Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2016 ONFSCDRS 87

FSCO A13-001849

BETWEEN:

ESTATE OF KHOSHABA DANIAL

Applicant

and

MOTOR VEHICLE ACCIDENT CLAIMS FUND

Insurer

Before:

Arbitrator Jeffrey Shapiro

Heard:

By written submissions completed on October 21, 2015 and in person at ADR Chambers on January 14, 2016

Appearances:

A representative for the Estate of Mr. Khoshaba Danial did not participate

Mr. Tuyen (Joseph) Nguyen participated for Mr. Khoshaba Danial, via written submissions only

Mr. Mark MacNeill participated for the Motor Vehicle Accident Claims Fund

Issues:

The Applicant, the late Mr. Khoshaba Danial, was injured in a motor vehicle accident on August 4, 2010 and sought accident benefits from the Motor Vehicle Accident Claims Fund (“MVAC Fund”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation and Mr. Danial, 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. As set-forth below, Mr. Danial died after applying for arbitration.²

The issues in this Motion are:

Should Mr. Tuyen (Joseph) Nguyen and the law firm of Allan S. Blott & Associates be removed from the record as legal representative of the late Mr. Danial and/or his Estate?
Should Mr. Danial’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. Danial’s Application be deemed withdrawn pursuant to Rule 70 of the Code?
Is the late Mr. Danial liable to pay the MVAC Fund’s expenses pursuant to subsection 282(11) of the Insurance Act?

Result:

Mr. Tuyen (Joseph) Nguyen and the law firm Allan S. Blott & Associates are removed from the record as legal representative of the late Mr. Danial and/or his Estate.
A finding that this Application for Arbitration is frivolous, vexatious or commenced in bad faith is not appropriate in these circumstances.
Mr. Daniel’s Application for Arbitration is deemed to be withdrawn pursuant to Rule 70 of the Code.
Each party shall bear its own expenses.

EVIDENCE AND ANALYSIS:

Chronology

On November 20, 2012, the Report of Mediator was released. On February 21, 2013, Mr. Danial’s Application was received by the Commission. After the Application was filed, the Applicant passed away. While the precise date has not been provided to the Commission, it was prior to the first Pre-Hearing conference, and sometime on or before July 14, 2014.³

By letter, dated June 1, 2015, Mr. MacNeill wrote to ADR Chambers seeking to have this matter dismissed or the Pre-Hearing be resumed, on the basis that “the file has been in limbo for almost two years.” In turn, on June 15, 2015, Mr. Nguyen wrote that “we wish to withdraw application file [no.] A13-001849.” Mr. Nguyen advised that his firm has been unsuccessful in reaching the Applicant’s family to determine who will be representing the Estate. Based on the record before me, I do not have any basis to conclude that an Estate has been opened.

On June 25, 2015, a Pre-Hearing was conducted before me, via telephone. Mr. Nguyen clarified that his firm sought to be removed as counsel. As his letter did not comply with Rule 9.7 regarding the request to be removed as counsel, I denied the request to be removed, but did grant leave to file another Motion, and provided further direction in a Pre-Hearing letter.

On October 14, 2015, a Pre-Hearing was held, in person. Although Mr. Nguyen again indicated his desire to be removed as representative, the Motion and Affidavit contemplated at the last Pre-Hearing and Pre-Hearing letter were not filed. Thus, the Pre-Hearing was again adjourned to January 14, 2016, with direction for the Applicant to provide certain information to the Commission by October 21, 2015. Those instructions were confirmed in a Pre-Hearing letter.

On October 21, 2015, Mr. Nguyen submitted his own Affidavit,⁴ setting forth a history of contact with the Applicant’s family, and in particular, the Applicant’s surviving spouse, beginning on or about July 14, 2014 to the present, requesting cooperation to establish an Estate. The Affidavit also provided the Applicant’s last known address. The name of the spouse and the date of the Applicant’s passing have not been provided.

