Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2005 ONFSCDRS 174
FSCO A02-001076
BETWEEN:
JOSEPHINE ABOUFARAH
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
DECISION ON EXPENSES
Before:
Eban Bayefsky
Heard:
By telephone conference call on November 18, 2005.
Appearances:
Humberto Geovo for Mrs. Aboufarah
Ryan M. Naimark for Allstate Insurance Company of Canada
Issues:
The Applicant, Josephine Aboufarah, was injured in a motor vehicle accident on July 5, 2001. In a decision dated September 30, 2003, I dealt with Allstate's claim that Ms. Aboufarah was precluded from proceeding with her arbitration because she had settled her claim on a full and final basis and because she had not rescinded the settlement in accordance with the Settlement Regulation. I made the following orders, while reserving on the issue of expenses:
- Ms. Aboufarah is precluded from proceeding with her arbitration.
Ms. Aboufarah appealed this decision. Her appeal was dismissed on May 5, 2005. The issue in this further hearing is:
- Is Allstate entitled to its expenses incurred in respect of the preliminary issue hearing?
Result:
- Allstate is entitled to its expenses in the amount of $1,500.
EVIDENCE AND ANALYSIS:
Rule 75.2 of the Dispute Resolution Practice Code, as it stood at the time of the preliminary issue hearing, set out the following criteria for an award of expenses, each of which I will address in turn:
(a) each party's degree of success in the outcome of the proceeding
Allstate succeeded on the principal issue in the preliminary issue hearing, namely, whether Ms. Aboufarah was precluded from proceeding with her arbitration due to the settlement she entered into with Allstate. Allstate was successful on each of the sub-issues in the case, namely, that the parties reached a settlement in the case, that Ms. Aboufarah's representative at the time, Mr. Joseph Nicosia, had the authority to settle Ms. Aboufarah's case on her behalf, that the cooling-off period began to run once Mr. Nicosia received the settlement documents from Allstate (or, at the latest, when Ms. Aboufarah reviewed the settlement documents), and that Ms. Aboufarah failed to notify Allstate that she was rescinding the settlement within the allotted time period.
(b) conduct of the insurer or the 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
The parties submitted, and I agree, that neither party engaged in conduct that delayed or hindered the proceeding. Both parties proceeded in an efficient and professional manner.
(c) 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
Allstate submitted that there was nothing in Ms. Aboufarah's position that was improper, but that she may have proceeded to arbitration unnecessarily given that she had settled her claims on a full and final basis and had not rescinded the settlement within the allotted time frame. Ms. Aboufarah submitted that proceeding to arbitration was entirely proper and was, in fact, a last resort for her.
I agree that nothing in Ms. Aboufarah's case was manifestly unfounded or improper. While I ultimately rejected her position on the issues in dispute, she raised legitimate arguments in response to Allstate's preliminary objection to her arbitration.
(d) the degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding
Allstate submitted that the issues in the preliminary hearing were not novel, but did involve complex, mixed questions of fact and law. Ms. Aboufarah submitted that the issues in the hearing were simple and straightforward.
I agree that this case involved mixed questions of fact and law. For example, the issue of whether Ms. Aboufarah was precluded from proceeding with her arbitration required a consideration of the factual question of whether the parties had settled the case, and the legal question of when the cooling-off period began to run. The case was not particularly complex and the hearing was completed in two days. However, the case did raise the significant question of how the Settlement Regulation ought to be applied and "arguably [led to] a middle path"1 between the two lines of decisions on when the cooling-off period begins to run.
(e) at the request of either party, any written offer to settle made in accordance with Rules 76 and 77, having regard to the outcome of the proceeding
The parties submitted that there were no written offers of settlement exchanged.
(f) any other matter related to the proceeding that the adjudicator considers relevant to the issue of whether any award of expenses is justified
Allstate submitted documents establishing total pre-hearing and hearing expenses of more than $13,000, which included $12,165 in counsel fees (81.1 hours at an hourly rate of $150). Counsel for Allstate confirmed that his hourly rate for the arbitration under the Legal Aid tariff would be $83.10, but submitted that, pursuant to Rule 78.1 of the Dispute Resolution Practice Code, I had the discretion to fix an hourly rate of up to $150 based on the "experience allowance established under the Legal Aid Services Act, 1998" I do not have any specific evidence of counsel's expertise in this area of law, but am generally aware of his frequent involvement in cases before the Commission and acknowledge his capable and professional handling of this particular case. However, at the time of the hearing in this case, he would only have been called for five years.In these circumstances, I am not prepared to award the maximum hourly rate, but am prepared to increase the applicable rate to $100. At this rate, Allstate's maximum claim for expenses would be $9,315.73 (consisting of $8,110 in legal fees, $567.70 in GST, and $638.03 in disbursements). At the expenses hearing, Allstate submitted that, in all of the circumstances of this case, a reasonable award of expenses would be $7,000.
Ms. Aboufarah acknowledged Allstate's success in these proceedings, but submitted that Allstate's specific request for expenses would create too great a burden for her. I am prepared to consider Ms. Aboufarah's concerns. However, in the absence of specific information as to her financial circumstances, I find that the reasonableness of Allstate's request for expenses should be determined primarily on the basis of the other criteria discussed above.
Conclusion
Allstate was entirely successful on the issues in this case. However, as noted, Ms. Aboufarah's position was not manifestly unfounded or improper. Neither the issues nor the hearing itself were particularly complex. Ms. Aboufarah raised legitimate issues for determination in response to Allstate's preliminary objection. In particular, Ms. Aboufarah's response raised the important issue of when the cooling-off period begins to run and required a determination of how the Settlement Regulation ought to be applied in the somewhat unique circumstances of this case. Therefore, in considering the applicable criteria, and in the particular circumstances of this case, I find that Allstate is entitled to an award of expenses in the amount of $1,500.
December 15, 2005
Eban Bayefsky Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2005 ONFSCDRS 174
FSCO A02-001076
BETWEEN:
JOSEPHINE ABOUFARAH
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Mrs. Aboufarah shall pay to Allstate its expenses in the amount of $1,500.
December 15, 2005
Eban Bayefsky Arbitrator
Date