Pembridge Insurance Company (Pafco Ins. Co.) v. Howden, 2004 ONFSCDRS 73

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2004 ONFSCDRS 73

Appeal P02-00031

Appellant

and

Respondent

Before:

David R. Draper

Representatives:

Grant R. Dow for Pembridge

David S. Wilson for Ms. Howden

Hearing Date:

March 5, 2004

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The parties will bear their own appeal expenses.

May 17, 2004

David R. Draper Director of Arbitrations

Date

Pembridge Insurance Company ("Pembridge") appealed from arbitration orders dated October 16, 2002 and January 23, 2003. It claimed the Arbitrator erred in law in ordering it to pay income replacement benefits ("IRBs") beyond the 104-week mark, a special award of 50 per cent of the outstanding benefits, and arbitration expenses assessed at $39,058.98. In a decision dated November 20, 2003, I partially allowed Pembridge's appeal on the special award and arbitration expense issues, but dismissed its appeal on IRBs. Both parties now claim their appeal expenses.

A. The Law

The power to award arbitration and appeal expenses is established in s. 282(11) of the Insurance Act. This subsection gives the adjudicator discretion to award expenses to the insured person or the insurer "according to the criteria established in the regulations." The question is which version of the regulation applies. Until recently, Ontario Regulation 664 read 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 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.

Effective October 1, 2003, this subsection was revoked and replaced by the following: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.

The parties agree that the new criteria are more restrictive. In particular, the list is now exhaustive, requiring the adjudicator to consider only the criteria listed in paragraphs 1 - 5. There is no longer a broad, "any other matter" criterion, as in paragraph 6 of the old subsection.

The appeal was heard in July 2003, before the new criteria came into effect. I issued my decision in November 2003, almost two months after the regulation was amended. My order states: "If the parties cannot agree on appeal expenses, they may request a determination by writing to the Commission within 30 days of this order, as set out in Rule 79.1 of the Dispute Resolution Practice Code." The parties were unable to resolve this issue and, therefore, counsel contacted me in early December 2003 for a determination.

Pembridge submits that because the old subsection was revoked, the new criteria apply to any cases where expenses are determined on or after October 1, 2003. Ms. Howden claims that she should recover her expenses whichever version applies. However, to the extent that it matters, she submits that Pembridge's position simply is not fair. Why, she asks, should her right to recover expenses depend on how quickly I was able to release my initial decision?²

Ms. Howden's position has considerable strength. The parties conducted themselves under a certain set of rules, including the potential expense consequences of their actions. The hearing was completed before the expense rules changed. It was my deliberations that took the matter beyond October 1, 2003.³

Similar arguments have been successful in the past. Until November 1996, only insured persons could be awarded their arbitration and appeal expenses. The Insurance Act was then amended to allow adjudicators to order expenses in favour of either insured persons or insurers. After this amendment, arbitrators and appeals adjudicators consistently held that the new provisions did not apply to arbitrations commenced before November 1, 1996. For example, in Pinto and General Accident Assurance Co. of Canada, (OIC A96-001246, April 10, 1997), the Arbitrator noted that insured persons often chose to pursue their claims through arbitration rather than court because in arbitration, insured persons typically were awarded their expenses and could not be ordered to pay the insurer's expenses. He concluded that "[t]o change the rules upon which Mr. Pinto commenced his application for arbitration would be arbitrary and unfair." I upheld this decision on appeal.⁴ In doing so, I specifically noted that I was not referred to any decisions holding that expense provisions are merely procedural and, therefore, operate retrospectively.

More recently, Ontario courts have had to deal with new cost provisions, including a new costs grid. The interpretation issues are similar. As with arbitration and appeal expenses, the general authority to order costs is found in the statute, with more specific rules in the regulations. According to s. 131 of the Courts of Justice Act, judges can determine by whom and to what extent costs should be paid "subject to the provisions of an Act or rules of court." Effective January 1, 2002, the rules governing costs in the Rules of Civil Procedure, which is the relevant regulation made under the Courts of Justice Act, were revoked and replaced with a new set of rules. Under the amended rules, costs are to be fixed by the court at the time they are awarded using new categories — partial and substantial indemnity — and based on a new costs grid.

