Neutral Citation: 2004 ONFSCDRS 89
FSCO A03-000370
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
RAJAKUMARI VICTOR
Applicant
and
WAWANESA MUTUAL INSURANCE COMPANY
Insurer
REASONS FOR DECISION
Before:
Janice Sandomirsky
Heard:
March 15, 2004, at the offices of the Financial Services Commission of Ontario in Toronto.
Written submissions were received on April 5, 2004.
Appearances:
Patrick DaSilva for Ms. Victor
Seth Kornblum for Wawanesa Mutual Insurance Company
Issues:
The Applicant, Rajakumari Victor, was injured in a motor vehicle accident on February 27, 2002. She applied for and received statutory accident benefits from Wawanesa Mutual Insurance Company ("Wawanesa"), payable under the Schedule.1 Wawanesa denied entitlement to weekly income replacement, housekeeping and medical benefits. The parties were unable to resolve their disputes through mediation, and Ms. Victor applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The issues in this hearing are:
Did Ms.Victor suffer an impairment as a result of an accident, as defined in subsection 2(1) of the Schedule?
Is Ms. Victor entitled to receive a weekly income replacement benefit from March 6 to October 31, 2002, claimed pursuant to section 4 of the Schedule?
What is the amount of weekly income replacement benefit that Ms. Victor is entitled to receive pursuant to section 6 of the Schedule?
Is Ms. Victor entitled to payment of the following medical benefits, claimed pursuant to section 14 of the Schedule:
a) $510 for assistive devices provided by Trillium Equipment Devices; and,
b) $1,722.70 for transportation services provided by Pro Care Help Inc.?
Is Ms. Victor entitled to payment of $100 a week for housekeeping services provided by Ms. Sinnammah Nadarajah from February 28 to October 31, 2002, claimed pursuant to section 22 of the Schedule?
Is Ms. Victor liable to pay an amount to Wawanesa that does not exceed the amount assessed against Wawanesa in respect of the arbitration, pursuant to subsection 282(11.2) of the Insurance Act, because she commenced an arbitration that is frivolous, vexatious or an abuse of process?
Is Wawanesa liable to pay a special award pursuant to subsection 282(10) of the Insurance Act because it unreasonably withheld or delayed payments to Ms. Victor?
Is Wawanesa liable to pay Ms. Victor's expenses in respect of the arbitration under subsection 282(11) of the Insurance Act?
Is Ms. Victor liable to pay Wawanesa's expenses in respect of the arbitration under subsection 282(11) of the Insurance Act?
Is Ms. Victor entitled to interest for the overdue payment of benefits pursuant to subsection 46(2) of the Schedule?
Result:
Ms. Victor is not entitled to receive a weekly income replacement benefit from March 6 to October 31, 2002, claimed pursuant to section 4 of the Schedule.
Ms. Victor is not entitled to payment of medical benefits, claimed pursuant to section 14 of the Schedule.
Ms. Victor is not entitled to payment of $100 a week for housekeeping services provided by Ms. Sinnammah Nadarajah from February 28 to October 31, 2002, claimed pursuant to section 22 of the Schedule?
Wawanesa is not liable to pay a special award pursuant to subsection 282(10) of the Insurance Act because it unreasonably withheld or delayed payments to Ms. Victor.
Ms. Victor is not entitled to interest for the overdue payment of benefits pursuant to subsection 46(2) of the Schedule.
Wawanesa is not liable to pay Ms. Victor's expenses in respect of the arbitration under subsection 282(11) of the Insurance Act.
I have no jurisdiction to order an award pursuant to subsection 282(11.2) of the Insurance Act.
Ms. Victor shall pay Wawanesa $1,674.55, inclusive of GST and disbursements, for its expense of this arbitration
Background:
Two issues arose in this application just prior to the arbitration hearing. First, the Applicant's representative, Mr. DaSilva, sought to remove himself from the record. Second, Wawanesa sough an order for production of documents.
The background of these requests is as follows:
At the pre-hearing before Arbitrator Blackman on August 11, 2003, the parties identified and agreed to the issues in dispute noted above. Wawanesa undertook to provide particulars of its claim under subsection 282(11.2) for repayment of its assessment and the Applicant undertook to provide particulars of her claim for a special award. In addition, the parties gave various undertakings in regard to productions. The hearing was scheduled to begin on March 15, 2004.
