CITATION: Cyr v. State Farm Mutual Automobile Insurance Company, 2018 ONSC 563
DIVISIONAL COURT FILE NO.: 331/16
DATE: 20180130
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
S.N. Lederman, N.J. Spies and M.G. Quigley, JJ
B E T W E E N:
MARGARET CYR and SOKOLOFF LAWYERS
Stanley Razenberg and Meral Kesebi, for the Plaintiffs/Applicants
Plaintiffs/Applicants
- and -
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and FINANCIAL SERVICES COMMISSION OF ONTARIO
Paul Omeziri, for the Respondent, State Farm Mutual Automobile Insurance Company
Deborah McPhail and Jessica Spence, for Financial Services Commission of Ontario
Defendants/Respondents
HEARD: December 22, 2017,
at Toronto, Ontario
BY THE COURT
REASONS FOR DECISION
NATURE OF PROCEEDING
[1] The applicants, Margaret Cyr, and her solicitors Sokoloff Lawyers, seek to judicially review an appeal decision by Director’s Delegate, Lawrence Blackman, of the Financial Services Commission of Ontario (“FSCO”), dated May 20, 2016, denying Ms. Cyr’s appeal from the FSCO decision of Arbitrator Charles D. Matheson (the “Arbitrator”) and ordering costs against Sokoloff Lawyers personally.
[2] The Arbitrator determined in his decision dated March 24, 2015, that Ms. Cyr was not entitled to any further income replacement benefits or claimed medical expenses.
[3] In the course of that hearing, Arbitrator Matheson also allowed the respondent’s motion to (i) exclude any documents, reports, or assessments that the applicant, Ms. Cyr, would rely on during the arbitration, (ii) exclude all of the “expert witnesses” Ms. Cyr sought to rely on, and (iii) exclude or excuse all other witnesses, including Ms. Cyr herself, from testifying.
[4] Ms. Cyr’s insurer, State Farm Automobile Insurance Company (“State Farm”), brought that motion on the basis that Ms. Cyr had failed to adhere to the timelines provided in the Dispute Resolution Practice Code (the “Code”) and failed to provide State Farm with witness lists and other documentation she intended to rely on at the arbitration 30 days before the hearing, as the Code requires. The Arbitrator granted State Farm’s motion, with the exception of the request to prevent Ms. Cyr herself from testifying.
[5] Ms. Cyr appealed to the Director’s Delegate, both from that decision and the decision denying further income replacement benefits or claimed medical expenses, but the Director’s Delegate upheld the Arbitrator’s decision. In addition to denying her appeal, the Director’s Delegate ordered that Ms. Cyr’s solicitors, Sokoloff Lawyers, personally pay $3,000 in costs (all-inclusive) to State Farm for their legal expenses incurred on the appeal from the Arbitrator’s decision. The applicants now seek judicial review from this Court respecting those two substantive decisions of the Director’s Delegate.
[6] At the end of hearing the applicants’ submissions, we did not feel the need to call upon the respondent, State Farm, or FSCO, to respond and advised counsel that the applicants’ application for judicial review was dismissed with costs, for reasons to follow. These are those reasons.
BACKGROUND
[7] Ms. Cyr was involved in a car accident on December 6, 2008 in which she sustained injuries. She was 59 years old at the time and worked as a registered nurse at a long-term care facility in Whitby, Ontario. She was the supervisor nurse for her assigned shift and had about 19 years of seniority. Her duties included being a manager and supervising other employees working on her shift.
[8] The accident was severe enough that State Farm considered Ms. Cyr’s car to be irreparable and paid her for the value of her car.
[9] In March 2011, however, State Farm denied Ms. Cyr’s post-104 week Income Replacement Benefit (“IRB”) claim. It also denied her claims for the cost of treatment plans and examinations between March 2009 and June 2011.
Arbitrator Matheson’s decision
[10] In January 2015, the parties came before Arbitrator Matheson of ADR Chambers to determine Ms. Cyr’s entitlement to the disputed IRB and other benefits.
