Financial Services Commission of Ontario
Commission des services financiers de l'Ontario
Neutral Citation: 2016 ONFSCDRS 32
Appeal P15-00001
OFFICE OF THE DIRECTOR OF ARBITRATIONS
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Appellant
and
NEIL WILLIAMS Respondent
BEFORE: David Evans
REPRESENTATIVES: Paul Omeziri for State Farm Mutual Automobile Insurance Company Alexander Voudouris for Mr. Neil Williams
HEARING DATE: By written submissions received by November 6, 2015
APPEAL EXPENSES ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- The parties shall each bear their own legal expenses of this appeal.
January 20, 2016
David Evans Director's Delegate
Date
REASONS FOR DECISION
I. NATURE OF THE APPEAL
In a decision dated July 17, 2015, I allowed the appeal brought by State Farm Mutual Automobile Insurance Company and ordered that State Farm is entitled to conduct an examination under oath (EUO) of its insured, Mr. Williams, pursuant to s. 33(1.1) of the 1996 SABS.1 I also held that it could rely on s. 33(2) of the SABS to suspend income replacement benefits pending the attendance.
State Farm now seeks its legal appeal expenses. Both sides provided written submissions. After Mr. Williams provided his submissions, State Farm could have replied but elected not to. Accordingly, on December 22, 2015, I advised the parties that I would proceed on the record based on the filed materials.
II. ANALYSIS
The first criterion for expenses listed in Rule 75.2 of the Dispute Resolution Practice Code, Fourth Edition — Updated January 2014, is Rule 75.2(a), namely "Each party's degree of success in the outcome of the proceeding."
Since State Farm was successful on appeal, this criterion favours State Farm.
However, Mr. Williams submits that the criteria relating to an offer to settle and to novelty favour him, so on balance each party should bear their own appeal expenses.
Rule 75.2(b) contains the criterion of "any written offers to settle made in accordance with Rule 76." Mr. Williams notes that some six months before the appeal hearing he wrote to State Farm suggesting a resolution on the basis that he would attend an EUO and abandon his claim for arbitration expenses on condition that State Farm reinstated his terminated benefits, paid back benefits, and abandoned the appeal. State Farm replied that it was not prepared to abandon the appeal.
However, the offer was not fully compliant with Rule 76, as it did not indicate the time period during which it remained open for acceptance. Further, an insurer is only required to reinstate benefits when an insured complies with s. 33 and not repay benefits for the period of non-compliance. State Farm therefore bettered the offer, so I do not place much weight on it.
I find the novelty criterion stronger. Rule 75.2(c) sets out the criterion of "whether novel issues are raised in the proceeding." The main issue in this case was whether an insurer has to make the request for an EUO within 10 days of an application for specified benefits such as IRBs, or whether it could start paying benefits and later request an EUO.
Arbitrator Murray in this case found that the only time an EUO request can be made is in those first ten days. However, her finding contradicted that of Arbitrator Bayefsky in Singh and State Farm Mutual Automobile Insurance Co., (FSCO A12-007594, August 22, 2014), who concluded that an insurer has a general option of requiring an insured to attend one EUO pursuant to section 33, assuming it has not requested one before.
There was thus a conflict in the case law. While State Farm submits that the matter had been settled in other cases, I found only Singh on point regarding the issue of the 10-day period. I find that the issue was novel.
As stated in Gray and Zurich Insurance Company, (FSCO P98-00047, June 11, 1999), success is only one criterion in the list in Rule 75.2, and so must be weighed against the other relevant considerations. In J.S. and Guarantee Company of North America, (FSCO P10-00016, February 16, 2012), I stated that where the relative merits of success and novelty balance each other, the parties should bear their own legal expenses of the appeal.
I find the same to be the case here.
Accordingly, the parties shall each bear their own legal expenses of this appeal.
January 20, 2016
David Evans Director's Delegate
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.