Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2014 ONFSCDRS 24

FSCO A13-006676

BETWEEN:

MUHAMMAD TIPU

Applicant

and

CHARTIS INSURANCE COMPANY OF CANADA

Insurer

Before: Deborah Pressman

Heard: October 1, 2013, at the offices of the Financial Services Commission of Ontario in Toronto and by written submissions received on October 22, 2013.

Appearances: Samia Alam for counsel of record for the Motion Mr. Muhammad Tipu did not appear Bevin Shores for Chartis Insurance Company of Canada

Overview:

The Applicant, Muhammad Tipu, was injured in a motor vehicle accident on August 30, 2010. He applied for and received statutory accident benefits from Chartis Insurance Company of Canada (“Chartis”), payable under the Schedule.¹ Disputes arose with respect to his entitlement to benefits when they were denied by Chartis in February 2011. At the time, Mr. Tipu’s representative, Mr. Barrafato, from the law firm Bartolini, Berlingieri, Barrafato, Fortino LLP, was unable to locate Mr. Tipu to discuss the next steps in his accident benefits claim. He then applied for Mediation and subsequently, Arbitration, in order to preserve Mr. Tipu’s rights.²

Shortly after applying for arbitration and having exhausted his efforts to find Mr. Tipu and seek instructions, Mr. Barrafato requested to be removed as his representative of record.³ Chartis submitted that any order permitting the removal of Bartolini, Berlingieri, Barrafato, Fortino LLP include terms that the firm personally pay Chartis’ costs of $4,900.00 and that the Application for Arbitration be deemed withdrawn pursuant to Rule 70.3 of the Dispute Resolution Practice Code (DRPC).⁴

Issues:

The issues in this hearing are:

Whether the firm of Bartolini, Berlingieri, Barrafato, Fortino LLP is permitted to withdraw as representative of record for Mr. Tipu?
Whether Chartis’ expenses are payable personally by Bartolini, Berlingieri, Barrafato, Fortino LLP?
Whether this Application for Arbitration is deemed withdrawn pursuant to Rule 70.3 of the DRPC?

Result:

The firm of Bartolini, Berlingieri, Barrafato, Fortino LLP is permitted to withdraw as representative of record.
Expenses are not payable personally by Bartolini, Berlingieri, Barrafato, Fortino LLP.
This Application for Arbitration is not deemed withdrawn.

EVIDENCE AND ANALYSIS:

Withdrawal of Mr. Tipu’s Representative

I allow the withdrawal of Mr. Tipu’s representative in this arbitration without terms for the reasons that follow.

Mr. Tipu did not attend at this motion, although served with motion materials and Notice of Motion at his last known address. Pursuant to Rule 9 of the DRPC, his representative requested that his firm be permitted to withdraw without terms due to a breakdown in the solicitor-client relationship.

I am satisfied that there has been a fundamental breakdown of communication in the solicitor-client relationship. Throughout the submissions and supporting documents, it was confirmed that Mr. Tipu’s representative has made many unsuccessful attempts to contact Mr. Tipu by letters and phone calls since August 2011.

Therefore, Bartolini, Berlingieri, Barrafato, Fortino LLP is permitted to withdraw as Mr. Tipu’s representative of record in this proceeding.

Expenses payable personally against a representative

Chartis submitted that Mr. Tipu’s representative should personally pay its expenses of this arbitration in the amount of $4,900.00. However, the facts of this case do not warrant such an order.

The authority to order an insured’s representative to personally pay all or part of any expenses awarded against an insured is derived from subsections 282(11.2) and (11.3) of the Insurance Act.

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.

Non-application to solicitors

(11.3) Clause (11.2) (a) does not apply to a barrister or solicitor acting in the usual course of the practice of law. 2002, c. 22, s. 127.

Overall, I find that Mr. Tipu’s representative did not attract potential liability for expenses pursuant to subsection 282(11.2). I also find that Mr. Tipu’s representative was “acting in the usual course of the practice of law” and is therefore exempt from liability pursuant to subsection 282(11.3).

