Junior Weekes v. Certas Direct Insurance Company, 2009 ONFSCDRS 163

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 163

FSCO A07-000365

BETWEEN:

JUNIOR WEEKES

Applicant

and

CERTAS DIRECT INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: Arbitrator John Wilson

Heard: October 3, 2007 and June 12, 2008, at the offices of the Financial Services Commission of Ontario in Toronto

Appearances: Mr. Weekes on his own behalf

Sean A. Brown for Certas Direct Insurance Company

Judy Matthews for Mr. Gary Mazin (solicitor of record for Mr. Weekes)

Issues:

The Applicant, Junior Weekes claimed to have been injured in a motor vehicle accident on August 17, 2004. He claimed certain benefits from Certas Direct Insurance Company (“Certas”), but filed an Application for Arbitration when differences arose over the payment of that claim.

This decision arises out of the non-attendance of both Mr. Weekes and his then solicitor, Mr. Gary Mazin at an initial pre-hearing which took place on October 3, 2007.

The issue in this further hearing is:

By whom should the expenses incurred by Certas in respect of the arbitration pre- hearing be paid?

Result:

Mr. Mazin shall pay the expenses arising from the adjournment of the pre-hearing.

EVIDENCE AND ANALYSIS:

There is no dispute that an arbitration application was made in the name of Junior Weekes, filed by the Toronto law firm of Mazin Rooz and Mazin (formerly Mazin and Rooz). That application for arbitration listed Mr. Gary Mazin as counsel of record.

As in the usual course of an arbitration, the Application for Arbitration was forwarded to the named insurer Certas, for its response. A Response was duly filed by the law firm of Flaherty, Dow, Elliott & McCarthy, the solicitor acting on behalf of Certas in this matter.

Subsequently a case administrator would have contacted counsel for both parties to attempt to find a mutually agreeable date for a pre-hearing. In this case, the agreed pre-hearing was to be on October 3, 2007 at the offices of the Financial Services Commission in Toronto.

In the interim I was appointed as arbitrator pursuant to section 282(3) of the Insurance Act and requested to preside at the pre-hearing.

On arrival at the pre-hearing only Mr. Sean Brown, counsel for Certas and a representative for Certas were present. I noted that the arbitration file listed Gary Mazin, of the firm Mazin, Rooz and Mazin as counsel of record for the Applicant. There was no correspondence or notation on the file indicating that Mr. Mazin or his law firm had ever been removed as solicitor of record.

While I was unable to contact Mr. Weekes at the number contained in the arbitration file, I was able to contact Mazin Rooz and Mazin firm who denied that they had anything to do with Mr. Weekes’ case, and stated that they were no longer solicitor of record. Eventually however they sent an articling student, Mr. Meenaz Jaffer to the pre-hearing.

Needless to say, in the absence of both a client and a file, not to mention any first-hand knowledge of the claim, Mr. Jaffer was unable to do much more than explain his principal’s position that he had nothing more to do with Mr. Weekes’ claim.

At the time I wrote to the parties and counsel:

It was clear by this point that proceeding with the pre-hearing would be futile. Neither Mr. Weekes nor properly instructed counsel were present on his behalf. Consequently, I adjourned the pre-hearing sine die to deal with the issue of representation.

As a result, the pre-hearing scheduled for Mr. Weekes’ claim accomplished nothing. The presence of counsel for the Insurer and his client was quite simply redundant.

Mr. Brown, on behalf of Certas, claimed his client’s cost thrown away for the abortive pre-hearing. Mr. Brown also pointed out that Mr. Mazin’s failure to attend, and his failure to either advise the parties of his withdrawal as representative, or even to undertake the mandatory steps to withdraw as solicitor of record contributed to the time and resources wasted. Mr. Brown felt that consequently Mr. Mazin should bear responsibility for any award of expenses arising out of the pre-hearing.

I accepted Certas’ entitlement to expenses under the circumstances, but reserved on the question of by whom the costs should be payable. Mr. Mazin was also formally put on notice that he could be subject to an expense award personally, and was to be given an opportunity to make submissions as to his potential liability.

Since the failure to take the necessary steps to remove himself as solicitor of record was at the heart of the expense claim against Mr. Mazin, it is useful to review the framework of that procedure in an arbitration at the Commission.

The Dispute Resolution Practice Code (the “Code”) provides at Rule 9.7:

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

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

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

9.8 Where the party represented provides written consent to the representative’s request for withdrawal, the Registrar or an adjudicator shall permit the representative’s withdrawal. Otherwise, an adjudicator may permit the representative to withdraw, subject to such terms as the adjudicator considers just.

In this matter Mr. Mazin did not comply with any of the provisions of Rule 9.7.

