part of the claim involving the estate of Mr. Alexander Maryasin is proceeding” [emphasis added].

The Arbitrator ordered that the parties attend a further pre-hearing discussion on November 2, 2007, at which Ms. Maryasin was to be present.

The Arbitrator’s letter concluded:

Providing that Mr. Mazin has taken the appropriate steps to regularize the Application for Arbitration that is the subject of this arbitration on a timely basis, the resumed pre-hearing will deal with the issue of expenses arising from this adjournment, together with the scheduling of dates for a new substantive hearing.

Otherwise, should Mr. Mazin fail to address the issues referred to above by September 30, 2007, ING shall be entitled to serve and file [a] motion for dismissal of this arbitration, which may be returnable on the date set for the resumption of the pre-hearing.

Given the concerns expressed concerning the manner in which this arbitration has been brought and whether the solicitor had the authority to bring an action in the name of the estate, it is possible that Mr. Mazin’s actions in bringing this arbitration may be brought into question as well. Mr. Mazin is consequently advised that should he be in breach of his warranty of authority, he may be expected to bear part or all of any ensuing expense award relating to this adjournment.

The Insurer should serve appropriate notice on Mr. Mazin at least 30 days prior to the scheduled resumption, including particulars of any conduct relied upon, should it wish to avail itself of the provisions of section 282 (11.2) of the Insurance Act. [emphasis added]

The noted subsection 282(11.2) pertains to the liability of legal representatives for costs.

The case conference was resumed before the Arbitrator on November 2, 2007. The Arbitrator’s

November 6, 2007 letter confirmed that an amended Application for Arbitration in the name of Ms. Faina Maryasin had been filed by Mr. Mazin notwithstanding that counsel had been unable to contact her. The Respondent did not consent to the amendment. The matter was put over to November 23, 2007 to hear the Respondent’s motion to dismiss the Application for Arbitration. The Arbitrator declined to rule on the motion at the November 6, 2007 resumption given the lack of formal notice for the motion to dismiss and the serious consequences to the Applicant.

The Respondent’s November 13, 2007 motion record sought an order pursuant to Rule 68 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”) dismissing the Application for Arbitration as an abuse of process and as vexatious. The Respondent also sought its legal expenses against both Ms. Maryasin and Mr. Mazin, the latter pursuant to subsection 282(11.2) of the Insurance Act. In part, the Respondent submitted that:

Mr. Mazin has not taken the steps to amend the Application for Arbitration to properly reflect the claims and the identify of the claimants in this arbitration, and the authority under which that part of the claim involving the estate of Mr. Alexander Maryasin is proceeding, by September 30, 2007, as Ordered. (see report of Arbitrator Wilson July 24, 2007)

In the interim between the November 2^nd case conference and the November 23^rd return of the motion, Mr. Mazin sought and then withdrew (upon contacting Ms. Maryasin) a request to withdraw the arbitration and to be removed as solicitor of record. Mr. Mazin’s November 8, 2007 letter indicated that Ms. Maryasin wished to proceed with “the claim.” By letter dated November 13, 2007, the Appellant requested an extension for its submissions as an extension had been granted to the Respondent. The Arbitrator allowed same as being fair in the circumstances. Ms. Maryasin attended the November 23^rd motion.

The Arbitrator’s February 22, 2008 decision on the motion to dismiss included the following findings:

1. It was “common ground in this matter that there was no will appointing Ms. Maryasin as either trustee or executor.” There was no evidence that Ms. Maryasin was the personal representative, executor or administrator of the estate or that any effort had been made to regularize the matter by the appointment of an estate trustee or administrator.

2. It was not at all clear that Mr. Maryasin’s estate, even if validly constituted, had any standing to advance the claims sought. A claim for death benefits was personal to the dependant bringing forward the claim. Ms. Maryasin confirmed at the dismissal motion that the funeral expenses were paid by her personally and not by Mr. Maryasin’s estate.

3. The generally accepted principle in Ontario was that an action would be a nullity if the party named was a totally different person from the person who ought to have been named and would be irregular if the party as named only misdescribed the person who ought to have been named.Ms. Maryasin, in her personal capacity, was not the same misdescribed person or interest as the estate of the late Mr. Maryasin. A new application for arbitration was insufficient to “rectify what is, on its face, a void application in the name of the estate.”

4. The Appellant had no possibility of success. This alone supported a finding that the arbitration should be dismissed both as a nullity and as frivolous and vexatious litigation

under clause 4.6(1)(a) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S. 22.

