Neutral Citation: 2000 ONFSCDRS 218

FSCO A-013683

Between:

Ali Reza Adabi-Ghomi Applicant

and

Allstate Insurance Company of Canada Insurer

Decision on Expenses

Before: Beth Allen

Heard: By written submissions received by October 27, 2000 and by a telephone conference call on November 3, 2000.

Appearances:

Adam Wagman for Mr. Adabi-Ghomi Todd J. McCarthy for Allstate Insurance Company of Canada

Issues:

The Applicant, Ali Reza Adabi-Ghomi, was injured in a motor vehicle accident on November 15, 1990. In a decision dated March 2, 2000, 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 is not entitled under section 6 of the Schedule, to rehabilitation benefits for the non-legal services of the law clerk at his counsel's firm

The issue in this further hearing is:

Is the Applicant entitled to his expenses incurred in respect of this arbitration hearing?
Is the Applicant liable to reimburse Allstate for any part of its assessment fee pursuant to subsection 282(11.2) of the Insurance Act, R.S.O. 1990 c.I-8 as amended ("the Act")?²

Result:

The Applicant is entitled to his expenses incurred in respect of the arbitration hearing.
The Applicant is not liable to reimburse Allstate for any part of its assessment fee.

Procedure:

On March 2, 1999, I issued a decision in this matter where I made no order as to expenses. The parties were unable to agree on the expense issue and I heard counsel's submissions by teleconference on November 3, 2000. Mr. Adam Wagman represented the Applicant as legal counsel and Mr. Todd McCarthy acted as legal counsel for Allstate. Counsel filed written submissions and delivered brief oral submissions.

The Parties' submissions:

The parties agreed that the version of subsection 282(11) of the Act in effect before the November 1, 1996 amendments governs the expense issue in this matter. The Application for Arbitration was filed with the Commission in March 1995. The applicable version of subsection 282(11) does not permit the insurer to seek its arbitration expenses from the applicant. I will therefore decide whether Allstate is liable to pay any or all of the Applicant's expenses.

The Applicant's counsel submitted that the Applicant should be awarded his expenses incurred in respect of the arbitration. He argued that although the Applicant was not successful at the hearing, his claim is reasonable and the issues he raised are novel, which factors should be considered in determining the expense issue. He argued that arbitrators have held that unless the application for arbitration is manifestly frivolous or vexatious or the applicant's conduct unreasonably prolonged the proceedings, it is appropriate to award the applicant his expenses. The Applicant's counsel further added that the arbitration decision made no finding that the Applicant's claim is frivolous or vexatious or that his conduct prolonged the proceedings.

Allstate's counsel submitted that for a number of reasons it should not be required to pay the Applicant's expenses. He submitted that the Applicant effectively prolonged the proceeding during the year that followed the determination by the directors delegate of the priorities dispute — that is, from October 27, 1997³ through to and beyond the pre-hearing discussion on July 28, 1998. Allstate's counsel further argued that the Applicant commenced an arbitration on the issue of his entitlement to the expenses associated with the services of the law clerk considerably after $145,000 had already been paid for rehabilitation services, $112,000 of this being for case management services. In Allstate's view, the Applicant advanced this claim in the face of the director's delegate's decision in the Ajzensztadt case⁴ which determined that legal costs are not compensable under the medical and rehabilitation provisions of the Schedule. Allstate advanced this argument despite the Applicant's characterization of the law clerk's services as non-legal. According to Allstate, the Applicant's pursuit of this issue unnecessarily prolonged the proceedings considerably after Allstate had settled all other claims.

Allstate's counsel further submitted that the Applicant's claim for the law clerk's expenses for her non-legal services is devoid of merit on the facts for the reasons that these expenses cannot be determined with any degree of certainty and they overlapped and duplicated the services of the case manager.

Allstate's counsel also asked for reimbursement of its assessment fee under subsection 282(11.2) of the Act on the basis that the Applicant's claim was inappropriate and unreasonable.

