Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2007 ONFSCDRS 15
FSCO A05-001104
BETWEEN:
LI WEN (KELLY) LU
Applicant
and
ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA
Insurer
REASONS FOR DECISION
Before:
Elizabeth Nastasi
Heard:
November 20, 2006, at the offices of the Financial Services Commission of Ontario in Toronto.
Appearances:
Sahereh Baghbani for Ms. Lu
Paul Belanger for Royal & SunAlliance Insurance Company of Canada
Ms. Lu did not attend
Introduction:
The Applicant, Li Wen (Kelly) Lu, was injured in a motor vehicle accident on March 28, 2003. She applied for and received statutory accident benefits from Royal & SunAlliance Insurance Company of Canada ("Royal"), payable under the Schedule.1 Disputes arose between the parties concerning Ms. Lu's entitlement to certain accident benefits. The parties were unable to resolve their disputes through mediation, and Ms. Lu applied for arbitration at the Financial Services Commission of Ontario (the "Commission") under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
Procedural Matters
In or about August 2006, Ms. Baghbani, the Applicant's representative, lost contact with her client. After several failed attempts to contact Ms. Lu, Ms. Baghbani brought a motion returnable the same date as the November 20, 2006 arbitration hearing date seeking an Order removing herself and Yeung & Associates as representative of record for the Applicant.
Royal did not oppose the motion. Royal requested that the arbitration hearing proceed as scheduled on November 20, 2006. Royal's position was that Ms. Lu had received proper notice of the hearing date.
Ms. Lu was not in attendance.
(i) Motion - Removal as Representative of Record
Upon review of the Commission's file, I noted that a pre-hearing discussion took place by telephone conference on December 20, 2005. Ms. Lu participated in these discussions. At that time the arbitration hearing dates were scheduled for May 15, 16 and 17, 2006. On or about April 11, 2006, counsel for the Insurer requested an adjournment of the May 15, 2006 hearing dates as new counsel was taking over the file. Arbitrator Wilson granted the adjournment on consent and the arbitration hearing was subsequently rescheduled to November 20, 21 and 22, 2006.
According to Ms. Baghbani, Yeung & Associates advised Ms. Lu of the rescheduled arbitration hearing dates via telephone. The Commission's file indicates that the Commission sent Ms. Lu written notice of the hearing dates. There is no record of any correspondence addressed to the Applicant being returned to the Commission by Canada Post.
Ms. Baghbani advised that in or about August 2006 she lost contact with Ms. Lu and since then has not been able to obtain instructions. According to the evidence,2 Yeung & Associates made numerous attempts to contact Ms. Lu in order to obtain instructions. These attempts include the following:
On or about August 24, 2006 Ms. Anna Sou, legal assistant with Yeung & Associates, attempted to contact Ms. Lu by telephone at her home number. The number was no longer in service. Ms. Sou also called Ms. Lu's cell number which had been transferred to an unknown person.
On September 6, 2006 Ms. Sou sent correspondence to Ms. Lu's last known address requesting that Ms. Lu contact their office and provide updated contact information. There was no response. This letter had been written in both English and Cantonese.
On or about October 5, 2006 Ms. Sou obtained an alternate telephone contact number for Ms. Lu from the Applicant's treating health clinic. This number had been transferred to an unknown person. The clinic advised that they did not have any updated contact information for Ms. Lu.
On or about October 13, 2006 Ms. Sou attempted to contact the Applicant's housekeeping provider. This number was no longer in service.
On or about October 13, 2006 Ms. Sou contacted the Applicant's previous employer, Zoff Fine Furniture, but was advised that the Applicant no longer worked there and they did not have any new contact information for her.
On October 23, 2006 Ms. Sou sent a registered letter to Ms. Lu's last known address. It was returned and marked "moved."
Ms. Baghbani filed a motion seeking to be removed as representative of record on the basis that there had been a breakdown in the representative-client relationship. The motion record was served on a male resident at Ms. Lu's last known address who accepted service.3
Rule 9.7 of the Practice Code states: A representative who seeks to withdraw from a proceeding must:
(a) provide a written request for withdrawal, with reasons, to the Dispute Resolution Group and all parties to the proceeding;
(b) provide the last known address, telephone number and electronic transmission address (if any) of the represented party.
Rule 9.8 of the Practice Code states:
Where the party represented provides written consent to the representative's request for withdrawal, the Registrar or an adjudicator shall permit the representative's withdrawal. Otherwise, an adjudicator may permit the representative to withdraw, subject to such terms as the adjudicator considers just.
I find that Ms. Baghbani and Yeung & Associates have made reasonable efforts to contact Ms. Lu and have been unable to obtain instructions from her. I accept that there has been a breakdown in the representative-client relationship and Ms. Baghbani has complied with Rule 9.7 of the Code. Therefore, Ms. Baghbani and Yeung & Associates are removed as representative of record for Ms. Lu.
After hearing Ms. Baghbani's motion, I briefly adjourned to allow extra time for the possible attendance of the Applicant. During the adjournment I personally telephoned Ms. Lu's phone number noted in the Commission's file and learned that it was not in service. I returned and gave oral reasons granting Ms. Baghbani's motion. Ms. Baghbani left and I resumed the arbitration hearing. No one participated on behalf of Ms. Lu.
(ii) Proceeding in the Absence of the Applicant
Royal requested that the arbitration hearing proceed as scheduled. Their position was that Ms. Lu had received proper notice of the hearing date.
Rule 37.7 of the Practice Code provides as follows:
Where notice of hearing has been sent to a party and a party does not attend at an oral or electronic hearing, or participate in a written hearing, the arbitrator may proceed with the hearing in the party's absence or without the party's participation, as the case may be, and the party is not entitled to any further notice of the hearing.
Section 7 of the Statutory Powers Procedure Act, R.S.O. 1990 c.22, as amended ("SPPA"), gives an adjudicator the authority to proceed with a hearing in a party's absence where the adjudicator is satisfied that proper notice of the hearing has been given to the party in accordance with the SPPA.
For the reasons set out above, I found that Ms. Lu received adequate notice of this hearing date from both her representative, Ms. Baghbani, and the Commission. I received no information as to why Ms. Lu was not in attendance. As such, the arbitration proceeded in Ms. Lu's absence pursuant to Rule 37.7 of the Practice Code.
Substantive Issues:
The issues as identified in the December 20, 2005 pre-hearing letter are:
Is Ms. Lu entitled to receive a weekly income replacement benefit from January 31, 2004 to March 12, 2004, at the rate of $321.03 and from March 13, 2004 to March 28, 2005 at the rate of $160.97 per week during a part-time return to work, pursuant to section 4 of the Schedule ?
Is Ms. Lu entitled to interest for the overdue payment of benefits pursuant to section 46(2) of the Schedule ?
Is Ms. Lu liable to repay Royal the income replacement benefits she received from Royal, in the amount of $3,853.08, together with interest, for the period from November 7, 2003 to January 30, 2004, pending receipt of a Designated Assessment Centre (DAC) report, pursuant to section 47 of the Schedule.
Is either party liable to pay each other's expenses of the arbitration pursuant to subsection 282(11) of the Insurance Act?
Result:
Ms. Lu is not entitled to receive a weekly income replacement benefit.
Ms. Lu is not entitled to interest as no income replacement benefits are overdue.
Ms. Lu is liable to repay Royal $3,853.08, together with interest, for income replacement benefits she received from Royal.
Ms. Lu is liable to pay Royal's expenses of the arbitration in the amount of $2,947.01.
Ms. Lu's Claims
The burden of proof in this arbitration rested upon Ms. Lu to present me with evidence which establishes her entitlement to the benefits she claimed. Because she failed to attend the hearing, no evidence was presented, and no submissions were made to support any of Ms. Lu's claims. She has failed to meet the burden of proof placed on her and, therefore, her claims for income replacement benefits and interest on overdue payments of such benefits are dismissed.
