Neutral Citation: 2007 ONFSCDRS 218 FSCO A06-000202

BETWEEN:

KWAKU ADDAE Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY Insurer

DECISION ON INSURER’S CLAIM FOR REPAYMENT AND EXPENSES

Before: Richard Feldman Heard: October 2, 2007, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Mr. Addae represented himself Joan Takahashi for Dominion of Canada General Insurance Company

Background:

The Applicant, Kwaku Addae, alleged that he had been injured in a motor vehicle accident on May 4, 2004 and he made a claim to Dominion of Canada General Insurance Company (“Dominion”) for statutory accident benefits under the Schedule.¹ Dominion raised a preliminary issue in this proceeding as to whether or not Mr. Addae had actually been involved in an accident. That preliminary issue was heard by me on February 19, 20, 21 and 22, 2007. In a decision dated June 12, 2007, I found that Mr. Addae failed to prove on a balance of probabilities that he had been involved in an accident on May 4, 2004.

The remaining issues (Dominion’s claim for repayment and for its expenses of the arbitration) were heard by me on October 2, 2007. Mr. Addae was assisted at the hearing by an interpreter (arranged by the Commission) in the Twi language.

Procedural Matters:

At the hearing on October 2, 2007, Dominion sought to file and to rely upon the Affidavit of Savitri Persaud, sworn on September 25, 2007 and a Costs Outline that were both served upon Mr. Addae on September 25, 2007. I informed Mr. Addae that, pursuant to Rule 39 of the Dispute Resolution Practice Code, documents must normally be served on a party at least 30 days before the hearing. I recessed the hearing so that the interpreter could translate these documents for Mr. Addae (and also because Dominion requested a brief recess to arrange for a verbatim reporter to attend the hearing). When the hearing resumed, Mr. Addae indicated that he did not object to my admitting these documents into evidence and that he was not challenging the accuracy of the information contained therein. The Affidavit of Savitri Persaud was marked as Exhibit 12, and the Insurer’s Costs Outline was marked as Exhibit 13.

Savitri Persaud was present at the hearing and I advised Mr. Addae that he had the right, if he wished, to cross-examine her. Mr. Addae chose not to do so. Mr. Addae also chose not to testify on October 2, 2007.

Issues:

The issues in this further hearing were:

Is Mr. Addae liable to repay to Dominion the benefits he received from Dominion (plus interest thereon), pursuant to section 47 of the Schedule?
Is either party liable to pay the other’s expenses incurred in respect of the arbitration, pursuant to s. 282(11) of the Insurance Act?

Result:

Mr. Addae shall repay to Dominion the amount of $6,800.00, together with interest thereon pursuant to s. 47(6) of the Schedule calculated from April 29, 2005.
Mr. Addae shall pay Dominion’s expenses in the amount of $13,292.73 (inclusive of G.S.T.).

EVIDENCE AND ANALYSIS:

Repayment

Pursuant to paragraph 47(1)(a) of the Schedule, Dominion is claiming repayment by Mr. Addae of monies paid by Dominion as a result of his claim for accident benefits. Paragraph 47(1)(a) of the Schedule provides (in part) that a person must repay to the insurer “any benefit under this Regulation [i.e., the Schedule] that is paid to the person as a result of … wilful misrepresentation or fraud.”

In this case, I have found that, in collusion with two other individuals, Mr. Addae made deliberate and material misrepresentations to Dominion. The inconsistencies in his sworn statement given to Dominion in February 2005 and his sworn testimony before me in February 2007 were so pronounced that I concluded that I could not rely upon the uncorroborated testimony of Mr. Addae. Furthermore, both a police expert and an engineer who specializes in accident reconstruction concluded that the damage to the vehicle in which Mr. Addae claims to have been a passenger could not have been caused in the type of accident described by Mr. Addae. The other vehicle allegedly involved in the accident could not be identified. For those reasons,² I found that Mr. Addae failed to prove that he had actually been involved in a motor vehicle accident on May 4, 2004 and that he had made wilful misrepresentations to Dominion.