[11] State Farm sought to exclude Ms. Cyr’s written and oral evidence at that hearing on the basis of late notice and service of required documentation. Ms. Cyr argued that this was neither fair nor reasonable, and that any procedural default by her counsel could be cured by an adjournment, legal costs or another remedy. She explained, through counsel, that the delay in providing the documents was due to her lawyers’ mistaken belief that a clerk at Sokoloff Lawyers had sent materials as instructed, when he or she had not. We were told that clerk’s employment was later terminated. Counsel for Ms. Cyr at the arbitration stated that Sokoloff Lawyers had become aware of this mistake in late November or early December 2014, which was still more than 30 days before the December 22, 2014 filing deadline.
[12] Under Rule 39.2 of the Code, the late service of documents is only permitted where extraordinary circumstances are present. The Arbitrator decided to adjourn the hearing to the following morning, but in the meantime asked Ms. Cyr to provide a list of what had been provided to State Farm before the 30-day filing deadline, and to provide any case law on what constituted “extraordinary circumstances”.
[13] The next day, however, counsel for Ms. Cyr did not provide the requested list or any case law on what would constitute extraordinary circumstances. This led the Arbitrator to conclude that all of the documents were provided after the 30-day deadline. As a result, the Arbitrator allowed State Farm’s motion and ordered:
(i) The exclusion of all of Ms. Cyr’s documents, under Rule 39 of the Code,
(ii) The exclusion of Ms. Cyr’s “expert witnesses”, under Rule 42 of the Code, and
(iii) The exclusion of all the other witnesses, other than Ms. Cyr herself, under Rule 41 of the Code.
[14] The Arbitrator ultimately denied all of Ms. Cyr’s substantive claims, including her claim to post-104 week IRBs and her claim to medical benefits.
The Director’s Delegate decision on appeal
[15] On appeal, Ms. Cyr submitted that the Arbitrator breached the rules of natural justice in failing to consider her explanation for the late delivery of her materials, particularly given that State Farm gave no notice of its motion. Further, Ms. Cyr argued that the clerk’s failure to follow specific instructions was capable of meeting the definition of “extraordinary circumstances.”
[16] In his May 20, 2016 decision, Director’s Delegate Blackman ultimately agreed with State Farm that allowing the appeal would render the time limits set out in the Code virtually meaningless. Moreover, he expressed great concern that it would set a precedent of allowing late service and notice “that would ultimately be especially detrimental to injured persons when on the receiving end of late delivery, thereby undermining the intended consumer protection of this process.”[^1]
[17] The Director’s Delegate also reiterated agreed upon facts, including that Sokoloff Lawyers discovered the clerk’s alleged failure to serve any of the required documents some time before the 30-day deadline, but that Ms. Cyr’s counsel was still late in delivering her documentary evidence, only between four and 21 days before the start of the arbitration, and at least a week past the filing deadline.[^2]
[18] The Director’s Delegate found that the Arbitrator had not mindlessly or mechanically applied the rules. His core finding that informs his conclusions on the appeal lies in his statement that he was “persuaded that the conduct of the applicant’s law firm in question at arbitration represents a blatant disregard, if not contempt, of the opposite party and of the Rules, orders and processes of this Tribunal.”
[19] The Director’s Delegate made four key findings:
The Arbitrator did not err in the exercise of his discretion not to adjourn the matter to allow affidavit material to be drafted, executed and filed. Ms. Cyr had conceded that the onus was on her to persuade the Arbitrator to set aside the timelines under the Code, and she failed to bring any evidence of extraordinary or any other circumstances warranting the exercise of the Arbitrator’s discretion. Moreover, the Director’s Delegate was not convinced that the non-existent affidavit that Ms. Cyr claimed would further explain the reason for the late service of documents would have made any difference in any event.
The Arbitrator did not require Ms. Cyr to establish “extraordinary circumstances” to merit deviating from the set timelines for witnesses and expert witnesses, since the Rules do not require this standard. The Arbitrator adjourned the hearing specifically to allow the applicant to produce case law that discussed extraordinary circumstances or “cogent reasons”, and Ms. Cyr failed to produce such case law both at the arbitration, and on appeal.
