Selma Shreet v. RBC General Insurance Company, 2008 ONFSCDRS 4

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

Neutral Citation: 2008 ONFSCDRS 4

FSCO A05-002602

BETWEEN:

SELMA SHREET

Applicant

and

RBC GENERAL INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: Judith Killoran

Heard: Written submissions received on October 31, 2007 and December 6, 2007 and a telephone conference call on December 7, 2007.

Appearances: Owen Elliot for Ms. Shreet Alexander Curry for RBC General Insurance Company

Issues:

The Applicant, Selma Shreet, was involved in motor vehicle accidents on January 4, 2004, May 27, 2004 and November 27, 2006. In a decision dated October 5, 2007, I dealt with Ms. Shreet’s claims for statutory accident benefits, related to the May 27, 2004 accident, under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

Ms. Shreet is not entitled to receive weekly caregiver benefits at the rate of $250 per week from September 3, 2004 to April 10, 2005 and $250 weekly from July 22, 2005 to May 27, 2006, pursuant to section 13 of the Schedule.
Ms. Shreet is not entitled to payments for housekeeping and home maintenance services at the rate of $100 per week from September 3, 2004 to April 10, 2005 and $100 per week from July 22, 2005 to May 27, 2006, pursuant to section 22 of the Schedule.
Ms. Shreet is not entitled to receive a medical benefit in the amount of $3,498 for treatment provided by Downsview Health Recovery, claimed pursuant to section 14 of the Schedule.

The issue in this further hearing is:

Is either party entitled to their expenses incurred in respect of this arbitration hearing? If so, what is the amount of expenses to which the party is entitled?

Result:

Each party shall bear its own expenses of the arbitration proceeding.

EVIDENCE AND ANALYSIS:

The expense hearing before me was conducted by way of written submissions from the parties and a teleconference for the purpose of hearing their supplementary oral submissions.

The relevant criteria that I have considered when making my decision are contained in the Expense Regulation under the Insurance Act as 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:

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.

The Expense Regulation has been modified over time. Prior to November 1996, arbitration expenses could be awarded only to the applicant. Generally, expenses were awarded to the applicant no matter the outcome of the arbitration. The Regulation was amended in November 1996 to allow an award of expenses to insurers. However, in the main, unsuccessful applicants continued to be awarded their expenses despite losing on the merits of their claim, except in unusual circumstances.

The Expense Regulation was amended again in 2003. One of the first decisions to consider the amended Regulation was the appeal in Pembridge Insurance Company and Howden.² The Director made these remarks about the effect of the changes to the Expense Regulation:

The new criteria, introduced on October 1, 2003, continue to 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.

RBC relied on Mathur and RBC General Insurance Company³, where the applicant was unsuccessful with his claims. In Mathur, the arbitrator stated, with respect to the changes in the Expense Regulation: “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.” The arbitrator went on to find that Mr. Mathur’s claims were not meritorious in any respect and awarded expenses to the insurer.

Ms. Shreet relied on Afriyie and TTC Insurance Company Ltd.⁴ where the applicant was unsuccessful and each party was ordered to bear its own expenses. She submitted that a lack of success at arbitration does not automatically make the applicant responsible for the insurer’s expenses. Ms. Shreet argued that the hearing concerned novel issues that needed to be determined. There was considerable confusion about causation and disability. Therefore, Ms. Shreet chose to participate in the dispute resolution process outlined in the Insurance Act in order to resolve the issues of causation and disability. RBC distinguished Afriyie on the basis that the applicant had been successful at a preliminary issue hearing.

CONCLUSION:

There is no issue that the Insurance Act is consumer protection legislation,⁵ which, according to section 10 of the Interpretation Act, is required to receive “such fair, large and liberal construction and interpretation, as will best ensure the attainment of the object of the Act according to it true intent, meaning and spirit.” The statute and its regulations must be interpreted in a purposive fashion which gives meaning to the remedial nature of the legislation. In this context, the Expense Regulation must be interpreted in such a way as to uphold both the protective and remedial nature of the legislation from which it flows. While changes to the Expense Regulation have moved toward a more results based approach to expenses, the approach cannot be entirely results based or the legislative purpose of the Insurance Act could be undermined.

Although I am required to apply the criteria enumerated in the Expense Regulation, I have the discretion to weigh each criterion appropriately in the circumstances of the case. The most relevant criterion, according to RBC, is each party’s degree of success. RBC argued that as RBC was successful on all issues and Ms. Shreet’s credibility was commented on in my decision, RBC should be fully entitled to its expenses. When I determined that Ms. Shreet was not entitled to any of the benefits claimed, I made some negative findings about the credibility of her caregiving and housekeeping claims and the believability of her testimony when it contradicted some of the documentary evidence.

While I attach importance to my negative credibility findings in the case before me, I agree with Ms. Shreet’s submission that a lack of success at arbitration does not automatically make the applicant responsible for the insurer’s expenses. In the case before me, the issues of causation and disability needed to be resolved through an arbitration proceeding. Also, Ms. Shreet’s fact situation was novel in that she was involved in three separate motor vehicle accidents. While I considered all of the enumerated factors in the Expense Regulation, I find that the question of raising novel issues, which required a decision from an arbitrator, was central to this proceeding. However, based on my negative credibility findings and RBC’s resulting success, I find that each party shall bear its own expenses of the arbitration proceeding.

January 11, 2008

Judith Killoran Arbitrator

Date