Neutral Citation: 2006 ONFSCDRS 35 FSCO A04-001771

BETWEEN:

EVELYN SILVA Applicant

and

YORK FIRE & CASUALTY INSURANCE COMPANY Insurer

REASONS FOR DECISION

Before: Eban Bayefsky

Heard: May 10 and June 16, 2005, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: No one for Ms. Silva Mark Fonseca for York Fire & Casualty Insurance Company

Issues:

The Applicant, Evelyn Silva, alleged that she was injured in a motor vehicle accident on June 18, 2003. York Fire & Casualty Insurance Company ("York Fire") denied Ms. Silva's claim for various medical benefits under the Schedule¹ on the basis that she had not been involved in an accident on June 18, 2003. The parties were unable to resolve their disputes through mediation, and Ms. Silva applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issues in this hearing are:

Was Ms. Silva involved in a motor vehicle accident on June 18, 2003?
Is either Ms. Silva or Ms. Silva's previous representative, Mr. Mohammed Muslim, liable to pay York Fire's expenses in respect of the arbitration, pursuant to sections 282(11) and 282(11.2) of the Insurance Act?

Result:

Ms. Silva was not involved in a motor vehicle accident on June 18, 2003. Her arbitration is dismissed.
Ms. Silva and Mr. Muslim are jointly and severally liable to pay York Fire's expenses in respect of the arbitration, in the amount of $1,943.52.

EVIDENCE AND ANALYSIS:

Background: Proceedings to Date

On August 24, 2004, Ms. Silva filed an Application for Arbitration in respect of her claims for medical benefits and the cost of medical assessments. At the time, Ms. Silva's representative was Mr. Mohammed Muslim. On September 17, 2004, York Fire filed its Response to the Application for Arbitration, alleging in part that Ms. Silva "was not a passenger in the vehicle alleged to have been involved in an accident."

The Commission scheduled a pre-hearing conference to take place on March 10, 2005, at the offices of the Financial Services Commission of Ontario. At that time, neither Ms. Silva nor Mr. Muslim attended. Ms. Connie Medeiros participated on behalf of York Fire, represented by Mr. Fonseca. The pre-hearing Arbitrator proceeded in Ms. Silva's and Mr. Muslim's absence. As set out in the pre-hearing letter dated March 16, 2005, the pre-hearing Arbitrator scheduled a hearing for May 10, 2005 to address the preliminary issue of whether Ms. Silva had been involved in a motor vehicle accident on June 18, 2003. The pre-hearing Arbitrator also noted York Fire's claim for expenses in respect of the arbitration, as well as her advice to Mr. Fonseca that he could pursue his expense claim in respect of Ms. Silva's non-attendance at the pre-hearing with the hearing arbitrator. The pre-hearing letter also contained a detailed explanation of the issue of expenses and stated that "an arbitrator may order one party to pay the other's expenses."

The preliminary issue hearing commenced on May 10, 2005, at the Financial Services Commission of Ontario. No one appeared for Ms. Silva. Mr. Fonseca represented York Fire. Mr. Fonseca sought to proceed with the preliminary issue, maintaining that there were significant issues concerning the propriety of Ms. Silva's claim that ought to be addressed.

I was concerned that Ms. Silva may not have received adequate notice of the hearing. The Commission had sent various letters to Ms. Silva in this matter, including a Notice of Pre-Hearing Discussion and a Notice of Hearing. Neither of these latter documents was returned to the Commission. However, the pre-hearing letter setting out the issues in this case was returned. Further, the Commission's letter of April 18, 2005 (advising Ms. Silva of the March 22, 2005 Court order transferring Mr. Muslim's files to the Law Society of Upper Canada and the steps Ms. Silva should take in the circumstances) was returned to the Commission. This letter also instructed Ms. Silva to advise the Commission as to whether she wished to proceed with a new representative or without a representative. The two letters that were returned had a line drawn through Ms. Silva's name and address. Over top this was affixed a printed label stating, in part, "Moved/Unknown...Return to Sender" with the Commission's postal code. The label appears to have been placed by Canada Post. Attempts to contact Ms. Silva by telephone, both before and during the preliminary issue hearing, were unsuccessful. Regarding the adequacy of notice of the hearing, Mr. Fonseca noted, in part, that his Productions Brief had been served by courier on Ms. Silva on or about April 12, 2005. However, it was not clear whether Ms. Silva had, in fact, received the brief.

