Neutral Citation: 2000 ONFSCDRS 108

FSCO A97-001546

BETWEEN:

KWABENA ADU-AGYEI

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION ON A MOTION FOR INTERIM EXPENSES

Before: Suesan Alves

Heard: By written submissions filed on February 11, 18 and 25, 2000

Appearances: Mark Baker for Mr. Adu-Agyei Darrell P. March for Zurich Insurance Company

Mr. Kwabena Adu-Agyei seeks interim expenses pending the completion of the arbitration pursuant to section 282(11.1) of the Insurance Act and section 65 of the Dispute Resolution Practice Code — Third Edition, April 15, 1997 (the "Code"). Zurich Insurance Company ("Zurich") opposes his request.

The issues on this motion are:

Is Mr. Adu-Agyei entitled to interim expenses pursuant to section 281(11.1) of the Insurance Act?
Is Zurich entitled to expenses of the motion?

Subject to my further Order as to expenses at the conclusion of the hearing, Zurich shall pay Mr. Adu-Agyei interim expenses in the amount of $3,100.50.
If the parties are unable to agree on the expenses of this motion, that issue is deferred until the issue of expenses of the hearing is addressed.

Kwabena Adu-Agyei was involved in motor vehicle accidents on March 10, 1995 and on May 10, 1995. Zurich paid Mr. Adu-Agyei income replacement benefits as a result of these accidents until December 13, 1997. Mr. Adu-Agyei claims that he continues to be entitled to those benefits, and that they should have been paid at a higher rate. He also claims rehabilitation benefits, a special award and his expenses in respect of the arbitration. Zurich disputes each of Mr. Adu-Agyei's claims. It submits that its surveillance and other evidence establishes that Mr. Adu-Agyei is not entitled to further benefits. Zurich claims its expenses and an award in respect of its assessment.

The hearing commenced on January 31, 2000. The allocated time for the hearing ended on February 3, 2000, and counsel requested further hearing dates. While earlier dates were available to the Commission, counsel for the Insurer advised that due to his heavy hearing schedule, he could not resume the hearing until August 2000, some six months away. In light of the delay, the Applicant brought an oral motion for interim expenses for legal fees, fees charged by witnesses for preparation and attendance at the hearing, and disbursements for reports and records, pursuant to section 65 of the Code. The Insurer opposed his request. Counsel agreed to provide written submissions.

For the reasons which follow, I conclude that Zurich is required to pay Mr. Adu-Adyei interim expenses in the amount of $3,100.50. This order is subject to variation or repayment once the issues in dispute have been decided.

Authority

Counsel for the Insurer submitted that I lacked the authority to make the Order sought by the Applicant at this stage of the proceeding. I disagree. I find that an arbitrator has the requisite authority to order interim expenses at any stage of the proceeding by virtue of section 282(11.1) of the Insurance Act, which states: "The arbitrator may at any time during an arbitration proceeding make an interim award of expenses, subject to such terms and conditions as may be established by the arbitrator."

Criteria

The Applicant submitted that in exercising my discretion to award interim expenses, I should consider the six month delay until the hearing was completed, and the three criteria which Arbitrator Manji suggested in the case of Bernicky and Guardian Insurance Company of Canada (OIC A-006268, July 6, 1994). The Bernicky criteria are that the application raises a bona fide issue; the expenses sought are reasonable and necessary for the conduct of the arbitration; and the applicant is unable to carry the expenses of the arbitration. These criteria have been adopted by many arbitrators when determining whether to award interim expenses to an applicant.

Counsel for the Insurer submitted that these criteria were formulated in 1994, when arbitrators could only award expenses to applicants. Since arbitrators can now award expenses to both insurers and applicants, the Bernicky criteria were no longer applicable. Where an arbitration application has been filed on or after November 1, 1996,¹ arbitrators are required to consider the following criteria set out in section 12(2) of the Regulation,² in granting an award of expenses.

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.

These criteria are primarily directed at an assessment of expenses at the conclusion of a hearing, and, except for the criteria in items 4 and 6 — the nature of the issues, and any other relevant criteria — for the most part are realistically determined only at the end of a hearing. In my view, the Bernicky criteria remain helpful to an arbitrator in exercising the discretion to grant or refuse an applicant's request for interim expenses, whether those criteria are considered as a development in the arbitration case law or as criterion number 6 under the Regulation, "any other matter...that the arbitrator considers relevant." In my view, the thrust of the Bernicky criteria is to facilitate applicants' access to the adjudication of legitimate disputes. Access to the adjudicative process continues to be a legislative objective under the November 1, 1996 legislative scheme.³

Different or additional criteria may be helpful depending on the party seeking interim expenses, and the circumstances of a given case. For example, it would be peculiar for an insurer to seek payment of interim expenses on the basis of financial need. Since November 1, 1996 arbitrators have generally exercised their power to award interim expenses to insurers as a sanction for applicants' misconduct or for non-compliance with undertakings.⁴ I am not persuaded that because each party is able to receive an award of expenses on a final basis, that neither should be awarded them on an interim basis.

