Financial Services Commission of Ontario

Neutral Citation: 2016 ONFSCDRS 78 FSCO A07-002666

BETWEEN:

JOHNSON BENEDICT THIYAGARAJAH (ESTATE) Applicant

and

AMERICAN HOME ASSURANCE COMPANY Insurer

REASONS FOR DECISION

Before: Susan Sapin Heard: December 4, 2015, at the offices of the Financial Services Commission of Ontario in Toronto. Appearances: Yasar Saffie for Mr. Thiyagarajah (Estate) Ruth A. Henneberry for American Home Assurance Company

Issues:

Johnson Benedict Thiyagarajah died intestate in a motor vehicle accident on September 28, 2005. The Law Office of Meleni David applied for statutory death benefits of $223,000 on behalf of family members under the Schedule¹ from American Home Assurance Company (“American”), on the basis that they were financially dependent on the deceased. American refused to pay the death benefits, for want of sufficient proof of financial dependency. The parties were unable to resolve their disputes through mediation, and the Law Office of Meleni David submitted an Application for Arbitration, purportedly on behalf of the Estate of the deceased, to the Financial Services Commission of Ontario on December 18, 2007, under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this motion hearing are:

1. Should the law firm of Meleni David be permitted to withdraw from this arbitration proceeding under Rule 9.7 of the Dispute Resolution Practice Code?

2. Should the arbitration proceeding be stayed until the Applicants produce documents in support of their claim?

Result:

1. The law firm of Meleni David is permitted to withdraw from this proceeding on condition that it advise Ms. Thevarambai Bendedict Thiyagarajah (“Ms. Thevarambai”), the deceased’s mother, orally and in writing, in both English and Tamil, of the outcome of this proceeding.

2. The arbitration proceeding is stayed until the Applicants produce the documents required by the insurer.

Introduction:

This hearing arises as the result of the alleged breakdown of the solicitor-client relationship between the Law Offices of Meleni David (“LOMD”) and their clients, family members of the deceased. LOMD seeks to be removed from the record. If the breakdown has occurred, then the question of how the arbitration is to proceed must be determined. American submits that the claimants have failed to provide sufficient proof of their claims and the arbitration should be stayed until they do. Furthermore, American has taken the position that the family members must pursue their claims through the estate of the deceased.

Having considered the Affidavit filed by LOMD, Commission records and submissions made at the hearing, I have concluded that counsel for the claimants should be permitted to withdraw from the arbitration proceeding, the arbitration should be stayed until the required documentation is produced, and the claimants are not required to pursue their claims for death benefits in the name of the estate.

Background:

This case has a long history before the Commission. In 2007, LOMD filed for mediation and arbitration on behalf of, eventually, fourteen alleged dependent family members of the deceased living in Toronto and Sri Lanka. The initial pre-hearing was held on April 21, 2008. Mr. Vijayakumar Santhiapillai, the deceased’s uncle, identified as the Administrator of the Estate, attended, accompanied by a number of the deceased’s relatives. The pre-hearing was adjourned several times to allow the claimants to obtain documents to prove their financial dependency. As the parties wished to explore settlement of the claims, no hearing date was set.

The pre-hearing resumed on April 24, 2009, at which time the required documentation had still not been produced. I issued an Order that the claimants produce tax returns, bank statements, evidence of living expenses of the deceased, and information about money transfer companies used by the deceased, within 60 days. I advised the parties that the pre-hearing would be reconvened once the claimants had produced the required information.

No documents were forthcoming. The Commission records indicate the file was closed in 2010 by a case administrator on the basis that it had been abandoned, due to inactivity. The file lay dormant until April 17, 2013 when, after almost four years of inactivity, LOMD wrote to the Commission to request that the Commission re-open the file because the Application for Arbitration was never withdrawn or abandoned, and neither the Insurer nor the Commission had advised the claimants that their file had been closed. American Home objected to this on the basis that they understood the Application for Arbitration had been abandoned; they had never received the productions that had been ordered; and they would suffer significant prejudice in attempting to adjust the claim eight years after the death of their insured.

