Michael Mawugbe v. Certas Direct Insurance Company, 2016 ONFSCDRS 246

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

Neutral Citation: 2016 ONFSCDRS 246

FSCO A13-009558

BETWEEN:

MICHAEL MAWUGBE

Applicant

and

CERTAS DIRECT INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before:

Arbitrator Jeff Musson

Heard:

In person at ADR Chambers on June 23, 2016

Appearances:

Mr. Virender Sharma for Mr. Michael Mawugbe

Mr. Thomas Elliot for Certas Direct Insurance Company

Issues:

The Applicant, Mr. Michael Mawugbe, was injured in a motor vehicle accident on November 21, 2010 in Vaughan, Ontario. There were numerous claims for accident benefits made against Certas Direct Insurance Company (“Certas”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Mawugbe, through his 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 the Hearing for the issues in dispute on October 21, 22 and 23, 2015. I issued my written decision with reasons, dismissing all of the Applicant’s claims in Arbitration. On the issue of expenses, I ruled that Certas was entitled to its expenses based on its complete success in the Arbitration, for reasons discussed further below. If the parties were unable to mutually agree on expenses, then either party would be entitled to request an Expense Hearing—which Certas subsequently requested.

The issue in this Expense Hearing is:

What is the quantum that the Applicant is liable to pay with regards to 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 $19,488.18 (inclusive of fees, disbursements and any applicable taxes).

EVIDENCE AND ANALYSIS:

INTRODUCTION

In this Hearing, the Insurer is claiming expenses in the total amount of $21,484.82, including H.S.T., which is comprised of $18,294.97 in fees and $3,189.85 in disbursements.

Rule 79.1 of the Dispute Resolution Practice Code (“DRPC”) states that where an Arbitrator has determined all issues in dispute except expenses, and the parties cannot agree on entitlement or amount of expenses, either party may request, in writing, an Expense Hearing within 30 days from the date the decision on all other issues in dispute. Both parties were prepared, absent an agreement as to expenses, to have the matter determined by me. My jurisdiction to conduct an Expense Hearing is set out in subsection 282(11) of the Insurance Act.²

In addition, an Arbitrator shall, under Rule 75.2 of the DRPC, consider only the following six (6) criteria for the purposes 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 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; and
Whether the insured person refused or failed to submit to an examination as required 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 under subsection 44 (9) of that Regulation.

At this Expense Hearing, both parties are focused on 3 areas: the degree of success in the outcome; the written offers to settle in accordance with Rule 76; and the conduct of the parties (or party representatives) to fail to comply with undertakings and orders.

Entitlement to Expenses

Degree of Success

In its submissions, the Insurer stated that it was 100% successful in defending all of the issues that were in dispute. In addition, there was no ambiguity in terms of its success in this matter. I agree with the Insurer’s conclusions. It was completely successful. At the Expense Hearing, the Applicant’s counsel stated that the Insurer was not 100% successful because it lost 2 Motions. The first Motion was a Motion to exclude expert reports. The second Motion was to strike the Special Award claim. I disagree with the Applicant’s representative’s line of thinking because, in spite of losing these Motions, the Insurer still 100% successfully defended the claim (i.e. issues in dispute) against the Applicant.

Written Offers to Settle

In its submissions, the Insurer states that it made an offer pursuant to Rule 76 to the Applicant to settle this claim prior to the Hearing. The Insurer made an offer of $4,453.00 to settle this claim, which included settlement of all outstanding issues, costs and expenses on February 24, 2015 which was approximately 8 months prior to the Hearing.³ The Applicant agreed that this offer was made; however, at the time, the Applicant felt that this offer was unreasonable, so it was declined. The Insurer withdrew its offer on August 7, 2015 because it had paid subsequent Income Replacement Benefit payments to the Applicant. The Applicant was asked to send a follow up settlement proposal after these payments were made, but the Applicant declined. Ultimately, in order to narrow the issues in dispute, the Insurer paid the Applicant’s outstanding Medical and Rehabilitation Benefit accounts. Even after this, there was still no settlement proposal submitted by the Applicant to State Farm.

Only on October 10, 2015, 11 days prior to the Hearing, the Applicant offered to settle the file for $5,000.00 all-in.⁴ According to the Insurer’s submission, by this time, it was too little, too late. The Insurer was already prepared for the Hearing and had already incurred the related costs associated with preparing for a Hearing. In hindsight, for the Applicant, the Insurer’s $4.453.00 offer of February 24, 2015 was better than the ultimate result at the Hearing.

