Sanjay Mathur v. RBC General Insurance Company, 2007 ONFSCDRS 230

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2007 ONFSCDRS 230

FSCO A06-000931

BETWEEN:

SANJAY MATHUR

Applicant

and

RBC GENERAL INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: David Muir

Heard: Written submissions received by September 14, 2007 and a telephone conference call on November 16, 2007.

Appearances: Mr. Vikram Kapur for Mr. Mathur

Alexander Curry for RBC General Insurance Company

Issues:

The Applicant, Sanjay Mathur, was injured in a motor vehicle accident on September 27, 2005. In a decision dated March 30, 2007, I dealt with his claims for statutory accident benefits under the Schedule.¹ I made the following order, while reserving on the issue of expenses:

The Application for arbitration is dismissed.

The issue in this further hearing is:

Is either party entitled to their expenses incurred in respect of this arbitration hearing?

Result:

RBC is entitled to its expenses in the amount of $5,300.

EVIDENCE AND ANALYSIS:

After reviewing the written submissions of the parties and hearing their supplemental oral submissions, I ruled orally that RBC was entitled to its expenses in an amount that I would fix upon review of the written material provided.

The criteria that I am now required to consider are contained in the Expense Regulation² under the Insurance Act³ and are set out below:

12(1) The expenses set out in the Schedule are prescribed for the purpose of subsection 282 (11) of the Act.

(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:

1. Each party’s degree of success in the outcome of the proceeding.

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

3. Whether novel issues are raised in the proceeding.

4. 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.

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

It is important to recall that the expenses regime applicable to these claims has evolved over time. Prior to November 1996, arbitration expenses could be awarded to the Applicant only, and not to the Insurer. Expenses were normally awarded to the Applicant despite the outcome of the arbitration, unless the claim was fraudulent or frivolous or the Applicant engaged in some other conduct which merited intervention on expenses.

Amendments to the Regulation in November 1996 allowed arbitrators to award expenses to insurers as well as to Applicants. Criteria for determining entitlement to an expense Order were included in the Regulation. These criteria were with one important exception similar to the existing ones. The changes were recognized as having signaled a legislative intent to move the expenses regime further along a continuum to a more results oriented approach. Despite the changes, unsuccessful Applicants continued to be awarded their expenses despite losing on the merits of their claim unless it was found manifestly unfounded or borderline fraudulent.

As noted, the Regulation was amended again in 2003. Amongst the first decisions to consider the current expenses regime was an appeal decision in Pembridge Insurance Company and Howden.⁴ The appeal was argued prior to the change in the Regulation, but the decision was released some two months after the changes were effective.

After describing the legislative history of the expenses rules as discussed earlier, the Director made the following concluding remarks on the effect of the changes:

The new criteria, introduced on October 1, 2003, continue the move toward a more results based approach to expenses. The list of criteria have been changed to some extent, but more significantly, the criteria are now the only factors that can be considered and there is no longer a broad, “any other matter” criterion.

There is no doubt that the new expense regulation has tilted the scheme away from the situation where insured persons were generally entitled to their expenses unless their case was patently lacking any merit at all. Accordingly, I think it plain that unsuccessful applicants are much less likely to get all or indeed any, of their expenses paid than would have been the case under the predecessor expenses regime. Further, given the clear legislative signal evidenced by the most recent changes, it is my view that where an applicant brings no case at all, it will be an unusual situation where the insurer will not be entitled to at least some of its expenses.

Mr. Mathur submits that his claims, while unsuccessful, were meritorious. I do not agree. Mr. Mathur’s claims were not meritorious in any respect. Mr. Mathur was completely unsuccessful in advancing his claims. The essence of my reasons in finding that Mr. Mathur was not entitled to further benefits is captured in the following passages:

As a general proposition, Mr. Mathur’s claim to be a primary caregiver and largely responsible for other homemaking duties is plausible. RBC agreed as well and paid these benefits to Mr. Mathur until late January 2006. The difficulty in making a finding of entitlement beyond that time is a product of the manifest inconsistencies and discrepancies in Mr. Mathur’s evidence respecting his responsibilities pre-accident as well as his needs post accident. These factors combined with the lack of detail of his responsibilities prior to the accident, most particularly with how they related to what his wife did and did not do, make it entirely unclear what Mr. Mathur’s caregiver and housekeeping needs were as a result of the injuries he sustained in the accident.

As I indicated at the oral expense hearing it is for these reasons, there being nothing else that would support a finding of entitlement, that I have concluded that Mr. Mathur is not entitled to have his expenses paid by RBC.

RBC claims that it is entitled to its expenses. It relies primarily on the first criteria and what I have characterized as its complete success in defending these claims. I accept that submission in this instance. In addition to being completely unsuccessful in vindicating his claim to any further benefits, Mr. Mathur raised no substantial issue with RBC’s decision to terminate benefits. It is also submitted by RBC that Mr. Mathur’s failure to comply with the pre-hearing arbitrator’s orders ought to be considered as well, in assessing both entitlement to and quantum of an expense order. I agree to some degree, although the transgressions of Mr. Mathur in this case were not egregious and are more than balanced by RBC’s decision to keep alive a preliminary issue through the hearing that apparently was entirely without merit. Accordingly, I find that RBC is entitled to have its reasonable expenses of the arbitration paid by Mr. Mathur.

I have considered the Bill of Costs submitted by RBC. It looks generally appropriate, although as I pointed out at the hearing the hourly rates used to calculate the legal fees were not correct. Taking into account the appropriate hourly rate for insurer’s counsel of $96.95 per hour and considering the fact that an unmeritorious section 50 defence was kept alive for only strategic purposes, I fix the expenses payable by Mr. Mathur to RBC at $5,000 plus G.S.T. of $300.

November 22, 2007

David Muir

Arbitrator

Date