Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2005 ONFSCDRS 112
FSCO A03-000993
BETWEEN:
LLOYD ALISON VILLERS
Applicant
and
PILOT INSURANCE COMPANY
Insurer
DECISION ON EXPENSES
Before: Eban Bayefsky
Heard: Written submissions received by May 31, 2005 and a telephone conference call on June 3, 2005.
Appearances: David Morin for Mr. Villers Kevin Griffiths for Pilot Insurance Company
Issues:
The Applicant, Lloyd Alison Villers, was injured in a motor vehicle accident on June 19, 2000. In a decision dated March 17, 2005, I dealt with a preliminary issue concerning Mr. Villers' entitlement to statutory accident benefits under the Schedule.1 I made the following orders, while reserving on the issue of expenses:
- Mr. Villers is not catastrophically impaired as a result of the June 19, 2000 motor vehicle accident.
The issue in this further hearing is:
- Is either party entitled to its expenses incurred in respect of this arbitration proceeding?
Result:
- Pilot shall pay Mr. Villers' arbitration expenses in the amount of $3,047.89.
EVIDENCE AND ANALYSIS:
Sections 12(2) and (3) of the Expense Regulation (Regulation 664, R.R.O. 1990, as amended) states as follows:
(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. O. Reg. 275/03, s. 4.
(3) Upon the request of the insurer or the insured person, the arbitrator shall, for the purposes of awarding expenses, take into account all written offers to settle, if any,
(a) that were made after the conclusion of mediation and before the conclusion of the arbitration; and
(b) that were made in accordance with the rules of practice and procedure applicable to the proceeding. O. Reg. 275/03, s. 4.
(4) If the arbitrator is requested to take into account a written offer under subsection (3), the arbitrator shall have regard to the terms of the offer, the timing of the offer, the response to the offer and the result of the proceeding. O. Reg. 275/03, s. 4.
Each party's degree of success in the outcome of the proceeding
While Pilot was successful on the principal issue before me in this case, namely, whether Mr. Villers was catastrophically impaired as a result of the June 19, 2000 motor vehicle accident, I did not accept Pilot’s position on two important points in the proceeding.
First, Pilot initially raised the question of whether Mr. Villers was, in fact, catastrophically impaired, but focussed its evidence and submissions entirely on the issue of whether the accident significantly or materially contributed to Mr. Villers impairment. I proceeded to consider the question of causation on the basis that Mr. Villers, in fact, suffered from a catastrophic impairment.
Secondly, Pilot attempted to rely on the CAT DAC's general view that Mr. Villers had not suffered a catastrophic impairment as a result of the motor vehicle accident. Mr. Villers challenged the process followed by the DAC in this case. Based on certain flaws in the DAC’s process, I found that I could not rely on its general conclusion on causation. However, I did not accept Mr. Villers position that the DAC’s evidence ought to be disregarded altogether, and found that I could rely on the DAC’s and Dr. Mayer’s evidence as to the general medical considerations applicable to the issue of causation in this case.
In my view, these findings are important to the parties' relative success in the outcome of the proceeding.
Any written offers to settle
Mr. Villers made various attempts to discuss settlement with Pilot both before and after the hearing, including a specific monetary offer on May 31, 2004 for the medical and rehabilitation portion of the claim. Pilot did not respond to this offer. Shortly before the hearing, Mr. Villers and Pilot participated in a settlement discussion through the Financial Services Commission.
However, at that time, Pilot had apparently not given its counsel instructions to make Mr. Villers a settlement offer. Other than this, Pilot did not respond specifically to Mr. Villers' attempts to discuss settlement until after the hearing, at which point Pilot simply indicated that it did not wish to pursue Mr. Villers' suggestion of engaging in further settlement discussions through the Commission.
Mr. Villers submitted that Pilot failed to meaningfully participate in settlement discussions and that this left him with no alternative but to proceed to arbitration. Pilot submitted that, because Mr. Villers' May 2004 offer was only in respect of future benefits, it was not an offer to settle the benefits in dispute, and that, in any event, Pilot was under no obligation to compromise its rights. Pilot also submitted that Mr. Villers' offer was irrelevant given Pilot's ultimate success in the preliminary issue hearing.
Rule 76 of the Dispute Resolution Practice Code states, in part, that an arbitrator will consider a settlement offer provided it contains the "time period during which [the offer] remained open for acceptance." The May 2004 offer did not contain such information. However, Pilot did not dispute the validity of the offer on this basis, nor did it challenge the offer on any basis other than that it only referred to future benefits. I note, as well, that Rule 76.4 of the Practice Code states, in part, that a settlement offer expires on the "earlier of the expiry date stated in the Offer...or at the conclusion of the hearing." Finally, as suggested by Rules 1.1 and 81.1(b) of the Practice Code, the Rules are to be interpreted and/or applied in such a way as to produce the fairest and most just resolution of the matter. I, therefore, find that I have the authority to consider the May 2004 offer despite the absence of an expiry date.
Mr. Villers' settlement offer was limited in the sense that it was for the full amount of his anticipated medical and rehabilitation expenses and did not address the substantive issues in the arbitration, namely, his entitlement to case management services and to past and future attendant care benefits. Mr. Villers was also unsuccessful on the principal issue of causation in the preliminary hearing.
