Neutral Citation: 2016 ONFSCDRS 22 FSCO A13-012922

BETWEEN:

JEYASUNTHER PARANSOTHY Applicant

and

UNIFUND ASSURANCE COMPANY Insurer

DECISION ON A MOTION

Before: Arbitrator Cheryl Gaster

Heard: By teleconference on October 1, 2015 and written submissions due November 13, 2015

Appearances: Mr. Jeyasunther Paransothy did not participate Ms. Meredith Harper for Unifund Assurance Company

Issues:

The Applicant, Mr. Jeyasunther Paransothy, was injured in a motor vehicle accident on December 14, 2010, and sought accident benefits from Unifund Assurance Company (“Unifund”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation and Mr. Paransothy, through his representative, 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 Motion are:

Should Mr. Paransothy’s Application for Arbitration (“Application”) be dismissed without a Hearing on the grounds that it is frivolous, vexatious or commenced in bad faith pursuant to Rule 68 of the Dispute Resolution Practice Code (“the Code”)?
In the alternative, should Mr. Paransothy’s Application be deemed withdrawn pursuant to Rule 70 of the Code?
Is Mr. Paransothy liable to pay Unifund’s expenses pursuant to subsection 282(11) of the Insurance Act?

Result:

Pursuant to Rule 68.1 of the Code, a finding that Mr. Paransothy’s Application for Arbitration is frivolous, vexatious or commenced in bad faith is not appropriate in these circumstances.
Pursuant to Rule 70 of the Code, Mr. Paransothy’s Application for Arbitration is deemed withdrawn.
Mr. Paransothy is to pay to Unifund its expenses in the amount of $500.00 inclusive of fees, disbursements and HST, forthwith.

EVIDENCE AND ANALYSIS:

Chronology

On September 5, 2013, the Report of Mediator was released.

On October 18, 2013, Mr. Paransothy’s Application was received by the Commission. Although unsigned by Mr. Paransothy, it was signed on his behalf by his then legal representative.

On March 5, 2015, the Pre-Hearing was conducted before me. Mr. Paransothy participated by telephone, although his counsel, Mr. Alim Ramji, along with Unifund’s representative and Unifund’s counsel all attended in person. A resumption was scheduled for April 30, 2015 to permit an exchange of documents and, as well, the Arbitration Hearing was scheduled for August 9 and 10, 2016.

On April 30, 2015, Mr. Alim Ramji, Mr. Paransothy’s legal counsel, requested his firm be removed from the record as Mr. Paransothy’s counsel as Mr. Paransothy had ceased communicating with him, resulting in a breakdown in the solicitor-client relationship. Mr. Paransothy did not participate nor had he contacted ADR Chambers.

On June 10, 2015, I ordered that Mr. Ramji and the law firm of D’Angela Fox Vanounou be removed as representatives of Mr. Paransothy based on the evidence demonstrating compliance with the requirements of Rule 9 of the Code including but not limited to Mr. Ramji’s documented failed attempts to contact Mr. Paransothy. In addition, I gave Mr. Paransothy notice that should he fail to contact ADR Chambers by August 10, 2015, it would be assumed his intention was to not advance his Application. Mr. Paransothy did not participate nor has he contacted ADR Chambers.

On August 13, 2015, I provided Mr. Paransothy with written notice of a teleconference scheduled for October 1, 2015, to hear Unifund’s submissions regarding its request that an order be issued dismissing his Application and for him to pay Unifund’s expenses.

On October 1, 2015, Unifund made oral submissions in respect of its request that Mr. Paransothy’s Application be dismissed and of its request for costs. Mr. Paransothy did not participate nor had he contacted ADR Chambers. I telephoned the last number ADR Chambers has on record for Mr. Paransothy and was informed that he was not there; I left a message with the individual who answered the call for Mr. Paransothy to contact ADR Chambers.

On October 14, 2015, Mr. Paransothy was given written notice that he had a further thirty (30) days to contact ADR Chambers and advise of his intentions regarding his Application. In addition, he was given notice that the consequence of his failure to communicate with ADR Chambers could include a dismissal of his Application and an award of costs to Unifund.

To date, Mr. Paransothy has not contacted ADR Chambers.

Unifund submits that Mr. Paransothy’s failure to attend, participate or respond to any written communication, despite notice, meets the test for dismissal of his Application as set out in Rule 68 of the Code.