In all of the circumstances, I was not satisfied that notice to Ms. Silva of the issues in this case had been sufficient and that she should be afforded a further opportunity to obtain representation and/or attend the hearing to address York Fire's significant allegations. I, therefore, adjourned the matter to a date to be arranged, and to provide Ms. Silva with a new notice of hearing and the relevant correspondence.

Subsequent to the first day of hearing, Mr. Fonseca advised that he had obtained a new address for Ms. Silva. The Commission scheduled the resumption of the preliminary issue hearing for June 16, 2005 at the Commission's offices in Toronto. By letter dated May 17, 2005 to Ms. Silva and Mr. Fonseca, I advised the parties of the proceedings to date and the steps to be taken. I indicated that the Commission would send a new Notice of Hearing to Ms. Silva at her new address, and that Ms. Silva would be provided with copies of the March 16, 2005 pre-hearing letter and the April 18, 2005 letter concerning Mr. Muslim's files. I noted that Mr. Fonseca had also undertaken to attempt to personally serve Ms. Silva with the new notice and other pertinent correspondence and materials.

On May 17, 2005, the Commission sent Ms. Silva a new Notice of Hearing at her new address. This document was not returned to the Commission. By letter dated May 20, 2005, Mr. Fonseca advised that his assistant "personally, and in my presence" served Ms. Silva on May 20, 2005 with the pre-hearing letter, the Notice of Pre-Hearing Discussion, the Commission's letter concerning Mr. Muslim, my letter of May 17, 2005, the new Notice of Hearing and York Fire's productions. Accompanying Mr. Fonseca's May 20, 2005 letter was a Statement of Service fully setting out the manner in which these materials were served upon Ms. Silva.

The hearing resumed on June 16, 2005. Mr. Fonseca attended. No one appeared for Ms. Silva. Based on the most recent activity in the case, particularly as set out in Mr. Fonseca's May 20, 2005 letter and the accompanying Statement of Service, I was satisfied that Ms. Silva had received proper notice of the hearing, including notice of the history of the proceeding and of the issues involved. The Notice of Hearing indicates that "if you or your representative do not attend [the preliminary issue hearing], the Arbitrator may dispose of the case in your absence and you will not be entitled to any further notice of arbitration proceedings." Pursuant to Rule 37.7 of the Dispute Resolution Practice Code, "where notice of the hearing has been sent to a party and a party does not attend..., the arbitrator may proceed with the hearing in the party's absence...and the party is not entitled to any further notice in the proceeding." Given my finding that Ms. Silva had received notice of the hearing, and given her non-attendance at the hearing, I found it appropriate to proceed in her absence.

The preliminary issue hearing proceeded on the basis of the following exhibits: York Fire's Brief of Productions, written statements of Leyla Masomi-Jorfian and Mohammad Masomi dated July 7, 2003 and a letter dated September 15, 2003 from Canmils Consultants Ltd. to York Fire. Mr. Fonseca submitted a Bill of Costs in respect of York Fire's claim for expenses of the arbitration. Mr. Fonseca made submissions on both the preliminary issue and the issue of expenses.

Facts

On June 19, 2003 (the day after the alleged accident), Ms. Leyla Masomi-Jorfian, York Fire's insured and the driver of one of the two cars alleged to have been involved in the collision, completed a "Self Reporting Collision Report" in which she noted that there were four occupants in each vehicle. On a "Collision Reporting Centres - Supplementary Information Form," Ms. Masomi-Jorfian stated that she was travelling westbound on Finch Avenue, west of Dufferin Street. She noted that the Applicant, Evelyn Silva, was a passenger in her car, sitting in the rear-left seat. She noted that her husband, Mr. Mohammed Mohamed-Masomi, was sitting in the front passenger seat and that another person, Lorena Narvaez, was sitting in the rear-right seat. Ms. Masomi-Jorfian noted that none of the passengers had been injured in the accident.

On June 24, 2003, Ms. Silva submitted an Application for Accident Benefits to York Fire, claiming that she had been involved in a motor vehicle accident as a passenger on June 18, 2003 while driving "W/B [westbound on] Finch Ave, West of Dufferin St." and that "due to the accident that occur [sic], I suffer from neck and lower back injuries."

