Yiu Ting (Jason) Hung v. Allstate Insurance Company of Canada, 2012 ONFSCDRS 81

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2012 ONFSCDRS 81

FSCO A09-001602

BETWEEN:

YIU TING (JASON) HUNG

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON EXPENSES

Before: Richard Feldman

Heard: By written submissions received by April 24, 2012

Appearances: Darryl Singer for the Applicant

Richard Horst for the Insurer

Issues:

The Applicant, Yiu Ting (Jason) Hung, allegedly sustained impairments as a direct result of a motor vehicle accident on July 20, 2007. He applied for statutory accident benefits from Allstate Insurance Company of Canada (“Allstate”), payable under the Schedule.¹ Issues arose between the parties concerning the Applicant’s entitlement to certain statutory accident benefits. The parties were unable to resolve their disputes through mediation and Mr. Hung applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

Mr. Hung applied for medical benefits, attendant care benefits, payments for housekeeping and home maintenance services, the cost of an examination and an assessment at Optimum Health Clinic, interest on overdue payment of benefits and his expenses in respect of this proceeding. The Insurer opposed all of the Applicant's claims and sought its own expenses related to this proceeding.

Although the hearing was originally scheduled to last four days, it actually took only about fourteen hours, over the course of three days (May 2, 3 and December 12, 2011). Additional time was spent dealing with motions brought and/or proposed and then abandoned by the Applicant; this required an additional attendance before me on July 29, 2011.

The results of the hearing, as determined in my order of February 24, 2012, were as follows:

The Applicant's claims for accident benefits are dismissed.
The decision on expenses is reserved to be resolved in accordance with Rules 75 through 79 of the Dispute Resolution Practice Code.

The issue in this further hearing is:

Is the Applicant liable to pay the Insurer's expenses incurred in respect of this arbitration hearing?

Result:

The Applicant shall pay to the Insurer its expenses, fixed in the amount of $5,000.00.

EVIDENCE AND ANALYSIS:

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.

Of these seven criteria, the Insurer is relying on three: (1) the degree of success of the parties; (2) conduct by the Applicant that tended to prolong the proceeding; and (3) relevant offers to settle that were exchanged by the parties prior to the hearing.

The Insurer is seeking legal fees of about $5,000.00³ and disbursements of $1,500.00⁴ for a total of about $6,500.00.⁵

Offers to Settle

With respect to the last of these three criteria, offers to settle, the Applicant has made no submissions. The Insurer seeks to rely upon two offers, one that it made and one made by the Applicant. The Insurer, however, has not made it clear whether these offers were made in writing and, if they were, the Insurer has not filed copies of same with me or provided me with evidence as to how and when they were sent and received. The Insurer's offer was purportedly on the basis of a "full and final settlement" dealing not just with the issues in dispute in this application but any and all claims possibly arising from the July 20, 2007 accident; this fact alone makes it impossible for me to compare that offer to the results of this arbitration proceeding.

The Applicant's offer to accept $10,000 in settlement of his claims in this arbitration (plus an additional $5,000 for legal expenses) clearly exceeded the amount I have awarded to the Applicant and, as it turns out, the Insurer was right to have rejected it. That does not mean that the Applicant should be penalized for having made an offer that exceeded the amount he was ultimately awarded. Thus, the Insurer has failed to adduce sufficient evidence to establish that this criterion is relevant.

Applicant’s Conduct

With respect to the second criteria, conduct of the Applicant that tended to prolong the proceeding, the Insurer submits that time was wasted by the Applicant purporting to bring and then abandoning various motions with respect to the issue of alleged problems with interpretation services provided by the Commission. The Applicant submits that it was reasonable to pursue this issue and that, ultimately, time was saved by the Applicant abandoning the motion when it became clear that the evidence did not support the relief he had intended to seek.

