Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2016 ONFSCDRS 215

FSCO A14-001843

BETWEEN:

YI YU

Applicant

and

TD GENERAL INSURANCE COMPANY

Insurer

Before: Stuart J. Mutch

Heard: June 28, 2016 at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Mr. Alexander Lempp for Ms. Yu

Mr. J. Jason M. Kerr and Mr. Marcel Malfitano for TD General Insurance Company

Issues:

The Applicant, Yi Yu, was injured in a motor vehicle accident on December 21, 2011. Disputes arose between Ms. Yu and her insurer, TD General Insurance Company (“TD”), concerning her entitlement to accident benefits payable under the Schedule¹ and Ms. Yu applied for arbitration at the Financial Services Commission of Ontario (“FSCO”) under the Insurance Act², by way of application dated February 14, 2013.

BACKGROUND

The Applicant was 24 years old at the time of the accident. She was a student of architecture at the University of Toronto. She came to Canada from China in 2008.³

The following is the sequence of events in this claim. TD provided copies of the documents referred to below. Ms. Monique Smith, an Accident Benefits claims advisor with TD, confirmed that the letters coming from TD were written by her.

December 21, 2011 – the accident occurred

March 18, 2012 – TD received an Application for Accident Benefits dated December 29, 2011.

April 23, 2012 – TD requested a new Disability Certificate⁴

May 30, 2012 - The Non-Earner Benefit (NEB) was denied on the basis that the Applicant had not provided an updated Disability Certificate.⁵ The Applicant was given notice of two Insurer Examinations (IEs) to be conducted on June 15, 2012 (orthopedic assessment) and June 21, 2012 (psychological assessment).

June 15, 2012 – The Applicant did not attend a scheduled orthopedic assessment. She told the transport driver she was too busy.⁶

June 21, 2012 – The Applicant did not attend a scheduled psychological assessment. The transport driver did not receive any response.⁷ TD advised the Applicant by letter copied to the Applicant’s counsel, that she is not entitled to a Non-Earner Benefit because of her non-attendance. TD offered to reschedule the IEs.⁸

June 28, 2013 – Dr. Tepperman, General Practitioner, wrote a report in which he expressed the opinion that the Applicant’s injuries fall within the Minor Injury Guideline (MIG). ⁹

October 1, 2013 – TD sent a letter to the Applicant again advising that a total of $3,457.22 had been paid in medical and rehabilitation benefits and that no evidence had been provided to suggest the Applicant fell outside the MIG. The letter invited the Applicant to submit further medical information. If no compelling evidence was received by November 1, 2013, the claim would be closed.¹⁰

November 7, 2013 – A letter from TD to the Applicant confirmed that no communication had been received from the Applicant or her legal representative and that TD was closing the Accident Benefits file.

December 17, 2013 – The Dispute Resolution Services of FSCO received an Application for Mediation.¹¹

February 4, 2014 – A Report of Mediator was issued indicating that the issues of NEB, cost of an FAE, and cost of physiotherapy remain in dispute. TD raised a preliminary issue pursuant to s. 55(2) of the Schedule.¹²

February 13, 2014 – The Applicant applied for arbitration.

August 18, 2014 – A pre-hearing was scheduled for this date but was postponed, apparently at the request of the Applicant’s counsel.

September 9, 2014 – A pre-hearing was conducted at the offices of FSCO. The Applicant participated by telephone from China. The issues identified as being in dispute were the same as those in the Report of Mediator. The arbitration hearing was scheduled for October 13, 14, 15, 2015. Earlier dates were offered but were not accepted due to the unavailability of the Applicant’s counsel. Her counsel at the time advised that the Applicant anticipated that she would get a visa “in the next couple of months” and that she would attend the hearing.¹³

August 13, 2015 – Counsel for TD made the first written offer of settlement addressed to the Applicant’s counsel.¹⁴

September 11, 2015 – The Applicant’s counsel wrote to FSCO requesting an adjournment of the arbitration hearing on the basis that it conflicted with a trial that was proceeding.¹⁵ In another letter of the same date, Applicant’s counsel provided an Arbitration Brief Index and list of witnesses.¹⁶

September 15, 2015 – Counsel for TD wrote to the Applicant’s counsel revoking the previous offer of settlement and making a new offer that expired September 21, 2015.¹⁷

October 5, 2015 – The hearing was adjourned to June 28, 29, 30, 2016 at the request of the Applicant’s counsel. The reason for the request was no longer that the Applicant’s counsel had a conflicting trial, but rather that he had been unable to contact the Applicant to obtain instructions from her. The pre-hearing arbitrator was able to get the Applicant on the phone for the resumed pre-hearing. The new hearing dates were pre-emptory on the Applicant.¹⁸

June 24, 2016 – FSCO received a letter from the Applicant’s counsel advising that he has instructions to withdraw all the issues in the Application for Arbitration and that a hearing would be unnecessary.¹⁹ Counsel for TD advised FSCO that the withdrawal of the issues was done unilaterally and not on consent and that they would be attending at the scheduled time to speak to expenses.

