Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2006 ONFSCDRS 65
FSCO A04-002743
BETWEEN:
CHRIS KABALA
Applicant
and
TD HOME AND AUTO INSURANCE COMPANY
Insurer
DECISION ON A MOTION FOR INTERIM EXPENSES
Before: Denise Ashby
Heard: By telephone conference call on February 10, 2006
Appearances: Mr. Kabala on his own behalf Dwain Burns for TD Home and Auto Insurance Company
Issues:
The Applicant, Chris Kabala, submits that he was injured in a motor vehicle accident on July 20, 2001. He applied for statutory accident benefits from TD Home and Auto Insurance Company ("TD"), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Mr. Kabala applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. The issues on the motion are:
Is Mr. Kabala entitled to an award for interim expenses?
Is TD liable to pay Mr. Kabala's expenses of this motion pursuant to subsection 282(11) of the Insurance Act?
Is Mr. Kabala liable to pay TD's expenses of this motion pursuant to subsection 282(11) of the Insurance Act?
Result:
- Mr. Kabala is entitled to an award for interim expenses as follows:
(a) Five hours of legal fees at the hourly rate of $73.87, without prejudice to the right of counsel, retained by him, to make submissions for an increase in the number of hours and rate awarded. Mr. Kabala is required to retain counsel within 30 days of the issuance of this decision.
(b) An assessment of his capacity, by a person qualified to conduct such assessments, the cost of which shall not exceed $1,500.00. Mr. Kabala is required to notify TD of his intention to undergo such an assessment and the name of the person he has chosen to conduct the assessment within 30 days of the issuance of this decision.
TD is not liable to pay Mr. Kabala's expenses of this motion pursuant to subsection 282(11) of the Insurance Act.
Mr. Kabala is not liable to pay TD's expenses of this motion pursuant to subsection 282(11) of the Insurance Act.
INTRODUCTION:
On September 26, 2005, a preliminary issue hearing was commenced before me to determine whether Mr. Kabala is precluded from proceeding to arbitration because he failed, without reasonable explanation, to submit an application for the benefits claimed and to provide information reasonably required to determine his entitlement to benefits, contrary to sections 32 and 33 of the Schedule. During the proceeding Mr. Kabala exhibited signs of mental difficulty. Therefore, I directed a hearing on a preliminary issue to determine whether Mr. Kabala has the mental capacity to continue to proceed in the dispute resolution process pursuant to Rule 10 of the Dispute Resolution Practice Code (the "Code").2
Procedural Ruling:
On January 15, 2006, Mr. Kabala served a Notice of Motion, seeking an order for interim expenses, disclosure of documents and a declaration that a settlement and final release dated March 17, 2004 is void.
In the motion before me, I ruled that I would deal solely with the issue of interim expenses in preparation for the capacity hearing. The other issues, raised in Mr. Kabala's Notice of Motion dated January 15, 2006, would be dealt with at the capacity hearing.
EVIDENCE AND ANALYSIS:
Mr. Kabala relied on British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, 2003 3 S.C.R. 371, in which the Supreme Court upheld a lower court order for interim costs based on the court's equitable and discretionary powers. I accept TD's submission that an arbitrator's authority flows from statute.
The Insurance Act, R.S.O. 1990, c.1.8, as amended, provides as follows:
- (11) Expenses. The arbitrator may award, according to criteria prescribed regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.
(11.1) Interim Award of Expenses. The arbitrator may at any time during an arbitration proceeding make an interim award of expenses, subject to such terms and conditions as may be established by the arbitrator.
In Jerry Champaigne and Co-operators General Insurance Company, FSCO A03-001344, September 3, 2004, Arbitrator Blackman reviewed the history of this provision and related arbitral law. In awarding Mr. Champaigne interim expenses he observed:
... notwithstanding the various amendments to the Insurance Act, subsection 282(11.1) ... has not been amended since its inception in 1993.
Although the ultimate award of expenses may, to use the words of Director Draper, 'continue the move to a more results-based approach to expenses,' the question of interim expenses in this context appears to be more concerned with process than results. The present subsection 12(2) of Ontario Regulation 664 states that the set criteria (regarding entitlement to legal expenses) shall be considered by the arbitrator 'under subsection 282(11) of the Act.' Given the absence of any reference in subsection 12(2) of Ontario Regulation 664 to subsection 282(11.1) of the Insurance Act, or any reference in subsection 282(11.1) to Ontario Regulation 664, I take the intention of the legislature to be that the Bernicky criteria remain.
The decision in Bernicky and Guardian Insurance Company of Canada, (OIC. A-006268, July 6, 1994), sets out the following criteria for an interim award of medical expenses: the Application for Arbitration raises a bona fide issue; the expenses claimed are reasonable and necessary for the conduct of the arbitration; and the applicant is unable to carry the expenses claimed until the arbitration hearing.
