Neutral Citation: 2000 ONFSCDRS 52

FSCO A97-000029

BETWEEN:

SAMI BOUASSALI

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before:

K. Julaine Palmer

Heard:

By teleconference on January 25, 2000 with written submissions filed in advance

Appearances:

William A. Garay for Mr. Bouassali

Donna M. Crabtree for Zurich Insurance Company

Sami Bouassali was injured in a motor vehicle accident on April 22, 1993. In a decision dated March 31, 1999, I dismissed Mr.Bouassali's claims for further weekly income benefits under the Schedule,¹ while reserving on the issue of expenses. Each party now seeks an order that the opposing party pay its arbitration expenses.

The issue in this further hearing is:

Is either party entitled to its expenses incurred in respect of this arbitration hearing?

Mr. Bouassali shall bear his own expenses of this arbitration and shall pay Zurich Insurance Company one-half of its arbitration expenses.

Until November 1, 1996, insurers could not recover their arbitration expenses. Although an insured person could be ordered to pay the insurer's assessment if his application was frivolous, vexatious, or an abuse of process, he could not be ordered to pay an insurer's expenses. Mr. Bouassali's application for arbitration was dated November 11, 1996 and was date-stamped by the Commission on December 23, 1996. Accordingly, the amended section 282(11) applies²permitting arbitrators to award to either party all or part of their expenses, according to criteria set out in the regulations. The criteria found in section 12(2) of Ontario Regulation 464/96 are incorporated in the Dispute Resolution Practice Code-Third Edition, in Rule 73.2 and section F.

In this case, the first pretrial conference was held on June 11, 1997. The prehearing arbitrator issued a prehearing report two days later. In that report, she advised as follows:

Recovery of Legal Expenses

As of November 1, 1996, the arbitrator may award to either party legal fees as well as other expenses incurred in respect of the arbitration, such as filing fees, the cost of issuing a summons, and experts' attendance fees.

The arbitrator, to be satisfied that an award is justified, may have regard for criteria such as:

each party's degree of success in the outcome of the proceeding;
the conduct of the parties—including any failure to comply with undertakings or orders—that shortened or lengthened the proceedings;
whether the proceeding or any position taken by a party 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;
written offers to settle made between mediation and the conclusion of the arbitration; and
any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.

Applicant's Argument:

Mr. Bouassali submits that his action was not frivolous, vexatious or without any merit whatsoever to the extent that it had no chance but to fail. He submits that although I did not accept his evidence about his ability to work, insofar as the amount of hours were concerned, he had "substantial medical evidence upon which he relied in support of his limitations." Mr. Bouassali submits I simply preferred the evidence of the insurer's experts to the evidence of the insured person. Mr. Bouassali submits that there was absolutely no suggestion that he actively deceived his medical practitioners or that he did not genuinely believe that his ability to work was limited.

Mr. Bouassali submits that the simple fact an Applicant is not successful on an arbitration is not a basis for denying his expenses. For example, he submits, even in the Kasap case,³notwithstanding findings of "dishonesty" the Applicant still recovered half his fees and all his disbursements of the arbitration. He cites in support a quote from Director's Delegate Naylor in the Allison case:

The discretion to award expenses is not, nor should it be, applied restrictively. Applicants are reasonably assured that they will recover their expenses even if they are unsuccessful, unless their case is without merit or their conduct is sufficiently serious to disqualify them. The fact that the arbitrator prefers other evidence over that of the applicant or his or her witnesses is generally not sufficient to deny an applicant his or her expenses. More is required than some embellishment or exaggeration. However, applicants who deliberately make false or misleading statements or are dishonest, especially if the dishonesty continues in the hearing, run a real risk that they will be denied their expenses.⁴

Insurer's Submissions:

Zurich submits that by every criterion of section 12(2) of Ontario Regulation 464/96 Mr. Bouassali should be denied his expenses. He was not successful. His conduct did prolong the hearing, to the extent of requiring an extra day of hearing time. His conduct in reporting his post-accident income to both Zurich and in evidence at the arbitration was deliberate, prolonged and fraudulent. Zurich submits that Mr. Bouassali lied and it was found that he lied in his records. Zurich submits that is fraud. Zurich submits it is not an answer to say, as his counsel submitted, that "all" taxi drivers under-report their income.

