Farhat Abbas v. Security National Insurance Co./Monnex Insurance Mgmt. Inc., 2009 ONFSCDRS 175

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 175

FSCO A07-000374

BETWEEN:

FARHAT ABBAS

Applicant

and

SECURITY NATIONAL INSURANCE CO./

MONNEX INSURANCE MGMT. INC.

Insurer

and

ALON ROOZ

MOTION FOR SUMMARY JUDGEMENT

ON EXPENSES

Before: Edward Lee

Heard: Written submissions received by October 5, 2009 and a telephone conference call held on October 16, 2009

Appearances: Alon Rooz for himself

No one appeared for Mr. Abbas

Alexander Lempp for Security National Insurance Co./ Monnex Insurance Mgmt. Inc.

The Applicant, Farhat Abbas, claimed statutory accident benefits under the Schedule.¹ In a decision dated October 1, 2008, I dismissed his claim, and found that Security National Insurance Co./Monnex Insurance Mgmt. Inc. was entitled to its expenses.

On October 28, 2008, the Financial Services Commission of Ontario received a request from counsel for Security National Insurance Co./Monnex Insurance Mgmt. Inc. (“Security National”) for a hearing on the issue of expenses, and an order requiring Mr. Abbas’ representative to personally pay all or part of the expenses awarded to Security National.

Issue:

This is a motion for summary judgment dismissing Security National’s request for an order requiring Mr. Rooz to personally pay all or part of any expenses awarded against Mr. Abbas.

Result:

Mr. Rooz’ motion is granted. The Insurer’s request for an order that Mr. Rooz be personally liable to pay all or part of any expenses awarded against Mr. Abbas is dismissed.

Proceedings:

An expense hearing was scheduled for October 16, 2009. I directed Security National to file all material on which it intended to rely no later than August 21, 2009. Mr. Abbas was to file his response by September 18, 2009, and Security National would be permitted to reply no later than October 2, 2009.

Security National filed its submissions on August 21, 2009, seeking expenses of the hearing as well as expenses personally against Mr. Alon Rooz. Security National also requested that Mr. Rooz be added as a party to these proceedings.

Mr. Rooz responded on September 15, 2009, consenting to his inclusion as a party. He also submitted his own affidavit² and the affidavit³ of Mr. Arvin Gupta, an associate of his firm. Further, Mr. Rooz argued that before I proceed to make any order regarding the quantum of expenses, I first hear his motion for summary judgement, and dismiss Security National’s request for an order requiring Mr. Rooz to personally pay any expenses awarded against Mr. Abbas. He pleaded that I should make this determination before it became necessary for Mr. Abbas to go to the expense of retaining new counsel, and his (Mr. Rooz’) being forced to disclose privileged solicitor-client information. Based on the materials filed by Security National, Mr. Rooz argued that there was no case for him to meet.

Security National replied on October 2, 2009, and argued that Mr. Rooz was now in a conflict of interest because he had consented to being added as a party.

Mr. Rooz then made further written submissions on October 5, 2009. Although no allowance had been provided for those arguments, I received and considered them, given that Security National reversed its own position in its pleadings in regard to Mr. Rooz’ party status.

EVIDENCE AND ANALYSIS:

Security National claims that it is entitled to an order requiring Mr. Rooz to personally pay all or part of the expenses awarded against his client, Mr. Abbas. The basis for any finding of liability on the part of a representative for costs is found in section 282 of the Insurance Act.

282(11.2) Liability of representative for costs

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.

282(11.3) Non-application to solicitors

Clause (11.2) (a) does not apply to a barrister or solicitor acting in the usual course of the practice of law.

282(11.4) Opportunity to make representations

An order under subsection (11.2) shall not be made unless the representative is given a reasonable opportunity to make representations to the arbitrator.

Is Mr. Rooz in a Conflict of Interest?

In its submission of October 2, 2009, Security National argued that allowing Mr. Rooz to be a party to this proceeding would place Mr. Rooz in a conflict with Mr. Abbas “... as either of them is responsible to pay costs to Security National.”⁴ Security National added that Mr. Abbas needed to be advised of this conflict. Nevertheless, Security National’s previous submission of August 21, 2009 had explicitly requested that I add Mr. Rooz as a party to these proceedings: “As such we ask that Mr. Rooz himself be added to as a party to this arbitration as has been previously ordered by the Commission in the cases of Zapisnoy, Luskin and various others.”⁵

Section 282(11.4) of the Insurance Act states that no order under section 282(11.2) shall be made unless the representative is given a reasonable opportunity to make representations before the arbitrator.

Further, the Director’s Delegate made the following statement in the decision of Jadavji and Security National Insurance Co./Monnex Insurance Mgmt. Inc.:

In Mazin, I was not persuaded that it was:

… in the interests of justice that there must be a blanket barrier to appeals by legal representatives when expense awards have been made personally against them. However, the appellate officer, in controlling the proceedings under section 23 of the SPPA, has the right to decide what, if any, evidence may be admitted from the representative and what submissions may be advanced, without improperly compromising the representative's duty to his or her present, or former, client [emphasis mine].⁶

Given section 282(11.4) of the Insurance Act and the ruling noted above, I am prepared to allow Mr. Rooz to present evidence and to make submissions at this stage of the proceedings. I do not find that in presenting his motion for summary judgement, Mr. Rooz is in a conflict of interest with Mr. Abbas. I do not find he has improperly compromised any duty to Mr. Abbas.

