Neutral Citation: 2014 ONFSCDRS 199 FSCO A13-001610 and A13-001612

BETWEEN:

SAMAUALLAH NASSERI and ABDUL WAHID NASSERI Applicants

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

REASONS FOR DECISION

Before: Arbitrator Jeffrey Rogers Heard: August 18 and November 14, 2014, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Ms. Zeeba Ahsan, licensed paralegal, for the Nasseris Ms. Jennifer Arduini, solicitor, for State Farm Mutual Automobile Insurance Company

Issues:

The Applicants, Samauallah Nasseri and Abdul Wahid Nasseri, were injured in a motor vehicle accident on June 14, 2010. They applied for statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.¹ State Farm denied their entitlement to certain claimed benefits. The parties were unable to resolve their disputes through mediation, and the Nasseris 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 the applications for arbitration be dismissed due to the Applicants’ failure to attend and present evidence in support of their claims?
Is State Farm entitled to its expenses of these arbitrations, and if so, in what amount?
Is the representative of the Applicants personally liable to pay State Farm part of the expenses of these arbitrations?
Should the Applicants’ representative be removed from the record as their representative?

Result:

These applications for arbitration are dismissed.
State Farm is entitled to its expenses of the arbitrations in the amount of $2,000. Each Applicant shall pay State Farm its expenses in the amount of $1,000.
The applicants’ representative is not personally liable for expenses.
UniGlobe Legal Services Professional Corporation is removed from the record as the Applicants’ representative.

EVIDENCE AND ANALYSIS:

Dismissal of Arbitrations

The arbitration hearing was scheduled for August 18, 2014. It was adjourned to November 14, 2014. The Applicants did not attend on either date. The Applicants were given proper notice of the hearing on each occasion. They gave no reason for their failure to attend. The record discloses no reason that the hearing should not proceed.

The Applicants bear the onus of proving entitlement to the benefits they claimed. No evidence having been presented in support of the Applicants’ claims, these arbitrations are dismissed.

Expenses: Entitlement and Quantum

State Farm was completely successful in these arbitrations. Both sides made offers to settle but they did not comply with the terms of Rule 76 of the Dispute Resolution Practice Code. Therefore the offers cannot be considered in determining expenses. State Farm’s degree of success is the only criterion I am required to consider. I find that State Farm is entitled to its expenses, based on its complete success.

Counsel for State Farm submitted Expense Outlines claiming $18,377.00 in expenses against Samaullah Nasseri and $21,639.60 against Abdul Wahid Nasseri. These claims are patently inflated. One of the reasons for inflation is that fees are claimed at the rate of $230 per hour and not at the applicable Legal Aid rates, as required by Rule 78. That aside, counsel for State Farm indicates that she spent a total of 66.4 hours working on these arbitrations, before she started preparation for the arbitration hearing. I find that claim to be so far removed from the reality of the issues involved in these arbitrations that the Expense Outlines are rendered irrelevant.

I fix expenses at $2,000, inclusive of disbursements and taxes.

Applicants’ Representative not liable for Expenses

State Farm argues that the Applicants’ representative is personally liable to pay part of its expenses. Section 282(11.4) of the Act provides that an order requiring a representative to pay expenses shall not be made unless the representative is given a reasonable opportunity to make submissions. State Farm gave notice that it intended to make this claim no earlier than three days before the date it sought to advance the claim.

At the hearing, I asked Ms. Ahsan whether she was prepared to address the issue, despite the short notice. She advised that she was. After the hearing was concluded, she provided unsolicited written submissions in which she claimed that she had been taken by surprise and had not been prepared to address the issue. Except for reading the allegation of surprise, I did not review the submissions. Since her post-hearing submissions were predicated on an allegation that was contrary to her position at the hearing, I returned them to Ms. Ahsan.

State Farm claims that Ms. Ahsan caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default. It submits that she is therefore liable to pay expenses pursuant to section 282(11.2)(c) of the Act. I reject this submission. I find that, even if State Farm’s allegations regarding the history of these matters are accurate, the arbitration was concluded without delay caused by Ms. Ahsan.

As noted above, these matters first came before me for hearing on August 18, 2014. Ms. Ahsan attended with instructions from her clients. Her clients did not attend. With no prior notice to Ms. Ahsan, State Farm alleged that she had no standing to represent her clients because the records of the Law Society indicated that she was not engaged in providing legal services.

Ms. Ahsan denied the accuracy of State Farm’s allegation. With Ms. Ahsan’s status cast in doubt, no other issues could be addressed until the question of her standing was resolved. An adjournment was mandated because State Farm raised the allegation without giving Ms. Ahsan a reasonable opportunity to respond. In these circumstances, it is of no consequence that Ms. Ahsan also intended to seek and adjournment which could possibly have prolonged the proceeding.

The effect of State Farm’s late notice is reinforced by events subsequent to the adjournment. Ms. Ahsan was quickly able to clarify her status. At the hearing on November 14, 2014, she presented evidence supporting her claim that she continued to be in good standing. She obtained this evidence two days after the adjournment². Had State Farm raised the allegation earlier, the question might have been resolved before August 18, 2014. In that case, the question of disposition of these arbitrations on the grounds of the failure of the Applicants to attend the hearing might have been addressed on August 18th and not November 14th.

The affidavit of Bob Atkins filed in support of State Farm’s claim against Ms. Ahsan lists a litany of alleged additional misconduct by Ms. Ahsan. The most serious claim is that the Applicants had no intention of proceeding with the hearing and that Ms. Ahsan was aware of it. The record does not support that allegation. Rather, it appears that the Applicants lost interest in pursuing the arbitration when faced with the prospect of a hearing and that Ms. Ahsan communicated their position to State Farm once she had clear instructions in that regard. I see no impropriety in her conduct.

State Farm also alleges impropriety in cancelling settlement discussions. I note that Ms. Ahsan gives a different version of the scheduling issues and I am not in a position to resolve the discrepancies. In any event, taken at their best, State Farm’s allegations might tend to show sharp or inept practice by Ms. Ahsan. There are no allegations misconduct grave enough to warrant personal liability for expenses. Further, one cannot assume that the effect of cancellation was undue prolonging of the proceeding. Even if settlement discussions had taken place in the manner that State Farm submits that they should have, there was no guarantee of early resolution.

The fact is that these arbitrations were summarily concluded, once the Applicants were faced with the prospect of having to prove their claims at a hearing. Had State Farm not shifted its focus to Ms. Ahsan’s conduct, rather than the Applicants’, there might have been an even earlier conclusion.

I find that Ms. Ahsan is not liable to pay part of State Farm’s expenses. I have therefore ordered each applicant to pay $1,000 for expenses, being half of State Farm’s expenses.

Removal of the Applicants’ representative

UniGlobe Legal Services Professional Corporation (as represented by Ms. Ahsan) commenced these arbitrations as the Applicants’ representative. After the hearing was adjourned it concluded that it could not continue to represent the Applicants because of their failure to comply with undertakings, failure to participate in settlement discussions and failure to attend the hearing on August 18, 2014. UniGlobe therefore moved to get off the record. The motion could not be addressed, without first determining the question of Ms. Ahsan’s liability for expenses.

I am satisfied that the Applicants were given proper notice of the motion at their last known address, pursuant to Rule 7 of the Dispute Resolution Practice Code. I am satisfied that there has been a breakdown in the solicitor/client relationship so that UniGlobe Legal Services Professional Corporation cannot continue to represent the Applicants. UniGlobe Legal Services Professional Corporation is therefore removed from the record as their representative.

December 22, 2014

Jeffrey Rogers Arbitrator

Financial Services Commission of Ontario