Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2010 ONFSCDRS 150
FSCO A09-000114
BETWEEN:
C.C.
Applicant
and
ECONOMICAL MUTUAL INSURANCE COMPANY
Insurer
DECISION ON EXPENSES
Before: Susan Sapin
Heard: Written submissions received by December 3, 2010 and a telephone conference call on December 10, 2010.
Appearances: Alexander Voudouris for C.C. Ian D. Kirby for Economical Mutual Insurance Company
Issues:
The Applicant, C.C., was injured in a motor vehicle accident on December 5, 2005. In an interim motion decision dated December 2, 2009, Arbitrator Alves ordered Economical Mutual Insurance Company (“Economical”) to pay interim Income Replacement benefits (“IRBs”) to C.C. “at the rate of $400 per week, commencing August 6, 2009 until the final Order in this arbitration.” Arbitrator Alves left the issue of expenses of the interim motion to the hearing arbitrator.
In a decision dated May 10, 2010, the hearing arbitrator determined C.C. was not entitled to IRBs under the Schedule.1 He advised that, should the parties be unable to agree on expenses, they should request an appointment before an adjudicator under Rule 79 of the Dispute Resolution Practice Code to determine expenses. I was appointed to determine expenses.
Issues in dispute:
The parties agree that the issues in dispute before me in this proceeding are:
Is Economical entitled to its expenses of the arbitration proceeding, under subsection 282(11) of the Insurance Act, R.S.O. 1990, c.I.8, as amended?
Is C.C. entitled to her expenses of the motion for interim benefits?
Do I have jurisdiction to determine whether C.C. is required to repay the interim IRBs she received from Economical, and, if so, is she required to repay IRBs received between August 6, 2009 and May 10, 2010?
The parties disagree that I have jurisdiction to determine whether C.C. is required to repay the interim IRBs she received from Economical.
Result:
Economical is entitled to its expenses of the arbitration proceeding, less the expenses claimed for the interim benefits motion.
C.C. is entitled to her expenses of the motion for interim IRBs.
I do not have jurisdiction to determine whether C.C. is required to repay the interim IRBs she received from Economical.
EVIDENCE AND ANALYSIS:
Expenses:
Under subsection 282(11) of the Insurance Act an arbitrator may award either party all or part of their expenses of an arbitration proceeding according to criteria prescribed in Regulation 664 (“The Expense Regulation.”) The only criterion that applies in this case is each party’s degree of success in the outcome of the proceeding.
C.C. claims her expenses of $19,177.75, including legal fees of $6,237, for her successful interim expenses motion. As the successful party in the final arbitration hearing, Economical claims expenses of $19,671.94, which include legal fees of $15,213.77. C.C. concedes both Economical’s entitlement to its arbitration expenses and their reasonableness, with the exception of expenses related to the interim motion. At a ratio of preparation to hearing time of less than 2:1, I find Economical’s legal fees and overall expenses to be reasonable.
However, I agree with C.C. that she is entitled to her expenses of the interim benefits motion on the basis that she was successful, and that she is not required to pay Economical’s expenses of that motion. Subtracting fees incurred for the interim benefits motion (31 hours by “PK” at $77.56 per hour, or $2,404.36, as per Economical’s Bill of Costs), Economical’s arbitration expense claim is reduced to $16,773.39. (I have not calculated GST or HST, and leave that aspect to Economical. It is also not clear which disbursements relate to the interim motion, which the parties will have to sort out themselves.) I find Economical is entitled to its arbitration expenses on that basis.
I find C.C. is entitled to her expenses of the interim motion less the cost of any disbursements specifically incurred for the arbitration hearing itself. Arbitrator Alves awarded C.C. interim benefits because she met the evidentiary requirements of a prima facie case of need, urgency and financial hardship as a result of the accident. Faced with a termination of IRBs and failed mediation of the dispute, C.C.’s decision to pursue interim benefits was a reasonable, even necessary one. Such an application is inherently very risky for an insured person. It adds to her financial obligations. If she is successful, she runs the risk of having to repay IRBs advanced to her, should the insurer prove successful at the arbitration, as well as the insurer’s expenses. If she is unsuccessful in the motion, she has added to her financial predicament by incurring expenses she may not recover. Even if she is ultimately successful, she will have incurred more debt pending the outcome, which an eventual award of expenses may not fully address. The prejudicial effect of the risk is far less to an insurer. For these reasons, I find C.C. is entitled to her expenses of her successful interim benefits motion, less disbursements incurred specifically for the arbitration hearing itself. As I do not know what those are, I leave that to the parties to determine.
Repayment:
There is no dispute that the issue of repayment of interim IRBs was articulated on behalf of Economical at the full arbitration hearing before Arbitrator Leitch, or that Arbitrator Leitch’s final decision dated May 10, 2010 is silent on that issue.
However, I must reject Economical’s submission, based on the decision in Decicco and State Farm Mutual Insurance Company (OIC A-000277, December 18, 1991), that to the extent that Arbitrator Leitch did not specifically order repayment, it was mere oversight, and an order of repayment necessarily flows from his finding that C.C. is not entitled to IRBs beyond August 10, 2008. C.C. concedes, correctly, that Arbitrator Leitch would have had jurisdiction to order repayment on the basis of the Decicco decision.
However, as Arbitrator Leitch’s decision and order are silent on the issue of repayment, the reasoning in Decicco does not apply. Specific procedural rules apply in the case of an alleged error in an arbitration order. The appropriate remedy for such an error is an Application for Variation or Revocation in accordance with Rule 61.1(c) of the Dispute Resolution Practice Code, which must be brought by written submission within 30 days of the arbitration decision (Rule 54.1), unless the Director of Arbitrations orders otherwise.
As this procedure was not followed in this case, I find I have no jurisdiction to determine the issue of overpayment.
December 23, 2010
Susan Sapin
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2010 ONFSCDRS 150
FSCO A09-000114
BETWEEN:
C.C.
Applicant
and
ECONOMICAL MUTUAL INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Economical shall pay to C.C. her expenses of her Motion for Interim Benefits, less disbursements specifically related to the final arbitration proceeding. C.C. shall submit a revised list of disbursements to Economical.
C.C. shall pay to Economical its expenses of the arbitration proceeding less legal fees of $2,404.36 incurred by Economical for the Motion for Interim Benefits, and disbursements associated with the motion. Economical shall submit a revised Bill of Costs to C.C.
December 23, 2010
Susan Sapin
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.