Subsection 282(11.2)(a) requires that a representative have the client’s authority to commence a proceeding and advise of the exposure to pay all or part of the opposing party’s expenses. Failure to comply may result in an order that the representative personally pay the ordered expenses.

In this case, Mr. Tipu’s representative confirmed his authority by affidavit evidence and provided a copy of a redacted retainer agreement. ⁵ He also provided a valid explanation for filing the Application for Arbitration. Therefore, I find that he did have an insured person as a client at the time he filed the Application for Arbitration and had the authority to commence and conduct an arbitration proceeding as required by subsection 282(11.2)(a).

Mr. Tipu’s representative had a professional obligation to advise Mr. Tipu of the time sensitive choices available following the denial of his benefits and to take Mr. Tipu’s informed instructions. The limitation period was approaching and Mr. Tipu was yet to be found. Having regard to the lapse of the limitation period, representatives may commence proceedings on behalf of a client, with whom they have lost contact, both to preserve the client’s rights and avoid a negligence claim. In such circumstances, the representative will usually bring a concurrent motion to be removed from the record. In this case, Mr. Tipu’s representative did just that, three months after having fulfilled the preservation of Mr. Tipu’s rights. Therefore, I find that Mr. Tipu’s representative was “acting in the usual course of the practice of law,” and is also exempt from liability for expenses by operation of subsection 282(11.3).

Pursuant to subsection 282(11.2)(b), Chartis submitted that Mr. Tipu’s representative caused expenses to be incurred without reasonable cause by advancing a frivolous or vexatious claim on behalf of the insured person. However, I note that Chartis initially paid accident benefits on Mr. Tipu’s claim.⁶ Without a full hearing on the merits of the claim, I am not able to conclude that this was a frivolous or vexatious claim or that Mr. Tipu’s representative caused expenses to be incurred without reasonable cause. As a result, I find that Mr. Tipu’s representative did not advance such a claim on behalf of Mr. Tipu as defined in subsection 282(11.2)(b).

With respect to subsection 282 (11.2)(c), I cannot find that Mr. Tipu’s representative caused Chartis to incur the expenses of the arbitration proceeding without reasonable cause or to be wasted by unreasonable delay or other default. The timing of the request to withdraw as Mr. tipu’s representative of record (shortly after filing the Application for Arbitration and prior to the scheduling of a pre-hearing discussion) limited any further expenses to Chartis. Threfore, the circumstances of this case do not warrant a finding against the representative pursuant to subsection 282(11.2)(c).

Lastly, the case law presented by the parties was not particularly helpful. Most of the cases deal with dissimilar circumstances. Chartis relied on Zapisnoy and Certas Direct Insurance Co.⁷ as an analogous factual situation. However, in Zapisnoy, unlike this case, the insurer denied the claim from its inception and the benefits in dispute represented a debt owed to a service provider. Further, the arbitrator found that the “circumstances of this claim are suspect” [and was] “satisfied that Mr. Zapisnoy had no intention of proceeding past the mediation.”⁸ In addition, the insured’s representative did not provide an explanation for applying for arbitration or any evidence of a retainer and the arbitrator “had to make her findings in an evidentiary vacuum.”⁹ Therefore, Zapisnoy is distinguishable from the circumstances of this case.

The facts of this case, as discussed above, do not support an order that Bartolini, Berlingieri, Barrafato, Fortino LLP personally pay expenses pursuant to subsection 282 (11.2).

Withdrawal of the Application for Arbitration

In accordance with Rule 70 of the DRPC, a party may seek permission to withdraw all or part of a dispute and an adjudicator may permit a party to withdraw all or part of a dispute where all parties agree.

Where a party does not agree to the withdrawal, an adjudicator may, according to Rule 70.3:

(a) permit the withdrawal on such terms and conditions as he or she considers just;

(b) award expenses to either party as permitted by Rule 75 and following.

I am not satisfied that Mr. Tipu had proper notice that this proceeding would consider the withdrawal of his dispute and an award of expenses against him. The Notice of Motion sent to his last known address dealt only with the removal of his representative. Therefore, I am unable to withdraw the Application for Arbitration or award any expenses pursuant to Rule 70 of the DRPC.

February 13, 2014

Deborah Pressman Arbitrator

Date