Neutral Citation: 2005 ONFSCDRS 186

FSCO A03-001311 and A03-001312

BETWEEN:

THANH THUY THI PHAN, also known as THUY THI THANH PHAN, and as THI THANH THUY PHAN

Applicant

and

WATERLOO INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: Suesan Alves

Heard: By telephone conference call on December 9, 2005

Appearances:

L. Brent Vickar for Mrs. Phan

Helen Friedman for Waterloo Insurance Company

Issue:

Which party is liable to pay the other's expenses incurred in respect of this arbitration under section 282(11) of the Insurance Act R.S.O. 1990, c.I.8?

Result:

Mrs. Phan is liable to pay Waterloo's arbitration expenses, assessed in the amount of $13,864.45, inclusive of G.S.T.
Mrs. Phan's claim for expenses is dismissed.

ANALYSIS:

Background

Mrs. Phan commenced two arbitration applications and claimed medical, caregiver and housekeeping benefits as a result of two motor vehicle accidents. Both Mrs. Phan and Waterloo claimed their arbitration expenses. The Financial Services Commission combined the arbitration files. There was a preliminary issue hearing, at which Arbitrator Sone held that Mrs. Phan was precluded from arbitrating her medical benefit claims. At the main arbitration hearing, I dismissed her claims for caregiver and housekeeping benefits, and reserved on the issue of expenses.

Waterloo claims its expenses of the arbitration based on its success. Mrs. Phan submits that the preliminary issue which Waterloo raised was novel, and neither party should receive its expenses of that hearing. Mrs. Phan also submits that she offered to settle the arbitration on the eve of the main hearing, by consenting to a dismissal of her claims, without expenses, and that I should therefore exercise my discretion to deny Waterloo's expenses of that hearing.

Law

Section 282(11) of the Insurance Act gives an arbitrator the discretion to award a party all or part of their arbitration expenses according to criteria prescribed by regulation. The criteria which govern this expenses award are those set out in Ontario Regulation 275/03, namely: the degree of success; the existence of offers to settle; the novelty of the issues; the conduct of the parties and their representatives; and whether any aspect of the proceeding was improper, vexatious or unnecessary.

1. The proceeding

I find neither party prolonged the arbitration proceeding.

I find the Applicant's claim raised significant questions as to its legitimacy, and that those questions remained unanswered following the hearing. Within 15 days of the Applicant's submission of an application for accident benefits in relation to the first accident, the surveillance evidence raised questions as to whether anyone was providing caregiving and housekeeping services to Mrs. Phan as she claimed.

Mrs. Phan gave Waterloo conflicting documentation and information which suggested that she hired as many as four caregivers. Mrs. Phan clarified that there had been one caregiver, Ms. Le, who also provided housekeeping services at each of the three residences she occupied during the period of her claim. Waterloo obtained a statement from Ms. Le. There were significant conflicts between Ms. Le's statement and Mrs. Phan's testimony, which were unexplained. Surveillance conducted at various points in the claim contradicted the Applicant's evidence and Ms. Le's statement, with respect to the provision of services. Subsequent information raised questions as to whether Mrs. Phan met the qualifications under the Schedule, as her children's caregiver at the time of either accident.

Given these questions, it was incumbent on Mrs. Phan to adduce evidence which would resolve them. The alleged caregiver would have been a key witness. Ms. Le allegedly provided services based on a promise to pay, and stood to gain the entire proceeds of the arbitration. Mrs. Phan testified that she learned that Ms. Le would not attend the hearing about a week before the hearing. Counsel for the Insurer prepared for a hearing at which she expected to cross-examine the alleged caregiver, but was only informed at the hearing that Ms. Le would not attend. While the hearing was shortened as a result of the absence of the witness, Waterloo incurred needless expense in preparing for the hearing. The conflicts in the evidence and the questions raised by Mrs. Phan's claim remained unanswered following the hearing, and I dismissed her claims for caregiver and housekeeping benefits.

2. Offers to Settle

On the day before the hearing, counsel for the Applicant sent a letter to counsel for the Insurer by facsimile, in which the Applicant offered to consent to a dismissal of the arbitration, without expenses. The Applicant asks that I exercise my discretion in her favour, and disallow the Insurer's expenses following the making of that offer.

I find the letter was an Offer to Settle within the meaning of Rule 76.1 of the Dispute Resolution Practice Code, Fourth edition — Updated October 2003, because it was made in writing, after mediation, before the conclusion of the hearing, was served on counsel for the Insurer, contained the full terms of the offer, set out the time period during which it remained open for acceptance, and showed the date and time of service by facsimile at the top of the document.

Rule 7.3 provides that when a document is served by facsimile, service takes place on the day that the document is sent. However, the written offer was open for acceptance by the Insurer for a total of 17 minutes from the time it was faxed to counsel for the Insurer. For this reason, I am not prepared to give it any weight.

3. Novelty of the Issues

Counsel agreed that the preliminary issue was somewhat novel. That issue was whether Mrs. Phan's delay, without any explanation, in returning an OCF-14 form, some 28 months after the proposed treatment plan, meant that she failed to provide the DAC assessors with information reasonably required to assess her claim, and was therefore precluded from mediating and arbitrating her claim for medical benefits. Arbitrator Sone found that the Applicant's delay was unreasonable, made the DAC system unworkable, and therefore found that Mrs. Phan failed to provide the DAC with information reasonably required to assess her claim. She concluded that Mrs. Phan was precluded from arbitrating her claims for medical benefits.

4. Degree of success

The Insurer was entirely successful; the Applicant entirely unsuccessful.

5. Conduct of the parties and representatives

Neither party made submissions on this criterion.

Conclusion on entitlement

The Applicant submitted that each party should bear its own expenses of the preliminary issue hearing as that issue was somewhat novel. That approach may be an appropriate one, because, as between the parties, the hearing eliminated a claim on a procedural basis, spared the parties the need and expense of calling witnesses to prove a case on the merits at the main hearing, and thus minimized expense for both parties.

Such an approach may also be appropriate because by raising the issue, the parties provided the benefit of an arbitrator's interpretation of the legislation to other insureds and insurers. However, in my view, the consideration of any novelty in this case is outweighed by the fundamental questions raised, almost from the outset, by the Applicant's claim. The Insurer made repeated attempts to clarify those questions well before the arbitration was commenced.

While the Applicant clarified that only one individual provided the caregiving and housekeeping services claimed, Mrs. Phan was unable to satisfactorily answer most of the questions her claim raised. I conclude that the appropriate order in this case is that the Applicant pay the Insurer's expenses of the arbitration.

Although Mrs. Phan did not pursue her claim for expenses, in the interest of completeness, I dismiss her claim for expenses of the arbitration.

Conclusion on amount

Waterloo served its bill of expenses. Mrs. Phan took no issue with respect to the number of hours, fee rates or disbursements. I have reviewed the Insurer's bill and in the circumstances of this case, I allow the Insurer's expenses as submitted. I assess the amount payable by the Applicant at $13,864.45, inclusive of GST.

Order:

Mrs. Phan shall pay Waterloo's expenses, assessed at $13,864.45, inclusive of GST.
Mrs. Phan's claim for expenses is dismissed.

December 30, 2005

Suesan Alves

Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario