Neutral Citation: 2000 ONFSCDRS 40
FSCO A98-000303
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
MARGARET KUBARSKA
Applicant
and
COACHMAN INSURANCE COMPANY
Insurer
REASONS FOR DECISION
Before:
Shari Novick
Heard:
January 20, 2000, at the Offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
Adam Komarnicki for Ms. Kubarska
Stanley C. Tessis for Coachman Insurance Company
Issues:
The Applicant, Margaret Kubarska, was injured in a motor vehicle accident on February 23, 1995. She applied for and received statutory accident benefits from Coachman Insurance Company ("Coachman"), payable under the Schedule.1 Ms. Kubarska continues to receive income replacement benefits from Coachman at the rate of $185 per week, but claims that she is entitled to a higher rate of benefits. Ms. Kubarska also claims that she is entitled to attendant care benefits for services provided by a friend during a period in late 1997. The parties were unable to resolve their dispute at mediation, and Ms. Kubarska applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The hearing of Ms. Kubarska's application was scheduled to begin on January 24, 2000. The Applicant advised the Commission of her intention to withdraw her application for arbitration by letter dated December 28, 1999, received at the Commission on January 4, 2000. The letter states that Ms. Kubarska wished to withdraw her application for arbitration and commence a court action to pursue her claims for accident benefits.
Counsel for Coachman initially advised that his client would consent to the Applicant's request to withdraw, subject to certain conditions. Ms. Kubarska subsequently indicated that she would not agree to the conditions proposed, and a hearing was convened to hear submissions from the parties on the matter.
Issues:
The issues in this hearing are:
Is Ms. Kubarska entitled to withdraw her application for arbitration?
If so, under what conditions?
Result:
Ms. Kubarska is entitled to withdraw her application for arbitration.
The withdrawal is subject to the following conditions:
(a) Ms. Kubarska shall pay Coachman its $3,000 assessment fee:
(b) Ms. Kubarska shall pay $1,125.60 (plus GST of $78.79) for legal fees and $536.28 (plus GST of $35.74) for disbursements "thrown away"; and
(c) Ms. Kubarska cannot reapply for arbitration on the same issues unless the above amounts are paid.
SUBMISSIONS AND ANALYSIS:
Background:
Ms. Kubarska commenced her application for arbitration in February of 1998. Two pre-hearing discussions were conducted and a voluminous amount of correspondence was exchanged, regarding productions and other matters. Adam Komarnicki, the Applicant's brother, has acted as her agent from the beginning of the process. The counsel initially retained by Coachman was replaced by Mr. Tessis in May of 1999.
The main issue in dispute between the parties is the proper quantum of income replacement benefits that Ms. Kubarska is entitled to receive. She was self-employed at the time of the accident, and consequently her benefits are determined in accordance with her earnings during either the 52 or 156 weeks prior to the accident. Given that the accident took place in February of 1995, her earnings during 1994 would be relevant under either time frame. The documentation obtained regarding her 1994 earnings was confusing and contradictory. Some documents suggest that she received only $18,000 in social assistance benefits during that year, while others indicate various amounts of income from self-employment.
The Insurer requested that the Applicant sign an authorization permitting the Ministry of Community and Social Services to release information relating to her receipt of social assistance benefits. The parties disagreed as to whether Ms. Kubarska had consented to sign an authorization at the pre-hearing, and the Insurer brought a motion for an Order requiring her to do so. After hearing submissions from the parties on this issue, Arbitrator Renahan ordered the Applicant to sign the authorization on November 10, 1999. The Applicant appealed this order to the Director of Arbitrations. In accordance with section 47.2 of the Dispute Resolution Practice Code, Director's Delegate Draper rejected the appeal because it involved only a preliminary or interim order that did not finally decide the issues in dispute.
The Applicant's request to withdraw her application for arbitration appears to have followed her receipt of the appeal decision.
