Chartis Insurance Company of Canada v. Tipu, 2014 ONFSCDRS 87

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2014 ONFSCDRS 87

Appeal P14-00009

Appellant

and

Respondent

and

Intervenor

BEFORE:

Delegate Lawrence Blackman

Ms. Bevin Shores for the Appellant, Chartis Insurance Company of Canada

Ms. Samia Alam for the Intervenor, Bartolini Berlingieri Barrafato Fortino LLP

Mr. Muhammad Tipu not appearing

By written submissions due May 23, 2014

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The Notice of Appeal, as it pertains to the Arbitrator’s February 13, 2014 order allowing the Intervenor to withdraw as representative of record without terms, is accepted. The balance of the Notice of Appeal is rejected pursuant to Rules 50.2 and 51.2(c) of the Dispute Resolution Practice Code (Fourth Edition, Updated – January 2014).
The Appellant’s request for a stay of the Arbitrator’s decision is denied.
The legal expenses of this preliminary appeal decision are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.

May 29, 2014

Lawrence Blackman Director’s Delegate

Date

I. NATURE OF THE APPEAL

The Respondent, Mr. Muhammad Tipu, was injured in an August 30, 2010 motor vehicle accident. As a result, he applied to his first-party insurer, the Appellant, Chartis Insurance Company of Canada, for statutory accident benefits under the Schedule.¹ In February 2011, the Appellant denied Mr. Tipu’s benefit claim. Unable to locate Mr. Tipu but wishing to preserve his rights, Mr. Tipu’s then representative, the Intervenor Bartolini Berlingieri Barrafato Fortino LLP, applied on his behalf for mediation and subsequently for arbitration at the Commission.

At arbitration, the Intervenor moved to be removed as counsel of record. The Appellant asked that any removal order be subject to the Intervenor being liable for the Appellant’s legal expenses of $4,900. The Appellant also sought, under Rule 70.3 of the Dispute Resolution Practice Code (Fourth Edition, Updated – January 2014) (the “Code”), an order that the Application for Arbitration be deemed withdrawn.

In her February 13, 2014 motion decision, Arbitrator Pressman (the “Arbitrator”) permitted the Intervenor to withdraw as counsel of record. The Arbitrator was not persuaded that the facts of the case supported an order under subsection 282(11.2) of the Insurance Act, R.S.O. 1990, c. I.8, that the Intervenor pay the Appellant’s legal expenses.

The Arbitrator was not prepared to deem the Application for Arbitration as having been withdrawn as she was not satisfied that proper notice had been sent to Mr. Tipu that the motion before her would consider the withdrawal of his dispute or an expense award against him.

Rule 50.2 of the Code provides that a party may not appeal a preliminary or interim order of an arbitrator until all of the issues in dispute have been finally decided, unless ordered otherwise. Rule 51.2(c) states that an appeal may be rejected if it is from a preliminary or interim order that does not finally decide the issues in dispute.

The Appellant seeks leave to appeal the Arbitrator’s motion decision, submitting that the Arbitrator “failed to consider whether the within Application for Arbitration ought to have been deemed withdrawn pursuant to Rule 70.3 of the Code.” The Appellant argues that the appeal might potentially finally dispose of the issues in dispute and that accepting this appeal would result in the quickest, most just and least expensive resolution of the dispute.

Regarding the Intervenor, the Appellant submits that the Arbitrator applied the wrong test, misapplied the correct test and/or had failed to consider relevant case law or material evidence.

In the event this appeal is accepted, the Appellant sought a stay of the Arbitrator’s order on the specific basis that it was in the interests of justice to allow the prior counsel to participate in the appeal. The Appellant asks, ultimately, that the Arbitrator’s order be rescinded and substituted with the following:

(a) The Application for Arbitration is deemed withdrawn under Rule 70.3 of the Code; and,

(b) The Intervenor is personally liable to pay the Appellant’s legal expenses as a condition of being permitted to withdraw as the Respondent’s representative, as well as being liable for the expenses of this appeal.

II. APPLICATION FOR INTERVENTION

The Intervenor delivered an April 11, 2014 Application for Intervention for the purpose of allowing it to make submissions on issues of law pertinent to itself. The Appellant’s April 17, 2014 letter stated it did “not object to the participation of Bartolini Berlingieri Barrafato Fortino LLP in the within Notice of Appeal, to make submissions on the issue of law arising in the appeal.”