Decision

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

Arbitrators have taken two different but equally efficacious approaches when dealing with the issue of abandoned proceedings. When dismissing proceedings without a Hearing, some Arbitrators rely on Rule 68, while others rely on the principle of “deemed” or “constructive withdrawal” under Rule 70.3. As noted in Fedoseev and RBC General Insurance Company,² both approaches are an attempt to interpret the Rules consistent with Rule 1.1, which calls for a broad interpretation designed to achieve the most just, quickest and least expensive resolution of disputes.

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.” Rule 68’s other subsections require the adjudicator to deliver written notice to all parties of the intention to dismiss under Rule 68.1 and provide for a party to object to the dismissal of the proceedings.

Neither the Insurance Act, the Schedule, the Statutory Powers Procedure Act, nor the Code provide definitions for the terms “frivolous”, “vexatious” or “commenced in bad faith”. However, Black’s Law Dictionary and case law provide some guidance. Black’s Law Dictionary defines the terms “frivolous and vexatious” as when the party initiating the action is not acting bona fide and merely initiates the proceeding in order to annoy or when knowing the proceeding will not lead to a practical result. I find the reasoning in the case law to be insightful on the applicability of these terms to Rule 68.1. In Almaliah and Dominion of Canada General Insurance Company,³ the Arbitrator indicated that a finding of frivolous, vexatious or commenced in bad faith can only be made after an assessment of the merits of the claim. In Fedoseev,⁴ the Arbitrator concluded the Black’s Law Dictionary definition of the terms infers a wilful intention on the part of the litigant to bring an unmeritorious claim, to act in a malicious manner and to fail to demonstrate they have made an honest mistake. Subsequent decisions in which those findings are followed include Niaze Tibi and Economical Mutual Insurance Company⁵ and James King and Waterloo Insurance Company.⁶ These cases speak to a high threshold in order to conclude that a proceeding is frivolous, vexatious or is commenced in bad faith.

To hold that Mr. Paransothy’s Application is “frivolous, vexatious or commenced in bad faith” would be to find that Mr. Paransothy knew from the outset of his claim that it was without merit. To make that determination requires an assessment of the merits of his case and consideration of the substantive issues in dispute along with the evidence in support of or rebutting his claim, which may include evidence of witnesses and cross-examination of those giving testimony. Mr. Paransothy’s claims are not being subjected to this independent scrutiny as none of these processes are being undertaken in this matter.

No evidence has been presented to me to establish that Mr. Paransothy’s failure to continue to participate, communicate, or respond on his own behalf support a finding that his Application is frivolous, vexatious or commenced in bad faith. Therefore, based on the circumstances of this case, I find that concluding that Mr. Paransothy’s Application is frivolous, vexatious or commenced in bad faith under Rule 68.1 is not appropriate. However, Mr. Paransothy’s failure to continue to participate, communicate or respond has interfered with the dispute resolution process.

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

Neither the Insurance Act, the Schedule, the Statutory Powers Procedure Act nor the Code provides a specific Rule which deals with the abandonment of claims. However, Rule 70 provides that an adjudicator may permit a withdrawal on such terms and conditions as the Arbitrator deems just even in circumstances where a party does not agree to a withdrawal.

In all the circumstances of this case, Mr. Paransothy’s actions over the several months since the first Pre-Hearing have led to a presumption of a lack of interest in advancing his claim. On June 10, 2015, I granted the order for his counsel to be taken off the record due to a breakdown in solicitor client relationship, based on a lack of communication on the part of Mr. Paransothy since in or around early March, 2015.

I find that Mr. Paransothy has withdrawn from the process as he has not communicated with his counsel since earlier in the process and he has not participated in the subsequent proceedings over an eight-month period. This permits ADR Chambers to close the file and for Unifund to conclude that further proceedings are unlikely, while at the same time, Mr. Paransothy’s claim is not extinguished. This broad interpretation of Rule 70 is consistent with the mandate that the Rules are to be interpreted to produce the most just, quickest and least expensive resolution of the dispute.

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.

Unifund requested expenses for the cost of its preparation and attendance at the proceedings. I heard submissions with regard to this issue on October 1, 2015.

Given the particular circumstances of this claim, I am ordering Mr. Paransothy to pay to Unifund the amount of $500.00 inclusive of fees, disbursements, and HST, forthwith.

January 18, 2016

Cheryl Gaster Arbitrator

Financial Services Commission of Ontario