The Hearing of June 28, 2016

At the hearing Mr. Lempp confirmed the Applicant’s instructions to withdraw her claims. TD had no objection to this. The Applicant is permitted with withdraw all of the issues in dispute as set out in the Application for Arbitration.

Expense Claim

Counsel for TD claims that TD is entitled to its expenses, on the basis that:

The conduct of the Applicant and her counsel prolonged the proceeding
The Applicant refused to submit to an examination required under section 44 of the Schedule
TD made two settlement offers
The withdrawal of the issues in dispute is tantamount to success for TD

TD’s counsel provided a Bill of Costs that included work done in opening and reviewing the file and preparing for the pre-hearing, as well as preparation for the hearings scheduled to commence October 13, 2015 and June 28, 2016. TD also claims the arbitration assessment fee.

Counsel for the Applicant takes the position that the Applicant should not have pay TD’s expenses, or pay very little. In his view, the Applicant’s case was a small one that does not justify the expenses claimed by TD. TD objected to Mr. Lempp giving evidence “from the floor” regarding discussions he had with TD’s counsel in the two weeks leading up to this hearing. However, the parties were able to agree that Mr. Lempp and Mr. Malfitano had a conversation “a couple of weeks ago” wherein Mr. Lempp indicated that the Applicant might not attend the hearing. In essence, Mr. Lempp argued that it was highly unlikely that hearing would proceed and counsel for TD were unwise to invest significant time in preparing for the hearing.

Analysis

Under subsection 282(11) of the Insurance Act I can award expenses to a party. I am restricted to the criteria set out in the Expense Regulation. The argument by TD references four of these criteria.

Unduly prolonging the proceeding and failing to attend two IEs

TD argues that the Applicant has unduly delayed the proceeding by requesting and obtaining an adjournment in September 2015 and then waiting until June 24, two business days before the commencement of the hearing, to formally withdraw her claims.

As stated earlier, Mr. Lempp argues that TD was aware the Applicant was having difficulties obtaining a visa and, by two weeks prior to the hearing, knew that it was unlikely she would attend, and therefore, presumably, the hearing would not be proceeding.

The history of this claim, as documented by TD, shows the claimant to be a reluctant participant in the process. She did not provide an updated Disability Certificate as requested. She did not attend the two scheduled IEs and did not respond to TD’s offer to reschedule them. At some unspecified time, apparently in 2014, she returned to China, perhaps after completing her degree.²⁰ She did participate by telephone in the pre-hearing and resumed pre-hearing of September 9, 2014 and October 5, 2015, respectively. As a Chinese national, the Applicant would require a visa to enter Canada. At the first pre-hearing in October 2014 her counsel advised that she would be getting a visa “in the next couple of months”. I have no evidence, beyond Mr. Lempp’s submissions, that she made any attempts to obtain a visa so as to be present at this hearing. It should have been evident to the Applicant’s counsel one month prior to the hearing, at the latest, that unless delivery of a visa to the Applicant was imminent, she would not be in attendance at the hearing.

I find that the Applicant has unduly prolonged these proceedings by failing to provide requested documentation and waiting until the last minute to give her counsel instructions to withdraw her claims. As well, her failure to give instructions to her counsel prior to the resumed pre-hearing resulted in the adjournment of the hearing scheduled for October 2015.

Settlement Offers and Degree of Success

Subsection 12(4) of the Expense Regulation reads:

If the arbitrator is requested to take into account a written offer under subsection (3), the arbitrator shall have regard to the terms of the offer, the timing of the offer, the response to the offer and the result of the proceeding.

This section is similar in spirit to Rule 49 of the Rules of Civil Procedure. Its wording is similar to that of Rule 49.13 which gives the court wide discretion to “to take into account any offer to settle made in writing, the date the offer was made and the terms of the offer”. Rule 49.13 broadens the scope of the Rule to include offers that were withdrawn prior to the commencement of a proceeding.

As stated earlier, TD made two offers, one on August 13, 2015, open for acceptance until September 14, 2015, offering $2000 to settle all the issues at arbitration, or $3000 to settle the Applicant’s claim on a full and final basis. The second offer, made September 15, 2015, open for acceptance until September 21, 2015 and revoking the prior offer was for $5 to settle the issues in dispute. The first offer was apparently made in an attempt to bring this claim to a conclusion rather than proceed with a hearing, then scheduled for October 13, 2015. The second offer was made after the Applicant’s counsel’s request to adjourn the arbitration hearing, apparently in an attempt to settle the matter on a without costs basis.

The Applicant would have done better to have accepted one of the two options proffered on August 13, 2012, than the result ultimately achieved, which was success for TD. Her non-response to the offer also had the effect of prolonging the proceedings.

