Neutral Citation: 2003 ONFSCDRS 162
FSCO A02–001448
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
VLADO ARGIROVSKI
Applicant
and
ZURICH NORTH AMERICA CANADA
Insurer
REASONS FOR DECISION
Before: David Muir
Heard: October 27, 2003, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
No one appearing for Mr. Argirovski
Melanie Malach for Zurich North America Canada
Issues:
The Applicant, Vlado Argirovski, was injured in a motor vehicle accident on August 3, 2001. He applied for and received statutory accident benefits from Zurich North America Canada ("Zurich"), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Mr. Argirovski applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The issues in this hearing are:
Is Mr. Argirovski entitled to receive a non-earner benefit pursuant to section 12 of the Schedule?
Is Mr. Argirovski entitled to receive a medical benefit for treatment obtained from Integrated Health Recovery claimed pursuant to section 14 of the Schedule?
Is Zurich liable to pay a special award pursuant to subsection 282(10) of the Insurance Act because it unreasonably withheld or delayed payments to Mr. Argirovski?
Is either party liable to pay the other's expenses in respect of the arbitration under section 282(11) of the Insurance Act.
Is Mr. Argirovski liable to Zurich an amount not to exceed $3,000 because he commenced an arbitration that was frivolous, vexatious or an abuse of process under section 282(11.2) of the Insurance Act?
Is Mr. Argirovski entitled to interest for the overdue payment of benefits pursuant to section 46(2) of the Schedule?
Result:
Mr. Argirovski is not entitled to receive a non-earner benefit.
Mr. Argirovski is not entitled to receive a medical benefit for treatment obtained from Integrated Health Recovery.
Zurich is not liable to pay a special award because it unreasonably withheld or delayed payments to Mr. Argirovski.
Mr. Argirovski is liable to pay Zurich's expenses in respect of the arbitration
Mr. Argirovski is not liable to pay an amount not to exceed $3,000 because he commenced an arbitration that was frivolous, vexatious or an abuse of process.
EVIDENCE AND ANALYSIS:
At the time and place set for the arbitration hearing, no one was in attendance for Mr. Argirovski. The hearing was convened and, in accordance with my usual practice, it was adjourned for 15 minutes in the event that Mr. Argirovski or his representative was delayed.
The hearing was reconvened at 10:22 a.m. No one was in attendance for Mr. Argirovski and the hearing proceeded in his absence.
Zurich submitted that the hearing should proceed to its conclusion in the absence of Mr. Argirovski as he had received notice of the proceeding. At the hearing I concluded that the Notice of Hearing was sent to the last known address of Mr. Argirovski. I also note that Mr. Argirovski attended at the pre-hearing of this matter when the dates for hearing were set. In the absence of any explanation for his non-attendance, I found that I was required to proceed to deal with the issues in dispute on the merits.
Zurich submitted that in the absence of any evidence supporting his claims respecting the issues in dispute as set out above, the arbitration ought to be dismissed.
At the hearing I dismissed the application for arbitration. I find that Mr. Argirovski bore, at a minimum, the onus of leading evidence in support of his claims. In the absence of any such evidence there was no case for Zurich to meet and, accordingly, the application for arbitration ought to be dismissed.
EXPENSES:
Zurich seeks its reasonable expenses of the arbitration pursuant to section 282(11) as well as an order pursuant to section 282(11.2) of the Insurance Act.
Section 282(11) of the Insurance Act provides for the awarding of expenses to the parties:
(11) The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.
Regulation 664 as recently amended by Ontario Regulation 275/03 provides the criteria that an arbitrator may consider in determining a party's entitlement to expenses. The Regulation which was effective on October 1, 2003, now provides:
- (1) The expenses set out in the Schedule are prescribed for the purpose of subsection 282 (11) of the Act., R.R.O. 1990, Reg. 664, s. 12.
(2) An arbitrator shall, under subsection 282 (11) of the Act, consider only the following criteria for the purposes of awarding all or part of the expenses incurred in respect of an arbitration proceeding:
Each party's degree of success in the outcome of the proceeding.
Any written offers to settle made in accordance with subsection (3).
Whether novel issues are raised in the proceeding.
The conduct of a party or a party's representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders.
Whether any aspect of the proceeding was improper, vexatious or unnecessary.
It ought to be noted that these statutory criteria are different in form at least, from those in effect at the time of the pre-hearing and those set out in the Dispute Resolution Practice Code, supra.
The Regulation previously provided as follows:
(2) An arbitrator may award expenses to an insurer or insured person under subsection 282 (11) of the Act if the arbitrator is satisfied that the 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.
Zurich made no submissions with respect to which of the statutory provisions applied to the matter at hand, nor with respect to the significance of the changes that have been made to the factors that can be considered in determining entitlement to expenses. This was likely because Zurich's submissions were focused on what were characterized as abuses of the dispute resolution process – a feature of both the new and old provisions.
To my mind whichever regulation applies to this matter has no practical effect on the result. Accordingly, I have assumed without deciding that I am required to consider the criteria as set out in the recently amended regulation above, but make no findings with respect to the significance of the changes in legislative language.