Conduct of the Parties and/or their Representatives to Comply with Undertakings

In its submissions, the Insurer states that there were a total of 7 requests for documentation prior to the Hearing from July 9, 2014 to February 9, 2015 that the Applicant failed to comply with. These included, among other things, documents related to calculating Income Replacement Benefits. The Applicant did not agree with the Insurer’s Income Replacement Benefit calculation, but refused to calculate his own Income Replacement Benefit number and instead asked for the maximum amount of $400.00 per week despite providing no proof to the Insurer or at the Hearing as to how this number was calculated. This caused numerous letters and phone calls between Insurer’s counsel and Applicant’s counsel requesting this information, which were an unnecessary waste of time and resources. In addition, there was a lack of medical documentation that the Insurer requested which, if provided, could have helped to settle this file ahead of time in my opinion. As it stood, without these documents, the Insurer maintained its denial of benefits.

On or about September 17, 2015, the Insurer suggested to the Applicant’s representative that both parties should submit a Joint Arbitration Brief prior to the start of the Hearing. The Applicant delayed his decision and ultimately decided against this request on October 10, 2015 (a mere 11 days before the Hearing with no reason given for his refusal to agree to a Joint Brief). Even though in his submission for this Expense Hearing, the Applicant states that there was duplication of services in the Insurer’s costs summary, in my opinion, after reviewing the detailed cost summary, I disagree.

CONCLUSION

For all these reasons, I have determined that the Insurer is entitled to its expenses from this Arbitration proceeding up to and including preparing for this Expense Hearing.

Assessment of Expenses

This was not an overly complex case but at the same time, it was not a simple case either due to lack of documentation. The Insurer had to defend against a claim for Income Replacement Benefits, Attendant Care Benefits and a Special Award. In terms of testimony, the Applicant testified as did a forensic accountant on behalf of the Insurer. There were many documents submitted into evidence, including 10 Exhibits which included multiple volumes of both the Insurer’s brief and the Applicant’s brief.

This case ultimately relied heavily upon the credibility of the Applicant and the presence or lack of corroborating evidence. In the end, with the onus being on the Applicant to prove his entitlement to benefits, he failed to do so.

The Insurer submitted the following fee breakdown for the individuals working on the case:

Description

Amount

Mediation to Pre-Hearing Sharon Dagan 13.1 hours @ $123.74 Carlie Flynn 5.4 hours @ $116.93 Natalie Spinelli .6 hours @ $30.83 Total 19.1 hours

$1,620.99 $631.42 $ 18.50 $ 2,270.91

Pre-Hearing to Hearing Carlie Flynn 6.3 hours @ $116.94 59.3 hours @ $122.78 Natalie Spinelli .2 hours @ $30.83 7.8 hours @ $32.37 Corey Critch 21.2 hours @ $64.74 Total 94.8 hours

$736.72 $7,280.85 $6.17 $252.49 $1,372.49 $ 9,648.72

Hearing Carlie Flynn 15.2 hours @ $122.78

$ 1,866.26

Post Arbitration - Written Submission Carlie Flynn 15.3 hours @ $122.78

$ 1.878.53

Expense Hearing Preparation Carlie Flynn .6 hours @ $122.78 Natalie Spinelli 5.0 hours @ $32.37 Total 5.6 hours

$73.67 $161.85 $ 235.52

HST

$ 2,066.99

Total

$ 17,966.93

With respect to preparatory work leading up to the Hearing and the relative nature of the issues in dispute, I find a ratio of 4:1 of prep time to Hearing time is reasonable for this case. The Applicant was questioning the reasonableness of the total hours spent by the Insurer. The Insurer spent 30.5 hours as part of the Hearing and an additional 119.5 hours completing activities that supported the Hearing for a total of $15,899.94 + $2,066.99 H.S.T. = $17,966.93. I disagree with the Applicant and find that this is a reasonable amount.

Disbursements

Photocopies

$878.73

Couriers

$16.58

Postage

$2.68

Experts/Consultants/Medicals

$404.00

Travel (Parking)

$44.25

Court Reporter

$1,515.50

H.S.T.

$328.11

Total

$3,189.85

I am accepting the disbursement list as presented by the Insurer’s counsel except for the item of the court reporter. All of the amounts claimed by the Insurer are within the maximum limits permitted under the Expense Regulation.⁵

With respect to the cost of $1,515.50 related to a court reporter attending the Hearing, this is not an expense that is specifically permitted under the Expense Regulation.⁶ Therefore, I will not allow the cost of a court reporter to be payable by the Applicant with this claim. It should also be noted that in the Insurer’s expense list, I noticed that the Insurer taxed the disbursement charges twice. But, in terms of disbursements related to courier fees, experts/consulting/medicals travel and photocopying, these disbursements are permitted under the Expense Regulation. Therefore, I am prepared to accept these disbursements a total of approximately $1,346.24 + HST $175.10 = $1,521.25.

EXPENSES:

After considering the complexity of this Arbitration Hearing, the time spent, the applicable Legal Aid Fee structure, written submissions of the parties, the supporting documentation filed, and using the maximum amounts permitted under the Expense Regulation as guidance, I find it appropriate to fix the Insurer's expenses at $19,488.18, inclusive of all fees, disbursements and any applicable taxes.

September 19, 2016

Jeff Musson Arbitrator

Date