Neutral Citation: 2016 ONFSCDRS 182

FSCO A14-006497

BETWEEN:

AMIR KERMANSHAH Applicant

and

PERSONAL INSURANCE COMPANY OF CANADA Insurer

DECISION ON A MOTION

Before: Arbitrator John Wilson

Heard: August 17, 2015, at the offices of the Financial Services Commission of Ontario in Toronto. and February 26, 2016 by written submissions.

Appearances: Volodymyr Klepinin on behalf of Marzel Law Sarah Deol for Personal Insurance Company of Canada Mr. Kermanshah did not appear and was not represented.

Issues:

The Applicant, Amir Kermanshah, claimed to have been injured in a motor vehicle accident on August 24, 2012. He applied for statutory accident benefits from Personal Insurance Company of Canada (“Personal”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Kermanshah applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Prior to the pre-hearing, Mr. Volodymyr Klepinin, counsel of record determined that he and his firm could no longer represent Mr. Kermanshah, and brought this motion to be heard at the date and time set for the pre-hearing.

The issues in this motion are:

Should Mr. Volodymyr Klepinin be permitted to withdraw as counsel of record in this matter?
Should this matter be dismissed?

Result:

Mr. Volodymyr Klepinin is permitted to withdraw as counsel of record in this matter.
Mr. Kermanshah’s arbitration is dismissed as vexatious and abandoned.
Mr. Kermanshah shall pay the Personal its expenses in this matter which I fix at $2772.07 including HST.

EVIDENCE AND ANALYSIS:

A motion hearing and a pre-hearing in the above matter was held at the offices of the Financial Services Commission of Ontario on Monday August 17, 2015 at 11:30 a.m. Mr. Klepinin attended as representative for Mr. Kermanshah, while Ms. Deol represented the Personal.

Mr. Kermanshah did not attend, although the record indicates that he was sent notice of both the motion and the pre-hearing. Mr. Klepinin also advised that the Applicant had been served with the motion materials personally.

The motion hearing was to hear a request for Mr. Klepinin to be removed from the record as counsel for Mr. Kermanshah. Ms. Deol advised that the Personal took no position on Mr. Klepinin’s request.

For reasons to be provided, I accepted Mr. Klepinin’s request to be removed as counsel of record by way of oral decision at the hearing.

I also heard submissions as to the dismissal of this arbitration and made orders setting out a process to do so.

The following are the reasons for my orders.

The withdrawal of representatives of record involves: Rule 9.8 of the Dispute Resolution Practice Code (the “Code”), the Rules of Professional Conduct of the Law Society of Upper Canada and the common law and jurisprudence surrounding such withdrawals.

Rule 9.8 of the Code provides:

Where the party represented provides written consent to the representative's request for withdrawal, the Registrar or an adjudicator shall permit the representative’s withdrawal. Otherwise, an adjudicator may permit the representative to withdraw, subject to such terms as the adjudicator considers just.

Although the Code explicitly sets out a procedure for the withdrawal of counsel, it only implicitly deals with an order that counsel remain as counsel or representative of record. It would make no sense however if the procedure under Rule 9.8 were an automatic rubber stamp, triggered only by a representative’s request to be removed from the record.

Rather, such a request triggers the exercise of an adjudicator’s discretion to allow or not allow removal of a representative. Notwithstanding some jurisprudence to the contrary, a court or an adjudicator has the discretion to refuse a representative’s request to be removed as solicitor from the record, but that discretion must be exercised sparingly and only when necessary to prevent serious harm to the administration of justice.

