Fatemea Rezaiezadeh v. State Farm Mutual Automobile Insurance Company, 2016 ONFSCDRS 59

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2016 ONFSCDRS 59

Appeal P15-00038

Appellant

and

Respondent

BEFORE:

Delegate Lawrence Blackman

Mr. Shahen A. Alexanian and Mr. Karl D. Furtado for the Appellant, Ms. Fatemea Rezaiezadeh

Mr. Cary N. Schneider for the Respondent, State Farm Mutual Automobile Insurance Company

January 29, 2016

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The Arbitrator’s June 10, 2015 decision is rescinded. The matter is remitted to arbitration for a new hearing by a different arbitrator.
The Respondent, State Farm Mutual Automobile Insurance Company, shall pay the Appellant, Fatemea Rezaiezadeh, her legal expenses of this appeal fixed in the amount of $6,423.19, inclusive of all fees, disbursements and taxes.

February 19, 2016

Lawrence Blackman Director’s Delegate

Date

I. BACKGROUND AND NATURE OF THE APPEAL

As a result of her injuries sustained as a pedestrian in a March 8, 2011 motor vehicle accident, the Appellant, Ms. Fatemea Rezaiezadeh, applied to her first part automobile insurer, the Respondent, State Farm Mutual Automobile Insurance Company, for statutory accident benefits under the 2010 Schedule.¹

An April 4, 2011 Form 1 (Assessment of Attendant Care Needs) prepared by Ms. J. Wong, O.T., stated the Appellant required $9,985.97 in monthly attendant care benefits for 24-hour basic supervisory care. Ms. Wong’s April 4, 2011 Occupational Therapy Report, at page 15, stated:

… [the Appellant] currently requires assistance with several aspects of her personal care activities and is dependent upon assistance for all instrumental activities of daily life due to her mobility restrictions and pain. Unfortunately [she] also copes with her daughter’s ongoing medical issues and has no other social network for support. There is an urgent need for [a] personal support worker and assistive aids equipment to maximize her safety.

In January 2015, the parties came before Arbitrator Anschell (the “Arbitrator”) of ADR Chambers for determination of a narrowed issue of whether, under subsection 3(8) of the 2010 Schedule, the Appellant should be deemed to have incurred a $36,000 expense for attendant care, making the benefit payable.

The Respondent concedes, at page eight of the January 13, 2015 arbitration transcript, that the Appellant required the attendant care. The Appellant concedes, at page one of the transcript, that she did not incur the attendant care expense within the meaning of paragraph 3(7)(e) of the 2010 Schedule.

Subsection 3(8) of the 2010 Schedule states:

If in a dispute to which sections 279 to 283 of the Act apply, a Court or arbitrator finds that an expense was not incurred because the insurer unreasonably withheld or delayed payment of a benefit in respect of the expense, the Court or arbitrator may, for the purpose of determining an insured person’s entitlement to the benefit, deem the expense to have been incurred. [Emphasis added]

The Appellant also sought a special award subsection under subsection 282(10) of the Insurance Act, R.S.O. 1999, c. I.8. That provision states:

If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule. [Emphasis added]

The Arbitrator’s June 10, 2015 decision dismissed the Appellant’s claim for attendant care benefits and a special award, and awarded the Respondent its expenses. The Arbitrator rejected the Appellant’s subsection 3(8) argument of deemed incurring for the following reasons:

The Arbitrator stated she was guided by Arbitrator Ahlfeld’s decision in Veley and Motor Vehicle Accident Claims Fund, (FSCO A13-002630, May 5, 2014), that subsection 3(8) of the 2010 Schedule was not meant to waive for disadvantaged individuals the incurred requirement of subsection 3(7) unless it was demonstrated that the insurer, knowing a person is impecunious and cannot afford the attendant care services in a Form 1 unreasonably denies or withholds the benefit.²
The Arbitrator found that the Appellant had not worked at any time since the accident (the top of page nine of her decision). The Appellant’s “sole source of income has been the government payments” (also page nine). At the Respondent’s July 5, 2011 Examination under Oath (held under the authority of subsection 33(2) of the 2010 Schedule), the Appellant “testified that she had not paid for any Attendant Care Benefits, because she could not afford it” (page nine of the decision).