On February 4, 2004, Wawanesa requested a resumption of the pre-hearing to discuss Ms. Victor's failure to comply with the production undertakings. In a letter dated February 9, 2004, Mr. DaSilva advised that he had been unable to contact his client.
The pre-hearing discussion was resumed on February 16, 2004. Mr. DaSilva did not participate. Mr. G.B. Callahan, legal counsel, appeared with a request from Mr. DaSilva that he be removed as the representative of record. Wawanesa sought an order to have the Applicant comply with the pre-hearing undertakings within 10 days.
In light of the fact that the Applicant could not be located, Arbitrator Blackman decided that it would serve little purpose to issue a further order to comply with the undertakings already given at the pre-hearing, and he put the matter over to the hearing on March 15, 2004.
Arbitrator Blackman stated that, if Mr. DaSilva wished to be removed as the Applicant's representative, he must provide a written request with reasons pursuanat to Rule 9.7 of the Dispute Resolution Practice Code (Fourth Edition, updated on October 2003)(the Code).
On February 23, 2004, Mr. DaSilva forwarded a written request stating that he had been unable to communicate with the Applicant, either by telephone or in writing, since September 2003. He provided her last known address, but gave no particulars of his efforts to locate his client. Arbitrator Blackman responded to this letter on March 4, 2004, and advised that he would put this request over to the beginning of the arbitration hearing.
The representation issue:
The hearing convened on March 15, 2004. The Applicant was not in attendance. At the commencement of the hearing, Mr. DaSilva outlined the steps he took to contact Ms. Victor after the pre-hearing discussion in August 2003. Mr. DaSilva sent her a letter on September 29, 2003, which was returned stamped "moved" "return to sender." He sent a letter by courier on March 4, 2004, which was also returned with a note "no one there by that name." Mr. DaSilva also tried telephoning Ms. Victor at her last know telephone number, and found that the line was not in service. Finally, he contacted her brother to try to locate her. He told the brother during their last conversation on March 8, 2004, about the arbitration hearing and asked that he remind his sister. Despite these numerous attempts, Mr. DaSilva was unable to connect with Ms. Victor.
On the basis of the information before me, I was satisfied that Mr. DaSilva made reasonable efforts to contact his client to try to comply with the production undertakings and prepare for the arbitration. As he is no longer in communication with Ms. Victor, I allowed Mr. DaSilva's request to be removed as the representative of record.
The substantive claims:
Wawanesa requested an order dismissing the Application for Arbitration. Wawanesa relied on Rule 34 of the Code, which provides that, where a party fails to produce documents in compliance with an order or agreement, an arbitrator may "make such other order as the arbitrator considers just." Wawanesa argued that it provided the necessary authorizations to the Applicant to obtain the necessary documents in order to proceed with the arbitration, however, no documents have been produced. Furthermore, having failed to appear at the hearing, Wawanesa argued that the Applicant did not meet the burden of proof to establish her entitlement to the benefits claimed. Therefore, the application ought to be dismissed.
As noted by Arbitrator Blackman, Ms. Victor participated in the pre-hearing discussion held on August 12, 2003, where the parties arranged for the date for the hearing of this application. A Notice of Hearing was sent to Ms. Victor's last known address that included the following statement: "If you or your representative do not attend the hearing, the arbitrator may dispose of the case in your absence and will not be entitled to any further notice of the arbitration proceedings." In the absence of any explanation for Ms. Victor's failure to respond to her representatives telephone calls and letters, and her failure to attend the hearing, I dismissed the Application for Arbitration on the basis that Ms. Victor did not discharge her onus of providing evidence in support of her claims.
The claim for expenses:
Wawanesa asked for its reasonable expenses of the arbitration pursuant to subsection 282(11) of the Insurance Act, which gives an arbitrator the discretion to award expenses to an insured person or the insurer "according to criteria established in the regulations."
Regulation 664 was amended by Ontario Regulation 275/03 effective October 1, 2003. It sets out the following list of criteria that an arbitrator must consider in determining a party's entitlement to expenses.
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 proceedings, including a failure to comply with undertakings and orders.
Whether any aspect of the proceeding was improper, vexatious or unnecessary.
This list of criteria is different from those set out in the Expense Regulation prior to October 2003. The question of which Regulation applies in this case was not addressed by the Insurer. I find, however, that the criteria the Insurer relies on in this case have not changed significantly. Therefore, regardless of which Regulation is applied, I find that Wawanesa is entitled to payment of its reasonable arbitration expenses for the following reasons. First, Ms. Victor effectively abandoned her claims by failing to appear at the arbitration hearing and, therefore, Wawanesa was entirely successful in the proceeding. Second, her failure to comply with production undertaking and orders amounted to conduct that obstructed and hindered the proceeding.
