Financial Services Commission of Ontario
Neutral Citation: 2015 ONFSCDRS 15 FSCO A10-003442
BETWEEN:
HAMIDE DERVISHOLLI Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer
DECISION ON EXPENSES
Before: Susan Sapin Heard: Written submissions received by December 19, 2014 and a telephone conference call on January 23, 2015.
Appearances: Sabrina Singh for Ms. Dervisholli Benjamin Flanagan for State Farm Mutual Automobile Insurance Company
Issues:
The issue in this hearing is:
- Is either party entitled to its expenses incurred in respect of the preliminary issue hearing, and if so, in what amount?
Result:
- State Farm is entitled to its expenses of $1,297.38 incurred in respect of the preliminary issue hearing.
Background:
The Applicant, Hamide Dervisholli, was injured in a motor vehicle accident on October 29, 2007. She disputed State Farm’s denial of her claims for statutory accident benefits under the Schedule1 and applied for arbitration. Prior to the hearing on the merits, Ms. Dervisholli brought a motion for a ruling that the law firm Reisler Franklin should be removed from the arbitration proceeding because it was in a position of conflict of interest in that it was acting for State Farm in both the arbitration before this Commission as well as in the related tort proceeding before the Ontario Superior Court of Justice. In a decision dated December 2012, Hambly, J. determined that Reisler Franklin was in a conflict of interest and ordered the firm to be removed as solicitors for State Farm. State Farm appealed that decision to the Divisional Court, which has yet to hear the case.
At the hearing of the motion before me, State Farm argued that it should be stayed until the Divisional Court rendered its decision.
In a decision dated June 27, 2014, I dealt with the preliminary issues raised by the parties, denied the request for a stay of the motion, and ordered that the law firm Reisler Franklin could continue to represent State Farm in the arbitration proceeding, while reserving on the issue of expenses.
State Farm has asked for its legal fees which, under the maximum allowable hourly rates set out in Rule 78 of the Dispute Resolution Practice Code (the “Code”) and based on the Ontario Legal Aid Tariff rates are $3,243.46. State Farm also claims its disbursements of $135.53, for a total of $3,378.99.
Reasons:
For the reasons set out below, I find State Farm’s reasonable expenses to be $3,243.46, including HST, and that Ms. Dervisholli should pay 40 per cent of that amount, or $1,297.38.
Subsection 282(11) provides that an arbitrator may award to either party all or part of expenses incurred in an arbitration proceeding, according to criteria prescribed by regulation; in this case, s.12(2) of the “Expense Regulation.”2 Rule 75.2 of the Code provides that an arbitrator will consider only the criteria referred to in the Regulation. For purposes of this expense hearing, the relevant criteria are:
(a) each party’s degree of success in the outcome of the proceeding;
(c) whether novel issues are raised in the proceeding;
(e) whether any aspect of the proceeding was improper, vexatious or unnecessary.
Regarding the first criterion, I agree with Ms. Dervisholli’s submission that State Farm was not entirely successful, in that I denied its motion to stay the conflict of interest motion until the appeal of Hambly J.’s decision was decided by the Divisional Court. That decision was necessary to avoid a prolonged delay in Ms. Dervisholli’s arbitration proceeding. As I estimate about 20 per cent of the time and effort involved by State Farm was expended towards that issue, I find it reasonable that Ms. Dervisholli be entitled to a deduction of 20 per cent from the legal fees claimed by State Farm on that basis.
Criteria (c) and (e) are related in this case. I agree with State Farm that the conflict of interest issue was not novel, as noted by Delegate Evans when he rejected Ms. Dervisholli’s appeal of my decision. The law on that point was both settled and binding on FSCO arbitrators and Directors Delegates.3 However, I do not agree that Ms. Dervisholli’s motion was unnecessary.
Although the law was settled at FSCO, there were conflicting court decisions. This was the basis on which the Divisional Court granted leave to appeal from the decision of Hambly, J. in the tort matter, as was the reasoning that the conflict of interest issue was a “significant issue to the personal injury bar and the insurance industry.” Just because the issue, given conflicting law, is one best dealt with by the Divisional Court, whose decisions are binding on both judges and FSCO arbitrators, does not mean it was unnecessary for Ms. Dervisholli to raise the issue before this Commission in her particular case, especially in light of Hambly J.’s decision.
I agree that the issue is one of public interest. I find it also affects the public perception of fairness. Automobile insurance law in this province is inordinately complicated, given the unique interplay between first-party and third-party issues, and not self-evident to the average consumer. Where arbitrators and judges come to different decisions on an apparently identical issue, as in this case, the consumer is entitled to ask why, and to get an answer in a timely manner.
This case also raises issues of access to justice. As a single mother of five children, there is no dispute that Ms. Dervisholli is impecunious; this should not be an obstacle to her ability to have issues of importance to her adjudicated. I agree with Delegate Blackman’s reasoning in Halim and Security National Insurance Company/Monnex Insurance Mgmt. Inc.,4 that the expense criteria above,
…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] 2. S. C. R. 129, which encompasses a fair and reasonable measure of access to justice.
Accordingly, I find State Farm’s costs should be reduced by 40 per cent to account for these factors, for a total reduction of 60 per cent of the $3,243.46 allowable legal fees it has claimed. The amount Ms. Dervisholli is required to pay to State Farm is $1,297.38 in fees. It would have been reasonable for State Farm to e-mail or fax the motion materials rather than copy and courier them, and so I am not awarding those expenses.
In this particular case, given Ms. Dervisholli’s lack of resources, I find the expenses are not payable until the outcome of the hearing on the merits.
January 28, 2015
Susan Sapin Arbitrator
Date
Financial Services Commission of Ontario
Neutral Citation: 2015 ONFSCDRS 15 FSCO A10-003442
BETWEEN:
HAMIDE DERVISHOLLI Applicant
and
STATE FARM MUTUAL AUTOMOBILE 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:
- Ms. Dervisholli shall pay to State Farm Mutual Automobile Insurance Company its expenses of the preliminary issue motion in the amount of $1,297.38 at the conclusion of the arbitration hearing on the merits.
January 28, 2015
Susan Sapin Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- Ontario Regulation 664, R.R.O. 1990.
- Klingbeil v. Worthington Trucking Inc. (Litigation Guardian of) (1999), 1999 CanLII 19927 (ON CTGD), 43 O.R. (3d) 697; Stratton v. Senger, [1996] O.J. No. 4774; Ramrattan and Motor Vehicle Accident Fund, (FSCO P12-00003, April 27, 2012), Appeal.
- (FSCO P07-00035, November 21, 2008), Appeal