Niaze Tibi v. Economical Mutual Insurance Company, 2011 ONFSCDRS 30

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2011 ONFSCDRS 30

FSCO A09-001695

BETWEEN:

NIAZE TIBI

Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY

Insurer

REASONS FOR DECISION

Before: Judith Killoran

Heard: January 13, 2011. Written submissions were received on January 17, 2011.

Appearances: Mr. Tibi did not appear and no one appeared on his behalf

Lori Sprott for Economical Mutual Insurance Company

Issues:

The Applicant, Niaze Tibi, was involved in a motor vehicle accident on April 3, 2007. He applied for statutory accident benefits from Economical Mutual Insurance Company (“Economical”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Tibi applied for arbitration 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. Tibi’s application be dismissed without a hearing pursuant to Rule 68 of the Dispute Resolution Practice Code?
Is Mr. Tibi liable to pay Economical’s expenses pursuant to subsection 282(11) of the Insurance Act?

Result:

Mr. Tibi’s Application for Arbitration is deemed withdrawn pursuant to Rule 70 of the Dispute Resolution Practice Code.
Mr. Tibi shall pay Economical’s expenses of $1712.63, inclusive of HST.

CHRONOLOGY:

On October 20, 2008, the Report of Mediator was released.
On July 3, 2009, Mr. Tibi’s Application for Arbitration was received by the Commission.
On May 13, 2010, a Notice of Rescheduled Prehearing was issued.
On July 13, 2010, the Prehearing was conducted before me. Mr. Tibi did not attend the prehearing discussion. Mr. Tibi’s counsel, Mr. Domenic Romeo, requested that his firm be removed from the record as Mr. Tibi’s counsel.
As Mr. Romeo complied with the requirements of Rule 9 of the Dispute Resolution Practice Code (“DRPC”) and documented his attempts to contact Mr. Tibi, all of which were unsuccessful, I ordered that the Mr. Romeo and the law firm of Romeo Pitaro be allowed to withdraw as representatives of Mr. Tibi.
The Commission issued a Notice of Motion to Mr. Tibi returnable on January 13, 2011 which was couriered to Mr. Tibi.
On January 7, 2011, Economical filed its motion materials for the dismissal of the Application for Arbitration.
Mr. Tibi did not object to the dismissal of the Application for Arbitration, as required by Rule 68.3 of the DRPC.

EVIDENCE AND ANALYSIS:

On January 13, 2011, I began the hearing. As Mr. Tibi was not present, I adjourned the hearing for thirty minutes and further attempts were made to contact Mr. Tibi.

Mr. Tibi did not appear. I proceeded with the hearing and Economical presented its submissions in support of dismissal. I find that Mr. Tibi had notice of all proceedings at the Commission. Also, I find that he received a copy of Economical’s motion record on or about January 7, 2011, as required by Rule 7.3(b) of the DRPC.

Economical submits that Mr. Tibi’s failure to attend any of the proceedings, despite notice, is a failure to participate in the process so that the test is met for dismissal of his application, as set out in Rule 68 of the DRPC.

Two approaches have been taken by arbitrators when dealing with the issue of abandoned proceedings. Those in which proceedings are dismissed without a hearing rely on Rule 68 and others rely on the principle of “deemed” or “constructive withdrawal” under Rule 70.3. Both approaches are an attempt to interpret the rules consistent with Rule 1.1 which calls for a broad interpretation designed to achieve the most just, quickest and least expensive resolution of disputes.

Rule 68.1 states the following: “Subject to Rule 68.2, an adjudicator may dismiss a proceeding without a hearing where the proceeding is frivolous, vexatious or is commenced in bad faith.” Rule 68.2 requires the adjudicator to deliver written notice to all parties of the intention to dismiss under Rule 68.1. Rule 68.3 allows a party to object to the dismissal of the proceedings.

Rule 68 mimics subsection 4.6(1) of the Statutory Powers Procedure Act² (“SPPA”) which allows for the dismissal of a hearing where the proceeding is frivolous, vexatious or is commenced in bad faith.

The phrase “frivolous, vexatious or brought in bad faith” is not defined in the Insurance Act, the Schedule, the DRPC and the SPPA. However, I agree with caselaw which has set a high threshold for a finding of “frivolous, vexatious or brought in bad faith” and more specifically, I am persuaded by the reasoning in Fedoseev and RBC General Insurance Company³ where the arbitrator found that the threshold is necessarily high as dismissal of a claim without a hearing extinguishes a party’s rights.

No evidence has been presented to me to establish that Mr. Tibi’s unexplained absences from the proceedings merit a finding that his claim is “frivolous, vexatious or brought in bad faith”. However, Mr. Tibi’s failure to participate has interfered with the dispute resolution process.

In the absence of a rule which deals with abandoned claims, Rule 70, the rule respecting withdrawal, provides an alternative. Rule 70.3 provides an arbitrator with the authority to permit a withdrawal on such terms and conditions as the arbitrator considers just.

I find that Mr. Tibi has withdrawn from the process as he has not communicated with his counsel earlier in the process and he has not participated in any of the proceedings. This result allows the Commission to close its file, Economical may conclude that further proceedings are unlikely and Mr. Tibi’s claim is not extinguished. This broad interpretation of Rule 70 is consistent with the mandate that the rules should be interpreted to produce the most just, quickest and least expensive resolution of the dispute.

EXPENSES:

Economical submitted that it should recover its reasonable expenses and disbursements of the arbitration proceeding in the total amount of $1,787.00.

An arbitrator’s authority to award expenses is established by subsection 281.1(11) of the Insurance Act R.S.O. 1990, c.I.8, as amended. As referred to in Rule 75 of the DRPC, the criteria for an award of expenses are set out in Ontario Regulation 664, R.R.O. 1990. In the case before me, the relevant criteria in determining an award of expenses are each party’s degree of success; whether there were novel issues raised in the proceeding; the conduct of a party or a party’s representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders; whether any aspect of the proceeding was improper, vexatious or unnecessary.

In the case before me, Mr. Tibi did not participate in the dispute resolution process. He did not appear for either the pre-hearing or the hearing. Economical was required to respond to his Application for Arbitration by attending at both proceedings and filing submissions.

Economical filed extensive submissions in support of its position that it is entitled to its legal fees in the amount of $1,618.73, inclusive of HST, and disbursements of $93.90, inclusive of HST. Economical also claimed a total of 74.40 for travel and parking.

I find that Economical is entitled to the total amount of legal fees and disbursements claimed which is $1,712.63. I do not find that Economical is entitled to its travel and parking costs as they are not specifically referred to as compensable in the applicable legislation and also, Mr. Tibi should not be liable for extra legal expenses because the insurer has retained out-of-town counsel.

March 25, 2011

Judith Killoran Date

Arbitrator