Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2010 ONFSCDRS 99
FSCO A07-002163
BETWEEN:
KEVIN TAM
Applicant
and
WAWANESA MUTUAL INSURANCE COMPANY
Insurer
DECISION ON EXPENSES
Before: Richard Feldman
Heard: By written submissions received by July 5, 2010
Issues:
The Applicant, Kevin Tam, was injured in a motor vehicle accident on July 21, 2003. He applied for statutory accident benefits from Wawanesa Mutual Insurance Company (“Wawanesa”), payable under the Schedule.1 Issues arose between the parties concerning the Applicant’s entitlement to certain statutory accident benefits. The parties were unable to resolve their disputes through mediation and Mr. Tam applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
I issued interim decisions in this matter on January 30, 2009 and December 2, 2009. Following about 32 hours of actual hearing time, spread out over eight days, on May 20, 2010 I issued a decision in which I decided the Applicant’s claims for statutory accident benefits. The issues in that hearing were as follows:
- Pursuant to section 12 of the Schedule, is Mr. Tam entitled to receive a non-earner benefit as follows:
(a) from January 21, 2004 to July 21, 2005 at the rate of $185.00 per week; and
(b) from July 22, 2005 to date and ongoing at the rate of $320.00 per week?
- Pursuant to sections 14 and 15 of the Schedule, is Mr. Tam entitled to receive the following medical and rehabilitation benefits:
(a) The cost ($3,138.70) of treatment pursuant to a plan from Toronto Poly Clinic dated November 17, 2003;
(b) $4,156.30 for the outstanding cost of treatment at Toronto Poly Clinic from December 2, 2003 to September 8, 2006;
(c) $26,110.60 for the cost of prescription medication purchased from November 27, 2003 through April 2, 2007; and
(d) $60.90 for the cost of parking between August 8, 2003 and January 11, 2006?
- Pursuant to section 24 of the Schedule, is Mr. Tam entitled to payments for the cost of the following:
(a) Dr. Glickman’s report dated June 30, 2004 in the amount of $500.00;
(b) Dr. Kevin Rod’s report dated June 8, 2004 in the amount of $963.00; and
(c) Dr. Dana Wilson’s report dated July 27, 2004 in the amount of $1,391.00?
The Applicant originally also claimed compensation for the cost ($1,558.20) of Dara Taylor’s File Analysis Report dated October 12, 2006 but this claim was withdrawn by counsel for the Applicant during his closing arguments.
Is Mr. Tam entitled to interest for the overdue payment of benefits pursuant to section 46(2) of the Schedule?
Is Wawanesa liable to pay a special award pursuant to subsection 282(10) of the Insurance Act because it unreasonably withheld or delayed payments to Ms. Tam?
Is Wawanesa liable to pay Mr. Tam’s expenses in respect of the arbitration under section 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?
Is Mr. Tam liable to pay Wawanesa’s expenses in respect of the arbitration under section 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?
The results of that hearing, as determined in my order of May 20, 2010, were as follows:
Mr. Tam is not entitled to receive a non-earner benefit.
Of the medical/rehabilitation benefits claimed, Mr. Tam is entitled to receive $25,546.02 for the cost of prescription medication purchased from November 27, 2003 through April 2, 2007.
Mr. Tam is not entitled to any of the amounts he claimed under section 24 of the Schedule.
Pursuant to section 46(2) of the Schedule, Mr. Tam is entitled to interest for the overdue payment of the cost of the prescription medication set out above.
Wawanesa is not liable to pay a special award pursuant to subsection 282(10) of the Insurance Act.
The decision on expenses is deferred at the request of the parties.
The issue in this further hearing is:
- Is either party liable to pay the other party’s expenses incurred in respect of this arbitration hearing?
Result:
- The Applicant shall pay to the Insurer its expenses of this proceeding related to the aborted hearing of January 26, 2009, fixed in the amount of $2,000.00 (inclusive of all legal fees, disbursements and any applicable tax). With respect to all other expenses related to this proceeding, the parties shall otherwise each bear their own expenses.
EVIDENCE AND ANALYSIS:
Subsection 282(11) of the Insurance Act2 provides that an arbitrator may award to the insured person or the insurer, according to the criteria (currently six criteria) prescribed by the regulations, all or part of such expenses incurred in respect of an arbitration proceeding, to the maximum set out in the regulations.
The six criteria are as follows:
Each party’s degree of success in the outcome of the proceeding.
Any written offers to settle made in accordance with [the regulations].
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.
Whether the insured person refused or failed to submit to an examination as required under section 42 of the Schedule or refused or failed to provide any material required to be provided under subsection 42(10) of the Schedule.
I find that only two of these criteria are relevant in this case: (1) degree of success; and (2) conduct that tended to prolong, obstruct or hinder the proceeding. In their written submissions, neither party argued that any other of the criteria applied.
With respect to the second of those two criteria (i.e., conduct that tended to prolong, obstruct or hinder the proceeding), the failure of the Applicant’s former counsel to comply with our procedural rules resulted in a change of representation, a lengthy adjournment of the hearing and unnecessary delay and expense to the Insurer. As a result, I included in my interim order of January 30, 2009, the following term:
Wawanesa is entitled to its expenses, in any event of the cause, for its “costs thrown away” in relation to preparing for and attending before the Commission on the morning of January 26, 2009. If the parties cannot agree on this issue, the amount of these expenses can be determined at the conclusion of the hearing.
On February 3, 2009, Mr. March, on behalf of Wawanesa, sought expenses pursuant to my interim order of January 30, 2009 in the total amount of $5,893.25. By letter dated February 9, 2009, I advised the parties that, if necessary, the issue of the “costs thrown away” would be dealt with at the conclusion of the arbitration and that, at that time, I would expect Mr. March to provide particulars concerning the actual time spent in preparing for and attending on January 26, 2009 and any disbursements attributable to that aborted hearing.
