Neutral Citation: 2007 ONFSCDRS 176 FSCO A06-002188

BETWEEN:

BOTAN MOHAMMED-AMIN Applicant

and

RBC GENERAL INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Anne Sone Heard: By telephone conference call on August 31, 2007. Appearances: Jeffrey D. Gray for Mr. Mohammed-Amin James V. Leone for RBC General Insurance Company

Issues:

The Applicant, Botan Mohammed-Amin, was injured in a motor vehicle accident on September 22, 2003. In a decision dated June 25, 2007, Arbitrator Muzzi dealt with his claims for statutory accident benefits under the Schedule.¹ She made the following order, while reserving on the issue of expenses:

Mr. Mohammed-Amin is precluded from proceeding to arbitration because his application for arbitration was filed beyond the two-year limitation period set out in subsection 281.1(1) of the Insurance Act, R.S.O. 1990, c.I.8, as amended, and subsection 51(1) of the Schedule.

Arbitrator Muzzi made the following comments about the issue of expenses:

The parties did not address the issue of expenses. I urge the parties to resolve this issue. Should they be unable to do so, either party may request an assessment of expenses in accordance with the provisions of the Dispute Resolution Practice Code before me within 30 days from the date that this decision is issued.

The issues in this further hearing are:

Is RBC liable to pay Mr. Mohammed-Amin’s expenses in respect of the preliminary issue hearing under subsection 282(11) of the Insurance Act?
Is Mr. Mohammed-Amin liable to pay RBC’s expenses in respect of the preliminary issue hearing under subsection 282(11) of the Insurance Act?
If a party is entitled to its legal expenses, what is the correct amount of expenses under subsection 282(11) of the Insurance Act?

Result:

RBC is not liable to pay Mr. Mohammed Amin’s expenses in respect in the preliminary issue hearing.
Mr. Mohammed-Amin is liable to pay RBC’s expenses in respect of the preliminary issue hearing which I have fixed in the amount of $3,474.36 for legal fees and disbursements.

Entitlement to Expenses:

Subsection 282(11) of the Insurance Act gives arbitrators the discretion to award expenses to parties in respect of an arbitration proceeding, according to criteria prescribed by the Regulations. The parties bring their claims for expenses under Regulation 664, R.R.O. 1990, of the Insurance Act.²

The current version of Regulation 664 requires an arbitrator to consider 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 subsection (3);

(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 Rule 75 of the Dispute Resolution Practice Code (Fourth Edition, Updated October 2003) (the “Code”). I was advised that no offer to settle pursuant to the Code had been served in this matter.

With respect to criterion (c), the issue in dispute was not novel. In my view, there was no aspect of the preliminary issue hearing that was “improper, vexatious or unnecessary” as stipulated by criterion (e). I find that the only relevant criteria are (a) and (d) as set out above.

I apply criterion (a) of Rule 75 in RBC’s favour, since it was entirely successful in the outcome of this hearing.

At page 7 of her decision, Arbitrator Muzzi found that RBC’s refusal of December 2003 to pay benefits to Mr. Mohammed-Amin was clear and unequivocal. As a result, she found that Mr. Mohammed-Amin was precluded from proceeding to arbitration because his application in respect of this refusal was filed beyond the two-year limitation period set out in subsection 281.1(1) of the Insurance Act and subsection 51(1) of the Schedule.

At page 4 of her decision, Arbitrator Muzzi set out other facts which she found were undisputed and relevant to an analysis of the limitation period issue. She stated the following:

Mr. Mohammed-Amin has been represented throughout this process. His Application for Accident Benefits was filed with RBC on October 7, 2003 through his agent at the time. In early 2004, Mr. Mohammed-Amin retained new counsel who corresponded for the first time with RBC by letter dated January 15, 2004. Counsel then sent subsequent correspondence to RBC, dated June 14, 2004, October 14, 2004, December 16, 2004 and August 31, 2005. RBC appears not have replied to any of counsel’s inquiries until January 25, 2006.