Wawanesa submitted its Bill of Costs for this hearing, including the following: 17.1 hours of Mr. March's time at a rate of $110.81 per hour; 7.2 hours of Mr. Kornblum's time at a rate of $83.10 per hour; and 12.4 hours of two legal clerks' time at a rate of $23.00 per hour, for a total claim for legal fees of $2,972.85.
Rule 78 of the Code sets out the maximum that may be awarded for legal fees, which is the hourly rate established under the Legal Aid Services Act, 1998. Rule 78 also provides that a higher amount for legal fees may be awarded to an insured person up to an hourly rate of $150. Legal fees for Wawanesa's counsel, therefore, is limited to the Legal Aid tariff, which provides for payment of a rate of $92.34 per hour for counsel with more than 10 years' experience and $73.87 per hour for counsel with less than four years' experience. Mr. March was called to the bar in 1990 and is entitled to the 10-year legal fee. Mr. Kornblum was called to the bar in 2000 and is entitled to the less than four-year legal fee. This reduces the claim for legal fees to $2,416.03.
This fee represents 24.3 hours of counsel's time plus 12.4 hours for the work of the legal clerks. I find that, in the circumstances of this case, the number of hours claimed is not reasonable for the following reasons. First, while I appreciate that Ms. Victor's failure to participate in the proceedings may have added some procedural steps to attempt to have her comply with the production orders, it also reduced the complexity of the hearing preparation as there would be little or no case to respond to. Second, the amount of counsel time spent on the production issues seems excessive in light of the very specific orders set out in Arbitrator Blackman's pre-hearing letter and it appeared that Wawanesa was made aware as early as November 2003 that Mr. DaSilva had been unable to locate his client. Finally, the Bill of Costs also includes a request for payment for time for lodging a complaint against the Applicant's representative with the Superintendent of Financial Services, which does not appear to be an item that falls within the list of legal fees payable by the insured person.
In determining the reasonableness of legal expenses, arbitrators often resort to formulas based on the number of hours of hearing. These ratios of hearing time to preparation time range from one to one to one to four. In light of the factors noted above, I find that one hour of preparation for each hour of hearing time is reasonable. In this case, most of the time was spent in the pre-hearing processes. The hearing itself took approximately two hours. Leaving aside the necessity of the lengthy pre-hearing processes, I find that 15 hours of legal time is reasonable in this case. Using Mr. March's higher hourly rate, that amounts to legal fees of $1,385.10, inclusive of GST.
Wawanesa also claimed payment of $1,028.08 in disbursements, which included $674.53 for the cost of service or attempting to serve witnesses. It also claims for payment of $159.00 in conduct money paid to three witnesses. While these may be allowable disbursements under the Regulation, there is no supporting documentation for the cost of servicing witnesses. Therefore, I am unable to determine that this is a recoverable disbursement in the circumstances of this case. In addition, the conduct monies paid to the witnesses can be recovered in light of the fact they did not appear at the hearing. Finally, there is a claim for $15.77 for transportation and travel expenses which was also not supported by documentation.
As a result, I find that Wawanesa is entitled to payment of the disbursements amount to $289.45, inclusive of GST, for its photocopy, courier, postage and fax costs.
The total arbitration expense Wawanesa is entitled to, including disbursements and GST, is $1,674.55.
Return of the Insurer’s assessment
Wawanesa also claimed that it was entitled to an order pursuant to the now repealed subsection 282(11.2) of the Insurance Act. Subsection 282(11.2), which gave an arbitrator the discretion to order an insured person to pay an amount no higher than the amount of the insurer's assessment fee, or filing fee, if the arbitrator found that the applicant "commenced an arbitration that was frivolous, vexatious or an abuse of process."
In this case, Wawanesa paid a $3,000 filing fee with its Response to the Application for Arbitration on April 9, 2003. Subsection 282(11.2) was repealed on October 1, 2003, and, therefore, the question of whether I had the jurisdiction to make such an order on March 15, 2004 arose and Wawanesa agreed to provide written submissions on this issue.
