Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 6

FSCO A05-000196 and A05-000197

BETWEEN:

DENISE UDELE PETERS and DIANE ANDREA PETERS

Applicants

and

AVIVA CANADA INC.

Insurer

DECISION ON EXPENSES

Before:

John Wilson

Heard:

Written submissions were received on June 21, 2006.

Appearances:

David J. Gillespie for Ms Peters

Catherine A Temple for Aviva Canada Inc.

The Applicants, Denise and Diane Peters, claimed death benefits following the death of their mother in a motor vehicle accident on December 22, 2003. In a decision dated April 10, 2006, I dealt with their claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses and final quantum of the interest and special award:

Aviva shall pay to Denise and Diane Peters each $12,500 as payment of a supplementary death benefit under section 25(2)3 of the Schedule.
Aviva shall pay statutory interest at the rate of 2 percent per month, compounded monthly on the above death benefit. The parties shall have 30 days to agree on the amounts due under the interest claim, failing which I will receive brief written submissions on the quantum of the interest award.
Aviva shall pay Denise and Diane Peters a special award at 50 per cent of the withheld death benefit together with interest on all amounts owing to them, the maximum rate permitted by the Insurance Act. Since the calculation is based on not only the benefit withheld, but also interest outstanding, the parties shall have 30 days to agree on the amounts due as a special award, failing which I will receive brief written submissions on the quantum of the special award.
Denise and Diane Peters were successful in all aspects of their claim. I am aware of no formal offers to settle that would affect an expense award. Therefore, Denise and Diane Peters shall have their expenses in this matter paid by Aviva.

The issue in this further hearing is:

What is the amount of expenses that Denise and Diane Peters are entitled to by reason of the above order?
What is the amount of interest and special award that Denise and Diane Peters are entitled to by reason of the above order?

Aviva shall pay the amount of $9,628.43, as the expenses and disbursements in this matter.
The interest amount payable as of April 10, 2006 is $14,173.50.
The amount of the special award is $39,173.50.

As noted above, at the time of the previous decision on entitlement in this matter, I asked the parties to provide submissions as to the appropriate amounts owing under the various headings. Both parties sent their own figures for the interest, and the amount of the special award. Both sets of figures differed. There is no explanation of the difference, nor any explanation by either party as to what, if any different assumptions were made in calculating the interest amount.

Given the lack of supporting information, and the relatively small differences in the figures put forward, I will make my determination based on the evident agreement between the two parties that at least an interest amount of $14,173.50 (the lower of the two figures) was contemplated by both parties.

Expressed otherwise, Mr. Gillespie's assertion that a higher amount should be attributed to interest is unsupported in evidence and I find that the Peters have not met their burden of so proving.

Based on the same analysis, the accepted interest amount would appear to then translate into a special award of $39,173.50. The effective date for the above calculations would be the date of my previous order; April 10, 2006. Interest on any unpaid balance of this award will be payable as of that date as well.

Interest post-April 10, 2006

Having found the amounts that were owing as of April 10, 2006 does not, however, end this matter. There is still the question of what happens between the April date and the date on which all monies owing under this claim will have been paid. Given the significant difference between the statutory interest set out in the Schedule and current bank rates, the rate of interest, post-arbitration can be important.

Section 46 of the Schedule, dealing with statutory interest, provides that:

(1) An amount payable in respect of a benefit is overdue if the insurer fails to pay the benefit within the time required under this Part. O. Reg. 403/96, s. 46 (1).

(2) If payment of a benefit under this Regulation is overdue, the insurer shall pay interest on the overdue amount for each day the amount is overdue from the date the amount became overdue at the rate of 2 per cent per month compounded monthly.

The French version of the Schedule makes the wide range of the word "benefit"² quite clear. The French term, "Indemnité", according to the dictionary definition means:

(a) Indemnity, indemnification, compensation (for loss sustained) (b) Penalty (for delay, non-delivery) (c) allowance, grant I. de chomage, unemployment benefit: F; dole I. de charges de famille, child allowance, I. de route, de déplacement, travelling expenses or allowance I. parlementaire = M.P.'s salary.

"Benefit" then cannot be construed narrowly. Since any withholding of an amount payable in respect of, or concerning a benefit can attract the statutory interest, the range of such payments potentially attracting interest goes beyond merely those items entitled "benefits."³ The analysis is dependent on whether the payment functionally relates to a benefit or indemnité, not whether it is so named.

Section 3(1) of the Schedule also provides for statutory accident benefits to "be provided under every contract of insurance." The interest provisions contained in section 46 of the Schedule form part and parcel of the statutory accident benefit scheme and hence, the contract of insurance.

