Nadarajah v. RBC General Insurance Company, 2014 ONFSCDRS 64

Financial Services Commission of Ontario

Neutral Citation: 2014 ONFSCDRS 64 Appeal P13-00010 OFFICE OF THE DIRECTOR OF ARBITRATIONS

NIRMALADEVI NADARAJAH Appellant

and

RBC GENERAL INSURANCE COMPANY Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Mr. David S. Wilson for the Appellant, Ms. Nirmaladevi Nadarajah Ms. Pamela A. Brownlee for the Respondent, RBC General Insurance Company

HEARING DATE: By written submissions due April 11, 2014

APPEAL EXPENSE ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The Respondent, RBC General Insurance Company, shall pay the Appellant, Nirmaladevi Nadarajah, her legal expenses of this appeal fixed in the amount of $3,487.44, inclusive of HST.

April 14, 2014

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

1. BACKGROUND AND THE PARTIES’ EXPENSE SUBMISSIONS

This appeal was from a January 29, 2013 arbitration decision on a preliminary issue. In that decision, the Arbitrator dismissed the Application for Arbitration on the basis that the Appellant was precluded from proceeding to arbitration because she had missed the two-year limitation period in subsection 281(5) of the Insurance Act and subsection 51(1) of the Schedule.¹

My December 11, 2013 appeal decision rescinded the Arbitrator’s order. I held:

1. The Appellant was not barred from claiming income replacement benefits.
2. The issues of the housekeeping limitation defence and entitlement to an interim benefits award were returned to arbitration for a new hearing.
3. If the parties were unable to agree on the legal expenses of the appeal, an expense hearing was to be requested within sixty days of my decision.

The Appellant seeks $3,360.32 in appeal legal expenses, plus an additional amount to reply to the Respondent’s April 4, 2014 request that my expense decision be held down. The $3,360.32 consists of 17.85 hours (including 0.75 hours for her March 21, 2014 reply expense submissions) at $150 an hour, plus $250 for her filing fee and $75 (plus HST) for photocopying.

The Appellant’s January 20, 2014 letter requested an appeal expense hearing. I subsequently set time lines ending March 19, 2014 for expense submissions. Responding to a April 7, 2014 deadline for additional submissions limited to a specific quantum issue, the Respondent’s Counsel advised by letter dated April 2, 2014 that she had “been instructed to bring a motion for a stay of the Director’s Delegate Award” and was in the process of scheduling same.

My April 3, 2014 letter stated that it was not clear what award was sought to be stayed or to whom the stay request was being made. I stated that if either party intended to seek an opportunity to provide additional submissions before me, either in writing or by oral argument, they were to do so by return correspondence.

The Respondent replied on April 4, 2014:

To clarify, a Motion is being brought before the Divisional Court on June 5, 2014 for a stay of the Appeal Order of yourself dated December 11, 2013. We are asking for a stay of the entire Appeal Order, including the award of expenses.

It is submitted on behalf of RBC that any decision with respect to the award of Appeal expenses should be put off until after our motion is heard by the Divisional Court.

The Respondent did not seek an opportunity to provide further submissions. I provided the Appellant an opportunity to respond. Neither party provided any statutory authority or case law for assistance.

Subsection 283(6) of the Insurance Act provides, in respect of arbitration decisions, that an “appeal does not stay the order of the arbitrator unless the Director decides otherwise.” Delegate McMahon held in Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000), that subsection 283(6) of the Insurance Act:

… provides that a stay from the order of an arbitrator ruling on accident benefit claims is the exception rather than the rule … The fact that a stay is the exception rather than the rule, suggests to me that the drafters of the legislation recognized that the insurer is in a much better position than the insured person to bear the risks inherent in not staying the arbitrator’s order.

Subsection 283(6) is also consistent with the precept enunciated in Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, that there “is no dispute that one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance.” In the present context, consumer protection is evidenced in the general rule that adjudicative awards not be put on hold pending exhaustion of appellate and judicial review.

In Armstrong, Delegate McMahon set out the criteria as to whether a stay should be granted:

1. The bona fides of the appeal;
2. The substance of the grounds for appeal; and,
3. The hardship to the respective parties if the stay is granted or refused.

The genesis of Armstrong was Canadian Home Assurance Company and Scavuzzo, (OIC P-000626, May 2, 1992), where Delegate Richardson cited the decisions in Re Great Northern Capital Corporation et al. and City of Toronto et al. (1973), 1973 CanLII 762 (ON HCJ), 1 O.R. (2d) 160 (H.C.), and the Divisional Court decision in Gaudet v. Ontario Securities Commission (1990), 38 O.A.C. 216.

A more recent Divisional Court decision, in Elementary Teachers’ Federation of Ontario v. Ontario (Labour), 2007 Can LII 35151, held:

The factors to be considered in determining whether this court should exercise its discretion to grant a stay are whether there is a serious issue to be tried, whether the Applicant has satisfied the court that irreparable harm will occur if the interim relief is not granted and whether the balance of convenience favours granting the stay. RJR Macdonald Inc. v. Canada (Attorney General)1994 CanLII 117 (SCC), (1994), 111 D.L.R. (4th) 385 (S.C.C.) at p. 400.

If a party genuinely thought that an internal appeal decision would result in irreparable harm, one would think they would move post-haste to request that this office hold down its decision while moving expeditiously to the Divisional Court for a stay. In this case, the Appellant waited almost four months, after expense submissions had been largely exchanged, to request, in initially ambiguous language, that I hold down my expense decision.

