Neutral Citation: 2017 ONFSCDRS 139 FSCO A15-006110

BETWEEN:

SINNARAJAH CHELLIAH Applicant

and

SECURITY NATIONAL INSURANCE CO./MONNEX INSURANCE MGMT. INC. Insurer

REASONS FOR DECISION

Before: Arbitrator Paulina Gueller

Heard: In person at ADR Chambers on March 22, 2017 and by teleconference call on April 25, 2017

Appearances: Ms. Sulakshana Genthirakumar represented Mr. Sinnarajah Chelliah Ms. Jennifer Sweitzer represented Security National Insurance Co./Monnex Insurance Mgmt. Inc.

Issues:

The Applicant, Mr. Sinnarajah Chelliah, was injured in a motor vehicle accident on October 30, 2012, and sought accident benefits from Security National Insurance Co./Monnex Insurance Mgmt. Inc. (“Security National”), payable under the Schedule. ¹ The parties were unable to resolve their disputes through mediation, and Mr. Chelliah, through his representative, applied for arbitration at the Financial Services Commission of Ontario (“FSCO”) under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The issues in this Hearing are:

Should Mr. Chelliah’s Application for Arbitration be dismissed?
Is Mr. Chelliah or his representative liable to pay the Insurer’s expenses in respect of the Arbitration under section 282(11) of the Insurance Act?

Result:

Mr. Chelliah’s Application for Arbitration is dismissed.
In the circumstances of this case, I have decided that: a) Each party shall bear its own expenses of this Hearing, and b) Security National’s claim for expenses personally against Ms. Genthirakumar is denied.

EVIDENCE AND ANALYSIS:

Chronology

Two Pre-Hearing discussions in this case were held on May 25, 2016 and January 25, 2017. Mr. Chelliah had died on April 28, 2016. Neither he nor anyone representing his Estate attended any of the Pre-Hearings or the Hearing.

The Hearing commenced on March 22, 2017.

I sent a letter, dated March 24, 2017, to Mr. Chelliah’s Estate advising: a) Ms. Genthirakumar made a Motion to be removed from the record as representative for the Applicant; b) Security National brought a Motion for costs personally against the Applicant’s representative; c) The Arbitration Hearing was adjourned to April 25, 2017; and d) I would decide both Motions at the Hearing resumption.

I also asked the Applicant’s heirs to contact me to: a) Advise whether there is an Estate Administrator that will participate on the above-mentioned Hearing, and b) Provide me with a telephone number to contact them, no later than April 24, 2017. I further advised that: c) The Hearing would proceed in their absence; d) The Applicant’s Application for Arbitration may be considered withdrawn or dismissed; and e) Security National’s expenses of the Arbitration process may be awarded against the Applicant’s Estate.

Motion to remove Ms. Genthirakumar as the Applicant’s Counsel of Record

Upon commencement of the Hearing held on March 22, 2017, Ms. Genthirakumar submitted a written Affidavit, requesting to be removed from the record as the Applicant representative, as the Applicant passed away and she couldn’t obtain instructions from his heirs.

Security National did not oppose.

Upon reading the Affidavit, I am satisfied that the submissions given by Ms. Genthirakumar are consistent with Rule 9 of the Dispute Resolution Practice Code (“DRPC”), and I allow her to be removed as the Applicant’s representative from the record.

The Dismissal

For the reasons that follow, Mr. Chelliah’s Application for Arbitration is dismissed.

As of April 25, 2017, I was unable to contact Mr. Chelliah’s Estate or heirs. No one had yet to contact ADR Chambers as requested, and had not participated in any of the Arbitration proceedings.

I am satisfied that Mr. Chelliah and his Estate or heirs were given notice of all the proceedings related to his Application for Arbitration at the last known address in our records.

Pursuant to Rule 37.7 of the DRPC, the Arbitration Hearing proceeded in the Applicant’s Estate’s absence.

The Applicant’s heirs bear the onus of proving entitlement to the claimed benefits. Since no one appeared at the Hearing and no evidence was presented to support the Applicant’s claims, this Application for Arbitration is dismissed.

EXPENSES:

Security National requested its costs of the Arbitration process, but did not provide a Bill of Costs.

Security National submitted that on or about June 15, 2016, Ms. Genthirakumar sent an email to ADR Chambers advising of the passing of the Applicant, but failed to ensure that the email address of Ms. Sweitzer was correct and Security National became aware of the Applicant’s passing on January 9, 2017, which contributed to unnecessary delay and caused the Insurer to incur cost without reasonable cause.

Security National submitted that on February 1, 2017, the Applicant’s representative advised them by email that the Applicant’s son-in-law was to provide a decision and response on this matter, but despite her attempts, she had not received a response. She also advised that she did not believe the Estate would appoint an Executor.