Having regard to those criteria, in particular 1, 3, 4 and 5, I awarded Zurich their reasonable expenses at the hearing, but reserved on the quantum requested. Mr. Argirovski failed to appear at the arbitration hearing effectively abandoning his claims but without complying with the provisions of the Dispute Resolution Practice Code (4th edition). I find this amounts to an abuse of the dispute resolution process. As well, as a consequence of the manner in which he has chosen to conduct this arbitration, Mr. Argirovski has had his claims for benefits dismissed entirely.
Zurich submitted that its reasonable expenses in preparing this matter for hearing are approximately $3,000, comprising almost 44 hours of counsel time – most at the lowest legal aid rate of $67 per hour. The number of hours claimed seems somewhat high given the nature of the issues in this hearing. Zurich submitted that in the circumstances, it had to prepare for a number of eventualities – that Mr. Argirovski would not appear, as has happened, or, alternatively, that he did attend and either wished to proceed with the hearing or would be seeking an adjournment in order to retain new representation.
I am not unsympathetic to the dilemma of a party, typically the insurer, faced with a hearing where there is an indication that the other side may not attend. However, that does not change the fact that the issues in the case appear to be straightforward and, in light of the failure of Mr. Argirovski to meaningfully participate in this proceeding since the pre-hearing in May, there was little or no case to respond to. In short, even if Mr. Argirovski had attended the hearing with the intention of proceeding with a hearing on the merits, Zurich would not likely have been taxed in responding to his case whatever it might have included. As against this consideration, Mr. Argirovski's failure to cooperate with his former counsel in her attempting to get off the record, his failure to attend insurer's examinations, etc., did cause Zurich some extra expenses when its counsel were required to get involved in these issues.
In attempting to determine a reasonableness of legal expenses, arbitrators have often resorted to formulas based on the number of hours of hearing. These ratios of hearing time to preparation time range from one to one to one to four. I do not have the benefit of knowing how long the hearing in this matter would have taken, but the parties and the pre-hearing arbitrator settled on four days. Assuming that was an accurate estimate, I find that the appropriate formula in this circumstance is one hour of preparation for each hour of hearing given the factors set out above. I find that Zurich is entitled to 35 hours of legal fees, including the 2.6 hours of more senior legal advice included in its calculations. I find therefore that Zurich is entitled to be paid $2,554.89 (including GST of $167.14) as its reasonable expenses of the arbitration.
At the hearing, Zurich submitted that it was entitled to an order pursuant to section 282(11.2) of the Insurance Act, in the amount of $3,000. I note that this provision of the Act was repealed effective October 1, 2003.2
The provision provided that an arbitrator could make an order requiring the insured person to pay to the insurer an amount up to $3,000 where the insured person had "commenced an arbitration that was frivolous, vexatious or an abuse of process."
The section having been repealed before the request by Zurich was made, I find that I have no jurisdiction to make such an order.
However, even were I entitled to make such an order, I would decline to do so in this case. As indicated above, Zurich submitted that Mr. Argirovski's conduct of this matter generally and in particular his non-attendance at the arbitration hearing amounts to an abuse of process. I have found that his failure to appear at his arbitration hearing to be an abuse of process. Accordingly, Zurich has made out a prima facie case for the order it is seeking. However, Mr. Argirovski has had no notice that Zurich would be seeking the order claimed. I note that the pre-hearing letter makes no reference to Zurich seeking such an order, nor does it advert even generally to the possibility of such an order being made.
I appreciate that it was likely only when Mr. Argirovski failed to appear at his hearing that Zurich felt entitled to make the request, however, it would have been apparent well before the first day of hearing that this eventuality was, at least, a possibility.
To my mind, an order under section 282(11.2) is an extraordinary remedy, in some ways similar to a special award and as such, notice is required.3 Had Zurich put Mr. Argirovski on notice that it would be seeking the order, I might have taken a different view of the matter. No notice of its being sought having been given to Mr. Argirovski, I am required to dismiss the claim.
November 19, 2003
David Muir Arbitrator
Date
Neutral Citation: 2003 ONFSCDRS 162
FSCO A02–001448
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
VLADO ARGIROVSKI
Applicant
and
ZURICH NORTH AMERICA CANADA
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
The arbitration is dismissed.
Mr. Argirovski shall pay to Zurich, forthwith, its reasonable expenses of the arbitration in the amount of $2,554.89 (including GST of $167.14).
November 19, 2003
David Muir 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.
- Keeping the Promise for a Strong Economy Act (Budget Measures), 2002, S.O. 2002, c. 22, s. 127, was proclaimed in force effective October 1, 2003.
- See for example Filippazzo and Allstate Insurance Company of Canada (FSCO A99-000932, November 8, 2000); Sakhuja and Markel Insurance Company of Canada (FSCO A98-000839, September 6, 2000), wherein arbitrators have dismissed claims under section 282(11.2) where no advance notice of the claim had been given and in circumstances similar to those at hand in this matter.