Alexander Maryasin (The Estate of) v. ING Insurance Company of Canada, 2011 ONFSCDRS 37

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2011 ONFSCDRS 37

Appeal P08-00011

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ALEXANDER MARYASIN (THE ESTATE OF) Appellant

and

ING INSURANCE COMPANY OF CANADA Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Mr. P. Malysheuski and Mr. C. Brown for the Appellant, Alexander Maryasin (The Estate of) Ms. K. Sharpe for the Respondent, ING Insurance Company of Canada

HEARING DATE: March 31, 2011

APPEAL EXPENSES ORDER

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

1. Pursuant to his undertaking and pursuant to subsection 282(11.2) of the Insurance Act, Mr. Gary Mazin, counsel for the Appellant, shall personally pay the Respondent, ING Insurance Company of Canada, its legal expenses of this appeal fixed in the amount of $5,755.84, inclusive of all legal fees, disbursements and applicable GST and/or HST.

April 8, 2011

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. BACKGROUND

The late Mr. Alexander Maryasin was involved in an October 29, 2005 motor vehicle accident. He subsequently applied to the Respondent, ING Insurance Company of Canada, in a November 17, 2005 Application for Accident Benefits, for statutory first-party automobile accident benefits payable under the Schedule.¹

Mr. Maryasin passed away April 1, 2006. The deceased’s daughter, Ms. Faina Maryasin, filed an Application for Mediation dated August 23, 2006 with the Financial Services Commission of Ontario, signed by her counsel, Mr. Gary Mazin. The January 5, 2007 Report of Mediator noted the remaining issues in dispute as Ms. Maryasin’s entitlement to a $35,000 death benefit under section 25 of the Schedule, section 26 funeral benefits of $6,000, and interest.

In the interim, Mr. Mazin had filed with the Commission a July 19, 2006 Application for Arbitration in the name of Alexander Maryasin seeking, in part, payment of death benefits. The January 26, 2007 arbitration pre-hearing letter, however, noted the Applicant as Mr. Alexander Maryasin (The Estate). The confirmed disputed issues were death and funeral benefit entitlement, interest, legal expenses and a special award claimed under the Insurance Act, R.S.O. 1990, c. I.8.

The Respondent brought a motion to dismiss the arbitration on the basis that the Estate of Alexander Maryasin had no standing to bring forward a claim for the benefits in dispute. Arbitrator Wilson (the “Arbitrator”), in his February 22, 2008 decision, agreed.

The Arbitrator found that the “arbitration was brought in the name of a non-existent entity with patently no right to the benefits claimed” and no possibility of success. Accordingly, the Arbitrator (1) dismissed the arbitration as a nullity and as frivolous and vexatious, “without prejudice to the right of any legitimate claimant to advance an accident benefit claim within the time-limits specified by the legislation,” and (2) held Mr. Mazin liable to pay the Respondent’s legal expenses, fixed at $4,256.37.

The Appellant’s March 14, 2008 Notice of Appeal only appealed the Arbitrator’s expense order. On the Appellant’s motion, my April 17, 2009 preliminary issues order granted the Appellant leave to expand its Notice of Appeal to include, in part, that the Arbitrator had erred in not amending the named Applicant to that of Ms. Maryasin.

I, however, denied the Appellant’s requests to file fresh evidence, remove the Respondent’s counsel from the record, have the Respondent produce two witnesses and allow Mr. Mazin’s affidavits into evidence. I did order the Respondent to identify a will it had referenced and to produce same if this was an additional will. The legal expenses of the preliminary issues hearing were deferred to the conclusion of the appeal.

My November 6, 2009 decision confirmed the Arbitrator’s February 22, 2008 decision and dismissed the appeal. If the parties were unable to agree on appeal legal expenses, an expense hearing was to be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the “Code”).

The Appellant sought judicial review of my decision. The Divisional Court, in Maryasin Estate v. ING Insurance Co. of Canada, [2010] O.J. No. 5780, dismissed the application for judicial review, ordering Mr. Mazin to personally pay the Respondent $5,000 in costs. The Divisional Court further held that the “costs of the appeal before Director’s Delegate Blackman are remitted to him for a determination.”

The Respondent’s January 5, 2011 letter requested an assessment of its appeal costs. My January 6, 2011 letter noted my November 6, 2009 order regarding Rule 79 of the Code that allows thirty days from the substantive hearing decision to request an appointment to determine expenses.

