Neutral Citation: 2003 ONFSCDRS 67
FSCO A02-000385
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
HONG NGOC TRUONG
Applicant
and
COACHMAN INSURANCE COMPANY
Insurer
DECISION ON A PRELIMINARY ISSUE
Before:
David Muir
Heard:
March 26, 2003, at the offices of the Financial Services Commission of Ontario in Toronto.
Written submissions were received on March 17 and April 11, 2003.
Appearances:
No one appeared for Mrs. Truong
Cary Schneider for Coachman Insurance Company
Issues:
The Applicant, Hong Ngoc Truong, claims to have been injured in a motor vehicle accident on July 11, 2001. She applied for statutory accident benefits from Coachman Insurance Company ("Coachman"), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Mrs. Truong applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The preliminary issue is:
- Was Mrs. Truong injured as a result of an "accident" as defined in section 2(1) of the Schedule? In particular, Coachman takes the position that Mrs. Truong was not present at the accident which occurred on July 11, 2001 and therefore could not have been injured as a result of an accident at that time.
In addition, the following issues arise in this proceeding:
Is either party entitled to their reasonable expenses of the arbitration, pursuant to section 282(11) of the Insurance Act?
Is Coachman entitled to be paid an amount not to exceed $3,000, pursuant to section 282(11.2) of the Insurance Act, because Mrs. Truong commenced an arbitration which was frivolous, vexatious or an abuse of process?
Result:
Mrs. Truong was not involved in an accident on July 11, 2001 and therefore could not have been injured in that accident.
Mrs. Truong shall pay Coachman's reasonable expenses of the arbitration in the amount of $2,668.33, pursuant to section 282(11) of the Insurance Act.
Mrs. Truong shall pay Coachman $3,000, pursuant to section 282(11.2) of the Insurance Act, because Mrs. Truong commenced an arbitration which was frivolous and an abuse of process.
At the time and place set for hearing, Mrs. Truong was not present. In accordance with Commission practice, the hearing was adjourned for 15 minutes. At 10:15 a.m., the hearing was reconvened. Mrs. Truong was not present. I am satisfied that Mrs. Truong had notice of the preliminary issue hearing and I determined that the hearing should proceed.
EVIDENCE AND ANALYSIS:
Although there was no evidence from the Applicant, who I find had an evidentiary burden with respect to the preliminary issue, Coachman lead evidence intended to show that Mrs. Truong was not present at the scene and, accordingly, not injured in an automobile accident that occurred on July 11, 2001.
In a statement given to an adjuster retained by Coachman, Mrs. Truong claimed that she was a passenger in a Dodge Caravan operated by Hong Thi Le Duong which was involved in an accident on the evening of July 11, 2001. In this statement, it is alleged that there were seven individuals in the vehicle. Mrs. Truong claims in her statement that she was seated in the very rear of the vehicle with two other women who she did not know. Immediately in front of her in the middle bench seat were two other women who Mrs. Truong also did not know according to the statement. The statement goes on to state that immediately after the accident all of the seven individuals exited the Dodge Caravan and waited for the police. When the police had not come in 15 minutes, the statement indicates, Mrs. Truong left the scene and took a bus home.
The factual claims made in the statement are flatly contradicted by the evidence of Nelson Braga and Jason Verissimo, the driver and passenger respectively in the other vehicle involved in the collision. Each confirmed that there was a collision with a Dodge Caravan operated by a female person later identified as Hong Thi Le Duong on Davenport Road at about 8:30 p.m. on July 11, 2001. Each testified that within seconds of the impact they had exited their vehicle to check on the occupants of the Dodge Caravan. They each testified that they saw only three persons in the van. Ms. Duong, a man identified later as Mr. Nguyen and another unidentified female sitting immediately behind Ms. Duong.
They each stated that they had clear views of the van because the side, sliding door was open and they each looked in to ensure that everyone was fine. They also each stated that, while they waited for the police to arrive, they stood outside of their vehicle, observing the surrounding area and at no time saw any other individuals exiting the van or waiting with Mr. Nguyen or Ms. Duong. They also each denied the possibility that a bus was ever in the area. Both indicated that their vehicle was blocking the westbound lane directly in front of the bus stop on Davenport Road. Both of these witnesses indicated that they would have noticed if a bus had come.
Constable Jose Dabu testified that he arrived at the scene at about four minutes before 9 p.m. He testified that he believed that there were only three people in the one van, but that no one had told him that. He testified that after completing his accident report, Mr. Nguyen asked him to change the accident report to record that there were seven passengers in the Dodge Caravan not three. He testified that he asked where the other four people had gone and whether they were injured. Mr. Nguyen responded that they were fine and had been picked up by a family member.
