Clancy v. Aviva Canada Incorporated, 2018 ONSC 5390
CITATION: Clancy v. Aviva Canada Incorporated, 2018 ONSC 5390
DIVISIONAL COURT FILE NO.: 18-2391
DATE: 20180913
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT
RE: SUZANNE CLANCY
Applicant
- and -
AVIVA CANADA INCORPORated and FINANCIAL SERVICES COMMISSON OF ONTARIO
Respondent
BEFORE: ASTON, ELLIES, and MYERS JJ.
COUNSEL: Ammar Hussein, for the Applicant
Frances Shapiro Munn, for Aviva Canada Incorporated
Martina Aswani for Financial Services Commission of Ontario
HEARD at Ottawa: September 12, 2018
ENDORSEMENT
Myers J.
The Application and Outcome
[1] The applicant seeks judicial review of the order of FSCO Arbitrator Morris dated March 26, 2018 and the order of FSCO Director’s Delegate Rogers dated February 5, 2018 both awarding expenses or costs of the proceedings before them to the respondent insurance company.
[2] For the reasons that follow, the application for judicial review of Arbitrator Morris’s decision is dismissed as premature. The application for judicial review of Director’s Delegate Roger’s decision is dismissed on its merits.
Background
[3] The applicant, Suzanne Clancy, was involved in a motor vehicle collision on November 5, 2012. She was insured by her insurer Aviva for accident benefits as provided for in the Statutory Accident Benefits Schedule – Effective September 1, 2010, O Reg 34/10 (“SABS”).
[4] Ms. Clancy applied to her insurer for the cost of an examination in the amount of $1,378.68 in respect of an in-home assessment. The insurer denied the benefit because, in its view, Ms. Clancy’s injuries were subject to the Minor Injury Guidelines which precluded coverage. The insurer also gave notice to Ms. Clancy that she was required to undergo a medical examination pursuant to s. 44 of the SABS in respect of her claim.
[5] Ms. Clancy took the position that there was insufficient basis for the insurer to require her to undergo a medical examination. She therefore declined to attend as required. The insurer therefore declined to pay the $1,378.68 sought by Ms. Clancy.
[6] Ms. Clancy elected to invoke the mediation and arbitration processes provided under the version of the SABS then in force to advance her $1,378.68 claim in formal legal proceedings. The proceedings were held before the Financial Services Commission of Ontario (“FSCO”).
[7] Section 55 of the applicable SABS provides in part:
An insured person shall not commence a mediation proceeding under section 280 of the Act if any of the following circumstances exist:
- The insurer has provided the insured person with notice in accordance with this Regulation that it requires an examination under section 44, but the insured person has not complied with that section.
[8] Aviva advised Ms. Clancy at the outset that it was relying on s. 55 (2) and her refusal to attend for a medical examination as required under s. 44 as one of the grounds it asserted in defence of her claim.
[9] On July 14, 2015 FSCO held a pre-hearing conference with the parties and counsel.
[10] By letter dated July 15, 2015, the adjudicator set out the results of the prehearing conference including the following:
The issues as identified and agreed to by the parties for this arbitration hearing are as set out below:
Preliminary Issue: Whether the Applicant is precluded from arbitrating the cost of examination issue because she failed to attend a section 44 examination, within the meaning of section 55 of the [SABS]?
Is Ms. Clancy [sic] impairment, as a result of the accident, minor injuries within the meaning of the Minor Injury Guidelines of the [SABS]?
Hearing
The arbitration hearing in this case is scheduled for May 4, 5 and 6, 2016, at 10:00 a.m., in Belleville. [Emphasis added.]
[11] Shortly before the scheduled date for the arbitration hearing, Aviva’s counsel served on Ms. Clancy’s counsel written submissions on which Aviva relied for the preliminary issue under s. 55 of the SABS. The parties attended for the hearing before Arbitrator Smith with their witnesses ready to argue the merits of all of the issues. The arbitrator decided that he would not proceed with a full evidentiary hearing that day as scheduled. Rather, he decided that he would deal with the preliminary issue in writing first.