While most jurisprudence relating to solicitors of record arises from the criminal courts, there is no reason that the fundamental principles in those cases may not be applied to civil matters. Fish, J.A., speaking for the Quebec Court of Appeal, considered some of the policy questions involved in the withdrawal of counsel during a proceeding:

Permission to withdraw at the outset or in the course of a trial is not lightly granted by the courts. Withdrawal will normally be permitted only where counsel and client are irreconcilable. So fundamental is the disagreement, that counsel is presumed incapable of properly representing the accused.²

Likewise in Ontario, the Courts have observed:

The mantle of solicitor of record may not be discarded except in accordance with the Rules of Civil Procedure. The client may deliver a notice of intention to act in person, pursuant to rule 15.03(3), or a notice of change of solicitors, pursuant to rule 15.03(1), or the solicitor of record may move under rule 15.04 for an order removing him as solicitor of record. Until a notice permitted by rule 15.03(1) or (3) is delivered, the responsibility remains with the solicitor of record. While the solicitor of record may expect to be served with one of the two notices, it is up to him to monitor the situation and, in the absence of such a notice, to move for an order in a timely fashion.³

This is precisely what the solicitor has done in this case.

The Commentary on Rule 3.7(2) of the Rules of Professional Conduct elaborates on the range of reasons that would permit a lawyer to withdraw from representation:

A lawyer may have a justifiable cause for withdrawal in circumstances indicating a loss of confidence, for example, if a lawyer is deceived by their client, the client refuses to accept and act upon the lawyer’s advice on a significant point, a client is persistently unreasonable or uncooperative in a material respect, there is a material breakdown in communications, or the lawyer is facing difficulty in obtaining adequate instructions from the client. However, the lawyer should not use the threat of withdrawal as a device to force a hasty decision by the client on a difficult question.

The supporting affidavit to the motion identifies serial attempts to leave messages with or otherwise contact the Applicant. All to no avail. It is patent that a lawyer cannot act without instructions from his client. By refusing to communicate with Mr. Klepinin, Mr. Kermanshah put his lawyer in an impossible position.

Consequently I saw no alternative but to relieve Mr. Klepinin from his obligations of solicitor of record in this matter and I so ordered.

There was no order as to expenses with regard to the motion to be removed as counsel of record.

Motion to Dismiss

As noted earlier, counsel for the Insurer, Ms. Deol, also attended on this motion. Although she stated that the Personal took no position as to removal of counsel, she emphasised that it was troubled by the information contained in the motion record which revealed that subsequent to the mediation, Mr. Kermanshah neither returned calls nor letters sent by his counsel and was unavailable to provide instructions.

Ms. Deol also pointed to Mr. Kermanshah’s failure to attend either the motion or the pre-hearing and requested orally that the arbitration be dismissed as abandoned by Mr. Kermanshah.

Rule 67.8 provides that motions may be brought orally during a pre-hearing at the discretion of the arbitrator. I declined, however, to exercise that discretion and hear the motion without clear notice to Mr. Kermanshah that a dismissal of his claims was contemplated.

Although the Notice of Pre-Hearing stated “If you or your representative do not attend at the hearing, the arbitrator may dispose of the case in your absence and you will not be entitled to any further notice of the arbitration proceedings”, it is not at all clear whether just the motion for removal of counsel or the entirety of the arbitration might be disposed of by the arbitrator in the absence of Mr. Kermanshah.

Consequently, I refused to rule on the Insurer’s request without a further attempt to put Mr. Kermanshah on notice that such a motion was pending. Such notice would also have to make clear that a potential consequence of Mr. Kermanshah’s non-attendance and non-communication would be the dismissal of his arbitration with or without an expense award against him. He has the right to be heard, the exercise of which requires proper notice.

While Mr. Kermanshah has now received notice of the Insurer’s intentions by letter decision following the motion, I found it appropriate that the Personal proceed on the basis of a formal Notice of Motion, served in accordance with the Practice Code, in such a situation and so ordered.

I ordered that, in accordance with the order given at the time of the pre-hearing, unless Mr. Kermanshah requested otherwise, any motion would be dealt with in writing, in accordance with the hearing schedule set out at the time of the motion hearing and pre-hearing.

These orders were contained in a letter decision that was sent to the parties, including Mr. Kermanshah, on August 17, 2015.

In accordance with my order, The Personal served and filed a dismissal motion on February 2, 2016. On March 24, 2016, the Personal served and filed additional materials in which it claimed that, inter alia, Mr. Kermanshah’s arbitration was frivolous and vexatious, and set out the expenses claimed by the Insurer in this matter.