As a result of and in reliance upon these misrepresentations by Mr. Addae, Dominion made the following payments:

Description	Amount Paid	Recipient
1. Income Replacement Benefits	$6,800.00	Mr. Addae (the insured)
2. Cost of Disability Certificate	88.50	Dr. Greenberg
3. Cost of Preparation of Treatment Plan	62.00	Dr. Bloom
4. Cost of Preparation of Treatment Plan	157.00	Dr. Bloom
5. Cost of Treatment	3,120.00	Accident Injury Rehabilitation Centre
6. Cost of assessment and Preparation of Application for Approval of an Assessment or Examination	242.00	Dr. Bloom
7. Cost of various DAC Assessments	3,934.56	Multi-Disciplinary Assessment Centre
8. Cost of DAC Assessment	455.00	West Park Assessment Centre
9. Cost of Insurer’s Examination (In-home Assessment)	1,404.27	Sibley & Associated Inc.
10. Cost of Verbatim Reported in Feb/05	121.98	Accardi & Miller Reporting Services Inc.
11. Cost of ordering transcript and tape of sworn statement given by Mr. Addae on Feb. 24/05	470.27	Accardi & Miller Reporting Services Inc.
TOTAL	$16,855.58

It is the uncontested evidence of Dominion that it notified Mr. Addae, by letter dated April 7, 2005, that because Mr. Addae wilfully misrepresented material facts with respect to his claim for benefits, Dominion was seeking repayment of the sum of $16,385.31.³ Dominion repeated its demand for repayment (albeit for a slightly higher amount) in its Response to Mr. Addae’s Application for Arbitration.

Pursuant to paragraph 47(1)(a) of the Schedule, a person is only required to repay to the insurer “any benefit under this Regulation that is paid to the person”. (emphasis added)

From the list of items for which Dominion is seeking repayment, only the income replacement benefits are benefits that were actually paid to Mr. Addae. None of the other amounts were paid to Mr. Addae.

Counsel for Dominion urged that the phrase “paid to the person” in paragraph 47(1)(a) of the Schedule should be read to mean “paid to or on behalf of the person” since, whether or not the money was sent directly to the insured person, that person has benefited from the goods or services for which the insurer has paid.

There are many examples within the Schedule where a claim can be made for expenses incurred “by or on behalf of an insured person” (emphasis added), including claims for medical benefits (s. 14), an attendant care benefit (s. 16), case manager services (s. 17), lost educational expenses (s. 20), expenses of visitors (s. 21), housekeeping and home maintenance services (s. 22), the cost of repairing or replacing damaged clothing, etc. (s. 23) and the cost of examinations (s. 24). It would have been a simple matter, therefore, for the drafters of the Schedule to have permitted insurers to claim repayment of benefits “paid to or on behalf of the [insured] person”. That is not, however, what paragraph 47(1)(a) requires.

There is recognition within the Schedule that while most payments must be paid to the insured person, pursuant to s. 44(2) of the Schedule, where the insurer is paying for goods or services provided in respect of the insured person, the insurer has the option of arranging to be invoiced directly and to pay that third party directly. Dominion argued that if the phrase “paid to the person” is read narrowly, then this will prejudice insurers in that they will not be able to claim repayment of those benefits under section 47, even where the insured person has wilfully misrepresented material facts or perpetrated a fraud, if the insurer has paid the benefits directly to the service provider. Dominion has submitted that this would be an absurd result.

While insurers may find such a result to be undesirable, it is not patently absurd. It would mean that an insured person is only responsible under paragraph 47(1)(a) to repay money that he or she actually received and will not be responsible under that provision to repay amounts that were paid by the insurer to a third party. Where the Schedule intends an insured person to be responsible for fees paid to a third party, it specifically and clearly says so, as in paragraph 47(1)(e).⁴ The phrase “paid to the person” is clear and unambiguous. Reading this phase in the context of the Schedule as a whole and giving this phrase its ordinary meaning, consistent with the consumer protection nature of the legislative scheme, I find that these words say exactly what they mean. A person can only be ordered to repay under paragraph 47(1)(a) benefits that the insurer paid to the person.

My interpretation of paragraph 47(1)(a) of the Schedule is consistent with the interpretation given to that paragraph relatively recently by Arbitrator Allen in Yusuf and Ahmed and TD Home and Auto Insurance Company (FSCO A04-001797 and A04-001522, May 31, 2006). Dominion has provided me with no cases that have adopted a contrary interpretation.

Furthermore, many of the expenses for which repayment is being requested by Dominion are not benefits, as I interpret that term. The term “benefit” is not defined in the Insurance Act or in the Schedule. Dominion has argued that any amount that an insurer is required to pay under the Schedule is a “benefit”. Dominion has provided no authority for this proposition and I reject it.

