Neutral Citation: 1999 ONFSCDRS 85

FSCO A98-000701

BETWEEN:

TIMOTHY E. PROUSE

Applicant

and

NON-MARINE UNDERWRITERS, MBRS. OF LLOYD'S

Insurer

Before:

Nancy Makepeace

Heard:

Written submissions were received on April 7 and April 15, 1999.

Appearances:

David M. Miller for Mr. Prouse

Rodney D. Dale for Non-Marine Underwriters, Mbrs. of Lloyd's

The Applicant, Timothy E. Prouse, was injured in a motor vehicle accident on March 10, 1995. In a decision dated March 12, 1999, I dealt with his claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

The Applicant's "gross annual income from employment" before the accident includes the benefit premiums paid by the employer.
The Insurer shall pay the Applicant the benefits owing with interest as set out in section 68 of the Schedule.

The issue in this further hearing is:

Is the Applicant entitled to his expenses incurred in respect of this arbitration hearing?
If the answer to the first issue is "yes," what is the amount of expenses to which the Applicant is entitled?

The Applicant is entitled to his arbitration expenses totalling $1,225.81.

Background

The only issue in dispute in this proceeding was whether the Applicant's "gross annual income from employment," for purposes of calculating his income replacement benefits, included the amounts his employer paid for life insurance, dental benefits and medical benefits. The total cost of the premiums at the time of the accident was $78.60 per month. I found that the employer-paid premiums were "income from employment," essentially because benefits were part of the Applicant's compensation package.

The Applicant seeks his arbitration expenses in the amount of $1,225.81. The Insurer submits that each party should bear its own expenses, but makes no comment on the amount of expenses claimed by the Applicant. The Insurer states that it should not be ordered to pay the Applicant's expenses, despite the Applicant's success in the matter, because "[t]he parties properly sought the guidance of an arbitrator on an important legal issue that had not been clearly resolved in law."

The Law

Subsection 282(11) of the Insurance Act, as amended, is as follows:

The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.²

Ontario Regulation 664, as amended by Ontario Regulation 464/96, prescribes the following criteria:

An arbitrator may award expenses to an insurer or insured person under subsection 282(11) of the Act if the arbitrator is satisfied that the award is justified, having regard to the following criteria:

Each party's degree of success in the outcome of the proceeding.
Conduct of the insurer or the insured person that tended to shorten or facilitate the proceeding or that tended to prolong, obstruct or hinder the proceeding, including failure to comply with undertakings or orders.
Whether the proceeding or any position taken by the insurer or the insured person during the proceeding was manifestly unfounded, frivolous, vexatious, fraudulent or an abuse of process.
The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.
If the insurer or the insured person requests, any written offers to settle made after the conclusion of mediation and before the conclusion of the arbitration in accordance with the rules of practice and procedure applicable to the proceeding, including the terms of the offers, the timing of the offers and the responses to the offers, having regard to the result of the proceeding.
Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.

Analysis

I accept the Insurer's submission that the parties proceeded "in the most inexpensive way possible, by written submissions." However, I do not accept the Insurer's characterization of the law in this area as "uncertain." The Insurer notes that I found the Schedule "ambiguous as to whether benefit premiums paid by the employer are included in or excluded from 'gross income'." Nevertheless, in reaching my decision, I followed two previous arbitration decisions which had come to the same conclusion — Mouawad v. Alpina Insurance Company, Limited and Crevier-Lamarche v. Missisquoi Insurance Company.³ I found both decisions to be of great assistance, despite the fact that Mouawad v. Alpina dealt with the predecessor Schedule and concerned a deduction made by a union rather than an employer. I am unpersuaded by the Insurer's submission that the Arbitrator in Crevier-Lamarche v. Missisquoi "did not consider all of the arguments submitted by the Insurer in this case." In any case, as I said in my reasons in this matter, there is a long line of arbitration and appeal decisions interpreting "income" broadly to include money or money's worth received by a person in exchange for his services, and there are no decisions adopting the narrow interpretation the Insurer proposed. The Insurer may have preferred that the arbitration and appeal decisions take a different approach, but I cannot agree that there is any uncertainty in the law on this point. The Insurer's position falls short of being frivolous, but I find no novelty or complexity that would warrant the expenses order the Insurer requests.

The Insurer made no submissions on the amount of expenses claimed by the Applicant, which I find to be reasonable. The Applicant is entitled to be reimbursed for arbitration expenses of $1,225.81, to be paid forthwith.

May 12, 1999

Nancy Makepeace Arbitrator

Date