Neutral Citation: 2014 ONFSCDRS 80 FSCO A10-003724

BETWEEN:

NIRMALADEVI NADARAJAH Applicant

and

RBC GENERAL INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: John Wilson Heard: By written submissions received by April 14, 2014 Appearances: David S. Wilson for Ms. Nadarajah Pamela A. Brownlee for RBC General Insurance Company

Issues:

The Applicant, Nirmaladevi Nadarajah, claimed to have been injured in a motor vehicle accident on August 24, 2005. In a decision dated January 29, 2013, I dealt with a preliminary issue as to limitations and dismissed her claim. Ms. Nadarajah appealed my decision and Director’s Delegate Blackman reversed it, remitting several matters to me for final determination. Among these matters was the issue of Expenses for the original preliminary issue hearing.

Since that time, I have been advised that RBC, in turn, has applied to the Divisional Court for judicial review of the decision of the Director’s Delegate. Although, to date, there is no stay issued by any court or tribunal on this matter, I am advised that RBC has obtained a date in June of this year to argue the stay issue in the Divisional Court.

It is my understanding as well that Director’s Delegate Blackman has now issued the expense decision (FSCO P13-00010, April 14, 2014), relating to the appeal decision that was before him.

The issue in this further hearing is:

Should I deal with arbitration expenses at this time, given the pending judicial review of the appeal decision in this matter?
If so, is Ms. Nadarajah entitled to her expenses incurred in respect of this arbitration hearing?

Result:

Ms Nadarajah is entitled to have her expense claim adjudicated.
Subject to any order made in the judicial review application, Ms. Nadarajah is entitled to her reasonable expenses of the May 11, 2012 preliminary issue hearing, payable by RBC.
RBC shall pay $4,858.95, including HST, to Ms. Nadarajah as her fixed expenses in this matter.

EVIDENCE AND ANALYSIS:

The accident benefit arbitration process was originally designed to be a short, effective, almost summary manner to dispose of important entitlement questions in a way that is both fair and expedited. This is consistent with a system that is designed to be “quicker, less expensive and less formal” than the courts.

From a principled perspective, it is important to keep in mind the purposes of this legislative statutory accident benefit scheme.

Eberhard J., in Gill v. Zurich¹, made the following comments on the purposes of the statutory accident benefit scheme:

I adopt the statement of purpose articulated by Arbitrator Mackintosh at page 12 in Edgar v. Wellington Insurance Co. [1994] O.I.C.D. No. 34 File A-005441 that SABS is remedial, that is to be interpreted in a broad and liberal way, and that its principal object is to provide a “fair and adequate income stream to those who are injured and disabled from work”. The victim is to receive an approximation of wages, and not be compensated more or less.

While this arbitration, with its initial delays and later twists and turns, could well be a poster child for those who claim the system has become over-complicated and time-consuming, it is important nonetheless to keep our sights on the original intention of the system in dealing with the questions at issue here.

Essentially some delay, either institutional or exacerbated by the parties, does not excuse yet further delay. Unless there is an order to the contrary the show must go on.

Ms. Nadarajah won on appeal. The Director’s Delegate has already awarded her expenses in that phase of the dispute and sent the issue of costs back to me for determination.

RBC wants the determination of the expense issue delayed to give it time to obtain a stay of proceedings from the Divisional Court in a month or so. For the reasons that follow I find that there is no reason to further delay the assessment of costs in this matter.

Under section 25(1) of the Statutory Powers Procedure Act, an appeal operates as a stay, except where provided for in another Act.

This is not an appeal. The Insurance Act does not provide for an appeal process to the Superior Court. Rather, there is an internal appeal to the Director with the further possibility of judicial review before the Divisional Court, should a party disagree with the decision of the Director or his delegate.

Nor is there any provision for an automatic stay under the Judicial Review Procedure Act which governs judicial review applications.

Rather, it is the policy expressed in section 283(6) of the Insurance Act that must be found as the default provision when faced with an application for judicial review.

Section 283(6) of the Act reflects the proposition that, barring an exceptional stay, the arbitration continues, whether an element of that arbitration is appealed or not.

Subsection 20(3) of the Insurance Act confirms this policy in providing that “[a]n application for judicial review and any appeal from an order of the court on the application does not stay the decision made under this Act.” Subsection 20(4) of the Insurance Act states that notwithstanding the aforementioned, a judge of the court to which the application is made or a subsequent appeal is taken may grant a stay until the disposition of the judicial review or appeal.