The concept of “solicitor of record” of course originates in the court system which has defined the scope of a solicitor’s responsibilities under this rubric. Quinn J. commented in Mans v. State Farm Mutual Insurance Company¹:

The role of solicitor of record is an important one with numerous attendant obligations. Included is the obligation, when withdrawing from that role, to do so only upon proper grounds. This is especially important where, as is the situation here, a trial date is imminent.

Likewise Master Dash has made the following observations about the termination of the role:

That however is not the end of the matter. A lawyer should not be allowed to withdraw “at a critical stage of a matter or at a time when withdrawal would put the client in a position of disadvantage or peril.” This is another way of saying the withdrawal or the timing of the withdrawal should not materially prejudice the client.²

In this matter the nub of the controversy was not so much as to whether Mazin Rooz and Mazin could withdraw as counsel of record, but whether it was incumbent upon them to properly withdraw from the arbitration in a timely manner, earlier in the process, and on notice to the Commission and the opposing party so that unnecessary costs would not be incurred.

The secondary question, if such an obligation is found is whether Mr. Mazin, the solicitor of record should be responsible for costs incurred by the insurer in attending at a pre-hearing in the absence of either the applicant party or his representative.

The position of Mazin Rooz and Mazin is simple. They believed that they had been discharged by Mr. Weekes. That ended the matter for them. Mr. Weekes’ file was apparently relegated to the dead file storage, and they viewed their role in this arbitration as finished. As a result they professed to be surprised to hear from FSCO that they had been expected to attend at the pre-hearing.

Whatever Mazin Rooz and Mazin may have believed their status to be with regard to Mr. Weekes, it is clear from the record that:

Gary Mazin of Mazin Rooz and Mazin was the solicitor of record for Mr. Weekes, as shown in the application for arbitration.
There was no letter or other communication in the Commission’s file suggesting that Mazin Rooz and Mazin no longer represented Mr. Weekes.
The notices of pre-hearing were sent to Mazin Rooz and Mazin directly.
Mazin Rooz and Mazin were unable to show any communication from Mr. Weekes ending their relationship, nor any order removing them from the arbitration record.
FSCO was not advised of where and how Mr. Weekes could be reached.

The Law Society of Upper Canada, which regulates lawyers and paralegals in Ontario has also looked at the responsibilities of a solicitor in removing him or herself from the record in a matter.

Rule 2.08 and 2.09(9) of the Rules of Professional Conduct provide the following guidance:

2.08 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 legal practitioner.

2.09(9) Upon discharge or withdrawal, a lawyer shall

(a) subject to the lawyer’s right to a lien, deliver to or to the order of the client all papers and property to which the client is entitled,

(b) give the client all information that may be required in connection with the case or matter,

(c) account for all funds of the client then held or previously dealt with, including the refunding of any remuneration not earned during the representation,

(d) promptly render an account for outstanding fees and disbursements, and

(e) co operate with the successor legal practitioner so as to minimize expense and avoid prejudice to the client.

The Rules of Professional Conduct serve to frame the expectations of the public with regard to a lawyer in Mr. Mazin’s situation. They also set the minimum standards for the conduct of lawyers whether in court or before administrative tribunals. As Quinn, J. has commented:

It is unlikely that a court would countenance a lower standard of conduct than that defined by the discipline-threshold of the Law Society.³

The same comments would apply to the conduct of counsel in this arbitration forum as well.

In addition to any expense or costs powers accorded to an administrative tribunal, the failure of a solicitor to appear at a proceeding also potentially involves a tribunal’s contempt powers as well as its power to restrain an abuse of process.

Although in this matter there has been no suggestion that Mr. Mazin’s conduct in failing to attend the pre-hearing constitutes formal contempt⁴, some of the judicial commentaries under that heading underline the enhanced expectations of conduct placed upon members of the bar in the performance of their duties. Laskin, J.A.’s summary of the responsibilities of a lawyer before a tribunal are relevant:

Lawyers are officers of the court and a lawyer who undertakes to appear in court on behalf of a client at a specified time commits to being present at that time unless he or she takes the remedial steps called for in R. v. Anders (1982), 1982 CanLII 3320 (ON CA), 67 C.C.C. (2d) 138, 136 D.L.R. (3d) 316 (Ont. C.A.) (arrange for an adjournment, ask to be excused from attending or find substitute counsel) or unless some unforeseen event occurs. A lawyer’s ethical and professional obligation is the same whether the court attendance is for a murder trial or to speak to sentence or even to attend on a matter to be spoken to. But when determining whether to make a finding of contempt of court, I agree with Mr. Greenspan’s submission that the court should consider the consequences of failing to appear. The nature of the proceedings, delay, inconvenience to the participants -- jurors, witnesses, lawyers and judge -- prejudice to the client, wastage of court time and resources, and repetitious conduct may all be relevant in assessing the consequences of a lawyer’s non-attendance on the administration of justice.⁵

Given the absence of any allegations of contempt, it is perhaps appropriate to focus on the latter criteria outlined in Laskin, J.A.’s comments, namely “inconvenience to the participants — jurors, witnesses, lawyers and judge — prejudice to the client, wastage of court time and resources, and repetitious conduct.”

