Adesina John v. RBC General Insurance Company, 2017 ONFSCDRS 144

Financial Services Commission of Ontario / Commission des services financiers de l’Ontario

Neutral Citation: 2017 ONFSCDRS 144 Appeal: P16-00053

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ADESINA JOHN, former representative of PATRICIA FRASER Appellant

and

RBC GENERAL INSURANCE COMPANY Respondent

BEFORE: Delegate Jeffrey Rogers

REPRESENTATIVES: Mr. Adesina John, licensed paralegal, representing himself Ms. Kadey Schultz, solicitor for RBC

HEARING DATE: April 21, 2017

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:

1. The appeal is allowed.

2. Paragraph 4 of the Arbitrator’s order of July 4, 2016, as it relates to payment of expenses by Adesina John is set aside.

3. The issue of payment of expenses by Mr. John is remitted for re-hearing by a different Arbitrator. The new hearing is to be restricted to the questions of whether Mr. John played a part in the filing or continuation of the frivolous or vexatious application for arbitration and whether he is therefore is personally liable to pay any of RBC’s expenses.

4. 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.

May 19, 2017

Jeffrey Rogers Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Mr. Adesina John, a licensed paralegal, appeals the Arbitrator’s decision of July 4, 2016. The Arbitrator ordered Mr. John to pay part of RBC’s expenses upon the withdrawal of his client’s application for arbitration. The Arbitrator found that the arbitration was frivolous or vexatious and that Mr. John contributed to its continuation. Mr. John submits that the Arbitrator erred in finding that his conduct contributed to the continuation of a frivolous or vexatious application and the Arbitrator failed to give him a reasonable opportunity to make representations with regard to the claim for expenses against him personally.

For the reasons that follow, I find that the Arbitrator did not give Mr. John a reasonable opportunity to make representations, as a result, his finding that Mr. John’s conduct contributed to the continuation of a frivolous and vexatious application cannot stand. The question of Mr. John’s liability for expenses is therefore remitted for re-hearing by a different Arbitrator.

II. BACKGROUND

Mr. John represented Patricia Fraser in her claim for accident benefits from RBC. She was injured in an accident on May 28, 2010. On May 11, 2015, Mr. John filed an Application for Arbitration on Ms. Fraser’s behalf, claiming income replacement benefits (IRBs), housekeeping and home maintenance benefits (HK), attendant care benefits (ACBs), and a special award. In its Response to the Application for Arbitration, RBC pleaded that the Application was statute barred because it was filed beyond the 2-year limitation period.

A Preliminary Issue Hearing on the limitation issue was scheduled to proceed on April 28, 2016. On April 6, 2016, Mr. John sought to withdraw his client’s Application for Arbitration. RBC did not oppose the withdrawal, but insisted that it should be paid its expenses. The parties could not agree on this issue. Therefore, the date for the Preliminary Issue Hearing was converted to address the issue whether expenses were to be paid upon the withdrawal.

Mr. John advised Ms. Fraser not to attend the hearing and she did not attend. Mr. John attended but he filed only a few documents and he called no oral evidence. He admitted that this was his first hearing, that he was ill-prepared and he was “sort of sketchy on the process”.¹ He indicated that he was nevertheless prepared to proceed “in order to get this issue over with”.²

RBC presented oral evidence from an employee of the TD Bank. This witness testified that the bank statement Ms. Fraser had tendered in support of her claim for IRBs was altered. The Arbitrator concluded that there had been willful misrepresentation with regard to the document Ms. Fraser had produced, that RBC gave a valid refusal to pay all of the benefits claimed, that the application for arbitration was filed too late, and that Mr. John had failed to respond to all of RBC’s production requests.

With respect to Mr. John’s conduct, the Arbitrator found as follows:

Based on the evidence submitted, the Applicant’s representative bears significant responsibility by allowing this Application for Arbitration to proceed to a Hearing. The Applicant’s representative knew, and if not, should have known, that the Applicant was time limited in filing the Application for Arbitration and provided no reasons otherwise. The Applicant’s representative continued his unprofessional conduct by not responding to the Insurer’s request for document productions and continued this conduct by not responding to emails, phone messages and other correspondence from Insurer’s counsel. As a result, the Insurer had to bear the cost of preparing for the Hearing, summonsing Mr. Collins to testify and the costs of engaging the services of a court reporter, all of which would have been unnecessary if the Applicant’s representative properly discharged his duties in a professional manner.³

The Arbitrator concluded that “this Application for Arbitration can best be described as frivolous”.⁴ The Arbitrator awarded RBC its expenses, with $ $18,781.40, payable by Ms. Fraser, and $838.96 payable by Mr. John. The amount awarded against Mr. John represents RBC’s recoverable disbursements.