The Respondent’s January 12, 2011 letter stated that the December 3, 2009 delivery of the Application for Judicial Review stayed the assessment of costs. The Respondent indicated it was seeking costs personally against Mr. Mazin, noting $27,491.17 in actual legal expenses and $17,136.47 in costs at a partial indemnity rate. The Bill of Costs included 153.25 hours of legal time and $1,604.42 in disbursements.

My January 13, 2011 letter asked that the Respondent advise as to the authority upon which it was relying regarding the stay. The Respondent’s January 27, 2011 submissions did not respond to my inquiry. Rather, it provided a revised Bill of Costs of $10,991.72 at the legal aid rate, with 113.15 hours claimed.

The Respondent argues it is entitled to its legal expenses as it was wholly successful in this appeal and that this appeal was frivolous and vexatious. Rather than follow the Arbitrator’s February 22, 2008 decision and simply file a new Application for Arbitration, Mr. Mazin allowed the limitation period to lapse while compounding his prior errors by pursuing an appeal that had absolutely no chance of success, causing the Respondent to incur further legal costs.

The Appellant, by letter dated February 10, 2011, requested its appeal legal expenses of $10,695.45, including 68.2 hours of legal time and $706.25 in disbursements.

The Appellant submits that a party’s degree of success is not determinative in awarding costs, and argues it is entitled to its expenses because (a) it raised a legitimate question of law, (b) the Respondent had minimal success as its arguments were rejected, (c) the Arbitrator was incorrect regarding the absence of a will and his remarks in this regard were unnecessary, (d) the appeal raised a novel issue as to amending a title of proceeding, and (e) the Respondent frustrated the efficient determination of this appeal by providing its written submissions late, failing to comply with my April 17, 2009 order and not properly preparing for the final appeal hearing.

The Respondent reiterates its own entitlement to legal expenses. It critiques the Appellant’s one hour claimed to complete a two-page Notice of Appeal as excessive, as well as the 15 hours preparation time claimed, given the same lawyer attended on arbitration and on appeal and should have been well versed in the file. The Respondent submits that it misunderstood the time table for providing its written submissions, that it complied with the undersigned’s April 17, 2009 order on May 8, 2009 after seeking clarification and that its failure to properly prepare for the issues in the main appeal hearing was an oversight and not procedural misconduct.

My February 14, 2011 letter noted the absence of a response to my question regarding a stay of my expense order and that neither party was requesting that the time for requesting an expense hearing be extended. In addition to querying whether both parties were out of time and not entitled to their legal expenses, I asked that Mr. Mazin confirm his position regarding any cost award that may be made against the Appellant in this appeal.

Mr. Mazin’s February 18, 2011 letter acknowledged his personal responsibility for any costs that may be awarded against the Appellant. He also stated that the Respondent’s costs were excessive and unreasonable. He noted that while the Respondent argued that his 15 hours of preparation time were excessive, it sought even higher hours for its own preparation time.

The Respondent’s February 25, 2011 letter submitted that while Rule 63 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (that pertains to Notices of Appeal, not applications for judicial review) did not prevent a Commission appeal expense assessment from being determined, it believed that it stayed the proceeding and prevented costs from being paid.

In any event, the Respondent had anticipated the Divisional Court determining expenses pertaining to the Commission appeal. The Respondent further submitted that subsection 23(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, provides an adjudicator with discretionary jurisdiction to make such orders as they find just.

The Respondent also submitted that it had incurred a further 28 hours in drafting expense submissions and submitted a revised account of actual appeal costs of $33,807.67 and legal aid costs of $12,590.54. The Appellant subsequently submitted a revised Bill of Costs of $11,106.77.

II. ANALYSIS AND RESULT

Late Request for an Expense Hearing

Rule 79 of the Code provides, in part, that where an adjudicator has determined all disputed issues except expenses and the parties cannot agree on same, either party may request an appointment to determine expenses, provided the request is made within thirty days from the date the decision on all other issues in dispute was issued. In this case, the first request for an expense hearing was received 16 months after my November 6, 2009 decision.

[S]ubsection 20(3) of the Insurance Act provides that “[a]n application for judicial review and any appeal from an order of the court on the application does not stay the decision made under this Act.” Subsection 20(4) of the Insurance Act states that notwithstanding the aforementioned, a judge of the court to which the application is made or a subsequent appeal is taken may grant a stay until the disposition of the judicial review or appeal.

There is no submission that there is any court order staying my November 6, 2009 order. Both parties request that I extend the time for requesting an expense hearing.

