Financial Services Commission of Ontario Commission des services financiers de l’Ontario

Neutral Citation: 2015 ONFSCDRS 247 FSCO A11-001927

BETWEEN:

SOZAN HURMZ Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY Insurer

Before: Richard Feldman Heard: Written submissions received by September 10, 2015 Appearances: No submissions were received from the Applicant Written submissions on behalf of Wawanesa Mutual Insurance Company were made by Paul Omeziri and Darrell P. March

Background:

The Applicant made numerous claims against the Insurer arising from an accident that occurred on November 4, 2009. The disputed issues proceeded to arbitration and were heard by me on November 26, 27 and 28, 2012 and June 19, 2013. On July 4, 2013, I issued my written decision in this arbitration proceeding, dismissing all of the Applicant’s claims (for the reasons attached to my decision) and reserving my decision on the issue of the expenses of the arbitration proceeding.

On July 16, 2013, counsel for the Insurer wrote to the Financial Services Commission of Ontario ("FSCO") and to counsel for the Applicant, requesting a hearing to determine that issue. Before an expense hearing could be scheduled, however, the Applicant sought to appeal the decision of July 4, 2013.

Ultimately, the decision of July 4, 2013 was upheld on appeal. The Director’s Delegate who heard the appeal did not deal with the issue of the expenses related to the original hearing. After the appeal was concluded (and after some further delay), the Insurer wrote to FSCO to renew its request that an expense hearing be scheduled.

The Applicant’s former counsel, Mr. Ciraku, declined to participate in this expense hearing¹ as he took the position that he had not been retained to do so. The Applicant also did not participate in this process or make any written submissions with respect thereto. Thus, the Insurer’s request for its expenses went unopposed.

Issues:

The issue in this hearing is:

Is the Applicant liable to pay the Insurer's expenses in respect of the arbitration proceeding under section 282(11) of the Insurance Act?

Result:

The Applicant is liable to pay to the Insurer its expenses in respect of the arbitration proceeding, fixed in the amount of $12,500.00 (inclusive of fees, disbursements and any applicable taxes).

EVIDENCE AND ANALYSIS:

Introduction

The Insurer is seeking expenses in the total amount of about $14,000.00, made up as follows: approximately $12,000.00 in fees (inclusive of HST) and approximately $2,000.00 in disbursements.

Entitlement to Expenses

The Insurer relies upon several grounds for seeking its expenses of this proceeding.

Each party's degree of success

All of the Applicant's claims were dismissed. The Insurer was completely successful. On this basis alone, the Insurer is entitled to its expenses. This is not disputed.

Offer to settle

Rule 76.1 of the Dispute Resolution Practice Code (“DRPC”) provides that an adjudicator will consider an Offer to Settle in connection with an award of expenses provided that:

(a) it was made in writing, was served on the other parties and contains:

(i.) The full terms of the Offer to Settle;

(ii.) The date when the Offer was served and the time period during which it remained open for acceptance

AND

(b) the Offer was made after the conclusion of mediation and before the conclusion of the hearing, with particular consideration given to any Offer served after the conclusion of the pre-hearing discussion … up to 5 days before the commencement of the hearing.

In his original written submissions to me, Mr. Omeziri advised that “On November 20, 2012, Wawanesa offered to settle the proceeding for $5,000.” Mr. Omeziri filed a copy of an Offer to Settle dated November 20, 2012. Mr. Ciraku (who indicated that he would not otherwise be participating in this process) denied receiving this Offer and requested proof of service of that Offer. On September 2, 2015, Mr. March submitted a letter (dated September 1, 2015) which enclosed a copy of what appears to be a fax transmittal page indicating that a two page document was successfully transmitted by Beard Winter to Mr. Ciraku’s office on December 17, 2012. I cannot ascertain from the fax transmittal page whether the document sent on December 17, 2012 was the Offer in question but Mr. March’s letter of September 1, 2015 implies that this is so.

The Offer to Settle therefore appears to have been made on December 17, 2012, after the first three days of this four-day hearing had been completed and not prior to the commencement of the hearing as the date on the Offer (November 20, 2012) would suggest. The Offer itself does not contain the date when the Offer was actually served nor does it indicate the time period during which it remained open for acceptance. The Offer therefore failed to comply with the requirements of clause 76.1(a)(ii) of the DRPC.

Furthermore, this Offer was on a “full and final” basis (i.e., a settlement of the current issues in dispute as well as any other potential claims that could arise from the November 4, 2009 accident). Since it was a "full and final" settlement proposal, it is difficult to compare the Offer to the result of the arbitration proceeding (which only resolves the issues in dispute in this arbitration proceeding and not potential future claims).

In these circumstances, I find that this purported Offer to Settle has no impact upon my determination of the issue currently before me.

Conduct that tended to prolong, obstruct or hinder the proceeding and whether any aspect of the proceeding was improper, vexatious or unnecessary

The Insurer submits that the Applicant failed, until the eve of the hearing, to deliver key documents and to identify a key witness. These failures are detailed both in my order and in the appeal decision of Director’s Delegate Blackman. This conduct did tend to obstruct the proceeding but it did not prolong it and, ultimately, it was the Applicant who suffered from these breaches as she was unable to produce at the hearing sufficient evidence to prove her claims.

Conclusion (re entitlement)

Because the Insurer was completely successful, it is entitled to its reasonable expenses of this arbitration proceeding, in an amount (quantum) to be determined in accordance with the provisions of the Expense Regulation.

Quantum

Fees

The oral hearing lasted four days. This was not a particularly complex case. It turned largely upon my assessment of the credibility of the Applicant and the lack of corroborating evidence.

The Insurer is seeking fees of about $12,000.00 (inclusive of HST), based upon the following:

About 23 hours of legal services by Mr. March at the hearing;
Preparation time for the hearing of about 35 hours by Mr. March and about 17 hours by a clerk;
Other services (reviewing the Application, preparing a Response, preparing for and attending a Pre-hearing Conference, etc.) of about 10 hours by Mr. March and about 20 hours by clerks.

Based upon the nature of this case and the length of the hearing, I find that the number of hours claimed is reasonable. Despite Mr. March’s experience, however, as counsel for an insurer, he is not entitled to claim $150.00 per hour; this is only available to be claimed by counsel for an applicant (per Rule 78 of the DRPC). Therefore, the hourly rate claimed must be adjusted downward to the appropriate Civil Tariff Legal Aid rates that were in place at the time the services were provided (for a lawyer called to the bar in 1990). When the appropriate adjustment is made, this reduces the fees by about $1,400.00 to approximately $10,600.00 (inclusive of HST).

Disbursements

A party to an arbitration proceeding at FSCO is only permitted to seek compensation for expenses of a type and in an amount permitted under the Expense Regulation. The Insurer is seeking reimbursement for the following disbursements:

Description	Amount ($)
1. Copies, Telecopier, Charges	514.43
2. Postage	20.72
3. Delivery/Courier/Service of Documents	286.70
4. Conduct Money	424.00
5. Productions / Clinical notes and records	841.84
Total	$ 2,087.69

These disbursements are all permissible under the Expense Regulation and the Applicant has not opposed or challenged the amounts claimed by the Insurer.

CONCLUSION:

Having considered the relative complexity of this matter, the time spent, the applicable Legal Aid rates, the written submissions of the parties, the supporting documentation filed and the maximum amounts permitted under the Expense Regulation, for the reasons set out above, I find it appropriate to fix the Insurer's expenses at $12,500.00 (inclusive of all fees, disbursements and any applicable taxes) and to order the Applicant to pay this amount to the Insurer.

November 18, 2015

Richard Feldman Arbitrator

Date