Mr. John filed an appeal on behalf of both Ms. Fraser and himself. Ms. Fraser later retained new counsel. On October 11, 2016 her new counsel advised the Commission that Ms. Fraser did not instruct Mr. John to file an appeal and she did not wish to pursue it. She withdrew her appeal.

On August 22, 2016, I granted a stay of the order against Mr. John on the grounds that there appeared to be a valid argument regarding whether he was given a reasonable opportunity to make representations to the Arbitrator.

II. ANALYSIS

Reasonable opportunity to make representations

The result in this appeal turns on a question of procedural fairness. The issue of procedural fairness governing an Arbitrator’s jurisdiction to award expenses against a representative is built into the section of the Insurance Act.⁵

Section 282(11.2)(b) confers jurisdiction to award expenses against a representative of an insured person where “the representative caused expenses to be incurred without reasonable cause by advancing a frivolous or vexatious claim on behalf of the insured person.” That is what the Arbitrator found in this case. But he did not turn his mind to the question of procedural fairness. Section 282 (11.4) states: “An order under subsection (11.2) shall not be made unless the representative is given a reasonable opportunity to make representations to the arbitrator.”

The Arbitrator did not address the question of procedural fairness in his decision and the issue was not raised in the hearing. In fact, the first time that RBC told Mr. John that it was seeking an order of expenses against him personally was by e-mailing him a factum on the day before the hearing. It then gave him a hard copy on the day of the hearing.

RBC had given ample notice of its position that the application was frivolous and vexatious and the pre-hearing report contains information about awarding expenses against a representative in those circumstances. But that is not notice to Mr. John that a claim is being made against him personally. I reject RBC’s submission to this effect. That approach would mean that representatives are always on notice of personal liability when there is an allegation that the arbitration is frivolous or vexatious. It would render moot much of the jurisprudence regarding the requirement for prior notice.

I also reject RBC’s submission that Mr. John either waived his right to be given a reasonable opportunity to make representations or he was in fact given a reasonable opportunity. There is nothing in the record that suggests that Mr. John was aware of his right. In fact, his performance at the hearing suggests that he was not aware. He could not have waived rights he did not know existed. The jurisprudence requires that the representative be notified well in advance of the hearing, not only that a claim is being made, but also of the specific facts upon which the claim is based. I can find no precedent where notice, as given in this case, was found to be reasonable. I can think of no prescribed period for notice of a claim for payment of any sum of money, comparable to the notice given in this case.

Jurisprudence at the Commission has followed what was established in the Courts, where judges have had similar jurisdiction, long before it was given to Arbitrators. Judges’ jurisdiction is codified in Rule 57 of the Rules of Civil Procedure. Rule 57(2) prescribes the following requirement for procedural fairness: “ …no such order shall be made unless the lawyer is given a reasonable opportunity to make representations to the court.” The language is identical to s. 282 (11.4) of the Insurance Act.

The Court of Appeal considered the notice requirement in Schwisberg v. Perry Krieger & Associates.⁶ In that case, the issue of personal liability of the lawyer was raised for the first time during oral submissions. The lawyer did not seek an adjournment and he made submissions opposing the order. The Court allowed the lawyer’s appeal of the Judge’s order against him. The Court stated:

In the circumstances of this case, the appellant could only have a reasonable opportunity to make submissions if he was put on notice by the judge that he was considering such an order and the basis for the potential order…⁷

Schwisberg speaks not only to the issue of notice, but also to the question of waiver. The Judge’s decision was reversed even though the lawyer must have known of the risk of personal liability and he did not raise the issue of notice.

Maryasin Estate and ING Insurance Company of Canada⁸ and Rooz and Certas Direct Insurance Company and Zapisnoy⁹ are examples of Commission appeal cases that have endorsed the Schwisberg approach. In Maryasin the Arbitrator was found to have given a reasonable opportunity, when he adjourned the hearing for several weeks and the representative had the opportunity to respond both in written submissions and orally. In Rooz, it was ruled that the representative had a reasonable opportunity when he had nine months’ notice and he made oral submissions at the hearing.