I am persuaded to exercise my discretion under Rule 81.1(a) of the Code to set aside the thirty-day time limit on the basis, first, that both parties are seeking to extend the time for requesting their respective legal expenses and second, it was not unreasonable in this case to wait for the completion of the application for judicial review to address the legal expenses of this appeal.

The Relevant Legislation

Subsection 12(2) of R.R.O. 1990, Reg. 664 (the “Expense Regulation”) sets out the following criteria for awarding legal expenses:

1. Each party’s degree of success in the outcome of the proceeding.
2. Any written offers to settle made in accordance with subsection (3).
3. Whether novel issues are raised in the proceeding.
4. 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.
5. Whether any aspect of the proceeding was improper, vexatious or unnecessary.
6. 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.
7. 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.

Subsections 282(11.2 to 11.4) of the Insurance Act provide that:

Liability of representative for costs

(11.2) An arbitrator may make an order requiring a person representing an insured person or an insurer for compensation in an arbitration proceeding to personally pay all or part of any expenses awarded against a party if the arbitrator is satisfied that,

(a) in respect of a representative of an insured person, the representative commenced or conducted the proceeding without authority from the insured person or did not advise the insured person that he or she could be liable to pay all or part of the expenses of the proceeding;

(b) in respect of a representative of an insured person, the representative caused expenses to be incurred without reasonable cause by advancing a frivolous or vexatious claim on behalf of the insured person; or

(c) the representative caused expenses to be incurred without reasonable cause or to be wasted by unreasonable delay or other default.

Non-application to solicitors

(11.3) Clause (11.2) (a) does not apply to a barrister or solicitor acting in the usual course of the practice of law.

Opportunity to make representations

(11.4) An order under subsection (11.2) shall not be made unless the representative is given a reasonable opportunity to make representations to the arbitrator.

Under subsection 283(7) of the Insurance Act, subsections 282(11) and (11.2) apply, with necessary modifications, to appeals.

Who is entitled to payment of its legal expenses?

I find that the Respondent is entitled to payment of its reasonable legal expenses of this appeal for the following reasons:

1. The Respondent was completely successful in this appeal, the Arbitrator’s decision being confirmed and the appeal dismissed.

2. The Divisional Court confirmed in law the Appellant’s concession that Mr. Maryasin’s Estate had no right to bring a claim for death benefits. If anyone could bring such a claim, it was Ms. Maryasin. The Court further noted the Appellant’s concession that Ms. Maryasin had paid the funeral expenses. Thus, the claim for such expenses in the name of the Estate could not be sustained. Hence, the arbitration claim, as constituted, was a nullity.

3. The Appellant had sought to remedy its error by filing with the arbitration case administrator self-amended Applications for Arbitration with Ms. Maryasin as applicant. The Appellant argued that the Arbitrator had erred in the circumstances in not automatically allowing this change. I did not accept this submission.

The Divisional Court, in upholding the appeal decision, held that the title of proceeding was not an irregularity in the form of a misdescription of the person bringing the claim. Rather, Ms. Maryasin as Executor was a different party than Ms. Maryasin claiming in her personal capacity. The amendment, if granted, would substitute a party with one legal interest for another with a very different legal interest. The only way to cure this problem was to commence a new application.

4. I was also not persuaded by the Appellant’s submissions that the Arbitrator was biased, or that the Arbitrator had erred in law in finding the Respondent entitled to its legal expenses of the arbitration proceeding or that such expenses be paid by Mr. Mazin personally. As these issues are not addressed by the Divisional Court, I presume that they were at some point abandoned.

5. While amending a title of proceeding is an issue of law, I am not persuaded that there was any strength to this specific appeal. This appeal was commenced solely regarding the Arbitrator’s expense award against Mr. Mazin personally, the amendment issue being added later. The Appellant ultimately, evidently, abandoned its allegations of arbitral bias and its appeal of the cost award. Nonetheless, it has pursued proceedings over the course of three years to amend its Application for Arbitration, including claiming $11,106.77 in expenses for this appeal, when a new Application for Arbitration could have been commenced within the requisite time limits at the cost of a $100 filing fee.

6. The concerns raised by the Appellant as to the Respondent’s late filing of submissions or failing to comply with an order in a timely manner pale in comparison to the three years of wasted time and expense.

7. The cases cited by the Appellant are distinguishable or inapplicable. Dobkina and Commercial Union Assurance Company, (FSCO A98-001232, October 31, 2000) holds that minimal success may justify a reduction in the amount of an assessment. In this case, the Appellant had no success.