My April 23, 2014 letter noted my authority under subsection 283(8) of the Insurance Act, R.S.O. 1990, c. I.8, to “permit persons who are not parties to the appeal to make submissions on issues of law arising in an appeal.” Rule 59.2 of the Code states that persons who are not parties to an appeal may apply to make submissions on an issue of law arising in an appeal.

Unifund Assurance Company and Danilov et al., (FSCO P09-00023, October 6, 2009), held that subsection 283(8) did not restrict intervention solely to friends of the court, nor was intervention limited to assisting the tribunal. Rule 13.01 of the Rules of Civil Procedure allowed intervention where, amongst other things, the person seeking leave to intervene has an interest in the subject matter of the proceeding or might be adversely affected by a judgment in the proceeding.

The Appellant seeks, in part, an order that the Respondent’s prior counsel pay its arbitration and appeal expenses. The prior counsel, therefore, has a direct interest in the subject matter of this proceeding and could be directly adversely affected by its outcome.

The Application for Intervention not being opposed, my April 23, 2014 letter decision allowed the request on terms that the Intervenor would have an equal right to make submissions on questions of substantive and procedural law and would be bound by the appeal decisions. I left open for submissions a possible further term regarding the Intervenor’s liability for or entitlement to claim legal expenses under subsections 282(11) and/or (11.2) of the Insurance Act.

III. SHOULD THIS APPEAL BE REJECTED?

Delegate Makepeace, in Allstate Insurance Company of Canada and Torok, (FSCO P01-00021, May 29, 2001), held that the purpose of now Rule 50.2 of the Code is to:

… facilitate the most cost-effective resolution of disputes by minimizing the time and money spent on procedural or collateral matters. The decision whether to hear an appeal of a preliminary order is discretionary … the over-arching principle guiding the exercise of the discretion is that the rule “should be broadly interpreted to produce the quickest, most just and least expensive resolution of the dispute.” The criteria to be considered include the apparent strength of the appeal, the importance or novelty of the issue raised, and whether rejecting the appeal or hearing it will prejudice either party.

The Intervenor cites Allstate Insurance Company of Canada and Al-Obaidi, (FSCO P99-00009, May 2, 1999), which notes the Code’s general intent of deferring appeals from preliminary or interim orders until the arbitration is over. Appeals have been allowed to proceed where it made sense to do so before the parties incurred the expense and time of a full arbitration hearing. Further considerations were the parties’ preference, whether the arbitration decision departed from prior case law and whether hearing the appeal would streamline the process.

The Intervenor submits that this appeal should be rejected because:

It fails to raise an important or novel issue. Rather, there are numerous arbitration decisions allowing representatives of record to withdraw based on the individual circumstances.
The Arbitrator’s decision does not represent a departure from prior decisions.
The issues raised by the Appellant are questions of fact.
The Arbitrator’s decision did not finally decide the issues in dispute between the Appellant and the Respondent. As the arbitration’s determination and the Respondent’s liability for legal expenses are still pending, this appeal is premature.

The Appellant’s March 25, 2014 letter advised that “the nominal Applicant, Mr. Tipu, cannot be located and has not been able to be located since at least August 2011.” It provided a copy of the Arbitrator’s March 21, 2014 letter that Mr. Tipu had not responded to her February 13, 2014 notice of intention to dismiss Mr. Tipu’s arbitration under Rule 68 of the Code.

Pursuant to Rules 50.2 and 51.2(c) of the Code, I reject the portion of the Notice of Appeal pertaining to the Arbitrator not deeming the Arbitration withdrawn, for the following reasons:

As the proceeding was not dismissed, the Arbitrator’s order did not finally decide all of the issues in arbitration between the Appellant and the Respondent. The Appellant’s citation of Luskin and Personal Insurance Company of Canada, (FSCO A06-001216, October 1, 2007), was not helpful. Luskin was not an appellate decision applying Rules 50.2 and 51.2(c) of the Code. Rather, it was an arbitrator’s decision at first instance deciding whether an arbitration should be dismissed.
Prima facie, the Arbitrator had a solid basis for not deeming the arbitration withdrawn, namely that no prior notice of such a motion had been sent to the Respondent. The Arbitrator, on the same day as her February 13, 2014 decision, sent notice of her intention to dismiss the arbitration proceeding under Rule 68 of the Code.
To accept this part of the appeal would add an unnecessary process at extra time and expense, while undermining the Arbitrator’s proper authority and detracting from a just and streamlined process.