Based on the Affidavit, on November 24, 2015, I issued a Pre-Hearing letter to both counsel, and also sent copies, by registered and regular mail, to (1) Ms. Danial, (2) the Spouse of Mr. Danial, and (3) the Estate of Mr. Danial. The letter set forth that a resumption of the Pre-Hearing discussion would be held on January 14, 2016 at which time I would consider Motions regarding (1) the removal of the legal representatives, (2) the dismissal of the Application for Arbitration, and (3) costs. The letter also set-forth the provisions of Rule 68.1 and advised that failure to attend the resumption without prior agreement would result in my assuming the Applicant (and/or the Estate) has chosen not to move forward with the Application for Arbitration and this proceeding is frivolous, vexatious or is commenced in bad faith, and I would dismiss the case.

At the January 14, 2016 resumption, Mr. MacNeill appeared for the MVAC Fund, but no one appeared for the Applicant. Canadian Post records show that two of the registered letters were “refused” and one “unclaimed”; none of the regular mail letters have been returned. Mr. MacNeill renewed the MVAC Fund’s Motion to dismiss. The MVAC Fund submits that the failure of the late Mr. Danial, and now his family, 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.

To date, Mr. Danial’s Estate or family have not contacted ADR Chambers. Based on the Affidavit of Mr. Nguyen, it further appears that they do not have interest in proceeding with the claim.

Decision

Should Mr. Tuyen (Joseph) Nguyen and the law firm of Allan S. Blott & Associates be removed from the record as the legal representative of the late Mr. Danial?

In addition to the death of the Applicant, which necessitates new instructions, the Applicant’s representative has established that that his law firm has not been retained by the Applicant’s Estate or heirs. To the extent that a solicitor-client relation was formed with the heirs, it has broken down. Accordingly, I find that Allan S. Blott & Associates is permitted to be removed as counsel of record.

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

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. Arbitrators have taken two different approaches when dealing with the issue of abandoned proceedings. 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 (FSCO A05-002435, December 6, 2006), 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.” While some jurisprudence holds that Rule 68 requires a finding that the Applicant knew from the outset that his/her claim was without merit, other jurisprudence holds that in the case of a missing applicant, an Applicant’s nonparticipation is sufficient to justify dismissal under Rule 68. For example, Arbitrator Feldman, in Sanchez de Diaz and TD General Insurance Company (FSCO A13-010052, March 18, 2015), commented as follows:

While I do not have sufficient evidence before me to conclude that this application was commenced in bad faith, at this point, it appears to me that the Applicant has manifested no interest in pursuing these claims. This problem is further exacerbated by her failure to communicate with her own legal representative, the Insurer or FSCO and her failure to participate in these proceedings. It would be unreasonable to force the Insurer to expend more time or effort on this matter. In these circumstances, the proceeding has now become frivolous or vexatious. I shall grant the Insurer’s motion to dismiss this application pursuant to Rule 68 of the Code. (Emphasis added)

While I generally agree with the approach of Arbitrator Feldman that abandonment of a claim can be considered “frivolous or vexatious” conduct under Rule 68, I do not believe that non-participation due to an Applicant’s passing can be properly considered “frivolous or vexatious” conduct, nor do I conclude, on the basis of the record, that the concept of “frivolous or vexatious” can be applied to the Applicant’s family for purposes of Rule 68. However, Mr. Danial’s passing, and his family’s ongoing failure to open an Estate or otherwise participate, communicate or respond has interfered with the dispute resolution process.

Should Mr. Danial’s Application for Arbitration be deemed withdrawn pursuant to Rule 70?

Rule 70.3 provides that an adjudicator may permit a withdrawal on such terms and condition 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. Danial’s passing, and his family’s lack of action in over a year and half since his passing, have led to a presumption of a lack of interest in advancing this claim.

I find that through Mr. Danial’s passing, and his family’s lack of action, he and his family have “constructively” withdrawn from the process under Rule 70.3 for more than a year. His family has not followed up with his representative since earlier in the process and he has not participated in the subsequent proceedings for over a year. This finding permits the Commission to close the file, and for the MVAC Fund to conclude that further proceedings are unlikely (and indeed likely time barred). 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:

The MVAC Fund has indicated that it is not seeking its expenses in this matter. Accordingly, each party shall bear its own expenses.

March 21, 2016

Jeffrey Shapiro Arbitrator

Date