Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2009 ONFSCDRS 16

Appeal P08-00033

Appellant

and

SECURITY NATIONAL INSURANCE CO./MONNEX INSURANCE MGMT. INC.

Respondent

BEFORE:

Delegate Lawrence Blackman

Mr. Arvin Gupta for Mr. Alnoor Jadavji

Mr. Gaspare Di Salvo and Mr. Christopher Caston for Security National Insurance Co.

HEARING DATE:

By written submissions received January 30, 2009

APPEAL ORDER

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

Pursuant to subsection 283(3) of the Insurance Act, the time is extended to September 26, 2008 for requesting an appeal of the Arbitrator’s July 15, 2008 decision.
The Affidavit of Mr. Alon Rooz, sworn November 24, 2008, is not allowed as fresh evidence. Exhibits “B” to “T” of the said Affidavit will form part of the appeal record.
The Respondent has ten days to serve and file, with supporting submissions, any further documentation, created up to and including August 29, 2008, that it requests form part of the appeal record. The Appellant has ten days to respond. My written decision, if required, will follow.

February 6, 2009

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL AND THIS PRELIMINARY ISSUE

The Appellant, Mr. Alnoor Jadavji, was injured in a September 7, 2005 motor vehicle accident. He subsequently applied for arbitration at the Commission regarding benefits claimed under the Schedule.¹ His proceeding, other than the issue of legal expenses, settled shortly before the arbitration hearing scheduled to begin on January 15, 2008.

On March 27, 2008, the Appellant submitted a Bill of Costs of $8,544.13, which Security National Insurance Co./Monnex Insurance Mgmt. Inc. (the “Respondent”) disputed. An expense hearing was held before Arbitrator Ashby (the “Arbitrator”) on May 9, 2008. The Arbitrator’s July 15, 2008 decision awarded the Appellant $6,628.75 “as his expenses of the arbitration.”

The Commission received the Notice of Appeal on September 26, 2008 and the Response to Appeal on October 22, 2008. The latter’s submissions included that the Appeal was out of time.

The Appellant’s subsequent written submissions included an affidavit of Mr. Alon Rooz, sworn November 24, 2008. Mr. Rooz was the Appellant’s counsel at the May 9, 2008 expense hearing. I allowed both parties until January 30, 2009 to provide any further submissions regarding the following preliminary issues, which would be determined based on the written submissions:

Was the Notice of Appeal filed in time?
Should fresh evidence be allowed in this appeal?
What is the record of the arbitration hearing, as set out in Rule 56.4 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”) regarding what is included in the appeal record?

II. THE SUBMISSIONS OF THE PARTIES

The Appellant submits that the Arbitrator’s July 15, 2008 expense decision only dealt with his expenses up to March 26, 2008, the Appellant having advised the Arbitrator at the May 9, 2008 expense hearing that he would be making submissions respecting his legal expenses incurred after March 26, 2008 once he received the Arbitrator’s decision.

The Appellant submits that he filed his Notice of Appeal within the prescribed time limits as the decision being appealed is the Arbitrator’s August 29, 2008 letter which states that the July 15, 2008 decision “dealt with all matters relating to expenses.” Prior to that letter, the Appellant submits there was nothing to appeal, as the July 15, 2008 decision was “silent on the issue of the entitlement to, and quantum of, the expenses of the hearing of May 9, 2008.”

Alternatively, the Appellant requests that I exercise my discretion to extend the time for filing the Notice of Appeal. The Appellant submits that his honest intention to pursue this issue is shown by his prompt communication to the Arbitration Case Administrator requesting a further expense hearing, starting with his July 21, 2008 letter and continuing until the Arbitrator’s August 29, 2008 response. The Appellant further argues that there is merit to his appeal and that there is no evidence the Respondent was prejudiced by any delay.

The Appellant seeks to submit as fresh evidence the said affidavit of Mr. Rooz. Mr. Rooz attests that on January 9, 2008 the parties settled all of the Appellant’s claims for accident benefits, but not legal expenses. The Appellant’s offer to settle his legal expenses for $3,500 was refused by the Respondent, who made a counter offer on March 6, 2008 of $1,252.06. On or about March 27, 2008, the Appellant served, amongst other things, the Bill of Costs noted above, which reflected the legal costs up to and including March 26, 2008.

