Neutral Citation: 2016 ONFSCDRS 106 FSCO A14-002065

BETWEEN:

JOYCE OLERU Applicant

and

CERTAS DIRECT INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Arbitrator Morris J. Winer, Q.C.

Heard: By written submissions completed March 18, 2016

Appearances: Mr. Mitchell Barber participated for Ms. Joyce Oleru Mr. Matthew Johnstone participated for Certas Direct Insurance Company

Issues:

The Applicant, Ms. Joyce Oleru, was injured in a motor vehicle accident on May 2, 2012 and sought accident benefits from Certas Direct Insurance Company (“Certas”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Ms. Oleru, 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.

The issues in this Expense Hearing are:

Is Ms. Oleru permitted to withdraw her Application for Arbitration pursuant to Rule 70.3 of the Dispute Resolution Practice Code (“the Code”)?²
If so, pursuant to Rules 70.3 and 75 of the Code, what expenses, if any, is Certas entitled to recover as a term of the Order for withdrawal?

Result:

Ms. Oleru is permitted to withdraw her Application for Arbitration.
Certas is entitled to its expenses of this Arbitration proceeding fixed in the sum of $500.00 (inclusive of fees, disbursements and taxes).

EVIDENCE AND ANALYSIS:

The Applicant was involved in a car accident on May 2, 2012, and submitted a claim for accident benefits on June 6, 2012.³

The parties mediated on September 23, 2013.⁴ An issue in dispute in the Report of Mediator is a claim, dated November 5, 2012, for $1,931.13 for services provided by Metro Rehabilitation Centre and, within that claim, an invoice of $1,236.52 for physiotherapy is the main subject of these reasons.⁵

An Application for Arbitration was filed February 12, 2014 and a Pre-Hearing was held on January 28, 2015 in which a two-day Hearing was scheduled for January 25 and 26, 2016.⁶

Certas made a time-limited offer to settle on September 30, 2015 of a dismissal without costs, which wasn’t accepted.⁷

A letter, dated November 10, 2015, was received by Ms. Oleru’s lawyers. It got stamped “Received Nov. 16th, 2015” and “Entered November 17th, 2015.” It referred to the “Date of loss”, the “Policy number”, the client’s name, and indicated that a copy was sent to Ms. Oleru. It was signed by “Cecilia Ledzinsky, Claims Adviser Accident Benefits”, and provided a phone number. Her name appears elsewhere in Ms. Oleru’s file. Attached to the letter is a “Standard Benefit Statement,” indicating payment to Metro Rehabilitation on October 28, 2015 of $1,236.52 (emphasis added). This is the payment for the claim, dated November 5, 2012, referred to above.⁸ Ms. Oleru’s lawyers complain that the letter lacked particulars and that it should have been sent from lawyer to lawyer. While the letter could have been directed to the lawyer handling the file, I believe that after a short enquiry, the letter should have been recognized and the information applied.

Surprisingly, the above letter, dated November 10, 2015, did not appear in Certas’ Arbitration Brief which is dated December 12, 2015. Instead, that brief shows that the claim for $1,236.52 is in issue and unpaid.⁹ In the Brief, at Tab 6, there is an “Explanation of Benefits,” in which Certas says, “This expense may be covered under your collateral coverage. Please submit ...to the collateral insurer....” The Table of Contents calls this document, “denial of invoice.”

Ms. Oleru’s Arbitration Brief, dated December 23, 2015, also does not contain the letter, dated November 10, 2015, evidencing payment of $1,236.52. In fact, at Tab 28, a document entitled “Account Activity” indicates that the amount of $1,931.13 (which mentions the included invoice for $1,236.52), was still owing.¹⁰

It appears that at that time, both sides were forging ahead to a Hearing without awareness that the crucial invoice had been paid.

On January 6, 2016, Certas’ lawyer emailed Ms. Oleru’s lawyer as follows:

... Appendix 1a is a breakdown of all the costs from Metro Rehab that you are seeking. $1931.13 corresponds with the amount in your application for arbitration. Included in these costs from Metro Rehab is a treatment plan for $1236.52. Are you aware that the full amount was paid directly to the clinic? The cheque was cashed. Correspondence was sent to your office November 10, 2015 confirming that the treatment plan was paid in full, with interest. The second issue in your claim in your application for arbitration which can be found at Appendix 2 is for the completion of an OCF-3. Desjardins’ position is that they’re not paying for the OCF-3 because it was never requested by them and there were no material changes in her health to necessitate an updated OCF-3. Considering the fact that the OCF-18 has been paid and the OCF-3 was unnecessary, why is this still going ahead? I’m not sure what you’re going to argue. I don’t mean to sound short here, I’m just trying to understand where you’re coming from.¹¹

This email was written 19 days before the Arbitration Hearing scheduled for January 25 and 26, 2016. I don’t understand why Certas’ lawyer didn’t inform Ms. Oleru’s lawyer sooner that the claim was paid or why the claim wasn’t defended on the basis that the major item was paid. It is quite possible that until before the email of January 6, 2016, Certas’ lawyer was also unaware that the claim for $1,236.52 was paid.