On July 7, 2003, Ms. Masomi-Jorfian gave a written statement to York Fire in which she stated that she had met Ms. Silva and one of Ms. Silva's friends in a coffee shop on the day of the accident in order to interview Ms. Silva for a job as a "nail technician" in Ms. Masomi-Jorfian's salon. Ms. Masomi-Jorfian stated that the interview ended at approximately 11:00 p.m. and that she offered to drive Ms. Silva and her friend home. Ms. Masomi-Jorfian stated that the accident happened during this drive, while "travelling westbound on Finch Ave, west of Dufferin." Ms. Masomi-Jorfian stated that her husband was sitting in the front passenger seat and that Ms. Silva and her friend were sitting as "passengers in the rear seat of the vehicle." Ms. Masomi-Jorfian stated that neither Ms. Silva nor her friend said that they had been injured in the accident. Ms. Masomi-Jorfian stated that she offered to give Ms. Silva and her friend money for a taxi, but that they said they were "okay" and that they went home on their own.

On July 14, 2003, Ms. Silva gave a written statement to York Fire in which she stated that she had called Ms. Masomi-Jorfian (apparently on the day of the accident) about an advertisement in the newspaper for "housekeeping workers" and that she "was advised that their [sic] was a job for cleaning." Ms. Silva stated that she arranged to be picked up at her home by Ms. Masomi-Jorfian and that she was picked up along with her friend, Lorena, who was at her house at the time and who was also looking for work. Ms. Silva stated that Ms. Masomi-Jorfian drove (with her husband in the front passenger seat) and that she and her friend were in the back seat, with Lorena sitting "behind the driver." Ms. Silva stated that they were "travelling east bound on Finch towards Dufferin...." She said that, in the impact, she hit her head on the side of the passenger window, that she eventually got out of the car and went home with Lorena on the bus. She stated that she had a sore neck and back the following day.

On July 14, 2003, Ms. Lorena Narvaez gave a written statement to York Fire. Ms. Narvaez stated that the statement had been "translated to [her] by a Spanish interpreter" and that she could "understand and [was] able to communicate with her, with no problems." Ms. Narvaez stated that Ms. Silva had called her on the morning of the accident, asking if she would be "interested in doing a cleaning job at night." Ms. Narvaez said that she went to Ms. Silva's house at around 10:00 p.m. that night and was picked up by a woman and her husband. Ms. Narvaez stated that she sat in the "back seat behind the drivers seat." Ms. Narvaez stated that the accident happened while "travelling on Finch Avenue, near Dufferin Street...." She said that, after the accident, she and Ms. Silva "decided to go home by bus...."

On July 15, 2003, Ms. Silva underwent an in-home assessment at Canada Health Assessment Centre, where she was reported as saying that the accident happened while she was "travelling east along Finch Ave...[approaching] Dufferin Street...."

On July 17, 2003, Ms. Silva underwent a mental health assessment at Canada Health Assessment Centre, where she was reported as saying that she was "the back right passenger in the car...[and] that there were three other people with her in the car." On the same day, Ms. Silva underwent a driving anxiety assessment, in which she was reported as saying that she was "in the back right passenger position of the vehicle," that she was "travelling with 2 other passengers, the driver and a person in the front passenger position" and that "they were travelling east on Finch Ave at Dufferin St...."

On August 19, 2003, Canmil Consultants interviewed Ms. Narvaez on behalf of York Fire and through a Spanish interpreter. The relevant portions of the interview are as follows:

Q. York Fire Insurance has received a claim number YFH0AP60826-157 that lists you as the occupant of a vehicle that was involved in an accident at Finch Avenue West and Dufferin Street on June 18th 2003. Were you a passenger in a car involved in that accident?

A. It's all false.

Q. Were you in a car in an accident?

A. I wasn't in anything.

Q. What happened?

A. A gentleman came to speak to me. This gentleman is the father (grandfather) of a kid that attends the same school as my kid. He spoke to me at the school. At first he told me if I declared I was with a certain lady he would pay me $5,000 to $8,000 and it would be very simple and I didn't see him anymore. Later he called me over the phone. He told me that if I agreed to participate in this I should visit him at his house and bring him my social insurance number. I didn't have my social insurance number with me, he said that was OK, so long as I brought him a document containing all my information. I went to the house and I gave him my name and home address, I did not give him my phone number and that was all.