The Arbitrator found Mr. Mazin responsible for the Respondent’s legal expenses because:

1. Both at the time the Application for Arbitration was filed and at the hearing on the dismissal motion, the estate of Mr. Maryasin had no legal existence and, on the limited evidence before the Arbitrator, no likelihood of being brought into existence. There were significant consequences for bringing an action with absolutely no chance of success.

2. At common law, an agent who has no existing principal may be personally liable.

3. An “arbitration brought in the name of a non-existent entity with patently no right to the benefits claimed would constitute a vexatious or hopeless litigation as provided for in section 282(11.2) of the Insurance Act.”

4. Mr. Mazin should have been aware of the governing law and “could have asked to proceed under the name of Ms. Maryasin early on in the process before costs were incurred in preparing for a hearing.” Notwithstanding that the Arbitrator advised at the time of the adjournment request that the arbitration may have been brought incorrectly, Mr. Mazin continued to maintain the action in the Appellant’s name, taking no action until the dismissal motion was pending.

5. Mr. Mazin attempted to mislead both the Arbitrator and the Respondent when seeking an adjournment by stating that the formal administration of Mr. Maryasin’s estate was pending and would be shortly concluded, a statement he acknowledged as untrue. Counsel not only advanced a claim that was patently incapable of success, but in handling that claim he was clearly derelict in his duties as an officer of the court.

II. NATURE OF THE APPEAL AND SUBMISSIONS

The Appellant seeks an order in this appeal that:

1. The name of the claimant be amended to that of Faina Maryasin;

2. The Respondent return to Mr. Mazin the sum of $4,256.37 paid pursuant to the Arbitrator’s February 22, 2008 order;

3. The Respondent pay Ms. Maryasin and Mr. Mazin their legal expenses of the arbitration and of this appeal; and that,

4. The Arbitrator not preside over any further aspect of this proceeding.

The Appellant submits that the Arbitrator erred in finding that that there was no will in this case, a conclusion not supported by the facts. Rather, at the pre-hearing conference a will was presented by the Respondent that named Ms. Maryasin as the estate trustee and only beneficiary of the estate of Alexander Maryasin.

Accordingly, the Appellant submits that the Arbitrator erred in law in:

1. Ordering Mr. Mazin to pay legal costs on the basis he was representing a party that did not exist when the Arbitrator held that an estate trustee gets its existence and power from a will

or a court order and, in reality, Ms. Maryasin was the named estate trustee; and,

2. Failing to substitute Ms. Maryasin for the Appellant on the basis that Ms. Maryasin had not been confirmed as the deceased’s personal representative. The will evidenced that Ms. Maryasin was the executor of the estate; hence, there was no need to regularize the matter by appointing an estate trustee. Further, there was no real difference between the Estate of Alexander Maryasin, the trustee of the Estate and Faina Maryasin personally, as they were all effectively Ms. Maryasin. Ms. Maryasin should have been able, pursuant to the Arbitrator’s logic, to change the title of proceeding and, indeed, took steps to do so.

The Appellant further submits that the Arbitrator’s decision should be quashed as “an informed person would be caused to have a reasonable apprehension of bias,” for the following reasons:

1. The Arbitrator, on his own initiative at the July 20, 2007 case conference, stated that the Estate of Alexander Maryasin was not a proper party, it thus had no chance of success, the claim was hence frivolous and vexatious and the Respondent should seek its legal costs against Mr. Mazin personally;

2. The Arbitrator had a hostile demeanour and held ill feelings towards Mr. Mazin’s firm;

3. There were misstatements by the Arbitrator in his decision which might indicate that his mind was closed against Mr. Mazin;

4. The Arbitrator failed to note that Mr. Mazin wrote the Respondent on August 7, 2007 requesting that the proceeding continue in the name of Faina Maryasin;

5. The Arbitrator blocked out of his mind the will produced by the Respondent at the July 20, 2007 case conference; and,

6. The Arbitrator failed to properly note that Ms. Maryasin attended the November 23, 2007 motion, that she was away until November 2007 because she was depressed and that she wanted to amend the application for funeral and death benefits from the name of the Estate of Alexander Maryasin to her own, but that request was denied by the Arbitrator.