Motion for Summary Judgement:

Mr. Abbas is represented by the firm of Mazin Rooz Mazin. Alon Rooz had carriage of the file at the commencement of his claim. Arvin Gupta appeared for Mr. Abbas at the hearing before me in June 2008.

Security National’s arguments:

Security National submits that Mr. Rooz should be held personally liable for the expenses awarded against Mr. Abbas for reasons which I have summarized broadly as follows:

First, Security National argues that Mr. Rooz has had no instruction from Mr. Abbas since November 2006. Mr. Rooz thus decided on his own volition to proceed to arbitration, and by doing so, prolonged the hearing despite repeated requests from Security National that he withdraw from the record.

Second, Security National argues that because Mr. Abbas did not attend at the hearing, his case had no chance of success. Without Mr. Abbas’ oral evidence, his claim could not succeed, and this amounted to a vexatious or frivolous proceeding.

Third, Security National argues that Mr. Rooz did not have instructions to commence and continue the arbitration. He also did not communicate the possible cost consequences of the proceeding to Mr. Abbas. Therefore, Mr. Rooz acted under his own volition, and as such, he was not acting in the usual course of the practice of law, which precluded him from the immunity of section 282(11.3) of the Insurance Act.

Finally, Security National argues that Mr. Rooz caused expenses to be incurred without reasonable cause by proceeding without the authority of his client, and Mr. Rooz failed to comply with an undertaking to produce Mr. Abbas and the housekeeper as witnesses at the hearing.

Mr. Rooz’s arguments:

Mr. Rooz argues that the governing principles in awarding costs personally against a lawyer were set out in the Supreme Court decision of Young v. Young:

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 … 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. [emphasis mine]⁷

Mr. Rooz also argues that Security National adduced no evidence in support of its case. The only evidence before me in this matter were the affidavits of Mr. Rooz and Mr. Gupta. Therefore the allegations brought against Mr. Rooz were unsupported and could not be viewed as other than mere speculation.

ANALYSIS:

I find that Security National can only succeed in this matter if it demonstrates that Mr. Rooz’ conduct has fallen within section 282(11.2) of the Insurance Act.

In this case, Security National adduced no evidence. Much of Security National’s argument is based on speculation. The only evidence in regard to instructions received from Mr. Abbas was found in Mr. Rooz’ letter⁸ of November 20, 2007, addressed to Arbitrator Feldman. It contained the following statement: “We have not received fresh instructions from the client contrary to the instructions to pursue the matter in Arbitration;”.

Security National argued that this statement meant that Mr. Rooz had not received instructions from Mr. Abbas since November 2007, but I do not find that this is necessarily true. The letter makes no proof of what transpired since November 2007. Further, bearing in mind the caution of the Supreme Court in Young, I am not convinced that this statement in itself is insufficient as a mandate to conduct an arbitration on behalf of a client. Finally, I note that paragraph 5 of Mr. Rooz’s affidavit⁹ reads as follows: “At all material times with respect to this arbitration preceding I acted on instructions given to me by my client, Mr. Abbas.”

Therefore, I am not convinced that Mr. Rooz acted without authority during the proceedings.

Second, I am not convinced that Mr. Abbas’ absence at the hearing guaranteed his claim would fail. I am also unconvinced that a claim where an applicant does not attend amounts to a frivolous or vexatious proceeding. It is trite to say that every case is specific to its own facts, but it strikes me that there may indeed be situations where an applicant does not attend at his hearing but still succeeds. Nor does it seem absolutely necessary that an applicant testify at his own hearing. In some cases, the medical evidence presented at a hearing might allow an applicant to succeed despite his absence or silence. Therefore, I do not accept Security National’s blanket suggestion that the case was frivolous and vexatious merely because Mr. Abbas did not attend his hearing.

Security National also argued that Mr. Rooz’ failure to comply with an undertaking to produce Mr. Abbas and the housekeeper caused expenses to be incurred without reasonable cause or to be wasted. At the hearing of June 2008, I drew an adverse inference against Mr. Abbas based upon his and the housekeeper’s absence. Instead, Dr. Polyvos, a chiropractor, attended and testified on Mr. Abbas’ behalf. Had Security National presented no medical evidence, the case might have been determined in Mr. Abbas’ favour. Therefore, I am not convinced that Mr. Rooz’ inability to satisfy his undertakings somehow caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default. Nor was there any evidence to suggest that the absences of Mr. Abbas or the housekeeper were in any way attributable to the actions of Mr. Rooz or Mr. Gupta.

Finally, Security National argued that Mr. Rooz should not be permitted to benefit from the immunity clause of Section 282(11.3) of the Insurance Act, because he acted on his own volition to conduct or commence the proceeding, and failed to advise Mr. Abbas that he might be liable to pay all or part of the expenses of the proceeding. Given my findings on the facts, it is not necessary for me to consider this argument.

CONCLUSION:

I find that Mr. Rooz has no case to meet. Mr. Rooz’ motion is granted. The insurer’s request for an order that Mr. Rooz be personally liable for any or all of the expenses that might be awarded against Mr. Abbas is dismissed.

December 23, 2009

Edward Lee

Arbitrator

Date