DECISION ON EXPENSES

Before: Fred Sampliner Heard: Written submissions prior to a teleconference hearing on December 11, 2009 Appearances: Mark Phillips for Mr. Asghar Joanna Cox for State Farm Mutual Automobile Insurance Company

Issues:

My decision determining Mohammad Asghar’s claims against State Farm Automobile Insurance Company (“State Farm”) for statutory accident benefits under the Schedule¹ was issued on August 19, 2009. Both parties claim their expenses from the other under subsection 282(11) of the *Insurance Act*, and they requested a hearing to resolve this issue.

The issue in this further hearing is:

What amount, if any, is Mr. Asghar or State Farm entitled to for their expenses of this arbitration under subsection 282(11) of the *Insurance Act*?

Result:

Both parties are denied their claims for the expenses of this arbitration.

EVIDENCE AND ANALYSIS:

Mr. Asghar claims entitlement to his arbitration expenses in the amount of $4,987.40 plus GST for legal costs and $231.25 for his disbursements. State Farm claims $6,899.21 legal fees plus GST and $1,819.76 for disbursements in this matter.

There are five criteria for evaluating entitlement to expenses in Rule 75 of the Dispute Resolution Practice Code (Fourth Edition Updated — October 2003).

The novelty of the issues.
Did a party prolong, obstruct or hinder the process?
Did a party do something improper, vexatious or unnecessary?
Success of the parties.
Were there written offers to settle?

I agree with the parties’ submissions that the first three criteria are not relevant in this matter, and that their relative degree of their success and their settlement offers are relevant.

About a week before the commencement of the arbitration hearing Mr. Asghar offered to settle his claims in this proceeding for a total of $21,975.31, inclusive of his arbitration expenses. He recovered a total of $1,825.29 for the costs of two examinations under section 24 of the Schedule, but the bulk of his claims were dismissed.

Clearly, State Farm was largely successful in the outcome of the arbitration hearing, but it did not make any offer to settle Mr. Asghar’s claims at any time before the decision was issued. This left Mr. Asghar with the choice of either abandoning all his claims in this proceeding and risking an assessment of State Farm’s expenses against him or proceeding with a full hearing on the merits.

State Farm’s failure to make a settlement offer that considered the risk Mr. Asghar could realistically recover some of his assessment expenses is an important consideration. Settlement offers encourage parties to resolve matters and avoid the expensive process of a full hearing. Towards that end, arbitrators actively engage parties and their representatives in direct discussions to promote settlements throughout the arbitration process.

I would be more disposed to grant State Farm its arbitration expenses or a portion thereof if it had made a realistic offer to Mr. Asghar that could have avoided the two day hearing. In my view, awarding State Farm its arbitration expenses where there is no evidence it made an effort to resolve Mr. Asghar’s claims undercuts the alternative and conciliatory nature of this process. I find that State Farm is not entitled to its expenses of this arbitration.

Mr. Asghar had a comparatively small degree of success in this process. His primary claims for caregiver benefits under Part IV of the Schedule, housekeeping expenses under section 22 of the Schedule, neurological and orthopaedic assessments under section 24 of the Schedule were completely dismissed. His $1,825.29 recovery for the costs of two other examinations amounts to approximately 12% of the benefits he asked for in his one settlement demand just before the hearing.

Mr. Asghar’s $21,975.29 offer also did not encourage an amicable resolution that would have avoided the parties’ expenses of a hearing. His inflated offer and small recovery are my reasons for denying his expenses, and I find Mr. Asghar is not entitled to his arbitration expenses either.

May 26, 2010

Fred Sampliner Arbitrator

Financial Services Commission of Ontario

Neutral Citation: 2010 ONFSCDRS 67 FSCO A08-000123

BETWEEN:

MOHAMMAD ASGHAR Applicant

and

STATE FARM MUTUAL AUTOMOBILE 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:

Mr. Asghar’s and State Farm’s claims for their expenses of this arbitration pursuant to subsection 282(11) of the *Insurance Act* are dismissed.