Other than the Bill of Costs, however, the written submissions filed on behalf of Wawanesa in support of its present claim for expenses do not specifically address the issue of the expenses attributable to the preparation for and attendance at the hearing on January 26, 2009. The Bill of Costs filed on behalf of Wawanesa seems to indicate that over 75 hours of time (including over 50 hours of work by Darrell March) ought to be attributed to preparing for and attending the commencement of the hearing on January 26, 2009. There is no evidence before me, however, that all legal work done on this file on behalf of Wawanesa after the pre-hearing conference and before the commencement of the hearing was wasted or had to be duplicated. It is reasonable to assume that some of the preparation time would have to be repeated shortly before the re-commencement of the hearing in January 2010 and that some consideration should be given for the time that was required for the resumed pre-hearing conference that had to be held in May 2009 in order to set the new hearing dates.
In all of the circumstances of this proceeding, I find 20 hours to be a reasonable estimate of the amount of time wasted by counsel for Wawanesa in preparing for and attending at the hearing on January 26, 2009 and in participating in the resumed pre-hearing conference that would not otherwise have been required had the hearing proceeded through to its conclusion in January 2009, as originally scheduled. There is no evidence that any disbursements are specifically attributable to the postponement of the hearing. Having considered the appropriate legal aid rates chargeable for work done in 2009, I hereby fix the Insurer’s expenses related to the aborted hearing at $2,000.00 (inclusive of legal fees, disbursements and any applicable tax).
With respect to all other expenses related to this proceeding, both parties are seeking their expenses and both parties rely upon their respective degrees of success.
Counsel for Mr. Tam argues that Mr. Tam was almost 100% successful on the issue of his entitlement to the cost of medication and estimates that, together with interest under section 46(2) of the Schedule, the relief I granted in my order of May 20, 2010 will be worth approximately $70,000.00. This, it is argued, is substantial success that ought to entitle the Applicant to all of his legal expenses.
Counsel for Wawanesa argues that of the eight or nine claims that were advanced by Mr. Tam (not including the issues of interest and expenses), Mr. Tam was only successful on one (the cost of medication) and was unsuccessful on all other issues. It is therefore submitted that Wawanesa was substantially more successful than the Applicant in this arbitration. Furthermore, if one considers the approximate value of the claims that were advanced by Mr. Tam (including interest), the Applicant’s claim for non-earner benefits may have been worth (according to Wawanesa) two or three times the value of his claim for the cost of prescription medication. It is therefore submitted that, on this basis as well, Wawanesa was more successful than the Applicant and Wawanesa ought to be awarded its expenses of this proceeding.
While the Expense Regulation requires that an arbitrator consider each party’s degree of success in the outcome of the proceeding, it does not state how this is to be interpreted or applied.
It seems to me that the degree of success of each party ought not to be determined mechanically by merely comparing the amount of benefits awarded to the amount originally claimed. Similarly, success cannot always be measured by simply adding up the number of categories in which an applicant is awarded all or some of the benefits claimed. Some examples may help to illustrate these points.
If, for example, an applicant were to claim ten benefits and be awarded $1 for each, one could argue that such an applicant was 100% successful in that he or she was found to have some entitlement to each and every one of the benefits claimed. On the other hand, had $10,000 been claimed in each category (for a total of $100,000) and only $1 had been awarded for each of the ten benefits claimed in the previous example (for a total of $10), an insurer could certainly argue that it had been more successful than the applicant from a monetary point of view. But what if one of the ten claims had been for $90,000 and the other nine claims were for $1,000 each and the applicant was successful on the claim for $90,000 but unsuccessful on the other nine claims? Should such an applicant be considered to be more or less successful than the insurer? Clearly, looking only at the percentage or number of claims in which an applicant receives all or part of what was claimed presents certain difficulties. Looking only at the size of arbitral awards, however, may present other difficulties, including the problem of quantifying the present value of future benefits to which an applicant may, or may not, be entitled. Focusing only on money also fails to consider a definition of “success” that might take into account the importance to an individual applicant of being awarded a particular benefit that was in dispute. Thus, “degree of success” has qualitative as well as quantitative aspects and must be carefully considered in light of the facts of each case.
In this case, although eight or nine accident benefits were originally identified as being in dispute, the focus of the entire hearing (and probably at least 95% of the time and energy) was devoted to two issues: (1) non-earner benefits; and (2) the cost of prescription medication. Both were very important to the applicant and both were potentially worth substantial amounts of money. All other claims, even when combined, were worth relatively little and were given almost no attention during the hearing. If one disregards those claims that turned out to be minor issues in this case and concentrates on the two real issues, it is clear that the Applicant was successful on one of the issues and the Insurer was successful on the other. In this respect, I think that the fairest way to describe the results of this proceeding is to say that the success of the parties was divided. Due to the mixed success of the parties in this case, except for the expenses related to the aborted hearing of January 26, 2009, I find that the parties should each bear their own expenses related to this proceeding.
August 4, 2010
Richard Feldman
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2010 ONFSCDRS 99
FSCO A07-002163
BETWEEN:
KEVIN TAM
Applicant
and
WAWANESA 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:
- The Applicant shall pay to the Insurer its expenses of this proceeding related to the aborted hearing of January 26, 2009, fixed in the amount of $2,000.00 (inclusive of all legal fees, disbursements and any applicable tax). With respect to all other expenses related to this proceeding, the parties shall otherwise each bear their own expenses.
August 4, 2010
Richard Feldman
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- R.S.O. 1990, c. I.8, as amended.