The Delegate’s decision in Rooz was upheld upon judicial review. The Court’s comments are incisive with regard to the notice requirement, including particulars:

It is also not disputed that nine months prior to the hearing date, Certas advised the applicant that they would be seeking costs against him personally. As to the particulars of the allegations giving rise to this claim, the applicant knew of the Arbitrator’s concerns, he had an outline of the quantum of costs being claimed and he had a summary of the evidence that Certas intended to lead at the hearing on this issue. In view of this, the requirements of s.282(11.4) of the Insurance Act that the applicant be given a reasonable opportunity to make representations have been satisfied.¹⁰

I find that Mr. John was not given a reasonable opportunity to make representations to the Arbitrator. This breach of procedural fairness means that the order against Mr. John must be rescinded. As a result, I have remitted the matter for re-hearing.

Frivolous or vexatious application

I do not accept Mr. John’s submission that the Arbitrator erred in finding that the arbitration was frivolous or vexatious. The Arbitrator’s conclusion was based upon two findings. First, RBC gave a valid denial of all claimed benefits on December 9, 2010 and the applications for mediation and arbitration were filed after the limitation period expired. Second, Ms. Fraser provided a falsified document as proof of the income upon which she based her claim for IRBs.

Mr. John called no oral evidence. His client did not attend. He disputes the Arbitrator’s statement that the document brief he filed only contained a few pages added to the documents the insurer served, arranged in a different order. My review of the record confirms the Arbitrator’s conclusion. Regardless, Mr. John did not identify a single document he filed which could have had an impact on the Arbitrator’s decision.

During the hearing before the Arbitrator, Mr. John admitted that he was unprepared and uninformed. He also indicated that he could use some assistance with the process. He specifically elected to proceed. RBC had given Ms. Fraser ample notice that it was claiming its expenses and that it considered the arbitration to be frivolous and vexatious. Mr. John owed his client a duty to competently represent her with regard to this claim. It was not up to the Arbitrator to mine the record for favourable evidence and to make his decision based upon the best case Ms. Fraser might have presented, as Mr. John now argues.

The case Mr. John actually presented was that there exists a letter from RBC dated March 8, 2016 which “implied Ms. Fraser has entitlement to benefits, all benefits…”¹¹ He did not put the letter before the Arbitrator or refer to any statement in it that supports his allegation. In fact, the letter does not imply entitlement to any benefits. It does just the opposite. It gives another reason for RBC’s refusal to pay, based upon Ms. Fraser’s failure to attend an Examination Under Oath on July 13, 2015.¹²

Mr. John submitted to the Arbitrator that RBC in fact paid HK and ACBs beyond the date of refusal, but he did not refer to any evidence supporting his submission. Mr. John argued that Ms. Fraser proved that she was employed in 2010 by declaring income to Revenue Canada, but that has no bearing on the Arbitrator’s finding that she falsified the document she provided to RBC as proof of her employment at the time relevant to her claim for IRBs, and of the income she earned from it. Mr. John raised no other issues before the Arbitrator.

The Arbitrator’s finding that the arbitration was frivolous and vexatious is supported by the evidence. The finding was based upon an arbitration founded in part upon an altered document, and filed after the limitation period, despite a valid refusal. The Arbitrator’s reasons explain his finding. I see no error in this regard.

Therefore, although I have remitted this matter for re-hearing, the new hearing is to be restricted to the questions of whether Mr. John played a part in the filing or continuation of the frivolous and vexatious application and whether he is therefore is personally liable to pay any of RBC expenses.

IV. EXPENSES

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.

May 19, 2017

Jeffrey Rogers Director’s Delegate

Date

Footnotes

1. 1Transcript, at page 40
2. 2Transcript, at page 41
3. 3At page 7
4. 4At page 7
5. 5R.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
6. 61997 CanLII 522 (ON CA), [1997] O.J. No. 1522
7. 7At page 4
8. 8(FSCO P08-00011, November 6, 2009)
9. 9(FSCO P07-00017, March 26, 2009)
10. 10Rooz v. Certas Direct Ins. Co., 2010 ONSC 2773, at paragraph 4
11. 11Transcript, at page 4, line 6
12. 12Document Brief of the Applicant, Tab B10