Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2017 ONFSCDRS 233
FSCO A13-014023
BETWEEN:
SAMA BARADARAN
Applicant
and
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY
Insurer
DECISION ON EXPENSES
Before: Rosemary Muzzi
Heard: All written submissions received by May 30, 2017
Appearances: Manouchehr Baradaran for Ms. Baradaran
Mari Maimets for State Farm Mutual Automobile Insurance Company
Issues:
The Applicant, Sama Baradaran, was injured in a motor vehicle accident on May 30, 2012. In a decision dated May 17, 2017, I made an order allowing her to withdraw the issues in dispute in this arbitration on a without prejudice basis until such time as she reaches the age of majority, while reserving on the issue of expenses. I also ordered that State Farm not be permitted, at this time, to pursue its allegation of a material misrepresentation in respect of Sama’s attendant care benefits claim.
The issue in this further hearing is:
- Is State Farm entitled to expenses incurred in respect of this arbitration hearing?
Result:
- State Farm is not entitled to its expenses.
EVIDENCE AND ANALYSIS:
State Farm requests that it be awarded its expenses of the proceeding to be paid personally by Sama Baradaran’s Form P representative, Manouchehr Baradaran, because he caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or default on his part.
Facts
Mr. Baradaran has been Sama’s representative since at least February 2015 when her last counsel’s retainer was terminated. It was at such time that State Farm added to Sama’s arbitration the issue of a material misrepresentation with respect to her attendant care benefits claim. At such time the issue of Mr. Baradaran’s conflict of interest in respect of his representation of Sama first arose because State Farm alleged that it was Mr. Baradaran who made the material misrepresentation.
At the adjourned pre-hearing in May 2015, a pre-hearing arbitrator set arbitration hearing dates for June 2016.
In February 2016, at a resumption of the pre-hearing for which Mr. Baradaran was not present (and well before the arbitration hearing) State Farm brought a motion to have Sama’s arbitration heard together with another related claim. The pre-hearing arbitrator wrote to Mr. Baradaran concerned about his non-attendance, informed him of State Farm’s motion, and advised that Mr. Baradaran should retain counsel for Sama given that the material misrepresentation allegations put him in a conflict of interest. Mr. Baradaran’s reply in March 2016 indicated that his attempt to retain the tort lawyer to act for Sama on this matter had been unsuccessful.
Also in March 2016, State Farm asked the Commission to request the appointment of counsel for Sama from the Office of the Children’s Lawyer, but the Commission declined to do so.1
In mid-May 2016, Mr. Baradaran wrote to State Farm and the Commission advising that “we are not prepared to proceed with the arbitration for some reasons”. The hearing, now a joint hearing with a related accident benefits claim, was adjourned to dates in April 2017.
In August 2016, the Office of the Children’s Lawyer wrote to the Commission advising that it declined to represent the minor Sama. This letter was in response to the Commission’s attempt to engage the services of the Office of the Children’s Lawyer.
State Farm proceeded to prepare for the joint arbitration now set for April 2017.
Between August 2016 and March 2017, there appears to have been little contact between Mr. Baradaran and State Farm.
The parties recommenced communication with State Farm’s delivery of its updated arbitration briefs on March 10, 2017. Mr. Baradaran reiterated by letter that “we are not proceeding with the upcoming hearing.” He also indicated that he would not settle Sama’s claims.2
State Farm advised the Commission in writing of its intention to proceed with the hearing given that “Mr. Baradaran has not taken any steps to withdraw the Application for Arbitration, and it is our position, therefore, that the hearing ought to proceed on all issues remaining in dispute.”3
At the beginning of the joint arbitration hearing in April, Mr. Baradaran made a request to withdraw the Application for Arbitration on behalf of Sama, without prejudice to her, until such time as she reaches the age of majority. State Farm ultimately agreed to such an order but asked that the arbitration proceed so that it might pursue the allegations of a material misrepresentation by Mr. Baradaran in respect of the attendant care claims made by Sama.
By order dated May 17, 2017, I allowed the withdrawal and declined to permit State Farm to pursue its allegations of a material misrepresentation in relation to Sama’s attendant care benefits claim.