It was not necessarily abusive of the Applicant to pursue this issue if it could be demonstrated that there was some factual foundation for having raised the issue in the first place and if the Applicant's counsel had raised it in an appropriate manner and pursued the issue diligently. No such foundation was ever established, however, and counsel for the Applicant repeatedly failed to follow my directions with respect to this issue. Since Insurer's counsel had to do some research into this issue and had to attend before me on July 29, 2011 to respond to the Applicant's request that I recuse myself from hearing a motion for a mistrial that the Applicant thought that he might bring, I find that the Insurer is entitled to seek some of its expenses based upon this criterion.

Degree of Success

The main thrust of the Insurer's written submissions is that the Insurer was completely successful in this proceeding. There is no question that the Insurer has been completely successful and that the Applicant has been completely unsuccessful.

The Applicant’s response does not focus not on any of the relevant criteria. Rather, the Applicant seems to focus upon my residual power to exercise some discretion in deciding whether to grant expenses and the quantum of any such expenses.

The Applicant relies upon the cases of Patterson and State Farm,⁶ Shreet and RBC,⁷ and Boucher v. Public Accountants Council.⁸ I do not find any of these cases to be very helpful in this case.

In Boucher, the Court of Appeal reduced the amount of costs that were awarded at a lower level on the basis that awards that are equivalent to substantial indemnity ought to be reserved for the worst cases in order to discourage frivolous or unnecessary litigation. This is of little assistance in this case for the following reasons: (1) Boucher has no application to the present circumstances as Allstate has not asked for anywhere near the maximum amount that FSCO could award in a case such as this;⁹ (2) Boucher is a decision of the Court made under the Rules of Civil Procedure and is not an accident benefits case (or even a case involving a motor vehicle accident); and (3) Boucher adds nothing new -- FSCO has repeatedly and independently recognized through its expense decisions that considerations of fairness and reasonableness underpin the interpretation and application of the relevant criteria and any exercise of discretion thereunder.

The Patterson decision was issued relatively soon after an amendment to the Expense Regulation signaled a curtailing of discretion in this area. The arbitrator held that, in his view, this did not necessarily turn expenses into a “winner take all” scheme. I find this case to be of limited assistance for two reasons. First, I believe that the approach of FSCO has shifted somewhat since this decision was released in 2007¹⁰ and is now better represented by Borissenko¹¹ and the decisions that have followed. Second, Patterson was a case in which the parties had mixed success; the Insurer was not completely successful and it was largely on that basis that the arbitrator decided that each party should bear their own expenses.¹²

In Shreet, the arbitrator found that the Applicant's fact situation was novel in that she was involved in three separate motor vehicle accidents and that the raising of novel issues was "central to this proceeding". As a result, the arbitrator ruled that although the applicant was unsuccessful, each party should bear their own expenses. I find that there is nothing novel in the case currently before me.

The Insurer was completely successful in this application. The Applicant was completely unsuccessful. This was largely because of my adverse findings concerning the Applicant's credibility. At best, his claims were grossly exaggerated. Based upon this criterion, I find that the Insurer is entitled to its expenses of this proceeding.

CONCLUSION:

Fees

With respect to legal fees, I find the amount claimed on behalf of the Insurer to be somewhat high, given the actual duration of the hearing. Also, some of the work by Mr. Horst would have been done before April 2011 (when the Legal Aid rate for a lawyer of Mr. Horst’s experience was increased to $112.74 per hour) and ought to have been calculated at the hourly rate(s) that was permissible at the time the legal services were provided. I therefore fix the Insurer's fees at $3,500, which allows about 16 hours of attendance before me (in May, July and December 2011) and about the same number of hours for all preparation.

Disbursements

Since there is no specific challenge to the disbursements claimed and they do not exceed the amounts that are permitted by the Expense Regulation, I shall permit the disbursements as claimed (i.e., $1,500).

Total:

I find that the Insurer is entitled to its expenses of this proceeding, fixed in the total amount of $5,000 (inclusive of all fees, disbursements and any applicable taxes thereon).

May 16, 2012

Richard Feldman

Arbitrator

Date