The Arbitrator found that the Respondent had demonstrated, on a balance of probabilities, that the Appellant’s “one brief comment” at her examination under oath was not a clear communication of her financial situation and her lack of funds for attendant care. The Arbitrator was not prepared to find that the Respondent was aware that the Appellant required attendant care benefits but could not afford to obtain them.

The Arbitrator found that the Respondent received an April 4, 2011 Occupational Therapy Report and Form 1. On April 15, 2011, it denied attendant care benefits on the basis the Appellant’s injuries fell within the Minor Injury Guideline (the “MIG”) and that, under subsection 14(2) of the 2010 Schedule, an insurer was only required to pay attendant care benefits if an injury or impairment was not a minor injury.

The Arbitrator accepted that the Respondent changed its position that the Appellant did not fall under the MIG based on non-medical information it received at the arbitration pre-hearing. The Arbitrator found the Respondent’s failure for two years to remove the Appellant from the MIG “unfortunate,” but not unreasonable.

The Arbitrator found, based on the medical information available to it in 2011, that the Respondent’s adjudication, as she put it, was not unreasonable as required to invoke subsection 3(8). Having found that the Respondent did not unreasonably withhold or delay payment of attendant care benefits, the Arbitrator held that a special award was not payable.

III. ANALYSIS

Under subsection 283(5) of the Insurance Act, R.S.O. 1990, c. I. 8, the Arbitrator’s June 10, 2015 decision is rescinded for the following reasons:

Subsection 283(1) of the Insurance Act restricts appeals from the order of an arbitrator to questions of law. Subsection 19(1) of the 2010 Schedule requires an insurer to pay for reasonable and necessary attendant care benefits incurred by or on behalf of the insured person as a result of the accident. Paragraph 3(7)(e) defines the term incurred.

The parties agree the Appellant has not incurred attendant care expenses, as defined.

Subsection 3(8) provides an exception where an expense was not incurred because the insurer unreasonably withheld or delayed payment of a benefit in respect of the expense.

There is no statutory requirement to access the relief under subsection 3(8) that the insured person communicate to the first-party insurer his or her financial inability to pay.

At oral appeal submissions, the Respondent agreed the 2010 Schedule “certainly does not” have a requirement of communication; there “is nothing in the legislation that makes it obligatory for the insured to clearly state that.” The Appellant opined that while an insured’s impecuniosity may be evidence of whether an insurer unreasonably withheld or delayed payment of benefits, it is not a pre-requisite.

Subsection 3(8) of the 2010 Schedule speaks of the insurer unreasonably withholding or delaying payment. Subsection 282(10) of the Insurance Act uses the same words.

Sullivan and Driedger on the Construction of Statutes, Fourth Edition (Markham Ontario, Butterworths Canada Ltd. 2002) states, at page 162, that there is a presumption of consistent expression. The legislature uses language carefully and consistently so that within a statute or other legislative instrument the same words have the same meaning. It is presumed the provisions of legislation are meant to work together, both logically and teleologically (the explanation of phenomena by the purpose they serve) as parts of a functioning whole (page 168).

Director Draper, at page 31 of Liberty Mutual Insurance Company and Persofsky et al., (FSCO P00-00041, January 31, 2003) (repeating similar comments at page 23), held the “purpose of s. 282(10) is to punish insurers that unreasonably fail to pay accident benefits promptly, as required by the SABS, and to deter that company and others from acting similarly in the future. The size of the special award should be aimed at that purpose.”

Subsection 3(8) of the 2010 Schedule does not require as a pre-requisite to waiving the paragraph 3(7)(e) incurred requirement that an insurer know that its insured is impecunious and cannot afford the attendant care services in the Form 1. In oral submissions, the Respondent agreed “there is nothing in the legislation that requires knowledge of impecuniosity.”

