Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2006 ONFSCDRS 51
FSCO A98-000988
BETWEEN:
DONNA C. HART
Applicant
and
ALLSTATE INSURANCE COMPANY OF CANADA
Insurer
DECISION ON EXPENSES
Before: Eban Bayefsky
Heard: December 13, 2005, in Hamilton, Ontario Written submissions completed January 2, 2006
Appearances: Mrs. Hart represented herself Meredith J. Donohue for Allstate Insurance Company of Canada
Issues:
The Applicant, Donna C. Hart, was injured in a motor vehicle accident on August 16, 1995. In a decision dated September 23, 2005, I dealt with her claims for statutory accident benefits under the Schedule.1 I made the following orders, while reserving on the issue of expenses:
Mrs. Hart does not have a reasonable excuse for failing to comply with the time limit for submitting an application for other disability benefits.
Mrs. Hart is not entitled to other disability benefits.
The issue in this further hearing is:
- Is either party entitled to its expenses incurred in respect of this arbitration hearing?
Result:
- Allstate is entitled to its reasonable expenses of the arbitration proceeding. If required, the parties may now make submissions on the issue of the quantum of Allstate's expenses, in accordance with the timelines set out in the body of this decision.
EVIDENCE AND ANALYSIS:
Background: The Proceedings Relevant to the Expenses Issue
This case has a long history, the details of which are set out in my decision of September 23, 2005. The proceedings relevant to the issue of expenses are as follows.
Mrs. Hart's initial arbitration came on for hearing in January 1999. That proceeding culminated on November 7, 2000 when Mrs. Hart's application for variation or revocation of the July 13, 1999 appeal decision was decided. The variation/revocation decision was allowed in part, remitting two issues to a new arbitration, namely, whether Mrs. Hart had had a reasonable excuse for failing to comply with the time limits for submitting an application for other disability benefits and whether she was substantively entitled to other disability benefits.
The Commission held a pre-hearing conference in the new arbitration on January 12, 2001, where the issues, productions and new hearing dates (of June 25 - 28, 2001) were addressed.
On June 25, 2001 (the day on which the new hearing was to commence), the Commission heard Allstate's motion for, among other things, a stay of the arbitration pending Mrs. Hart's attendance at two insurer medical examinations. Allstate's motion was dismissed, with the issue of expenses of the motion being deferred to the hearing arbitrator.
The Commission resumed the pre-hearing conference on December 18, 2003 to address Mrs. Hart's refusal to permit her rheumatologist (Dr. Lawrence Hart) to disclose his clinical notes and records to Allstate, despite her having previously provided a written authorization for this purpose. Mrs. Hart re-signed the authorization at the pre-hearing conference only after being shown Dr. Hart's November 22, 2002 letter to the effect that she had "provided written authorization for provision of her clinical notes and records but, verbally, [had] repeatedly insisted that there be no compliance with such instructions." The pre-hearing Arbitrator also set new hearing dates for May 31 to June 3, 2004.
On the day on which the hearing was then to commence (May 31, 2004), Mrs. Hart brought a motion for the hearing to be adjourned on the basis that Dr. Richard Black, her family physician, was out of the country and on the basis that Dr. Black's testimony was necessary for her case.
Allstate consented to the adjournment, but this was essentially on the basis that they needed time to transcribe Dr. Black's clinical notes. The motion Arbitrator adjourned the hearing to September 27 - 30, 2004, deferring the issue of expenses of the motion to the hearing arbitrator.
The parties proceeded with the hearing on September 27, 28 and 29, 2004 on the issues remitted to arbitration by the November 7, 2000 variation/revocation decision.
The Applicable Expense Provisions
Given that the proceedings relevant to the issue of expenses span at least three and a half years (from the date of the first post-variation/revocation pre-hearing, January 2001, to the date of the hearing on the "remitted issues," September 2004) and cover a period in which two different expense regimes existed, an issue arises as to the appropriate provisions to apply to the current determination of the parties' entitlement to expenses.
Prior to October 1, 2003, section 12(2) of Regulation 664, R.R.O. 1990, as amended by Ontario Regulation 464/96, set out the following regarding the awarding of expenses:
(2) An arbitrator may award expenses to an insurer or insured person under subsection 282 (11) of the Act if the arbitrator is satisfied that the award is justified, having regard to the following criteria:
Each party's degree of success in the outcome of the proceeding.
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.
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.
The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.
If the insurer or the insured person requests, any written offers to settle made after the conclusion of mediation and before the conclusion of the arbitration in accordance with the rules of practice and procedure applicable to the proceeding, including the terms of the offers, the timing of the offers and the responses to the offers, having regard to the result of the proceeding.
Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.
On October 1, 2003, Ontario Regulation 275/03 revoked this provision and replaced it with the following:
(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.
(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.
(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.
Allstate did not have a particular position on the issue of the applicable expense provisions, other than to maintain that it would be entitled to its expenses under either regime. Allstate also noted that the most costly proceedings since the variation/revocation hearing were the May 2004 adjournment motion and the September 2004 hearing, both of which post-dated the amendments to section 12(2) of the Expense Regulation. Mrs. Hart did not make any submissions on this issue, other than to argue that she was entitled to her expenses of the arbitration.