Counsel for the Insurer submitted that the Bernicky criteria were formulated at the pre-hearing stage of the proceedings; however, the merits of the case should be considered during the hearing. I do not agree that it is appropriate to apply a merits-based test at this stage of the proceedings. In my view it would be premature to do so, since the Applicant has not as yet completed his case in chief.

It would also be difficult to address the merits, even on a preliminary basis, without giving the appearance to at least one, and, perhaps both parties, that I had prejudged the case. For example, in the case of Dominion of Canada General Insurance Company and Ms. Z. (OIC P98-00053, December 11, 1998), the hearing arbitrator granted interim benefits while emphasizing that her findings were not conclusive, and subject to other evidence. Nevertheless, on appeal the insurer's allegation, that it had a reasonable apprehension of bias, was held to have been made out. For these reasons, I believe it would be inappropriate to express my views on the merits of the case even in a preliminary way, and decline to do so.

I find it helpful to apply the Bernicky criteria in exercising my discretion under section 282(11.1) of the Act. I have reviewed the medical and rehabilitation reports which are the subject of the Applicant's request for interim expenses. According to those reports Mr. Adu-Agyei's injuries include a transverse fracture at the joint of the proximal and middle thirds of his right femur (thigh bone) in the second accident. I find that Mr. Adu-Agyei has raised bona fide issues of entitlement to income replacement benefits and to rehabilitation benefits in this arbitration. None of the reports address the question of Mr. Adu-Agyei's entitlement to a benefit at a higher rate, and I make no finding in this regard.

Both counsel submitted that I should consider delay as a factor. Counsel for the Insurer submitted that any delay was occasioned by the Applicant's decision to call numerous witnesses at the hearing. To date Mr. Adu-Agyei has called three witnesses. All have been subjected to cross-examination. Counsel for the Applicant submitted that all of his witnesses had also been summonsed by counsel for the Applicant. Since witnesses are summonsed on the basis that their evidence is material, I put little weight on the Insurer's submission at this point in the proceedings.

The Commission's mandate is to conduct hearings on a speedy basis. The Applicant submitted that there was now a further six month delay before the hearing could be completed. If the hearing concludes in August 2000, it will be just shy of three years since Mr. Adu-Agyei filed a completed application for arbitration.⁵ The Applicant consented to two of the three adjournments and opposed one. I accept that the delay in resuming the hearing is a consequence of counsel's schedule and do not attribute fault. I also accept that there is no guarantee that the Applicant will be awarded his expenses at the end of the hearing.

The Applicant is on social assistance and I am satisfied on this basis that he is unable to carry all of the expenses for a prolonged period of time. Realistically he has relied on the credit extended by his lawyer, his health practitioners and assessors. However, ultimately, he is responsible for payment of these reports. One of the invoices from a treating physician is stamped "past due." I accept the submission of counsel for the Applicant that there comes a time when delay is a relevant factor in what is supposed to be a speedy system of dispute resolution. Given the lengthy adjournment, I exercise my discretion to make an interim award in favour of the Applicant.

The invoices in relation to the following reports are well within the amounts permitted under the Code and therefore reasonable. I also find the charges for the clinical notes and records reasonable. I find it reasonable that Zurich should pay a total of $3,100.50 in relation to the following invoices on an interim basis:

clinical notes and records and a report from Mr. Adu-Agyei's treating orthopaedic surgeon, Dr. C.B. Paitich, in the amount of $30 and $500, respectively;
a report from Mr. Adu-Agyei's treating physiatrist, Dr. Pierre Kirwin, for $695.50;
a report from Dr. J. Alcock, Mr. Adu-Agyei's treating psychologist in the amount of $450, and the amount of $50 for his clinical notes and records;
a report from Dr. Rodrigues-Nascimento, Mr. Adu-Agyei's family physician, in the amount of $1,375. I am unable to determine what his $125 fee represents and therefore do not make an interim award for this amount;

Zurich should pay these amounts no later than June 30, 2000.

EXPENSES

The question of expenses of this motion is deferred until the issues raised in the arbitration have been decided.

June 16, 2000

Suesan Alves Arbitrator

Date