This is consistent with Recommendation 25 of the Report on the Five Year Review of Automobile Insurance, March 31, 2009, cited by Arbitrator Ahlfeld in Veley at page 8:

The attendant care benefit should continue to compensate claimants for incurred expenses. However, to enhance consumer protection and transparency, the SABS could clarify that where an arbitrator has found that the insurer has been unreasonable in denying the attendant care benefit, payments should be made even if no expenses have been incurred.

The Arbitrator’s own earlier words, at the bottom of page nine of her decision, stated that in order for her to invoke subsection 3(8), “I need to find that State Farm unreasonably withheld or delayed payment of the Attendant Care Benefits.”

As stated, the purpose of subsection 3(8) of the 2010 Schedule, consistent with subsection 282(10) of the Insurance Act, is to “punish insurers that unreasonably fail to pay accident benefits promptly” and “deter that company and others from acting similarly in the future.” The prohibition against an insurer unreasonably withholding or delaying benefits, as with its positive duty of utmost good faith, applies to all of its insureds.

Consistent with the legislative intent of punishing unreasonable insurer conduct, the exercise of adjudicative discretion under subsection 3(8) of the 2010 Schedule is not restricted to the deserving poor, properly approaching their first-party insurer, cap in hand, like some waif from a nineteenth century Charles Dickens’ serialized novel.

The pre-requisite for the application of subsection 3(8) is simply that “an expense was not incurred because the insurer unreasonably withheld or delayed payment of a benefit in respect of the expense.” That includes, but is not necessarily restricted to, impecuniosity. An insurer’s plea of ignorance of the exact ramifications of its unreasonable withholding or delay of benefits does not provide absolution from the application of subsection 3(8).

Ms. T. Stewart, the Respondent’s representative, testified at page 63 of the January 14, 2015 transcript, that the Respondent required proof of incurred or economic loss prior to issuing payment. However, there were other options. She testified that the Appellant could have retained a third party service provider and the Respondent could have paid them directly. Ms. Stewart testified there was nothing in the file that this was ever communicated or made known to the Appellant.

Rather than advancing the legislative purpose of the 2010 Schedule, Veley diluted the legislative purpose by adding a pre-condition the Legislature chose not to include and a pre-condition contrary to its intent, of the insurer’s actual knowledge of the insured person’s impecuniosity. This was an error of law.

The Arbitrator in this present case further diluted the legislative purpose by adding an additional pre-requisite that the insured person was responsible for clearly communicating his or her impecuniosity to the insurer, a pre-condition the Legislature chose not to include and that was contrary to its intent. This was a further error of law.

This was not the judicial exercise of discretion. It was not the exercise of discretion in accordance with principles of fairness and natural justice. It was the exercise of discretion based on a wrong principle. It was a restriction of the exercise of discretion contrary to the legislative intent. It was an exercise of discretion resulting in an injustice.³

In Young and Liberty Mutual Insurance Company, (FSCO P03-00043, June 20, 2005), application for judicial review dismissed, 2006 CanLII 7286 (ON S.C.D.C.), Delegate Evans cited Delegate McMahon in Lombardi and State Farm Mutual Automobile Insurance Company, (FSCO P01-00022, February 26, 2003):

… errors of law include findings of fact made in the complete absence of supporting evidence, made on the basis of conjecture, or made on the basis of a misapprehension of the evidence caused by a misdirection on a legal principle. The vital distinction is between a conclusion that there was “no evidence” to support a finding and a mere “insufficiency of evidence.”

The Appellant’s July 5, 2011 Examination under Oath, at lines 16-20 of page 38 (of 43

pages), has the following question asked by the Respondent’s counsel, Mr. D. Raposo, and answer given by the Appellant:

Q. Has anybody come in to the house to help you with your self-care activities, since the accident on March 8th?

A. No, I don’t have anybody, because I don’t have the money.

The transcript of the Examination under Oath shows two other individuals attending in person for the Respondent, Mr. W. Wong and Ms. K. Esposito. At arbitration, Ms. Stewart testified (January 14, 2015, page 40) that Ms. Esposito and Mr. Wong are “special investigation unit claim representatives at State Farm.”

