Parminder Rehsi v. Dominion of Canada General Insurance Company, 2007 ONFSCDRS 234

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

Neutral Citation: 2007 ONFSCDRS 234

FSCO A06-002468

BETWEEN:

PARMINDER REHSI

Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Elizabeth Nastasi

Heard: By telephone conference call on October 23, 2007.

Appearances: Jack Parsekhian for Mrs. Rehsi Jane Cvijan for Dominion of Canada General Insurance Company

Issues:

The Applicant, Parminder Rehsi, was injured in a motor vehicle accident on July 12, 2004. She applied for and received statutory accident benefits from Dominion of Canada General Insurance Company (“Dominion”), payable under the Schedule.¹ A dispute arose between the Applicant and the Insurer with respect to Ms. Rehsi’s entitlement to certain benefits. The parties were unable to resolve their disputes through mediation, and Ms. Rehsi applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issue in this hearing is whether Ms. Rehsi should be permitted to withdraw her claim for medical benefits and, if she is, whether Dominion is entitled to its expenses incurred in respect of this preliminary issue hearing.

Result:

Ms. Rehsi is permitted to withdraw her claim for medical benefits made pursuant to section 14 of the Schedule in the amount of $3,192.25 as set out in the October 28, 2004 treatment plan prepared by Dr. Kobrossi.
Dominion is entitled to its expenses incurred in respect of this preliminary issue hearing in the amount of $334.59 (inclusive of G.S.T. and disbursements) to be paid at the conclusion of the hearing in any event of the cause.

EVIDENCE AND ANALYSIS:

A pre-hearing in this case was held on May 7, 2007. The pre-hearing letter listed several issues in dispute including income replacement benefits, medical benefits, housekeeping benefits, a section 24 assessment and interest and expenses. At the time of the pre-hearing a preliminary issue hearing was scheduled for October 23, 2007. The Insurer argued that pursuant to section 50 of the Schedule Ms. Rehsi was precluded from claiming the $3,192.25 in medical expenses set out in the October 28, 2004 treatment plan by Dr. Kobrossi.

The Insurer denied the costs associated with the disputed treatment plan on January 18, 2005 and arranged for a medical rehabilitation DAC assessment on March 17, 2005 and March 24, 2005. On or about March 4, 2005, the Insurer received correspondence from the Applicant’s representative indicating that she was withdrawing her claim to the disputed treatment plan and therefore would not be attending at the scheduled DAC assessment.

Dominion submits that it was “vexatious” for the Applicant to have proceeded to mediation and arbitration on the issue of the October 28, 2004 treatment plan. The Insurer submits that they had made several attempts to advise Applicant’s counsel of the matter and their position was set out in their Response. Insurer’s counsel submits that she requested that this issue be withdrawn at the pre-hearing but Ms. Rehsi refused to do so and thus the Insurer was “forced” to proceed to a preliminary issue hearing.

By way of faxed letter dated October 17, 2007, one week before the scheduled preliminary issue hearing, counsel for the Applicant wrote to the Commission and advised that Ms. Rehsi was “abandoning” her claim to the medical benefit which was the subject matter of the preliminary issue hearing. Further, the letter noted that the Insurer did not consent to the withdrawal. In that October 17, 2007 letter, the Applicant requested that the issue of costs be assessed by the hearing arbitrator.

Ms. Rehsi cannot unilaterally withdraw her claim. Pursuant to Rule 70 of the Dispute Resolution Practice Code (Fourth Edition, Updated October 2003) (the “Practice Code”), a party may seek a withdrawal of a single issue or all issues in an arbitration. An arbitrator may grant the request, impose terms and conditions, or may refuse the request entirely if appropriate. An arbitrator may also make an award on expenses as permitted by Rule 75.

The Insurer did not consent to the withdrawal on the basis that they are seeking their costs in preparing for the preliminary issue hearing. The Insurer requests that costs be assessed at this time and not by the hearing arbitrator as the issue of the treatment plan will no longer be a live issue at the hearing. The Insurer referred me to the case of McCormack and Aviva.²

I permit Ms. Rehsi to withdraw her claim for medical expenses in the amount of $3,192.25 as set out in the October 28, 2004 treatment plan from the upcoming arbitration hearing.

I find that the Applicant’s delay in withdrawing the treatment plan as an issue in dispute caused some expenses to be incurred in preparing for the preliminary issue hearing. Further, the Applicant did not provide any reasonable explanation for the late withdrawal. I find that the Insurer is entitled to its reasonable costs.

I agree with the Applicant’s submission that the facts in this case do not amount to an abuse of process. I find that including the treatment plan as an issue in dispute at the mediation and pre-hearing discussion has not caused any significant additional expenses to be incurred or resulted in excessive delay in this case. I further agree that the case of McCormack and Aviva can be distinguished from this case. In McCormack, the withdrawn issue was the sole issue in dispute (other than interest and special award) whereas in this case, the treatment plan was merely a small portion of the entire claim proceeding to arbitration.

In the case of McCormack and Aviva, counsel for the Insurer argued that the conduct of the Applicant’s counsel had caused expenses to be incurred without reasonable cause. The arbitrator in that case ordered that Applicant’s counsel was responsible for the Insurer’s expenses pursuant to section 282(11.2) of the Insurance Act. In the case before me, Dominion did not argue that the Applicant’s counsel should be personally responsible for any expenses owing.

I will now turn to the issue of quantum of expenses being claimed. The hourly rates claimed by Insurer’s counsel are in excess of the Legal Aid hourly rates as required by Rule 78 of the Practice Code. The Insurer’s position is that an arbitrator always has the discretion to award any amount of expenses. In addition, Dominion argues that in this case, the higher hourly rate of $150 is appropriate because of the late timing of the Applicant’s withdrawal. I do not agree.

Under the Schedule to the Expense Regulation³, legal fees may be awarded for all services performed before an arbitration hearing, preparation for the hearing, attendance at the hearing and for services subsequent to the hearing.⁴ 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.⁵

The maximum amount that may be awarded for legal fees is the amount calculated using the hourly rates set out in the Practice Code.⁶ 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. The reference in this section to the hourly rate of $150 is only in respect of legal fees claimed by the “insured person” and not an insurer.⁷ The Insurer did not refer me to any cases supporting the argument that an arbitrator has the discretion to award costs at any rate.

Expense Regulation does explicitly say that “… an arbitrator shall consider the conduct of a party or party’s representative that tended to prolong, obstruct or hinder a proceeding when awarding expenses.” However, this section applies with respect to determining the number of hours for which legal fees may be awarded and not the hourly rate of those fees. The Expense Regulation does not allow for a higher more punitive hourly rate based on the conduct of the party or their representative.

Dominion provided me with a Bill of Costs in which they claimed 2.4 hours for the time of counsel Jane Cvijan and Christopher J. Schnarr at the rate of $255.00 and $390.00 respectively for a total of $894.00. However, the hourly rate charged by each lawyer did not comply with the Legal Aid Ontario hourly rates tariff. After making the necessary rate adjustments, I allow the total number of hours claimed (2.4 hours) at an hourly rate of $87.26 for Jane Cvijan⁸ and $96.95 for Christopher J. Schnarr⁹ for a total of $211.36.

Dominion claimed $123.23 for disbursements. I have accepted all of their disbursements.

I find that Dominion is entitled to its expenses in this preliminary issue hearing in the amount of $334.59 (inclusive of G.S.T. and disbursements) to be paid at the conclusion of the hearing in any event of the cause.

November 26, 2007

Elizabeth Nastasi Arbitrator

Date