Sipon Rahman v. TD General Insurance Company, 2007 ONFSCDRS 226

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2007 ONFSCDRS 226

FSCO A05-002690

BETWEEN:

SIPON RAHMAN

Applicant

and

TD GENERAL INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: Robert A. Kominar

Heard: Telephone conference call on April 26, 2007

Written submissions received on November 8 and November 15, 2007

Appearances: Peter S. Carlisi for Mr. Rahman

Anne Walker for TD General Insurance Company

Issues:

The Applicant, Sipon Rahman, was injured in a motor vehicle accident on November 15, 2002. In a decision dated February 9, 2007, I dealt with his claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

Mr. Rahman entered into a binding full and final settlement with TD General of all accident benefit claims arising out of his accident on November 15, 2002. As [a] result Mr. Rahman is precluded from further mediating or arbitrating any accident benefit claims arising out of this accident.

The issue in this further hearing is:

Is either party entitled to expenses incurred in respect of this arbitration hearing, and if so in what amount?

Result:

TD General is entitled to expenses, assessed in the amount of $5,597.93 inclusive of GST.

EVIDENCE AND ANALYSIS:

Mr. Rahman applied for arbitration of claims he was asserting for certain accident benefits. Following the hearing, I dismissed Mr. Rahman’s claims on the basis of my finding that TD General Insurance Company (“TD”) was entitled to rely upon a full and final settlement of his accident benefit claims which Mr. Rahman entered into prior to retaining Mr. Carlisi. I encouraged the parties to attempt to resolve the issue of expenses between themselves. However they were unable to do so and have requested that I rule on entitlement to expenses and assess the amount if I find any entitlement.

In determining whether either party is entitled to expenses an arbitrator is governed by the provisions of the Expense Regulation of the Insurance Act.² The relevant criteria set are out below along with my findings in respect to each of them:

Each party's degree of success in the outcome of the proceeding.

In this arbitration Mr. Rahman was unsuccessful in satisfying me that he had not earlier settled the claims raised in this arbitration. My findings reflected my view that there was strongly consistent evidence to support TD’s view of the facts and that there were numerous inconsistencies in Mr. Rahman’s version of events. Further, I found that the evidence provided by Mr. Rahman’s prior legal representative, Mr. Caprani, unequivocally supported TD’s position. In essence, my conclusion was that, despite the fact that Mr. Rahman now regrets having settled his accident benefit claims, he nonetheless did settle them. As a result, TD was completely successful in resisting Mr. Rahman’s claims in this arbitration. In my view, this was not even a close case.

Any written offers to settle made in accordance with subsection (3).

No written offers to settle were provided to me for consideration and thus this criterion is not relevant here.

Whether novel issues are raised in the proceeding.

Mr. Carlisi argued that Mr. Rahman should not be penalized through an expense award in these proceedings, due to the fact that there were novel issues raised in the arbitration. As I understand Mr. Carlisi’s submissions, the novelty arises out of the issue of whether Mr. Rahman should have been allowed to resile from this settlement based on his claim that he had not received adequate legal representation from Mr. Caprani. TD’s response to this argument was that, as between Mr. Rahman and TD, there was nothing particularly novel about this situation, and that it in fact had nothing to do with TD at all. Rather, the issue was one that ought to have been sorted out between Mr. Rahman and Mr. Caprani. In my decision I agreed with TD’s point of view and found that Mr. Rahman’s locus of recourse, if he in fact has any, seems to lie with Mr. Caprani and not TD.

As a result, any novelty in the issues in this arbitration was completely unwarranted. The issues raised in this arbitration are “novel” only in the sense that Mr. Rahman attempted to transform what was really a dispute with his former legal representative into a dispute with the insurer who was dealing with that legal representative in good faith at the time the settlement occurred. In my view, this is not the sort of “novelty” the regulation intends. Novelty has to be assessed within a general context of a reasonably plausible extension or development in the law or a rather unusual or complex factual background. To accept Mr. Carlisi’s argument would mean that the more outlandish and fantastic a claim or argument is the more likely it would not attract any expense consequences. One could shield oneself from an expense award simply by making unwarranted claims. This clearly is not the intention of the regulation’s novelty criterion. As a result, I find that there were no relevantly novel issues raised in this arbitration such that this criterion should be applied in Mr. Rahman’s favour.

