Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2010 ONFSCDRS 68

FSCO A03-000701

BETWEEN:

BALTAR SINGH DHUGA

Applicant

and

ZURICH NORTH AMERICA CANADA

Insurer

DECISION ON A MOTION

Before: Robert A. Kominar

Heard: April 8, 2010, at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions were received on April 8, 2010.

Appearances: No one appearing for Mr. Dhuga Jennifer Griffiths for Zurich North America Canada

Issues:

The Applicant, Baltar Singh Dhuga, was injured in a motor vehicle accident on May 15, 2001. He applied for statutory accident benefits from Zurich North America Canada (“Zurich”), payable under the Schedule. Zurich denied entitlement to accident benefits based on its view that Mr. Dhuga was injured in the course of his employment and was covered by the terms of the Workplace Safety and Insurance Act, 1997 (WSIA). Mr. Dhuga denied that he was in the course of employment when the accident happened. The parties were unable to resolve their disputes through mediation, and Mr. Dhuga applied for arbitration of accident benefits 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. Dhuga’s claim for automobile accident benefits be dismissed?
Is Zurich entitled to expenses, and if so in what amount?

Result:

Mr. Dhuga’s claims for accident benefits in this arbitration are dismissed.
Zurich is entitled to its expenses in the arbitration in an amount to be agreed upon by the parties. If the parties cannot agree on the quantum of expenses within 30 days of the date of this decision, an expense hearing can be arranged for their assessment.

EVIDENCE AND ANALYSIS:

This matter originally came before me as an arbitration pre-hearing on September 18, 2003. At that time Zurich put forward its position that Mr. Dhuga was in the course of his employment when the automobile accident occurred in the state of Kentucky and therefore that he ought to be seeking benefits under the WSIA and seeking to resolve any disputes related to those benefits before the Workplace Safety and Insurance Tribunal (WSIAT). At that time Mr. Dhuga was represented by a paralegal agent. The original pre-hearing was adjourned on consent to allow Zurich to follow up further on the issue of whether this matter should be heard at FSCO or WSIAT.

As a result of further investigation into the circumstances surrounding the accident, Zurich advised in correspondence dated January 26, 2004 that it was bringing an application pursuant to section 31 of the WSIA to extinguish any right Mr. Dhuga may have to proceed with a tort claim as a result of this accident. This section reads as follows:

Decisions re rights of action and liability

(1) A party to an action or an insurer from whom statutory accident benefits are claimed under section 268 of the Insurance Act may apply to the Appeals Tribunal to determine,

(a) whether, because of this Act, the right to commence an action is taken away;

(b) whether the amount that a person may be liable to pay in an action is limited by this Act; or

Same

(2) The Appeals Tribunal has exclusive jurisdiction to determine a matter described in subsection (1).

Finality of decision

(3) A decision of the Appeals Tribunal under this section is final and is not open to question or review in a court.

Claim for benefits

(4) Despite subsections 22 (1) and (2), a worker or survivor may file a claim for benefits within six months after the tribunal’s determination under subsection (1).

Extension of time

(5) The Board may permit a claim to be filed after the six-month period expires if, in the opinion of the Board, it is just to do so. 1997, c. 16, Sched. A, s. 31.

The necessary logical inference to be drawn after taking this action, Zurich argued, was that, if it was successful in taking away any right which Mr. Dhuga had to pursue a tort claim, any associated right to claim automobile accident benefits would be extinguished as well by operation of law. This inference was premised on the fact that the Schedule makes it perfectly clear that accident benefits are potentially available only to a claimant who may be entitled to workers compensation benefits if that person bona fides chooses to pursue a tort action pursuant to section 76 of the Schedule.

Subsequent to Zurich’s notification that it was bringing such an application before WSIAT, Mr. Dhuga and his paralegal representative terminated their professional relationship. Thereafter, Mr. Dhuga requested various adjournments of the arbitration proceeding at the Commission, as well as at WSIAT, while he was attempting to retain new legal representation. More than one lawyer has since advised the Commission that they had been contacted by Mr. Dhuga, or were retained by him to provide some form of service. However, to date, no legal representative has got on the record in this arbitration on behalf of Mr. Dhuga. In fact, it is fair to say that all legal representatives who have contacted the Commission in this matter have advised that they did not represent Mr. Dhuga in these proceedings.

At some point in time WSIAT determined that it would move forward with hearing Zurich’s application and a decision was ultimately rendered on November 22, 2007 by Vice Chair Linda Gehrke. I am advised that Mr. Dhuga did retain the services of a lawyer afterwards and requested a reconsideration of his case by WSIAT. That process ended with a decision, dated December 5, 2008, by WSIAT Tribunal Chair, Ian J. Strachan, denying Mr. Dhuga’s request to have the matter reopened at WSIAT. The effect of Mr. Strachan’s decision was to bring an end to the parties’ proceedings at WSIAT. I have not been advised that any other proceedings related to WSIAT’s decision have been initiated by Mr. Dhuga and clearly section 31.3 of the WSIA makes it clear that the tribunal’s decision is final.