Q. Did this man explain why he was going to give you this money?

A. He said the only thing I should do is to say that I was going as a passenger with another lady. He told me that following week I would start going to therapy, that it was very good for me, because I would be exercising and that I would get one massage.

Q. What was the gentleman's name?

A. I think his name is Teodoro Silva, but I'm not sure about his first name.

Q. Did you go to therapy?

A. Yes (produces exercise sheets). These are the exercises I was given to do at home. Before going to therapy I had to go to this place (produces a business card) PMR, Pacific Medical Rehabilitation....These people were supposed to tell me what I should say. When I arrived at PMR, the daughter of Mr. Silva, her name is Evelyn, was already there and she was the one to instruct me because I don't speak English.

Q. After that?

A. ...From the following week I was to attend therapy and three days a week and this until the day we were going to meet with someone from the insurance company who was going to pay. Before that though, we were taken to a legal office to meet a lawyer (produces a business card for Mohammed Muslim...)....

Q. What happened next?

A. Then took place the meeting with the insurance. We had an interview where I was supposed to say that I was in a certain blue car and that I was seated behind the driver and we were supposed to say that we were going to do a job around eleven o'clock in the event [sic] and I was to say I was separated when the accident happened.

Q. I'm showing you a statement dated July 14, 2003. Is this your statement?

A. Yes

Q. Is this your signature?

A. Yes.

Q. Is this statement true?

A. No it's false.

Q. Who told you what to say in your statement?

A. Evelyn.

Q. Did the other people in your case phone you?

A. ...Much earlier Evelyn and I had to meet this lady (produces a business card for Leila's Esthetics...). She was supposed to be the driver of the car in the accident and we were supposed to say we were going for a cleaning job....

Q. What did you say in your statement that was different from Leila's statement?

A. In our statement we said that Leila was picking us up on her way from a Tim Horton's place nearby her husband's workplace. We were supposed to say that but Evelyn asked me to say that Leila picked us up from Evelyn's house and that's all....

Q. What did you tell the Chiropractor?

A. I told him my back hurt....

Q. When he examined you did you pretend that you felt pain?

A. Ya, I had to fake that I felt pain.

Q. Who instructed you how to act when you were examined by the Chiropractor?

A. Evelyn....

Q. The interpreter has read this statement to you, is it correct?

A. Yes.

On September 11, 2003, Mr. Daniel Mills, a collision reconstructionist with TSI Solutions Inc., prepared a report on the circumstances of the alleged accident, specifically on whether "the collision happened as described...." Mr. Mills concluded, in part, as follows:

The inconsistencies in statements from the MASOMI Lumina occupants about the purpose of their trip, trip origin and collision events indicate that likely not all of the reported vehicle occupants were actually present at the time of the collision. These discrepancies are beyond minor differences in recollection of the collision events and should not be present if all of the occupants had experienced the same event.

On September 15, 2003, Mr. Richard Rolfe of Canmils Consultants reported that, on August 13, 2003, he spoke to Ms. Narvaez who, while Spanish-speaking, "was able to communicate the fact that this accident was staged...." Mr. Rolfe reported that, later that evening, he spoke to Ms. Narvaez's husband, who stated that he had "become aware that his wife was involved in a staged accident scheme to defraud the insurance company, but had not been aware of this prior to the accident claim."

On October 5, 2003, Mr. Rolfe reported that, on October 3, 2003, he had spoken to Toronto Police Constable Wes Hamilton and that Constable Hamilton had said that Mr. Masoud Shirasb, the driver of the other vehicle in the alleged collision, stated that "there were only two persons in the vehicle driven by Leyla Mosami Jorfian..., identifying her as the driver and her husband, Mohammad Mosami identifying him as a front seat passenger."