The Appellant submits there was further evidence before the Arbitrator regarding her impecuniosity: page five of her OCF-1 (Application for Benefits) showing her status as unemployed, Ms. J. Wong’s March 29, 2011 assessment stating the Appellant could not undergo an MRI or purchase medication due to financial difficulties, and the adjuster’s April 1, 2011 log note that the Appellant was unemployed and prevented from working.

Subsection 33(6) of the 2010 Schedule provides that an insurer is not liable to pay a benefit in respect of any period during which the insured person fails to submit to an examination under oath. This is a serious consequence. It is an especially serious consequence to an impecunious first-party insured relying on a paid policy of insurance.

One is then at a loss to understand how an insurer, having exercised its rights under the 2010 Schedule to hold an examination under oath to gather information, can subsequently imply (there being no evidence from either attending claims representative) poor hearing, dull wits or bored indifference regarding information so obtained. This is so even if the insurer has less than three representatives attending the examination under oath.

If I am in error in finding, in the application of subsection 3(8), that there is no pre-requisite that (1) the insurer know that its insured was impecunious and could not afford the attendant care services in the Form 1; or that (2) the insured clearly communicate his or her impecuniosity to the insurer, I find that the Arbitrator, in the absence of supporting evidence and on the basis of conjecture, erred in law in finding the Appellant, at a time and in a manner the Respondent chose, did not clearly communicate her impecuniosity.

At page 55 of the January 14, 2015 arbitration hearing, Ms. Stewart testified:

Q. Why did you take [the Appellant] out of the MIG in 2013, in October 2013? Why was that done? What new information did you have to take her out of the minor injury guideline that you didn’t have before you in 2011? I’m not going to lead you. What’s the answer?

A. I don’t know the answer to that. Based on my review of the file there was a file review conducted and it was determined that your client’s injuries were outside of the MIG.

Q. Okay. Based on the information you already had?

A. Yes.

Q. And based on the information which we’ve agreed has not changed at all since 2011?

A. Correct.

Under subsection 3(6) of the 2010 Schedule, a minor injury “means one or more of a sprain, strain, whiplash associated disorder, contusion, abrasion, laceration or subluxation and includes any clinically associated sequelae to such an injury.” The MIG Guideline has a similar definition.

The Arbitrator states, at page nine of her decision, the parties agreed the Respondent’s removal of the Appellant from the MIG “was not made on the basis of any new medical information.” She stated that based upon the medical information available in 2011, the Respondent’s adjudication was not unreasonable as required to invoke subsection 3(8) of the Schedule.

Adjusters do not adjudicate. Adjudicators adjudicate. I take it the Arbitrator meant to say adjusting. However, subsection 3(8) of the 2010 Schedule does not speak to unreasonable adjudication or unreasonable general adjusting. It is specific to the unreasonable withholding or delay of payment of a benefit in respect of the expense.

At the oral appeal hearing, there being no objection, as requested, I included in the appeal record under Rule 56.4 of the Dispute Resolution Practice Code (Fourth Edition – Updated January 2014) (the “Code”) the parties’ written arbitration submissions. The Respondent’s arbitration submissions, at paragraph 43, state:

It is agreed that the Applicant’s injuries were subsequently removed from the MIG following the pre-hearing held on October 21, 2013. This decision was communicated to the Applicant by way of OCF-9 dated October 23, 2013. Although no additional documentation had been received by State Farm since 2011, giving the timing of the pre-hearing, it is State Farm’s position that new information was disclosed at the pre-hearing prompting State Farm to reconsider its MIG determination.

I agree with the Appellant’s submission, citing Marar v. Mueller, 2011 ONSC 3744, at paragraphs 45 to 49, that evidence cannot be introduced through a factum.

The Respondent denied the Appellant’s attendant care claim based on its contention she fell within the MIG. The Arbitrator’s decision does not discuss what the MIG entails. She does not say what medical information was before or was not before the Respondent at any point in time that would make the Respondent’s refusal to pay attendant care benefits based on the MIG reasonable or unreasonable.

