Neutral Citation: 2004 ONFSCDRS 25

FSCO A02-000845

BETWEEN:

HAROLD TROTTIER

Applicant

and

ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON EXPENSES

Before:

Eban Bayefsky

Heard:

Written submissions received by August 12, 2003 and a telephone conference call on September 26, 2003.

Appearances:

Andrew Kerr for Mr. Trottier

Peter Trueman for Royal & SunAlliance Insurance Company of Canada

The Applicant, Harold Trottier, was injured in a motor vehicle accident on December 20, 1999. In a decision dated April 29, 2003, I dealt with his claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

The quantum of Mr. Trottier's income replacement benefits is $237.05 per week, as of May 26, 2002. Royal shall pay Mr. Trottier interest of $230.55 on these benefits.
Mr. Trottier shall repay to Royal $40,267.52, plus interest of $475.16.
Royal shall pay Mr. Trottier a special award of $350.

The issue in this further hearing is:

Is Mr. Trottier or Royal entitled to their expenses incurred in respect of this arbitration proceeding?

Mr. Trottier is entitled to $4,100.22 in respect of his arbitration expenses.

The Expense Regulation sets out the relevant criteria for determining a party's entitlement to expenses. I will discuss the facts of this case as they pertain to each of the criteria (as they stood at the time of the arbitration). The parties have agreed on the maximum amount of expenses should either be found to be entitled to them, namely, $5,125.27 for Mr. Trottier and $4,974.25 for Royal & SunAlliance Insurance Company of Canada ("Royal").

(1) Each party's degree of success in the outcome of the proceeding

Royal was largely successful on the issues at arbitration, namely, whether Mr. Trottier's collateral benefits were deductible, the amount of interest Royal had to pay on the outstanding benefits, whether Mr. Trottier had to repay benefits to Royal with interest and whether Mr. Trottier was entitled to a rehabilitation benefit for home renovations. During the hearing, Mr. Trottier raised the issue of whether he was entitled to deduct his legal fees from any repayment. I indirectly ruled that he was not so entitled. Mr. Trottier was successful on his request for a special award and on Royal's request for a return of its assessment fee.

Royal submitted that it was overwhelmingly successful in the arbitration. Mr. Trottier argued that the award of expenses is not simply a results-based analysis and must take into account the whole arbitration process. Mr. Trottier pointed out that Royal had only conceded Mr. Trottier's calculation of the benefits owing at the beginning of the hearing and that this made it necessary to proceed through to an arbitration hearing to obtain a determination of quantum as well as an order for the payment of benefits. Mr. Trottier emphasized that Royal had only conceded the issue of entitlement before the hearing and had still not paid any benefits by the time of the hearing (the latter being a factor in the ordering of a special award).

(2) Conduct of either party that tended to facilitate or hinder the proceeding

Both parties conducted themselves reasonably and co-operated well so as to shorten and simplify the proceeding.

(3) Whether the proceeding or any position taken by either party was manifestly unfounded, frivolous, vexatious, fraudulent or an abuse of process

As noted, I rejected Royal's claim for a return of its assessment fee on the basis that Mr. Trottier had not commenced an arbitration that was frivolous, vexatious or an abuse of process. While I accepted most of Royal's arguments and while Mr. Trottier's positions regarding the deduction of legal fees and the costs of a home renovation were somewhat tenuous, I do not find that his approach in this arbitration was manifestly unfounded or vexatious. The two noted issues were, in any event, relatively small aspects of this case and did not significantly delay or complicate the arbitration proceeding. The principal issue in the hearing, namely, the deductibility of Mr. Trottier's long-term disability benefits was a legitimate issue for determination. I also found that Mr. Trottier was entitled to a special award in relation to Royal's initial termination of benefits, and in relation to Royal's failure to pay any benefits by the time of the hearing.

(4) The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding

The issues raised in this proceeding were not particularly complex, novel or significant. Nevertheless, they required a consideration of a variety of factual and legal matters, particularly with regard to the nature and, therefore, the deductibility of Mr. Trottier's long-term disability benefits. As noted, the issue of deductibility was a legitimate matter for determination and one of particular importance to Mr. Trottier, given the effect on the quantum of his benefits and the potential for repayment.

(5) Any written offer to settle, having regard to the outcome of the proceeding

On December 6, 2002, roughly seven weeks prior to the hearing, Royal served Mr. Trottier with a written offer to settle. The offer stated that Mr. Trottier would repay to Royal $40,267.52 less half of the legal expenses he incurred in pursuing collateral benefits, plus interest on the resulting $33,892.22. It also provided that Mr. Trottier would pay Royal its legal expenses and that Royal would pay Mr. Trottier his legal expenses to the point it conceded his entitlement to income replacement benefits.

Royal submitted that the offer represented a compromise which Mr. Trottier ought to have accepted since Royal was awarded a full repayment of benefits, without a deduction for Mr. Trottier's legal fees. Royal submitted that the settlement would have rendered the arbitration unnecessary since it dealt with the only issue required to be adjudicated, namely, the deductibility of Mr. Trottier's collateral benefits. Mr. Trottier submitted that the offer unreasonably failed to provide for the quantum and ongoing payment of income replacement benefits, as well as interest on the outstanding amounts. Mr. Trottier submitted that it would have been unreasonable for him to relinquish his rights, and fail to proceed, on matters that initially gave rise to and were ultimately determined in the arbitration (including a special award), particularly since Royal had only conceded his general entitlement to benefits prior to the hearing.

(6) Any other matter relevant to the proceeding and the awarding of expenses

In my view, there are no other matters relevant to determining the parties' entitlement to expenses.

Conclusion:

While Royal was largely successful in this arbitration, I agree with Mr. Trottier that an award of expenses must take into account the whole arbitration process and not simply the discrete issues at the hearing, particularly in light of the importance of facilitating an insured's access to the dispute resolution process. However, given that one of the factors to be considered is the actual outcome of the proceeding, an award of expenses must also reflect the relative success of the parties.

Mr. Trottier was well within his rights to proceed to the hearing, particularly since Royal had only conceded his general entitlement to benefits prior to the hearing. Mr. Trottier was also successful on a significant aspect of this case, namely, his claim for a special award, on the basis that Royal had unreasonably terminated his benefits and had not paid anything by the time of the hearing. Despite the extent of Royal's success in this case, I do not agree with Royal's suggestion that the outcome of the issue of deductibility was essentially a foregone conclusion. As noted, Mr. Trottier's arguments were not manifestly unfounded or frivolous; they were legitimate issues for determination and of particular importance to Mr. Trottier. For these reasons, I do not find that Mr. Trottier clearly ought to have accepted Royal's offer to settle, particularly since the offer reflected little, if any, compromise on the discrete issue of the deductibility of collateral benefits and since Mr. Trottier legitimately sought and obtained an order on the payment and specific quantum of benefits owing, as well as an order for a special award.

In all of the circumstances, I find that Royal ought to pay Mr. Trottier 80% of his expenses incurred during the arbitration proceeding, namely, $4,100.22.

February 25, 2004.

Eban Bayefsky Arbitrator

Date