Kulaveerasingam Ramalingam v. State Farm Mutual Automobile Insurance Company, 2004 ONFSCDRS 181

Neutral Citation: 2004 ONFSCDRS 181

FSCO A02-001646

BETWEEN:

KULAVEERASINGAM RAMALINGAM

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON EXPENSES OF A VARIATION MOTION AND CROSS-MOTION FOR INTERIM BENEFITS

Before:

Suesan Alves

Heard:

By written submissions received by August 31, 2004 at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

David S. Wilson for Mr. Ramalingam

Grant Dow for State Farm Mutual Automobile Insurance Company

On June 8, 2004, I made an Order granting the Insurer's motion to vary an interim order for housekeeping, home maintenance and income replacements benefits. I also granted the Applicant's cross-motion for an order continuing his interim income replacement benefits, and remained seized of the question of expenses of that proceeding, in the event the parties were unable to agree.

Each party claims its expenses of the proceeding. Counsel advised that the parties have been unable to resolve this issue and now seek an Order with respect to entitlement to expenses.

The issue is:

Which party is entitled to expenses of the variation motion and cross-motion for continuing interim income replacement benefits heard April 29, 2004?

Mr. Ramalingam is entitled to his expenses of the variation motion and cross-motion.

Background

In an Order dated September 5, 2003, I awarded Mr. Ramalingam interim income replacement benefits and interim housekeeping and home maintenance benefits. That Order provided:

Subject to the further Order of the hearing arbitrator, State Farm Mutual Automobile Insurance Company shall pay Mr. Ramalingam interim income replacement benefits at the rate of $388.42 per week and interim housekeeping and home maintenance benefits at the rate of $100 per week from April 29, 2003 pending the final order in this arbitration, pursuant to section 279(4.1) of the Insurance Act R.S.O. 1990, c.I.8 as amended.
The expenses of this motion are in the discretion of the hearing arbitrator.

The Order was made within the pre-104 week period, about six weeks before the hearing was scheduled to start. Subsequently, the hearing was adjourned to a date post-104 weeks. Under the Schedule, an insured person who is not catastrophically impaired is entitled to housekeeping and home maintenance benefits for 104 weeks post accident. After the 104-week period, the insured person is also required to meet a more onerous test to qualify for income replacement benefits.

The parties interpreted the interim benefits Order differently in relation to the post-104 week period. They agreed Mr. Ramalingam had no further entitlement to housekeeping and home maintenance benefits under the Order, but disagreed whether his entitlement to interim income replacement benefits ended on January 9, 2004, at the 104-week mark, or continued pending the hearing.

The Insurer moved to vary the Order so that it would end at January 9, 2004. The Applicant submitted that interim income replacement benefits were payable pending the final order in the arbitration and filed additional medical evidence which addressed the more onerous test for entitlement to income replacement benefits in the post 104-week period.

In an Order dated June 31, 2004, I granted State Farm's request to vary the order so that it terminated retroactively on January 9, 2004, and made a fresh order for interim income replacement benefits commencing on January 10, 2004. The Order, made under sections 282 and 284 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, provided:

The Order dated September 5, 2003 awarding Mr. Ramalingam interim income replacement and housekeeping benefits is terminated as of January 9, 2004, pursuant to the provisions of section 284(3) of the Insurance Act, R.S.O. 1990, c.I.8, as amended.
Subject to the further Order of the pre-hearing arbitrator and of the hearing arbitrator, State Farm Mutual Automobile Insurance Company shall pay Mr. Ramalingam interim income replacement benefits at the rate of $388.42 per week from January 10, 2004 pending the final order in this arbitration, pursuant to section 279(4.1) of the Insurance Act, R.S.O. 1990, c.I.8, as amended.
If the parties are unable to agree on expenses, that issue may now be addressed.

Each party claims that the other should pay its expenses of the proceeding of April 29, 2004. In the alternative, the Insurer submits that each party should bear its own expenses.

Law - the applicable criteria

Section 282(11) of the Insurance Act gives an arbitrator a discretion to award expenses to either party, all or part of the expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.

In Pembridge Insurance Company and Howden, (FSCO P02-00031, May 17, 2004), the Director of Arbitrations held that the criteria which govern an award of expenses made on or after October 1, 2003 are those set out in O. Reg. 275/03. They are: ¹

(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.

I will now apply those criteria to this case.

Degree of success

I conclude that each party had some degree of success. The Insurer succeeded in obtaining a variation of the original Order. The Applicant succeeded in his claim for ongoing interim income replacement benefits. In measuring the degree of success of each party in the outcome of the proceeding, I have had regard to the substance of the outcome of the proceeding. Since the Applicant was successful in maintaining his ongoing entitlement to income replacement benefits, in my view, he enjoyed a greater degree of success.

Offers to settle

Neither party advised of the existence of any written offers to settle.

Novelty of issues

There have been few variation applications at FSCO, and few cases in which interim benefits have been awarded in the post-104 week period. While there was some degree of novelty to the issues raised, I do not place a great deal of weight on this factor in the circumstances of this case.

Conduct of the parties

Each party was critical of the other's conduct. I find no improper conduct on the part of the Applicant or his counsel. In dealing with the Insurer's conduct on the variation motion itself, I find no improper conduct. In my view my role at this juncture is to deal with the parties' conduct only in relation to the variation motion and cross-motion.

In stating this, I do wish to be taken to sanction the Insurer's repeated non-compliance with the interim benefits order until the eve of the April 29, 2004 hearing, when it brought the interim benefits order into good standing.

During the currency of the first interim order, State Farm was repeatedly late in making payments. A writ of seizure and sale was issued on October 2, 2003 in the amount of $11,233.66. State Farm then paid those amounts. On March 29, 2004, the Sheriff attended at State Farm's offices and made a return of $5,212.46. The variation motion was heard on April 29, 2004. On that motion, counsel for State Farm advised that on the eve of the motion, it paid Mr. Ramalingam a further sum of $9,000 to become current with the order, thereby removing Mr. Ramalingam's objection that State Farm could not be heard on the variation motion because it had not complied with the Order.

I believe it is appropriate for me to consider the Insurer's conduct in relation to the variation proceeding before me, and leave to the hearing arbitrator the questions of State Farm's non-compliance, lateness, withholding and delay in payments under the Order of September 5, 2003. In my view, the proper place for dealing with those considerations is at the conclusion of the overall hearing.

Improper, vexatious or unnecessary proceedings

For the reasons given above, I restrict my reasons to the variation application and the cross-motion for continued interim benefits before me.

Overall, the parties made efficient use of the Commission's time. The parties filed reports, written submissions and Affidavit evidence. The proceeding before me consisted of oral submissions and required rulings. I reject the submission that there was anything improper, vexatious or unnecessary in the Applicant's response in seeking to maintain interim income replacement benefits. In my view, his response was appropriate, timely and more efficient than bringing a similar motion at a later date.

Conclusion on entitlement to expenses

I award the Applicant his expenses of the proceeding because he had a greater degree of success in the overall outcome of the proceeding. He obtained continuing payment of interim income replacement benefits. If the parties are unable to agree on the amount of expenses, they may seek an assessment.

December 1, 2004

Suesan Alves Arbitrator

Date