The arbitrator does not criticize RBC for not responding Mr. Mohammed-Amin’s counsel’s letters. Rather, she is mystified by Mr. Mohammed-Amin’s failure to file for mediation. She states at page 6:

In these circumstances, I fail to understand why counsel did not pursue mediation at any time during this period. Attempts had been made at negotiation and resolution of the disputes with RBC, yet Mr. Mohammed-Amin could not elicit any kind of response whatsoever. There were no actions on the part of RBC during this entire period that could be viewed as attempts to lull Mr. Mohammed-Amin into believing that it was planning to revoke its refusal. Surely, RBC’s silence cannot be interpreted as a revocation.

Mr. Mohammed-Amin argues that RBC’s failure to respond to his counsel’s correspondence constituted conduct that tended to prolong, obstruct or hinder the proceeding under expense criterion (d). I disagree. Criterion (d) refers to a “proceeding.” “Proceedings” in a legal context are defined in the Concise Oxford Dictionary as “action taken in court to settle a dispute.” Under Rule 4.1 of the Code, “proceeding” means “a matter requiring the exercise of a statutory power of decision.”

The mediation in this matter was conducted from July 17 to September 13, 2006. Since the mediation was unsuccessful, the Applicant could then choose to resolve the ongoing dispute either through an arbitration or a court proceeding.

The RBC conduct that Mr. Mohammed-Amin refers to took place between early 2004 and January 25, 2005. Therefore, it occurred before the mediation. In my view, an arbitration, which requires the “exercise of the statutory power of decision,” is the starting point for “the proceeding” referred to in the Expense Regulation and the Code. Since arbitration occurs after mediation, I find that the conduct complained of did not prolong, obstruct or hinder the proceeding under expense criterion (d).

In any event, the arbitrator who heard this case and wrote the decision did not see fit to censure RBC’s conduct. The Applicant chose not to appeal this decision. Under these circumstances, I am not persuaded that RBC’s conduct to which the Applicant refers, which took place prior to the arbitration should impact my ruling about entitlement to expenses. The proper remedy, if applicable, would be a potential special award under the Insurance Act.

Accordingly, I find that RBC is entitled to its expenses incurred in respect of the arbitration proceeding.

Amount of Expenses:

RBC submitted a Bill of Costs. It provided two alternatives for legal fees. If legal fees are calculated at a $150 per hour rate, the fees total $6,068.80. If they are calculated at the legal aid rate of $73.87 per hour, the fees total $3,114.53.

Rule 78.1 of the Code provides that “Where an adjudicator is satisfied that a higher amount for legal fees to an insured person is justified, an hourly rate of up to $150 may be awarded.” (My underlining.) Since RBC is not an insured person, it is not appropriate for me to award the hourly rate of $150 to it. RBC also claimed disbursements in the amount of $359.83, which appear to be reasonable to me.

RBC also requested reimbursement of the arbitration fee of $3,000. Previously, section 282(11.2) of the Insurance Act contained a provision which allowed relief up to the amount assessed against the insurer under certain circumstances. However, the Act has now been amended and no longer contains that provision. I find that I no longer have the authority to order the Applicant to reimburse RBC for the assessment fee it paid in the amount of $3,000.³

Mr. Mohammed-Amin did not raise any objection with respect to the amount of expenses RBC claimed. Traditionally, the Commission does not deal with Bills of Costs on a line by line basis.

In this case, according to the Bill of Costs, the preliminary issue hearing took 3.4 hours. There were the 26.8 hours of lawyer’s time spent on this matter prior to the hearing and the 6.4 hours spent after the hearing, including preparing the Bill of Costs. In addition, ten hours of law clerk’s time was spent on this file before and .2 hours of law clerk’s time was spent after the hearing. The amount of time spent by RBC’s lawyers and law clerks is greater than the usual maximum ratio of four hours of preparation time to one hour of hearing time. However, as arbitrators have said before, the ratio is only a guideline. The brief hearing was on a legal preliminary issue which required significant preparation. Therefore, I consider the time spent to be reasonable.

Under all these circumstances, I find that RBC’s Bill of Costs at the legal aid rate totalling $3,474.36 for fees and disbursements is reasonable and award that amount in expenses to RBC.

September 17, 2007

Anne Sone Arbitrator

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

Mr. Mohammed-Amin shall pay expenses for legal fees and disbursements in the total amount of $3,474.36 to RBC General Insurance Company.