Neutral Citation: 2003 ONFSCDRS 22

FSCO A01-000550

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PATRICIA HILL

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before:

John Wilson

Heard:

February 6, 2003, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Albert M. Conforzi for Ms. Hill

Donald G. Cormack for Wawanesa Mutual Insurance Company

Issues:

The Applicant, Patricia Hill, was injured in a motor vehicle accident on January 13, 1995. In a decision dated October 25, 2002, I dealt with her claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

1. Ms. Hill is not precluded from proceeding to arbitration on the PEC issue by reason of the expiry of the limitation period.

2. Ms. Hill is bound by her solicitor's agreement as to the quantum of the PEC, and is thereby precluded from raising this issue in a new arbitration.

3. The applications for mediation and arbitration are clearly within the jurisdiction of the Commission.

The issue in this further hearing is:

1. Is Ms. Hill entitled to her expenses incurred in respect of this arbitration hearing?

2. Is Wawanesa entitled to its expenses in respect of this arbitration hearing?

Result:

1. Ms. Hill shall pay to Wawanesa its expenses, fixed at $500.

EVIDENCE AND ANALYSIS:

The preliminary issue hearing in this matter arose because of a dispute between the Insurer and Ms. Hill concerning the amount of her Loss of Earning Capacity Benefit (LECB), and specifically, the calculation of her Pre-accident Earning Capacity (PEC).

Both these matters had been the subject of a previous arbitration² before Arbitrator Leitch, which had resulted in Ms. Hill receiving an LECB payment from the Insurer.

At that hearing, counsel for Ms. Hill, Mr. Robert Ipacs of the Pace Law Firm, had formally agreed, on the record, as to the exact amount of her pre-accident earning capacity.

In this arbitration, Ms. Hill sought an increase in her LECB, due to a re-calculation of the PEC number. The Insurer quite naturally resisted any change to the PEC number, pointing to Mr. Ipac's agreement on the record that the agreed number was valid "backwards, forwards" and "today."

In the preliminary issue hearing decision I made several comments and findings on the circumstances surrounding the agreement whose interpretation triggered Ms. Hill's second arbitration.

With regard to the nature of the agreement I found:

Counsel for the Applicant stretches credulity in asking this tribunal to accept that the agreement should be interpreted as a limited, procedural, agreement that preserved the Applicant's right to challenge the PEC once again. I find that, based on the clear evidence of the transcript, Mr. Ipacs waived any future right to challenge the PEC calculation.

I also gave short shrift to the suggestion that Mr. Ipacs did not have authority to make the concessions alleged:

Other than a bald assertion by Mr. Ipacs, in his affidavit that the "Applicant did not instruct me to abandon her PEC claim," there is no probative evidence that the Pace law firm's retainer was limited in any way by Ms. Hill, nor any suggestion that the Insurer was aware of any relevant limitation on the authority of Mr. Ipacs to make concessions with regard to the PEC calculation.

The criteria for an order of expenses are set out in section 73 of the Dispute Resolution Practice Code, (Third Edition, April 15, 1997) (the "Code”). Subsection 73.1 establishes the jurisdiction of an arbitrator to award expenses, while subsection 73.2 reflects the principles for an award, as set out in the Expense Regulation (Regulation 664, R.R.O. 1990, as amended).

Subsection 73.2 reads as follows:

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.

There have been no settlement offers tendered pursuant to Rules 74 and 75.

The Expense Regulation uses the term "expense" instead of the more usual word "costs" in the context of a reimbursement of legal expenses incurred by a party to an arbitration. While "costs" generally refers to the practice of providing an allowance to a successful party, based on known scales or tariffs, to indemnify him or her for some of the expenses incurred, "expense" seems to have a more simple meaning. The Canadian Oxford Dictionary describes "expense" as:

1Cost incurred; payment of money. 2 a costs incurred in doing a particular job etc. (will pay your expenses). b an amount paid to reimburse this.

Clearly, the legislature in using the word "expense" meant to indemnify a party for its actual incurred expenses up to any statutory limit.

In this matter, both parties are requesting their expenses.

The Insurer, since it won on the issue of Ms. Hill's right to access the arbitration process, claims its expenses based on its success. It also urges me to accept that Ms. Hill's application for arbitration was frivolous and vexatious. It bases this contention on some of my findings at the hearing:

Although it is possible that Mr. Ipacs, counsel for the Applicant, still contemplated a limited procedural agreement, that was not the impression that his assent, by words and conduct, gave.