Early decisions on the application of the new cost rules were inconsistent. Judges came to different conclusions on whether the new rules should be applied retrospectively. Some applied the new costs regime regardless of when the services were provided, but another line of cases, starting with Carleton Condominium Corp. No. 21 v. Minto Construction Ltd., (2002) 21 C.P.C. (5th) 308 (Ont. S.C.J.), held that the new rules did not apply to costs incurred before January 1, 2002.

In Carleton Condominium, all aspects of the case were completed before the new cost provisions came into effect, except for finalizing the calculation of damages and formalizing the judgment. The decision was delayed for reasons outside the control of the parties and, if it had been issued within the normal time frame, costs would have been determined under the old rules. Finally, applying the new rules would have meant significantly lower costs for the plaintiff. In these circumstances, Aitken J. concluded that the old rules should apply, noting that the parties' actions throughout were informed by the old rules.

While I find the Carleton Condominium approach attractive, it has been rejected by the Ontario Court of Appeal. In Canadian Broadcasting Corp. Pension Plan (Trustee of) v. BF Realty Holdings Ltd., 2002 CanLII 15157 (ON CA), [2002] O.J. No. 4313, the Court noted the split in the lower court decisions and agreed with the other line of cases. It held that cost provisions are procedural and, as a general rule, apply to any determination of costs made after their enactment, even if the services were performed before the change in legislation.

The situation in the CBC Pension Plan case closely paralleled Carleton Condominium. Most, if not all, of the relevant legal services had been performed before the cost rules changed: the court action was commenced in 1996; the relevant trial issue was decided on June 29, 2000; and the appeal was heard on December 5 and 6, 2001, a month before the cost provisions were amended. The Court released its decision on May 29, 2002, dismissing the appeal and awarding costs to the respondents "on a partial indemnity basis," reflecting the new approach to costs.

The respondents then filed their bills of costs, prepared on a partial indemnity basis, consistent with the Court's order. In response, the appellants made three arguments, although only one is relevant here. They argued that the costs should be calculated on a party and party basis (the old approach), not on a partial indemnity scale, because the appeal was initiated before the new rules came into effect. The difference was important because, according to the appellants, they would have to pay an additional $50,000 under the new rules.

The Court rejected the appellants' argument, concluding as follows:

As a general rule, enactments are not to be given retrospective effect in the absence of a clear expression of contrary legislative intent. That general rule, however, is subject to the established exception that procedural enactments are presumed to have a retrospective effect. This court has recognized that litigation costs are procedural in nature: see Shea v. Miller, 1970 CanLII 250 (ON CA), [1971] 1 O.R. 199 (C.A.) and Somers v. Fournier (2002), 2002 CanLII 45001 (ON CA), 214 D.L.R. (4th) 611 (Ont. C.A.).

The consequences of retrospective application of the new costs grid can be serious and, in some cases, highly prejudicial to the affected parties. In those circumstances, justice between the parties may require a court, in the exercise of its discretion concerning costs, to deviate from the strict requirements of the costs regime envisaged by O. Reg. 284/01. In our view, however, those cases will be rare and will normally depend on evidence of actual prejudice beyond the fact that the legal services in issue were rendered prior to January 1, 2002.

In this case, no demonstration of such prejudice has been advanced or established. There is no basis, therefore, to depart from the traditional approach of retrospective application of enactments in the nature of O. Reg. 284/01. The court's award of costs was made after O. Reg. 284/01 came into force. Accordingly, the scale of costs applicable to the costs award made in favour of the respondents is governed by O. Reg. 284/01. Thus, costs are to be calculated on a partial indemnity, rather than on a party and party, basis.

To understand the Court's approach, it is helpful to look at the earlier decisions cited in the CBC Pension Plan decision. In Shea v. Miller, judgment was entered, including an order that the defendant pay the plaintiff costs "forthwith after taxation thereof." Before the costs were taxed, the Rules were amended. The question was whether the Taxing Officer should apply the new provisions. To answer this question, the Court asked whether the new provisions were procedural or substantive. Although there was judicial disagreement on this point, the Court found that the weight of authority favoured the view that matters of cost are procedural and, therefore, have retrospective effect. However, the Court went on to hold that the critical date is when judgment is signed — the amended rules about costs only apply if they come into effect before judgment is signed. Therefore, in Shea v. Miller, the Court concluded that the new rules did not apply. As Schroeder J. put it:

While the amended Rule, being procedural, would ordinarily have retrospective effect in relation to pending actions, it does not operate so as to deprive a successful litigant of the costs payable to him under a judgment which was signed and entered before its enactment. The rights of the parties were at that time merged in the judgment and could not be divested by the provisions of the new and subsequently enacted Rule..