State Farm Mutual Automobile Insurance Company and Ponnampalam, (FSCO P12-00031, September 20, 2012), cited by the Appellant, does not support accepting this part of the appeal. Rather, the criteria noted in that decision, including the cost-effective, expeditious and just resolution of a dispute, supports the opposite.

I accept the Notice of Appeal as it pertains to the Arbitrator’s orders allowing the Intervenor to withdraw as counsel of record without terms, for the following reasons:

While the Arbitrator’s decision was not final pertaining to all of the issues in dispute, it was final in respect of the Intervenor. In any event, the arbitration, with the Respondent’s whereabouts being unknown, may be moot. I am not persuaded that it is sensible to presently reject the Intervenor’s aspect of the appeal pending the arbitration’s seemingly inevitable ultimate demise.
The appeal raises important questions regarding the duties and/or potential liabilities of counsel regarding a client who has disappeared.
Accepting at this time this aspect of the appeal will result in the most expeditious resolution of this issue in a fair manner, while avoiding unnecessary extra time and expense in having the Appellant and the Intervenor simply repeat the appeal process once the Arbitrator’s final decision is issued.

Accordingly, applying Rule 54 of the Code, I set the following time lines for written submissions:

(a) The Appellant shall serve on the Respondent and the Intervenor and file with (with Statements of Service in Form F) with this office its written submissions within thirty days of the date of this decision.

(b) The Respondent and the Intervenor shall serve on each other and on the Appellant and file (with Statements of Service in Form F) with this office their written submissions within twenty days of receiving the Appellant’s written submissions.

IV. SHOULD A STAY OF THE ARBITRATOR’S DECISION BE GRANTED?

Subsection 283(6) of the Insurance Act, R.S.O. 1990, c. I.8, provides that an appeal does not stay the order of an arbitrator, unless so ordered. Thus, as stated by Delegate McMahon in Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000), a stay from the order of an arbitrator is the exception rather than the rule. In Armstrong, Delegate McMahon adopted the following criteria as to whether a stay should be granted:

The bona fides of the appeal;
The substance of the grounds for appeal; and,
The hardship to the respective parties if the stay is granted or refused.

The Intervenor argues that the Arbitrator’s decision is entitled to deference and that the Appellant has not incurred any hardship with the Intervenor being removed as counsel of record.

In reply submissions, the Appellant argues that the Intervenor’s abandonment of Mr. Tipu prejudices the Respondent in being vulnerable to an arbitration expense award. A stay of the Arbitrator’s decision would allow these matters to be expeditiously streamlined in appeals, allowing it to claim its expenses from the Intervenor rather than from a party that has disappeared.

The Appellant also argued that staying the Arbitrator’s order would allow the prior counsel to participate in this appeal. My April 23, 2014 order allowing the prior counsel Intervenor status confers that right of participation. It also provides that the Intervenor will be bound by the appeal decisions. That will include addressing the Arbitrator’s decision that legal expenses were not payable by the Intervenor. To now stay the Arbitrator’s decision would be superfluous.

As I have now also rejected that aspect of the Notice of Appeal pertaining to the Arbitrator’s resolution of the arbitration, it would be contradictory to stay that same proceeding. Accordingly, the Appellant’s stay request is denied.

V. EXPENSES

The Intervenor states that as it could be held responsible for the Appellant’s reasonable appeal expenses, it should equally be entitled to claim its legal expenses should the Appellant be unsuccessful.

The Appellant agrees that both it and the Intervenor ought to be entitled to seek their legal expenses of this appeal, subject to the adjudicator’s discretion and the provisions of the Code. It notes that subsection 282(11) of the Insurance Act does not limit payment of legal expenses to insured persons and insurers. The Appellant cites Mazin and Personal Insurance Company of Canada et al., (FSCO P07-00028, December 8, 2008), that a former representative who participates in an appeal may be liable for legal expenses.

I find that the legal expenses of this preliminary appeal decision should be presently deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.

May 29, 2014

Lawrence Blackman Director’s Delegate

Date

Footnotes

The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.