The prejudice to State Farm in adjourning the arbitration hearing was not “minimal,” as Ms. Cyr had suggested. The Director’s Delegate accepted that Ms. Cyr’s prejudice was inflicted by her own law firm, notwithstanding the Arbitrator’s orders concerning the timelines to be abided by and the respondent’s 11-month request for documentation. The Director’s Delegate also acknowledged that while he personally preferred to determine disputes on their merits where possible, the exercise of that discretion belonged to the Arbitrator at first instance, and should not be interfered with.
The Arbitrator’s determination of Ms. Cyr’s IRB entitlement was not based on “no evidence,” as she suggested.
[20] Ultimately, the Director’s Delegate considered the issue of costs. He determined that State Farm was entitled to its reasonable legal expenses, given the requirement to consider each party’s degree of success. The Director’s Delegate fixed the legal expenses of the appeal at $3,000. In considering who should pay the costs of the appeal, the Director’s Delegate considered clause 282(11.2)(c) of the Insurance Act, R.S.O. 1990, c. I.8., which provides that:
An arbitrator may make an order requiring a person representing an insured person or an insurer for compensation in an arbitration proceeding to personally pay for all or part of any expenses awarded against a party if the arbitrator if satisfied that…
(c) the representative caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default.
[21] Both parties provided written and oral submissions, as required by subsection 282(11.4) of the pre-transition Insurance Act. The Director’s Delegate found that Ms. Cyr’s lawyers should be personally liable to pay the respondent its legal expenses for the appeal. He noted the following:
To have Ms. Cyr personally pay the respondent’s appeal legal expenses in the extraordinary circumstances of non-compliance in this case would be a distorted and contorted protection of counsel at the consumer’s expense.[^3]
KEY ISSUES
[22] In our view, there are three main issues to be addressed on this application:
Did the Arbitrator and Director’s Delegate deny Ms. Cyr procedural fairness by ruling against her request to file an affidavit speaking to the reason for the late delivery of her documents?
Did the Arbitrator and Director’s Delegate deny Ms. Cyr procedural fairness by ruling to exclude her proposed witnesses from testifying?
Was it reasonable for the Director’s Delegate to order that costs of the appeal be paid personally by Ms. Cyr’s counsel?
JURISDICTION AND STANDARD OF REVIEW
[23] Pursuant to ss. 2 and 6(1) of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1, the Divisional Court has jurisdiction to hear an application for judicial review.
[24] The parties substantively agree that the standard of review to be applied on this judicial review is reasonableness while issues concerning procedural fairness should be determined without a standard of review analysis and considering the Baker factors[^4].
ANALYSIS
Issue 1: Did the Arbitrator and Director’s Delegate deny Ms. Cyr procedural fairness by ruling against her request to file an affidavit speaking to the reason for the late delivery of her documents?
[25] Ms. Cyr took the position before us that the Arbitrator denied her procedural fairness by “refusing” to allow Ms. Cyr to file an affidavit and that the Director’s Delegate erred in upholding that ruling.
[26] Ms. Cyr claimed she made 13 separate requests during the hearing to file an affidavit addressing the issue of delay. Despite this, the Arbitrator did not allow her to file the affidavit. While the Arbitrator did summarize some of Ms. Cyr’s submissions regarding the late delivery of documents, she submitted that the Arbitrator “did not consider those submissions in ruling to exclude Ms. Cyr’s document brief”, and claimed the Arbitrator’s decision is silent on why he would not permit an affidavit speaking to extraordinary circumstances.
[27] Ms. Cyr claimed there was no reason why the affidavit could not have been considered on the second day of the arbitration hearing, even though it had not been brought on the first day, and that procedural fairness mandated that she be given an opportunity to file the affidavit and have it be considered by the Arbitrator, where there was no prejudice to the insurer. Further, she submitted that the Arbitrator’s decision, read as a whole, shows that he did not accept her explanation for the late delivery of documents because he had no evidence to support her explanation, although in her submissions it was stated that he only lacked this evidence because he denied the applicant the opportunity to submit an affidavit.
[28] We disagree entirely with this contention; a line of argument that is without support in the record. First, we specifically note that there was no affidavit that was ever drafted and put before the Arbitrator. It simply did not exist. Equally, it is important to be clear on what actually transpired before the Arbitrator.