On January 13, 2016, Ms. Oleru’s lawyer emailed Certas’ lawyer as follows: “I confirm that the Application will be withdrawn and the arbitration hearing will not be taking place.”¹² The parties then agreed to a Hearing by the exchange of written submissions.

I believe that this matter is governed by Rule 70 of the Code even though the parties have agreed to withdraw. Rule 70.2 provides:

An adjudicator may permit a party to withdraw all or part of a dispute where all parties agree.¹³ (emphasis added)

I am permitting the withdrawal subject to liability for expenses, and I will determine the expenses in accordance with Rule 75 of the Code and subsection 12(2) of the Expense Regulation.¹⁴

Entitlement to Expenses

Section 12(2) of the Expense Regulation provides in part as follows:

An Arbitrator shall under subsection 282(11) of the Act consider only the following criteria for the purpose of awarding all or part of the expenses incurred in respect of an arbitration proceeding:

Each party’s degree of success in the outcome of the proceeding.

Any written offers to settle.

[Omitted].

The conduct... 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.

[Omitted].

[Omitted].

Subsection 12(4) provides:

If the arbitrator is requested to take into account a written offer ...., the arbitrator shall have regard to the terms of the offer, the timing ..., the response..., and the result of the proceeding.

With respect to the degree of success, Ms. Oleru agreed to withdraw from the proceeding after learning that $1,236.52, 67% of the total of $1,931.13, had been paid and she dropped the balance, $694.61, of the Metro Rehabilitation account. Looking at this situation another way, she collected most of the account, even though she offered to withdraw.

As to written offers, Certas relies on the offer for dismissal without costs referred to above. When this offer was made, no part of the account for $1,931.13 was paid. It, at that time, was not a fair offer to Ms. Oleru. As to criteria 4 and 5, both lawyers prepared for the Arbitration Hearing apparently unaware that an important invoice had been paid. Both lawyers should have been aware of the payment. Both “prolonged” the proceeding. A large part of the proceeding was “unnecessary.”

Ms. Oleru’s lawyers could have reduced the issues or even prevented the action from going forward if they would have credited the payment of the invoice in question when they received the letter from Certas advising of the payment. I conclude that Ms. Oleru’s lawyer is somewhat more responsible for the unnecessary proceedings and so, I will assess costs against Ms. Oleru in accordance with section 12 and the direction to obtain “the most just result;”¹⁵ and to achieve that result I will have regard for the proportionality of the claim. It has often been stated that the Insurance Act is consumer protection legislation.

“In determining the appropriate quantum of expenses, the objective is to fix an amount that is fair and reasonable given the number of issues, their complexity, and the amounts in dispute. In so doing, a pragmatic, broad-stroke approach (rather than line-by-line assessment) is frequently favoured.” ¹⁶

“The Insurance Act and its regulations must be interpreted in such a way to uphold the protective and remedial nature of the legislation...”¹⁷

Quantum of Expenses

The lawyer for Certas has submitted two alternative Bills of Costs.¹⁸ Both have no supporting documentation, are far above the Code allowance¹⁹ and also are above the hourly Legal Aid Rates.²⁰ The maximum would be $125.00 per hour and he is claiming $180.00 per hour. Secondly, Certas achieved limited results, namely the non-pursuit of the further $695.61 ($1,391.13-$1,236.52).

The first Bill of Costs is for the whole Application in which he claims $10,016.32, representing 30.4 hours for counsel and 18 hours for clerks. The alternative Bill is for the period following the Offer to Settle, dated September 23, 2015, in which he asks for $7,071.54 for lawyer’s fees. Considering the limited results achieved and the contribution to the extra work, the fees are much too high. A large portion of the claim was paid. Much of the preparation time could have been avoided if Certas’ lawyers knew of the payment of the invoice. As the lawyer himself said in the email of January 6, 2016, “Considering the fact that OCF-18 has been paid and the OCF-3 was unnecessary, why is it still going ahead?”

Disbursements

Certas requests the return of the $3,000.00 filing fee. There is nothing in the Schedule to the Expense Regulation that would allow a return of it to the Insurer in this case.

Conclusion

I conclude that Certas is entitled to expenses totalling $500.00, inclusive of all fees, disbursements and taxes.

April 1, 2016

Morris J. Winer, Q.C. Arbitrator

Financial Services Commission of Ontario