Mr. Rooz attests that his May 9, 2008 advice that he would make subsequent submissions on the further legal expenses upon receipt of the Arbitrator’s decision was followed by his July 21, 2008 request for a further expense hearing. Mr. Rooz states that between March 27 and May 9, 2008, the Appellant incurred $2,318.16 in legal fees for preparation for and attendance at the May 9, 2008 expense hearing. However, the Bill of Costs (updated November 21, 2008) attached

to the affidavit totals $13,388.52, an increase of $4,844.39 over the prior Bill of Costs.

The Appellant submits that the documentation marked as exhibits to Mr. Rooz’ affidavit are either evidence that was before the Arbitrator at the May 9, 2008 Expense Hearing (Exhibits “A” and “B,” “C” through “F” except for the blacked out portions, and “G” through “N”’), or could not have been put before her (the blacked out portions of Exhibits “C” through “F” pertaining to settlement offers, and “O” through “S,” which are letters subsequent to the Arbitrator’s decision).

The Appellant argues that the letters are reasonably capable of belief as they show the intentions and/or positions taken by the parties and are relevant for the truth of their content, such as the length of the expense hearing. The Appellant submits that “the fact that the settlement discussions between the parties was blacked-out before the Appellant put the letters before [the Arbitrator] demonstrates an intention to bifurcate the issue of expenses.” The Appellant asks that if his fresh evidence is refused on the basis of any delay, the Respondent’s written submissions be likewise excluded.

The Appellant submits that the absence of an arbitration record for the Arbitrator’s August 29, 2008 letter shows the importance of admitting the fresh evidence. The Appellant asks that the exhibits of the May 9, 2008 hearing and the Arbitrator’s July 15, 2008 decision itself be admitted as evidence at this appeal.

The Respondent submits that the Notice of Appeal is 43 days late, that the onus is on the Appellant to provide reasonable grounds to extend the time for filing and that no such grounds have been provided. The Respondent states that the Arbitrator’s August 29, 2008 letter is not a decision and, in any event, there is no provision in the Insurance Act, or elsewhere, that permits a party to appeal from a letter. The Respondent maintains that no submissions were made by either party at the May 9, 2008 expense hearing with respect to a further expense hearing.

The Respondent objects to the Appellant’s fresh evidence that it says was first raised in the Appellant’s November 24, 2008 written submissions. The Appellant was free to have arranged for a court reporter to be present at the expense hearing, which he failed to do. Without a transcript of the expense hearing, there is no basis upon which to second guess the Arbitrator.

The Respondent submits that the Affidavit evidence could not reasonably, when taken with other evidence adduced at the expense hearing, be expected to affect the result as the Arbitrator has already considered and adjudicated on the legal costs of the expense hearing itself and that she had discretion not to allow any such expenses. The Respondent also argues that an arbitrator has no jurisdiction to award legal expenses of an expense hearing.

Regarding the record of the arbitration hearing, the Respondent submits that in the absence of a transcript of the expense hearing, that the Arbitrator’s Expense decision should be included as the definitive record of the hearing.

III. ANALYSIS

Subsection 283(2) of the Insurance Act provides that a notice of appeal shall be in writing and shall be delivered to the Commission within thirty days after the date of the arbitrator’s order. Subsection 283(3) provides that the time for requesting the appeal may be extended if there are reasonable grounds to do so. The provision further provides that directions may be given as to conditions considered proper for granting the extension.

In Gouliaeff and Commercial Union Assurance Company of Canada, (OIC P96-000011, July 18, 1996), Delegate Naylor held that:

Time limits on appeal exist in order to bring some closure to the adjudication process. Providing a discretion to extend them injects fairness and flexibility into the system. Whether the time should be extended is a discretionary decision which depends upon the facts of each case.

Director Sachs in Sittler and Canadian General Insurance Company; Sittler and Pilot Insurance Company, (August 11, 1995, OIC Files P-000951 and V-000951, P-004495 and V-004495), stated that the factors that might be considered regarding granting an extension for the time for an appeal included:

the existence of a bona fide intention to appeal;

the length of the delay in applying for the extension;

the merits of the proposed appeal;

any prejudice to the other party and whether it is compensable or not.

