Mr. C v. Kingsway General Insurance Company, 2009 ONFSCDRS 126

Financial Services Commission of Ontario

Neutral Citation: 2009 ONFSCDRS 126 Appeal: P08-00025

Office of the Director of Arbitrations

Mr. C, Appellant and Kingsway General Insurance Company, Respondent

Before: Delegate Lawrence Blackman

Representatives: Mr. C represented himself Ms. Jennifer A. Reid for Kingsway General Insurance Company

Hearing Date: September 15, 2009, by telephone conference call

Appeal Expenses Order

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The Respondent is entitled to its legal expenses of this appeal, fixed in the amount of $1,548.19, inclusive of GST.

September 18, 2009

Lawrence Blackman Director's Delegate

Reasons for Decision

I. Nature of the Appeal

The Appellant, Mr. C, was involved in three motor vehicle accidents in 2001. My March 26, 2009 appeal decision dismissed the Appellant's July 16, 2008 Notice of Appeal and confirmed the Arbitrator's June 27, 2008 order dismissing the Appellant's accident benefits claims under the Schedule.¹

The parties were unable to agree on the legal expenses of this appeal. The Respondent, Kingsway General Insurance Company, seeks $3,299.52 in legal expenses. The Appellant submits that both parties should bear their own legal expenses of this appeal.

II. Entitlement to Legal Expenses

The Respondent submits that the five criteria of Rule 75.2 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the "Code") entitle it to its legal expenses for the following reasons:

(a) the Appellant was completely unsuccessful on appeal (criterion "a"); and,

(b) the Appellant's appeal was without merit and the claims made by the Appellant on appeal were frivolous, unnecessary and had no basis in law (criterion "e").

The Respondent submits that no offer to settle was made in this proceeding (criterion "b"), none of the issues in appeal could be considered novel (criterion "c") and neither party prolonged, obstructed or hindered the proceeding (criterion "d").

The Appellant's written submissions stated that his appeal was neither frivolous nor unnecessary. Rather, he submitted that his appeal raised legitimate concerns and referenced appeal decisions where legal expenses were not awarded when legitimate challenges to the arbitration decision were raised.² In oral submissions, the Appellant stated that he did not know how to bring out the factual errors he saw in the arbitration decision other than by appealing the decision.

The Respondent's written submissions argued that the criteria in section 75 of the Code are exhaustive. In any event, it submitted that the cases cited by the Appellant were distinguishable as there was either mixed success on appeal or novel issues were raised, whereas in this case the Appellant, arguing errors of fact, simply disagreed with the Arbitrator's decision.

Subsection 75.2 of the Code states that the "adjudicator will consider only the criteria referred to in the Expense Regulation found in Section F of the Code." Section F of the Code refers to the section 12 excerpt from R.R.O. 1990 Regulation 664 made under the Insurance Act, as amended to O. Reg. 275/03. Regulation 664 has been further amended by O. Reg. 548/05, s. 1, to include a further criterion that is not relevant here, namely failure to submit to a section 42 examination under the Schedule.

Nonetheless, both versions of subsection 12(2) of Regulation 664 refer solely to an arbitrator considering only the listed criteria. The Regulation is silent regarding appellate adjudicators.

While these criteria may not be exhaustive on appeal, they are relevant considerations. In any event, as stated in Halim and Security National Insurance Co./Monnex Insurance Mgmt. Inc., (FSCO P07-00035, November 21, 2008):

... these expense criteria do not exist in a vacuum, segregated from the overall legislative intent. Rather, the criteria are defined by, and help define the broader, overarching legislative intentions, including consumer protection, as set out by the Supreme Court of Canada in Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, which encompasses a fair and reasonable measure of access to justice.

Further:

... as stated by Arbitrator Rogers in Mulhall and Wawanesa Mutual Insurance Company, (FSCO A04-000384, June 16, 2006), no guidance is given in the legislation as to "what factors are to be considered in assigning weight."

In Sarpong and Owusu and TD Home and Auto Insurance Company, (FSCO P08-00003 and FSCO P08-00004, June 19, 2009), I stated that:

Legal costs are an important regulator of litigation within the context of fair and reasonable access to justice. I do not see that the legislation views legal costs as red lights impeding meritorious claims or defenses raised in good faith. Nor do I see the legislation viewing legal costs as a green light to claims or defenses of dubious merit, bad faith or poor choice.

