Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2012 ONFSCDRS 100

FSCO A10-003081

BETWEEN:

MAU BUI

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: John Wilson

Heard: June 15, 2012, by teleconference.

Appearances: Kelley Campbell for Mr. Bui Sven Mascarenhas for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Mau Bui, was injured in a motor vehicle accident on January 25, 2008. In a decision dated May 9, 2012, I dealt with his claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

State Farm shall pay an interim income replacement benefit of $185 per week, effective December 8, 2011, the date of the first pre-hearing, when this interim claim was first put forward. Payments shall be made until the final arbitration order dealing with the benefit is signed and delivered to the parties, unless otherwise varied by an arbitrator’s order.

The issue in this further hearing is:

Is Mr. Bui entitled to his expenses incurred in respect of this interim benefit motion hearing?

Result:

Mr. Bui is entitled to his reasonable expenses incurred in this interim benefit motion hearing.

EVIDENCE AND ANALYSIS:

Ms. Campbell, counsel for Mr. Bui, has submitted a bill of expenses related to the hearing of the interim benefit motion.

The Bill of Expenses identifies some $6,020.91 in expenses plus HST and disbursements for a total of $7,468.50. Of this, $5,235.00 is for 30.40 hours of work performed by Ms. Campbell at a rate of $150.00 per hour, while an additional 20.66 hours of work was performed by her clerk, Ms. Vo, at a rate of $34.81 per hour.

An award of expenses to a party to an arbitration is provided for by section 282(11) of the Insurance Act, which provides:

Expenses

(11) The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations. 1996, c. 21, s. 38 (4).

The regulations referred to in the Act are primarily contained in Regulation 664 which sets out the ground rules for awards of expenses in the arbitration forum:

An arbitrator shall, under subsection 282 (11) of the Act, consider only the following criteria for the purposes of awarding all or part of the expenses incurred in respect of an arbitration proceeding:
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.

(3) Upon the request of the insurer or the insured person, the arbitrator shall, for the purposes of awarding expenses, take into account all written offers to settle, if any,

(a) that were made after the conclusion of mediation and before the conclusion of the arbitration; and

(b) that were made in accordance with the rules of practice and procedure applicable to the proceeding.

(4) If the arbitrator is requested to take into account a written offer under subsection (3), the arbitrator shall have regard to the terms of the offer, the timing of the offer, the response to the offer and the result of the proceeding.

In this matter, I have been advised of no written settlement offers, nor has my attention been drawn to any conduct by either of the parties that was delaying, improper, vexatious, or obstructive. In fact, both parties dealt with this matter with dispatch, in an open, polite and business-like matter.

Principally then, the remaining consideration for an award is the relative success or failure of either party at the hearing.

In this motion, Mr. Bui requested a discretionary remedy which principally consisted of interim payment of income replacement benefits. He persuaded me that I should exercise my discretion in his favour and received an award of interim benefits. To this extent there is no question that Mr. Bui was successful.

State Farm has suggested that because I declined to deal with interest and an interim special award, and ordered that the interim benefit only commence as of the date when counsel first raised the request, Mr. Bui must be found to have had mixed success. I disagree.

As noted earlier, an interim benefit is a discretionary order. It has few fixed rules, but is meant to be a flexible tool to address inequities, prejudice and difficult circumstances during the arbitration process. Each order must be tooled to the timing and circumstances of a particular arbitration.

Although I declined to order an interim special award, I did not make any finding that there was no entitlement made out. Indeed, I found that in relation to the multiple versions of the Insurer’s I.E., “the lack of answers does raise serious questions as to the handling of this case and whether the Insurer acted in good faith on the basis of all the available information.” It cannot be said that the preference to deal with a special award on a full record indicates a lack of success by Mr. Bui. Rather, provided that the evidence at arbitration follows the thrust of that adduced at the interim benefit motion, Mr. Bui’s special award claim may be seen to be merely delayed rather than rejected.

Likewise, the IRB claim prior to the first pre-hearing and the interest claim have been deferred but not rejected. Mr. Bui asked that I order interim benefits and he got them. By any measure he was successful in this matter and should have his expenses paid by the Insurer.

Quantum of Order:

As noted earlier in this decision, Ms. Campbell billed for 30.06 hours of work at $150 per hour. Ms. Campbell’s hourly rate was not seriously in issue. She is experienced counsel and handled the hearing with efficiency. However, she candidly admitted that she had never done an interim benefit motion before and had to spend some time getting up to speed on the requirements.

While an interim benefit should not necessarily be part of every arbitration, in appropriate circumstances it is a useful tool in protecting the interests of an insured. It can also be useful to both parties in providing a forum for what is in effect an independent review of the critical issues in dispute. Settlements frequently follow an interim benefit decision.

In short, State Farm should not have to pay Ms. Campbell to learn about a fundamental part of the arbitration process. Ms. Campbell billed 4.50 hours for a review of the case law. While an update is always prudent, I would allow her .5 hours to do so. The remaining 4 hours of case law review should not have been necessary if counsel was already up to speed on interim benefits. I will therefore disallow that 4 hours of review.

Otherwise, without doing a detailed analysis of dockets, I find that the amounts claimed appear reasonable, including the amounts and time billed for assistance by her law clerk, Ms. Vo.

Consequently, I fix the expenses payable to Mr. Bui at $6,790.50, including disbursements and HST. This shall be payable forthwith and in any event of the cause.

June 26, 2012

John Wilson

Arbitrator

Date

Financial Services Commission of Ontario