[29] On the first day, the Arbitrator asked Ms. Cyr to submit case law on the next day of the hearing on how the “extraordinary circumstances” test could be met. She did not. It is not clear how the Arbitrator could have come to a favourable decision for Ms. Cyr without such case law; the proposed affidavit alone was not going to substantiate her position. It would only have spoken to the alleged facts put forward by Ms. Cyr’s counsel, and those facts were already in evidence through the extensive exchanges of emails between the parties on this very subject. However, Ms. Cyr provided no law to advance or support her position.
[30] Second, the Arbitrator felt he had sufficiently understood the reasons for the late delivery of documents and referred to them in his decision. The document filed before us listing the claimed thirteen requests to file the non-existent affidavit plainly shows that the affidavit was not needed. The record of Mr. Wright’s submissions, who represented Ms. Cyr before the Arbitrator that day, casts a very different light on what transpired than counsel suggested to us on this hearing. The following quotations provide a clearer flavour of this:
“If he [Mr. March, counsel for State Farm]… my suggestion is this Mr. Arbitrator. If you would like us to respond to the motion materials that are being served, we would be more than pleased to do that.”
“I take my responsibilities particularly seriously… and if the facts are going to be in dispute which they ought not to be, I want an opportunity to file an affidavit, because the paper trail is quite clear as Mr. March knows.”
“I really feel strongly about the factual matrix and I want an opportunity, if necessary, to file an affidavit with you. Set out all the back and forth, the e-mails strictly since the beginning…”
“But I think in order to properly do so, you need a proper appreciation of the factual matrix. Now that Mr. March has brought his motion which I have not yet seen before this morning, I would like an opportunity if necessary to file affidavit material that sets out all the back and forth, it shows quite clearly, in my submission, or will show that Mr. March has just refused to deal with this in the last three weeks.”
“Just lastly, the e-mail that Mr. March got from me yesterday was “I don’t ever understand you to be saying you do not accept my explanation about the clerk’s screw up. If you do, let me know and I’m going to file an affidavit or materials.”
I said ‘If we are talking about whether that constitutes extraordinary circumstances, that is a different matter, but if you are essentially saying you do not believe me, or you should not accept my explanation, that is a different matter, that is something I take very seriously. That is something I need to respond to.”
So I am not blaming this person, but I am saying that is how this problem arose…” (our emphasis)
[31] We agree with the Director’s Delegate that an affidavit would not have made a difference. This is particularly so given Ms. Cyr’s counsel’s acknowledgement that they knew about the non-service of the required documents some time before the 30-day filing deadline and yet still submitted her documents late. As well, as noted, the e-mails were all provided to the Arbitrator at his request, essentially in lieu of that supporting affidavit that had not yet been drafted. They certainly contained all of the information that would have been in the affidavit if it had ever been prepared and submitted.
[32] The Arbitrator had a full understanding from that documentation just what the factual matrix was. He did not need to grant yet another adjournment to permit the non-existent affidavit to be prepared, and he could rightly be understood to be unwilling to do that. In our view, this is particularly so given that we would reasonably have expected, given the background, that an affidavit should have been prepared and presented to the Arbitrator on the first day of the hearing when the motion that Ms. Cyr’s counsel knew was going to be brought, was filed.
[33] Moreover, the transcripts show that to grant an adjournment to permit an affidavit to be prepared would necessarily have resulted in a much lengthier adjournment of the arbitration hearing itself, because there were only four days available for the arbitration, dates that had been scheduled six months before.[^5]
[34] This leads to the third point. As already stated, Ms. Cyr’s counsel knew well before the hearing that State Farm intended to challenge the submission of her documents, even if she did not have formal notice of the motion. Ms. Cyr should have come prepared with an affidavit and supporting materials to convince the Arbitrator not to accept the respondent’s submissions. She did not. But the point is, it matters not, because there was no factual dispute. The Arbitrator accepted everything Ms. Cyr said relating to the delay in delivering the required documents. So did the respondent. There were no facts in dispute, and a delay of the proceedings, with only a limited number of days available, would have served no useful purpose.
