Khanh Phuong Le v. Wawanesa Mutual Insurance Company, 2004 ONFSCDRS 119

Financial Services Commission of Ontario

Neutral Citation: 2004 ONFSCDRS 119 FSCO A03-000404

BETWEEN:

KHANH PHUONG LE Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY Insurer

REASONS FOR DECISION

Before: Beth Allen

Heard: June 5, 2004, at the offices of the Financial Services Commission of Ontario in Toronto. Written submissions were received from Wawanesa July 9, 2004.

Appearances: Neither Mr. Le nor a representative on his behalf appeared Darrell March for Wawanesa Mutual Insurance Company

Issues:

The Applicant, Khanh Phuong Le, was injured in a motor vehicle accident on February 3, 2001. He applied for and received statutory accident benefits from Wawanesa Mutual Insurance Company ("Wawanesa"), payable under the Schedule.¹ Wawanesa terminated weekly income replacement benefits on July 4, 2001. The parties were unable to resolve their disputes through mediation, and the Applicant applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The Applicant did not attend the hearing. Wawanesa requested that the matter be dismissed.

The issues in this hearing are:

Preliminary Issue:

1. Is Wawanesa entitled to a dismissal of the arbitration?

Substantive Issues:

2. Is the Applicant entitled to receive a weekly income replacement benefit ongoing from July 5, 2001, claimed pursuant to section 4 of the Schedule?

The IRB entitlement issue includes a claim for post 104-week benefits.

3. Is the Applicant entitled to a payment of $352.20 for outstanding prescription expenses dated June 5, July 14 and September 1, 2001, claimed pursuant to section 14 of the Schedule?

4. Is Wawanesa liable to pay the Applicant's expenses in respect of the arbitration under subsection 282(11) of the Insurance Act?

5. Is the Applicant liable to pay Wawanesa's expenses in respect of the arbitration under subsection 282(11) of the Insurance Act?

6. Is the Applicant entitled to interest for the overdue payment of benefits pursuant to subsection 46(2) of the Schedule?

Result:

1. The arbitration is dismissed.

2. The Applicant is liable for Wawanesa's expenses, pursuant to subsection 282(11) of the Insurance Act, fixed at $500.00 inclusive of G.S.T.

EVIDENCE AND ANALYSIS:

Background

The arbitration hearing was scheduled to commence at 10:00 a.m. on July 5, 2004. I waited until approximately 10:30 a.m. and the Applicant failed to appear. I commenced the hearing in his absence.

The arbitration process has been marked by a history of the Applicant failing to communicate with his lawyer and by his seeking adjournments and failing to attend at pre-hearing discussions and a motion.

The Applicant requested, and was granted on conditions, an adjournment of the initial pre-hearing discussion scheduled for July 30, 2003 on the basis that he had to visit a sick relative in his homeland. At this point, there was no indication of his date of return. A letter dated June 23, 2003 from the adjournment arbitrator set the conditions for the adjournment which included requiring the Applicant's counsel to obtain the Applicant's return date from relatives in Toronto and setting a deadline for production. The arbitration hearing was scheduled for January 12 to 15, 2004. The Applicant's counsel later advised that the Applicant was expected back in Toronto in August 2003. The return date for the pre-hearing discussion was therefore scheduled for September 11, 2003.

The Applicant did not attend the pre-hearing discussion scheduled for September 11, 2003. The Notice of Pre-hearing Discussion was sent to his last known address. Attempts were made at the pre-hearing discussion to call him at his last known telephone number which revealed that he was no longer receiving calls at that number. The Applicant's counsel requested a motion that her law firm be removed as counsel of record. Subsequent to the pre-hearing discussion, Wawanesa's counsel requested a further motion for dismissal of the arbitration for non-production of documents. The pre-hearing arbitrator set hearing dates of July 5 to 8, 2004 in order to allow time for the Applicant to retain new counsel. As required by the pre-hearing arbitrator, the Applicant's counsel notified the Applicant by letter dated September 22, 2003 to his last known address, requesting withdrawal as counsel of record.

The motions were heard by the pre-hearing arbitrator on January 6, 2004. The Applicant was not present at his last known address to receive service of the Motion Record and he failed to attend the motion. The pre-hearing arbitrator declined to dismiss the arbitration. The pre-hearing arbitrator was satisfied that attempts had been made to contact and serve the Applicant with notice of the motion, and was further satisfied that the Applicant's counsel had not communicated with the Applicant for more than seven months. Pursuant to Rule 9.8 of the Dispute Resolution Practice Code (the "Code")², he allowed the Applicant's counsel to withdraw as counsel of record. In a letter dated January 20, 2004, the pre-hearing arbitrator ordered the Applicant to pay Wawanesa's expenses of the motion at $700.00 inclusive of G.S.T.