The Parties' Submissions:
At the hearing, the Insurer took the position that the Applicant should not be permitted to withdraw her application at this late stage and pursue her claims in court, as that would only further delay the determination of the issues in dispute. Counsel submitted that if Ms. Kubarska was permitted to withdraw, the quantum of her income replacement benefits should be fixed at $185 per week and her attendant care benefits should be denied. I advised Insurer's counsel that this would go beyond stipulating conditions for withdrawal and would constitute a ruling on the merits of the issues in dispute.
Counsel for the Insurer then submitted that the Applicant be ordered to pay the Insurer's assessment fee as well as its costs and disbursements incurred on the file. He also sought an order preventing Ms. Kubarska from withdrawing the application until the assessment fee and expenses are paid.
The Applicant advised that she did not object to reimbursing the $3,000 assessment fee paid by the Insurer, but submitted that she should not be required to pay any of the costs or disbursements incurred by Coachman, on the grounds that any time spent preparing for the arbitration hearing would be useful in its defence of the court action she intended to commence.
Decision:
Section 67 of the Practice Code outlines the manner in which requests to withdraw applications are to be addressed. Given that Coachman does not agree to the withdrawal sought by Ms. Kubarska, section 67.3 applies. It states:
Where a party does not agree to the withdrawal, an adjudicator may:
(a) permit the withdrawal on such terms and conditions as the adjudicator considers appropriate;
(b) award expenses to either party as permitted by Rules 73 and following, and the Expense Regulation under Section F of the Code;
(c) award an amount to the insurer, up to the amount the insurer is required to pay to participate in the hearing, if the adjudicator decides an abuse of process has occurred or the proceeding is frivolous or vexatious.
I advised the parties at the hearing that I would grant Ms. Kubarska's request to withdraw her application. A review of the arbitral jurisprudence reveals that applicants have generally been permitted to withdraw from the arbitration process at various stages, in order to pursue their claims in court.2 While a withdrawal at this late stage of the process inevitably causes inconvenience both to the Commission and to the Insurer, I am not prepared to force the Applicant to proceed to arbitration. I am not persuaded that any prejudice suffered by Coachman as a result of a withdrawal at this stage cannot be compensated for by way of an order for expenses.
As I also mentioned to the parties at the hearing, certain conditions will accompany the Applicant's withdrawal. Ms. Kubarska advised that she was prepared to pay Coachman its $3,000 assessment fee. That will be one condition of the withdrawal. I am not prepared to stipulate that the Applicant must pay this amount before she is permitted to withdraw her application.
It is clear that the Insurer has incurred significant costs in the defence of Ms. Kubarska's claims thus far. While much of counsel's preparation time and many of the disbursements incurred can be applied to defend the court action she intends to pursue, some of the time and money spent has clearly been "thrown away" now that she has chosen not to proceed with the scheduled arbitration. Rule 73.2 of the Practice Code sets out the criteria to be considered by an arbitrator in awarding expenses to a party. These are:
73.2 The adjudicator will consider the criteria referred to in the Expense Regulation found in Section F of the Code. These criteria are:
(a) each party's degree of success in the outcome of the proceeding;
(b) 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;
(c) 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;
(d) the degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding;
(e) at the request of either party, any written offer to settle made in accordance with Rules 74 and 75, having regard to the outcome of the proceeding;
(f) any other matter related to the proceeding that the adjudicator considers relevant to the issue of whether an award of expenses is justified.
The Insurer submitted that subsection (b) applies in this case, as the Applicant's refusal to sign the authorization to release her social assistance file, and her subsequent failure to comply with the Order requiring her to do so both prolonged and hindered the proceeding. Counsel contended that subsection (c) was also applicable, as the Applicant's position that the Insurer was not entitled to production of these records was completely unfounded. He also noted that the Applicant made disparaging remarks about him and the expert accountant retained by Coachman, accusing them of lying and acting unethically. He contended that this constituted an abuse of process and of counsel and should not be countenanced.
Finally, the Insurer submitted that the Applicant's accusations of bias on the part of the Commission as well as an allegation of conspiracy between Coachman, the Ministry of Community and Social Services and the Commission (contained in a letter dated December 28, 1999 to Director's Delegate Draper) would be appropriate to consider under subsection (f) of Rule 73.2.