I nevertheless find that Mr. Villers' May 2004 correspondence constituted a meaningful settlement offer. Further, in my view, given the centrality of settlement discussions to the dispute resolution process, a party's efforts to resolve a case should not be disregarded, particularly where, as here, the other party has shown no interest at all in participating in meaningful settlement discussions. Section 12 (4) of the Expense Regulation specifically requires an arbitrator who has been asked to review a written offer to settle to consider the response to the offer, as well as the terms of the offer and the result of the proceeding. Therefore, while Mr. Villers was ultimately unsuccessful in the preliminary issue hearing, and while Pilot was under no obligation to enter into a settlement in this case, I find that Mr. Villers efforts to resolve the matter and Pilot’s lack of responsiveness are factors that ought to be taken into consideration in an award of expenses.
Whether novel issues were raised in the proceeding
The principal issue in this case (whether Mr. Villers had suffered a catastrophic impairment as a result of the accident) gave rise to three sub-issues: whether Mr. Villers was, in fact, suffering from a catastrophic impairment, the reliability of the DAC evidence, and whether Mr. Villers' impairment was caused by the motor vehicle accident. The first issue was not a contentious matter and did not raise novel issues. While Mr. Villers raised legitimate concerns about the DAC process, the question of whether, and to what extent, to rely on the DAC evidence was a relatively straightforward factual determination. The third and main issue of causation required a consideration and weighing of various facts, but did not raise novel issues.
Conduct that tended to prolong, obstruct or hinder the proceeding
Mr. Villers submitted that Pilot delayed the proceeding both by failing to produce documentation related to the damage to Mr. Villers' car and by having inappropriately contacted one of the DAC assessors in anticipation of his giving evidence at the hearing.
In my view, neither of these tended to prolong, obstruct or hinder the proceeding. Mr. Villers first requested the damage documentation on May 31, 2004 (roughly two weeks before the preliminary issue hearing) and obtained an order from the Commission on June 7, 2004 for Pilot to "make their good faith best efforts to produce the information to [Mr. Villers' counsel] no later than June 10, 2004." However, the order acknowledged the lateness of the request and stated that counsel for Pilot was not required to take any active steps to secure the information, other than to provide Mr. Villers' counsel with consent to obtaining it directly from Pilot. Mr. Villers' counsel pursued this information directly from Pilot, but it was not produced until well after the hearing. On the basis of the limited information before me, I am unable to determine that Pilot failed to "make their good faith best efforts" to produce the relevant material in a timely fashion. However, even if that were the case, in the preliminary issue decision, I considered the issue of causation in light of Mr. Villers' contention that the accident was "very serious, involving extensive damage..." and evidence to the effect that "repairs to the truck were estimated at approximately $9,000." Even if Pilot were in breach of its production obligations, I do not find that this prolonged, obstructed or hindered the preliminary issue hearing.
Similarly, even if Pilot's contact with the DAC assessor was inappropriate, this was only one of the issues Mr. Villers addressed in connection with the reliability of the DAC's evidence. I considered the issue of causation in light of Mr. Villers' concerns about the DAC process. This matter did not prolong, obstruct or hinder the proceeding.
Other than these issues, both parties and their counsel conducted the proceeding in a professional and efficient manner.
Whether any aspect of the proceeding was improper, vexatious or unnecessary
Mr. Villers submitted that he had "very proper and necessary reason for pursuit of this arbitration." Pilot did not dispute this, and I do not find, that any aspect of Mr. Villers' case was improper, vexatious or unnecessary. I find that the preliminary question of whether Mr. Villers' impairment was causally related to the motor vehicle accident was a legitimate issue for determination. Mr. Villers also needed to respond to this aspect of the case in part due to Pilot's lack of responsiveness to his attempts to discuss settlement.
CONCLUSION:
In considering the above criteria, and in the particular circumstances of this case, I find that Mr. Villers is entitled to twenty percent of his expenses. While Pilot's success on the principal issue before me in the preliminary hearing is an important factor in an award of expenses, it must, in my view, be balanced against Mr. Villers' success on some of the secondary issues in the case. It must also be considered in light of the fact that Mr. Villers' general arbitration was entirely proper and that he was fully entitled to respond to the preliminary issue given that it involved a legitimate question for determination. Finally, while Mr. Villers specific settlement offer was limited and while Pilot was ultimately successful on the preliminary issue, I find it significant that Pilot failed to meaningfully participate in any settlement discussions with Mr. Villers. In my view, an award of expenses must reflect not only the final result of a proceeding, but the general nature of the proceeding and the party’s interaction prior to the hearing, as contemplated by the criteria set out in the Expense Regulation. While Pilot was under no obligation to resolve the preliminary issue, and while there was no guarantee the matter would settle (particularly in light of the limited nature of Mr. Villers' May 2004 offer), I find that Pilot disregarded a vital element of the dispute resolution process and, to this extent, required Mr. Villers to proceed to the hearing and incur significant additional expenses. In all of the circumstances, I find that Mr. Villers is entitled to twenty percent of his expenses.
Mr. Villers claims expenses in the amount of $17,210.33. However, a portion of this pertains to work done prior to the point at which Mr. Villers began to prepare his Application for Arbitration (namely, July 15, 2003). Pursuant to section 282(11) of the Insurance Act and section 12(2) of the Expense Regulation, I only have the authority to order expenses in respect of an "arbitration proceeding." Therefore, Mr. Villers' claim must be restricted to fees, disbursements and GST incurred as of July 15, 2003. Based on the Bill of Costs filed by Mr. Villers' counsel, this totals $15,239.47 (fees and GST of $13,807.60 and disbursements and GST of $1,431.87). Twenty percent of this is $3,047.89.
August 11, 2005
Eban Bayefsky Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2005 ONFSCDRS 112
FSCO A03-000993
BETWEEN:
LLOYD ALISON VILLERS
Applicant
and
PILOT 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:
- Pilot shall pay Mr. Villers' arbitration expenses in the amount of $3,047.89.
August 11, 2005
Eban Bayefsky Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.