In relation to the current arbitration dates, a Notice of Rescheduled Hearing, dated September 12, 2003, was issued to the Applicant, his previous counsel, Wawanesa's representative Mrs. Mina Cosolo, and Wawanesa's counsel, Mr. March. The Notice was sent to the Applicant's last known address in Toronto. The Notice advises the parties of the date, time and venue for the arbitration hearing and alerts the parties "if you or your representative do not attend at the hearing, the arbitrator may dispose of the case in your absence and you will not be entitled to any further notice of the arbitration proceedings", which warning is based on wording in subsection 7(1) of the Statutory Powers Procedure Act.³ Wawanesa succeeded in personally serving its Arbitration Brief on the Applicant on June 3, 2004 at 3:10 p.m. at his last known address. A Statement of Service dated June 7, 2004 confirms service.

I am therefore satisfied that the Applicant received adequate notice of the arbitration hearing.

Wawanesa's Counsel's Submissions

The Applicant filed an Application for Arbitration dated March 14, 2003 claiming the following benefits under the Schedule: income replacement benefits, prescription expenses, and his arbitration expenses under subsection 282(11) of the Insurance Act.

Wawanesa filed an Arbitration Brief for the hearing and called no viva voce evidence. Counsel for Wawanesa made alternative oral submissions on how to proceed and subsequently filed written submissions.

Wawanesa's counsel submitted that the arbitration should be dismissed due to the Applicant's failure to provide any evidence to substantiate his accident benefit and expense claims, and therefore, has not discharged the burden to prove his case.

Wawanesa's counsel submitted, in the alternative, that I should consider the Applicant's conduct under Rule 34 of the Code on the basis of his failure to comply with the adjournment and pre-hearing arbitrators' production orders of June 23, 2003 and January 20, 2004 respectively. Rule 34 states in part, "where a party fails to comply with a time requirement established by these Rules or by order or agreement, or fails to produce documents in compliance with an order or agreement, an arbitrator may"... "make such other order as the arbitrator considers just." Wawanesa asks that I make an order to dismiss the arbitration under this Rule.

Wawanesa's counsel submitted in the further alternative that the arbitration should be dismissed pursuant to Rule 68.1 of the Code, which states that "an adjudicator may dismiss a proceeding without a hearing where the proceeding is frivolous, vexatious or is commenced in bad faith."

Reasons for Decision

I have decided to dismiss the arbitration for the Applicant's failure to meet the burden to prove his case.

Despite Wawanesa's counsel's many requests for document production and the various orders made by the adjournment and pre-hearing arbitrators, the Applicant failed to produce any documents for the hearing. Neither the Applicant nor any witnesses on his behalf attended the hearing to give viva voce evidence in support of his claims.

I therefore dismiss the Applicant's arbitration. I find I need not consider Wawanesa's counsel's alternative submissions.

Expenses:

Arbitration Expenses

Wawanesa claims its expenses under subsection 282(11) of the Insurance Act which gives arbitrators the discretion to award expenses to parties to an arbitration hearing. Regulation 664 of the Insurance Act, the terms of which are replicated in Rule 75 of the Code, sets out the criteria to be considered on an award of expenses.

Rule 75 of the Code requires that the arbitrator take into account: (a) each party's degree of success in the outcome of the proceeding; (b) any written offers to settle made in accordance with Rule 76; (c) whether novel issues are raised in the proceeding; (d) 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; and (e) whether any aspect of the proceeding was improper, vexatious or unnecessary.

In his written submissions dated July 9, 2004, Wawanesa's counsel argued that Wawanesa is entitled to full compensation for all expenses incurred in defending the Applicant's claims including the cost of the arbitration hearing. He argues that in making my decision, I should take into account: that Wawanesa was successful in the outcome; that the Applicant failed to comply with two production orders; that he failed to attend the arbitration hearing; and that the nature of his claims are frivolous and vexatious.

The Applicant made a claim for arbitration expenses in his Application for Arbitration, however, he provided no particulars of the services rendered and the time utilized by the respective lawyers and clerks for particular services. Wawanesa's counsel submitted a Bill of Costs claiming total arbitration expenses of $7,218.07 involving: lawyer's fees of $3,372.94; disbursements of $624.10; mileage of $9.03; conduct monies of $212.00; and its filing fee of $3,000.

In the circumstances, I decline the Applicant's claim for expenses and award Wawanesa a portion of its expenses.

I concluded that Wawanesa's counsel is entitled to expenses based on the following criteria: Wawanesa's success in the outcome of the arbitration under criterion (a); the Applicant's conduct in failing to comply with production orders under criterion (d); and the Applicant's improper conduct in failing to attend and participate in the arbitration process without notice to the Insurer or the tribunal under criterion (e).