The Respondent submits that:

1. The Arbitrator noted that there was no evidence that Ms. Maryasin was the personal representative, executor or administrator of the estate. The appeal should be dismissed because it has been brought in the name of a non-existent entity and there has been no appeal of the Arbitrator’s finding that there was a void application;

2. In any event, the appeal should be dismissed because it does not identify any error of law;

3. The appeal is out of time, the Arbitrator’s Order being dated February 22, 2008; and,

4. The Respondent is entitled to its legal expenses, including its filing fee.

The Appellant replies, in part, that the Respondent should pay its legal costs for prolonging the

proceeding by not consenting to the proposed amendment. Mr. Mazin indicated that should a

cost award be made against Ms. Maryasin personally, he would be responsible for same.

III. ANALYSIS

Subsection 283(2) of the Insurance Act provides that a notice of appeal shall be in writing and shall be delivered to the Commission within thirty days after the date of the arbitrator’s order. The Arbitrator’s order was dated February 22, 2008. The Notice of Appeal was received by the Commission on March 14, 2008. The Notice of Appeal is not out of time.

Rule 68.1 of the Code provides that, subject to providing written notice to all parties of the intention to dismiss a proceeding, an adjudicator may dismiss a proceeding without a hearing where the proceeding is frivolous, vexatious or is commenced in bad faith.

Subsections 282(11.2) and (11.3) of the Insurance Act, R.S.O. 1990, c. I.8 provide that a barrister or solicitor acting in the usual course of the practice of law may be held personally responsible to pay all or part of the expenses awarded against a party if the arbitrator is satisfied either that:

• in respect of a representative of an insured person, the solicitor or barrister caused expenses to be incurred without reasonable cause by advancing a frivolous or vexatious claim on behalf of the insured person; or,

• the solicitor or barrister caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default.

The Arbitrator found as a fact that the Appellant had no claim for death benefits and that the funeral expenses were paid personally by Ms. Maryasin. Accordingly, the Arbitrator found that there were no expenses being claimed in the arbitration for which the Respondent could be found liable to indemnify the Appellant.

The Appellant’s oral submissions conceded that it had absolutely no claim for the death benefits or funeral expenses sought in this arbitration. The Appellant does not argue that the Arbitrator erred in dismissing its own (non-existent) claims. Rather, the Appellant argued that the Arbitrator erred in failing to amend the title of proceeding to have the claim continue in Ms. Maryasin’s name, in her personal capacity.

The Appellant argued that no motion was necessary for such an amendment. All that was required after filing an amended Application for Arbitration was for Mr. Mazin to confirm his authority to change the title of proceeding. Once Ms. Maryasin attended the November 23, 2007 motion to dismiss, it was unfair for the Arbitrator to place any further requirement on Mr. Mazin.

As noted above, the Arbitrator’s July 24, 2007 letter allowed Mr. Mazin until September 30, 2007 to take the necessary steps to amend the Application for Arbitration to properly reflect the claims and the identity of the claimants in this arbitration and the authority under which that part of the claim involving the estate of Mr. Alexander Maryasin was proceeding.

Neither the Code nor the Statutory Powers Procedure Act specifically addresses amendments to the initiating documents in arbitration once they are accepted into the adjudicative process.

Rule 26.02 of the Rules of Civil Procedure addresses when amendments may be made to a court pleading. Amendments may be made, without leave, before the close of pleadings, if the amendment does not include or necessitate the addition, deletion or substitution of a party to the action. Pursuant to this Rule, the Divisional Court in Streisfield v. Karnovsky (2005), 140 A.C.W.S. (3d) 93, in the context of adding a defendant, stated that:

… No authority exists to enable suing someone new without notice “over the counter”. Amending “over the counter” to sue someone new is expressly prohibited by Rule 26.02(1) unless the plaintiff has obtained one of two things: an order granting leave to sue someone new, or written consent from the existing defendants and the new person to be sued. The amendments constitute abuse of the Court’s process and they should be struck.

Rule 67 of the Code does address motions and orders within proceedings. Rule 1.1, the paramount rule of the Code, provides that these Rules are to be interpreted not merely to produce the quickest and least expensive resolution of the dispute, but also the most just resolution. Rule 67 specifically addresses fundamental requirements of fairness: the right to notice, the right to know the basis of the relief sought and the right to a reasonable period to respond.

The Appellant expressly conceded in oral submissions that it failed to bring a motion under Rule 67 of the Code to amend the title of proceeding herein. Rather, Mr. Mazin’s office simply wrote

the Case Administrator two separate letters on October 1, 2007.

One letter stated that Mr. Mazin’s firm “would like to amend the Application for Arbitration to change the name of the Applicant from Alexander Maryasin to Faina Maryasin.” Accompanying the letter was a copy of the first page of the initial Application for Arbitration with the first name “Alexander” crossed out and the name “Faina” printed in its place.