Findings

It is trite law that Ms. Silva bears the onus of establishing, on a balance of probabilities, that she was involved in a motor vehicle accident. At the hearing, Mr. Fonseca urged me to find, not only that Ms. Silva had failed to discharge this onus, but that she had, in fact, participated in a widespread conspiracy to defraud York Fire. I advised Mr. Fonseca that the only issue before me was whether Ms. Silva had been involved in a motor vehicle accident on June 18, 2003. I note, further, that at no time did York Fire invoke section 48 of the Schedule to deny Ms. Silva benefits on the basis that she had "wilfully misrepresented material facts with respect to [her] application for benefits...." Ms. Silva may well have committed a fraud in this case, but in my view, it is not necessary to decide that question in order to determine the preliminary issue before me. Nevertheless, I will consider the nature of Ms. Silva's conduct more directly in connection with York Fire's claim for its expenses of the arbitration, which, to a large extent, was Mr. Fonseca's primary concern.

For the following reasons, I find that Ms. Silva has not established, on a balance of probabilities, that she was involved in a motor vehicle accident on June 18, 2003.

The evidence before me contains various discrepancies as to the purpose and location of the meeting that allegedly took place before the accident, the location and/or direction of the vehicle at the time of the accident and the number and location of passengers in the car.

Regarding the purpose and location of the pre-accident meeting, Ms. Masomi-Jorfian stated that she had met Ms. Silva and her friend in a coffee shop in order to discuss a job as a nail technician at a salon, whereas Ms. Silva and Ms. Narvaez stated that Ms. Masomi-Jorfian had picked them up at Ms. Silva's house in connection with a housekeeping or cleaning job. Ms. Narvaez later recanted her version of events, stating, in this regard, that she was supposed to have said that Ms. Masomi-Jorfian had picked Ms. Silva and herself up at a Tim Horton's, but that, based on Ms. Silva's instructions, she had said that Ms. Masomi-Jorfian had picked the two of them up at Ms. Silva's house.

The evidence is inconsistent as to the location of the accident and/or the direction in which the vehicle was to have been travelling. Ms. Masomi-Jorfian said that the vehicle was travelling westbound on Finch west of Dufferin, whereas Ms. Silva said both that the vehicle was travelling westbound on Finch west of Dufferin and that it was travelling eastbound on Finch towards Dufferin.

Regarding the occupants in the car, Ms. Masomi-Jorfian stated that there were four people in the car, with Ms. Silva in the rear left seat and Ms. Narvaez in the rear right seat. Ms. Silva stated that she was sitting in the rear right seat and that Ms. Narvaez was sitting behind the driver (being the rear left seat). Ms. Silva also said both that there were three other people in the car and that there were two other people in the car (in the latter scenario, the other two people were said to be the driver and a passenger in the front right passenger seat). Ms. Narvaez said that she was sitting behind the driver and then said that she was not involved in the accident at all, having been instructed to concoct the whole story. Finally, Mr. Shirasb, the driver of the other car, stated that there were only two other people in Ms. Masomi-Jorfian's car, Ms. Masomi-Jorfian and her husband, both sitting in the front seat.

Based on these discrepancies, particularly those in Ms. Silva's own evidence, and in light of the uncontroverted evidence of Ms. Narvaez (and her husband) that Ms. Silva and others instructed her to fabricate the details of the accident, I find, on a balance of probabilities, that Ms. Silva has failed to establish the basic elements of the accident, namely, the events leading up to the accident, the location of the accident and the people involved in the accident, most notably herself. I find significant that, despite being fully notified of the nature and purpose of the hearing, Ms. Silva failed to attend to address these issues. I, therefore, conclude that Ms. Silva was not involved in a motor vehicle accident on June 18, 2003.

EXPENSES:

At the hearing, Mr. Fonseca sought an order against Ms. Silva and her former representative, Mr. Muslim, jointly and severally, for York Fire's expenses of the full dispute resolution process, namely, mediation and pre- and post-hearing arbitration costs. Mr. Fonseca submitted a Bill of Costs, including a list of disbursements for, among other things, the "FSCO mediation fee" of $500 and the "FSCO arbitration fee" of $3,000. Mr. Fonseca argued that I had the authority, pursuant to section 282(11) of the Insurance Act, to issue an award of expenses that included the arbitration "filing fee."

First, I am prepared to address the issue of expenses at this stage of the proceeding. I find that Ms. Silva has had ample notice of the nature of the proceedings, including York Fire's claim for expenses and my authority to proceed with, and dispose of, the case in her absence and without any further notice to her.