Royal's Claim for Repayment
Introduction
Royal is claiming repayment of income replacement benefits in the amount of $3,853.08, together with interest, for the period from November 7, 2003 to January 30, 2004. This period represents the time period from the date Royal gave notice to Ms. Lu that she was no longer entitled to receive an income replacement benefit pursuant to subsection 37(1), to the date the DAC report was received.
The Law
At the time Royal terminated Ms. Lu's income replacement benefits, subsection 47(1)(d) stated:
- (1) A person shall repay to the insurer,
(d) if subsection 37(4) applies, any income replacement benefit, non-earner or caregiver benefit that is paid for the period after the insurer gives notice under subsection 37(1) and before the date of the report of the designated assessment centre referred to in subsection 37(4);
Subsection 37(4) provided as follows:
37.(4) The insurer may stop paying a benefit to a person, after providing the person with notice of its reasons for stopping payment, if,
(a) the person undergoes a designated assessment referred to in paragraph 3 of subsection (3); and
(b) the report from the designated assessment centre states that the person no longer has a disability that entitles the person to receive the benefit. O. Reg. 281/03, s. 14.
Subsection 47 stated:
(2) If a person is required to repay an amount to an insurer under this section,
(a) the insurer shall give the person notice of the amount that is required to be repaid; and
(b) if the person is receiving an income replacement or caregiver benefit, the insurer may give the person notice that the insurer intends to collect the repayment by deducting up to 20 per cent of the amount of the benefit from each payment of the benefit.
(3) The obligation to repay a benefit does not apply unless the notice under subsection (2) is given within 12 months after the payment was made.
(6) The insurer may charge interest on an amount repayable under this section from the fifteenth day after notice is given under subsection (2) at the bank rate in effect on that day.
(7) In subsection (6), "bank rate" means the bank rate established by the Bank of Canada as the minimum rate at which the Bank of Canada makes short term advances to the banks listed in Schedule I to the Bank Act (Canada). O. Reg. 403/96, s. 47.
Evidence and Submissions
Based on the documents filed4 and the testimony of Royal's adjuster, Ms. Linda Rees, I make the following findings of fact:
Royal paid income replacement benefits to Ms. Lu in the amount of $321.93 per week for the period from March 13, 2003 to January 30, 2004.
On October 23, 2003, Royal sent Ms. Lu notice that her income replacement benefits were terminated effective November 7, 2003. The termination of benefits was based on an Orthopaedic Assessment by Dr. Malcolm dated September 24, 2003. An In-Home Assessment was also completed on September 30, 2003 which concluded that Ms. Lu could return to her pre-accident activities of daily living, personal care and housekeeping. Copies of these reports were sent to Ms. Lu under a cover letter dated October 22, 2003.
Ms. Lu requested a Disability DAC which was completed by Dr. Platnick, Physician, on December 15, 2003 and Mr. Jason McLachlan, Kinesiologist, on December 18, 2003. The Disability DAC concluded that Ms. Lu did not suffer a substantial inability to perform the essential tasks of her employment.
By way of letter dated January 29, 2004, Royal advised Ms. Lu of the results of the Disability DAC and provided her with a copy. In that same letter, Royal informed Ms. Lu that as of January 30, 2004 her income replacement benefits would be terminated. It further advised her that in accordance with Section 47(1)(d) of the Schedule they were requesting a repayment of the income replacement benefits paid to her from November 7, 2003 to January 30, 2004.
In a letter dated April 28, 2004, Ms. Lu's representative acknowledged Royal's demand for repayment.5
Royal has not received any portion of the repayment requested to date.
Analysis and Conclusions
I accept Royal's uncontroverted evidence that after giving Ms. Lu notice of the termination of her income replacement benefits they continued to pay those benefits until receipt of the DAC report as required by subsection 37(3)3 of the Schedule. As the Disability DAC concluded that Ms. Lu did not suffer a substantial inability to perform the essential tasks of her employment, Royal was entitled to terminate her income replacement benefits and seek a repayment for the benefits paid pending the receipt of the DAC report.