Despite the information contained in the letter decision, the motion materials and the supplementary motion materials, no response was ever received from Mr. Kermanshah.

When a motion is unopposed, it means that I am invited to accept all those allegations made in the proceedings that do not offend reason and appear to have some factual basis in the record.

I see no reason not to accept the Insurer’s assertion that the continuation of this arbitration has become vexatious. It is also patently obvious from the record that Mr. Kermanshah has abandoned this arbitration. Consequentially, I accept that the reasonable outcome should be dismissal of the arbitration.

The route to that dismissal takes us through sections 4.6 and of the Statutory Powers Procedures Act which gives me the power to control the process and make orders restraining abuse and Rule 68 of the Code, which allows for the dismissal without a full hearing when a matter has become frivolous and vexatious.

Letting this arbitration proceed, unopposed, to the final hearing, with the Insurer accumulating costs all the way is not only inappropriate but a waste of resources, and potentially unfair to both parties.

Section 23 of the SPPA and Rule 68 of the Code provide the keys to dismissal of a matter without a substantive hearing.

Section 23 of the SPPA is invoked because on the face of it, it would be a travesty of justice and waste of resources if there was no way to terminate an arbitration in circumstances where there was no possibility of success at a hearing, or if a party simply abandoned the process.

If a party bringing the arbitration is unwilling to participate in the process, and providing instructions to counsel, let alone appearing for pre-hearings, motions, and hearings as required, then, arguably, that process becomes vexatious and ultimately an abuse of process.

Section 4.6 of the SPPA contains provisions which allow for the dismissal of hearing. Section 4.6(1) specifically allows for a dismissal where “the proceeding is frivolous, vexatious or is commenced in bad faith.”

Section 4.6(2) provides some preconditions for a dismissal on this basis including provisions for notice and the opportunity to make submissions.

Section 7(1) also provides for proceeding without further notice where there is a non-attendance at a proceeding with notice.

While the SPPA provisions provide some guidance as to practice in an administrative tribunal environment, the Rules of Civil Procedure which govern court proceedings, give some insight into the policies at play in early dismissal.

Since the introduction of the new summary judgement procedures, the dismissal of an action prior to a full hearing in the court system is now much more of an ordinary event there than in arbitration.⁴

Under Rule 20.04(1) of the Rules of Civil Procedure, summary judgment will be granted if: (a) the Court is satisfied that there is no genuine issue requiring a trial, or (b) the parties agree to have all or part of the claim determined by summary judgment and the court is satisfied that it is appropriate to grant summary judgment.

While the Rules of Civil Procedure provide a virtually complete code of practice for the courts, and indeed the court rules deal with all manner of dismissals. The Code which applies to arbitration is not as comprehensive.

In fact other than Rule 68, relating to dismissal without a hearing, there is no specific provision for a motion to dismiss in the Code. I find, however, that such is not a barrier to dealing with the Insurer’s motion.

A motion, after all is simply an application to a court or an adjudicator requesting an order that some act be done or some finding made in favour of the moving party.

Preliminary issue hearings which may result in dismissal of a matter without a substantive hearing proliferate at FSCO, even though there is no specific provision for them either in the Practice Code. The motion to dismiss in this matter is nothing more than a continuation of that pragmatic approach to procedure that has distinguished practice at the Commission.

“Frivolous and Vexatious” and Abuse of Process

While I have no direct evidence about the situation surrounding the commencement of this arbitration, nor about the factual foundation of Mr. Kermanshah’s claim, there are grounds to consider that the continuation of this arbitration would be “vexatious” and an abuse of process.

“Vexatious” is not a common term. Rather, it is a term of art used in legal decisions and law for centuries to describe a specific manner of conduct. Lord Blackburn observed in Metropolitan Bank Ltd. et al. v. Pooley (1885) 10 App. Cas. 210:

(T)he Court had inherently in its power the right to see that its process was not abused by a proceeding without reasonable grounds, so as to be vexatious and harassing.