I took the following into account in looking at the quantum of expenses:

Concerning legal fees, Wawanesa's counsel did not particularize the services to which the respective fee applied. He charges total lawyer's fees of $1,754.46 for his services; $1,122.82 for the services of two other lawyers; $275.00 for two law clerks and $220.66 for G.S.T. A total of 34.2 hours was billed for lawyer's services and 11 hours for the services of the law clerks. I find these billings to be excessive in view of the fact that the Applicant did not participate in any part of the arbitration process and provided no documentary or other support for his claims. To this extent, I find Wawanesa's counsel's law firm's legal services, hearing preparation time and attendance time would reasonably be limited. Wawanesa's Arbitration Brief is not extensive and consists solely of correspondence by both parties' counsel and the Commission; applications for accident benefits, mediation and arbitration; the Report of Mediator; Explanations of Benefits Payable by Insurance Company; two surveillance reports; an insurer's functional abilities evaluation and two designated assessment centre reports. I find this suggests that the time to prepare a defence for arbitration would not reasonably have been as extensive as claimed. The arbitration hearing lasted less than one hour. Wawanesa's counsel called no viva voce evidence and made oral submissions supplemented by written submissions which he filed four days later.

In deciding to allow Wawanesa's counsel a portion of its expenses, I considered that he prepared for and participated in two telephone pre-hearing discussions and prepared for and attended a motion. However, I also note that the pre-hearing arbitrator imposed an expense order of $700.00 against the Applicant in a letter dated January 20, 2004 for costs thrown away on the motion.

I also considered Wawanesa's counsel's claim for conduct monies. I find this claim to be inappropriate. Assuming Wawanesa paid these amounts to the respective witnesses, I find Wawanesa should seek reimbursement of the amounts from the witnesses, and not from the Applicant, since Wawanesa did not call the witnesses to testify at the hearing.

In the circumstances, I order the Applicant to pay Wawanesa's expenses fixed at $500.00 inclusive of G.S.T.

The Insurer's Filing Fee:

Wawanesa also claims it is entitled to its $3,000 assessment fee (the fee for filing the Response to the Application for Arbitration) pursuant to a predecessor version of subsection 282(11.2) of the Insurance Act.

Regarding the insurer's filing fee, as I determined in Gi'mondo and Royal & SunAlliance Insurance Company of Canada⁴, arbitrators no longer have the authority to award an insurer its filing fee. Wawanesa paid a $3,000 fee with its Response to an Application for Arbitration dated May 1, 2003 under the predecessor Regulation. However, the provision that allowed arbitrators to consider this type of claim was revoked effective October 1, 2003 and replaced by a provision that does not authorize an arbitrator to consider such an award. The predecessor subsection 282 (11.2) of the Insurance Act⁵ allowed an arbitrator the discretion to order an insured person to pay an amount no higher than the amount of the insurer’s $3,000 assessment fee if the arbitrator finds that the applicant "commenced an arbitration that was frivolous, vexatious or an abuse of process."

I find in this case, as I did in Gimondo, that although Wawanesa paid the $3,000 filing fee on May 1, 2003, before the legislative change, the mere payment of the filing fee under the predecessor provision does not entitle Wawanesa to rely on that provision to make a claim for an award after that provision has been repealed. I also adopt Dredger's⁶ analysis in these circumstances. According to Dredger, Wawanesa would be required to have a right to such an award that arose under the predecessor provision. I find this would mean the right or interest would have had to have been vested, accrued or been accruing before the new legislation came into effect. I find that Wawanesa was not in that position on October 1, 2003 when the legislation changed and further find that no unfairness or prejudice results from this determination. Applying the ruling in Gimondo, I find that "the payment of an assessment fee allows an insurer a limited right or expectation to participate in the arbitration process and, absent a determination or order by an arbitrator, no right or expectation of obtaining an award based on this fee would exist at that time."

Conclusion

I therefore order the Applicant to pay Wawanesa's expenses fixed at $500.00 inclusive of G.S.T. pursuant to subsection 282(11) of the Insurance Act.

August 19, 2004

Beth Allen Arbitrator

Date

Neutral Citation: 2004 ONFSCDRS 119 FSCO A03-000404

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

KHANH PHUONG LE 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. I order the arbitration dismissed.

2. The Applicant shall pay Wawanesa's arbitration expenses fixed at $500.00 inclusive of G.S.T.

August 19, 2004

Beth Allen Arbitrator

Date

Footnotes

1. 1The 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.
2. 2(4th Edition, updated October 2003).
3. 3Subsection 7(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 states: "Where notice of an oral hearing has been given to a party to a proceeding in accordance with this Act and the party does not attend at the hearing, the tribunal may proceed in the absence of the party and the party is not entitled to any further notice in the proceeding.
4. 4(FSCO A02-000654, April 16, 2004)
5. 5As enacted by the Statutes of Ontario, 1993, Chapter 10, section 33.
6. 6Ruth Sullivan, Driedger on the Construction of Statutes, (Third Edition) (Toronto: Butterworths 1994) ("Driedger"), p.522.