Not coincidentally such criteria are similar to the provisions of section 282(11.2) of the Insurance Act which deal with an award of costs or expenses against a counsel or representative:

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.

If, as the Insurer has suggested counsel of record for Mr. Weekes is to be required to pay its costs thrown away, it must be under one or more of the provisions of section 282.11.2, the most obvious of which would be whether he “caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default”.

While a literal reading of section 282.11.2(c) could result in costs being awarded personally in a great number of cases, the jurisprudence cautions us about such simple-minded application of the provision. Clearly the award of costs against counsel should not be the default. To do so would risk discouraging counsel from fearless advocacy on behalf of their clients.

The Supreme Court in dealing with a similar provision in the British Columbia court rules has observed:

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.⁶

Unlike the situation in both Young and Marchand (Litigation Guardian of) v. Public General Hospital Society of Chatham⁷ the reprehensible conduct being alleged on the part of the solicitor in this matter is not clearly linked to his actions on behalf of his client, or any obligation to “to bring forward with courage even unpopular causes”. Rather it is Mr. Mazin’s omission in failing to communicate to the Commission and the opposite party that he was withdrawing from the case that is at the heart of this dispute over costs. It is a failure or neglect that has little to do with his client, but everything to do with a failure to maintain a reasonable standard of practice before an administrative tribunal, and to follow the rules of practice set by that tribunal.

As a consequence however of Mr. Mazin’s failure to attend the pre-hearing, and his failure to provide the current contact numbers for Mr. Weekes, there was a risk that Mr. Weekes’ claim could have been dismissed out of hand. Indeed Certas had already initiated the dismissal process before Mr. Weekes took over the carriage of his own arbitration.

While there has been some discussion in the jurisprudence that a finding of bad faith might be a pre-condition for a cost order against a solicitor, recent caselaw in Ontario seems to suggest otherwise.

However, one of the situations in which such an award is appropriate is where one party to the litigation has behaved in an abusive manner, brought proceedings wholly devoid of merit, and unnecessarily run up the costs of the litigation: Shier v. Fiume (1991), 1991 CanLII 7188 (ON CTGD), 6 O.R. (3d) 759 Ont. Court, General Division);…Mr. Masters submits that before a lawyer can be found personally responsible for costs, there must be a finding he acted in bad faith or has been derelict in his duty to his client or the court, relying on the historic roots of the power to make such an order as articulated in cases such as Myers v. Elman, [1939] 4 All E.R. 484 (H.L.); R. & T. Thew Ltd. v. Reeves (No. 2), [1982] 3 All E.R. 1086 (Q.B.). While those cases still apply to a residual discretion in the court at common law to award costs against a solicitor, I do not believe that is the applicable test now in Ontario.⁸

Although there are two strains running through the jurisprudence on costs against solicitor, one of compensation of the wronged party and the other of punishment for some transgression of the solicitor, it is clear that in the absence of abuse of process or contemptuous conduct, compensation remains the dominant consideration in any award of costs or expenses.⁹

In this matter Mr. Brown claims costs thrown away by his client due to the failure of Mazin Rooz and Mazin to advise that they would not attend the pre-hearing, that they had no idea how to contact their client, and that they had taken no steps to withdraw as representative.

Had the solicitors taken the above steps, the pre-hearing could have been put over to a date and time when Mr. Weekes was available to attend, and no costs for preparation and attendance would have occurred. The linkage between the conduct of the solicitors and the costs thrown away is direct and compensatory.

Nor is it obvious that absent contempt or abuse by Mr. Weeke’s solicitor of record that Certas should have to absorb the additional costs occasioned by that solicitor’s neglect. Rather, the jurisprudence seems to suggest the contrary.¹⁰

Given that the phrase “caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default”, as used in section 282 (11.2) of the Insurance Act, specifically omits any reference to intention on the part of the solicitor,(an omission that that is concordant with the jurisprudence) it would seem clear that a solicitor’s liability for costs can also be based on negligent actions or omissions that fall below a standard of practice and that occasion expenses to be incurred.

Such an interpretation is consistent with the common law. Joseph Sayers in the second edition of his treatise on costs, observed:

Many “mistakes having been made by the plaintiff’s attorney in the “copy of a capias, a rule was made for him to shew cause why he should not pay to both plaintiff and defendant the costs occasioned by those mistakes.”¹¹

Such awards were not based on disgraceful conduct by the solicitor, but rather on negligence of a serious character which resulted in wasted costs to other parties.

