Shaazil Khan v. State Farm Mutual Automobile Insurance Company, 2016 ONFSCDRS 120

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2016 ONFSCDRS 120

Appeal P16-00028

OFFICE OF THE DIRECTOR OF ARBITRATIONS

SHAAZIL KHAN Appellant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Ms. Samia Alam for Shaazil Khan Mr. Nicholaus de Koning for the Respondent, State Farm Mutual Automobile Insurance Company

HEARING DATE: April 14, 2016 by telephone conference (Consent Order given April 14, 2016)

PRELIINARY APPEAL ORDER

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

1. Arbitrator Matheson’s February 29, 2016 Order that Shaazil Khan, a minor, pay the Respondent $3,172.50 in arbitration legal expenses, is stayed.

2. As expanded upon within, this appeal proceeding is put over to a June 2, 2016 preliminary conference to allow the parties, in the interim, to have these proceedings properly constituted.

April 19, 2016

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. BACKGROUND AND NATURE OF THE APPEAL

This Commission does not facilitate the garnishment of after-school paper route earnings. This Commission does not facilitate the seizing of piggy banks.

In his February 29, 2016 Expense Decision, Arbitrator Matheson of ADR Chambers (the “Arbitrator”) set out the issue before him as whether “Mr. Khan” was liable to pay the arbitration expenses of the Respondent, State Farm Mutual Automobile Insurance Company. The only “Mr. Khan” the Arbitrator identified in his decision is Shaazil Khan.

The Arbitrator, at page two of his decision, held that “Mr. Khan” shall pay the Respondent’s legal expenses of $3,172.50. He repeats this at page six. The formal Arbitrator Order confirms that “Mr. Khan shall pay the legal expenses of State Farm at the fixed amount of $3,172.50, inclusive of all fees, disbursements and taxes.”

Rule 66 of the Dispute Resolution Practice Code (Fourth Edition – Updated January 2014) (the “Code”) states that a party may file a certified copy of an order in the Ontario Superior Court of Justice and the order can be enforced by the Court in the same manner as an order of that Court.

Shaazil Khan is 11 years old. The Commission’s records note his birth date as November 29, 2004. At page two of his decision, the Arbitrator notes that the Appellant was six years old at the time of the April 26, 2011 motor vehicle accident.

The Notice of Appeal herein sought a stay of the Arbitrator’s order. As the Notice of Appeal states, subsection 283(6) of the Insurance Act, R.S.O. 1990, c. I.8, provides that an appeal does not stay the arbitrator’s order, unless decided otherwise. As the Notice of Appeal also states, Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000), set out the following criteria to be considered in deciding whether to grant a stay:

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

My April 8, 2016 acknowledgement letter noted the named Appellant has been a minor through this entire dispute and that he remains so. I noted Rule 10.2(c) of the Code provides that a minor “must” commence a mediation or other proceeding (which would include arbitration and appeals) through a parent with whom the minor resides, a person with lawful custody of the minor, a court appointed guardian of the minor’s property or, in the event there is no person otherwise available, the Children’s Lawyer.

The purpose of the mandatory Rule 10.2(c) is to protect minors as persons under disability. Rule 10.2(c) has the same intent as Rule 7 of the Rules of Civil Procedure. Rule 7.02(2)(h) of the latter provides that no person (other than the Children’s Lawyer or the Public Guardian and Trustee) shall act as a litigation guardian for a plaintiff or an applicant under disability without their affidavit acknowledgement of having been informed of their liability to pay personally any costs awarded against them or against the person under disability.

The Arbitrator does state, at page two of his decision, that “Mr. Khan” is bringing his arbitration “through his legal representative.” However, the title of proceeding, as set out above, does not reflect this. The Arbitrator, at page five, does state that “Mr. Khan, via his litigation guardians, shall pay the legal expenses of State Farm.” That is not, however, reflected in his Arbitration Order, nor does the Arbitrator name the litigation guardians at page five or at any other point in his decision. These proceedings are presently improperly constituted.

My acknowledgement letter held that to allow the enforcement of a legal expense order personally against an 11-year child would be to bring the administration of justice into disrepute. To protect a minor and to avoid the consequences of a fundamental procedural error, my April 8, 2016 letter granted an immediate, temporary stay of the Arbitrator’s February 29, 2016 Order that the minor, Shaazil Khan, personally pay the Respondent its assessed legal expenses.

A telephone preliminary conference under section 57 of the Code was expeditiously arranged for April 14, 2016 to address the temporary stay as well as the broader question of how these proceedings are presently constituted. In the interim, the Respondent wrote on April 13, 2016 to advise that it was asking the Arbitrator, under Rules 65.5 and/or 65.6 of the Code, to clarify or correct his Expenses Order. The Respondent stated it was never its intention that the Expense Order be paid by the minor personally and that it had not taken any steps to enforce and collect on the Arbitrator’s Order, nor did it intend to do so.

II. PROCEDURAL DISPOSITON

At the April 14, 2016 preliminary conference, the parties agreed:

1. My April 8, 2016 stay of the Arbitrator’s February 29, 2016 expense order shall remain.

2. The parties will request that the Arbitrator:

(a) Amend the title of proceeding herein to provide for a named litigation guardian or guardians bringing the proceeding on behalf of the Minor, Shaazil Khan; and,

(b) Amend the body of his February 29, 2016 decision to reflect the amended title of proceeding that any expense award is not against the Minor, Shaazil Khan personally, but against his named litigation guardian or guardians.

3. This appeal proceeding is put over to a further telephone Preliminary Conference under section 57 of the Code, to be held Thursday, June 2, 2016, at 10:30 a.m. to:

(a) Confirm that the title of proceeding and that body of the February 29, 2016 arbitration decision have been properly corrected.

(b) Amend the title of proceeding of this appeal accordingly.

(c) Set a date for delivery of the Response to Appeal that will include the Respondent’s submissions on whether any expense order against a litigation guardian should be stayed.

Although not discussed at the preliminary conference, if the Appellant wishes to first expand on the arguments set out in the Notice of Appeal, that can also be discussed.

(d) Set a date for delivery of the Appellant’s reply submissions on whether any expense order against a litigation guardian should be stayed.

III. APPEAL LEGAL EXPENSES

I wish to thank both counsel for making themselves available on short notice and for their exemplary cooperation and professionalism at the preliminary conference in moving this matter forward towards correcting the procedural irregularity.

The legal expenses of this preliminary appeal order are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.

April 19, 2016

Lawrence Blackman Director’s Delegate

Date