I reviewed the Commission file and found that it was closed through administrative error and not as a result of any final determination by an arbitrator. Consequently, the file was re-activated. On June 11, 2013 I wrote to the parties and advised that, before a further pre-hearing could be scheduled, the claimants would have to satisfy me that best efforts had been made to comply with my Order of April 24, 2009, and must provide an explanation for the extraordinary four-year delay in pursuing the matter, within 30 days.

There was no further communication from the claimants for two years, until LOMD wrote to the Commission on September 25, 2015, advising it was “in the process of removing themselves as Counsel of Record” and requesting a date for this motion.

Motion to Withdraw from the Arbitration Proceeding

Under Rule 9.8 of the Dispute Resolution Practice Code, an adjudicator may permit a legal representative to withdraw from a proceeding without the written consent of a party, subject to such terms as the adjudicator considers just.

There is no written consent in this case.

LOMD brought this motion to withdraw on the basis that the solicitor-client relationship has broken down.

Based on the Affidavit of Ms. Dushi Balasubramaniam (“Affidavit”), sworn November 23, 2015, other documentary evidence in support of the motion, and the history of this matter at the Commission,² I find that the solicitor-client relationship between the claimants and counsel has indeed broken down despite counsel’s best efforts.

I accept the evidence as set out in the Affidavit, which states that Mr. Santhiapillai, the deceased’s uncle, retained LOMD on October 12, 2005 to advance a claim for death benefits for himself and family members of the deceased. Thereafter, the firm worked with Mr. Santhiapillai and Ms. Thevarambai Benedict Thiyagarajah (“Ms. Thevarambai,”) mother of the deceased. The deceased’s family members were unable to provide tax returns, bank statements and other documents requested by the Insurer. In 2013, Mr. Santhiapillai decided to discontinue his claim in the estate, as he was not willing to submit his personal documents. He requested that LOMD communicate with Ms. Thevarambai regarding the claims for death benefits.³

LOMD submits that it has been unable to obtain meaningful instructions from Ms. Thevarambai and the solicitor-client relationship has broken down as a result.

I am satisfied the evidence before me shows that counsel attempted several times to contact Ms. Thevarambai by telephone and letter to advise her of the documents that still needed to be produced to support her and her relatives’ claim for death benefits. I find these attempts were unsuccessful. When the law office attempted to obtain the tax returns for the deceased from Revenue Canada, Revenue Canada advised that a family member should be appointed as the Estate Trustee without a Will, before it would release the personal documents of the late Mr. Johnson.⁴

In January, 2015, LOMD submitted an Application for a Certificate of Appointment of Estate Trustee without a Will to the Superior Court to appoint Ms. Thevarambai as the Estate Trustee for Mr. Johnson’s Estate, and served it on all of the next of kin.⁵ Despite several efforts, the law firm was unable to contact Ms. Thevarambai until she contacted them eight months later on August 10, 2015. She was either unwilling or unable to sign the documents herself and requested the law firm to obtain instructions from her son in the United Kingdom.

LOMD wrote to Ms. Thevarambai in both English and Tamil to explain that her son in the UK was not their client; that it would be impractical for them to deal with him directly; that it was important she sign the documents to proceed with her claim; and the consequences of her failure or inability to do so. The law firm maintains it has been unable to obtain meaningful instructions from Ms. Thevarambai, and I find this to be the case.

For these reasons, I find the solicitor-client relationship has broken down. LOMD is permitted to withdraw from this proceeding on condition that it undertake to inform Ms. Thevarambai, in the Tamil language, of the outcome of this proceeding and of the obligations of the claimants to produce documentary evidence should they wish to proceed with their claims for death benefits. LOMD shall also advise each claimant in writing of the outcome of this proceeding.

Motion for a Stay of the Arbitration Proceeding:

American brought a motion for a stay of the arbitration hearing until such time as the claimants produce documents to support their claims. It submits that no documents capable of supporting their claims have been produced to date, nor has there been any explanation for the delay in doing so. Based on my review of the evidence and findings above, I agree.