Due to the factual situation in Shea, the Court did not specifically address two questions of interest in later cases: What happens if judgment is on reserve when the changes come into effect? What happens if judgment is issued before the changes come into effect, but the judgment does not include an order for costs?

In Somers v. Fournier, the other decision cited by the Court of Appeal in CBC Pension Plan, an action was brought in Ontario arising out of an automobile accident in New York State. The issue was which law to apply. The Court of Appeal upheld the motion judge's conclusion that the substance of the claim should be decided under New York law, but that Ontario law governed the procedural aspects of the case. With respect to costs, the Court of Appeal agreed with the motions judge that costs are procedural and, therefore, Ontario cost rules applied. In doing so, the Court discussed the role of costs:

Traditionally, costs have been regarded as a form of indemnification of the party to whom they are awarded for the legal fees and expenses incurred in litigation (see Bell Canada v. Consumers' Association of Canada, 1986 CanLII 49 (SCC), [1986] 1 S.C.R. 190, 26 D.L.R. (4th) 573 and Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3, 108 D.L.R. (4th) 193). While that indemnification principle continues to inform awards of costs, it is not the exclusive, or necessarily the predominate, function of such awards. In contemporary litigation, costs serve many purposes. Among those purposes are the goals of encouraging settlement and facilitating the management and control of the litigation process. (See, generally, Mark M. Orkin, O.C., Costs: The Bottom Line (Toronto: Law Society of Upper Canada, 1999).)

Viewed from a multi-purpose perspective, therefore, costs are "a means by which the ends of justice are attained" (Sutt v. Sutt, at p. 175 O.R., per Shroeder J.A.).

They are an essential tool designed, in the words of La Forest J. in Tolofson, to " make the machinery of the forum court run smoothly" and to aid Ontario courts in "administer[ing] [their] machinery as distinguished from [their] product" (at pp. 1067-68 and pp. 1071-72 S.C.R., pp. 318 and 321 D.L.R.).

Finally, costs of litigation are incidental to the determination of the rights of the parties. They are not part of the lis between litigants. In my view, the motions judge correctly concluded (at para. 61): [page 234]

Costs are a defining part of our civil litigation process. They are appropriately characterized as procedural since with the discretion granted, particularly to trial courts, the "machinery" of the Court can be enabled to work effectively. A particular example of the operation of that machinery is seen in the application of Rule 49 dealing with offers to settle.

Shortly after CBC Pension Plan, the Court of Appeal reaffirmed its interpretation in a case dealing with appeal costs. In Universities'Reciprocal Insurance v. Halwell Mutual Insurance Co. et al. (2002), 2002 CanLII 27712 (ON CA), 217 D.L.R. (4th) 314, the appeal was heard in August 2000, well before the costs provisions changed. However, the Court did not release its decision until August 2002, after the change, concluding as follows: "In the result, I would dismiss the appeal with costs. If the parties cannot agree on the amount of such costs, the respondent may submit a bill of costs with brief submissions within 10 days and the appellant may respond within 10 days thereafter."

The parties could not agree and, on the assessment, the appellant argued that because the appeal was fully argued prior to the advent of the new costs grid, the old costs regime ought to apply. The Court rejected this argument, citing the CBC Pension Plan decision which "held that the new costs grid is procedural and therefore retroactive in its application, as long as the costs were awarded after the new grid came into effect. There remains a discretion for exceptional circumstances. In this case, the new costs grid applies."

The Court of Appeal's approach is straightforward and easy to apply, but can lead to harsh results. It has been followed, although with some reliance on the "rare case" discretion.⁵

For example, in Hodgson v. Canadian Newspapers Company Ltd. et al., (2003), 2003 CanLII 44877 (ON SC), 228 D.L.R. (4th) 732, the initial decision was released in July 1998, awarding damages to the plaintiff and ordering that party-and-party costs should follow the event unless either party wished to contend otherwise. After the defendant exhausted its appeal rights, the matter returned to Lane J. to deal with costs.

