Financial Services Commission of Ontario
Neutral Citation: 2012 ONFSCDRS 75
FSCO A11-000896
BETWEEN:
CORINNE WARREN HANCOCK Applicant
and
RBC GENERAL INSURANCE COMPANY Insurer
REASONS FOR DECISION
Before: John Wilson
Heard: March 3, 2012, at the offices of the Financial Services Commission of Ontario in Toronto
Appearances: Michael Wentzel for Ms. Hancock Donata Di Iorio for RBC General Insurance Company
Issues:
The named Applicant, Corinne Warren Hancock, was injured in a motor vehicle accident on February 18, 2009. She applied for statutory accident benefits from RBC General Insurance Company (“RBC”), payable under the Schedule.1 Ms. Hancock died of causes unrelated to the accident on August 14, 2010.
The parties were unable to resolve their disputes through mediation, and Mr. Wentzel applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended in the name of the late Ms. Hancock, without mentioning her demise.
An Application for Arbitration was filed with FSCO. It was stamped as received on March 22, 2011. The Application lists a claim for non-earner benefits, housekeeping and home maintenance expenses for two years post-accident, a period after the death of Ms. Hancock.
The Application for Arbitration is signed by a squiggle that commences in the Applicant’s signature box and finished in the box for the Representative’s signature. At the hearing which took place on November 18, 2011, Mr. Wentzel acknowledged this mark as his signature.
Following the hearing of a motion to dismiss, I issued the following orders:
On the basis of the evidence before me, the arbitration brought in the name of Ms. Hancock is a nullity, as it was brought by an agent without any specific authorization from anyone authorized by law to bind the estate of the late Ms. Hancock.
I reserve on any final determination of expenses to allow Mr. Scott Warren an opportunity to make submissions if so advised.
The issues in this hearing are:
Should this arbitration be finally dismissed for having been brought without authority?
Should Mr. Wentzel, the paralegal who brought this action be held personally responsible for RBC’s expenses?
Result:
This arbitration is dismissed.
Mr. Wentzel is responsible for RBC’s expenses in this matter.
EVIDENCE AND ANALYSIS:
As noted above, I reserved on the final disposition of this matter to give Ms. Hancock’s son an opportunity to either take corrective action on behalf of his late mother’s estate or to make any other submissions that he felt appropriate.
Since the original decision was issued I have received no further correspondence from either Mr. Scott Warren, or from Mr. Wentzel, who began this arbitration.
Prior to issuing the interim decision, and after the close of the hearing, however, I did receive a communication from Mr. Wentzel containing a direction from Mr. Warren in which he apparently retroactively acknowledged Mr. Wentzel’s conduct and confirmed that he was considering taking further action to obtain probate or administration of his mother’s estate.
Subsequently, I received correspondence from counsel for the Insurer stating that I should not accept the proffered documents as evidence in the hearing, since the hearing by then was closed and Mr. Wentzel had not asked for leave to file further evidence.
In the end I did not see fit to consider the letter and documents in the context of the hearing, principally for the reasons enunciated by the Insurer, and also because, as evidence, the documents were of questionable reliability and probative value.
Even if they were to be admitted, they do not address the principal question in this matter — that is whether anyone has taken the necessary action to administer the estate, and obtained the necessary court order to do so. The document at best speaks to a conditional intention — that is if there are funds to warrant administration, but not positive action. As such, it does not change the situation.
Mr. Warren, who claims as Ms. Hancock’s son to have an interest in the estate of Ms. Hancock, has been provided with a copy of the earlier decision. No other person of interest has come forward. Mr. Warren has been put on notice, that without positive action by someone to administer the estate, and authorize the arbitration application, this matter must be dismissed.
In the absence of proof of that positive action, I see no alternative but to proceed with the Insurer’s request to finalize the dismissal of the arbitration and the award of expenses.
As well the “estate”, if it ever was administered, would have no claim against the Insurer for the matters set out as issues in this arbitration such as ongoing housekeeping assistance or a non-earner benefit that was claimed when the insured was dead.
There are consequences for bringing an action with absolutely no chance of success. Such actions are often characterized as frivolous and vexatious, since they serve no legal purpose, other than to cause the opposite party to incur costs in defending the action.
The law surrounding frivolous and vexatious litigation was summarized by Caputo, J. in Bronfman v. Richler:
The leading case on the matter, Re Lang Michener et al. and Fabian et al. (1987), 1987 CanLII 172 (ON HCJ), 59 O.R. (2d) 353 (H.C.J.), outlined the applicable principles at p. 358:
(a) the bringing of one or more actions to determine an issue which has already been determined by a court of competent jurisdiction constitutes a vexatious proceeding;
(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief, the action is vexatious;
(c) vexatious actions include those brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;
(d) it is a general characteristic of vexatious proceedings that grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings;
(e) in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action;
(f) the failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings is one factor to be considered in determining whether proceedings are vexatious;
(g) the respondent's conduct in persistently taking unsuccessful appeals from judicial decisions can be considered vexatious conduct of legal proceedings.2
The Dispute Resolution Practice Code at Rule 68 deals with the dismissal of matters that are found to be “frivolous and vexatious”:
- Dismissal of proceeding without hearing
68.1 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.