As I indicated at the conclusion of the hearing, I am satisfied that Mrs. Truong was not in the Dodge Caravan on the evening of July 11, 2001 when it became involved in an automobile accident. As indicated earlier there is no evidence before me that she was in the vehicle at any material time. On the contrary, the evidence offered by Coachman, in particular the evidence of Mr. Braga and Mr. Verissimo, establishes without much doubt that she was not. The only basis for a finding that Mrs. Troung was in the vehicle would require accepting the facts as alleged in the statement given by Mrs. Truong, in particular that there were seven individuals in the vehicle and that four of them, Mrs. Truong included, left the scene. In addition to the fact that there is no evidence that she was there, the evidence of Mr. Braga and Mr. Verissimo establishes without much question that there were only three individuals in the vehicle not seven, and that none of the three who were at the accident scene was Mrs. Truong.
Accordingly, I find that Mrs. Truong was not involved in a car accident and did not suffer any impairments resulting from injuries in an accident and is, therefore, not entitled to statutory accident benefits.
EXPENSES:
Coachman seeks its expenses incurred in responding to this arbitration. As the effect of this decision is the dismissal of the application for arbitration, I will consider the expense claim as set out by Coachman.
The Insurance Act in section 282(11) provides for the awarding of expenses to the parties:
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 amended by Ontario Regulation 464/96, provides the criteria that an arbitrator may consider in determining a party's entitlement to expenses, 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.
In addition to these enumerated criteria, arbitrators consider the need to ensure that insured persons are able to access the dispute resolution system.
In considering these criteria, the first three being most relevant to this matter, it is clear that Coachman is entitled to its expenses of the arbitration. The application for arbitration was based on a misrepresentation. Coachman should not be required to bear the costs of responding to an arbitration that should never have been brought in the first place.
Coachman submitted a Bill of Costs. It records that a total of 54.4 hours of counsel's time was taken up in getting the arbitration to hearing. This seems excessive. Although the Commission encourages the parties to properly prepare their cases, counsel for Coachman appears to have spent at least 23 hours up to the time of the pre-hearing, not including the time allocated to correspondence and legal opinions. Moreover a further 20 hours was taken up in preparing for this preliminary issue hearing, which was scheduled for one day and in the end lasted approximately 90 minutes.
I find that a more reasonable amount of time for the legal work on this case would be approximately 24 hours. I have accepted the breakdown of lawyer's time, as between the three lawyers involved in the matter, provided by Coachman, as well as the fees associated with the lawyers involved. The disbursements claimed by Coachman appear to be reasonable. I find therefore that Coachman is entitled to its reasonable expenses in the following amounts:
Legal Fees:
$1,675.04
GST on fees
117.25
Disbursements
245.73
Total
$2,038.02
Submissions were received from Coachman after the conclusion of the hearing, seeking payment for the cost of an investigator retained to locate and obtain witness statements from the three individuals who gave evidence at the hearing.
I find that Coachman is entitled in principle to this expense, however, again the amount claimed appears to be excessive. In the absence of any explanation for it taking 14 hours to locate and take statements from these three individuals, I find that Coachman is entitled to 50% of the amount claimed or, $630.31.
Accordingly, Coachman is entitled to its reasonable expenses of the arbitration in the total amount of $2,668.33 ($2,038.02 + $630.31).
Coachman also seeks an order, pursuant to section 282(11.2) of the Insurance Act, requiring Mrs. Truong to pay $3,000, on the basis that the application for arbitration was predicated on a misrepresentation and, as such, the application for arbitration was vexatious and an abuse of process. I agree.
There can be no more serious misconduct by an insured person than to commence an arbitration based on a misrepresentation of a fact or circumstance, which is fundamental to the merits of the arbitration. I find that this application for arbitration was commenced on the basis of such a misrepresentation - Mrs. Truong's involvement in the July 11, 2001 accident - and, accordingly, when Mrs. Truong commenced the arbitration, it was vexatious and an abuse of process.
April 24, 2003
David Muir
Arbitrator
Date
Neutral Citation: 2003 ONFSCDRS 67
FSCO A02-000385
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
HONG NGOC TRUONG
Applicant
and
COACHMAN 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:
The application for arbitration of Mrs. Truong is dismissed.
Mrs. Truong shall pay Coachman $2,668.33 as its reasonable expenses of the arbitration, pursuant to section 282(11) of the Insurance Act.
Mrs. Truong shall pay Coachman $3,000, pursuant to section 282(11.2) of the Insurance Act.
April 24, 2003
David Muir
Arbitrator
Date
1 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.