Any reasonable person hearing the words spoken by Mr. Cormack would have believed that the temporal reach of the agreement was both "backwards, forwards" and "today."

Counsel for the Applicant stretches credulity in asking this tribunal to accept that the agreement should be interpreted as a limited, procedural, agreement that preserved the Applicant's right to challenge the PEC once again. I find that, based on the clear evidence of the transcript, Mr. Ipacs waived any future right to challenge the PEC calculation.

To the Insurer, an action was brought based on an untenable and unreasonable interpretation of the clear words of the agreement. Ms. Hill or her solicitors should have recognized this, but carried on with the arbitration nonetheless. Consequently, the arbitration application must be considered frivolous and vexatious.

The Insurer further submitted that any expenses ordered in this matter should be payable by the Pace law firm, since it may have had an interest in extricating itself from the improvident agreement made by Mr. Ipacs on behalf of Ms. Hill. In other words, it was the driving force behind this matter being litigated.

The Applicant bases its claim for expenses on what it views as the Insurer's mixed success in this matter. Out of all the issues raised in this preliminary issue matter, the Insurer succeeded on only one, albeit one that had the effect of barring access to the arbitration process.

Counsel for Ms. Hill also points to the jurisprudence at the Commission that underlines the importance of access to justice as an important element in any award of expenses. Ms. Hill raised some important issues that have not been directly addressed by either arbitrators or judges.

Director's Delegate Draper in the appeal of Gray and Zurich Insurance Company (FSCO P98-00047, June 11, 1999), examined the role of an arbitrator in awarding expenses subsequent to the implementation of subsection 282(11) of the Insurance Act and the Settlement Regulations.

Arbitrators now have an obligation to consider the legislated criteria, including the result, applying them to both parties. However, I agree with the arbitrator that the criteria do not reflect a move to the kind of results-based approach used by the courts. Success is only one criterion in an open-ended list and, therefore, must be weighed against the other relevant considerations. I also agree with the arbitrator that the criteria, specifically clause 6, leave room for concerns about the access to the dispute resolution system. One aspect of accessibility is that insured persons should have a reasonable opportunity to raise novel issues of interpretation, particularly those of general importance.

I accept Mr. Conforzi's submissions with regard to the novelty of the application. There is little jurisprudence dealing with re-opening PEC calculations or dealing with the matters raised by a three-year or an eight-year review. It was clearly a question that was neither frivolous nor vexatious, and one that she had every right to raise.

I do not accept, however, Mr. Conforzi's characterization of the outcome of the matter as a split decision. The Insurer submitted that Ms. Hill should be barred from proceeding to arbitration on her claim. I accepted their submissions and so held.

It is irrelevant that the Insurer may have pleaded three alternative reasons in support of their submission, and I only relied on one in making my decision. Having made a strong case, based on the agreement at the hearing, it is clear that the Insurer felt no need to press on with the other alternative arguments. Far from a mixed result, the outcome was squarely in favour of the Insurer.

There are, then, competing policy reasons at play in this matter that could support an award of expenses to either party.

An award of expenses or costs has a double nature. On one hand, it is some compensation for the expenses incurred by a party in successfully litigating a matter. On the hand, it may also be, to some degree, a punitive matter, awarded to ensure that an abuse of process or outrageous conduct by a party is appropriately sanctioned.

From a compensatory point of view, I find that the Insurer's position was upheld on arbitration, and that it did nothing at the preliminary issue hearing to disentitle itself from compensation. Its actions in bringing this motion were reasonable and above-board and devoid of frivolous or vexatious argument or positions.

I cannot necessarily say the same about the positions taken by counsel for Ms. Hill. Although both Mr. Conforzi and Mr. Myron Sidenberg were beyond reproach at both the preliminary issue hearing and the expense hearing, some doubt remains as to the role of their firm in bringing this matter to arbitration.

Mr. Cormack has alleged that the bringing of this arbitration in itself was an abuse of process. While I do not necessarily agree with his analysis, I accept that there remain unanswered questions about the appropriateness of the Pace law firm bringing this application.

Mr. Ipacs of the Pace law firm represented Ms. Hill at the arbitration hearing before Arbitrator Leitch. In the context of that hearing, he made an agreement on behalf of his client that the PEC figure was established "backwards, forwards" and "today."

