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

Neutral Citation: 2016 ONFSCDRS 15

FSCO A13-012188

BETWEEN:

MOHAMMAD HAMZEH Applicant

and

SECURITY NATIONAL INSURANCE COMPANY Insurer

ARBITRATION DECISION

Before: Richard Feldman

Heard: On November 30, 2015 at the offices of the Financial Services Commission of Ontario

Representatives: No one appearing on behalf of the Applicant Eric Levin and Jason Kerr appearing on behalf of the Insurer

Issues:

The Applicant, Mohamad Hamzeh, claims to have been injured in a motor vehicle accident on August 16, 2010. He applied for statutory accident benefits from Security National Insurance Company (“Security National” or the "Insurer"), payable under the Schedule.¹ Disputes arose concerning the Applicant’s entitlement to certain accident benefits and the parties were unable to resolve their disputes through mediation. Mr. Hamzeh then applied for arbitration at the Financial Services Commission of Ontario (“FSCO”) under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in dispute are as follows:

1. Is the Applicant entitled to receive a weekly income replacement benefit from August 23, 2010 onwards at the rate of $400.00 per week?
2. Is the Applicant entitled to attendant care benefits from August 16, 2010 through August 15, 2012, at the rate of $400 per month?
3. Is the Applicant entitled to payments for housekeeping and home maintenance benefits from August 16, 2010 through August 15, 2012 at the rate of $100.00 per week, less amounts paid by the Insurer?
4. Is the Applicant entitled to interest for the overdue payment of benefits?
5. Is the Insurer liable to pay the Applicant's expenses in respect of the arbitration?
6. Is the Applicant liable to pay the Insurer's expenses in respect of the arbitration?

Result:

1. This application is dismissed.
2. The Applicant shall pay to the Insurer $10,000.00 for its expenses of this arbitration.

BACKGROUND:

After mediation failed to resolve the issues in dispute between the parties, Mr. Hamzeh, through his legal representative, filed an application for arbitration. Since then, Mr. Hamzeh has utterly failed to participate in this proceeding. He did not participate in the pre-hearing discussion or the resumption(s) of that discussion. The Applicant failed to provide requested information or instructions to his own lawyer and she brought motions on multiple occasions seeking permission from FSCO to withdraw from this proceeding. The Insurer brought its own motion seeking dismissal of this proceeding on the basis that it was frivolous or vexatious. The Applicant did not participate in any of these motions.

At the request of the Applicant, the hearing of all issues was adjourned from May 19 - 21, 2015 to November 30 - December 3, 2015 but strict terms were imposed by Arbitrator Bayefsky in his letter of April 16, 2015, including orders that:

• the Applicant pay $1,000.00 to the Insurer for its expenses at least 30 days prior to the commencement of the hearing;
• the Applicant produce, at least 30 days prior to the commencement of the hearing, the documents he had previously promised or been ordered to produce; and, perhaps most importantly,
• the new hearing dates would be peremptory upon the Applicant.

I am advised by counsel for the Insurer that the Applicant did not comply with any of the terms imposed by Arbitrator Bayefsky.

REQUEST FOR ADJOURNMENT OF THIS HEARING:

On or about November 3, 2015, an email apparently sent by the Applicant to his lawyer requested a further adjournment of the hearing on the basis that he was still in Lebanon caring for his ill father and would not be able to return to Canada until sometime in early 2016. In this message, the Applicant indicated that, if necessary, he would be sending his wife to attend the hearing on November 30, 2015 to further explain his need for an adjournment. His counsel forwarded this information to FSCO to request an adjournment of the hearing on behalf of the Applicant. That request was denied by Senior Arbitrator Richards in his letter of November 18, 2015.

The Applicant's wife, Nikola Sucha, attended before me on November 30, 2015 to support the Applicant’s request for an adjournment of the hearing. Ms. Sucha testified that the Applicant has been living in Lebanon since December 2013. She further testified that, although the Applicant’s father had been ill, he died in mid-January 2015. She was unable to provide a current mailing address or telephone number for the Applicant. She was unable to explain why the Applicant would claim that he needed an adjournment of the hearing to care for his father since his father died almost a year ago. Finally, Ms. Sucha confirmed that the Applicant was aware of all documents relating to this matter that had been delivered to his last known address in Ontario as Ms. Sucha has been receiving it and has been keeping the Applicant informed of the contents of all such documents.