[12] By decision dated December 19, 2016, Arbitrator Smith ruled that Ms. Clancy was precluded from claiming the $1,378.68 expense from Aviva because she failed to attend the s. 44 examination as required.
[13] Ms. Clancy appealed Arbitrator Smith’s order within FSCO. The appeal was dismissed by Director’s Delegate Rogers on October 19, 2017.
[14] It should be noted that Ms. Clancy has not sought judicial review from this ruling. Ms. Clancy does not dispute the finding that she is not entitled to the $1,378.68 that she claimed.
[15] Aviva then requested that Ms. Clancy be required to indemnify it for a portion of its legal expenses or costs of the appeal hearing. By decision dated February 5, 2018, Director’s Delegate Rogers ordered Ms. Clancy to pay Aviva expenses of the appeal in the amount of $3,500 all-inclusive.
[16] Aviva also sought an order requiring Ms. Clancy to reimburse it for a portion of its legal expenses incurred at the initial hearing before Arbitrator Smith. By order dated March 26, 2018, Arbitrator Morris ordered Ms. Clancy to pay $5,419.07 to Aviva in respect of its costs of defending her claim for $1,378.68 at first instance.
[17] Ms. Clancy has appealed this order within FSCO. She moved to stay the appeal pending this judicial review. That request was declined by Director’s Delegate Lee in July of this year. Director’s Delegate Lee ruled that the appeal should proceed before him. Counsel agree that the appeal has been fully briefed and all that remains outstanding is a brief oral hearing.
The Application in Relation to the Costs Order of Arbitrator Morris is Premature
[18] Ms. Clancy still has an appeal available to her within FSCO. It will be held before Director’s Delegate Lee in the next several months. Absent very unusual circumstances, litigants are required to exhaust their remedies within the administrative structure before seeking judicial review. Judicial review is not an appeal. It is an extraordinary remedy by which the court engages in oversight of government action in circumstances in which the legislature has assigned a particular adjudicative task to another body. Requiring that people first exhaust the legal route provided in the regulatory scheme is respectful of the tribunal process and also ensures that there is a full record of proceedings before the court for review. Volochay v. College of Massage Therapists of Ontario, 2012 ONCA 541 at para. 70.
[19] The applicant asks us to rule on the propriety of the decision made by Arbitrator Morris while she is in the midst of making the very same arguments by way of appeal to Director’s Delegate Lee. Assuming that we were to rule on the application, what then becomes of the appeal? It is an invitation to possible inconsistent verdicts. Moreover, to the extent that Ms. Clancy relies on issues of procedural fairness, the appeal may cure those concerns. Should she be unsuccessful before Director’s Delegate Lee and choose to bring yet another application for judicial review arising from her claim for $1,378.68, the issues may be quite different than those presented today. Even if that is not the case, the court will have the benefit of the reasons to be provided by Director’s Delegate Lee to help inform its inquiries.
[20] Mr. Hussein argues that requiring his client to undergo further proceedings is too expensive. She has already incurred her own costs and cumulative costs orders of almost $9,000 in respect of her claim for $1,378.68. With respect, whatever is motivating these ongoing proceedings, where the substance is not even in issue, it is not economic rationality.
[21] Mr. Hussein argues that the appeal outcome is a forgone conclusion because Director’s Delegate Lee has already commented negatively on the merits of the appeal in making his decision to deny the stay of proceedings sought by Ms. Clancy. It is black letter law that an assessment of the likely merits of the proceeding is part of the test for an interim stay of the proceedings.
[22] Any difficulty faced by Ms. Clancy on appeal is not due to prejudgment by Director’s Delegate Lee. He simply performed the test applicable to a stay pending appeal as requested by Ms. Clancy. A costs appeal is a difficult proceeding in which to succeed. Costs orders are highly discretionary. They are entitled to significant deference on appeal or judicial review. But that does not give Ms. Clancy license to skip the appeal process and try her appeal arguments in court. As noted above, an application for judicial review is not an appeal. Conflating the two is an error. I see no special circumstances of the kind discussed in Volochay and subsequent cases to entitle Ms. Clancy to proceed with a judicial review before exhausting her appeal remedy before FSCO.