[35] We accept that this is an issue of procedural fairness but find no violation of procedural fairness that was due to Ms. Cyr, or denial of the opportunity to put forward “evidence” in the form of an affidavit that did not actually exist, particularly given the prior history, the nature and limited available time to conduct the arbitration itself, and the absence of supplementary evidence or case law to support the applicant’s actions.
Issue 2: Did the Arbitrator and Director’s Delegate deny Ms. Cyr procedural fairness by ruling to exclude her proposed witnesses from testifying?
[36] Ms. Cyr submits that the Arbitrator and Director’s Delegate erred in two ways. The first relates to the Arbitrator who is claimed to have incorporated the more onerous “extraordinary circumstances” requirement into Rule 41, despite the fact that the Code does not contain that requirement. We acknowledge, as Ms. Cyr noted, that the Arbitrator did quote in his reasons from the decision in Hotchkiss v. Kingsway General Insurance Co.[^6], which does clearly refer to extraordinary circumstances.
[37] Nevertheless, in our view, the Arbitrator clearly addressed this in his decision, as did the Director’s Delegate. The Arbitrator quoted from Hotchkiss, but it was to note that whether or not extraordinary circumstances is the specific criterion to be applied, a party must demonstrate “cogent reasons” in seeking to have the Commission deviate from the Rules. This does not, in our view, constitute acceptance by the Arbitrator that the “extraordinary circumstances” requirement applied to the interpretation of Rule 41.
[38] Turning to the Director’s Delegate, Ms. Cyr claimed before us that he provided no explanation for his finding that the Arbitrator had not incorporated the requirement of extraordinary circumstances into Rules 41 and 42. We disagree. The Director’s Delegate clearly addressed this and provided an explanation in paras. 43-44 of his reasons. We find it to be a sufficient explanation, one that essentially mirrors the Arbitrator’s findings that even if the circumstances need not be extraordinary, there must be cogent reasons to explain the delay and seemingly blatant failure to adhere to the Rules.
[39] Contrary to Ms. Cyr’s submissions before us, we also find nothing in the language of Arbitrator Richards in Chung v. Unifund Insurance Co.[^7] that supports her claim that Arbitrator Matheson incorporated an inappropriate standard. Arbitrator Richards acknowledges in Chung that there is no requirement to show extraordinary circumstances, and notes the Rules merely state witnesses may be excluded if a party does not comply with the Code. Here the party did not comply with the Code, which in and of itself permitted the exclusion of her witnesses. However, Arbitrator Matheson looked to see, not if there were extraordinary circumstances, but simply if there were cogent reasons for that non-compliance, an obviously lesser test, but he found none. Further, we note that Mr. Wright, Ms. Cyr’s counsel on the hearing, did not cite Chung in opposition to Arbitrator Matheson as it seemed to be claimed before us, but only to demonstrate that extraordinary circumstances applies only to the documentary evidence, a point that was plainly not lost on the Arbitrator. Further, the transcripts show that Mr. Wright never said he wanted to call witnesses if the documents were not admitted.
[40] A deeper look into Ms. Cyr’s witness issue and the transcripts of the proceedings shows, however, that there are further and more pointed reasons why this claim is unfounded before us.
[41] The transcript from January 19, 2015, reveals that it was Mr. March, counsel for State Farm, who first raised the possibility of Ms. Cyr calling the doctors, but he then told the Arbitrator[^8] that it was Ms. Sokoloff, counsel for Ms. Cyr, who acknowledged that Ms. Cyr did not have any expert witnesses. As such, Mr. March correctly observed that if there were no experts to be called then there could be no opinion evidence and thus, the evidence of the proposed witnesses, whether doctors or other health professionals or not, would be of no value.
[42] The next day, January 20, 2015, the Arbitrator (at p. 8) stated his decision that the evidence not presented prior to the 30 days would be excluded, i.e. the documents, but that he heard and understood that Ms. Cyr’s position was that the witnesses were to be treated differently. He asked counsel for direction on whether this would apply to Ms. Cyr, as she is a party.
[43] Mr. Wright appeared uncertain on the witness issue, and sought clarification of the Arbitrator’s decision. He wanted to know if the Arbitrator had ruled that he could call the witnesses, but could not rely on the documents. In response, Mr. March again observed that Ms. Sokoloff had admitted that there were no experts to be called, and thus there was no value to any other non-expert testimony except for that of Ms. Cyr herself.