In Haile/Debassay and Old Republic Insurance Company (OIC P-008657, April 24, 1995, pages 4 and 5), Director Sachs upheld the arbitrator's decision to allow interim benefits holding:
The criteria set out in the Bernicky case are a useful touchstone for assisting arbitrators in exercising their discretion to make interim expense awards. In some cases, greater weight may be placed on one of the listed factors over another. In others, it may be appropriate for all of the considerations to be met. There may be, in some cases, as yet unconsidered matters which will weigh in the balance. The category of what may be relevant or appropriate criteria for making such interim orders cannot be closed, or limited by the Bernicky case.
The overriding principle, it seems to me, is that the arbitrator's discretion should be exercised judicially having regard to the usually limited information available on such motions.
Mr. Kabala has stated that he suffers psychological problems which, at times, makes it difficult or impossible for him to follow the proceedings. Mr. Kabala submitted that he would prefer to retain counsel and have a medical assessment but he does not have the finances for either. In the absence of contrary information, I accept these submissions.
The issue of Mr. Kabala's capacity was raised at the pre-hearing. The arbitrator determined that, at the time of the pre-hearing, Mr. Kabala was not exhibiting signs of mental difficulty which required a preliminary issue hearing. TD withdrew its request that the arbitration be stayed until Mr. Kabala retains counsel because he is not competent to represent himself.3 I am satisfied that before me Mr. Kabala exhibited signs of mental difficulty requiring a capacity hearing.
I agree with Arbitrator Blackman that the issue of interim expenses has more to do with "process than results." As well, I agree that had the legislature intended to restrict an arbitrator's discretion in the awarding of interim benefits it would have done so in the amendments made in 2003. The legislature had the benefit of Director Sach's decision in Haile in which she held that Bernicky did not set out an exhaustive set of criteria and it was foreseeable that there would be "other relevant or appropriate criteria" for making interim expense orders.
In the present case, the preliminary issue to be determined is whether Mr. Kabala submitted an Application which raises a bone fide issue. However, because Mr. Kabala exhibited signs of mental difficulty on the first day of hearing, I directed a hearing on a preliminary issue to determine his capacity to proceed. I am persuaded that this is an extraordinary situation which constitutes an appropriate criterion for the awarding of interim expenses as contemplated in Haile.
I am of the opinion that counsel acting on Mr. Kabala's behalf would contribute to a fair and efficient hearing of the preliminary issue. Mr. Kabala's access to legal representation at the capacity hearing should not be prejudiced by his financial circumstances. I find that Mr. Kabala is entitled to 5 hours of legal fees. Rule 78.1 of the Code requires that the rate awarded be calculated pursuant to the Legal Aid Services Act, 1998, subject to an adjudicator's discretion to award a maximum hourly rate of $150.00. Therefore, I award an hourly rate of $73.87,4 the minimum rate provided by the Regulation to the Legal Aid Services Act, 1998. This award is without prejudice to counsel retained by Mr. Kabala making submissions for an increased number of hours and an increase in the hourly rate payable. Mr. Kabala is required to retain counsel within 30 days of the issuance of this decision.
I am also persuaded that Mr. Kabala is entitled to an assessment of his capacity by a person qualified to conduct such assessments. The cost of the assessment shall not exceed the maximum of $1,500.00 permitted by the "Code Mr. Kabala is required to notify TD of his intention to undergo such an assessment and the name of the person he has chosen to conduct the assessment within 30 days of the issuance of this decision.
EXPENSES:
I exercise my discretion in respect of the awarding of expenses and order each party to bear its own expenses of this motion.
May 4, 2006
Denise Ashby Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2006 ONFSCDRS 65
FSCO A04-002743
BETWEEN:
CHRIS KABALA
Applicant
and
TD HOME AND AUTO INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Mr. Kabala is entitled to an award for interim expenses as follows:
(a) Five hours of legal fees at the hourly rate of $73.87, without prejudice to the right of legal counsel, retained by him, to make submissions for an increase in the number of hours and rate awarded. Mr. Kabala is required to retain counsel within 30 days of the issuance of this decision.
(b) An assessment of his capacity by a person qualified to conduct such assessments the assessment expense shall not exceed $1,500.00. Mr. Kabala is required to notify TD of his intention to undergo such an assessment and the name of the person he has chosen to conduct the assessment within 30 days of the issuance of this decision.
TD is not liable to pay Mr. Kabala's expenses of this motion pursuant to subsection 282(11) of the Insurance Act.
Mr. Kabala is not liable to pay TD's expenses of this motion pursuant to subsection 282(11) of the Insurance Act.
May 4, 2006
Denise Ashby Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- 4th Edition, (Updated October 2003)
- Exhibit 3, Tab 12, admitted into evidence September 26, 2005
- Ontario Regulation 107/9, Amended to O. Reg. 286/05, Schedule 2, Fees in Civil Matters