I am of the view that an award of expenses in favour of the Insurer is justified in this case. A consideration of the issues in dispute and a review of the correspondence exchanged indicates that the Applicant's refusal to sign an authorization permitting the Ministry of Community and Social Services to release her social assistance file was both manifestly unfounded and tended to prolong the proceeding. I also agree with Mr. Tessis' submissions that the Applicant's disparaging comments about both him and Mr. Edwards, the accountant retained by Coachman, and her allegations of conspiracy involving the Commission should be considered in my determination of an appropriate expense award. While some of the accusations made may have resulted from the Applicant's (and/or her agent's) unfamiliarity with the arbitration process, much time was spent refuting these groundless allegations.
Counsel for the Insurer filed a computer printout detailing the hours of time he and other members of his firm devoted to this matter, as well as the disbursements incurred on the file since being retained by Coachman in May 1999. These records indicate that approximately 100 hours of time was spent and just over $900 worth of disbursements incurred in this matter. It is clear, however, that not all of these costs have been "thrown away". I have closely reviewed the time dockets filed by Mr. Tessis, and find that all but 15 hours of his time would likely be useful in defending the claim Ms. Kubarska intends to bring in court. These hours were spent preparing for and attending pre-hearings and preparing for the arbitration hearing that will now never take place. I do not accept that these hours of preparation will be useful at the ultimate trial of the court action, if the case proceeds to trial, as that will likely not occur for some time.
Given Mr. Tessis' length of time at the bar, he is entitled to the experiential premium to the legal aid rate, which amounts to an hourly rate of $75.04. Multiplying this rate by the 15 hours that I have found have been "thrown away", yields an amount owing of $1125.60 for legal fees.
Mr. Tessis asked for the maximum allowable amount ($1,500) for an expert report for the reports generated by Daniel Edwards, the forensic accountant retained by Coachman to calculate the correct amount of income replacement benefits that Ms. Kubarska is entitled to. Counsel filed a copy of the accounts rendered by Mr. Edwards to Coachman for his services, which amounted to approximately $17,000. I decline to award any amount to the Insurer in this regard, as the reports can be used in the court action. I am, however, prepared to order the Applicant to pay the disbursements "thrown away" by the Insurer as a result of the late withdrawal of her application. A review of the list of disbursements filed indicate that $536.28 was spent on photocopying and fax charges, which I order the Applicant to pay.
Accordingly, Ms. Kubarska is ordered to pay Coachman $3,000 for its assessment fee, $1,125.60 for Mr. Tessis' legal fees and $536.28 for disbursements for a total amount of $4,661.88, plus GST where applicable. While I am not prepared to stipulate that Ms. Kubarska pay these amounts prior to her application being withdrawn, she will not be permitted to reapply for arbitration on the same issues unless the above amounts are paid.
February 24, 2000
Shari L. Novick
Arbitrator
Date
Neutral Citation: 2000 ONFSCDRS 40
FSCO A98-000303
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
MARGARET KUBARSKA
Applicant
and
COACHMAN INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Ms. Kubarska's application for arbitration is withdrawn.
The following conditions accompany the withdrawal of the application:
(a) Ms. Kubarska shall pay Coachman its $3,000 assessment fee;
(b) Ms. Kubarska shall pay Coachman $1,125.60 (plus $78.79 GST) for legal fees and $536.28 (plus applicable GST of $35.74) for disbursements "thrown away"; and
(c) Ms. Kubarska may not reapply for arbitration on the same issues unless and until the above amounts are paid.
February 24, 2000
Shari L. Novick
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule —Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98.
- See Richard and Lombard General Insurance (OIC A97-001526, April 29, 1998) Catlos and Jevco Insurance Company (appeal decision P97-00013, September 26, 1997), Saini and CIBC General Insurance Company (OIC A96-001752, July 8, 1997), Long and Zurich Insurance Company (OIC A96-001561, June 25, 1997), Sacco and Wawanesa Mutual Insurance Company (OIC A95-000349, October 1, 1996).