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

Neutral Citation: 2016 ONFSCDRS 101

FSCO A13-000851

BETWEEN:

SAHRA ASKAR

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

Before: Arbitrator Andrew M. Diamond

Heard: By teleconference on January 21, 2016

Appearances:

Mr. Dana Bruce Hanson participated for Mrs. Sahra Askar

Ms. Christine Galea participated for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Mrs. Sahra Askar, was injured in a motor vehicle accident on February 18, 2010 and sought accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and the Applicant, through her representative, applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

I conducted a Preliminary Issue Hearing on July 20 and 21, 2015. The purpose of this Hearing was to determine if the Applicant was involved in an “accident” on February 18, 2010 and whether the Applicant was thereby entitled to claim accident benefits as a result of the alleged accident.

On October 30, 2015, I issued my written decision. I found that the Applicant was not involved in an “accident” within the meaning of the Schedule.² I also stated in my Order that if the parties were unable to agree on the amount of the expenses, they were invited speak to me in accordance with Rule 79 of the Dispute Resolution Practice Code (“the Code”).

Counsel for State Farm requested an Expense Hearing as the parties were unable to resolve the issue of expenses.

The issue in this Expense Hearing is:

Is Mrs. Sahra Askar required to pay State Farm its expenses of the Arbitration proceeding, and if so, in what amount?

Result:

Mrs. Sahra Askar shall pay to State Farm its expenses in the total amount of $13,220.38, inclusive of fees, disbursements and any applicable taxes.

EVIDENCE AND ANALYSIS:

State Farm is seeking expenses in the total amount of $15,900.28, comprising $11,699.45 in fees, $1,520.93 in HST and $2,679.90 in disbursements.

State Farm supports its claim for expenses on Rule 75.2 of the Code and more specifically, on clauses (a), (b) and (c) of that Rule. It references Section 3 of the Schedule – Dispute Resolution Expenses to Ontario Regulation 664, which states that legal fees may be awarded for all services performed before, inter alia, an Arbitration; for preparation toward same; for attendance at same; and for services subsequent to an Arbitration Hearing (but related thereto).

State Farm asserts two points in particular: that it was completely successful on all matters at issue in the outcome of the proceeding; and that, pursuant to Rule 75.2(e), the Arbitrator should find that the Applicant pursued an improper, vexatious and unnecessary proceeding.

The Applicant’s counsel advised that he was unable to obtain instructions from his client, however, he submitted that the time spent on the file by the Student-at-Law seemed excessive, and that no dockets of supporting documents were submitted with the Bill of Costs.

ENTITLEMENT TO EXPENSES

Subsection 282(11) of the Insurance Act provides as follows:

Expenses

(11) 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. 1996, c. 21, s.38 (4).

Regulation 664, R.R.O. 1990, in turn, provides:

12 (1) The expenses set out in the Schedule are prescribed for the purpose of subsection 282 (11) of the Act. R.R.O. 1990, Reg. 664, s. 12.

(2) An arbitrator shall, under subsection 282 (11) of the Act, consider only the following criteria for the purposes of awarding all or part of the expenses incurred in respect of an arbitration proceeding: (emphasis added).

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 (Statutory Accident Benefits Schedule-Accidents on or after November 1, 1996) made under the Act or refused or failed to provide any material required to be provided by subsection 42 (10) of that regulation.
Whether the insured person refused or failed to submit to an examination as required to be provided under section 44 of Ontario Regulation 34/10 (Statutory Accident Benefits Schedule- Effective September 1, 2010), made under the Act, or refused or failed to provide any material required to be provided by subsection 44 (9) of that regulation. O. Reg. 275/03, s. 4; O. Reg. 548/05, s. 1; O. Reg. 36/10, s. 2.

DETERMINATIVE ISSUES

The determinative issues in this Expense Hearing are the degree of success; whether any aspect of the proceeding was improper, vexatious or unnecessary; and whether the Insurer should receive reimbursement of its filing fees and court recording and transcription costs.

Degree of Success

The Applicant does not dispute that the Insurer was completely successful as submitted by the Insurer. The dispute is over the quantum to be awarded, which are the Legal Aid Rates contained in the Schedule.

I accept the Insurer’s submission that the amounts set out in the Bill of Costs are appropriate for a two day Hearing in which it is alleged that the Applicant was not involved in the subject accident.

Frivolous and Vexatious

I am prepared to accept that the claim ended up as being frivolous and vexatious given that I made adverse findings of credibility against the Applicant and her witnesses on material parts of the claim. In accepting this, I also accept that because of my finding that the Applicant had not been credible, the Hearing and therefore preparation required by the Insurer was more complex and made more difficult.

Disbursements

State Farm does not seek reimbursement of its Response filing fee.

Section 282(11) states that an Arbitrator can award expenses incurred in respect of an Arbitration proceeding “as may be prescribed in the regulations”.

EXPENSES:

Mrs. Sahra Askar shall pay to State Farm its expenses in the total amount of $13,220.38, inclusive of fees, disbursements and any applicable taxes.

March 28, 2016

Andrew M. Diamond Arbitrator

Date