[44] At p. 21 of the Transcript, the Arbitrator repeated his ruling that any evidence not disclosed before the 30-day limit was excluded, but that they still had to deal with the witnesses’ issue. Mr. Wright asked that they deal with the medical witnesses first so that he could call them first or tell them they were not needed, if that was the Arbitrator’s ruling. However, we note that there was no argument made that those witnesses could give evidence without referring to their documents, nor did Mr. Wright respond to the argument that their evidence would be of no value.
[45] In response, at p. 22-23, the Arbitrator gave brief oral reasons, concluding that since there were no expert witnesses, then the doctors who might have been called just for chronology and treatment, not for expertise, could not give opinions. The Arbitrator told the parties that he could not see the value of the testimony of these witnesses, and that he wished to expedite the matter as quickly as possible to minimize costs to both parties. It is thus plain on the face of the transcripts that this was the reason he decided to exclude these witnesses. It was not because of Ms. Cyr’s delay in providing the witness list. As such, this conclusion could not possibly be contrary to Chung in any event, and is clearly distinguishable on the facts. That said, again we find no error in the language used by the Arbitrator and his focus on cogent reasons for delay, but in the end, that was not what decided the issue relative to whether the witnesses would be permitted to testify.
[46] Finally, it is claimed that both adjudicators, the Arbitrator and the Director’s Delegate, failed to engage in a weighing of the respective prejudice that would be suffered by Ms. Cyr and the insurer.
[47] Ms. Cyr argued that the prejudice to State Farm in permitting her witnesses to testify was minimal, given that the respondent had almost two weeks’ notice of which witnesses would testify. Ms. Cyr conceded that notice was late and not ideal, but asserted that the time provided was sufficient for the respondent to prepare a cross-examination of those witnesses. In contrast, Ms. Cyr argued that her prejudice was severe because her documentary evidence had already been ruled inadmissible for failure to comply with the Rules, and in her submission, the decision to exclude her “expert” witnesses guaranteed that she would not be successful in proving her case.
[48] In addition, relative to the Director’s Delegate, Ms. Cyr asserted that the Director’s Delegate also erred in failing to consider the relative prejudice to the parties, yet also claimed, surprisingly to us, that she was not seeking to have the Director’s Delegate substitute his own discretion for that of the Arbitrator when that appears to have been exactly what was being sought.
[49] We reject all of these contentions. It is plain from their reasons that both adjudicators were concerned not only with the prejudice to Ms. Cyr, but the prejudice to State Farm that would result from an adjournment, and both were also very concerned with the prejudice to the Commission in adjudicating cases at large. Ms. Cyr fails to even acknowledge that those would be reasonable sources of concern to the Arbitrator or the Director’s Delegate in her submissions before us. We also see no meaningful distinction between this issue and Issue 1 above, because the reason for the delay in submitting the witness list was also the clerk’s alleged error. But in the end, it is not the delay aspect that resulted in the Arbitrator’s decision not to receive the testimony of Ms. Cyr’s “expert” witnesses, but rather that they were not in fact experts who could give opinion evidence. That is a reasonable determination that the Arbitrator was entitled to make and is accordingly not subject to review by us.
Issue 3: Was it reasonable for the Director’s Delegate to order that costs of the appeal be paid personally by Ms. Cyr’s counsel?
[50] The applicants submitted that the two-part test in the Court of Appeal decision in Galganov v. Russell (Township)[^9] applies in these circumstances. The Director’s Delegate considered this two-part test, but the applicants claimed before us that the test was not met. The respondent argued that Galganov was not even applicable here. In Galganov, the lawyer was acting with the explicit instructions of his client. It is plain in this case that the failure to file the required lists on a timely basis did not result from Ms. Cyr’s instructions, but instead, as the evidence shows, from a failure on the part of her solicitors. Moreover, Galganov did not involve a claim for statutory accident benefits and as such, did not implicate the consumer protection goal found in the Code.