Strictly, the time for delivering this Notice of Appeal was thirty days from the July 15, 2008 decision. However, the Appellant, shortly after the release of the decision, wrote the Commission on July 21, 2008 requesting a hearing with respect to the expenses of the expense hearing. The Arbitrator replied on August 29, 2008. I find that there was, subsequent to the July 15, 2008 decision, an early intention by the Appellant to pursue this issue. Upon receipt of the Arbitrator’s August 29, 2008 letter, there was then a timely appeal. The Respondent does not argue that it is prejudiced in its ability to respond to this appeal as a result of any delay.

As to the merits of the Appeal, I note the Appellant’s letter of March 27, 2008 that:

The amount I will be seeking at the expense hearing will include work done between settlement and the expense hearing (in fact, it already does) which is already higher than usual due to the research I have done into the matter of providing dockets, sworn affidavits, detailed invoices, all of which were onerous demands by you which are not supported by numerous FSCO expense decisions I had researched following your demands. [emphasis added]

I am not referred to any contemporaneous documentation, prior to the May 9, 2008 expense hearing, of the Appellant’s intent to request a bifurcation of the expense hearing. I note the Arbitrator’s statement at page three of her decision, that the Appellant “claimed 15.5 hours for all services rendered in the arbitration proceeding including preparation for the expense hearing.” The July 15, 2008 expense decision does not appear to expressly refer to the expenses of the hearing day itself.

I also note the Arbitrator’s comment that the Appellant’s Bill of Costs, while particularized, did not show the dates services were provided, as privilege was asserted regarding dockets. The Arbitrator agreed with Frumusa and General Accident Assurance Co. of Canada, (OIC A96-000192, February 12, 1998), “that a party who does not provide dockets risks not being adequately compensated for incurred expenses.” The Arbitrator noted the Appellant’s reliance, in part, on decisions adopting a global rather than a “line by line” assessment of legal expenses.

On balance, I am persuaded that there are reasonable grounds, supported by considerations of fairness and reasonable flexibility, to exercise my discretion under subsection 283(3) of the Insurance Act to extend the time to September 26, 2008 for requesting this appeal. The Appellant

states that he is not appealing the Arbitrator’s decision as to his legal expenses up to March 26,

2008, but only those from March 27, 2008. Accordingly, this appeal is so limited.

Regarding the introduction of fresh evidence on appeal, in Budd and Personal Insurance Company of Canada, (FSCO P99-00032, January 8, 2000), Delegate McMahon adopted the following criteria:

The evidence should generally not be admitted if, by due diligence, it could have been adduced at trial;
The evidence must be credible, in the sense that it is reasonably capable of belief;
The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial; and
The evidence must be such that, if believed, it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result.

The issue in appeal comes down to whether the Arbitrator erred in law in failing to address the Appellant’s legal costs after March 26, 2008 in a further expense hearing. Rule 65.6 of the Code provides that an “adjudicator may at any time clarify a decision or order that contains a misstatement, ambiguity or other similar error.” The Arbitrator’s letter of August 29, 2008 succinctly states, as noted above, that her decision dealt with all matters relating to expenses.

Both parties include in their materials the Arbitrator’s August 29, 2008 letter. Both also submit that the Arbitrator’s July 15, 2008 decision should be part of the appeal record. I find both

documents relevant and necessary to this appeal, and include them in the appeal record. As the Arbitrator’s August 29, 2008 letter does not exist in a vacuum, it is relevant and necessary to also include in the appeal record, in these specific circumstances, the correspondence leading up to that letter, being the documents marked as Exhibits “O” to “S” in the Affidavit of Mr. Rooz.

I am allowing as part of the appeal record the now unmarked letters of which portions were blacked out in Exhibit “4” entered by the Arbitrator. The unmarked letters show that the deleted portions refer to offers to settle. These letters were partially before the Arbitrator, they are

relevant to the Appellant’s position in this appeal and, to put it simply, “they say what they say.”

As a condition, I am allowing the Respondent ten days to serve and file notice of any further

documentation, created up to and including August 29, 2008, that it requests form part of the appeal record, with supporting submissions. The Appellant will then have ten days to respond with any arguments as to why this documentation, if any, should not be before me. On the basis of these written submissions I will provide a written decision to the parties as to what further, if any, documentation will be included in the appeal record.

The ultimate significance of these further documents is still in question. It is perhaps plausible, as argued by the Appellant, that portions of the letters were blocked out because of his intention to leave open the expenses of the expense hearing, one criterion for an expense award being any written offer. It may also be plausible that as settlement discussions are usually confidential, someone seeking $8,544.13 in legal expenses may simply not wish the adjudicator to see that the range of settlement discussion was $1,252.06 and $3,500.