Director’s Delegate Roger’s Decision
[23] The Director’s Delegate correctly noted that an order for the payment of legal expenses is available under s. 12 of the applicable regulation and Rule 75.1 of the Dispute Resolution Practice Code. Rule 75.1 provides adjudicators with the discretion to award expenses if justified in accordance with a list of criteria set out in Rule 75.2. Those criteria include assessing both the party’s degree of success in the proceeding and any conduct by a party or her representative that tended to prolong, obstruct, or hinder the proceeding.
[24] Director’s Delegate Rogers found that Aviva had been completely successful in its appeal before him. That is not contested.
[25] Director’s Delegate Rogers also relied on a paragraph from his initial dismissal of Ms. Clancy’s appeal to find that Mr. Hussein’s conduct tended to prolong the hearing of the appeal. In his October 19, 2017 decision Director’s Delegate Rogers wrote:
The pattern continued, with counsel refusing to address the questions I raised, alleging bias instead, making unrelated submissions, and refusing to stop when instructed to do so. I threatened to re-schedule the hearing to an in-person appearance, assuming that it would be easier to control counsel in that setting. I decided against this approach when counsel for Aviva pointed out that Aviva would be prejudiced by the additional cost of attending in person. I decided instead to depart from my usual practice and to allow counsel to make submissions as he saw fit. I informed him that what he saw as bias was my seeking clarification, the very purpose of the hearing. I asked him to tell me how much time he required. He refused. In the end, counsel for Ms. Clancy was allowed to make his oral submissions, with no time limit. He mostly read his written submissions. I stopped him only when he became overly repetitious.
[26] Director’s Delegate Rogers also read post-hearing correspondence between counsel and found that “it was counsel for Ms. Clancy who complicated the process for setting up the expense hearing and not counsel for Aviva.” He also found that Mr. Hussein had questioned the jurisdiction of the Director’s Delegate (although Ms. Clancy was the one who brought the appeal) and he had sought a stay pending a judicial review that was never brought.
[27] While the Director’s Delegate was of the view that there was little room in the criteria in Rule 75.2 for general considerations such as access to justice, he found that even if relevant, they would carry less weight on an appeal because Ms. Clancy had already had a full hearing at the arbitration stage. The Director’s Delegate also agreed that while proportionality is a relevant consideration in costs or expense hearings, “the disregard for an economical process by counsel for Ms. Clancy, counterbalances that consideration.”
Jurisdiction
[28] The court hears this application under ss. 2 and 6(1) of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1.
Standard of Review
[29] The standard of review is reasonableness.
[30] Wilton-Siegel J. recently described this standard of review in Agyapong v. Jevco Insurance Company et al., 2018 ONSC 878, in this way:
[12] I am of the view that the appropriate standard of review of the Decision is reasonableness. In particular, the standard of review of the statutory interpretation of s. 35(3) of the SABS is reasonableness, as the exercise falls squarely within the Arbitrator’s expertise in the interpretation of a home statute: see Pastore v. Aviva Canada Inc., 2012 ONCA 642 at para. 18. Similarly, the standard of review of the Arbitrator’s determination with respect to the application of the principles of causation to the Applicant’s case is reasonableness for the same reason. In addition, neither of these issues is of central importance to the legal system as a whole.
[13] In determining whether a decision is reasonable, the court is concerned largely with the justification, transparency and intelligibility of the Board’s reasons, as well as whether the decision falls within a range of possible, acceptable outcomes, given the facts and law: see Dunsmuir v. New Brunswick, 2008 SCC 9 at para. 47.
[31] In Kerry (Canada) Inc. v. DCA Employees Pension Committee, 2007 ONCA 416, the Court of Appeal held that because costs issues are inherently discretionary, in reviewing FSCO costs order, “the Divisional Court ought only to interfere if the Tribunal's order is clearly wrong or the Tribunal acted on an error in principle.”