[51] It was claimed that counsel’s conduct did not cause expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default. The applicants actually claimed that the Director’s Delegate had stated in a letter he wrote to them that there was no unreasonable delay or other default attributable to counsel in respect of the appeal.[^10] However, our review of that letter provides no evidential support for the applicants’ claim. The Director’s Delegate did not made make any such statement. The Director’s Delegate’s letter merely asked the parties to make written submissions on this issue.
[52] Secondly, the applicants claimed that the standard of “extreme caution” referenced in Galganov was also not satisfied. The applicants claimed that without filing the affidavit, which we again note never existed, the applicants did not have the opportunity to outline the specifics for the delay of service, and mere inadvertence or error on counsel’s part should not and is not sufficient to trigger an order of costs against a lawyer personally. The applicants submitted, without explanation, that this issue should be determined on a correctness standard, but we can see no reason why that standard should be applied. As set out below, we agree it is the reasonableness standard that applies.
[53] State Farm’s costs submissions focused on the Director’s Delegate’s decision, and the findings made on appeal before him. These included Ms. Cyr’s concessions that she did not comply with the applicable rules for the delivery of documents, and her counsel’s concession at the appeal that Ms. Cyr was prepared to pay costs up to $13,000 to State Farm, if only the matter would be sent back for a re-hearing on the substantive arbitration issues. The Director’s Delegate found, however, correctly in our view, that it would have been an inappropriate protection of counsel to order Ms. Cyr to pay the respondent’s legal expenses in the extraordinary circumstances of counsel’s non-compliance. In fairness to her solicitors, it should be acknowledged that before us Ms. Cyr’s counsel acknowledged that they would be assuming responsibility for any costs awards made against her.
[54] Considering the Director’s Delegate’s costs decision on a reasonableness standard, we find that the decision falls within the range of acceptable outcomes. The decision involves an interpretation of the Insurance Act and the Code, both legislation and regulations that the Director’s Delegate has expertise to interpret. In particular, the issue of costs against a solicitor under s. 282(11.2)(c) of the Insurance Act, the issue of entitlement to benefits under the SABS and the interpretation of Rules 39, 41 and 42 of the Code with respect to documents and witnesses, are all issues that fall within the Director’s Delegate’s specialized expertise and therefore the reasonableness standard would apply, and we find nothing that conflicts with the requirements of Dunsmuir in the decision reached by the Director’s Delegate.
[55] It was within the Director’s Delegate’s discretion to make this costs order. He considered the Insurance Act provisions and noted one of the purposes of the statute, consumer protection, in coming to his conclusion. The Director’s Delegate did consider Galganov, but he applied it within the context of interpreting the Insurance Act. In our view, his interpretation is entitled to deference.
Conclusion
[56] For these reasons, this application for judicial review is dismissed. As agreed by counsel at the conclusion of the hearing, costs shall be payable by Ms. Cyr in favour of State Farm in the amount of $5,500 all-inclusive payable within 30 days of the release of this decision. FSCO did not seek costs and none are awarded.
Sidney N. Lederman J.
Nancy J. Spies J.
Michael G. Quigley J.
Released: January , 2018
CITATION: Cyr v. State Farm Mutual Automobile Insurance Company, 2018 ONSC 563
DIVISIONAL COURT FILE NO.: 331/16
DATE: 20180130
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
MARGARET CYR and SOKOLOFF LAWYERS
Plaintiffs/Applicants
- and –
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and FINANCIAL SERVICES COMMISSION OF ONTARIO
Defendants/Respondents
REASONS FOR DECISION
S.N. Lederman, N.J. Spies and M.G. Quigley JJ.
Released: January 30, 2018
[^1]: DD Blackman decision, para. 24. [^2]: DD Blackman decision, para. 28. [^3]: DD Blackman’s decision, para. 87. [^4]: Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 SCR 817. [^5]: Transcript of Proceedings, January 19, 2015, at p. 518. [^6]: [2011] O.F.S.C.D. No. 110. [^7]: [2010] O.F.S.C.D. No. 69. [^8]: Transcript at p. 520. [^9]: 2012 ONCA 410. [^10]: Application Record, Volume 3, Tab 70 cited by the applicant, but Tab 70 is actually in Volume 5.