The parties disagreed on which costs regime should apply. Mr. Justice Lane's primary conclusion was that because costs were awarded in his original decision, they should be assessed according to the rules in effect at that time. Alternatively, he held that if the costs award could not be viewed as having been made in the original decision, he would exercise the discretion referred to in CBC Pension Plan "because to adopt the present regime would be highly prejudicial to the defendant as is apparent from the discrepancy between the Bill prepared by the plaintiff in 1999 and that contained in the current submissions. All the work was done years before the costs grid was put in place and the reasonable expectations of the parties are best measured by the former regime. The bill would have been assessed in 1999 but for the ruling I made that the assessment should be postponed in the light of the pending appeal in order to ensure that the process was cost effective."

In Waxman v. Waxman, 2003 CanLII 32907 (ON SC), [2003] O.J. No. 87, the proceedings concluded well before the rules changed, but judgment was delayed due to the judge's health. She held that, in the particular circumstances of that case, the old rules should apply:

The evidence and the written argument were completed well before January 1, 2002. All parties conducted themselves in the reasonable expectation that the old regime would be applied - there was no new regime until after all of the costs had been incurred. They made offers to settle bearing in mind the costs consequences then in effect. Morris [plaintiff] had a reasonable expectation that if he were successful at trial and obtained judgment for more than his offer(s) to settle, he would be entitled to solicitor and client costs, with indemnity for all reasonable legal fees for all of the trial. Given the manner in which the Defendants pleaded and conducted their case, if successful, Morris could reasonably expect to receive solicitor and client costs throughout [which the judge found would "greatly exceed" costs on a substantial indemnity scale under the new rules].

There is another reason the application of the new regime would result in a substantial injustice to the Plaintiffs. All counsel have kindly refrained from referring to my personal situation, but the fact remains that, while unavoidable and beyond my control, my medical difficulties were the cause of the delay in the preparation and release of the Reasons. But for those difficulties, the Reasons would have been released many months before January 1, 2002 and the old regime would have applied. The imposition of the new regime on the Plaintiffs, in all the circumstances here, would be unjust.

Were the new regime to be applied, a serious injustice to the Morris parties would result for reasons beyond the fact that the services were rendered before January 1, 2002. In my view, this is one of the rare cases where justice requires the application of the old regime for services rendered prior to January 1, 2002. [par. 36 - 38]

In my view, these decisions reflect some discomfort with the Court of Appeal's approach, a discomfort I share. With respect, there is something odd about saying that costs are procedural because they are used to control the process, and then, on that basis, applying new cost rules to actions taken at a time when different rules were in effect. Nevertheless, the starting point is clear — changes in the cost provisions are procedural and, absent transition rules to the contrary, apply to any determination of expenses after they come into effect.

The next question is whether there is anything to distinguish the application of the new expense provisions. One possible distinction was offered that held some initial attraction. It was suggested that the changes to the expense provisions affected the parties' entitlement to expenses, while the changes to the cost provisions only affected the amount. Even assuming that is correct, it is my view that the decisions cited above stand for the proposition that provisions dealing with costs, not just the calculation of costs, are procedural. Given the similar role of costs and expenses, I conclude that provisions dealing with expenses must also be regarded as procedural.

The Court of Appeal left the door open to apply the old rules in "rare cases." I heard argument that arbitrators and appeal adjudicators do not have this discretion because it stems from the inherent jurisdiction of judges of the Superior Court of Justice. I cannot accept this argument. The importance of the Court of Appeal decisions is their analysis of the retrospective application of new rules about costs. If the Court's analysis were dependent on the unique powers held by judges, I would be far less inclined to apply it to dispute resolution proceedings under the Insurance Act. In my opinion, the better view is that, given the similar roles of costs and expenses, the Court's analysis applies to legislative changes involving expenses, including the residual discretion to apply the old provisions in rare cases.

Looking at this case, it is not like Hodgson, where the cost determination was interrupted for a lengthy period by other proceedings. Nor is it like Waxman, where the critical date passed due to an unusual delay by the adjudicator. Nor, in my view, has Ms. Howden shown any actual prejudice beyond the fact that the legal services were performed before October 1, 2003. As the respondent, she clearly did not rely on the old rules in deciding whether or not to appeal. Nor is there any suggestion that her preparation was influenced by the expense provisions. Given the issues raised in the appeal, she needed to respond, and did so efficiently and effectively. In these circumstance, I conclude that the new expense criteria apply.