Regarding cases where the existence of a novel issue was an important expense criterion, I am not persuaded that the manner in which this proceeding was commenced and pursued can be characterized as raising a novel issue of law.

Who is Responsible for Paying the Respondent’s Legal Expenses?

I find that Mr. Mazin is personally liable for the Respondent’s reasonable legal expenses of this appeal for the following reasons:

1. Mr. Mazin’s February 18, 2011 letter acknowledged his personal responsibility for any costs that may be awarded against the Appellant in this appeal.

2. In any event, I would find Mr. Mazin personally liable at least under clause 282(11.2)(c) of the Insurance Act, by causing expenses to be incurred without reasonable cause. Ms. Maryasin’s claims could have been protected by simply commencing a new application for arbitration rather than pursuing this appeal.

Further, there was no legitimate basis to the claims of bias against the Arbitrator. The legal expenses at first instance were incurred and flowed from Mr. Mazin’s error in launching an arbitration claim where the deceased sought statutory benefits for which, as Mr. Mazin himself concedes, the deceased had no entitlement.

What are the Respondent’s reasonable legal expenses?

Lunn and State Farm Mutual Automobile Insurance Company, (OIC A-013960, March 15, 1996) held that a line-by-line assessment of legal expenses claimed is not appropriate. Rather, a global assessment of reasonable expenses should be made.

Henri and Allstate Insurance Company of Canada, (OIC A-007954, August 8, 1997) confirmed that the main consideration in determining legal expenses is reasonableness and that a ratio of preparation time to hearing time served as a rough approximation of the reasonableness of the submitted account.

In Rooz and Certas Direct Insurance Company and Zapisnoy, (FSCO P07-00017, November 18, 2009), Delegate Evans, however, held “that ratios in appeals are of limited assistance, given that the bulk of work done in appeals goes to preparing written submissions for relatively short oral submissions and that brevity may in fact reflect a considerable amount of work.”

In Bains and RBC General Insurance Company, (FSCO P09-0005, September 8, 2010), I noted that my review of appeal expense orders over the prior six years indicated an average appeal expenses award of $3,389.11, $4,733.58 where insureds were successful and $2,812.91 where the award was to insurers. I noted that the differential may be due, in part, to the higher maximum hourly rate of $150 under Rule 78 of the Code allowed applicants’ representatives, rather than the legal aid maximum applicable to insurers’ representatives.

The Respondent’s final Bill of Costs seeks 131.15 hours of legal time, notwithstanding its argument that this Appeal had no merit whatsoever and that the Appellant’s claimed hours, approximately half (73.2 hours) those the Respondent claims, are excessive. Further, notwithstanding the substantial hours claimed for preparation and correspondence, there were several instances of the Respondent not complying with or responding to timelines, orders and inquiries.

I am not persuaded that the Respondent’s claimed hours are reasonable. I am not persuaded that the Bill of Costs is proportionate to the complexity of this proceeding or the importance of the issues.

The Arbitrator assessed the Respondent’s expenses at first instance at $4,256.37. The Divisional Court fixed the Respondent’s costs on judicial review at $5,000, including disbursements. I do find that this particular appeal did require additional preparation and attendance as there were two oral hearings. The preliminary appeal hearing was necessitated by the Appellant seeking an indulgence to expand the scope of its appeal, which was allowed, and for other relief that was, with one exception, denied. Ultimately, however, the Appeal was dismissed.

I am of the view that an expense award of $5,000, taking into account the legal aid rate to which the Respondent is restricted, inclusive of GST and/or HST as applicable, plus assessable disbursements, is reasonable.

Regarding disbursements, I do not allow the $864 claimed for a court reporter. Arbitrator Killoran noted, in Hughes and Allstate Insurance Company of Canada, (FSCO A99-000961, April 2, 2002), that a court reporter is a discretionary expense. Arbitrator Renahan held, in Singh and Wawanesa Mutual Insurance Company, (FSCO A02-001401, May 18, 2004), that “court reporter’s fees are not covered as a disbursement in the tariff.” In this appeal, where only oral submissions were received, I am further persuaded that such an expense was not reasonable and is not recoverable.

The balance of the claimed disbursements is $755.84. The Appellant does not object to these claims. I am persuaded that these disbursements are reasonable. Accordingly, I find that the Respondent is entitled to its legal expenses of this appeal fixed in the amount of $5,755.84, inclusive of all legal fees, disbursements and applicable GST and/or HST, payable personally by Mr. Gary Mazin.

April 8, 2011

Lawrence Blackman Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.