Pursuant to Rules 75.1 and 75.2 of the Dispute Resolution Practice Code, I have the authority to award expenses based on the following criteria: each party's degree of success in the outcome of the proceeding, any written offers to settle, whether novel issues were raised in the proceeding, the conduct of the party or a party's representative that tended to prolong, obstruct or hinder the proceeding, and whether any aspect of the proceeding was improper, vexatious or unnecessary. York Fire was entirely successful in this case. I am not aware of any written offers to settle. The case did not raise novel issues. The non-participation of Ms. Silva and Mr. Muslim once the pre-hearing date had been set tended to prolong the proceeding in the sense that the parties could not engage in discussions that might have obviated the need for a hearing. Based on the non-participation of both Ms. Silva and Mr. Muslim, the significant evidence of wrongdoing on Ms. Silva's part, as well as the potential involvement of Mr. Muslim in the alleged scheme, I find that the proceeding was, at the least, unnecessary and vexatious, and at the most, improper. I, therefore, find that York Fire is entitled to its expenses of the arbitration.

Pursuant to section 282(11.2) of the Insurance Act, an arbitrator may order a representative to "personally pay all or part of any expenses awarded against a party if the arbitrator is satisfied that...the representative caused expenses to be incurred without reasonable cause by advancing a frivolous or vexatious claim on behalf of the insured person" or "the representative caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default." Section 282(11.4) states that "an order under subsection (11.2) shall not be made unless the representative is given a reasonable opportunity to make representations to the arbitrator." Given Mr. Muslim's non-participation in this matter, given his disappearance part way through this proceeding, and given that his whereabouts are currently unknown, I find that it is impossible to provide Mr. Muslim notice of a potential award of expenses against him. Further, based on Mr. Muslim's own actions in this case, I find that he caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default, as set out in section 282(11.4) of the Act. I, therefore, find that Mr. Muslim ought to be liable for York Fire's expenses in the same manner and to the same extent as Ms. Silva.

Regarding the specific expenses claimed, I find that York Fire is not entitled to any of its expenses prior to the date on which Ms. Silva and/or Mr. Muslim filed the Application for Arbitration, namely, August 24, 2004. Section 282(11) of the Act states that an arbitrator may award "all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations..." (emphasis added). Section 12(2) of Regulation 664, R.R.O. 1990, as amended, states that, under section 282(11) of the Act, an arbitrator can only consider certain criteria in awarding expenses incurred "in respect of an arbitration proceeding," including "each party's degree of success in the outcome of the proceeding...any written offers to settle made in accordance with subsection (3)" (namely, offers "that were made after the conclusion of mediation and before the conclusion of the arbitration...") and "whether any aspect of the proceeding was improper" (emphasis added). Section 3(1) of the Expenses Schedule of Regulation 664 states that the legal fees payable by a party may be awarded for the following activities:

all services performed before an arbitration hearing;
the preparation for an arbitration hearing;
attendance at an arbitration hearing; and
services subsequent to an arbitration hearing.

In my view, these provisions suggest that, aside from considering post-mediation settlement offers, my authority to award expenses extends only to the arbitration proceeding itself. As set out in Howden and Pembridge Insurance Company (Pafco Ins. Co.), (FSCO Appeal P02-00031, November 20, 2003), this refers to "steps taken after the mediation directly related to completing the arbitration application"² and, pursuant to section 3(1) of the Expense Schedule, would extend to services subsequent to the arbitration hearing. However, to the extent that the reasoning in Cruz and Royal & SunAlliance Insurance Company of Canada, (FSCO A00-001179, September 14, 2001) and Lacroix and Elma Mutual Insurance Company, (FSCO A99-000158, February 12, 2002) applies (to the effect that work prior to, but in respect of, an arbitration proceeding, is compensable), I, nevertheless, find that York Fire is not entitled to its expenses prior to the date upon which Ms. Silva filed her Application for Arbitration. The Bill of Costs submitted by Mr. Fonseca lists six pre-arbitration items which all pertain to the mediation proceeding itself (with no indication that they were in respect of the subsequent arbitration proceeding) and the pre-arbitration disbursements refer to the services and reports provided in respect of York Fire's adjusting and/or investigation of Ms. Silva's claim. I, therefore, deny York Fire's claim for pre-arbitration legal fees and disbursements.