The Respondent argues, at paragraphs 53 and 54 of its written appeal submissions:

… State Farm has not alleged at any point that additional medical documentation had been received since 2011. However, its position is that information at the pre-hearing did in fact prompt it to reconsider its MIG determination.

Given the timing and close proximity of the pre-hearing date and State Farm’s decision to remove the Applicant from the MIG, the Arbitrator agreed that, on a balance of probabilities, State Farm reconsidered its MIG determination based on information received at the Pre-Hearing.

The Arbitrator does not say what this new information is. She does not say why it was reasonable for the Respondent to await this new, unidentified information. She does not say how or why it changed the Respondent’s position on the MIG.

In oral appeal submissions, the Respondent conceded there was no evidence adduced at arbitration as to what information it received at the pre-hearing. It argues that since, temporally, the change in its decision followed the arbitration pre-hearing, deference should be given to the Arbitrator’s conclusion.

The applicable Latin phrase is Post Hoc, Ergo Propter Hoc, the logical fallacy that “after this, therefore because of this.” This concept was discussed at oral appeal submissions. In this case, the fallacy is not simply relying on one thing following another to find that the former caused the latter. In this case, there is no evidence as to what the information was that was produced at the pre-hearing, if anything. Nor was there any actual evidence, written or oral, that the “something” (if anything) that was provided in fact caused the Respondent to take the Appellant out of the MIG.

That this “new information,” if any, is unknown, may be due to the following:

(1) The Arbitrator, at page six of the January 14, 2015 transcript, noted she believed the Appellant’s December 12, 2014 letter was in the file. The Appellant states she had asked the Respondent to produce for cross-examination six adjusters who had carriage and knowledge of this file. The Respondent produced only Ms. Stewart, who testified she took over carriage of the file in late 2014 and had no involvement or personal knowledge of anything being dealt with in the log notes.

The Respondent submits that if the Appellant wanted to have all of its adjusters attend, it should have served summons to witness. The Appellant states she had asked for the adjusters’ last known contact information so she could subpoena them, but this information was not provided.⁴

(2) The Respondent claimed privilege over its log notes from early 2012 on, while relying on events at the September 2013 pre-hearing for changing it position in 2013 on the MIG. The Respondent argued in oral appeal submissions that if the Appellant had wanted these notes, she should have brought a motion.

R. v. Anglin, 2005 CanLII 8189 (ON CA), in setting a conviction aside and ordering a new trial, stated that the “conclusion of the trial judge is simply conclusory and generic … The failure to give adequate reasons is an error of law which warrants a new trial.”

The Arbitrator’s decision that it was not unreasonable for the Respondent to take the Appellant out of the MIG for two years “based upon information received at the Pre Hearing” is simply conclusory, made in the absence of supporting oral or written evidence and on the basis of conjecture.

The Arbitrator erred in law in awarding legal expenses to the Respondent:

(1) It is not disputed the Arbitrator failed to receive submissions on the question of entitlement to legal expenses. This was a breach of a fundamental precept of natural justice.

(2) The Arbitrator failed to give reasons for her legal expense entitlement award. As stated in Scarlett v Belair Insurance, 2015 ONSC 3635, the “duty of procedural fairness would include providing interested parties a reasonable opportunity to address case law, statutory provisions, and lines of argument which the arbitrator wishes to consider but which were not raised at the arbitration.”

As stated in my September 18, 2015 Preliminary Appeal Order:

Neither the Code nor the Expense Regulation automatically award legal expenses to the successful party. Rather, other criteria for consideration include whether any novel issues were raised in the proceeding, the conduct of the parties and whether any aspect of the proceeding was improper, vexatious or unnecessary.

Rather than the matter being sent back to a new arbitration hearing, the Appellant asks for an appellate order that she is entitled to Attendant Care Benefits from April 13, 2011 in accordance with the April 4, 2011 Form 1 prepared by Ms. Wong, subject to any applicable policy limits, interest on those benefits and the maximum special award “or the matter to be referred to a different arbitrator for determination of the quantum of special award.”

