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

Neutral Citation: 2012 ONFSCDRS 63

FSCO A10-002609

BETWEEN:

JOHN EARL OLESIUK Applicant

and

KINGSWAY GENERAL INSURANCE COMPANY Insurer

REASONS FOR DECISION

Before: Richard Feldman

Heard: By written submissions received between November 23, 2011 and March 5, 2012 and oral submissions heard by teleconference call on March 30, 2012

Appearances: Margaret A. Hoy for Mr. Olesiuk Gabriel Flatt for Kingsway General Insurance Company

Background:

The Applicant, John Earl Olesiuk, was injured in an incident on October 24, 2008. He applied for statutory accident benefits from Kingsway General Insurance Company (“Kingsway”), payable under the Schedule.¹ Disputes arose between the parties concerning Mr. Olesiuk’s entitlement to the accident benefits he claimed. The parties were unable to resolve their disputes through mediation, and Mr. Olesiuk applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

In this application for arbitration, Mr. Olesiuk was seeking income replacement benefits, attendant care benefits, compensation for damaged clothing, the cost of an in-home assessment concerning his need for attendant care, interest and his expenses of this proceeding. Kingsway denied all of these claims, sought its own expenses of this proceeding and raised two preliminary issues concerning Mr. Olesiuk's entitlement to pursue any accident benefits under the Schedule. All of these issues were scheduled to be heard in Niagara Falls on July 5 and 6, 2011.

When the hearing commenced on July 5, 2011, the parties advised me that they only wished me to hear one issue, as that issue might dispose of the entire proceeding. That issue was whether Mr. Olesiuk’s injuries resulted from an “accident” as that term is defined in section 2(1) of the Schedule (as it read at the relevant time).

On September 7, 2011, I issued a decision on the preliminary issue in which I found that the Applicant failed to prove, on a balance of probabilities, that he was involved on or about October 24, 2008 in an “accident” as defined in the Schedule. Counsel for Kingsway then wrote to FSCO, indicating that Kingsway would be seeking a further order with respect to the following issues:

Issues:

1. Should this arbitration be dismissed?

2. Is the Applicant liable to pay the Insurer’s expenses in respect of the arbitration under subsection 282(11) of the Insurance Act?

Result:

1. Since Mr. Olesiuk was not involved on or about October 24, 2008 in an “accident” as defined in the Schedule, all of his claims herein are dismissed.

2. The Applicant shall pay $500.00 to the Insurer for its expenses in respect of this arbitration.

EVIDENCE AND ANALYSIS:

Issue 1 - Dismissal of the Application

Counsel for the Applicant concedes that, given my finding on the preliminary issue (i.e., that the Applicant was not involved in an “accident” that falls within the Schedule), the Applicant’s claims for accident benefits cannot stand. Accordingly, I shall dismiss the remainder of the Applicant’s claims.

Issue 2 - The Insurer's Expenses

Subsection 282(11) of the Insurance Act² provides that an arbitrator may award to the insured person or the insurer, according to the criteria prescribed by the Expense Regulation (currently seven criteria), all or part of such expenses incurred in respect of an arbitration proceeding, to the maximum set out in the regulations. According to the written submissions of the parties, of these seven criteria, the Insurer is relying on only two (degree of success of the parties and conduct of the Applicant that tended to prolong the proceeding) and the Applicant is relying on the third criterion (novelty).³

With respect to the first criterion, the Insurer points out that it was completely successful in this application; this is not in dispute. With respect to the second criterion upon which the Insurer relies, it points out that, in requesting that closing arguments be put over until July 6 rather than concluding the hearing on July 5, 2011, the Applicant prolonged the proceeding and put the Insurer to unnecessary additional expense.

Counsel for the Applicant argues that the Applicant should not have to pay any of the Insurer's expenses because this proceeding raised novel issues. This is disputed by the Insurer. For the reasons that follow, I find that this case did, by its nature, raise novel issues.

This case was about whether the Applicant’s impairments were caused directly as a result of repairing a vehicle and whether repairing a vehicle constitutes a use thereof. The Insurer contends that this is not novel because there is at least one case directly on point (Khan⁴). In fact, there are very few cases on point, each case turns upon its own facts, the cases that do exist are distinguishable from this one and none of the relevant cases is binding upon me.