Wawanesa submitted that its right to seek repayment of its assessment fee from the Applicant was vested prior to the October 1, 2003 change in legislation. It relied on Arbitrator Manji’s decision in Herrera and Wawanesa (OIC A96-000442, November 19, 1997), which concluded that legislation dealing with substantive rights or liabilities is presumed only to apply prospectively and cannot be construed as having retrospective or retroactive operation unless such a construction is expressly, or by necessary implication, required by the language. Wawanesa also quoted Driedger on the Construction of Statutes, which states:
When new legislation comes into force or when legislation in force is repealed, the existing interests or expectations of individuals are often prejudiced. Vested or accrued rights are the interest and expectations that the law chooses to protect from the effect of new legislation or repeal.2
Accordingly, Wawanesa argued that by denying its vested right of entitlement to repayment of its assessment fee, Wawanesa's interest and expectations would be prejudiced, and as such, the legislation would fail to protect its rights. It submitted that, despite the repeal of section 282(11.2) of the Insurance Act, Wawanesa's entitlement to seek repayment from the Applicant was vested prior to October 1, 2003, and therefore, should not be affected.
This issue has been considered in other arbitration decisions.3 For example, in Argirovski and Zurich North America Canada (FSCO A02-001448, November 19, 2003), Arbitrator Muir concluded that he did not have jurisdiction to make an order under subsection 282(11.2). He also concluded that, even if he did have the jurisdiction, he would decline to make the order on the basis that the applicant did not receive notice that the insurer was seeking that order. In this case, Wawanesa's claim for repayment of the assessment fee was identified as an issue in dispute at the pre-hearing which Ms. Victor attended, therefore, it is clear she was notified of this issue.
The courts have recently considered similar issues in the context of new cost provisions. The Ontario Court of Appeal decision in Canadian Broadcasting Corp Pension Plan (Trustee of) v. BF Realty Holdings Ltd., 2002 CanLII 15157 (ON CA), [2002] O.J. No. 4313, held that:
As a general rule, enactments are not to be given retrospective effect in the absence of a clear expression of contrary legislative effect. 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.)
This decision has been followed in a recent appeal decision, Pembridge Insurance Company (Pafco Ins. Co.) and Lorna Howden (P02-00031, May 17, 2004), where Director of Arbitration, David Draper, reviews the Court of Appeal decision and concludes that changes in cost provisions are procedural and, absent transition rules to the contrary, apply to any determination of expenses after they come into effect, Further, that the same reasoning holds for the expense provisions under the Insurance Act.
The question remains, however, whether the provisions dealing with repayment of the filing fee under subsection 282(11.2) of the Insurance Act may also be considered as procedural. Without deciding this issue, I am satisfied that the payment of the filing fee prior to the change in the legislation does not result in a vested right of entitlement to repayment. The order for repayment of the fee is determined at the end of the arbitration process if the arbitrator finds that the applicant's case was frivolous, vexatious or an abuse of process. In this case, that determination is being made after the legislation granting the arbitrator the jurisdiction to make such an award has been repealed.4 As a result, I conclude that I have no jurisdiction to make an award under subsection 282(11.2), which was repealed on October 1, 2003.
June 10, 2004
Janice Sandomirsky Arbitrator
Date
Neutral Citation: 2004 ONFSCDRS 89
FSCO A03-000370
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
RAJAKUMARI VICTOR
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:
Ms. Victor’s application for income replacement benefits, medical benefits and housekeeping benefits is dismissed.
Ms. Victor is ordered to pay Wawanesa $1,674.55, inclusive of GST and disbursements, for its expenses of this arbitration.
Wawanesa's request for an order under subsection 282(11.2) is dismissed.
June 10, 2004
Janice Sandomirsky Arbitrator
Date
Mangat and Kingsway General Insurance Company (FSCO A03-000263, March 18, 2004); Howard and State Farm Mutual Automobile Insurance Company (FSCO A02-000004, March 29, 2004); Rashid and Wawanesa Mutual Insurance Company (FSCO A03-000787, March 23, 2004); Shalchi-Amirkhiz and Belair Insurance Company Inc. (FSCO A02-001155, March 22, 2004). But also see Nguyen and Royal & SunAlliance Insurance Company of Canada (FSCO A02-001662, February 17, 2004), where it was found that the insurer was entitled to repayment of its assessment fee.
Footnotes
- 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.
- Ruth Sullivan (Toronto: Butterworths, 1994), p.510
- See other decisions that have also found there was no jurisdiction to make a subsection 282(11.2) order:
- Girmondo and Royal & SunAlliance Company of Canada (FSCO A02-000654, April 16, 2004)