There is no question that if Mr. Addae had not made a claim for accident benefits under the Schedule, Dominion would not have been put to the expense of investigating the merits of his claims. That does not mean that every amount paid by Dominion in processing Mr. Addae’s claim is an accident benefit.

For example, the cost to Dominion of conducting an insurer’s examination, the fees paid by Dominion for various designated assessments and the cost to Dominion of the services of a verbatim reporter to record the interview of Mr. Addae and then prepare a transcript are not statutory accident benefits. With respect to the fees paid for designated assessments, that is specifically dealt with and limited to the circumstances described in paragraph 47(1)(e) of the Schedule. I find no general right to advance a claim for repayment of such fees under paragraph 47(1)(a).

Dominion is looking for complete indemnification. Dominion may well have remedies elsewhere for damages it has suffered as a result of its reliance upon any misrepresentations made by Mr. Addae. That is not, however, the issue before me. The issue before me is, “What amount, if any, must Mr. Addae repay to Dominion for benefits Dominion paid to Mr. Addae as a result of his misrepresentations, pursuant to paragraph 47(1)(a) of the Schedule?”

I find that the only benefit paid by Dominion to Mr. Addae as a result of his misrepresentations were income replacement benefits totalling $6,800.00. That is the amount to which Dominion is entitled under paragraph 47(1)(a) of the Schedule.

Mr. Addae opposes any order for repayment because he disputes the findings contained in my order of June 12, 2007 and because, according to the submissions of Mr. Addae, the administrative and criminal proceedings that have resulted from his claims for benefits have caused him both great financial hardship and upset. I do not have any actual evidence to support Mr. Addae’s assertion of financial hardship and, in any event, I do not find that to be a relevant consideration in deciding whether or not Mr. Addae has a legal obligation to repay to Domninion accident benefits that he received. Finally, given my determination that Mr. Addae has wilfully misrepresented material facts to Dominion and to the Commission, even if I found that I had discretion in these matters, I would not choose to exercise such discretion in favour of Mr. Addae.

For the foregoing reasons, I shall order Mr. Addae to pay to Dominion the amount of $6,800.00. Pursuant to s. 47(6) of the Schedule, Dominion is also entitled to interest⁵ on that amount from 15 days after the date it gave Mr. Addae notice of its claim for repayment. In this case, notice was provided by a letter dated April 7, 2005 that was sent by registered mail to Mr. Addae and by mail to his solicitors. Pursuant to section 68 of the Schedule, since there is no evidence to the contrary, the notice is deemed to have been given to Mr. Addae on the fifth business day after it was mailed (i.e., on April 14, 2005). Therefore, Dominion is entitled to interest on the $6,800.00 from April 29, 2005 at the applicable bank rate that was in effect on that date.

EXPENSES

Pursuant to section 12 of the Expense Regulation and subsection 282(11) of the Insurance Act, an arbitrator shall 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.
Whether the insured person refused or failed to submit to an examination as required under section 42 of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996) made under the Act or refused or failed to provide any material required to be provided by subsection 42 (10) of that regulation.

Counsel for Dominion submits that only the first and fifth of the above-noted criteria are relevant in this case. I agree. Dominion was almost entirely successful on this application and it was improper for Mr. Addae to have falsified information that he provided to the Insurer and to have commenced an application for benefits based upon that information. For both reasons, Dominion is entitled to its reasonable expenses related to this application.

Mr. Addae stated that he was not in a position to challenge the figures set out in Dominion’s Costs Outline but reiterated that he has no financial ability to pay any amounts to Dominion and stated that he opposes Dominion’s claim for its expenses.

(a) Fees

Dominion is asking for reimbursement of 100% of the time spent on this file by Ms. Takahashi, a junior lawyer (R. Squires) and a law clerk (R. Lam), from the time they received the Application for Arbitration to the end of the last day of hearing on October 2, 2007 (plus GST). For Ms. Takahashi, Dominion is requesting an hourly rate of $150.00. In total, more than $16,000 (plus GST) is being sought by Dominion as reimbursement for its legal fees.

Some of the fees claimed by Dominion are related to a motion heard by Arbitrator Nastasi on September 6, 2006. By order dated October 3, 2006, Arbitrator Nastasi ordered that each of the parties would bear their own expenses of the motion. It was inappropriate for Dominion to include as part of its Costs Outline (Exhibit 13) the expenses related to this motion, especially in light of the fact that the Applicant is unrepresented, cannot read English and only received the Costs Outline from Dominion shortly before this hearing. Accordingly, I shall reduce the expenses by an appropriate amount to ensure that none of Dominion’s expenses related to that motion are included in my order.