Much of the arbitration hearing before me turned on the meaning of Mr. Ipac's words and actions in consenting to the PEC number. As noted previously, Mr. Ipac's affidavit submitted in this matter specifically states that he was not authorized to settle the PEC figure on a final basis. I have found that was, indeed, what he did at the hearing.

From the time of the first pre-hearing the Pace law firm should have been aware that there was a suggestion that it might have missed a limitation period in bringing this matter, or have acted contrary to a client's interests.

The Rules of Professional Conduct of the Law Society of Upper Canada govern the conduct of lawyers in Ontario.

Rule 6.09 of the above Rules deals with potential errors or omissions in a lawyer's practice. Subrule 6.09(2) provides:

A lawyer shall give prompt notice of any circumstance that the lawyer may reasonably expect to give rise to a claim to an insurer or other indemnitors so that the client's protection from that source will not be prejudiced.

The Commentary is even more specific:

As soon as a lawyer becomes aware that an error or omission may have occurred, that may reasonably be expected to involve liability to the client for professional negligence, the lawyer should take the following steps.

1. Immediately arrange an interview with the client and advise the client that an error or omission may have occurred, that may form the basis of a claim by the client against the lawyer.

2. Advise the client to obtain an opinion from an independent lawyer and that, in the circumstances, the first lawyer might no longer be able to act for the client.

If the suggestion of a possible missed limitation period was not enough to trigger the provisions of the Rules of Professional Conduct, then Mr. Ipac's affidavit should have raised cause for concern.

It is clear that when the Pace law firm received Mr. Ipac's affidavit, it had interests that were potentially at odds with those of the client Ms. Hill. The conduct of one of its members was at issue. It should have so advised Ms. Hill and withdrawn as her representative in accordance with the Rules of Professional Conduct of the Law Society of Upper Canada.

This did not happen. The Pace Law Firm remained on the record, and represented Ms. Hill at the preliminary issue hearing and at the expense hearing. Ms. Hill was not present at either of these hearings.

It may well be that counsel didn't view this as a problem. If the Pace law firm won on this matter, then the conflict of interest and Mr. Ipac's problem with his instructions would have been of no consequence, since the same end would have been achieved.

If it lost, however, Ms. Hill as the applicant would bear the risk of an expense order against her. In addition, she would be burdened with a decision that would be tainted by the lack of independent counsel. She continued to be represented by counsel who, at least on the face of the matter, had an interest in exculpating the conduct of the Pace law firm.

One of the criteria for the award of expenses is conduct that is frivolous or vexatious or an abuse of process, by one of the parties. An abuse of process is not defined in the Schedule, the regulations or in the Act. The phrase, however, has a long history, especially in conjunction with the phrase "frivolous and vexatious."

Vexatious litigation includes situations where the court has no power to grant the relief sought (see Dreyfus v. Peruvian Guano Co. (1229) 41 Ch.D. 151), if no reasonable person can possibly expect to obtain relief in it, (see Lawrance v. Lord Norreys et al. (1222) 39 Ch. D. 213), or if the applicant has no proper authority to pursue the remedy (see R. ex rel. Tolfree v. Clark et al [1943] O.R. 314)

I find that none of these criteria apply to Ms. Hill's own actions in this matter. There was a reasonable question with regard to the scope of the three-year review under the Schedule, as well as to whether her counsel may have missed a limitation period. The subject matter was within the jurisdiction of the tribunal.

The only conduct that might, possibly, be considered an abuse of process is the conduct of her solicitors in not removing themselves from the case when it was clear that their actions were at issue in the matter.

It would be odd, however, if this were to be used as grounds for ordering Ms. Hill to pay the Insurer's expenses. Although it is clear that under normal circumstances an individual is responsible for the actions of his or her agent, the same rule does not necessarily apply where there are circumstances giving notice to another party that an agent has exceeded his mandate.

In this case, the Insurer has specifically alleged that the Pace law firm acted outside its retainer, and in conflict with its duty towards Ms. Hill in bringing this arbitration.

While I do not accept that it has tendered sufficient direct credible evidence to sustain such a serious charge, it remains a possible inference that can be drawn from the curious fact situation surrounding this arbitration. It is also an inference that can be sustained by Mr. Ipac's affidavit, and the failure of the Pace law firm to adduce evidence responding to the Insurer’s allegations, including testimony from Ms. Hill herself.

At the very least, however, the Insurer’s allegation demonstrates that it had information that ought to have drawn its attention to the possibility that the Pace law firm was acting outside of its mandate, thus, potentially, limiting Ms. Hill’s responsibility for her solicitor’s actions.