ANALYSIS
The award of expenses at the Commission is essentially governed by section 75 of the Dispute Resolution Practice Code which sets out the criteria that an arbitrator may consider for the purposes of awarding all or part of the expenses incurred in respect of an arbitration proceeding.
I find that three of the listed criteria are relevant to my consideration:
Each party’s degree of success in the outcome of the proceeding;
The conduct of party or a party’s representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders; and,
Whether any aspect of the proceeding was improper, vexatious or unnecessary.
Success
The applicant was successful in the proceeding in that her request to withdraw the application for arbitration without prejudice was granted, albeit with the ultimate acquiescence of State Farm. In addition, State Farm was not successful in its attempt to pursue the allegations of material misrepresentation.
Conduct
It is State Farm’s view that Mr. Baradaran, in his role as Sama’s Form P representative, conducted himself in a manner that prolonged or hindered the proceeding and caused needless expense to State Farm because he failed to withdraw the application for arbitration at the earliest opportunity. State Farm argues that Mr. Baradaran could have made the decision to withdraw the application for arbitration after he failed to secure independent legal representation for Sama in early 2015.
The consideration of this criterion is complicated by the fact that Sama was a minor at the time of the accident and remained a minor throughout the period that this matter has been before the Commission. It is usually the case at the Commission that a minor’s Form P representative is one of her parents. In this case, the hurdle to Mr. Baradaran’s representation of his daughter arose as a result of the allegations of a material misrepresentation. While it is true that Mr. Baradaran knew of the allegations in early 2015, it seems that the nature of the allegations dissuaded other counsel from taking on the case, and it was not until August 2016 that the Office of the Children’s Lawyer wrote to the Commission advising that it too declined to represent Sama.
The Commission’s Dispute Resolution Practice Code4 requires a party to seek the permission of an arbitrator to withdraw all or part of a dispute and allows for the request to be made orally at a pre-hearing or settlement discussion or at a hearing. Therefore, there is some contemplation in the Code that such requests can be made as late as the hearing stage in a proceeding.
Finally, it is a fact that twice5 Mr. Baradaran indicated in writing to both State Farm and the Commission that he did not intend to proceed with the arbitration.
Given all these factors, I find that I cannot assess this criterion in favour of State Farm.
Improper, vexatious or unnecessary
Finally, I am also not persuaded that a consideration of this criterion assists State Farm. I find that this proceeding would have been necessary in any event given State Farm’s stated position.
I am not satisfied that State Farm was likely to have agreed to an earlier request by Mr. Baradaran to withdraw the application for arbitration given its stated intent to pursue the allegations of a material misrepresentation. Following its ultimate agreement6 to the withdrawal request, State Farm nevertheless argued that adjudication of the issue of the alleged material misrepresentation could proceed, notwithstanding the withdrawal of the application for arbitration, because the allegations pertained to the actions of Mr. Baradaran and not those of Sama. Given that position, it is difficult to see how Mr. Baradaran’s late withdrawal could or would have contributed to additional incurred expenses on the part of State Farm.
CONCLUSION
The relevant criteria having been considered in the context of all the evidence leads me to find that State Farm is not entitled to its expenses of this arbitration hearing.
August 30, 2017
Rosemary Muzzi
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2017 ONFSCDRS 233
FSCO A13-014023
BETWEEN:
SAMA BARADARAN
Applicant
and
STATE FARM MUTUAL AUTOMOBILE
NSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 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, as amended, it is ordered that:
- State Farm is not entitled to its expenses of this arbitration hearing.
August 30, 2017
Rosemary Muzzi
Arbitrator
Date
Footnotes
- Tab 18, Expense Submissions of the Insurer
- Tab 32, Expense Submissions of the Insurer
- Tab 33, Expense Submissions of the Insurer
- Section 70.1, Dispute Resolution Practice Code
- In May 2016 and in March 2017
- The wording of Section 70.3 would also suggest that expenses may only be considered in cases where the parties disagree, and, not as here, where the parties finally agreed to the withdrawal.