Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2012 ONFSCDRS 8 Appeal: P11-00024V

OFFICE OF THE DIRECTOR OF ARBITRATIONS

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Applicant

and

SUBASHINI YOGESVARAN Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Mr. Robert S. Franklin for the Applicant, State Farm Mutual Automobile Insurance Company Mr. David S. Wilson for the Respondent, Subashini Yogesvaran

HEARING DATE: By written submissions due February 1, 2012

VARIATION EXPENSE ORDER

Under section 284 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

State Farm Mutual Automobile Insurance Company pay Ms. Subashini Yogesvaran her legal expenses of this variation application fixed in the amount of $1,254.30, inclusive of HST.

February 8, 2012

Lawrence Blackman Director’s Delegate Date

REASONS FOR DECISION

I. BACKGROUND AND THE PARTIES’ EXPENSE SUBMISSIONS

As a result of her injuries sustained in a May 13, 2007 motor vehicle accident, the Respondent, Ms. Subashini Yogesvaran, applied to her first-party insurer, the Applicant, State Farm Mutual Automobile Insurance Company, for statutory accident benefits available under the Schedule.¹

The Arbitrator’s November 26, 2009 decision found the Respondent entitled to specific benefits based on the Applicant’s failure to properly terminate those benefits in accordance with the procedure set out in the Schedule. My October 28, 2010 appeal decision varied the Arbitrator’s decision from a final to an interim order, with the matter to proceed to an adjudicative determination in arbitration based on the substantive entitlement tests.

This present October 13, 2011 Application for Variation requested, pursuant to subsection 284(3) of the Insurance Act, R.S.O. 1990, c. I.8, that ongoing income replacement benefits (“IRBs”) be suspended on the basis that there was an error in the October 28, 2010 order, the IRB entitlement test having changed at 104 weeks. The grounds for variation subsequently expanded to include, in part, that the change in the entitlement test also represented a material change in the Respondent’s circumstances.

The preliminary issue to be addressed in this variation application was whether, pursuant to subsection 61.4(a) of the Dispute Resolution Practice Code (Fourth Edition, Updated August 2011) (the “Code”), the application should be rejected on the basis that it was from an interim order that did not finally decide the issues in dispute.

My November 22, 2011 decision rejected this variation application. Applying the criteria in Allstate Insurance Company of Canada and Torok, (FSCO P01-00021, May 29, 2001), I was, in part, not persuaded as to the strength of the application. It was unclear how a change in the entitlement test that preceded by more than a year the October 28, 2010 decision in question, constituted a material change in the insured’s circumstances. It was also unclear how a change in the substantive entitlement test constituted an error in the order when it was the consequences of procedural non-compliance that were in issue.

The Respondent seeks her legal expenses of this variation application, totalling $1,254.30, including the time expended for expense submissions, on the basis that she was entirely successful in this variation application that she submits was ill-conceived and inappropriate.

The Applicant submits that it brought this application due to its concern whether an arbitrator had jurisdiction to vary the October 28, 2010 appeal order. It further argues that as the appeal order issued was not sought by either party, the legal expenses of this present proceeding should not be awarded to either party or, alternatively, the issue of legal expenses should be deferred.

II. RESULT

Subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8, states 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.

Subsection 282(11) applies to variation applications, as set out in subsection 284(5). Subsection 12(2) of R.R.O. 1990, Reg. 664 (the “Expense Regulation”) lists the following criteria that shall be considered for the purposes of awarding all or part of incurred legal expenses:

Each party’s degree of success in the outcome of the proceeding
Any written offers to settle made in accordance with the Expense Regulation
Whether novel issues are raised in the proceeding
The conduct of a party or a representative that tended to prolong, obstruct or hinder the proceeding, including failure to comply with undertakings and orders
Whether any aspect of the proceeding was improper, vexatious or unnecessary
Whether an insured refused or failed as required under applicable provision to submit to a medical examination or provide required material

The most pertinent criteria in this case are each party’s degree of success in the outcome of this proceeding and whether any aspect of this proceeding was unnecessary.

My earlier January 20, 2011 decision on appeal expenses found that each party should bear its own legal expenses given the mixed success on appeal, the novelty of the legal issue, the importance and technicality of the question on appeal and that the Arbitrator did not have the advantage of the Ontario Court of Appeal decision in Stranges v. Allstate Insurance Company of Canada, 2010 ONCA 457, when she rendered her decision.

In this present application, however, the Respondent was completely successful. Whatever the Applicant’s motivation in bringing this variation application, the grounds upon which it chose to base the application were found wanting. Whatever the Applicant’s concerns regarding the initial appeal decision, this subsequent proceeding, as detailed in my November 22, 2011 decision, was found to have created an unnecessary multiplicity of proceedings. As a result, the Respondent has been put to unnecessary expense.

The legal expenses requested, 7.4 hours at $150 an hour, plus HST, are modest. No disbursements are sought. The Applicant does not object to the quantum of the expenses sought. It provided no further submissions, as allowed, after the Respondent requested a further hour of time for its reply submissions. I find the legal expenses sought to be reasonable and recoverable. I am satisfied that the $150 hourly rate is justified, specifically as this application was unnecessary.

Accordingly, I find that the Respondent is entitled to her legal expenses of this variation application fixed in the amount of $1,254.30, inclusive of HST.