Based upon the Applicant's failure to participate in this matter, his failure to provide necessary information, documents and instructions to his counsel, his failure to comply with the order and directions of Arbitrator Bayefsky, his failure to attend this hearing which was peremptory upon him and his attempt to mislead FSCO as to the reason for the requested adjournment, I denied the requested adjournment of this hearing and indicated that the hearing would be proceeding.

MOTION BY OLGA KANEVSKY:

Olga Kanevsky was the Applicant's solicitor of record. On November 30, 2015, she appeared before me to seek permission to withdraw from this matter as the Applicant's legal representative (and also to oppose the Insurer's request for an order that Ms. Kanevsky be made to personally pay some of the Insurer's expenses). For reasons contained in a separate order, I granted Ms. Kanevsky's request to withdraw from this proceeding but ordered her to pay the Insurer $500.00 for its expenses. Ms. Kanevsky was then permitted to leave and the hearing proceeded in the absence of the Applicant or any representative of the Applicant.

MERITS OF THIS CASE:

The Applicant has utterly failed to participate in this arbitration proceeding. He failed to attend this hearing although he knew that it was peremptory upon him. He adduced no evidence in support of this application. The Insurer requested that this application be dismissed and I granted that request.

EXPENSES:

The Insurer is seeking its expenses of this arbitration proceeding. At the hearing, counsel advised that the Insurer is seeking total expenses of approximately $19,500.00 (representing fees of about $16,000.00, inclusive of HST, and disbursements of about $3,500.00).

Entitlement

In seeking its expenses of this proceeding, the Insurer relies upon the grounds that follow.

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.

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

It is clear that the Applicant has failed to participate in this process in any way. His failure to participate, to comply with undertakings and orders and his failure to provide information, documentation and instructions to his legal representatives resulted in procedural steps (resumptions of the pre-hearing conference and motions) that would otherwise have been unnecessary. The Insurer, however, has already sought and been awarded expenses related to these interlocutory matters ($1,000.00 having been awarded against the Applicant by Arbitrator Bayefsky and $500.00 having been awarded by me against Olga Kanevsky).

In addition, the Insurer submits that this entire arbitration proceeding was unnecessary and that, therefore, the Insurer ought to be awarded greater expenses than might normally be granted. The Insurer takes the position that there was no jurisdiction to arbitrate these issues since the Applicant had no right to mediate them. The Insurer relies upon section 50 of the Schedule and adduced evidence (both documents and the testimony of Sophie Kelpis, claims advisor for Security National) to establish that the Applicant failed to submit to numerous medical examinations arranged by the Insurer as well as an examination under oath.

Had this accident occurred on or after September 1, 2010, then the Insurer's argument in this respect would likely have had merit. Section 50 of the Schedule that applies to this case (O. Reg. 403/96), however, is not as broad as section 55 of the new Schedule (O. Reg. 34/10) that came into effect on September 1, 2010. Section 50 of the Schedule that applies to this case prohibits an insured person from commencing mediation if he or she failed to undergo a required designated assessment under section 43. In this case, there is no evidence that the Applicant ever failed to undergo such a designated assessment required under section 43. His failure to attend various insurer examinations requested under section 42 may have given rise to possible defences to the Applicant's claims for certain periods of time, but such failures would not go to the jurisdiction of FSCO to arbitrate those claims. Similarly, the failure of the Applicant to submit to an examination under oath does not deprive FSCO of the jurisdiction to arbitrate the current issues in dispute.

The Insurer also attempted to show that the Applicant's case had little merit. For example, the Applicant claimed attendant care benefits but never submitted a Form 1 to the Insurer (i.e., an Assessment of Attendant Care Needs form which is usually a prerequisite to making this type of a claim). He claimed income replacement benefits but, according to Ms. Kelpis, was caught on surveillance working as usual and moving with apparent ease on at least five dates in January 2011 (i.e., approximately six months after the accident). The Insurer has already succeeded in having the application dismissed due to lack of evidence from the Applicant. I am reluctant to speculate on the strength of the Applicant's claims when there has not been a full hearing with evidence presented by both parties.