Bill of Costs

TD has claimed fees in the amount of $9,598.33 at the Legal Aid rate plus HST, plus disbursements of $2,826.38 plus the Arbitration assessment fee of $3,000.

Whether an arbitrator can order an insured person to pay the arbitration assessment fee of $3,000, levied against an insurer at the time of the Application for Arbitration, has had a chequered history. Arbitrators and appeal officers have held that they have no authority to make such an order after October 1, 2003, when the section permitting them to do so was repealed.²¹ It now appears that that power has been restored.

Section 7 of the Expense Regulation²² reads as follows:

There may be awarded to an insurer the total of all amounts in respect of a claim by an insured person that are included under section 4 of Ontario Regulation 11/01 (Assessment of Expenses and Expenditures) made under the Financial Services Commission of Ontario Act, 1997 in determining the amount of the insurer’s total assessment for arbitrations under section 282 of the Act, total assessment for appeals under section 283 of the Act or total assessment for applications under section 284 of the Act, if the insured person, on or after March 1, 2006,

(a) refused or failed to submit to an examination relating to the claim under section 42 of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996) made under the Act or under section 44 of Ontario Regulation 34/10 (Statutory Accident Benefits Schedule — Effective September 1, 2010) made under the Act; or

(b) refused or failed to provide any material relating to the claim that was required to be provided by subsection 42 (10) of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996), made under the Act, or by subsection 44 (9) of Ontario Regulation 34/10 (Statutory Accident Benefits Schedule — Effective September 1, 2010), made under the Act.

The Applicant in one instance refused and in another instance failed to attend an examination under section 44 of the Schedule. I therefore find it appropriate that TD be awarded its assessment fee of $3,000.

Turning to the other expenses outlined in the Bill of Costs, I do not think it appropriate that TD be awarded its expenses as set out in in section A of the Bill, which included drafting the response to the Application for Arbitration and preparing for the pre-hearing. At that time, the Applicant appeared to be proceeding with her claim in good faith, although she had failed to attend two section 44 assessments. That failure has been addressed in the awarding of TD’s arbitration assessment fee.

In section B of the Bill, TD set out its expenses in preparing for the arbitration scheduled for October 13, 2015. As outlined earlier, counsel for the Applicant wrote a letter to FSCO on September 11, 2015, copied to TD’s counsel, requesting an adjournment of that hearing.²³ The letter stated that he had spoken with TD’s counsel to advise him of his request.

The adjournment was not granted until October 1, less than two weeks before the scheduled commencement of the arbitration. The reason for the adjournment was ultimately the result of the Applicant’s failure to make her whereabouts known to her counsel. It is a bit of a mystery as to why the arbitrator hearing the adjournment request was able to locate the Applicant when her counsel was not.²⁴ In any case it is not unreasonable that TD made preparations for the October 13arbitration hearing in the amounts set out in section B of the Bill of Costs.

Arbitrator King’s letter of October 5, 2015 states “It was confirmed that she [the Applicant] would be available at the next hearing dates and that she will be securing a visa to attend the hearing in Toronto”.

However, I have no evidence that, since that time, the Applicant ever made any attempts to secure a visa in order to return to Canada for the hearing.

As stated earlier, Mr. Lempp has taken the position that he made TD’s counsel aware, two weeks before the commencement of the hearing, that it was unlikely that the Applicant would be returning to Canada, the implication apparently being that the hearing would not be proceeding and that therefore, the expenses incurred by TD in preparing for the hearing were unjustified.

In my view, TD cannot be expected to abandon their preparations on a “maybe”. Until TD received a formal notice that the Applicant was withdrawing her claims, which it did on June 24, 2016, two business days before the commencement of the hearing, TD had little choice but to continue to prepare as if the hearing was proceeding, I find the 28.4 hours claimed by Mr. Malfitano to be a little excessive, given that he had already docketed 8.4 hours in preparation for the hearing the previous October. I fix his expenses for the June hearing at $2,000, rather than the $3,099.29 claimed.

The disbursements claimed are reasonable except for the expense listed for Dr. Tepperman, presumably for his June 28, 2013 report. This is an expense incurred in the ordinary course of adjusting the claim and incurred at a time before the Applicant commenced proceedings.

I therefore award TD its expenses as follows:

Arbitration assessment fee

$3,000.00

Section B expenses (Preparation for arbitration scheduled for October 13, 2015)

$2,143.69

Section C expenses (Preparation for arbitration scheduled for June 28, 2016)

$2,637.40

Preparation for Bill of Costs

$ 29.36

H.S.T.

$ 625.36

Disbursements

$ 426.23

TOTAL

$8,862.04

Accordingly, I fix TD’s expenses at $8,236.68 plus $625.36 for HST, pursuant to subsection 282(11) of the Insurance Act.

August 15, 2016

Stuart J. Mutch Arbitrator

Date