Neutral Citation: 2005 ONFSCDRS 71 FSCO: A03-000395, A03-000396 and A03-000397

BETWEEN:

MOUSTAFA ABDALA-AMIN and AWIL MOALIN AHMED and HAJIO ELMI Applicants

and

GUARANTEE COMPANY OF NORTH AMERICA Insurer

DECISION ON EXPENSES

Before: Anne Sone

Heard: Written Submissions Received By January 11, 2005. November 25, 2004, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Moustafa Abdala-Amin, Awil Moalin Ahmed and Hajio Elmi, all in person Sarah Small for Guarantee Company of North America

Issues:

The Applicants, Moustafa Abdala-Amin, Awil Moalin Ahmed and Hajio Elmi, claimed to have been injured in a motor vehicle accident on May 25, 2002. In a decision dated April 21, 2004, Arbitrator Skinner dealt with their claims for statutory accident benefits under the Schedule.¹ She made the following orders, while reserving on the issue of expenses:

The preliminary issue hearing was not adjourned.
Mr. Abdala-Amin, Mr. Ahmed and Ms. Elmi were not involved in an accident on May 25, 2002.

The issues in this further hearing are:

Is Guarantee liable to pay the Applicants' expenses in respect of the preliminary issue hearing under subsection 282(11) of the Insurance Act, R.S.O. 1990, c.I.8?
Is any one or all of the Applicants liable to pay Guarantee's expenses incurred in respect of the preliminary issue hearing under subsection 282(11) of the Insurance Act?
If so, what is the correct amount of the expenses under subsection 282(11) of the Insurance Act?

Result:

Guarantee is not liable to pay the Applicants' expenses in respect of the preliminary issue hearing.
The Applicants are jointly and severally liable to pay Guarantee's expenses incurred in respect of the preliminary issue hearing.
The expenses that the Applicants are jointly and severally liable to pay Guarantee in respect of the preliminary issue hearing are fixed in the amount of $7,373.11.

EXPENSES:

Entitlement

Subsection 282(11) of the Insurance Act gives arbitrators the discretion to award expenses to parties at an arbitration hearing, according to criteria prescribed by the Regulations. Guarantee brings its claim for expenses under Regulation 664² of the Insurance Act. At the hearing, the Applicants did not pursue a claim for expenses against Guarantee.

The current version of Regulation 664 requires an arbitrator to apply the following criteria:

(a) each party's degree of success in the outcome of the proceeding; (b) any written offers to settle made in accordance with Rule 76; (c) whether novel issues are raised in the proceeding; (d) the conduct of a party or party's representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders; and (e) whether any aspect of the proceeding was improper, vexatious or unnecessary.

These criteria, which are set out in section 12 of Regulation 664, are repeated in Rules 75 and 76 of the Dispute Resolution Practice Code (Fourth Edition Updated October 2003). I was not advised of any offer to settle that had been served in this matter.

With respect to criterion (c), the issue in dispute was not novel.

I find that the only relevant criteria are (a), (d) and (e), as set out above.

I apply criterion (a) of Rule 75 in Guarantee's favour since Guarantee was clearly successful in the outcome of the hearing.

At page 6 of her decision, Arbitrator Skinner stated the following:

In light of the unrebutted physical evidence demonstrating that the two vehicles did not collide, I find the Applicants were not involved in a motor vehicle accident on May 25, 2002. When asked, the Applicants were unable to offer any explanation for the discrepancy between their testimony and the physical findings of the insurer's expert witnesses. The Applicants' evidence concerning the accident was sparse and lacked detail. Specifically, I found I could not rely on their testimony concerning the mechanics of the alleged accident. Neither Mr. Abdala-Amin nor Mr. Ahmed were driving, which may account for the absence of detail in their testimony. Ms. Elmi's testimony concerning her car's speed and location at the time of impact was inconsistent and, at times, contradictory. I find the applicants evidence insufficient to rebut the insurer's evidence that there was no collision between the Applicants Mercury Sable and Phung Pham's Honda.

In summary, Arbitrator Skinner found that the Applicants were not involved in a motor vehicle accident on May 25, 2002. Despite this finding, during the Expense Hearing, the Applicants insisted that there had been an accident on May 25, 2002. I explained that I could not overrule Arbitrator Skinner's finding of fact that the Applicants were not involved in an accident. The Applicants confirmed that Arbitrator Skinner had advised them that they had to file a Notice of Appeal within 30 days of the date of her arbitration order. However, they stated that they had misunderstood the effect of her decision. They claimed not to be aware that they could be liable for expenses in connection with the proceeding.