While section 286 of the Insurance Act provides that “an arbitrator appointed by the Director cannot vary or revoke an order made by him or her and cannot make a new order to replace an order made by him or her if the order is under appeal,” in this matter the appeal is completed and, indeed, there has yet to have been an order as to expenses in the preliminary issue proceeding. There is nothing to revoke or replace when it comes to an expense order.

In other words, there is no impediment to proceeding promptly with an expense order and, in fact, the arbitration process mandates it being done in a timely manner.

RBC has pointed to my decision to put over its original request for an expense hearing until such time as the internal FSCO appeal was completed, and requested a similar indulgence to allow the Divisional Court to rule. I decline to do so. The internal FSCO appeal is subject to the same timeliness requirements as any arbitration. Director’s Delegate Blackman completed the appeal process and rendered a decision promptly and efficiently. As pointed out earlier, even the expense award in the appeal process has already been issued.

RBC cannot point to a similar guaranty of timeliness in its process before the Divisional Court. Under the circumstances, barring a stay order from the Divisional Court, the expense order at arbitration should not be further delayed.

Having chosen the forum of the Divisional Court, it is up to RBC to pursue its request to stay the expense portion of this arbitration in that forum as well.

According to the decision of the Director’s Delegate, Ms. Nadarajah was successful on the limitations issue.

It is not self-evident, however, that costs slavishly follow the cause in this forum. Success is one important criterion in the determination of an award of expenses in arbitration. Sometimes it is necessary to sanction unproductive or other conduct. This is not one of those situations.

Indeed, the Expense Regulation outlines the following considerations when making an expense order:

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 Ontario Regulation 403/96

In this matter, I would be inclined to focus on items 1 and 6 as being potentially relevant to the determination of expenses. In particular, I would find that items 2, 3, 4 or 5 do not bear close examination, since there was a serious issue in play, well handled by capable counsel and no suggestion on either side of obstreperous behavior.

With regard to the admitted failure of Ms. Nadarajah to attend certain IMEs, while relevant to the delay and the timing of RBC’s refusal, they were cured by subsequent attendance, and indeed did not affect the outcome of the hearing.

Consequently, I see no reason to depart from the notion of costs following the cause and I award Ms. Nadarajah her reasonable expenses.

Ms. Nadarajah has claimed some $4,559.55 in expenses covering some 26.9 hours of counsel time at the experienced counsel rate of $150 per hour. Ms. Nadarajah also claims HST and disbursements for a total of $4,655.55.

Counsel for Ms. Nadarajah has subsequently added an additional 1.2 hours or $203.40 to the claim for expenses to deal with the further expense submissions that were requested.

It has been long understood that, except in rare circumstances, a detailed line by line assessment is not required. Rather, in accordance with Lunn and State Farm Mutual Automobile Insurance Company², a global assessment of reasonable expenses is the preferred route in arbitration. In addition, there should be a common sense recognition of proportionality in the costs awarded in any matter.

It is helpful to note when looking at the reasonableness of the counsel fees claimed, that RBC had put forward a claim for some $7,500 in costs plus disbursements and HST for its own counsel’s participation in this matter. Clearly RBC felt it was reasonable for its counsel to put in and bill significant time in this preliminary issue hearing.

I note, as well, that Ms. Nadarajah’s claim would stand or fall based on the outcome of the preliminary issue hearing. It was not a minor matter and justified a complete response to RBC’s allegation that the claim was time-barred. By any analysis the expense claim was proportional to the issues at play in this hearing.

Having reviewed the expense outline provided by Ms. Nadarajah, I accept that it is reasonable and indeed properly payable by RBC.

Consequently, I order that RBC pay to Ms. Nadarajah the amount of $4,858.95, including HST, as her fixed expenses in this matter.

May 9, 2014

John Wilson Arbitrator

Financial Services Commission of Ontario

Neutral Citation: 2014 ONFSCDRS 80 FSCO A10-003724

BETWEEN:

NIRMALADEVI NADARAJAH Applicant

and

RBC GENERAL INSURANCE COMPANY Insurer

ARBITRATION ORDER

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

The arbitration expense hearing for the preliminary issue hearing of May 11, 2012 should proceed, notwithstanding the pending judicial review.
RBC pay to Ms. Nadarajah the amount of $4,858.95 (including HST) as her fixed expenses in this matter