[32] On issues of procedural fairness, there is no need to discuss a standard of review. The court will look to the criteria in Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817, 1999 699 (SCC) to assess the content and any alleged breaches of procedural fairness.
Analysis
The Allegations of Bias
[33] The applicant’s arguments, as set out in her counsel’s factum, are predicated on an assumption that the decision-makers below “have shown an inability to come to the correct conclusion” and that they “got it wrong.” On that basis, the applicant claims that she has been denied procedural fairness and that the decision-makers must have been biased against her.
[34] Before us, Mr. Hussein argued that the Director’s Delegate was biased because he was critical of Mr. Hussein rather than being critical of both counsel concerning their correspondence discussing scheduling the appeal. But the Director’s Delegate made a specific finding that it was counsel for Ms. Clancy who complicated the process “and not counsel for Aviva.” Apart from voicing his disagreement with this finding of fact, Mr. Hussein did not point to any basis in the evidence to say that the Director’s Delegate had made an error. Applying a reasonableness standard, the correspondence was before the Director’s Delegate and his finding that one side was to blame for complicating the matter is within the range of decisions reasonably open to the Director’s Delegate on the evidence. The finding of fact is entitled to deference.
[35] Mr. Hussein also argued that both adjudicators were biased because neither dealt with the case law that he provided that showed that FSCO will deny costs to an insurer where the insurer lies in the weeds and fails to raise a preliminary matter in a timely way.
[36] That is a complaint in respect of the appeal of the s.55 outcome that is not under review. The case law relied upon by Mr. Hussein was not germane to the subsequent assessment of costs or expenses.
[37] Assuming that we should consider this issue in relation to a bias argument that would have arisen at the appeal proper and then continued to the costs hearing, the difficulty with the case law relied upon by counsel is that, in my view, none of it applied to this case as it was all readily distinguishable. In each of the cases that Mr. Hussein relies upon, the insurer sat on its rights while the insured incurred costs without knowing that the insurer planned to bring a surprise proceeding that would make the costs incurred unnecessary and wasted. In this case, the opposite occurred. Aviva raised its s. 55 defence in its initial communication. Counsel agree that the matter was also canvassed expressly at the pre-hearing conference on July 14, 2015.
[38] The pre-hearing conference order cited above expressly provides that the s. 55 issue will be the first issue at the “arbitration hearing.” The adjudicator also set the dates for that very hearing. Mr. Hussein argues that Aviva was required to bring the matter on as a preliminary motion despite the adjudicator’s ruling that it would be heard at the arbitration hearing. He argues that the arbitrator was using the words “arbitration hearing” loosely to refer to just the overall process so that Aviva remained required to move by way for preliminary ruling under rules governing motions and preliminary hearings.
[39] The arbitrator’s use of the words “arbitration hearing” in listing the issues and then again in setting the timing for the actual “arbitration hearing” make that submission untenable. Moreover, the fact that the adjudicator did not set a schedule for the preliminary hearing at a pre-hearing conference that is designed expressly to schedule the remaining steps to get to the arbitration hearing also makes Mr. Hussein’s argument untenable. If the adjudicator intended that Aviva would bring the issue on at a preliminary motion, he would have scheduled that separate process and not included the issue as the #1 issue for the “arbitration hearing.”
[40] Mr. Hussein argues that since the Rule 67 provides that a party who wishes to have a preliminary issue dealt with may bring motion, all preliminary issues must be brought that way and they cannot be brought at the main arbitration despite a pre-hearing ruling to the contrary. This ignores Rule 1.1 that provides for the broad interpretation of the Rules to provide for the most just and efficient procedures.
[41] Mr. Hussein argues that he was entitled to sit back and hope that Aviva would forget to bring its s. 55 issue forward before the hearing when it would be too late for Aviva to do so. It would be a dangerous reversal of the burden of proof, he argued, if he was required to remind Aviva to bring issues forward before the hearing. He argues therefore that his client should not have to bear the costs both she and Aviva incurred preparing for the full hearing when Aviva failed to come forward with its written submissions for the s. 55 issue until the main arbitration hearing as required by the pre-hearing order.
