Neutral Citation: 2014 ONFSCDRS 52

FSCO A10-003386

BETWEEN:

JAMES KING Applicant

and

WATERLOO INSURANCE COMPANY Insurer

REASONS FOR DECISION

Before: Arbitrator Isoken Osunde

Heard: By teleconference on Tuesday, January 7, 2014. Written submissions were due on Tuesday, January 28, 2014.

Appearances: Mr. King did not appear, nor anyone on his behalf Ms. Katie Quinlan for Waterloo Insurance Company

Issues:

The Applicant, James King, was injured in a motor vehicle accident on May 26, 2009. He applied for and received statutory accident benefits from Waterloo Insurance Company (“Waterloo”), payable under the Schedule.¹ Waterloo terminated Mr. King’s benefits. The parties were unable to resolve their disputes through mediation, and Mr. King 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. King’s Application for Arbitration be dismissed on the ground that it is frivolous, vexatious or commenced in bad faith pursuant to Rule 68 of the Dispute Resolution Practice Code (Fourth Edition – Updated August 2011), (the Code)?
In the alternative, should Mr. King’s Application for Arbitration be deemed withdrawn pursuant to Rule 70 of the Code?
Is Mr. King liable to pay expenses in respect of the arbitration pursuant to subsection 282(11) of the Insurance Act?

Result:

A finding that this arbitration application is frivolous, vexatious or commenced in bad faith is not appropriate.
Mr. King’s arbitration application is deemed to be withdrawn pursuant to Rule 70 of the Dispute Resolution Practice Code.
Mr. King is not liable to pay Waterloo’s expenses with respect to the arbitration.

EVIDENCE AND ANALYSIS:

BACKGROUND

Mr. King filed an Application for Arbitration dated October 18, 2010. Following his application, a pre-hearing was scheduled for July 26 2011, at 2.00 p.m., at the offices of the Financial Services Commission of Ontario. Mr. King attended the pre-hearing and an arbitration hearing was scheduled for April 30, May 1, 2 and 3, 2012.

The hearing was concluded with Mr. King in attendance, however, a rehearing of the case was ordered pursuant to Rule 71.1 of the Code.²

Waterloo brought this motion as a result of the events that occurred after the rehearing was ordered.

ANALYSIS

Should Mr. King’s Application for Arbitration be dismissed on the ground that it is frivolous, vexatious or commenced in bad faith?

Dismissals of proceedings without a hearing are governed by Rule 68 of the Code. Specifically, Rule 68.1 provides that an adjudicator may dismiss a proceeding without a hearing where the proceeding is frivolous, vexatious or commenced in bad faith. The rest of Rule 68 outlines the procedure to be followed prior to a finding that the proceeding is frivolous, vexatious or commenced in bad faith.

There is no definition for the phrase “frivolous, vexatious or commenced in bad faith” in the Insurance Act, the Schedule, the Statutory Powers Procedure Act or the Dispute Resolution Practice Code. However, Black’s Law Dictionary and case law have provided some guidance. In Fedoseev and RBC General Insurance Company,³ the arbitrator concluded that the Black’s Law Dictionary definition indicates that there must be a willful intention on the part of the litigant to bring an unmeritorious claim. In Almaliah and Dominion of Canada General Insurance Company,⁴ the arbitrator stated that a finding of “frivolous, vexatious or commenced in bad faith” can only be made after an assessment of the merits of the claim.

To conclude that Mr. King’s application is frivolous, vexatious, or commenced in bad faith would be to conclude that Mr. King knew at the onset that his claim was baseless. A determination of this nature requires me to assess the merits of his case and look into the substantive issues in dispute, the evidence in support of or refuting his claim and possibly the testimonies of witnesses. I am unable to make that determination as I was not the original hearing arbitrator.

I find, therefore, that a finding that the arbitration application is frivolous, vexatious, or commenced in bad faith under Rule 68.1 is not appropriate in this case.

Should Mr. King’s Application for Arbitration be deemed withdrawn pursuant to Rule 70 of the Code?

The Insurance Act, the Schedule, the Statutory Powers Procedure Act or the Dispute Resolution Practice Code contain no specific rule with regards to abandonment of claims. Rule 70.3 provides, however, that an adjudicator may permit a withdrawal on such terms and conditions as he or she considers just. Rule 70 presupposes a request by a party to withdraw the claim.

In the case before me, Mr. King’s actions since the rehearing was ordered have indicated a lack of interest in his case. On February 19, 2013, the pre-hearing arbitrator granted an order for his counsel to be taken off the record due to a breakdown in solicitor client relationship, predominantly attributable to a lack of communication on the part of Mr. King.⁵ At a pre-hearing scheduled for April 26, 2013, Mr. King advised the pre-hearing arbitrator by telephone that he was in the process of retaining a new representative. As a result, he was given 90 days to achieve this and contact the Commission. He failed to contact the Commission.

Mr. King was served with a notice of motion and a copy of the motion brief by FSCO and Waterloo respectively. I have no evidence that Mr. King did not receive the correspondence and so, I find that Mr. King was properly notified of the motion to dismiss his application.

On January 7, 2014, Ms. Katie Quinlan brought this motion on behalf of Waterloo. At the outset of the motion, I waited for 30 minutes for Mr. King to call. During that time, several attempts were made by the case administrator to reach Mr. King by phone. I telephoned Mr. King twice and left a voice message on one occasion. My calls were not returned.

At 10:30 a.m., I permitted Ms. Quinlan to make oral submissions on behalf of Waterloo. During her motion, Ms. Quinlan informed me that Waterloo had made several attempts to contact Mr. King both by phone and letter and they had received no response by the motion date.

Given the fact that there had been a previous hearing on his case, in which Mr. King fully participated, I reserved my decision and wrote a letter to Mr. King giving him 20 days to contact the Commission if he was still interested in pursuing his application. My letter reads:

This letter will serve as notice to you of my intention to dismiss your application based on the Insurer’s motion. If you object to the dismissal or seek to make submissions as to why the motion should not be granted, you are required to provide the grounds upon which you object to the dismissal in writing and serve the material on the other parties and file it with FSCO within 20 days of the date of this notice, being, on or before Tuesday January 28, 2014. [emphasis in original]

To date, there has been no response from Mr. King.

In the absence of any evidence to the contrary, I find that Mr. King received all the correspondence from Waterloo and from FSCO.

Arbitral jurisprudence here at FSCO has established that conduct of this nature on the part of an applicant can be inferred as a constructive withdrawal of a dispute,⁶ which is consistent with a broad interpretation of Rule 1.1 of the Code.

I agree with this line of reasoning and find therefore that Mr. King is deemed to have withdrawn his Application for Arbitration.

EXPENSES:

Rule 70.3 of the Code gives an adjudicator the jurisdiction to award expenses where there has been a withdrawal of a claim. Rule 75 outlines the criteria for awarding expenses by an arbitrator.

Waterloo requested expenses for the cost of its preparation and attendance at this arbitration. I heard submissions with regard to this issue on January 7, 2014.

Given the history of the file and particularly taking into consideration the fact that Mr. King attended the previous hearing, I am not persuaded that an award of expenses against Mr. King is warranted in this case.

I find therefore that no expenses are payable to Waterloo Insurance Company.

March 28, 2014

Isoken Osunde Arbitrator

Date

Financial Services Commission of Ontario