In my decision of September 7, 2011, I cite only two decisions from FSCO — Umer⁵ and Khan.⁶ In Umer, the Insurer conceded that repairing a vehicle was a use of the vehicle but challenged the applicant on the issue of causation. In Khan, in addition to the issue of whether repairing a vehicle is a “use” thereof, there was also a causation issue (a faulty air compressor having been found to have broken the chain of causation). Neither of these decisions is binding upon me. There is no binding authority directly on point (i.e., a decision squarely dealing with this issue from a Director's Delegate, the Divisional Court or the Court of Appeal). Thus, the law is far from settled in this area.

In addition, this case was unique in that, because of his head injury, the Applicant was unable to recall the events that led to his apparent fall and the injuries he sustained therein. The unique nature of this case⁷ (including the inability of the Applicant to recall exactly what happened on the evening in question) virtually necessitated a hearing before an adjudicator. This case truly was novel and, as a result, I find that the appropriate result is to have each party bear that party’s own expenses (with one exception described below).

I note that, even had I not found that this case raised novel issues, the expenses claimed by the Insurer are excessive in the extreme. The Insurer is claiming a total of about $17,000.00 made up as follows: over $14,000.00 in fees, about $460.00 in disbursements and applicable taxes. With respect to the fees, the amount claimed by the Insurer represents about 200 hours of work by legal representatives,⁸ including attendance at both days of the hearing by two lawyers. Of the $460.00 or so claimed for disbursements, about $350.00 related to witnesses who were never called by the Insurer.

The hearing of all issues was originally scheduled for two days but, ultimately, this case took less than two full days to complete. On July 5, 2011, I heard the testimony of the Applicant and his wife. The Applicant tendered two documents. The Insurer called no witnesses and tendered no documentary evidence. At about 1:45 p.m., counsel for the Applicant asked if we could reconvene the next morning so that she could have some additional time in which to prepare her closing arguments. On July 6, 2011, I heard closing arguments from both sides. That took about 2.25 hours.

Ultimately, this case took about 6 hours to hear (over two days). The Applicant called two witnesses and tendered two documents. The Insurer called no witnesses and tendered no documents. There appears to have been some duplication of legal services by the Insurer’s legal representatives, including having two lawyers present throughout the hearing. It is in light of all of these facts that I find to be excessive the Insurer’s claim for compensation for about 200 hours of legal services.

Despite the Insurer’s success in this application, I find that this case turned upon novel issues and I am exercising my discretion to decline to award to the Insurer any of its expenses other than the unnecessary expenses incurred by the Insurer in having its counsel return to Niagara Falls on July 6, 2011. I find that requiring the Insurer’s counsel to return to Niagara Falls on July 6, 2011 (rather than completing the hearing on July 5, 2011) did put the Insurer to some additional and unnecessary expense and, as a result, I will order that the Applicant pay to the Insurer its expenses, fixed in the amount of $500.00.

April 17, 2012

Richard Feldman Arbitrator

Date

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

Neutral Citation: 2012 ONFSCDRS 63

FSCO A10-002609

BETWEEN:

JOHN EARL OLESIUK Applicant

and

KINGSWAY GENERAL INSURANCE COMPANY Insurer

ARBITRATION ORDER

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

1. Since Mr. Olesiuk was not involved on or about October 24, 2008 in an “accident” as defined in the Schedule, all of his claims herein are dismissed.

2. The Applicant shall pay $500.00 to the Insurer for its expenses in respect of this arbitration.

April 17, 2012

Richard Feldman Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2R.S.O. 1990, c. I.8, as amended.
3. 3In her written submissions, counsel for the Applicant raised a number of issues concerning such things as the severity of the Applicant’s injuries, his alleged financial circumstances and his eligibility (or lack thereof) for Workers’ Compensation benefits. I find that most of these assertions are unsupported by evidence properly before me. In addition, I find that most of these alleged “facts” are irrelevant under the applicable criteria to my determination of the Insurer’s entitlement to its expenses of this proceeding.
4. 4Khan and Certas Direct Insurance Company (FSCO A06-002205, July 18, 2008).
5. 5Umer and Non-Marine Underwriters, Mbrs. of LLoyd's (FSCO A02-000721, April 3, 2003).
6. 6Khan and Certas Direct Insurance Company (FSCO A06-002205, July 18, 2008).
7. 7see my earlier decision for details of the relevant facts
8. 8At least five legal representatives worked on this file, according to the Bill of Costs submitted on behalf of the Insurer.