Vice Chair Gehrke determined that Mr. Dhuga was, in fact, in the course of his employment when the accident happened in the State of Kentucky and further that Mr. Dhuga had no right of action against the defendants he hoped to sue. Nor did his spouse have family law damage claims against those defendants. What Mr. Dhuga did potentially still have was a right to claim workers compensation benefits. Ms. Gehrke clearly advised Mr. Dhuga in her decision that his rights to claim those benefits were not foreclosed, however she also noted that there is a limitation period for asserting such a claim within six months of the date of her decision being released. I have no knowledge whether Mr. Dhuga ever claimed benefits pursuant to WSIA.

On August 13, 2008, I received correspondence from Ms. Griffiths advising that her discussions with Mr. Dhuga’s recently retained legal counsel led her to believe that the parties had resolved the automobile accident benefit claims in dispute, subject to Mr. Dhuga’s executing the required settlement documentation. However on September 30, 2009, Ms. Griffiths wrote again to advise that no settlement was actually finalized and further that Mr. Dhuga’s most recent legal counsel was no longer representing him on any matters.

As a result of all of this, Zurich seeks an order dismissing the arbitration based on the effect of the rulings of WSIAT. On March 25, 2010, I wrote to Mr. Dhuga, and to the last legal representative which FSCO had any knowledge of, advising him that Zurich has applied to have the arbitration dismissed on the basis of it being frivolous and or vexatious pursuant to Rule 68 of the Dispute Resolution Practice Code. In that letter I stated that prior to my ruling on Zurich’s request I was allowing 20 days for submissions as to why I should not consider dismissing this application as required by the Code.

The Commission received correspondence dated April 8, 2010 from Mr. Dhuga’s last known legal counsel advising that he does not, nor has he ever represented Mr. Dhuga on any matters before the Commission. Mr. Dhuga has not responded to my correspondence. I am satisfied that he was notified at the last known address which the Commission has recorded for him.

The interaction between automobile accident benefits and workers compensation benefits is clear. As I have said before, there is no “election” between these two statutory schemes. What is available, in some cases, is for an individual to elect to pursue an action in tort where that is available. In such situations, provided that the primary purpose for the decision to pursue an action is not to collect accident benefits, automobile accident benefits may be payable. Such individuals must assign any entitlement to workers’ compensation to the auto insurer, etc.

The final result of this situation is that Zurich’s submissions are correct in my view. Given that WSIAT has the sole authority to determine whether Mr. Dhuga has the ability to “opt out” of that system and sue as a result of his automobile accident, the decision of Ms. Gehrke, confirmed on review by Mr. Strachan, is conclusive. Mr. Dhuga has no right to maintain an action arising out of this accident. As the Schedule opens the door to the possibility of claiming accident benefits only to those who bona fides bring an action for damages, there is no logical possibility for Mr. Dhuga to succeed in this arbitration. His remedy, if any, is in the Workers’ Compensation system, as Ms. Gehrke pointed out to him in her decision.

Rule 68 of the Dispute Resolution Practice Code allows an arbitration to be dismissed if it is found to be “frivolous, vexatious or commenced in bad faith.” The Oxford English dictionary defines “vexatious” as “not having sufficient grounds and seeking only to annoy the defendant.” To be frivolous according to Merriam Webster is to have “no sound basis.” Following on the decision of WSIAT, there is no reasonable basis for this arbitration to continue, if there ever was. It is clear that Zurich continues to incur transaction costs as they try to bring this matter to a close. In my view, it is unreasonable to expose the Insurer to the incremental accumulation of legal costs in a case that it cannot lose. In the circumstances, I believe that it is reasonable to say that an ultimate award of expenses against Mr. Dhuga is an appropriate response to the situation. Beyond that, Mr. Dhuga has had a history of not participating meaningfully in these proceedings, either personally or through a legal representative. He has been provided with ample opportunity to find a lawyer or paralegal to assist him, and he has not done so. Nor has he personally maintained contact with the Commission. This leads me to the conclusion that he has de facto abandoned this arbitration proceeding, which in my view supports a finding that the proceeding is now also vexatious.

In conclusion, I find that Mr. Dhuga’s claims for accident benefits should be dismissed. I am further satisfied that Zurich is entitled to its reasonable expenses in the arbitration. The parties are encouraged to attempt to resolve the issue of quantum of expenses within 30 days of the date of this decision. If they cannot do so I remain seized of the matter and shall assess them at Zurich’s request.

May 28, 2010

Robert A. Kominar Arbitrator

Date