In Personal Insurance Company v. Hoang, 2014 ONSC 81, the Divisional Court, having upheld an adjudicative decision of entitlement to a special award, agreed to determine the quantum of the award, stating:

The court has been provided with the complete appeal record that was before the Delegate as well as the transcripts of the hearing before the arbitrator. Given the unusual circumstances of this case and the fact that both counsel wish this court to determine the amount of the special award, I agree that we should do so.

This present case involves more than the quantum of a special award. Even regarding the quantum of a special award, the Divisional Court in Hoang had before it both the interest calculation under both the Schedule and subsection 282(10) of the Insurance Act against which to determine an appropriate special award. I do not have such evidence.

Further, in the present case, the Respondent does not agree that, if I set aside the Arbitrator’s decision, I should decide whether to apply subsection 3(8) of the 2010 Schedule to award the Appellant $36,000 in attendant care benefits, plus interest and legal costs, as well as determine her entitlement to and the quantum of any special award.

The Appellant, herself, argued in oral submissions that “the heart of my case is a lack of fairness of how the case went.” She notes her lack of opportunity to cross-examine the Respondent’s adjusters who had carriage and personal knowledge of the pertinent aspects of this case.

In the circumstances of this case, I find it appropriate to remit this matter back to arbitration for a new hearing, to be heard by another arbitrator.

IV. CHANGE OF THE TITLE OF PROCEEDING

The Appellant brought a motion for an order that both the appeal and arbitration title of proceeding be amended to substitute “Certas Home and Auto Insurance Company” for the Respondent. The Appellant submits that the Desjardins Group acquired State Farm January 1, 2015 and that the Respondent’s correspondence and website suggest that Certas Home and Auto Insurance Company are now liable for any amounts payable to the Appellant.

The Appellant concedes there is no explicit procedure in the Code or the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended, to permit a party to continue a proceeding against a non-party. She notes, however, that CGU Insurance Company of Canada and Bittan, (FSCO P01-00058, May 30, 2002), and Abbas and Security National Insurance Co./Monnex Insurance Mgmt. Inc. (P08-00034, February 18, 2009), held that the Rules of Civil Procedure, although not binding, may be helpful. Rule 1.1 of the Code states that the Rules will be broadly interpreted to produce the most just, quickest and least expensive resolution of the dispute.

The Appellant cites Rules 11.01 and 11.02 of the Rules of Civil Procedure that where at any stage in a proceeding the liability of a party is transferred or transmitted to another person by assignment or other means the proceeding is not nullified but is stayed until an order to continue against the person is obtained from the Court. She submits that the liability to pay her benefits has been “transferred or transmitted” to Certas and that Abbas supports an adjudicator having the authority to fashion an analogous procedural remedy to ensure a just and efficient outcome.

However, as the Respondent noted, the Appellant failed to provide any case law either regarding the Commission applying Rules 11.01 and 11.02 of the Rules of Civil Procedure or the Court application of these rules in similar circumstances.

The Respondent’s January 19, 2016 Response to the Appellant’s motion states “the issue is neither here nor there;” whether “State Farm no longer exists is not an issue. State Farm has and will continue to respond to this appeal as a named party and it is our position,” (emphasis in the original). That State Farm continues to exist, it submits, is evidenced by the letterhead on recent correspondence to the Appellant. The Respondent does, however, concede:

… as noted in the Appellant’s motion materials, there is no dispute that the State Farm branded policies are now underwritten by Certas Home and Auto Insurance Company or Desjardin Financial Security Life Assurance Company.

The Appellant’s apparent concern is that if she is successful on appeal and obtains a monetary award, if the Respondent does not pay, whose property does the sheriff seize? The Respondent submits that Certas would respond to any “valid” judgment by cutting a cheque because of its contractual obligation with State Farm. This did not seem to reassure the Appellant.