In Howden and Pembridge Insurance Company (Pafco Ins. Co.) (FSCO Appeal P02-00031, May 17, 2004), Director Draper applied the reasoning of the Ontario Court of Appeal in Canadian Broadcasting Corp. Pension Plan (Trustee of) v. BF Realty Holdings Ltd., 2002 CanLII 15157 (ON CA), [2002] O.J. No. 4313, in concluding that the arbitration expense provisions are procedural in nature and, therefore, apply retrospectively (that is, "apply to any determination of expenses after they come into effect"). Director Draper noted, however, that the Court of Appeal in the CBC Pension Plan case "left the door open to apply the old rules in 'rare cases.'"
In the case of Truong and Lumbermens Mutual Casualty Company /Kemper Canada (FSCO Appeal P03-00007, March 31, 2005), Director's Delegate Makepeace considered the case of Howden, as follows:
... I am uncertain whether the court decisions are directly applicable in the arbitration context because rules about costs or expenses are specific to the particular forum. The dispute resolution scheme at FSCO was intended, amongst other remedial purposes, to provide a more accessible alternative to the courts. This remains its mandate, despite the amendments to the 1990 version of the expenses regulation that have progressively tilted expenses towards the successful party.
Mr. Truong submits, in the alternative, that his is one of the rare cases that justifies an exception to the rule. If the court decisions apply in the context of FSCO proceedings, I agree with Director Draper that FSCO adjudicators have discretion to apply the old expenses regulation in rare cases where it would be unjust to apply the new regulation.
Read together, these cases suggest that there is a presumption that the new expense provisions apply to proceedings that pre-date the amendments, subject to an arbitrator's discretion to apply the old provisions in exceptional circumstances and/or where it would be unjust to do otherwise. In my view, the issue of access to justice (as discussed in Truong) is still very much alive in the new provisions; it must simply be interpreted in the context of, and to the extent contemplated by, the criteria laid down for arbitrators in the awarding of expenses.2
In the present case, I find that the new expense provisions ought to apply. Nothing in the proceedings since the variation/revocation decision has been unusual or otherwise exceptional, so as to justify the application of the previous expense provisions. I note that the significant activities on the case occurred after the enactment of the new expense provisions. I see no injustice in applying the new provisions, particularly in light of the manner in which Mrs. Hart pursued and presented her case, and given the specific conclusions reached in the arbitration. In my view, the new provisions are more than adequate to address the parties' respective claims for expenses. I will, therefore, consider the issue of expenses having regard to the criteria set out in section 12(2) of Regulation 664, R.R.O. 1990, as amended by Ontario Regulation 275/03.
The Criteria for an Award of Expenses
(a) Each Party's Degree of Success in the Outcome of the Proceeding
Allstate was entirely successful in this arbitration. In particular, I rejected Mrs. Hart’s attempt to change her previous evidence as to whether Allstate had provided her with an Application for Benefits shortly after the accident. Further, Mrs. Hart provided almost no explanation of her claim for other disability benefits, and despite her general position that she had been severely disabled by the motor vehicle accident, I found her pre- and post-accident conditions to be virtually identical.
(b) Any Written Offers to Settle made in accordance with Rule 76
Ms. Donohue submitted a copy of a letter dated April 5, 2004 (which was roughly five months before the September 2004 arbitration hearing) in which she advised Mrs. Hart that she had "instructions to make a formal offer to settle all issues at Arbitration for $5,000, plus costs" and that the "offer [was] open until the commencement of the Arbitration." Mrs. Hart denied receiving this offer. After hearing submissions from the parties, I granted Ms. Donohue's request to provide an Affidavit concerning the service of the April 2004 offer. Based on the Affidavit, the simple denial of Mrs. Hart that she never received the offer, as well as my previous rejection in this proceeding of Mrs. Hart’s attempt to maintain that Allstate had not provided her with an Application for Benefits prior to March 1996, I find that Allstate did serve Mrs. Hart with the noted offer to settle. I further find that the offer complied with the technical requirements laid down in Rule 76 of the Dispute Resolution Practice Code. Mrs. Hart did not respond to this offer.
Given my finding that Mrs. Hart’s arbitration ought to be dismissed on both procedural and substantive grounds, I find that Allstate’s offer to settle was a reasonable one. I note as well that, pursuant to Rule 76.1(b), I should give "particular consideration" to Allstate's offer since it was served after the pre-hearing conference and before five days prior to the commencement of the hearing. I also find significant that the offer was made before the May 2004 motion hearing.
(c) Whether Novel Issues are Raised in the Proceeding
The case did not raise any novel issues.
(d) 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
I find that Mrs. Hart’s conduct tended to prolong, obstruct and hinder this proceeding. For example, Allstate was required to request a resumption of the pre-hearing conference in December 2003 to address Mrs. Hart’s repeated verbal instructions to Dr. Hart to disregard her previous written authorization for the disclosure of his records. As noted, Mrs. Hart only agreed to re-sign the necessary authorization after being shown Dr. Hart’s letter on the matter.