The second letter sent to the Case Administrator enclosed an original Application for Arbitration dated October 2, 2007 with “Faina Maryasin” named as the Applicant. However, this Application largely copied the body of the prior Application for Arbitration, including attendant care and medical claims that would appear to be personal to the deceased. The letter did not include payment of the requisite application filing fee set out in Section D of the Code, nor did it profess to be a fresh Application for Arbitration under section 25 of the Code. Rather, the second letter again stated that Mr. Mazin’s law firm wished “to amend the Application for Arbitration to change the name of the Applicant from Alexander Maryasin to Faina Maryasin.”

The letters the Case Administrator received were not noted as being copied to the Respondent or to the Arbitrator. There is, however, a third letter of October 1, 2007 from Mr. Mazin’s office in the Respondent’s motion record, similar to the second, but noted as copied to the Respondent’s counsel.

I am not persuaded that these “over the counter” requests, fourteen months after the Application for Arbitration was initially received by the Commission on August 4, 2006, complied with the Arbitrator’s July 24, 2007 letter that Mr. Mazin “take the necessary steps to amend the Application for Arbitration to properly reflect the claims and the identity of the claimants in this arbitration.”

Nor am I persuaded that the Respondent was automatically compelled to consent to the requested amendment. If the Respondent improperly or unnecessarily opposed a requested amendment, the Appellant’s remedy was legal expenses under Rule 75 of the Code, and specifically the criterion of Rule 75.2(e) therein. However, in this case, as noted, the requested amendment included attendant care and medical benefit claims for which it is difficult to discern that Ms. Maryasin, in her personal capacity, had any claim against the Respondent.

In the absence of any notice of motion served with any supporting documentation or any affidavit, sworn oral testimony or other supporting evidence properly put forward by the Appellant, and with the opposition of the Respondent, it is unclear how the Arbitrator could have changed the title of proceeding at the return of the motion to dismiss. I do not accept the Appellant’s submission that the onus was on the Arbitrator to satisfy himself of any concerns he might have by conducting his own cross-examination of Ms. Maryasin who was in attendance.

The Arbitrator did have discretion to stay the dismissal, pending Mr. Mazin rectifying his error as to the named claimant. However, the Arbitrator’s July 24, 2007 letter had given Mr. Mazin two months until September 30, 2007 to properly do just that. Mr. Mazin failed to take any appropriate action. Mr. Mazin then, additionally had another two months, until November 23, 2007, to bring a proper motion. He, again, failed to do so. Mr. Mazin did not request any additional time to remedy his error, being of the view that he had done all that was required of him.

The Arbitrator chose to exercise his discretion to dismiss the Application for Arbitration without prejudice to a new claim being commenced. The Appellant submitted that this prejudiced Ms. Maryasin with the additional delay and expense of further pre-hearings. It is unclear how this appeal, with the request to amend the Applicant’s name added as an afterthought (the appeal being initially limited to the expense award) was less expensive, prolonged or trying for Ms. Maryasin.

The Appellant has not argued that there was some other concern that would constitute a significant prejudice warranting the requested amendment. Rather, the Appellant argues that this appeal was necessary, in any event, regarding the award of legal expenses personally against counsel. It is not clear how the expense award prejudices Ms. Maryasin personally.

The Appellant is correct that there are two wills of Mr. Maryasin found in the Respondent’s

July 16, 2007 Arbitration Brief. The later will, dated August 29, 2004, names Ms. Maryasin as

“the Executor and Trustee of everything and all my belongings.” That does not, in my view, diminish, as conceded, that the Appellant has no claim against the Respondent for the benefits sought in this proceeding. Ms. Maryasin, in her personal capacity, is not the same person as the Appellant, Alexander Maryasin (the Estate of), and amending the claim as requested involved deleting one party and substituting another at an advanced stage of the proceeding that, as a fundamental right of fairness necessitated, in the absence of consent, a properly constituted motion.

No such motion having been advanced, the Appellant having had nearly four months to do so and having not requested any adjournment once Ms. Maryasin was contacted (and having been granted an extension for its written submissions), I am not persuaded that the Arbitrator erred in law in failing to amend the title of proceeding and allowing the arbitration to proceed under Ms. Maryasin’s name, in her personal capacity.

