Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2016 ONFSCDRS 326

Appeal P16-00028

OFFICE OF THE DIRECTOR OF ARBITRATIONS

SHAAZIL KHAN, by his litigation Guardian, QAMAR AHMAD SHASADAH Appellant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Respondent

BEFORE: Delegate Jeffrey Rogers

REPRESENTATIVES: Ms. Samia Alam, solicitor for Mr. Khan Mr. Nicholaus de Koning, solicitor for State Farm

HEARING DATE: By Written Submissions, completed on November 14, 2016

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990 c. I.8 as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Regulation 664, R.R.O. 1990, as amended, it is ordered that:

The Arbitrator’s decision is rescinded and this matter is remitted for rehearing before a different Arbitrator.
If the parties are unable to agree about expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

December 5, 2016

Jeffrey Rogers Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Shaazil Khan, a minor, by his Litigation Guardian, Qamar Ahmad Shasadah, appeals the Arbitrator’s decision of February 29, 2016. He submits that the Arbitrator erred in ordering him to pay State Farm its expenses of the arbitration in the amount of $3,172.50. For the reasons that follow, I conclude that the Arbitrator’s order cannot stand because the Arbitrator failed to give reasons.

II. BACKGROUND

Shaazil Khan was born on November 29, 2004. He was six years old when he was injured in a motor vehicle accident on April 26, 2011. He claimed statutory accident benefits from State Farm. When disputes arose regarding his entitlement to further benefits, he applied for mediation. He then applied for arbitration at the Commission after mediation failed to resolve disputes regarding his entitlement to a non-earner benefit, attendant care, and the cost of two examinations or assessments.

Rule 10.2(c) of the Dispute Resolution Practice 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.

Qamar Ahmad Shasadah, Mr. Khan’s father, pursued his son’s claims throughout the process. A Form P, showing Mr. Shasadah as the representative, was filed with the Application for Arbitration, but the Application incorrectly listed Mr. Khan as the Applicant.

The Application for Arbitration was withdrawn about 3 years after it was filed. At the time, a hearing was scheduled to start in about 2 weeks. Counsel agreed to use one of the scheduled days to address the dispute that remained regarding State Farm’s entitlement to its legal expenses.

The Arbitrator concluded that State Farm was entitled to its expenses. The body of the decision and the Order of February 29, 2016 required Mr. Khan to pay State Farm its expenses in the amount of $3,172.50.

In his letter acknowledging the Appeal, Delegate Blackman pointed out the patent error in ordering expenses against a minor and he temporarily stayed the order. The Arbitrator later amended the body of his decision and the Order to show that payment was ordered against Qamar Ahmad Shasadah in his capacity as Litigation Guardian for Shaazil Khan.

On July 7, 2016, on consent of the parties, Delegate Blackman ordered that the title of proceedings be similarly amended. On August 17, 2016, I declined to lift the stay of the order on the grounds of the apparent strength of the appeal.

II. ANALYSIS

The Notice of Appeal and written submissions list several alleged errors of law. I will address only one, since it encompasses all of the allegations. I find that the Arbitrator failed to give any reasons for the Order. Therefore, one cannot know what other reversible errors the Arbitrator might have made.

Failure to give reasons is a breach of natural justice that mandates setting aside the decision.

The Supreme Court of Canada set out this principle in Baker v. Canada (Minister of Citizenship and Immigration).¹

It is now appropriate to recognize that, in certain circumstances, including when the decision has important significance for the individual, or when there is a statutory right of appeal, the duty of procedural fairness will require a written explanation for a decision.

In its decision in Kanareitsev v. TTC Insurance Company Limited,² the Divisional Court summarized the jurisprudence regarding the adequacy of reasons as follows:

Determining adequacy of reasons is a contextual exercise. The essential question is whether reasons provide the basis for meaningful judicial review.
The reasoning process must set out and reflect consideration of the main relevant factors.
It is insufficient to summarize parties’ positions and baldly state conclusions.
Factors to be considered include the decision maker setting out essential findings of fact and the evidence upon which they are based. The reasons must address the major points in issue.
Particularly when results turn on credibility and involve fact-driven analysis, appellate review must take proper account of the distinct advantage of the decision maker’s assessments. Appeal officers must not try the case de novo or substitute his or her view.

The Arbitrator’s decision sets out the relevant background. Next, the Arbitrator lists the criteria set out in Rule 75 which an Arbitrator must consider in awarding expenses. Then, the Arbitrator records the parties’ positions regarding expenses and agreed with “the Applicant’s argument that the expenses must be reasonable under the circumstances and the award of expenses does not necessarily flow from a withdrawal.”

After that, the only findings that the Arbitrator made are as follows:

I am satisfied that the amount of hours and the rates charged for these hours are reasonable. I also find that the out of pocket disbursements are unrecoverable as argued by the Applicant.

Accordingly, I find and order that Mr. Khan, via his litigation guardians, shall pay the legal expenses of State Farm at the fixed amount of $3,172.50, inclusive of all fees, disbursements and taxes.

In my view, the Arbitrator simply set out the parties’ positions and stated his conclusions, as prohibited by Kanareitsev. In reviewing the decision, I am unable to determine from the findings, what criteria the Arbitrator considered to be relevant or how they were applied. I am unable to determine which of State Farm’s submissions the Arbitrator accepted. I am also unable to determine what facts led the Arbitrator to conclude that the amount claimed was reasonable.

Since I am unable to determine the basis of the Arbitrator’s decision, I conclude that the reasons do not provide the basis for meaningful appellate review. I accept State Farm’s submission that it is not the function of appeals to usurp an Arbitrator’s jurisdiction to make the decision which is under appeal. This matter must therefore be remitted for a new hearing, before a different Arbitrator.

IV. EXPENSES

I received no submissions on expenses of the appeal, except a request for expenses by the Appellant. I am not prepared to decide the matter on that limited record. Therefore, if the parties are unable to agree about expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.