Neutral Citation: 2003 ONFSCDRS 143
FSCO A01-000695
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
HAGOS TESFAI
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
DECISION ON EXPENSES
Before:
Judith Killoran
Heard:
July 4, 2003, at the Offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
Altaf Khan for Mr. Tesfai
John D. Dean for Allstate Insurance Company of Canada
Issues:
The Applicant, Hagos Tesfai, was injured in a motor vehicle accident on May 3, 1998. In a decision dated December 18, 2002, 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:
Mr. Tesfai is not entitled to income replacement benefits from October 1, 1999 to June 26, 2000.
Mr. Tesfai is not entitled to housekeeping benefits from May 3, 1998 to August 4, 1999.
Mr. Tesfai is not entitled to payment of a gym membership of $590.64.
Mr. Tesfai shall repay Allstate $2,503.36 together with interest in accordance with subsection 47(6) of the Schedule.
The issue in this further hearing is:
- Is Allstate entitled to payment of its expenses incurred in respect of the arbitration hearing?
Result:
- Each party shall bear their own expenses.
EVIDENCE AND ANALYSIS:
Under subsection 282(11) of the Insurance Act, an arbitrator may award expenses to an insured person or an insurer, if the arbitrator is satisfied that such an award is justified having regard to the following criteria:
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.2
In its submissions, Allstate reviewed the above criteria for awarding expenses. Allstate submitted that it was successful on all four issues in dispute and that Mr. Tesfai prolonged the hearing by creating confusion about what claims were to be heard. The first hour of the hearing was spent confirming the period of time for the income replacement benefit claim. Allstate argued that the claims were manifestly unfounded and Mr. Tesfai had filed no medical evidence to support his income replacement benefit claim.
Allstate submitted that Mr. Tesfai's conduct was tantamount to an abuse of process, both before and during the hearing. As an illustration of this, Allstate submitted that Mr. Tesfai fell while in Ethiopia in 2002 and broke his arm. This is what delayed his return to work from March to June 2000 and yet, he sought income replacement benefits for that period of time.
Allstate claimed that the evidence supporting the housekeeping claim was inconsistent and lacking in credibility. The housekeeping claim was filed late, long after the accident and after another accident which occurred on March 10, 1999. In the Great-West Life application for collateral benefits, Mr. Tesfai did not disclose that he was involved in a second motor vehicle accident. Allstate submitted that no evidence was filed to substantiate that the gym membership was a reasonable and necessary expense. With respect to the complexity, novelty or significance of the issues, Allstate claimed that the hearing was relatively straightforward.
Allstate requested that I consider a written offer to settle which was forwarded to Mr. Tesfai's then counsel, Mr. David Longley, on January 29, 2002. This was not filed, as required by Rule 75 of the Dispute Resolution Practice Code - the Third Edition (April 17, 1997) (the "Code"), within ten days of my order. However, Rule 79 of the Code provides that this time limit may be set aside. Taking into consideration that I did not solicit information about any written offer to settle at the conclusion of the hearing, I am prepared to set aside the ten-day time limit and consider the written offer to settle. The written offer to settle was, of course, a greater sum than was awarded to Mr. Tesfai at the hearing, as he was unsuccessful with all his claims.
Finally, Allstate submitted that Mr. Tesfai was represented at the hearing by his wife and not by counsel. Allstate argued that in all the circumstances it was appropriate that Mr. Tesfai should not be awarded his expenses and, indeed, that he should pay Allstate's expenses.
Mr. Tesfai had a total of five different representatives, three of them lawyers, in the course of the entire proceedings at the Commission. Mr. Tesfai conceded that he was not seeking payment of his expenses. He argued that unless he had been fraudulent, there was no direct attempt to deceive and hence, no abuse of process. Allstate explained that no fraud was alleged but expenses were sought because the claims were unfounded, frivolous and vexatious. Mr. Tesfai claimed that if he had the necessary documents or proper representation, he would have been successful at arbitration. He requested that expenses not be awarded in favour of either party.
Mr. Tesfai sought to submit further medical reports to prove his entitlement to benefits at the expense hearing. I did not allow the filing of these reports as the hearing on the merits concluded on October 22, 2002 and I released a decision on December 18, 2002.
Conclusion
Although I agree that an important principle underlying the awarding of expenses is facilitating access to the dispute resolution system, it must be balanced with the findings on the merits of claims, particularly regarding credibility and conduct. I have a broad discretion under Rule 73 of the Code to consider all relevant factors when awarding expenses.
I agree with many of the submissions made by Allstate about the lack of evidence presented by Mr. Tesfai to substantiate his claims. There were also problematic aspects to Mr. Tesfai's conduct and testimony. I was not convinced, however, that Mr. Tesfai's claims were entirely without merit from the outset of the proceedings. Nor was I convinced that Mr. Tesfai deliberately prolonged the process. Rather, I attribute many of the difficulties at the hearing to the fact that Mr. Tesfai had no legal representative. In my view, applicants who are not represented by a legal representative are entitled to a greater latitude in the presentation of their cases in order to ensure a full and fair hearing.
I find that Mr. Tesfai is not entitled to his costs of the proceeding. Allstate presented an assessment of its costs which I shall not consider as I have determined that Allstate is not entitled to its expenses. Mr. Tesfai's conduct in the course of the proceedings was not so egregious or obstructive that Allstate should be awarded its expenses. Consequently, I find that each party should bear their own expenses.
September 19, 2003
Judith Killoran
Arbitrator
Date
Neutral Citation: 2003 ONFSCDRS 143
FSCO A01-000695
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
HAGOS TESFAI
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Each party shall bear their own expenses.
September 19, 2003
Judith Killoran
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, 114/00 and 482/01.
- Subsection 12(2) of Ontario Regulation 664, as amended by Ont. Reg. 464/96. These criteria were incorporated into Rule 73.2 of the Dispute Resolution Practice Code - Third Edition (April 15, 1997).