Rule 66 of the Code provides that, on written request, the Director will provide a party with a certified copy of an order that may be filed with the Ontario Superior Court of Justice. The Order may be enforced by the Court as an order of that Court. Rule 65.5 provides, in part, that an adjudicator, “at any time” may correct a technical error in his or her decision. Rule 65.7 allows an adjudicator to make such orders or give such directions as he or she considers proper to prevent an abuse of process.

A change in the title of proceeding in this case potentially affects every Commission case involving the present insurer. At present there is no suggestion that this appeal is a nullity or that it should be stayed pending an order to continue as would happen under Rule 11.01 of the Rules of Civil Procedure. In the absence of any case law regarding a presently hypothetical concern, I defer to any further or other appellate officer the question of amending the title of proceeding in this appeal proceeding in the event there is any difficulty in the enforcement of this appeal order. I leave to arbitration any amendment of the title of proceeding at that level.

IV. LEGAL APPEAL EXPENSES

Both parties seek their legal expenses both of this appeal and arbitration. I refer the parties to arbitration for a determination of legal expenses at that level.

My December 7, 2015 letter stated that the parties should be prepared at the oral appeal hearing to speak to both entitlement to and the quantum of appeal legal expenses. Both parties brought a Bill of Costs. The Appellant seeks $6,423.19 in legal expenses. This consists of 27.5 hours at $150 an hour (equaling $4,661.25, including HST), and $1,761.94 in disbursements (including $1,263 for the arbitration transcripts). The Respondent seeks $7,459.60 in legal fees, consisting of 55.4 hours claimed at either $116.93 or $129.93 an hour. No legal disbursements are claimed.

Subsection 12(2) of R.R.O. 1990, Reg. 664 (the “Expense Regulation”) sets out the criteria to be considered in awarding legal expenses. I find the Appellant entitled to her reasonable expenses of appeal, first because she was successful in setting aside the Arbitrator’s order.

The Respondent argued that, at the end of the day, no legal expenses should be awarded as the issue was novel on appeal and there was only one prior arbitration decision on point, Veley. As I have found that Veley also erred in law regarding a point not dealt with in the appeal in that case, I find this to be a further reason to award the Appellant her reasonable legal expenses of this appeal.

I find the Appellant’s claimed hours entirely reasonable, especially given that the Respondent claims twice as many hours. This is of significance when it is often argued on appeal that it is to be expected that the appellant, having the onus, should incur greater hours.

Insurers’ counsel are subject to the increasing rates of the Legal Aid, Civil Tier 3 rate. The maximum $150 hourly rate for applicants’ counsel under Rule 78.1 of the Code has been in effect for the nearly two decades since 1997. Successful applicants see their awards, and access to justice, eroded by inertia in the face of increasing cost of representation. It is difficult to disagree with the Respondent that this system undercompensates counsel.

I am persuaded that the relatively modest $150 an hour the Appellant seeks is more than justified in this case that addressed issues of law novel at the appellate level. I am persuaded that the Appellant’s disbursements are reasonable. I specifically find the transcript in this case not merely reasonable, but necessary. I award the Appellant her requested legal appeal expenses of $6,423.19, inclusive of all fees, disbursements and taxes.

February 19, 2016

Lawrence Blackman Director’s Delegate

Date

Footnotes

The Statutory Accident Benefits Schedule — Effective September 1, 2010, Ontario Regulation 34/10, as amended.
On appeal, in Motor Vehicle Accident Claims Fund and Veley, (FSCO P14-00021 and P14-00041V, April 20, 2015), Delegate Evans held that Mr. Veley’s argument that the modifier “unreasonable” applied only to withholding, and not to denying, was “illogical, ungrammatical and impractical.”
See Kalin v. Ontario College of Teachers, 2005 CanLII 18286 (ON SCDC), 75 O.R. (3d) 523 and Pugh v. Pugh, 1979 CanLII 766 (BC CA), 17 B.C.L.R. 14 (C.A.).
I note that under Rule 53.07(2) of the Rules of Civil Procedure, the attendance of an adverse party may be secured by service, with attendance money, on the adverse party’s lawyer.