Regarding his award of legal expenses, the Arbitrator could have limited his discussion to finding, on the basis of paragraph 282(11.2)(c) of the Insurance Act alone, that Mr. Mazin, had “caused expenses to be incurred without reasonable cause,” by advancing a claim, as conceded, that had no chance of success and in failing, in a reasonable and timely manner, to correct this error. The Arbitrator’s further discussion regarding the absence of a will and Mr. Mazin advancing a frivolous and vexatious claim was not necessary.

The Respondent cites Allison and Markel Insurance Company of Canada (August 21, 1996, OIC P-001231), that:

An award of expenses is a matter within the discretion of the arbitrator, although the discretion must be exercised reasonably. Because the discretion is given to the arbitrator, it should not be interfered with lightly on appeal. The arbitrator is able to consider the evidence in totality, including observing and hearing any witnesses, and usually is in the best position to assess the merits of the case and the way it was handled by the parties. Generally, his or her determination should not be disturbed unless the party appealing the order can point to a serious error in the exercise of the discretion: for example, the arbitrator adopted a wrong approach, based the decision on irrelevant considerations or inadequate evidence, or failed to look at the merits of the individual case by inappropriately fettering his or her discretion.

While consistency of approach is important to the integrity and fairness of the dispute resolution system, there are bound to be shades of difference in individual arbitrators’ perspectives of the cases before them. Provided that the arbitrator has approached the discretion on a proper basis, his or her judgement should not be second-guessed merely on the basis that another arbitrator might have reached a different conclusion.

I am not persuaded that the Arbitrator committed a serious error or improperly approached or fettered his discretion. While the Arbitrator’s finding as to the absence of a will was incorrect, there was certainly an adequate basis to support an expense award against counsel personally pursuant to clause 282(11.2)(c) of the Insurance Act, the expenses of the arbitration proceeding having been were incurred without reasonable cause and further wasted by the default of counsel in taking proper remedial action.

Regarding the allegations of bias, in Kahkesh and Lloyd’s Non-Marine Underwriters, (OIC P‑000378, August 19, 1992), Director Sachs stated that “[b]ias on the part of an adjudicator against a party is a serious allegation. It should not be made lightly, nor as a catch-all ground for appeals.” The Director cited the Supreme Court of Canada in Newfoundland Telephone Company Limited v. Newfoundland (Board of Commissioners of Public Utilities), 1992 CanLII 84 (SCC), [1992] 1 S.C.R. 623 that:

… The test for bias, and the reasonable apprehension of bias … is whether, taking all considerations into account, the arbitrator closed her mind to being persuaded, or prejudged the issues so as to preclude the acceptance of representations to the contrary and denied a party a fair hearing.

In this case, I find that:

• The Arbitrator allowing the Appellant’s opposed adjournment request, on terms, is not consistent with an adjudicator having closed his mind to being persuaded, prejudging the issues or denying a fair hearing.

• Having as a term of the adjournment the “possible” award of expenses was not unreasonable or unfair. This “possible” term did not come from some personal whim but, rather, flowed as a term of the Appellant’s request for an indulgence, namely the adjournment of hearing dates set some six months prior.

• I do not have a transcript of the arbitration proceedings to determine the specific allegations as to what was said by the participants at these proceedings. I do have before me the Arbitrator’s July 24, 2007 letter that raises, in accordance with an arbitrator’s obligations under Rule 33 of the Code, relevant issues and concerns.

• There is an absence of contemporaneous correspondence taking issue with any actions of the Arbitrator at the July 2007 meeting or with the Arbitrator’s confirming July 24, 2007 letter, including the Arbitrator’s statement that Mr. Mazin initially advised that a grant of administration was imminent and later conceded that he was not involved in the appointment process or in the administration of the estate.

• The Arbitrator giving Mr. Mazin more than two months from his July 24, 2007 letter, to September 30, 2007, to take the necessary steps to amend the Application for Arbitration is inconsistent with an adjudicator having closed his mind to being persuaded, prejudging the issues or denying a fair hearing.

• The Arbitrator’s denial of the Respondent’s request at the November 2, 2007 pre-hearing to dismiss this arbitration with costs personally against Mr. Mazin on the basis of lack of formal notice being given by the Respondent and the serious consequences to the Appellant is inconsistent with an adjudicator having closed his mind, having prejudged the issues or having denied a fair hearing. Rather, it is consistent with the Arbitrator’s prior order that Mr. Mazin likewise take the proper steps, in his case, to amend the Application for Arbitration.

• Consistent with subsection 282(11.4) of the Insurance Act (that no expense order personally against a representative be made unless a reasonable opportunity is given to the representative to make representations), the Arbitrator put the dismissal motion over to a new date for the Respondent to bring a proper motion, to which the Appellant had an opportunity to respond both in written submissions and orally.