As there were no offers to settle, and no basis for criticizing the conduct of either party, expenses are to be based on two criteria:

Each party's degree of success in the outcome of the proceeding; and,
Whether novel issues are raised in the proceeding.

Both parties still claim that, applying these criteria, they are entitled to recover at least some portion of their appeal expenses.

B. The Parties' Positions on Expenses

Ms. Howden contends that she should be awarded modest appeal expenses of $4,001. In her submission, she enjoyed substantial, although not complete, success. She submits that:

(a) The most significant aspect of Pembridge's appeal — its challenge to the Arbitrator's order for ongoing IRBs — had little merit and was dismissed.

(b) Pembridge was unsuccessful in having the special award rescinded. Although the amount of the award was reduced significantly, the reduction was less than the ongoing IRBs unsuccessfully challenged by Pembridge.

(c) Although her expenses were reduced, the amount of the reduction was so small in comparison to the entire account that this aspect of the appeal should be viewed as "vexatious" or "unnecessary," within the meaning of Rule 75.2(e) of the Practice Code.

Pembridge claims that its appeal, including the unsuccessful aspects, involved significant issues of general importance. In Pembridge's submission, I accepted many of its challenges to the Arbitrator's analysis, citing the following excerpts from my decision, dated November 20, 2003:

(a) Income replacement benefits

The Arbitrator started by analyzing the "complete inability" test in s. 5(2)(b) of the SABS-1996. He held that it is essentially the same as the "substantial inability" test used in previous versions of the SABS, with any difference being, at best, a matter of nuance. I disagree. The phrase, "substantial inability," is not just used in earlier legislation, it is the centerpiece of the test for initial entitlement to IRBs found in paragraph 1 of s. 4 of the SABS-1996. If the Arbitrator's interpretation were correct, there would be little, if any, difference between the pre and post 104-week tests. This is contrary to the structure of the legislation. (p. 3)

(b) Special award

I conclude that the Arbitrator's order cannot stand. The most obvious reason is that it is inconsistent with my appeal decision in Persofsky and Liberty Mutual Insurance Company, (FSCO P00-00041, January 31, 2003). Although Persofsky was issued after the Arbitrator released his decision, it was properly raised in the appeal and must be considered. (p. 6)

First, as discussed above, the Arbitrator misstated the test for IRBs after 104 weeks. This suggests that when it came to evaluating Pembridge's conduct, he may have had the wrong test in mind. As Pembridge submits, if the Arbitrator had the proper test in mind, he might have viewed its behaviour as "closer to the line" and ordered a smaller special award, or none at all.

Second, I conclude that the Arbitrator failed to consider all the relevant factors in ordering a special award at the maximum. According to the Arbitrator, Pembridge's main failing was in not reconsidering its decision as more information became available. The question is whether, and at what point, Pembridge should have known that its position was untenable and reversed its decision. (pp. 6-7)

In my opinion, the Arbitrator's reliance on Bogojevski was inappropriate. First, it is unclear to me what facts were available "as of the date of the hearing," before Bogojevski was issued. Second, and more importantly, the only fact disclosed in Bogojevski is that Dr. Doxey made negative comments about Dr. Siegel's report. (p. 8)

I agree that parties are well advised to pay close attention to the professional reputations of the experts they choose to engage, including any judicial and arbitral assessments. However, I do not see how Pembridge can be criticized for relying on Dr. Siegel based on a decision that merely accepts a different set of opinions, without commenting negatively on his qualifications, competence or impartiality. (p. 9)

In my opinion, the Arbitrator erred in failing to consider Ms. Howden's motion for interim benefits . . . If the interim benefits decision had gone against Pembridge, there might have been room to criticize its failure to reconsider its position in June, when it received Mr. Katz's report . . . It is difficult to understand how, in the face of this decision, Pembridge's refusal to pay IRBs can be viewed as unreasonable. (p. 11)

In my view, however, various rules suggest that the hearing arbitrator can only rely on evidence that he or she has admitted in the context of the arbitration hearing. For example, Rule 39.3 states that "[t]he hearing arbitrator will determine the relevance, materiality and admissibility of evidence submitted at the hearing . . . " (p. 13)