In the interests of fairness and in order to move this matter along, I agree with American’s request that the arbitration proceeding should be stayed until the documents it requires to adjust the claims are produced. As a condition of the stay, I require American to provide Ms. Thevarambai with a list of the documents previously provided and those that remain outstanding, within 30 days of this decision, with a copy to the Commission.

Within 30 days after receiving American’s list of documents required, Ms. Thevarambai shall contact the Commission in writing to advise how, or if, she intends to proceed with her claim for death benefits. If Ms. Thevarambai contacts the Commission within 30 days, a pre-hearing resumption will be scheduled. If she does not contact the Commission within that time, an arbitration hearing will be scheduled for a final determination of the claims of any remaining claimants against The American Home Assurance Company.

The Applicants in this proceeding are the family members claiming death benefits, and not the Estate of the deceased:

LOMD originally submitted a Death and Funeral Benefits Application (OCF-4) to American Home on behalf of the dependents of the deceased in October 2005, shortly after the accident. The form listed seven family members as claimants and was signed by Vijayakumar Santhiapillai, uncle of the deceased, who had retained the firm. American Home denied the death benefit and Mr. Santhiapillai applied for mediation.

When it received the Application for Mediation, American Home wrote to the FSCO mediator, advising, incorrectly, that the claimant should not be listed as Mr. Santhiapillai, but as the Estate of Johnson Benedict Thiyagarajah, because “Johnson Benedict Thiyagarajah was the individual involved in the motor vehicle accident who suffered fatal injuries.”

Regarding the dispute resolution process, including mediation, subsection 279(3) of the Insurance Act⁶ provides that, “for the purposes of this section and sections 280 to 284, “insured person” includes a person who is claiming funeral expenses or a death benefit under the Statutory Accident Benefits Schedule.”

I find the Schedule itself is clear that family members of a deceased insured person may claim death benefits directly from the deceased’s insurer. Section 25(1) of the Schedule states that the insurer shall pay a death benefit “in respect of an insured person if he or she dies as a result of an accident,” within 180 days of the accident. Section 25(2)2 states that the death benefit “shall provide . . . a payment to each of the insured person’s dependants of $10,000. . . .”⁷

There is no requirement for claims to be made in the name of, or through the estate of the deceased insured person. The only requirement is that the claimants be able to prove that they are dependants of the deceased. Under the Schedule, “. . . a person is a dependant of another person if the person is principally dependent for financial support or care on the other person . . .”⁸

Although from a practical point of view it may prove difficult for the individual claimants to establish their claims for death benefits without an Estate Trustee, due to the difficulty in obtaining some necessary information to support their claims, I find they are not required to apply for the appointment of an Estate Trustee to pursue their claims for death benefits against American Home.

EXPENSES:

The question of entitlement to expenses of the arbitration proceeding is deferred until the final determination of this matter.

March 9, 2016

Susan Sapin Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2016 ONFSCDRS 78 FSCO A07-002666

BETWEEN:

JOHNSON BENEDICT THIYAGARAJAH (ESTATE) Applicant

and

AMERICAN HOME ASSURANCE COMPANY Insurer

ARBITRATION ORDER

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

1. The Law Offices of Meleni David are permitted to withdraw from the arbitration proceeding.

2. The Law Offices of Meleni David shall inform Ms. Thevarambai Benedict Thiyagarajah in both English and Tamil, of the outcome of this motion.

3. The arbitration hearing is stayed until the Applicants have complied with the production order dated April 24, 2009.

4. Under s.279(3) of the Insurance Act, the family members claiming death benefits from the American Home Insurance Company are “insured persons” for purposes of the dispute resolution process and are not required to pursue their claims through the Estate of the deceased.

5. The American Home Insurance Company shall advise the Applicants in writing within 30 days of the documents that have been produced to date and of the documentary information that remains outstanding.

March 9, 2016

Susan Sapin Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Affidavit, paragraph 5, Motion Record of the Law Offices of Meleni David
3. 3Ibid., paragraph 6.
4. 4Affidavit, paragraph 19.
5. 5Affidavit, paragraphs 20 and 21.
6. 6R.S.O. 1990, c.I.8, as amended
7. 7Where optional coverage was not purchased.
8. 8Section 2(6)