Neutral Citation: 2002 ONFSCDRS 102
FSCO A00-001170
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
DUNG MINH HOANG
Applicant
and
KINGSWAY GENERAL INSURANCE COMPANY
Insurer
REASONS FOR DECISION
Before:
William J. Renahan
Heard:
June 24, 2002, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
Jamie Pollack for Kingsway General Insurance Company
Issues:
The Applicant, Dung Minh Hoang, was injured in a motor vehicle accident on May 15, 2000. He applied for and received statutory accident benefits from Kingsway General Insurance Company ("Kingsway"), payable under the Schedule.1 Kingsway refused to pay weekly income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mr. Hoang applied for arbitration at the Financial Services Commission of Ontario ["the Commission"] under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The issues in this hearing are:
Is Mr. Hoang precluded from proceeding to arbitration pursuant to subsection 50(b) of the Schedule on the grounds that he failed to make himself reasonably available for an insurer's examination under section 42 and for an examination at a Designated Assessment Centre ("DAC") under section 43?
Is Mr. Hoang entitled to income replacement benefits after May 22, 2000?
Is Mr. Hoang entitled to expenses for physiotherapy in the amount of approximately $4,600 and for acupuncture in the amount of approximately $1,200 pursuant to section 14 of the Schedule?
Is Mr. Hoang entitled to a special award under subsection 282(10) of the Insurance Act?
Is either party entitled to expenses of the arbitration proceeding pursuant to subsection 282(11) of the Insurance Act?
Result:
The Application for Arbitration is dismissed.
Dung Minh Hoang shall pay Kingsway $2,500 for expenses of the arbitration proceeding pursuant to subsection 282(11) of the Insurance Act together with $3,000 pursuant to subsection 282(11.2) of the Insurance Act.
EVIDENCE AND ANALYSIS:
Mr. Hoang did not appear at this proceeding. The history of this matter is relevant to the issue of whether he received notice of this hearing. It is also relevant to the issue of entitlement to expenses and to whether Kingsway is entitled to the return of its assessment fee pursuant to subsection 282(11.2) of the Insurance Act on the grounds that Mr. Hoang commenced an application for arbitration that was frivolous, vexatious or an abuse of process.
A law firm represented Mr. Hoang at the pre-hearing discussion of this matter in February 2001. Kingsway claimed that Mr. Hoang was precluded from proceeding to arbitration because he failed to attend a medical examination, which it had arranged to assess his disability, and because he failed to attend an assessment at a DAC, to assess his claim for medical benefits. The preliminary issue was scheduled to be heard May 22 and 23, 2001 and the hearing was originally scheduled to commence October 1, 2001. Just prior to the hearing of the preliminary issue, the parties agreed that Mr. Hoang would attend the medical assessments and that they would argue the preliminary issue at the main hearing. Mr. Hoang did not attend all of the insurer's exams or the DAC. At the request of Kingsway, and with Mr. Hoang's consent, the hearing scheduled to commence October 1, 2001 was adjourned to commence January 7, 2002 so that Mr. Hoang could attend the assessments. The arbitrator adjourned the hearing peremptory to Mr. Hoang and in her order wrote: "No further adjournments will granted to this party, other than in extreme and unforeseeable circumstances." The Commission mailed the order and the new Notice of Hearing to Mr. Hoang at the address in Mississauga he had specified in his Application for Arbitration.
The practice of the Commission is to provide an arbitrator to assist the parties settle the dispute in the week before the hearing. On January 4, 2002, just prior to the scheduled hearing date, the parties entered settlement discussions with the assistance of an arbitrator. Mr. Hoang participated in the telephone conference call. Mr. Hoang's lawyer advised the participants that if the matter did not settle he would apply to withdraw as Mr. Hoang's representative. The matter did not settle and that same day Mr. Hoang signed an authorization in which he instructed his counsel to apply for an adjournment so that he could retain other representation and otherwise terminated his retainer. Kingsway opposed the request for an adjournment. Another arbitrator decided the adjournment request on the written material filed and granted the request for adjournment so that Mr. Hoang could find new representation. Again, the adjournment was peremptory to Mr. Hoang. The hearing was adjourned to commence June 24, 2002.
On February 19, 2002, the case worker for this file made a log note. She wrote that she spoke to Mr. Hoang at a certain number, which was his friend's cell phone number. She recorded:
. . . and informed him of new hearing dates of June 24, 25, 26, 27/02. He advised me he is living at a friend's residence and stated he cannot reveal to me the address per his friend's instructions. Mr. Hoang will inform me of his living address [sic] when he obtains a place of his own. Mr. Hoang informed me he will represented [sic] himself at the arbitration. If he decides to obtain a lawyer, he will inform arbitration.
That same day the case worker issued a new Notice of Hearing to commence June 24, 2002. In the address for Mr. Hoang she inserted "no fixed address."
Rule 37.5 provides in part:
The parties to an arbitration shall be given reasonable notice of a hearing, the manner of the hearing. . . .
Subsection 6(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S 22 provides:
The parties to a proceeding shall be given reasonable notice of the hearing by the tribunal.