Since the Applicants were unrepresented at the hearing, English is a second language for them, and they appear to have misunderstood the effect of Arbitrator Skinner's decision, I allowed the Applicants until the close of business on January 10, 2005 to confirm to me in writing that they have filed a Notice of Appeal in this matter.

I also advised that at this point, some seven months after Arbitrator Skinner's decision was released, it is up to the Director of Arbitrations to decide if there are reasonable grounds for granting an extension to the time for appeal. In addition, I noted that appeals to the Director are only on a question of law. I confirmed this information to them in a letter dated December 14, 2004.

On January 5, 2005, I received a letter dated December 28, 2004 from Ms. Elmi on behalf of the Applicants which stated the following:

This letter is regard to the absence of our court date. We were unable to attend our court date because we did not have a lawyer. After visiting many lawyers, their offers for an appeal were too expensive. They offered us two thousands dollars for each appeal. Due to this situation, we were unable to receive a lawyer. However, our last option was legal aid, but due to the holidays we were unable to receive any assistance. On behave of this issue; I would like to personally say that we are innocent people. I hope you have the time to put yourself in our condition and take into consideration about our situation. There are no other options for us. The decision lies in your hands. [sic] [I have made no changes to the grammar or spelling in the original letter.]

As set out in the above letter, the Applicants are not appealing Arbitrator Skinner's decision. Accordingly, I must render my decision on the basis of her findings.

Concerning the issue of conduct under criterion (d), Guarantee submitted that the Applicants conduct of the case caused a delay in the proceedings. On November 5, 2003, one week prior to the originally scheduled date for the preliminary issue hearing, the Applicants requested an adjournment to permit them additional time to obtain new representation. By letter dated November 5, 2003, Arbitrator Muir granted the Applicants' adjournment request, with Guarantee's consent, and rescheduled the preliminary issue hearing to March 9, 2004. Amongst other things, he directed the Applicants to provide the name of their new representative by December 12, 2003.

On March 8, 2004, one day before the beginning of the preliminary issue hearing, the Applicants again requested an adjournment of the hearing to allow them to obtain new representation. By oral decision, Arbitrator Sampliner denied their request for an adjournment.

The Applicants renewed their request for an adjournment before Arbitrator Skinner at the outset of the preliminary issue hearing. Guarantee objected to an adjournment of the proceeding.

Arbitrator Skinner was not satisfied that the Applicants had attempted to comply with Arbitrator Muir's direction to them on November 5, 2003. In her decision, she stated the following:

The Applicants did not provide the name of a new representative by December 12 or at any other time. Although they indicated that they had approached a lawyer in connection with this case, they could not specify when they had spoken with the lawyer or what the substance of that conversation had been. I found that the Applicants did not make reasonable efforts to obtain new representation. I did not find that there were exceptional or unforeseeable circumstances that would warrant a second adjournment in this case.

Under these circumstances, Arbitrator Skinner denied the adjournment request. I find that the Applicants failure to make reasonable efforts to obtain new representation somewhat prolonged the proceedings.

The final criterion I must consider under (e) is whether any aspect of the proceeding was improper, vexatious or unnecessary. Arbitrator Skinner stated that the Applicants evidence concerning the accident was sparse and lacked detail. Ms. Elmi had been the driver of the vehicle. Arbitrator Skinner stated that "Ms. Elmi's testimony concerning her car's speed and location at the time of impact was inconsistent and, at times, contradictory." As a result, she found "the applicants evidence insufficient to rebut the insurers evidence that there was no collision between the Applicants Mercury Sable and Phung Pham's Honda." I did not conduct or attend this hearing. I have already noted that the Applicants were unrepresented, and that English is a second language for them. It is difficult for me to determine if the proceeding was improper, vexatious or unnecessary and, accordingly, do not make this finding.

As a result of my findings in connection with criteria (a) and (d), as set out above, I order the Applicants to pay Guarantee's arbitration expenses, as set out below.