[42] This argument has no force. Mr. Hussein cannot just wish away the pre-hearing order that scheduled the s. 55 issue to be brought at the arbitration hearing. If he was concerned that his client, Ms. Clancy, risked incurring costs that could be wasted if the preliminary issue succeeded after the parties had incurred the costs of preparing on all of the issues, he could have called counsel opposite and sought to amend the pre-hearing order on consent in the interests of efficiency for all parties. His choice to sit back and hope Aviva forgot the #1 issue listed on the pre-hearing conference order was made at Ms. Clancy’s risk.
[43] In all, there is not a shred of evidence that the Director’s Delegate exhibited any bias. The fact that he concluded against the applicant is simply an exercise of his jurisdiction. Failing to cite law that is plainly inapplicable is not evidence of bias. Moreover, the fact that a litigant is unhappy with a result is not a basis to find that the decision-maker had forsaken his or her oath or pre-determined the matter.
Fairness
[44] Mr. Hussein argues that the Director’s Delegate erred by finding that the pre-hearing adjudicator had deferred the s. 55 issue to the arbitration hearing without any evidence. He ignores again the pre-hearing conference letter provided for this outcome expressly. In any event, this too is an issue for the merits of the appeal. It does not go to the costs issue. The Director’s Delegate made no mention of this point except inferentially in finding that Aviva had succeeded on the merits. Neither does this point raise any issue of procedural fairness for the purposes of judicial review of the expenses decision. It seems necessary to say again that this is not an appeal of the merits.
Summary
[45] The applicant chose to ignore the express requirement in s. 44 of the SABs that she attend the insurer’s examination to support her claim for funding for treatment. She did so despite the clear provisions of s. 55 of the SABS that would preclude her from making her claim if she refused to attend the medical examination. She then brought arbitration proceedings that was found to have no merit due to her own decisions. The legal proceeding was for $1,378.68. In bringing her proceedings, she required the insurer to incur expenses to defend its position. Rule 75.2 provides that the adjudicator should consider each party’s degree of success as part of the decision to award indemnity for expenses. The Director’s Delegate found that the insurer was entirely successful. Having done so, an award of expenses was quite properly within the range of remedies available to him. There is no basis for this court to intervene in his exercise of discretion.
[46] Even if the Director’s Delegate understated the importance of bringing an overall approach to an assessment of reasonableness in expenses decisions, and considering factors such as proportionality, access to justice, and efficiency, I agree with the Director’s Delegate that those issues have little or no weight in a proceeding like this one which has been knowingly uneconomical from the outset and has seemingly been carried on without regard to costs of wasted steps and unreasonable positions taken by the applicant and her counsel.
[47] The application is dismissed.
Costs
[48] Aviva seeks costs of $9,000 all-in with counsel claiming a partial indemnity rate of $145. Mr. Hussein argued that if Ms. Clancy succeeded, she should be entitled to costs of $3,000 all-in. Mr. Hussein argued that there should be low costs in this proceeding because the factums were just a re-tread of the factums below. This was not the case for Aviva, however. It properly directed itself to issues and case law relevant to an application for judicial review. Mr. Hussein argues that if Aviva succeeds, it should not be entitled to any costs because it was the cause of the delays attributed to his client. But I am dealing with the proceeding in this court rather than what happened below. In any event, there is no basis in the findings below to disentitle Aviva to the normative approach that costs are presumptively payable to the successful party.
[49] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), 2004 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.
[50] In my view, balancing what is reasonable, including what a reasonable applicant would understand to be her likely costs jeopardy in this proceeding, Ms. Clancy shall pay costs to Aviva of $7,000 all-inclusive. This includes the costs awarded in the cause on the motion before Toscano Roccamo J. on July 24, 2018 that were reserved to this court for quantification.
Myers J.
I agree _______________________________
Aston J.
I agree _______________________________
Ellies J.
Released: September 13, 2018