The obvious solution to this quandary is, as suggested by the Insurer, to make an expense order against the Pace law firm, rather than Ms. Hill.

However, in Tanzos and State Farm Mutual Automobile Insurance Company Appeal Order (FSCO P01-00017, October 22, 2002), the Director of Arbitrations, David Draper, ruled that, "I am not persuaded that the current legislation allows me to order a non-party to pay expenses."

In arriving at this conclusion, the Director relied on the decision of Television Real Estate Ltd v. Rogers Cable T.V. Ltd. (1997), 1997 CanLII 999 (ON CA), 34 O.R. (3d) 291, a decision of the Court of Appeal. In this case the court interpreted the meaning of the phrase "by whom" in the context of an order to pay costs pursuant to subsection 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43.

The phraseology used in that subsection is similar, albeit not identical, to the words used in section 222(11) of the Insurance Act.

While I accept that the Director has determined that a section 222(11) expense order at arbitration may only be made against a party, this is not necessarily the end of the discussion.

Although an arbitrator has no inherent jurisdiction in the manner of a court, subsection 21(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, (the "SPPA") specifically grants a power to control abuse.

The SPPA has conferred on administrative tribunals some of the court’s authority to rein in abuse of process. It has also (section 17.1) conferred a separate, independent authority for the award of expenses or costs, separate from the powers provided under the Insurance Act.

The jurisdiction of a court to order either costs or a punitive sanction against someone appearing before it has roots in several areas. One of the most obvious is the provisions of the Courts of Justice Act cited above. These provisions deal with the statutory power to award costs.

Another source of power is the inherent jurisdiction of the court to control its own process and to prevent an abuse of process.

A third source is the power of a court to discipline barristers and solicitors, who are officers of the court. This jurisdiction is clearly not available to a statutory tribunal.

A fourth, less well known source of power is the power that once resided in the Courts of Equity or Chancery. Although, with the fusion of the courts under the Judicature Act courts of equity ceased to exist, the powers of those courts continued on in the new structures. Indeed, in the event of any conflict between law and equity, equity was to prevail.

In Oasis Hotel Ltd. and Suroweec v. Zurich Insurance Co. Et Al 1981 CanLII 433 (BC CA), [1981] 5 W.W.R. 24, the British Columbia court of appeal considered the roots of a modern court's jurisdiction to award costs, and the limits to its discretion.

The court found that the power to award costs flows not only from the Supreme Court Act, (British Columbia's equivalent to the Courts of Justice Act), but from the statutory and common law powers inherent in the courts of Chancery and Law, prior to the passage of the Judicature Act, which merged the two court systems. Lambert J.A. observed:

The scope of the power of the High Court of Chancery with respect to costs is described by Fry, L.J. in Andrews V. Barnes (1888) 39 Ch. D. 133 in these words at p. 138:

The jurisdiction of the Lord Chancellor in costs was essentially different from that at common law."The giving of costs in equity", said Lord Hardwicke in Jones v. Coxeter "is entirely discretionary, and is not at all conformable to the rule at law". "Courts of Equity" said the same great judge in another case, "have in all cases done it" (i.e., dealt with costs ) "not from any authority" (i.e. as we understand, from any statutory or delegated authority)- "but from conscience and arbitri bono vitri, as to the satisfaction on one side or other on account of Vexation:" Corporation of Burford v. Lenthall.

"Arbitri bono vitri is a version of the legal maxim "arbitrum est judicium bonf vrii, secundum cequum et bonum" which Black's Law Dictionary translates as, "An award is the judgment of a good man, according to justice." Thus, the courts in dealing with cost matters may apply equitable notions of justice.

The application of such equitable principles in the courts has been seen in a variety of decisions. One of the most famous is Sturmer v. Beaverton (Town) (1912), 1912 CanLII 588 (ON DIVCT), 25 O.L.R. 566, a decision of Middleton J. In this case, Middleton J. ordered costs against a non-party as a means of addressing what he saw as an abuse of the process of the court.

This, as the cases shew, is an abuse of the process of the Court, and I think a contempt of a most serious character, because the Court, which is called into existence to administer justice, is being used as a tool and instrument by which an injury is afflicted, which it is said, it can no way redress.

That this is not an archaic power that has fallen into desuetude is demonstrated by the decision of Winkler J. in Smith v. Canadian Tire Acceptance, (1995) 1995 CanLII 7163 (ON CTGD), 22 O.R. (3d) 433, a decision that was affirmed by the court of appeal, with leave to appeal denied by the Supreme Court.