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.

Neither party made submissions in this regard, and I do not find that either party engaged in any behaviour that would warrant the application of this criterion.

Whether any aspect of the proceeding was improper, vexatious or unnecessary.

I have no grounds to conclude that Mr. Rahman was acting improperly or vexatiously in pursuing his claims in arbitration. I understand that he feels regretful about the settlement he made of his accident benefit claims and that he has now obtained legal advice that suggests that he might have negotiated something better. Arbitrators do have the authority to determine whether settlements are binding or not and, to that extent, this was an appropriate forum to have that issue determined. I also find that both parties agreed to have the issue of the validity of settlement determined expeditiously and prior to spending more time and money on disputing the actual substantive claims which Mr. Rahman was claiming. This was, in my view, an efficient and reasonable use of resources all around.

TD’s perspective is that, notwithstanding the above, the proceeding was still unnecessary, as the evidence very clearly reflected that the settlement was compliant with the law and even Mr. Caprani confirmed that there was never any doubt that the parties were negotiating a full and final settlement of Mr. Rahman’s accident benefit claims. In essence TD’s argument is that, since this case was as clear as it was on the facts, it was not prudent for Mr. Rahman to cause the insurer to incur the costs of defending the application.

Mr. Carlisi raises concerns about access to justice and the right of individuals to have disputes with insurers resolved by an impartial adjudicator. I take these submissions seriously. It is important, in my view not to discourage people from bringing disputes to arbitration which they cannot resolve between themselves or with the help of a mediator. The fact that Mr. Rahman was wrong in his interpretation of the situation here does not render the arbitration process unnecessary.

The prospect of having to pay expenses of the other party can serve as that form of deterrent and therefore there must be, in my view, a balance struck between fostering an environment where expenses act as an unwarranted barrier to parties seeking recourse and an environment where broad based exemptions from having to pay expenses after losing a case discourage careful reflection and informed decision making about which cases to press through the full dispute resolution process. Striking this balance fairly involves the exercise of an arbitrator’s discretion in many situations, and I believe that this case is one of them.

Although Mr. Rahman lost the case I find that, given his circumstances as a recent immigrant to Canada and given that he was dealing with a paralegal, a group of practitioners which have been now subjected to regulation by the Law Society of Upper Canada, I am prepared to find that it was necessary for him to have this matter adjudicated to bring some closure to the issue for him. I make this finding based on the importance of maintaining the integrity of the dispute resolution process at the Commission and the public perception that it is accessible to all.

My conclusion on entitlement to expenses in these circumstances is that TD General is entitled to its expenses in the arbitration. However those fees, which I assess below, shall be reduced by 40% to reflect my belief that Mr. Rahman and Mr. Carlisi were in good faith exploring whether the settlement here was binding or not. I find this to be a fair result that reflects both TD’s success on the issue and Mr. Rahman’s right to have his concerns heard by a neutral third party.

Ms. Walker submitted a Bill of Costs which I generally find to be in order and in accordance with the Legal Aid Tariff in effect at the time of the proceedings. I allow the following:

Fees:

Preparation & Attendance at Pre-Hearing 12.6 hours $1,047.06

Attendance at Preliminary Hearing 18.5 hours 1,537.35

Preparation for Preliminary Hearing³ 40 hours 3,324.00

Preparation & Attendance Expense Hearing 6 hours 498.60

Law Clerk 10.7 hours 246.10

Total Fees Allowed $6,653.11

Reduced by 40% $3,991.87

Disbursements:

Photocopies $ 632.82

Courier Charges 108.58

Process Server 441.80

Attendance Money 106.00

Ms Walker also claimed as disbursements Quicklaw research fees, which I decline to award. She also claimed $15.05 for TTC fares, which I also decline to award.

Total Disbursements allowed $1,289.20

In summary, TD is entitled to its expenses assessed as follows:

Fees $3,991.87

Disbursements 1,289.20

GST 316.86

Total $5,597.93

November 19, 2007

Robert A. Kominar Arbitrator

Date