Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2012 ONFSCDRS 68

FSCO A09-003266

BETWEEN:

BRIJMOHAN RAMRATTAN

Applicant

and

MOTOR VEHICLE ACCIDENT CLAIMS FUND

Insurer

Before: Joyce Miller

Heard: Written submissions received by April 4, 2012

Appearances: Maurice Benzaquen for Mr. Ramrattan

Robert W. Kerkmann for Motor Vehicle Accident Claims Fund

Issues:

On October 28, 2006, Mr. Brijmohan Ramrattan, a pedestrian, was injured in a hit-and-run motor vehicle accident. He applied for and received statutory accident benefits from Motor Vehicle Accident Claims Fund (“MVAC Fund”), payable under the Schedule.¹ MVAC Fund denied Mr. Ramrattan housekeeping benefits and terminated his attendant care benefits on February 9, 2007. The parties were unable to resolve their disputes through mediation, and Mr. Ramrattan applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

An arbitration hearing was scheduled to commence on February 15, 2011. At the start of the hearing, Mr. Ramrattan’s counsel advised that he was bringing a motion to have the Motor Vehicle Accident Claims Fund’s counsel, Mr. Robert Kerkmann and his law firm Loudon & Sterling LLP, removed as solicitors of record by reason of a conflict of interest. The motion was heard partially on February 15, 2011 and completed by written submissions on March 10, 2011. I made the following orders, while reserving on the issue of expenses:

I find that there is no conflict of interest that would result in the removal of Mr. Kerkmann and the law firm of Loudon & Sterling LLP as solicitors of record for MVAC.
If the parties cannot agree on expenses, I can be spoken to within 30 days of this decision.

The issue in this further hearing is:

Is MVA entitled to its expenses incurred in respect of this arbitration hearing?

Result:

Each party is responsible for its own expenses incurred in respect of the motion hearing.

THE LAW

Subsection 282(11) of the Insurance Act provides that:

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.

The criteria for determining entitlement to expenses of an arbitration proceeding are enumerated in section 12(2) of Ontario Regulation 664, R.R.O. 1990, as amended. The criteria are:

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 the Schedule or refused or failed to provide any material required to be provided under subsection 42(10) of the Schedule.

SUBMISSIONS

MVAC’s Submissions

MVAC submits it was completely successful in this motion. MVAC claims legal fees of $5,917.50 plus HST for 39.45 hours at $150 an hour.

MVAC submits that “it was reasonable for the Fund to prepare a detailed and thorough response to Mr. Ramrattan’s motion, which necessitated thorough legal research. Mr. Ramrattan was directly or indirectly challenging the Fund’s long standing practice of having the same lawyer represent it on tort and accident benefit claims and he was asserting that the Fund ought to have a ‘Chinese Wall.’ He was also challenging the Fund’s practice of joining settlement positions in respect of accident benefit and tort claims. The outcome of the motion had the potential to greatly affect the Fund’s overall management and handling of claims and therefore thorough preparation of a supporting affidavit and written submissions was amply justified.”

Mr. Ramrattan’s Submissions

Mr. Ramrattan submits that I should exercise my discretion not to award expenses to MVAC pursuant to Rule 75.2(c) of the Dispute Resolution Practice Code and section 12(2)3 of Regulation 664 to the Insurance Act.

Specifically, Mr. Ramrattan submits the Motion hearing “raised the novel issue of whether the Chinese Walls required to be set up between the accident benefit adjuster and the tort adjuster could be breached by simply retaining the same Counsel for both parties and particularly with respect to the Motor Vehicle Accident Claims Fund and its practices.”

Mr. Ramrattan submits that “This issue had not been previously litigated as it relates to the Motor Vehicle Accident Claims Fund and there is significant conflict in the case law, FSCO decisions and publications, and as such, it is respectfully submitted that no costs should be awarded to either party as a result of this novel issue being litigated in accordance with … [Rule] 75.1 of the Dispute Resolution Practice Code.”

In the alternative, Mr. Ramrattan submits that if costs are to be awarded to MVAC, they should be awarded pursuant to Rule 78 of the Dispute Resolution Practice Code and the Legal Aid Tariff Rate in force on the date of the Motion, February 15, 2011.

In the further alternative, Mr. Ramrattan submits that if costs are to be awarded to MVAC, the costs claimed are excessive and should be reduced to reflect reasonable and necessary costs in preparation for the Motion.

Lastly, Mr. Ramrattan submits that if costs are to be awarded to MVAC, they should be awarded payable at the conclusion of the Arbitration hearing.

ANALYSIS AND FINDING

Entitlement

MVAC was asked and declined to respond to Mr. Ramrattan’s submission that the Motion dealt with a novel issue. For the following reasons, I accept Mr. Ramrattan’s submission that the Motion dealt with a novel issue.

While not a de jure rule, insurance companies usually separate their tort and SABS cases when engaged in litigation. MVAC does not. There had been no previous specific rulings regarding this de facto practice on the part of MVAC. On the facts of this case, I agree with Mr. Ramrattan’s submission that, pursuant to section 12(2)3 of Regulation 664 to the Insurance Act, the Motion issue was a valid novel issue.

Accordingly, I find that each party is responsible for its own expenses.

In the event that I am incorrect on the issue of entitlement, for the sake of completeness, I will comment on the remainder of the submissions.

(1) Amount of Counsel Fee

MVAC claims $150 an hour for its counsel fees.

Rule 78.1 of the Dispute Resolution Practice Code states that where an adjudicator is satisfied that a higher amount for legal fees to an insured person is justified, an hourly rate of up to $150 may be awarded. There is no such discretion on the part of the Arbitrator to award a higher amount than the legal aid rate for the insured’s counsel fees.

Accordingly, MVAC is not entitled to claim $150 an hour for its counsel’s fee.

(2) Amount of Hours Claimed

MVAC claims counsel fees for 39.45 hours in the amount of $5,917.50.

I agree with Mr. Ramrattan that the number of hours claimed is excessive. In its submissions, MVAC stated: “Mr. Ramrattan was directly or indirectly challenging the Fund’s long standing practice of having the same lawyer represent it on tort and accident benefit claims and he was asserting that the Fund ought to have a ‘Chinese Wall.’”

I agree with Mr. Ramrattan’s submission that given MVAC’s long-standing practice, MVAC ought to have been aware of the legal basis for this long-standing position. As well, I find the paucity of law would negate extensive research on this issue.

Accordingly, I would fix expenses at $1,500, inclusive of HST.

(3) Payment of Costs

And finally, if I am incorrect on the entitlement issue, I would order the expenses payable to MVAC at the conclusion of the arbitration hearing.

April 26, 2012

Joyce Miller

Arbitrator

Date