Rule 1.1 of the Dispute Resolution Practice Code (Fourth Edition, Updated – January 2014), the cardinal rule of the Code (that includes rules regarding expense awards), provides that these Rules are to be broadly interpreted to produce the most just, quickest and least expensive resolution of the dispute.

In my view, the most just, efficient, quickest and least expensive means of resolving the last remaining issue before me, that of appeal legal expenses, as well as the most respectful to the process and to the Divisional Court, is to render my expense decision so that orders on all of the issues I was to decide will be before the Divisional Court for its consideration, both at any stay motion and at the main judicial review hearing. Accordingly, I decline the Respondent’s request that I hold down my expense decision.

Returning then to the issue of legal expenses, the Appellant argues that she is entitled to her legal appeal expenses because of her success on appeal.

The Respondent, however, submits:

1. The Appellant was only partially successful in the outcome of the appeal. As the issues of the housekeeping limitation defence and entitlement to an interim benefits award were returned to arbitration, the Appellant’s ultimate success is yet to be determined.
2. This appeal raised a novel issue regarding the interplay between the Schedule as it existed prior to the Bill 198 amendments and the application of the benefit termination processes thereafter.

The Respondent argues that each party should thus bear its own appeal costs. In the alternative, it submits that the Appellant should only be awarded half of her claimed expenses.

The Respondent states that if the Appellant is found to be entitled to her appeal expenses, it “does not take any issue with respect to the legal expenses that have been claimed in the Appellant’s Bill of Costs,” with the exception of:

1. 0.5 hours claimed for preparing her Bill of Costs that seems “excessive.”
2. $75 for photocopying, no details or supporting documents having been provided.

II. ENTITLEMENT TO AND THE QUANTUM OF LEGAL EXPENSES

Subsection 282(11) of the Insurance Act provides:

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 283(7) provides that the above applies, with necessary modifications, to appeals.

Subsection 12(2) of R.R.O. 1990, Reg. 664 sets out the criteria that shall be considered in awarding legal expenses. The parties agree that in this case the following criteria are pertinent:

• Each party’s degree of success in the outcome of the proceeding
• Whether novel issues were raised in the proceeding

I agree with the Appellant that whatever her ultimate success in arbitration regarding an interim benefits award, the housekeeping limitation defence and IRB entitlement, she was still successful in this appeal proceeding that is the subject of this expense decision. I agree with the Appellant that had she not have been successful on appeal, her entire right to proceed would have been foreclosed. Rather, the Appellant was successful in having the Arbitrator’s dismissal of her Application for Arbitration rescinded.

Arbitrator Killoran, in Reid and ING Insurance Company of Canada, (FSCO A05-002870, May 22, 2008), with regard to arbitration legal expenses, held:

The relationship between insurer and insured is a contractual one. The insured is entitled to access the dispute resolution process at FSCO as a result of that contract. The Insurance Act and its regulations must be interpreted in such a way as to uphold the protective and remedial nature of the legislation from which it flows.

I agree. In Halim and Security National Insurance Co./Monnex Insurance Mgmt. Inc., (FSCO P07-00035, November 21, 2008), I held:

I find that these expense criteria do not exist in a vacuum, segregated from the overall legislative intent. Rather, the criteria are defined by, and help define the broader, overarching legislative intentions, including consumer protection, as set out by the Supreme Court of Canada in Smith v. Co-operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, which encompasses a fair and reasonable measure of access to justice.

I find that the novelty of the issues raised in this appeal should also inure to the Appellant’s benefit, as an insured person.

Accordingly, I find the Appellant entitled to her expenses of this appeal, as assessed. I thus turn to the quantum of legal expenses claimed.

In Lunn and State Farm Mutual Automobile Insurance Company, (OIC A-013960, March 15, 1996), Arbitrator Kirsch held that a line-by-line assessment of the expenses claimed was not necessary. Arbitrator Makepeace, in Henri and Allstate Insurance Company of Canada, (OIC A-007954, August 8, 1997), agreed that the overriding consideration in fixing legal expenses is reasonableness.

I find the Appellant’s $3,360.32 account for legal expenses up to March 22, 2014 reasonable. The Respondent objects only to two minor items. I find 0.5 hours for preparing a Bill of Costs and written submissions to be extremely efficient and cost effective. I find $75, at 25 cents a page, to be a reasonable and proportional estimate for photocopying in this appeal proceeding.

Bains and RBC General Insurance Company, (FSCO P09-00005, September 8, 2010), in reviewing twenty appeal expense awards, found that the average appeals expense award was $4,733.58 where expenses were awarded to insured persons (reflecting a higher allowed hourly rate of up to $150 an hour) and $2,812.91 where expenses were awarded to insurers (who, under Rule 78.1 of the Code, are restricted to fees allowed under the Legal Aid Services Act, 1998). The expense claim in this case for an insured person is clearly well below average.

Subsequent to March 22, 2014, there have been six more letters in this matter, including the Appellant’s submissions opposing my expense decision being held down. The Appellant leaves it to me “to determine if any further expenses in this regard are appropriate.” I have already given the Respondent an opportunity to provide submissions on an additional $127.12 sought by the Appellant for her initial reply submissions, which the Respondent did not dispute.

Rather than incur unnecessary expense for both parties in having further submissions, I award a further modest additional $127.12. Accordingly, the Respondent shall pay the Appellant her legal expenses of this appeal, fixed in the amount of $3,487.44, inclusive of HST.

April 14, 2014

Lawrence Blackman Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.