There would seem to be no strong reason that unpaid interest which is due or payable should be an exception to this rule, especially since the courts have agreed that the statutory interest under the Schedule is compensatory⁴ rather than punitive, and indeed forms part of the compensation agreed upon in the contract of insurance.

While the alternative might be to apply the post-judgement interest provisions of the Courts of Justice Act, these provisions relate specifically to court judgements, not arbitral orders. While section 19. (1) of the Statutory Powers Procedure Act⁵ provides for a certified copy of a tribunal's decision or order in a proceeding to be filed in the Superior Court of Justice, the result is that such an order is enforceable as an order of the Superior Court, not that the provisions of the Courts of Justice Act are imported holus bolus into the administrative forum.

More pertinently, section 129(5) of the Courts of Justice Act provides:

Interest shall not be awarded under this section where interest is payable by a right other than under this section. R.S.O. 1990, c. 43, s. 129.⁶

Even if the post-judgement interest rate provisions of the Courts of Justice Act were to be applied to arbitration orders, I accept that statutory interest under section 46 of the Schedule constitutes interest "payable by a right other than under this section."

It follows therefore, that any delays in honouring any of the payment obligations should continue to attract the interest rate provided for in the contract, even after the decision has been rendered, until paid.⁷

Therefore, the above amounts ($39,273.50 - special award and $14,173.50 - interest to April 10, 2006) will continue to bear interest at the rate of 2 per cent per month compounded monthly from April 10, 2006 until paid in full by the Insurer.

EXPENSES:

As noted, I found that barring extraordinary circumstances the Peters were entitled to have their expenses in this matter paid by Aviva. No such circumstances that would disentitle them to or reduce an award of expenses have been brought to my attention.

Mr. Gillespie has served and filed his Bill of Costs. The total costs in this matter were given as $8,400.00, with a further $1,228.43 in disbursements, totalling $9,628.43.

The traditional approach to dealing with expenses at the Commission has not been to deal with the Bill of Costs on a line by line basis. At times this is difficult to avoid, when a party makes principled objections to specific disbursements based on monetary limits contained in the Code. Such is not the case here.

The Expense Regulation uses the term "expenses" instead of the more usual word "costs" in the context of a reimbursement of legal expenses incurred by a party to an arbitration. While the word "costs" generally refers to the practice of providing an allowance to a successful party, based on known scales or tariffs, to indemnify him or her for some of the expenses incurred, "expense" seems to have a more simple meaning. The Canadian Oxford Dictionary defines "expense" as:

cost incurred; payment of money. 2a. costs incurred in doing a particular job etc. (will pay your expenses) b. an amount paid to reimburse this....

Clearly, the legislature in using the word "expense" meant to indemnify a party for its actual incurred expenses up to any statutory limit.

Rule 78 of the Code provides for maximum amounts to be allowed for legal services, based on the legal aid tariff, and an exception for experienced applicant's counsel, limits on the fees to be charged by expert witnesses for reports, and for the transportation and preparation of expert witnesses. The limits with regard to legal fees do not form part of either the primary or subsidiary legislation. They exist, rather, as a presumptive guideline, subject to the ultimate discretion of the arbitrator to set aside under the wide-ranging provisions of Rule 81. There is no such flexibility permitted, however, with regard to charges for expert testimony and reports.

Counsel for Aviva reviewed the claim for expenses and commented that Mr. Gillespie's hourly rate should be restricted to $73.87 per hour rather than the $150.00 per hour claimed in the Bill of Costs.

Mr. Gillespie has listed his year of call to the bar as 1981. He is clearly a lawyer of some experience. As well, he has achieved considerable success for his clients. A special award at the maximum rate is a rare event in this forum. I remarked in my earlier decision:

As noted earlier, counsel for the Peters was fastidious in providing both the application documentation, and a copy of the Court of Appeal case they relied upon in pursuing the alternative to spousal benefit. It would appear that the Insurer had everything in hand that it needed to process the benefit, and pay the claim, within a reasonable time.

There was clearly a relation between Mr. Gillespie's skilled conduct of this matter and the outcome.

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." Given Mr. Gillespie's year of call, his obvious experience, his presentation of this matter and the outcome, I have no hesitation that he is entitled to charge the $150 per hour rate, and I so find.

The Insurer not having challenged other items on the Bill of Costs, and there being nothing unusual or untoward apparent in the Bill of Costs, I order it paid as presented. Consequently, Aviva shall pay the amount of $9,628.43, as the expenses and disbursements in this matter.

January 10, 2007

John Wilson Arbitrator

Date