Further, while Mrs. Hart sought, and was granted, an adjournment on May 31, 2004 in order to ensure Dr. Black’s attendance at the hearing, when the hearing finally took place, Mrs. Hart had very few questions for him and he added very little to her claim for other disability benefits. On the contrary, Dr. Black’s testimony simply confirmed what was plainly evident in the medical records, namely, that Mrs. Hart’s pre- and post-accident symptoms and activities were virtually identical, and that she had, therefore, not been substantially disabled (or severely disabled, as she claimed) as a result of the motor vehicle accident.
(e) Whether any Aspect of the Proceeding was Improper, Vexatious or Unnecessary
I find that various aspects of the current arbitration were either unnecessary or improper, or both.
As noted earlier, the Commission needed to resume the pre-hearing conference as a result of Mrs. Hart’s unwarranted refusal to permit Dr. Hart to release his records, despite her previous written authorization to allow him to do so. Mrs. Hart then re-signed the authorization only after being shown Dr. Hart’s correspondence regarding her conduct.
The variation/revocation decision granted Mrs. Hart the opportunity to address not only the question of whether she had had a reasonable excuse for failing to submit her application for other disability benefits in a timely manner, but whether she was substantively entitled to such benefits. The variation/revocation decision also set out some of the factors potentially relevant to the consideration of the question of reasonable excuse.
Despite this, at the new hearing, Mrs. Hart failed to maintain that her personal circumstances prevented her from submitting an application for benefits in a timely manner, which is the principal reason the variation/revocation decision re-opened the question of Mrs. Hart’s failure to act more expeditiously. As noted, Mrs. Hart attempted to maintain, not that she had been delayed by her personal circumstances, but that she had not received the application for benefits at all until well after the accident, a position she had specifically not taken in the various other proceedings in this matter. I found Mrs. Hart’s most recent position on the matter to be completely unfounded.
I also needed to prompt Mrs. Hart at the hearing to address the criteria set out in the variation/revocation decision concerning the other factors that may have delayed her in submitting an application for benefits. However, she had little to add on these issues, and, in any event, I found them not to have assisted Mrs. Hart in addressing the matter of delay.
Despite being afforded the opportunity to address her substantive entitlement to other disability benefits (even if she might be found not to have had a reasonable excuse, as was in fact my finding in the case), Mrs. Hart offered little evidence on this aspect of the arbitration, maintaining simply that by virtue of her being a "homemaker" and in light of her severe disability, she was entitled to other disability benefits. As noted, I found that the accident had virtually no impact on Mrs. Hart’s day-to-day activities and, specifically, that she had not suffered a partial or complete inability to carry on a normal life, within the meaning of sections 19(1) and 19(7) of the Schedule.
At the hearing itself, Mrs. Hart objected to the introduction of one of Allstate's surveillance videotapes, in part, on the basis that it did not show her and given that it showed other people without their consent. As set out in my initial decision, despite having been served the tape in accordance with the Dispute Resolution Practice Code and despite having previously viewed the tape, Mrs. Hart refused to review it with Allstate's counsel to determine if her concerns were justified. After lengthy submissions on the matter, I ultimately ordered Mrs. Hart to review the tape with Allstate’s counsel, after which Mrs. Hart consented to my viewing the tape. As noted in my decision, I would have admitted the tape into evidence in any event. I also found the tape to be directly relevant to Mrs. Hart’s claim that she had been severely disabled by the motor vehicle accident.
In all of the circumstances, therefore, I find that, despite her success in the variation/revocation proceeding, various aspects of Mrs. Hart's subsequent arbitration were unnecessary and/or improper.
CONCLUSION:
Allstate was entirely successful in this proceeding. Mrs. Hart failed to respond to a reasonable settlement offer by Allstate. Mrs. Hart did not raise any novel issues in the proceeding. Mrs. Hart’s conduct, both before and during the hearing tended to prolong, obstruct and hinder the proceeding, and, in many respects, was unnecessary and/or improper. In my view, Mrs. Hart has had ample opportunity to pursue her claim and has, in various ways, misused that opportunity. In all of the circumstances, therefore, I find that Allstate, and not Mrs. Hart, is entitled to its expenses of the arbitration. If required, the parties may now make submissions on the quantum of Allstate's expenses. The parties shall provide their submissions, if any, by the following dates: Allstate's submissions by April 24, 2006; Mrs. Hart's submissions by May 15, 2006; Allstate's reply by May 29, 2006.
April 3, 2006
Eban Bayefsky Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2006 ONFSCDRS 51
FSCO A98-000988
BETWEEN:
DONNA C. HART
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. Hart shall pay to Allstate its reasonable expenses of the arbitration, as agreed or as determined by me in accordance with the procedure set out in the body of this decision.
April 3, 2006
Eban Bayefsky Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98.
- See, also, for example, Villers and Pilot Insurance Company (FSCO A03-000993, August 11, 2005) in which I found that "an award of expenses must reflect not only the final result of a proceeding, but the general nature of the proceeding and the parties' interaction prior to the hearing, as contemplated by the criteria set out in the Expense Regulation."