The same principle was enunciated by Lambert J. in Oasis Hotel (supra) in commenting on Alexanian v. Dolinsky (1974) 1973 CanLII 835 (ON CA), 43 D.L.R. (3d) 649, a decision of the Ontario Court of Appeal:

Again it is suggested that gross misconduct will invoke the application of a different principle than the principle that only a real party to the proceedings or a solicitor of record will be required to pay costs.

If there were gross misconduct in the conduct of a matter, a tribunal may wish to act to punish the abuse, and to compensate the other party who was put to unnecessary expenses arising from that abuse of process.

As noted, however, there are some difficulties with this approach. Neither the Expense Regulation nor the cost provisions of the SPPA necessarily contemplate the awarding of an expense order against a non-party. Indeed, that is the gist of the Directors decision in Tanzos (supra).

The Commission, however, as with any tribunal governed by the SPPA, has authority under section 23(1) of that act to "make such orders or give such directions in proceedings before it as it considers proper to prevent abuse of its processes."

This power is similar to the power traditionally residing in courts to control abuse.

As Lord Blackburn observed in Metropolitan Bank Ltd. et al. V. Pooley (1225) 10 App. Cas. 210:

(T)he Court had inherently in its power the right to see that its process was not abused by a proceeding without reasonable grounds, so as to be vexatious and harassing.

Ruth Sullivan in Driedger on the Construction of Statutes (Butterworth's, Toronto 1994) at p. 301, deals with the intersection of legislative and common law, and the use of common law terms and concepts in legislation.

Incorporation of common law concepts or terms. Where used in legislation, common law terms and concepts are presumed to retain their common law meaning, subject to any definition supplied by the legislature.

I find that the legislature, in formulating section 23(1), intended that tribunals be imbued with the ordinary and general powers of the courts to deal with an abuse of process, such as those identified by Lord Blackburn. These powers include both the powers of courts of law, and those rooted in equity.

While the power of a statutory tribunal to provide equitable relief is limited, a tribunal may necessarily apply equitable principles in the exercise of its statutory mandate.

The grant of powers in s. 21(1) did not, however, include the power to require a person to answer for a contempt of court, since this is a quasi-criminal matter, and was dealt with specifically by the legislature in section 23 of the SPPA.

I find, therefore, that the Commission has jurisdiction to sanction non-parties for an egregious abuse of process, including, if appropriate, the award of punitive costs.

The question remains as to whether the actions of the Pace law firm are such as to attract such a sanction.

I am not convinced that they are. The decisions with regard to award of costs to non-parties use words such as "fraud" and "gross misconduct."

Lord Denning in R & T Thew Ltd. & Reeves (No. 2), 3 All E.R. 1026, examined some of the considerations in awarding costs against a solicitor.

This compensatory jurisdiction still retains, however, a disciplinary slant. Just as officers in the services are subject to military discipline, so are solicitors, as officers of the court, subject to judicial discipline. If they are guilty of "any act, conduct or neglect to the prejudice of good order and [judicial] discipline, or which is "unbecoming the character of an officer and a gentlemen", causing loss or damage to another, they can be ordered personally to compensate him. The cases show that it is not available in cases of error, error of judgement or mere negligence. It is only available where the conduct of the solicitor is inexcusable such as to merit reproof. In Myers v. Elman [1939] 4 All E.R. 484 at 490, 498, 509, [1940] AC 282 at 292, 304, 319, Viscount Maugham put it as "a serious dereliction of duty", Lord Atkin spoke of "gross negligence", and Lord Wright said that "gross neglect or inaccuracy may suffice."

Lord Denning's characterization of the level of inappropriate conduct required for a solicitor to be found personally liable for costs is consistent with the more recent jurisprudence in Ontario, including Marchand (Litigation Guardian of) v. Public General Hospital Society of Chatham [1998] O.J. No. 527, a decision of Grainger J.

The Commission is not in the business of disciplining lawyers and, indeed, lacks any statutory mandate to do so. However, should the exercise of its power to control abuse of its process have the incidental effect of sanctioning the conduct of lawyers appearing before it, such sanctions should only take place in the context of egregious conduct of the type identified by Lord Denning.

While I accept that there were circumstances in the bringing of this arbitration by the Pace law firm that raised serious questions about their full compliance with the Rules of Professional Conduct, I find that the Insurer has produced absolutely no evidence of activity that could be characterized as either gross negligence or dereliction of duty.