On the balance of probabilities, based on all of the documentation provided, I am satisfied that Royal's request for repayment of benefits was made within 12 months after the payments were made as required by subsection 47(2).
For the foregoing reasons, I find that Ms. Lu must repay Royal $3,853.08, together with interest, for income replacement benefits she received from Royal for the period from November 7, 2003 to January 30, 2004.
EXPENSES
Entitlement to Expenses
Subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8 (as amended), provides that:
The arbitrator may award, according to criteria prescribed by the 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. 1996, c. 21, s. 38 (4).
As of October 1, 2003, an arbitrator may only consider only the criteria in the Expense Regulation found in Section F of the Practice Code. The Expense Regulation provides as follows:
(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 that were made in accordance with the rules of practice and procedure applicable to the proceeding after the conclusion of mediation and before the conclusion of the arbitration.
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.
In addressing each of these criteria I find as follows:
Ms. Lu was unsuccessful in all of the claims she advanced in this arbitration. Royal was successful on its claim for a repayment of income replacement benefits.
I was not provided with evidence of any written offers to settle.
No novel issues were raised in this proceeding.
Ms. Lu has failed to communicate with either her former representative or the Commission in respect of her intentions to proceed with his Application. She has failed to provide an explanation for her absence at this proceeding. As a consequence, Royal has incurred unnecessary legal expenses.
No evidence was presented to me that would support a conclusion that these proceedings were improper or vexatious, i.e. that were contrived only to harass or annoy the insurer. However, Ms. Lu's absence at this proceeding has caused Royal to incur unnecessary legal expenses.
Taking into account the five criteria in the Expense Regulation, I find that it is just and reasonable to award Royal its reasonable expenses in this arbitration.
Quantum
Under the Schedule to the Expense Regulation, legal fees may be awarded for all services performed before an arbitration hearing, for preparation for the hearing, for attendance at the hearing and services subsequent to the hearing. The number of hours for which legal fees may be awarded shall be determined by the arbitrator having regard to the criteria set out in subsection 12(2) of the Expense Regulation. Under Rule 78.1 of the Practice Code, the maximum hourly rate that can be awarded for legal fees is established under the Legal Aid Services Act, 1998.
Royal provided me with a Bill of Costs in which they claimed 39.8 hours for a total of $6,308.50 for legal fees. However, the hourly rate charged by each lawyer, law student and law clerk did not comply with the Legal Aid Tariff. After making the necessary rate adjustments and considering what is reasonable for this matter, I fix the legal fees at $2,500.00.
Royal claimed $849.01 for disbursements. I have accepted all of their disbursements with the following two exceptions which were not adequately explained:
Postage on July 4, 2005
$245.00
Paid to Minister of Finance for court filing fees – Issue Claim
$157.00
After reducing the amount of the disbursements claimed as per the items above, I assess Royal's allowable disbursements at $447.01.
Therefore, I find that Royal is entitled to its expenses in this arbitration in the amount of $2,947.01 (inclusive of G.S.T. and disbursements).
January 31, 2007
Elizabeth Nastasi Arbitrator
Date
Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2007 ONFSCDRS 15
FSCO A05-001104
BETWEEN:
LI WEN (KELLY) LU
Applicant
and
ROYAL & SUNALLIANCE 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:
Pursuant to section 47 of the Schedule, Ms. Lu shall pay to the Insurer $3,853.08, together with interest, for income replacement benefits she received from the Insurer.
Pursuant to subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8, Ms. Lu shall pay to the Insurer its expenses of the arbitration in the amount of $2,947.01 (inclusive of G.S.T. and disbursements).
January 31, 2007
Elizabeth Nastasi Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- Affidavit of Ms. Anna Sou, Motion Record of Applicant's Representative. Exhibit 1, Tab 3
- Affidavit of Service of Jimmy Liang, Motion Record of Applicant's Representative. Exhibit 1
- insurer's Arbitration Brief. Exhibit 2
- Exhibit 2, Tab 24