Lord Blackburn’s comments indicate that there is a close linkage between vexatious conduct and the abuse of the process of a court or tribunal.

R.E. Mesbur J. in Deep v. College of Physicians and Surgeons of Ontario (2010 ONSC 5248, [2010] O.J. No. 4017) summarised the potential scope of the reasons for judicial intervention:

Abuse of process is a discretionary doctrine that is not limited by set categories. Its general purpose is to bar proceedings that are inconsistent with public policy considerations. Principally, these considerations include preventing fragmentation of litigation, multiplicity of proceedings and inconsistent results, as well as preventing inefficient use of judicial resources and also preventing collateral attacks on orders.

As Cameron, J. once remarked (Canada (Attorney General) v. Hainsworth [2004] O.J. No. 2730): “the categories of vexatious proceedings are never closed and must be determined by an objective standard.” He further noted that: “(A)n action that initially had some merit might be rendered vexatious through subsequent conduct.”

Lord Diplock said in Hunter v. Chief Constable of West Midland Police ([1982] A.C. 529):

My Lords, this is a case about abuse of the process of the High Court. It concerns the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nonetheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people.

Bowen, L.J. in Willis v. Earl Beauchamp ([1886-90 ] All E.R. 515) characterized vexatious litigation as a process that “can really lead to no possible good.”

I find that prolonging an arbitration in which one party clearly has no interest in participating, and forcing the other statutory party to prepare and continue with the proceeding to its ultimate denouement “can really lead to no possible good” and would bring the administration of justice into disrepute.

Having regard to the spirit of Rule 1.1 of the Practice Code that promotes a process that is “most just, quickest and least expensive”, I find that the continuation of this arbitration would run against the spirit of the process. The Insurer would be prejudiced by any continuation of the arbitration process beyond this point. The Applicant would be needlessly exposed to further expense orders.

Mr. Kermanshah launched this arbitration through his then counsel. He was served notice of a motion by his own counsel to be removed from the record, and chose not to either reply or appear. His own counsel deposed as part of that motion that Mr. Kermanshah was not replying to any communications from his law firm.

I ordered Mr. Kermanshah in my letter decision of August 17, 2015 to notify the Commission by September 17, 2015 if he intended to continue with this arbitration. No such notice has been received by the Commission.

Nor has Mr. Kermanshah advised of any new counsel, or that he intends to proceed without counsel in this matter.

Even the Insurer’s motion requesting that this matter be dismissed has generated no response from Mr. Kermanshah.

Given that all of these notices have been served on Mr. Kermanshah and that he has not deigned to respond or participate in any way in the pre-hearing and hearing process, I find that he has effectively abandoned his claims and ignored his obligations under section 279(5) of the Insurance Act to attend pre-hearings and hearings or provide someone with full authority in his place.

For all the above reasons I order that Mr. Kermanshah`s arbitration be dismissed.

EXPENSES:

No expenses being requested by any party in the motion for removal of the solicitor from the record, no expense order was made in that motion.

The Personal, however, has requested an expense order with regard to its participation in this arbitration and its costs related to the dismissal. Given that the Personal was successful in this arbitration proceeding and Mr. Kermanshah provided no reasons that an expense order should not be made, I find that the Personal is entitled to its reasonable expenses.

The Personal submitted a costs outline, which was duly served on Mr. Kermanshah. Quite properly the expenses claimed appear to be based on the legal aid tariff and total $2,772.07. I find that the amount claimed is both modest and reasonable and within the realm of what Mr. Kermanshah would have reason to expect to be ordered. Consequently I order that Mr. Kermanshah pay $2,772.07 including HST to the Personal as its fixed expenses in this matter.

June 30, 2016

John Wilson Arbitrator

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

Mr. Volodymyr Klepinin is permitted to withdraw as counsel of record in this matter.
Mr. Kermanshah’s arbitration is dismissed as vexatious and abandoned.
Mr. Kermanshah shall pay the Personal its expenses in this matter which I fix at $2,772.07 including HST.