Security National also submitted that under Sections 282(11.2) and (11.3) of the Insurance Act, an Arbitrator may make an Order requiring a person representing an insured person to personally pay all or part of any expense awarded against a party “…without reasonable cause by advancing a frivolous or vexatious claim on behalf of the insured …”

The Insurer requested that the costs be made payable by the representative of the Applicant personally, on the basis that the Ms. Genthirakumar‘s actions contributed to a delay in the process.

The Applicant’s representative stated that she had made every attempt to assist her “client’s family and counsel when they came aware of his passing to have this application dismissed but unfortunately Arbitrator Smith had made an order to have the matter be dismissed at the hearing should the Applicant’s Estate doesn’t show up”. She also submitted that she did not advance a frivolous or vexatious claim on behalf of the insured person.

The Applicant’s counsel submitted case law that states:

“The basic principle on which costs are awarded is as compensation for the successful party, not in order to punish a barrister. Any member of the legal profession might be subject to compensatory order for costs if it is shown that repetitive and irrelevant material, and excessive motions and applications, characterized the proceedings in which they were involved, and that the lawyer acted in bad faith in encouraging this abuse and delay … [C]ourts must be extremely cautious in awarding costs personally against a lawyer, given the duties upon a lawyer to guard confidentiality of instructions and to bring forward even unpopular causes. A lawyer should not be placed in a situation where his or her fear of an adverse order of costs may conflict with these fundamental duties of his or her calling”.²

Ms. Genthirakumar

The issue is whether Ms. Genthirakumar’s conduct prolonged, obstructed or hindered the proceeding, including failure to comply with undertakings and Orders. I find that Ms. Genthirakumar attended all the Pre-Hearings held and the Hearing. However, Mr. Chelliah had passed away and Ms. Genthirakumar could not obtain instructions from the Applicant or his heirs.

I find that the evidence before me does not support that the Applicant’s counsel did not follow her client’s instructions or that the Applicant’s counsel’s actions were negligent or in bad faith.

The Insurer submitted that the basic principle upon which costs are awarded is compensation for the successful party, not to punish a barrister.

I am not persuaded that Ms. Genthirakumar did not follow her client’s instructions and authority, or, that the Application for Arbitration was frivolous or vexatious. Her client passed away and she tried to obtain instructions from the Applicant’s heirs without success.

The Insurer recognized that Mr. Chelliah’s Application for Arbitration was commenced with good intentions, but the Estate has shown no intentions to pursue the Applicant’s claim for 10 months. However, Security National failed to prove that Ms. Genthirakumar acted in bad faith or her conduct was unreasonable.

The case law provided by Security National states: “A lawyer should not be placed in a situation where his or her fear of an adverse order of costs may conflict with these fundamental duties of his or her calling”. I am satisfied by Ms. Genthirakumar’s Affidavit affirming she attempted to get instructions from the Applicant’s heirs.

I also consider that the Hearing was held as originally scheduled at the first Pre-Hearing held on May 25, 2016. On February 1, 2017, Ms. Genthirakumar advised Security National that it appeared the Applicant’s Estate would not be appointing an Executor and she requested to be removed from the record, but the Pre-Hearing Arbitrator denied the Motion. Consequently, I find Ms. Genthirakumar did not tend to prolong, obstruct or hinder the process.

For all those reasons, I do not accept the Insurer’s request to award expenses personally against Ms. Genthirakumar to be reasonable.

Consequently, I find that Ms. Genthirakumar is not personally liable to pay expenses to the Insurer.

Mr. Chelliah’s Estate

Mr. Chelliah filed an Application for Mediation and Arbitration before FSCO. No one attended any of the proceedings. The Applicant passed away on April 28, 2016.

Rule 75.2 of the DRPC sets out the criteria that an Arbitrator must consider in awarding expenses incurred in respect of the Arbitration. These criteria include:

(a) each party's degree of success in the outcome of the proceeding;

(b) any written offers to settle made in accordance with Rule 76;

(d) the conduct of a party or a party's representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders;

(e) whether any aspect of the proceeding was improper, vexatious or unnecessary.

In awarding expenses, I am taking into consideration the relevant criteria, which includes the party’s success in the proceedings and the conduct of the party that prolonged the proceeding unnecessarily. Mr. Chelliah filed an Application for Arbitration, which he could not proceed with because he passed away on April 28, 2016. Therefore, he could not pursue his claim, instruct his counsel, or attend any Pre-Hearing.

The intention of the natural justice principles and the consumer protection legislation is to maintain procedural fairness by protecting the rights of individuals and enhancing public confidence in the process.

The evidence before me does not demonstrate that Mr. Chelliah’s Application for Arbitration is frivolous or vexatious, or that he willfully brought an unmeritorious claim, or that his conduct was deceptive or malicious.

Accordingly, in the circumstances of this case, I am not persuaded that an award of expenses against Mr. Chelliah or his Estate is appropriate. Therefore, I have decided that each party shall bear its own expenses of this process.

May 17, 2017

Paulina Gueller Arbitrator

Date

Financial Services Commission of Ontario