68.2 Before dismissing a proceeding under this Rule, an adjudicator shall deliver written notice to all parties of the intention to dismiss the proceeding on the grounds set out in Rule 68.1.
I have no doubt that the bringing of an arbitration without a named principal capable of giving instructions, for benefits which to a large degree are impossible to obtain, would constitute vexatious litigation as described above.
In this matter, notice has been given and, indeed a hearing held to allow the parties to speak to the issue of dismissal. Additional opportunity has been provided for anyone to undertake the administration of Ms. Hancock’s estate and to apply for any relief that may be available to a trustee or administrator, but to no avail.
Consequently, for the reasons outlined in my decision dated February 12, 2012, and the above, I dismiss this arbitration as being undertaken without the permission of an individual or an entity entitled to act on behalf of the estate of the late Ms. Hancock.
Costs award against a representative pursuant to section 282 11.2
The issue of expenses remains to be dealt with.
RBC has been successful in this matter. The arbitration was found to be frivolous and vexatious. In all fairness RBC is entitled to its expenses.
Ms. Hancock died without instructing this arbitration. No one has taken legal responsibility for her estate.
As Mr. Wentzel issued and signed the Application for Arbitration, without obtaining either prior consent or subsequent ratification from a duly appointed representative of Ms. Hancock’s estate, and failed to disclose Ms. Hancock’s death on a timely basis, he has been asked to bear the burden of the Insurer’s expenses in this matter.
As noted in the previous decision, responsibility for costs where a person begins a legal procedure in the name of a non-existent person or a person who has not authorized the process, the legal representative may be held liable for costs, both at common law and, in this matter, under the Insurance Act. Section 282 11.2 of the Act reads:
Liability of representative for costs
11.2 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. 2002, c. 22, s. 127. [emphasis added]
Although Mr. Wentzel may once have had a retainer directly from Ms. Hancock, patently that retainer expired with her death. I am aware of no evidence that he took further steps to obtain a new retainer from someone legally able to act on behalf of her interests after death.
Clearly, in this matter he can be seen to have: “commenced or conducted the proceeding without authority from the insured person”. After all, the named Applicant died many months before the Application for Arbitration was delivered.
Allocating responsibility for an improper application is also in accordance with the common law. Lord Eldon in Wright v. Castle3 observed:
There can be no doubt as to the course of this court’s jurisdiction, that, if a solicitor files a bill in the name of his client without having authority from him for so doing, then, if the plaintiff wishes to have the bill dismissed it will be so ordered, and the solicitor will be made to reimburse him all the expenses occasioned by its having been filed.
Armour, C.J.C.P. in Scribner v. Parcells4, a similar case to Wright v. Castle, indicated that Lord Eldon’s view was accepted in Ontario.
Mr. Wentzel, in addition to having signed the Application for Arbitration is also a paralegal, with lawyer-like duties to look after his client’s interest and to advocate fiercely and fairly therefore.
If cost or expense awards against counsel personally were routine, then there would be little doubt that a chill might well descend on the plaintiff bar, afraid of the personal consequences of what otherwise might be considered to be effective advocacy. In considering the discretion of a court to award costs against a lawyer personally, McLachlin J., in Young,5 cautioned:
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.
There is no fear of Mr. Wentzel betraying the confidences of his client, nor feeling constrained in advancing his client’s interest. He had no client when he began this arbitration, and he still has none capable of providing instructions in this matter.
The Estate of Ms. Hancock is not a party to this action and did not authorize the claim. Mr. Scott Warren has no standing in this matter, and there is no evidence that he has undertaken to pay any expenses arising from this arbitration.
Consequently I find that this is an appropriate case for the award of costs or expenses against a representative under section 282 11.2 of the Insurance Act.
Ms. Di Iorio submitted a Bill of Expenses in this matter. I am satisfied that it was properly served on Mr. Wentzel, who has had ample time to comment. The total claimed (at legal aid rates) is $1795.85, which with disbursements and HST comes to $2,138.52.
While the legal aid tariff is the standard by which costs are judged outside of exceptional circumstances, I am satisfied that the expenses claim do not amount to full indemnity costs, or the reimbursement of ” all the expenses occasioned by its having been filed”. Nonetheless it is the maximum permitted under the tariff which applies to this arbitration.
I view this as an egregious situation. This is not a case of inadvertence. No reason was ever provided by Mr. Wentzel for failing to inform the Insurer of Ms. Hancock’s death during the course of this claim. I see no reason to reduce Ms. Di Iorio’s bill. RBC was wrongly put to defend this arbitration, and it should be compensated.
Consequently, Mr. Wentzel shall pay the full amount of RBC’s expenses as claimed.
May 9, 2012
John Wilson Arbitrator
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
This arbitration is dismissed.
Pursuant to section 282 11.2 of the Insurance Act, Mr. Michael Wentzel shall forthwith pay to RBC General Insurance Company, $2,138.52 being the assessed expenses ordered payable by the representative in this matter.
May 9, 2012
John Wilson Arbitrator
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- Bronfman v. Richler [2003] O.J. No. 922, Divisional Court
- 3 Mer. 12
- (1890) 20 O.R. 554
- Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R 3