The balance of section 6 deals with what the tribunal should include in the notice. I find that Mr. Hoang received the first Notice of Hearing, for the hearing scheduled to commence October 1, 2001, at his Mississauga address, and that this Notice satisfied the requirements of the balance of section 6 of the Statutory Powers Procedure Act as to what the notice should include. I also find that the Commission gave Mr. Hoang reasonable notice of the date of this hearing on February 19, 2002 when the caseworker advised Mr. Hoang of the hearing dates on the telephone. It made no sense to mail the Notice of Hearing to Mr. Hoang's last address in Mississauga when the case worker knew that Mr. Hoang did not live there. Lastly, if Mr. Hoang has a new mailing address, he did not comply with his obligation under Rule 9.1 of the Dispute Resolution Practice Code (Fourth Edition) or his undertaking to the case worker, to advise the Commission of his new address.
Mr. Hoang did not appear at the hearing. I concluded the hearing at 10:55 a.m. Mr. Hoang did not satisfy the burden on him of proving that he is entitled to the benefits he claimed. Accordingly, his Application for Arbitration is dismissed.
EXPENSES and RETURN OF ASSESSMENT FEE:
I deal with entitlement to expenses of the arbitration proceeding under s. 282(10) of the Insurance Act and return of the assessment fee under s. 282(11.2) because Mr. Pollock's submissions are relevant to both issues. Mr. Pollock claimed that Mr. Hoang never intended to proceed with this arbitration if he could not settle his claim and as a result, put Kingsway to unnecessary expense.
The criteria for determining entitlement to expenses of the arbitration proceeding are set out in subsection 12(2) of Ontario Regulation 664, R.R.O. 1990 as amended by Ontario Regulation 464/96 ["Expense Regulation"].
Kingsway paid the Commission $3,000 to respond to Mr. Hoang's Application for Arbitration. Under section 282(11.2) of the Insurance Act, I am authorized to award Kingsway all or a part of this amount if I find that Mr. Hoang commenced an application that was frivolous, vexatious or an abuse or process.
The hearing was adjourned twice peremptory to Mr. Hoang so that he could attend assessments. He did not attend all the assessments. He served and filed a pre-hearing memorandum, however, he did not serve Kingsway with any documents he intended to rely on at the preliminary hearing or the main hearing, even though he was on the verge of hearing four times in May 2001, October 2001, January 2002 and June 2002. Kingsway served and filed a document brief in anticipation of the hearing of the preliminary issue and two briefs in anticipation of the main hearing. The Commission arranged a settlement discussion on the eve of the January 2002 hearing and Mr. Hoang participated on the basis that he would seek an adjournment to obtain another counsel if the matter did not settle. I agree with Mr. Pollack that it is reasonable to infer that Mr. Hoang never intended to proceed with the hearing if he could not settle his claim. I find that his conduct was frivolous and vexatious and put Kingsway to the unnecessary expense of preparing to defend a claim which the claimant did not intend to pursue to hearing.
Having regard to the criteria contained in the Expense Regulation, I order Mr. Hoang to pay Kingsway its expenses of the arbitration proceeding. The more difficult question is the amount of those expenses.
The maximum allowable hourly rate is that established under the Legal Aid Services Act for professional services in civil matters before the Ontario Superior Court of Justice and starts at $67 per hour and is increased up to 25 per cent for solicitors with at least ten years of experience. Mr. Pollock was not prepared to make submissions on the amount of expenses, however, he did agree to make submissions. He submitted that all the hours his firm docketed were in preparation for this hearing. At the applicable legal aid rates he estimated his bill of expenses for all work after receipt of the application for arbitration at between $5,000 and $6,000. This represents a portion of what he would bill his client.
The number of hours for which legal fees may be awarded shall be determined by the arbitrator having regard to the criteria set out in the Expense Regulation. Docketed hours are not necessarily equal to allowable hours. Mr. Pollock docketed 34.2 hours. One associate docketed 20.1 hours and another docketed 5.3 hours. A law student docketed 6.6 hours. Mr. Pollack also claimed approximately $500 in process serving and photocopy fees.
In Duffus and CGU Insurance Company of Canada (June 14, 2002, FSCO A01-001030), the arbitrator noted that counsel had spent about 25 hours on an arbitration where the insured did not appear. She considered amounts awarded in other cases where the insured did not appear and awarded $1,000 for expenses.
Each side uses aspects of the dispute resolution system to negotiate a settlement and I recognize that an applicant may use an insurer's potential expenses as a lever to negotiate a settlement. However, such conduct should not be risk-free. It is a simple matter for a vexatious or frivolous insured to commence an application for arbitration and take it to the point of hearing without incurring significant expenses. On the other hand, an insurer may incur significant expenses to respond to the application and prepare for a hearing. To allow an insured to abandon his claim without significant consequences if he cannot settle it is unfair to the insurer and brings the dispute resolution system into disrepute.
Considering the issues and amounts involved, 60 hours of preparation and assessable expenses of $5,000 to $6,000 for preparation for this hearing appear excessive. Mr. Pollock offered to reduce his claim for assessable expenses to $2,500. In view of my finding that Mr. Hoang's use of this process was frivolous and vexatious, I agree that $2,500 is reasonable. I therefore order Mr. Hoang to pay Kingsway its expenses of the arbitration proceeding assessed at $2,500 together with $3,000 under section 282(11.2) of the Insurance Act.
June 27, 2002
William J. Renahan
Arbitrator
Date
Neutral Citation: 2002 ONFSCDRS 102
FSCO A00-001170
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
DUNG MINH HOANG
Applicant
and
KINGSWAY GENERAL 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:
- Dung Minh Hoang shall pay Kingsway General Insurance Company $5,500.
June 27, 2002
William J. Renahan
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96, 303/98 and 114/00.