Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2011 ONFSCDRS 32

Appeal P09-00036

OFFICE OF THE DIRECTOR OF ARBITRATIONS

DENISE GONSALVES Appellant

and

CERTAS DIRECT INSURANCE COMPANY Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Mr. Amin Sachedina for the Appellant, Denise Gonsalves Mr. Todd J. McCarthy for the Respondent, Certas Direct Insurance Company

HEARING DATE: By written submissions and correspondence received by March 23, 2011

APPEAL EXPENSES ORDER

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

Certas Direct Insurance Company shall pay Mrs. Denise Gonsalves her legal expenses of this appeal fixed in the amount of $7,742.47.

March 31, 2011

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. BACKGROUND

The Appellant, Mrs. Denise Gonsalves, was injured in an August 25, 2005 motor vehicle accident. An arbitration hearing was set to determine her entitlement to benefits claimed under the Schedule¹ from the Respondent, Certas Direct Insurance Company. At the beginning of the hearing, the Hearing Arbitrator granted the Respondent’s adjournment request and stayed the arbitration pending the Appellant’s attendance at an insurer’s orthopaedic medical examination.

The Notice of Appeal sought leave to appeal the Hearing Arbitrator’s aforesaid preliminary issue decision and asked that the Hearing Arbitrator’s order be set aside, the stay lifted, a new arbitration be scheduled at the earliest possible date and that the Respondent not be allowed to introduce documents it failed to disclose within the requisite time limits under the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”).

My April 16, 2010 letter decision accepted this appeal from a preliminary arbitration order, exercising my discretion under Rule 50.2 of the Code. My January 24, 2011 decision rescinded the Arbitrator’s October 9, 2009 decision, lifted the stay and remitted the matter to arbitration for a new hearing. I further held that if the parties were unable to agree on legal expenses, an expense hearing was to be requested within thirty days accompanied by a Bill of Costs and written submissions as to entitlement to and the quantum of such expenses.

By letter dated February 22, 2011, the Appellant provided its Bill of Costs in the amount of $7,742.47. The Bill of Costs includes 39.8 hours at $150 an hour, disbursements of $1,310.77 and GST and HST as applicable. The Appellant further provided written submissions that she was entitled to her legal expenses on the basis that she was entirely successful in this appeal and that the appeal raised novel, important and broadly applicable issues of general importance that merited a fair and reasonable access to the appeal process.

The Appellant submits that the maximum hourly rate of $150 sought (available to insured persons under Rule 78.1 of the Code) is reasonable having regard to counsel’s experience, effectiveness and efficiency, the novelty and complexity of the issues in appeal and to ensure that insured persons have access to competent and qualified counsel.

The Respondent does not seek its legal expenses of this appeal. Rather, it argues that each side should bear their own expenses as success was divided, the Appellant only being successful with respect to the issue of the exercise of discretion and not on the issues of res judicata or alleged bias. In the alternative, the Respondent submits that while the amount submitted in the Appellant’s Bill of Costs, including disbursements, is not unreasonable, the Appellant’s Bill of Costs should be reduced by two thirds to $2,500 as the Appellant was only successful on one of the three issues raised on appeal.

The Appellant replies that the Respondent has provided no case law or other support for its assertion that success on only one of the three issues in appeal merits each party bearing its own costs or reducing a Bill of Costs by two-thirds.

The parties agreed that oral expense submissions were not necessary.

II. ANALYSIS AND RESULT

The Relevant Legislation

Subsection 12(2) of R.R.O. 1990, Reg. 664 (the “Expense Regulation”), as mandated by subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8, sets out the following criteria for awarding legal expenses:

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.
Whether the insured person refused or failed to submit to an examination as required under section 42 of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996) made under the Act or refused or failed to provide any material required to be provided by subsection 42 (10) of that regulation.
Whether the insured person refused or failed to submit to an examination as required under section 44 of Ontario Regulation 34/10 (Statutory Accident Benefits Schedule — Effective September 1, 2010), made under the Act, or refused or failed to provide any material required to be provided under subsection 44 (9) of that regulation.

Under subsection 283(7) of the Insurance Act, R.S.O. 1990, c. I.8, subsection 282(11) applies, with necessary modifications, to appeals.

The only dispute between the parties regarding the above criteria is what constitutes success under subparagraph 12(2)1 of the Expense Regulation.

It is correct that the Appellant raised three grounds for setting aside the Hearing Arbitrator’s adjournment and stay orders. It is also correct that I accepted only one of those grounds. It is further correct that the Appellant was successful in having this appeal from a preliminary decision accepted, over the Respondent’s objections, and in having the Hearing Arbitrator’s decision set aside.

I am not persuaded that if an appellant raises more than one ground of appeal to set aside an order, that it must be successful on every ground of appeal to be entitled to its legal costs. Nor am I persuaded that entitlement to legal expenses is simply a mathematical formula whereby the ratio of grounds of appeal accepted to grounds of appeal argued is applied against a party’s claimed legal expenses.

On the other hand, a successful party’s claimed expenses may be reduced where that party or its representative has tended to prolong, obstruct or hinder the proceeding (subparagraph 12(2)4 of the Expense Regulation) or if any aspect of the proceeding was improper, vexatious or unnecessary (subparagraph 12(2)5 of the Expense Regulation). Neither of these provisions is argued in this case, nor am I of the view that either is applicable. Rather, I thank both counsel for their professionalism and assistance throughout.

Given the Appellant’s success in both the preliminary and final appeal decisions, I am persuaded that she is entitled to her reasonable expenses of this appeal proceeding.

The overriding consideration in fixing the amount of legal expenses is reasonableness. The Respondent submits that the quantum of the Bill of Costs, per se, is not unreasonable. The Appellant notes her appreciation for this acknowledgement.

In this specific proceeding an oral hearing on the preliminary issue whether to accept this appeal was reasonably required. Subsequent to the final oral hearing, I asked the parties for further written submissions. In addition, the issue on appeal, although of a preliminary nature, was of some complexity as well as of broad importance.

Accordingly, I find the hours and the hourly rate claimed, as well as the disbursements submitted, to be reasonable. I, therefore, allow the Appellant her legal expenses of this appeal, fixed at $7,742.47.