Zurich asserts that in the Kasap case, the Applicant got half his fees of the arbitration, because on the facts of that case he was disabled three years by the accident. Here, Mr. Bouassali was back at work a few months after the accident. In the Lanctot decision,⁵ the Applicant did exaggerate and so did Mr. Bouassali. The difference is that Mr. Bouassali submitted false and misleading evidence to mislead the Insurer and finally the arbitrator. In Pintucci,⁶ the Applicant had a measure of success because the Insurer had not handled the claim properly, unlike Mr. Bouassali's case. In Allison, the Director's Delegate made it plain that arbitrators are not restricted to the three criteria set out in the McCormick decision.⁷

In this case, Zurich submits, Mr. Bouassali's deception coloured every aspect of the hearing. For example, Zurich submits that the evidence of Dr. Gillen was largely put aside because it depended on Mr. Bouassali's reports to him of his inability to work. In Richardson,⁸ the arbitrator commented that even though an Applicant may be a genuine and honest person, there have to be consequences and a line drawn if false evidence is created and relied upon at the arbitration. The Insurer asserts that Mr. Bouassali does not have to match the deceitful activity of the insured person in Khanna⁹ in order for the insurer to receive its expenses; however, in this case Zurich was put to the considerable expense of four or five rounds of surveillance and five days of arbitration. Zurich submits that, as in Athanasiadis,¹⁰ a message should be sent. Mr. Bouassali should be denied his expenses and the Insurer should be awarded its expenses.

Findings:

In this case Mr. Bouassali submitted false and misleading evidence of his post-accident earnings both to his insurance company and to this tribunal. Zurich's rehabilitation caseworker worked with Mr. Bouassali after his return to part-time work in July 1993 to help him access the proper medical specialists to deal with his post-accident symptoms. Zurich continued to pay Mr. Bouassali weekly income benefits until April 26, 1994, while deducting 80 percent of the income he reported, as section 15 of the Schedule permitted.

Mr. Bouassali was not successful in this proceeding. I find his conduct did prolong the hearing, to the extent of requiring an extra day of hearing time, when he wished to verify the Zurich investigator's evidence about the value of fares taken on days when he was under surveillance. Mr. Bouassali's presentation of his post-accident income was fraudulent, that is "intending to deceive."¹¹

Arbitrator Miller, in her decision in Athanasiadis and Zurich Insurance Company,¹² recalled the principles set out in the McCormick and Allison decisions and suggested that the new expense regulation should be interpreted in a manner "consistent with the purpose of the legislation, namely to facilitate access to inexpensive, speedy and informal adjudication of disputes regarding statutory accident benefits, while deterring undeserving claims or undesirable behaviour." I agree with these comments.

Arbitrator Alves, in her decision on expenses in Gray and Zurich Insurance Company,¹³ stated her view that where an insurer is successful in opposing an applicant's claim:

insurers cannot expect as a matter of course to receive an award of expenses simply because the Applicant is unsuccessful at arbitration. Such an approach would discourage applicants from bringing forward legitimate disputes.

I also agree with these observations.

Mr. Bouassali will have to bear his own expenses of this arbitration. It would be unjust to require Zurich to pay his expenses given his dishonest behaviour. In addition, he should pay one-half of Zurich's expenses. Even at the Legal Aid rate for counsel, that amount will be substantial for a hearing held over five days.

I urge the parties to resolve the amount of expenses by agreement and direct their attention to Rule 77 of the Code governing the assessment of expenses.

March 14, 2000

K. Julaine Palmer Arbitrator

Date