Regarding Mr. Rooz’ affidavit itself, as noted by the Respondent, the Appellant could have hired a court reporter to be sworn by the Arbitrator to provide an independent record of the one-day, in-person expense hearing. Allowing the Appellant’s affidavit evidence would mandate, in fairness, providing the Respondent an equal opportunity, the latter having noted in correspondence that it has no recollection of the Appellant’s assertion as to bifurcation of the expense hearing. One would then be left with dueling affidavits.

In addition to the concern regarding the Appellant’s failure to retain a court reporter which would have avoided this problem, there are significant concerns regarding the deponent’s brief statements alleging what occurred at the expense hearing regarding bifurcation. Rather than assisting in clarifying matters, the affidavit raises numerous questions.

When precisely during the hearing was the alleged request for bifurcation made? Under what

circumstances was it made? What was the Respondent’s response to the Appellant’s alleged request, if any? Was a decision from the Arbitrator requested? Did the Arbitrator accede to the purported request, or provide any response? If there was no express decision by the Arbitrator to bifurcate the expense proceeding, on what basis, if any, was the Appellant justified in relying on that silence in not providing alternative submissions at that point? Or did the Appellant, in fact, provide alternative submissions in the event the Arbitrator declined his purported request?

The Appellant has had an opportunity to make his request for fresh evidence. Allowing further affidavits and/or having the deponents cross-examined would be of limited assistance, if any, and would be outweighed by considerations of expeditiousness and cost efficiency, which are enshrined in Rule 1.1 of the Code, together with obtaining a just result, as the guiding principles of this Commission. This is especially so when the Appellant’s claim for further legal expenses is $2,318.16. Accordingly, I am not allowing as fresh evidence the body of Mr. Rooz’ affidavit.

Rule 56.4 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”) provides that the appeal record includes:

the Notice of Appeal and the Response to Appeal;
the written submissions of the parties; and,
the record of the arbitration hearing, including the arbitration exhibits and, if it is filed, the transcript of the arbitration hearing.

The record of the May 9, 2008 arbitration hearing would include the seven exhibits entered by the Arbitrator.

I am allowing as part of the appeal record the letters attached as Exhibits “B” to “T” of Mr. Rooz’ affidavit. Exhibits “B” and “G” to “N” were included, unmarked, in Exhibit 4 before the Arbitrator at the May 9, 2008 expense hearing. Exhibits “C” to “F” were, as noted above, partially blacked out, Exhibit “T” is the Arbitrator’s August 29, 2008 letter and Exhibits “C” to “G” are the letters leading up to that response.

I am not including in the appeal record two of the Exhibits to Mr. Rooz’ Affidavit. Exhibit “A” is

the January 10, 2008 letter of the settlement arbitrator, I do not see that it was marked as an exhibit by the Arbitrator and it is of little relevance, as it merely confirms information that is not in dispute. Exhibit “U” is a Bill of Costs up to November 21, 2008, more than two months after

the Notice of Appeal was received. The relevance of this document is not clear.

Accordingly, the Appeal Record, subject to any further or other order of an adjudicative officer, presently consists of the following:

The Arbitrator’s Decision on Expenses dated July 15, 2008
The Notice of Appeal dated September 26, 2008
The Response to Appeal dated October 22, 2008
The Appellant’s written submissions dated November 24, 2008 (excluding the Affidavit of Alon Rooz sworn November 24, 2008, but including Exhibits “B” to “T” therein) and his written submissions dated January 30, 2009
The Respondent’s written submissions dated December 17, 2008 and January 30, 2009
The Exhibits entered at the Arbitration Expense Hearing, namely:

(1) the Respondent’s Expense Hearing Brief

(2) Affidavit of Oana Floricel, sworn May 8, 2008

(3) Affidavit of Nureen N. Shariff, sworn April 28, 2008

(4) Correspondence Between Counsel

(5) Affidavit of Arvin Gupta, sworn May 5, 2008

(6) the Appellant’s Arbitration Brief

(7) a two-page list of insurer medical examination and designated assessment centre documentation

The tentative appeal hearing date of April 29, 2009, set on the consent of both parties subject to this interim decision, is now confirmed, and shall proceed as scheduled.

IV. EXPENSES

The legal expenses of this decision are deferred to the final determination of this appeal, subject to any further or other order of an adjudicative officer.