Finally, the Insurer submits that the Applicant's failure to participate in the arbitration process is not new but merely a continuation of a pattern of conduct in which he has repeatedly failed to comply with his obligations under the Schedule and has failed to co-operate in any way with the Insurer's efforts to investigate the validity of his claims. The Insurer argues that this pattern of conduct on the part of the Applicant justifies the granting of a substantial award of expenses.

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. In determining the appropriate quantum, I shall consider the Applicant's pattern of conduct. Generally, however, the conduct that is relevant when assessing expenses is the conduct of a party during the course of the arbitration proceeding.

Quantum

Fees

Not including the time for which the Insurer has already been awarded expenses, counsel for the Insurer is claiming about 167 hours of legal services (about 26 hours by a clerk and about 141 hours by lawyers). The Insurer's legal representatives are seeking compensation at the rate of $100.00 per hour plus HST for the work by lawyers and $15.00 per hour plus HST for the work by a clerk). This totals about $16,000.00 for fees (inclusive of HST).

The hearing was originally scheduled to last three days. When it was rescheduled, it was set for four days. It actually lasted less than one day (about five hours).

Since the hearing set to commence on November 30, 2015 was made peremptory upon the Applicant and the Applicant's request to adjourn the hearing had been denied, it was reasonable for the Insurer to assume that the hearing would be proceeding and to prepare for a full hearing. As a result, I am prepared to allow the Insurer its reasonable expenses for preparation for the hearing, for attending before me on November 30 for about five hours, and for some reasonable time for steps up to and including the original pre-hearing conference (reviewing the Application, preparing a Response, preparing for and attending the pre-hearing discussion, etc.).

Based upon the nature of this proceeding and the expected duration of the hearing and based upon my experience as an arbitrator at FSCO, I find the number of hours claimed by the Insurer to be excessive. Not including the time spent on various motions (for which compensation has already been ordered), I find that a total of about 60 hours of legal services would be more reasonable. At $100.00 per hour (for most but not all of these legal services) plus HST, this would represent fees of about $6,500.00.

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. Arbitration Filing Fee	3,000.00
2. Photocopies, etc. (The Printing House)	94.92
3. Photocopies, etc. (Ricoh Legal Document Services)	443.75
Total	$ 3,538.67

Under the Expense Regulation, the Insurer's arbitration filing fee of $3,000.00 is reimbursable where the Insurer can prove that the insured person "refused or failed to submit to an examination relating to the claim under section 42 [of the Schedule]". In this case, based upon the testimony of Ms. Kelpis and the documents filed, I am satisfied that the Applicant failed to submit to numerous examinations relating to the claim under section 42 of the Schedule.

The Insurer's costs associated with copying documents and preparing arbitration briefs appear to me to be reasonable and permissible under the Expense Regulation.

I therefore find that the Insurer is entitled to the disbursements it has claimed.

CONCLUSION:

For the reasons set out above, the Applicant's claims are dismissed and the Insurer is entitled to its reasonable expenses of this proceeding. Having considered the nature of this matter, the conduct of the Applicant, the reasonable time spent by the Insurer's legal representatives, the hourly rates requested, the submissions of the Insurer 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 $10,000.00 (inclusive of all fees, disbursements and any applicable taxes) and to order that the Applicant pay this amount to the Insurer. This is in addition to the $1,000.00 the Applicant was ordered to pay to the Insurer by Arbitrator Bayesfsky in his letter of April 16, 2015.

January 14, 2016

Richard Feldman Arbitrator

Date

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

Neutral Citation: 2016 ONFSCDRS 15

FSCO A13-012188

BETWEEN:

MOHAMMAD HAMZEH Applicant

and

SECURITY NATIONAL 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:

1. This application is dismissed.
2. The Applicant shall pay to the Insurer its expenses in respect of this arbitration proceeding, fixed in the amount of $10,000.00.

January 14, 2016

Richard Feldman Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.