Assessment Fee:

Guarantee sought reimbursement of the assessment fee of $3,000 it had paid against all three Applicants. To support this claim, it referred to the arbitration decision of Dirie and Guarantee Company of North America³ In that case, Arbitrator Sampliner found that Mr. Dirie had commenced the arbitration with the knowledge that his claim was fraudulent. He further found that this constituted an abuse of process. He then ordered that Guarantee was entitled to recover its $3,000 assessment fee from Mr. Dirie, pursuant to subsection 282(11.2) of the Insurance Act However, that section of the Act has now been amended and no longer contains the provision which allowed relief up to the amount assessed against the insurer. I find that I no longer have the authority to order the Applicants to reimburse Guarantee for the assessment fee it paid in the amount of $3,000.

Quantum:

Legal Fees

Given the nature of the preliminary issue and the outcome of the preliminary issue hearing, Guarantee asked for its expenses on a substantial indemnity basis, including legal fees in the amount of $11,351.50; however, it recognized that pursuant to Rule 75 of the Code, the maximum amount that may be awarded to an insured person or an insurer for legal fees, is an amount calculated using the hourly rates established under the Legal Aid Services Act, 1998, for professional services in civil matters before the Ontario Superior Court of Justice. As a result, it claimed the following amounts as legal fees, pursuant to Rule 75 of the Code:

advising and receiving instructions for the commencement of proceedings (2.5 hours x $73.87) $184.68
preparation of pleadings (insurer responses) (2.0 hours x $73.87) (2.0 hours x $23.00) 193.74
preparation for issue hearings (including pre-hearing) (2.0 hours x $73.87) 147.44
attendance at issue hearings (including pre-hearing) (4.0 hours x $73.87) 295.48
all necessary correspondence and communications (2.0 hours x $73.87) (1.0 hour x $23.00) 170.74
preparation for arbitration (preliminary issue hearing) (8.0 hours x $73.87) 590.96
attendance at arbitration (preliminary issue hearing) (8.0 hours x $73.87) 590.96

TOTAL: $2,174.00

Guarantee also claimed four hours of travel time at the rate of $73.87 per hour, for its counsel who was based in London, Ontario to come to Toronto for the hearing. This portion of their claim amounted to $295.48. Since Guarantee could have hired Toronto counsel, I do not find a charge for this travel time to be reasonable.

I find that the amounts that Guarantee has otherwise claimed for legal fees, at the Legal Aid Tariff hourly rates, for Ms. Sarah J. Small, lawyer and third year associate, at $73.84 per hour, and for Ms. Charlotte Collie, law clerk, at $23 per hour, to be reasonable, and order the Applicants to pay this amount of $2,174 plus $152.18 GST to Guarantee, totalling $2,326.18.

Disbursements

Once again, although Guarantee asked for disbursements on a substantial indemnity basis in the total amount of $7,847.62, it recognized that my authority was limited to the maxima set out pursuant to section 75 of the Code. In view of Rule 75 of the Code, it claimed the following for disbursements.

Expert Report Fees TSI Solutions Inc. $1,500.00

Origin and Cause Inc. 1,011.16

Expert's Attendance Fee Mr. Rob Seaton, TSI Solutions Inc. (5 hours x $200.00) 1,000.00

Mr. Sam Kodsi, Origin and Cause Inc. (5 hours x $200.00) 1,000.00

Courier Fees related to Arbitration 20.00

Photocopying 185.60

Total Disbursements: $4,716.76

Guarantee also claimed a mileage charge of $117.00 (390 kilometres x $0.30) for its counsel to drive from London, Ontario to attend the hearing in Toronto. Since, as stated above, Guarantee could have retained Toronto counsel, I do not find this charge to be reasonable.

I did not attend the hearing, so it is challenging for me to assess what is reasonable for disbursements. Both of Guarantee's experts testified, and Arbitrator Skinner relied on them to come to her decision. Accordingly, I find the amounts that Guarantee has otherwise claimed for disbursements pursuant to Rule 74 of the Code to be reasonable and order the Applicants to pay the amount of $4,716.76 plus $330.17 GST to Guarantee, totalling $5,046.93.

Conclusion:

For all of the above reasons, I order the Applicants, to pay Guarantee, jointly and severally, legal fees and disbursements in the amount of $6,890.76 plus $482.35 GST, which totals $7,373.11.

May 25, 2005

Anne Sone Arbitrator

Date

ARBITRATION ORDER