York Fire also claimed as disbursements the $500 "mediation fee" and the $3,000 "arbitration fee." In my view, I do not have the authority to award these items to an insurer as disbursements, or as any part of an award of expenses. The previous section 282(11.2) of the Insurance Act (which allowed an arbitrator to award an insurer an amount that did not exceed the "amount assessed against the insurer in respect of the arbitration") was repealed prior to the commencement of this proceeding. The remaining section 282(11) states that an arbitrator can award expenses incurred in respect of an arbitration proceeding "as may be prescribed in the regulations...." Section 1 of the Expense Schedule under Regulation 664 states that the "filing fees paid by the insured person when applying for arbitration may be awarded to the insured person" and section 2 states that the "filing fees paid by the insured person or the insurer when appealing the order of an arbitrator or applying to vary or revoke an order may be awarded" (emphasis added). Section 4 of the same regulation sets out five groups of items which can be claimed as disbursements, none of which refers to a party's mediation or arbitration filing fees.

Mr. Fonseca argued that the new legislation, in fact, broadens my authority to award expenses. In my view, however, by repealing the previous section 282(11.2) of the Act and by restricting an award of expenses to those items set out in the regulations (which do not include an insurer's mediation or arbitration filing fees), my authority to award York Fire expenses for its filing fees has, in fact, been narrowed.³

Mr. Fonseca cited the decision of Bershteyn and Allstate Insurance Company of Canada (FSCO A01-000858, March 8, 2005) in support of his claim for filing fees. However, the Arbitrator in that case simply stated as follows: "While there may possibly be some justification for claiming an assessment fee as a necessary disbursement of an arbitration proceeding, there is no claim for such a disbursement. Patently, I have no jurisdiction to award a repayment of the fee in the manner claimed." In my view, the repeal of section 282(11.2) and the exclusion of mediation and arbitration filing fees from the relevant provisions of the regulation, confirm that I have no authority to award York Fire expenses in respect of those fees.

I am not prepared to award York Fire expenses in respect of two additional items, the first being Mr. Fonseca's claim for two hours of post-hearing work, and the second being disbursements for Canmils Consultants Ltd. on February 5 and April 19, 2005, in the amounts of $287.50 and $228.60, respectively. While, as noted above, post-hearing legal fees can be awarded, aside from a brief statement in the Bill of Costs regarding Mr. Fonseca "reporting to [his] principal re: hearing" (which would presumably take very little time), I have no information as to why two additional hours of legal work would be necessary. I am not prepared to award expenses on the basis of anticipated legal fees. I note as well that the need to report to York Fire would, to some extent, arise from the fact that no one from York Fire accompanied Mr. Fonseca to the hearing. In any event, in my view, post-hearing expenses should not only be demonstrable, but should bear more directly on the nature of the arbitration proceeding itself, namely, steps required to be taken as a result of the hearing (such as reviewing and implementing arbitral orders, preparing submissions on expenses or responding to new caselaw issued following the hearing). I, therefore, deny York Fire's claim for two hours of post-hearing legal work.

Regarding the two items for Canmils Consultants, the Bill of Costs does not specify what these amounts are for. None of the evidence submitted indicates that Canmils provided additional reports or services in February or April 2005 relevant to the arbitration proceeding. I, therefore, deny these two claims.

Finally, Mr. Fonseca sought expenses for forty-four hours of legal work from August 25, 2004 to June 16, 2005. Mr. Fonseca cited the case of Buccellato and Allstate Insurance Company of Canada, (FSCO A03-000609, August 27, 2004) in which the Arbitrator stated that "arbitrators have developed a rule of thumb in assessing the reasonableness of the amount of preparation time...of between one and four hours of preparation for every hour of hearing time." This hearing was conducted in approximately four hours over two days. There was a modest amount of documentary material and there were no witnesses. The issues in the case were relatively straightforward. However, given the nature of the proceeding and the expense to which York Fire has been put throughout this matter, I am prepared to apply the standard of four hours of preparation for each hour of hearing time. On this basis, and in all of the circumstances, York Fire should be awarded expenses for a total of twenty hours of legal work.

I, therefore, award York Fire legal fees from August 25, 2004 up to and including June 16, 2005, in the amount of $1,846.80 and disbursements in the amount of $96.72, for a total award of expenses of $1,943.52.

February 28, 2006

Eban Bayefsky Arbitrator

Date

Financial Services Commission of Ontario