Reasons for Decision:

Applicant's expenses:

Prior to the November 1, 1996 amendment of subsection 282(11) of the Act, an arbitrator could award expenses only to the applicant. Applicants generally succeeded in recovering all or part of their expenses. The McCormick⁵ line of cases held that arbitrators have the discretion to deny the applicant's expenses, in whole or in part, based on: whether the applicant's claim was manifestly fraudulent or frivolous, novel or complex; whether the applicant failed to attend; abused the process; unduly prolonged the hearing; or failed to comply with production orders. The Alison⁶ case, upheld on appeal, denied the applicants expenses on the basis that her claim had little merit. McCormick laid down the basic ground rule, adopted in subsequent decisions, that "applicants with legitimate claims, conducted reasonably, can expect to recover their allowable expenses" irrespective of success or failure in the result.

I allow the Applicant his reasonable expenses incurred in respect of the arbitration hearing. In arriving at my decision, I took into account the criteria set down by Commission arbitration and appeal cases. The Applicant did not succeed in the ultimate outcome of the hearing. However, in awarding his expenses, I considered the novelty of the issue of whether the non-legal, case manager services of a law clerk are compensable under the medical and rehabilitation provisions of the Schedule. I find that unlike the circumstances in the Ajzensztadt case, the Applicant in the case before me did not claim legal expenses for the regular legal services of a law clerk, but rather is clearly seeking compensation for non-legal services provided by a law clerk. I conclude for this reason that the Applicant's case is distinguishable from Ajzensztadt and as such raises a novel issue.

While I find that the Applicant did not advance a strong case, I do not find that his claim is totally without merit. Commission decisions have awarded medical and rehabilitation benefits for non-professional service providers. The Applicant did not succeed because the law clerk provided services that overlapped and duplicated those of his case manager and he failed to prove the quantum of his claim. However, I do not find that his failure to prove his claim means the claim has no merit.

As well, I do not find it to be the case that the Applicant unduly delayed in bringing his claim for the law clerk's case management services to arbitration.

The Applicant applied for arbitration on this issue in March 1995 and a pre-hearing discussion was held in August 1995. As I understand it, the parties had to await the release of the director's delegate's appeal decision on the priorities issue in this case to deal with any unresolved issues, which decision was released on October 27, 1997. A subsequent pre-hearing discussion was held on July 28, 1998 to deal with the outstanding issue at which time a hearing was scheduled for four days in September 1999. However, it was at Allstate's counsel's request that the hearing was rescheduled to the later dates in November 1999, due to a scheduling conflict with a court matter.

Moreover, I do not find that the Applicant conducted himself at the hearing so as to prolong or delay the proceedings. The hearing lasted two days instead of the scheduled three days and proceeded expeditiously and without undue delay or interruption. The only delay in the proceeding resulted from Allstate's counsel's request for the hearing to start one hour after the scheduled start time due to a court commitment.

I do not see where any lapses in time between the various points in the process or at the hearing were a consequence of the Applicant's conduct.

Applicants are entitled to raise legitimate claims within prescribed limitation periods, which the Applicant did in this case. The Commission's dispute resolution process encourages the parties to resolve all claims together when possible. However, this is not always accomplished. I find the fact that the issue in this case was not resolved along with the other issues should not reasonably result in the Applicant being penalized through expenses. I therefore conclude, pursuant to subsection 282(11) of the Schedule, that Allstate must pay the Applicant his reasonable expenses incurred in respect of the arbitration hearing.

Allstate's assessment fee:

Subsection 282(11.2) of the Act provides that an arbitrator may order an award of up to the amount of an insurer's assessment fee if the insured person's claim is found to be manifestly unfounded, frivolous, vexatious or an abuse of process.

For reasons discussed above, I do not find the Applicant's claim to be manifestly unfounded. I received no submissions from Allstate specifically addressing whether the Applicant's claim is frivolous, vexatious or an abuse of process. Allstate submitted in this regard that the Applicant's claim is inappropriate and unreasonable. However, in spite of his inability to succeed in his claim, I find the Applicant raised a bona fide, justiciable, and as I found above, novel issue for consideration. As such, I do not find his claim to be frivolous, vexatious, unreasonable or inappropriate. Nor do I find that the Applicant's claim is an abuse of process. I have no evidence that the Applicant by his conduct, abused the Commission's process. Accordingly, the Applicant is not liable pursuant to subsection 282(11.2) of the Act, to reimburse Allstate for any part of its assessment fee.

Amount of expenses:

I encourage the parties to resolve the matter of the amount of the Applicant's expenses. However, failing this, I may be spoken to.

December 6, 2000

Beth Allen Arbitrator

Date

Arbitration Order