Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2010 ONFSCDRS 108

FSCO A08-001115

BETWEEN:

REZVAN MAHJOURIAN

Applicant

and

TD HOME AND AUTO INSURANCE COMPANY

Insurer

Before: Lloyd Richards

Heard: By telephone conference call on June 11, 2010

Appearances: Rene A. Clonfero for Ms. Mahjourian Paul Barnes for TD Home and Auto Insurance Company

Issues:

The Applicant, Rezvan Mahjourian, was injured in a motor vehicle accident on July 6, 2006. In a decision dated August 6, 2009, I dealt with her claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

Ms. Mahjourian is precluded from applying for and receiving statutory accident benefits under subsection 59(2) of the Schedule because she elected to bring an action referred to in section 30 of the Workplace Safety and Insurance Act, 1997, and that election was made primarily for the purpose of claiming benefits under the Schedule.

The issue in this further hearing is:

Is either party entitled to its 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:

I conducted this expense hearing by telephone conference call on June 11, 2010. I also considered written materials submitted by TD Home. Ms. Mahjourian made no written 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(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.

TD Home’s position is that it was completely successful in the preliminary issue hearing, and consequently completely successful in resisting Ms. Mahjourian’s housekeeping and home maintenance and attendant care benefit claims. As such, its position is that it is entitled to its expenses resulting from its initial response to Ms. Mahjourian’s statutory accident benefits claims, as well as its expenses from the preliminary issue hearing.

TD Home notes the October 1, 2003 amendments to the Expense Regulation that led to a “more results-based” approach to expenses. TD Home relies on Pembridge Insurance Company and Howden (FSCO P02-00031, May 17, 2004), Thiyagarajah and ING Insurance Company of Canada (FSCO A05-001520, November 9, 2007), Kingsway General Insurance Company and Pereira (FSCO P05-00031, July 21, 2003), and Urgiles and Allstate Insurance Company of Canada (FSCO A04-001424, November 16, 2006). According to TD Home, these cases stand for certain propositions. First, the Dispute Resolution Practice Code does not indicate that weight should be given to any specific criteria when determining expenses, rather an arbitrator has discretion to look at the specifics of each case in order to assign appropriate weight. Second, where appropriate, it is acceptable to apply the “degree of success” criterion only, when making an expense award.

TD Home also contends that Ms. Mahjourian significantly prolonged the proceeding by withholding two critical liability documents, which led to the hearing being adjourned. Ms. Mahjourian’s position is that the adjournments were at TD Home’s request, were unreasonable and that the issues at the root of the adjournment requests took time to address and were not relevant to the proceeding.

I agree with Ms. Mahjourian and find that TD Home’s actions delayed the hearing. During the preliminary issue hearing I granted TD Home’s unusual request to call as a witness, Mr. Hugh DesBrisay, counsel for Ford Motor Company. In granting TD Home’s request, I adjourned the hearing. In evidence, Mr. DesBrisay referenced the liability documents mentioned above. I again adjourned the hearing to allow TD Home and Ms. Mahjourian sufficient opportunity to address the documents. Ultimately, nothing in my decision turned on either Mr. DesBrisay’s evidence or the liability documents.

Neither TD Home nor Ms. Mahjourian contended that any aspect of the proceeding was improper, vexatious or unnecessary. In addition, neither party made written offers to settle in this case, nor did either party claim that the issue I considered was novel.

Conclusion

Arbitrator Killoran considered the interpretation of the Insurance Act and the Expense Regulation in Shreet and RBC General Insurance Company.² She noted that the Insurance Act is consumer protection legislation.³ She went on to state:

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.⁴

I agree with Arbitrator Killoran. A proper approach to the Expense Regulation cannot be entirely results based. While “degree of success” is relevant, I do not believe that a lack of success at arbitration automatically makes an applicant responsible for an insurer’s expenses.

TD Home’s position in this expense hearing hinges on the “degree of success” criterion. While TD Home was completely successful in the preliminary issue, I find no compelling reason to grant expenses based solely on that success. Ms. Mahjourian’s chances of success in her claims for housekeeping and attendant care benefits rested on her ability to prove that her election to sue Ford Motor Company was bona fide. Therefore, she faced a legitimate preliminary issue concerning what can be a fairly confusing entitlement test for statutory accident benefits for claimants as well as insurers. The preliminary issue hearing simply answered a question that Ms. Mahjourian had every right to pursue and she should not be penalized for having pursued it. In fact, I find that the issue Ms. Mahjourian raised at the preliminary issue hearing needed to be resolved through an arbitration proceeding. Prior decisions concerning the interaction between the statutory accident benefits scheme and the workers’ compensation scheme had seen mixed results with parties often experiencing some consternation about the interplay between the two regimes. As such, I characterize Ms. Mahjourian’s claim as a novel one, simply because I believe this arbitration hearing clarified for the parties the interplay between the statutory accident benefits scheme and the workers compensation scheme.

Even though TD Home was successful at the preliminary issue hearing and I made some negative findings about the credibility of Ms. Mahjourian’s evidence, I find that the issue in dispute needed to be resolved through an arbitration hearing. I find that each party shall bear its own expenses of the arbitration hearing.

August 26, 2010

Lloyd (J.R.) Richards

Arbitrator

Date