The transcript includes numerous discussions about the manner in which documents should be introduced and marked as exhibits.⁶ However, there is no discussion about the documents filed for purposes of the interim benefits motion. As a result, I find considerable strength in Pembridge's position that it was taken by surprise by the Arbitrator's reliance on Mr. Morgan's affidavit. The question is whether this was a serious error, undermining the decision. In my view, it was not. (p. 13)

(d) Mediation expenses

In this case, I find no legal basis for the Arbitrator's conclusion that the pre-mediation expenses are recoverable. (p. 18)

Pembridge submits that given its success in having the special award reduced by at least $20,000, and obtaining clarification and appellate guidance in a number of important areas, it should be awarded at least 75 per cent of its appeal expenses — $16,781.47.

In reply to these arguments, Ms. Howden submits that success is measured by the outcome, not whether the adjudicator accepts some aspect of the appeal argument. Therefore, on the IRB issue, she claims she was completely successful. She also notes that in her written submissions, she took the position that even if the Arbitrator's analysis was wrong, she still met the test — the conclusion that I reached in my decision. Ms. Howden also submits that she was almost entirely successful on the issue of arbitration expenses — a reduction of $92.00 being virtually meaningless in an award of almost $40,000.

C. Conclusion

The expense provisions have gone through two major revisions since 1990. Originally, expenses could only be awarded to insured persons, not insurers. Under this legislation, arbitrators and appeal adjudicators typically awarded expenses to the insured person, win or lose, as long as the claim was legitimate and the proceedings were conducted in a reasonable manner.

This changed in November 1996. Subsection 282(11) of the Insurance Act was amended to allow expenses to be awarded to either the insured person or the insurer. In addition, a list of criteria was added to the regulations.⁷ The adjudicator was to award expenses "having regard to" these criteria. I discussed these changes in Gray and Zurich Insurance Company, (P98-00047, June 11, 1999), as follows:

In my view, the new expense provisions signalled a change. Although most of the criteria have been discussed in earlier decisions, the analysis was affected by the fact that only one party could be awarded its expenses. 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.

The new criteria, introduced on October 1, 2003, continue the move toward a more results-based approach to expenses. The list of criteria have been changed to some extent, but more significantly, the criteria are now the only factors that can be considered and there is no longer a broad, "any other matter" criterion.

The outcome in this appeal must be viewed as mixed. Pembridge did not succeed on the IRB issue and had very minimal success on the expenses issue. While it raised legitimate challenges to the Arbitrator's approach on both issues, it is my view that this works to relieve Pembridge from paying Ms. Howden's expenses, but does not mean that Ms. Howden must pay Pembridge's expenses. On the special award, Pembridge enjoyed substantial, although not complete, success. In the circumstances, including Pembridge's significantly higher claim for expenses, I conclude that the most appropriate result, consistent with the criteria, is for the parties to bear their own appeal expenses.

May 17, 2004

David R. Draper Director of Arbitrations

Date

Footnotes

O. Reg. 275/03.
At the time of the expense hearing, I was scheduled to hear another case raising the same issue — Lanctot and Zurich Insurance Company, (P02-00033). I advised the parties in this case that I would not be releasing my decision until I heard Lanctot. The Lanctot hearing went ahead on April 14, 2004, as scheduled, but the parties resolved their dispute before I issued my decision.
At the expense hearing on July 18, 2003, I indicated that I expected to issue my decision within the Commission's performance standard of 60 to 85 days. That is, by October 12, 2003 — just beyond the effective date of the cost amendments. However, when I realized that my decision would be delayed, I wrote to the parties on September 29, 2003, advising that it would not be completed until November. The decision was released on November 20, 2003, although, as noted above, it did not decide the issue of expenses.
Pinto and General Accident Assurance Co. of Canada, (OIC P97-00031, November 26, 1997).
For decisions following CBC Pension Plan, see Aviaco International Leasing, Inc. v. Boeing Inc., [2003] O.J. No. 4876, Kinbauri Gold Corp. v. IAMGOLD International African Mining Gold Corp., [2003] O.J. No. 2855.; and Seed v. ING Halifax Insurance, [2002] O.J. 4226.
For example, see Arbitration Transcripts, Volume 1, pp. 58-61.
R.R.O. 1990, Regulation 664, s. 12.