If there is credible, probative evidence of serious misconduct available, then there are other, more appropriate, forums available for any aggrieved parties to pursue that issue.

I find that, at best, the unproven allegations against the Pace law firm would comprise potential negligence vis-à-vis its client, not gross negligence or dereliction of duty. Certainly an abuse of this tribunal’s process has not been proven. Furthermore, there is no convincing evidence that the Pace law firm acted as the principal, or without the valid authorization of its client, and so, potentially, would be liable for expenses.

Mr. Ipac's affidavit, although somewhat unsettling, does not provide sufficient support for the Insurer’s allegation that the Pace law firm acted beyond its mandate in settling the PEC. Clearly, from the lines struck out in his affidavit, Mr. Ipacs had a limited recall of the events of 1999. In addition, the Insurer neither cross-examined Mr. Ipacs on his affidavit, nor called any witnesses to support its contention.

I, therefore, decline to find that the Pace law firm should be responsible for any expense award.

Bill of Expenses:

Rule 79.2 of the Code provides that where a party requests an expense order setting out the amounts payable, it shall provide the other party with "an account describing each of the expenses claimed, services and costs."

In this matter, the Insurer has set down this matter for a hearing to determine whether expenses are payable to it and, if so, what the amount of such an award should be.

Notwithstanding the fact that this conjunction of hearings is not specifically provided for in the Code, it is apparent that it is incumbent upon a party claiming expenses to serve a copy on the opposing party well before the date set for the hearing of the issue.

In this case, the Insurer served a copy of its Bill of Expenses on the eve of the hearing. It had also provided a list of expenses on November 8, 2002 that, in Mr. Cormack's own words, formed part of an offer to settle the issue of costs. He maintained at the hearing that the document was not a Bill of Expenses pursuant to section 79 of the Code, and requested that I not consider the document when it was tendered by Mr. Conforzi. I accept his characterization of this document.

The Bill of Expenses that was ultimately served, totals some $27,746.61, a somewhat unusual sum for a hearing that lasted, at most, some three hours. As part of this bill Mr. Cormack included compensation for himself at a rate of $350 per hour and $225 per hour for junior counsel.

Given that the maximum rate that can be ordered, pursuant to Rule 78 of the Code, for Insurer’s counsel is the hourly rate established for legal aid, the Insurer’s account is so far from reality as to be ludicrous. In addition, it purports to claim for mediation fees and expenses that patently cannot be compensated, such as court reporters and the cost of transcripts.

The parameters for expense claims have long been established. Mr. Cormack, as a senior counsel and respected member of the Bar, should be well aware of the nature of such a claim, and the manner in which it should be presented.

I find that delivery of such an outrageous bill, on the eve of a hearing, shows a disrespect for the process that borders on contemptuous.

While I accept that the Insurer is entitled to some compensation, it is not entitled to payment based on the bill it tendered.

Rather, I order that the Insurer's expenses be fixed in the amount of $500, which would cover some three hours hearing time at legal aid rates, together with some limited time for preparation. This order reflects the absence of reasonable documentation to support the quantum claimed by the Insurer, and the need to preserve access to the arbitration system when there are novel issues of law raised by an applicant.

Given my finding that there are no grounds within my jurisdiction to make this order payable by her lawyers, Ms. Hill shall be liable to pay the Insurer’s fixed expenses.

The Insurer also raised the issue of the repayment of its assessment fee. Although this matter was listed as an issue in the arbitration itself, in making the decision on the preliminary issue this matter was not before me. Nor is it appropriate to raise it as part of an expense hearing for that preliminary issue. I therefore have no jurisdiction to consider the matter.

Even if there is jurisdiction to make such an order, I have found that there were valid issues that could be referred to arbitration. Consequently, Ms. Hill did not commence an arbitration that was necessarily frivolous and vexatious, or an abuse of process. I find that this is not an appropriate situation for a return of the Insurer’s assessment.

February 24, 2003

John Wilson Arbitrator

Date

Neutral Citation: 2003 ONFSCDRS 22

FSCO A01-000550

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PATRICIA HILL

Applicant

and

WAWANESA MUTUAL 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:

1. Ms. Hill shall pay to Wawanesa $500 as its fixed expenses in this matter.

February 24, 2003

John Wilson Arbitrator

Date

Footnotes

1. 1The 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.
2. 2(FSCO A98-001113, November 29, 1995)