• The Arbitrator granting the Respondent an extension of the time to serve and file written submissions is inconsistent with an adjudicator who had closed his mind to being persuaded, had prejudged the issues or denied a fair hearing. The Appellant’s written submissions consisted of five paragraphs, focusing on Ms. Maryasin’s alleged state of mind and the confidence that the claimant in the Application for Arbitration was now correctly named.

• Notwithstanding its argument that the Arbitrator’s failure to mention his August 7, 2007 letter to the Respondent was evidence of bias, the Appellant failed to note this document in its written submissions.

• The Appellant also made no mention in its written submissions of any will. The Appellant spent considerable effort in this appeal proceeding in having the Respondent confirm what will was in fact before the Arbitrator on July 20, 2007. I am not persuaded that the Arbitrator’s error of fact following the November 2007 motion in finding that there was no will, same having been allegedly noted four months earlier, establishes bias.

Based on the above, I am not persuaded that the Arbitrator closed his “mind to being persuaded, or prejudged the issues so as to preclude the acceptance of representations to the contrary and denied a party a fair hearing” or that the Arbitrator’s decision should be rescinded based on bias.

Subsequent to the oral appeal hearing, I wrote the parties noting that subsection 282(11.2) of the Insurance Act begins as follows:

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 … [emphasis added]

My initial question to the parties was:

1. Is it a pre-requisite under subsection 282(11.2) of the Insurance Act that before an arbitrator, or an appellate adjudicator by virtue of subsection 283(7), may award expenses against a representative, an award of expenses must first be made against a party?

The Respondent cited Sebamalai and Nterekas and Royal & SunAlliance Insurance Company of Canada, (FSCO P06-00037, June 2, 2008) wherein I held that to give effect to the purpose of subsection 282(11.2), the words “personally pay all or part of any expenses awarded against a party” must include expenses that could have been held payable by an insured person or an insurer, but which were not necessarily so ordered. If not, an arbitrator would be required to make an expense award against a totally innocent insured person, who perhaps must remain jointly and severally liable for legal expenses, as a pre-requisite to an award being made against the legal representative. I further stated that:

Sullivan and Driedger on the Construction of Statutes, Fourth Edition (Ottawa: Butterworths, 2002), state at page 236 that encompassed in the “golden rule” is the presumption that “the legislature does not intend its legislation to have absurd consequences,” which includes “violations of widely accepted standards of justice and reasonableness.” Whenever possible, an interpretation that leads to absurd consequences should be rejected in favour of one that avoids absurdity, but no further. The more compelling the absurdity, the greater the departure from the ordinary meaning that is tolerated which, as set out on page 254, would include an expansive interpretation.

The Appellant submitted simply that a literal reading of subsection 282(11.2) of the Insurance Act requires as a prerequisite to awarding expenses against a representative, an award must first be made against the party being represented.

In this case, it is not clear why the then deceased Alexander Maryasin in whose personal name the arbitration was initially incorrectly brought by Mr. Mazin, or the deficiently and still incorrectly subsequently named claimant, Alexander Maryasin (the Estate of), should be found liable for the Respondent’s legal expenses. As for Ms. Maryasin, she has never been made a party to this proceeding in any capacity. In any event, Mr. Mazin, rightly, accepts responsibility for misnaming the claimant. Further, Mr. Mazin has asked, to his credit, that if the Respondent is found to be entitled to its legal expenses, he and not Ms. Maryasin should be liable for same.

I am not persuaded to depart from my reasoning in Sebamalai. My further questions to the parties pertained to the Divisional Court’s decision in Royal & SunAlliance Insurance Company of Canada v. Volfson, 2005 CanLII 38902, (leave to appeal denied April 18, 2006). The Court held that having a representative pay the expenses of innocent parties is a logical and necessary extension of the tribunal’s general control of its own process. Given my view as to the intent of subsection 282(11.2) of the Insurance Act, it is not necessary to address the more expansive power of adjudicators discussed in Volfson, in the context of this case.

In conclusion, I am not persuaded that the Arbitrator erred in law in finding the Respondent entitled to its reasonable legal expenses incurred in this misdirected arbitration proceeding. I am not persuaded that the Arbitrator erred in law in awarding legal expenses personally against counsel. The Arbitrator’s February 22, 2008 decision is, therefore, confirmed and the Notice of Appeal herein is dismissed.

IV. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Code.

November 6, 2009

Lawrence Blackman

Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.