It is notable that in at least one of the cases referenced by Sayers, the cost award against the solicitor was made in favour of both parties: that is the solicitor’s client and the opposing party. Presumably the court was reluctant to saddle a party to the litigation with the costs of errors arising directly from the conduct of the solicitor.

That same rationale for directing that a solicitor pay all or some costs personally is alive and well in contemporary jurisprudence.

A.W.D. Pickup J. in 2007, in a matter that resonates with White v. Washington¹², found as follows:

It is obvious from the materials filed by plaintiff’s counsel that the failures to file a memorandum resulted from errors and decisions for which plaintiff’s counsel was fully responsible and, therefore, in my view, it would be inappropriate to award costs against his client.¹³

Lawyers enjoy a privileged position within the legal system. Expectations of competency and responsibility flow from that position. To whom much is given, much is expected.

Although, presumptively, a party to an arbitration is responsible for any expense award, I believe that in this matter, the responsibility for the interim expenses expense award should rest with Mr. Mazin and not his client, Mr. Weekes.

Mr. Mazin was obliged to take the necessary steps to withdraw as representative before closing the file. He was required to advise FSCO and Certas of his desire to withdraw. He was required to provide an address and contact number for Mr. Weekes before withdrawing. He was required to attend any hearings and pre-hearings on behalf of Mr. Weekes until such time as he had obtained an order relieving him of his responsibilities as solicitor of record. He did none of the above.

From the point of view of causation, had Mr. Mazin taken appropriate steps to be removed from the record prior to the pre-hearing, Certas’ expenses for attendance would not have been incurred. Either the pre-hearing would have been rescheduled pending further contact with Mr. Weekes, or the Insurer could have taken steps to have the claim dismissed for abandonment had Mr. Weekes completely disappeared, as alleged by Mr. Mazin’s office.

As it is, Certas prepared for a pre-hearing which was not to take place, unaware that Mr. Mazin, and his office had information that would suggest that there could be no productive pre-hearing discussion.

Consequently, I find that the prime responsibility for the abortive pre-hearing rests with Mr. Weekes’ solicitor of record at the time, Mr. Mazin.

Mr. Brown filed a costs summary on behalf of Certas. Although the hours claimed seem consistent with the expectation of careful preparation for a pre-hearing, the hourly rate claimed by Mr. Brown is significantly in excess of the normal rate accorded to insurer’s counsel.

The Expense Regulation uses the term “expenses” instead of the more usual word “costs” in the context of a reimbursement of legal expenses incurred by a party to an arbitration. While the word “costs” generally refers to the practice of providing an allowance to a successful party, based on known scales or tariffs, to indemnify him or her for some of the expenses incurred, “expense” seems to have a more simple meaning. The Canadian Oxford Dictionary defines “expense” as:

cost incurred; payment of money. 2a. costs incurred in doing a particular job etc. (will pay your expenses) b. an amount paid to reimburse this....

Clearly, the legislature in using the word “expense” meant to indemnify a party for its actual incurred expenses up to any statutory limit.

While expenses are meant to be compensatory, and while Mr. Brown’s actual rate charged to his client may well exceed the $200 per hour claimed, the provisions of the Code would suggest that for the purposes of an expense order, Mr. Brown may only claim reimbursement to his client up to the current legal aid tariff.

Rule 78 of the Code provides for maximum amounts to be allowed for legal services, based on the legal aid tariff, and an exception for experienced applicant’s counsel, limits on the fees to be charged by expert witnesses for reports, and for the transportation and preparation of expert witnesses.

The limits with regard to legal fees themselves no longer form part of either the primary or subsidiary legislation. They exist, rather, as a presumptive guideline, subject to the ultimate discretion of the arbitrator to set aside under the wide-ranging provisions of Rule 81. There is no such flexibility permitted, however, with regard to charges for expert testimony and reports whose amounts are still fixed by regulation.

There must however be a compelling reason to exercise the discretion under Rule 81, and to go beyond the expectations of parties and counsel as set out in the Code. In this matter I have been provided with no such compelling reason to provide the Insurer with either a full or partial indemnity for its costs. Consequently, the rate at which Mr. Brown is entitled to bill for expense purposes remains the default — that is the legal aid tariff.

Consequently I will fix the expenses payable at $600 inclusive of GST, which is an approximation of Mr. Brown’s Bill of Costs at legal aid rates.

I order that pursuant to section 282 (11.2) of the Insurance Act, Mr. Mazin pay that amount to Certas as its expenses thrown away. The order will be payable forthwith in any event of the cause.

Since Mr. Weekes is continuing this matter as a self-represented party, it goes without saying that he, rather than his former solicitor will be responsible personally for any further expense orders that may be made against him.

November 23, 2009

John Wilson

Arbitrator

Date