Similarly, I find that Dominion is over-reaching in the hourly rates that it has claimed for its legal representatives.

First, it is claiming an hourly rate of $150.00 for Ms. Takahashi. As Ms. Takahashi conceded, the appropriate hourly rate is usually set by the Legal Aid rate. Rule 78.1 of the Dispute Resolution Practice Code (the “Code”) authorizes the Commission to exercise its discretion to increase that amount up to $150.00 per hour, but only for an applicant’s counsel! Ms. Takahashi was able to find one decision⁶ where an arbitrator apparently inadvertently permitted this rate for an insurer’s counsel but I find that there is absolutely no statutory authority for so doing and Ms. Takahashi could not point to any provision of the Insurance Act, the Schedule or the Code that gives me the jurisdiction to make such an order.

Second, Ms. Takahashi urged that if I used the appropriate Legal Aid rate for her, that I use the new rate of $96.95 per hour. This rate, however, only came into effect as of April 1, 2007 and I find that it would be inappropriate to apply this rate to services provided to Dominion prior to that date. For services provided by Ms. Takahashi prior to April 1, 2007, the appropriate hourly rate is $92.34.

Having reviewed the Costs Outline filed by Dominion, having considered the submissions of Ms. Takahashi and Mr. Addae and having made appropriate adjustments to reflect a reasonable number of hours and the correct hourly rates determined in accordance with the Expense Regulation and the Code, I shall permit Dominion to recover the following legal fees:

Name	Hours	Rate	Total
Joan Takahashi	70 hours (up to March 31/07)	@ $92.34/hr.	$ 6,463.80
	10 hours (after March 31/07)	@ $96.95/hr.	969.50
R. Squires	2.8 hours	@ $73.87/hr.	206.84
R. Lam	50 hours	@ $23.00/hr.	$ 1,500.00
SUBTOTAL			$ 8,790.14
GST	6 %		$ 527.41
TOTAL			$ 9,317.55

(b) Disbursements

Dominion is claiming total disbursements of $6,216.02 ($5,864.17 plus $351.85 in GST).

I find that the disbursements claimed are reasonable except for the amount ($ 3,114.00 plus G.S.T.) being claimed for the attendance of Sam Kodsi (engineer) at the hearing in February 2007.

The maximum allowable amount for attendance of an expert witness is $200 per hour of attendance, up to a maximum of $1,600 per day. In addition, up to $500 may be awarded for preparation of such a witness.

Mr. Kodsi only testified for about one hour during the afternoon of February 21, 2007. An invoice from Origin and Cause Incorporated for the services of Mr. Kodsi is attached to the Insurer’s Costs Outline. This invoice (no. 22007) charges $3,114.00 plus G.S.T. (for a total of $3,300.84) and states that it covers “consulting services from February 14, 2007 through February 23, 2007”. There is no indication of the hourly rate being charged, how much time is attributed to February 21 (the date upon which Mr. Kodsi testified before me), how much time is attributed to the period of February 14 through February 20 and how much time is attributed to dates after February 21, 2007. In these circumstances, I find that a reasonable amount to permit for Mr. Kodsi’s time to prepare for and testify at the hearing would be $1,000.00 plus G.S.T.

All of the other amounts shall be permitted as claimed. Therefore, I shall permit Dominion to recover the following disbursements:

Item	Amount
Photocopies and Binding	$ 986.53
Courier Charges, Postage and Registered Mail	182.25
Process Server	1,097.87
Summons to Witness Conduct Money	424.00
Witness Fee for the preparation and attendance of Sam Kodsi	1,000.00
Faxes	54.25
Long Distance Charges	3.47
Quicklaw On-line research	1.80
SUBTOTAL	$3,750.17
GST	$ 225.01
TOTAL	$3,975.18

CONCLUSION

Accordingly, pursuant to subsection 282(11) of the Insurance Act, I find that Dominion is entitled to its expenses with respect to this arbitration in the amount of $13,292.73 (inclusive of G.S.T.).

November 9, 2007

Richard Feldman Arbitrator

ARBITRATION ORDER

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

Mr. Addae’s application is dismissed.
Mr. Addae shall repay to Dominion the amount of $6,800.00, together with interest thereon pursuant to s. 47(6) of the Schedule calculated from April 29, 2005.
Mr. Addae shall pay to Dominion its expenses in the amount of $13,292.73 (inclusive of G.S.T.).