Legal costs, in this first party dispute resolution system, are an aid to the advancement of justice and a caution against abuse or excesses.

As noted, an appeal from the decision of an arbitrator under subsection 283(1) of the Insurance Act is restricted to issues of law. Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, states that "an appeal is not a retrial of a case."

In this case, the Appellant raised legitimate concerns regarding certain findings of fact. However, the overall basis of the Arbitrator's decision was that he preferred, for the numerous reasons he provided, the expert evidence proffered by the Respondent. As noted, Rothwell v. Raes (1990), 2 O.R. 332 (C.A.) states that it is not for the appellate level "to weigh conflicting evidence or to reassess the relative merits of contradictory expert testimony," nor is it for appeals to substitute their findings of fact for those of the hearing arbitrator.

I am persuaded that this appeal was brought in good faith by a need, as the Appellant submitted, to show someone his concerns over certain factual findings in the Arbitrator's decision. The appeal was advanced throughout in a polite, fair, co-operative and expeditious manner. So too was the response to the appeal.

This appeal, however, on findings of fact after an extensive arbitration, while certainly not frivolous, was not a good choice. The Appellant stated that he did not believe there was anything novel in this appeal. The Applicant was completely unsuccessful on appeal. I find that the Respondent is entitled to its reasonable expenses of this appeal proceeding.

III. Quantum of Legal Expenses

The Respondent's Bill of Costs claims 35.1 hours of legal work. Oral submissions before me at the main appeal hearing were 2.1 hours (from 10:00 a.m. to 12:05 p.m.). A further 3.0 hours are allotted in the Bill of Costs for the appeal expense hearing. 30.0 hours, therefore, pertain to appeal preparation. The Respondent seeks a further $204.86 for disbursements.

The Respondent cites Henri and Allstate Insurance Company of Canada, (OIC A-007954, August 8, 1997) for the proposition that the main consideration in determining legal expenses is reasonableness. The Respondent submitted that the legal expenses claimed are reasonable, as orally submitted, based on the amount of material in the arbitration.

In arbitration, as stated by Arbitrator Sapin in Carr and Lombard General Insurance Co. of Canada, (FSCO A00-000411, April 12, 2002) arbitrators "have found ratios of preparation time to hearing time ranging from 1:1 to 4:1 to be reasonable, with the lower ranges reserved for less complex cases."

Given that the bulk of work done in appeals is preparing written submissions in advance of relatively short oral submissions, such a ratio is of limited assistance. Further, the sometimes relative brevity of written submissions in appeals reflects significant and considered effort in paring submissions to that which is truly helpful to the appeals adjudicator. Such specific labour should not be discouraged.

The Arbitrator herein, in considering the Respondent's legal expenses at arbitration, in his recent August 27, 2009 expense decision significantly reduced the over 400 hours claimed in preparation time at the arbitration, where the Appellant was represented.

In this appeal, I am not persuaded that 30.0 hours of preparation time was reasonably warranted to respond to roughly 2.5 pages of written submissions from an unrepresented Appellant, in addition to four pages in the Application for Appeal. The grounds for appeal were specific and concise, and would not warrant a review of nine hearing days of oral evidence and the full scope of the documentary evidence.

The Appellant was co-operative, polite, fair, succinct and expeditious throughout. It is important that same be appropriately recognized in assessing the quantum of legal expenses.

In these circumstances, I am reducing the amount allowed for preparation to $875.00, inclusive of GST (noting the hourly rates of $23.00, $77.56 and $96.95 submitted). I allow the 2.1 hours for the hearing at the senior counsel's hourly rate, amounting to $213.78, inclusive of GST, as well $244.31, inclusive of GST, claimed for appeal expense submissions.

No objection was made to the $215.10, inclusive of GST, claimed for disbursements and I am persuaded that same is reasonable.

Accordingly, I find that the Respondent is entitled to its legal expenses of this appeal proceeding fixed in the amount of $1,548.19, inclusive of GST.

September 18, 2009

Lawrence Blackman Director's Delegate

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Pembridge Insurance Company (Pafco Ins. Co.) and Howden, (FSCO P02-00031, May 17, 2004), Szabo and CAA Insurance Company (Ontario), (FSCO P03-00015, March 31, 2004) and State Farm Mutual Automobile Insurance Company and Berhe, (FSCO P02-00027, July 24, 2003).