Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2017 ONFSCDRS 1
FSCO A13-002910 and A13-002912
BETWEEN:
ROSEMARY USENGBUWA and EMMANUEL USENGBUWA
Applicants
and
THE PERSONAL INSURANCE COMPANY
Insurer
DECISION ON EXPENSES
Before:
Arbitrator Lynda Tanaka
Heard:
By written submissions completed on October 14, 2016
Appearances:
Mrs. Rosemary Usengbuwa and Mr. Emmanuel Usengbuwa did not participate
Mr. Kevin Griffiths participated for The Personal Insurance Company
Issues:
Mrs. Rosemary Usengbuwa and Mr. Emmanuel Usengbuwa (“Applicants” or individually “RU” and “EU”) alleged that they were injured in a motor vehicle accident on June 3, 2010 and sought accident benefits from The Personal Insurance Company (“TPIC”) (incorrectly named in the Application for Arbitration as Personal Insurance Company of Canada), payable under the old SABS.1 The parties were unable to resolve their disputes through mediation, and the Applicants applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.
By Decision on a Preliminary Issue, dated April 25, 2016, I found that there had not been an accident within the meaning of the old SABS. I ordered that if the parties were unable to agree on the payment of expenses, either party could request an Expense Hearing pursuant to the Dispute Resolution Practice Code (“the Code”).
TPIC requested an Expense Hearing. TPIC also requested an Order for repayment of benefits paid to the Applicants pursuant to the SABS (either s. 52(1) of the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the “new SABS”) or under s. 47(1)(a) of the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996 (the “old SABS”). This claim for repayment was identified in the Pre-Hearing letters on each of these files dated January 12, 2015 as follows:
a) On file A13-002910, “Is Mr. Usengbuwa liable to repay to Personal $21,291.70 plus interests (sic) for the benefits he received from Personal from June 3, 2010 and ongoing?”
b) On file A13-002912, “Is Mrs. Usengbuwa liable to repay to Personal $11,339.56 plus interest for the benefits she received from Personal from June 3, 2010 and ongoing?”
The Applicants became self-represented after the issuance of my decision on April 25, 2016 and they were served with copies of the materials filed by TPIC. The Hearing with respect to expenses and repayment was originally scheduled to be held in person but it was adjourned to be conducted by teleconference when neither Applicant appeared. I subsequently directed that the parties should provide all submissions in writing and set out time limits for the submissions. The Applicants did not make any submissions.
The issues in this Expense Hearing are
Are the Applicants liable to repay the benefits paid to them by TPIC and, if so, what is the amount of the repayment to be made?
Are the Applicants liable for the expenses of TPIC and, if so, in what amount?
Result:
The Applicants are liable to repay the benefits paid to them, including any interest paid by TPIC as follows: Mr. Emmanuel Usengbuwa shall repay $2,862.48 and Mrs. Rosemary Usengbuwa shall repay $4,929.66.
The Applicants are liable to pay to TPIC its expenses of this arbitration in the amount of $9,242.96, as follows: Mr. Emmanuel Usengbuwa shall repay $4,620.50 and Mrs. Rosemary Usengbuwa shall repay $4,620.49.
EVIDENCE AND ANALYSIS:
Issue 1 - Repayment of Benefits Paid
TPIC’s request for repayment of benefits was identified as an issue in the Hearing at the Pre-Hearing held in January 2015. It reiterated its request for repayment of the benefits it paid to the Applicants in a letter, dated August 26, 2016, and it provided the evidence in support of the request in an Affidavit of Mr. Darren Rodrigues, sworn August 23, 2016 (“Affidavit”). Mr. Rodrigues is the adjuster for these two claims, employed by TPIC. He testified at the Preliminary Issue Hearing in this matter and I accept that he has personal knowledge of the matters to which he testified in his Affidavit.
In the Affidavit, Mr. Rodrigues listed the specific amounts paid to each Applicant and the dates and reasons for payment, as well as giving a total amount. He testified that, in each case, the payments were made in response to forms required to be filed by the Applicants for accident benefits claims.
For RU’s claims, Mr. Rodrigues testified that TPIC paid caregiver benefits, housekeeping expenses, medical and rehabilitation benefits and interest, totalling $4,929.66, and the itemized list in the Affidavit totalled that amount.
For EU’s claims, Mr. Rodrigues testified that TPIC paid medical and rehabilitation benefits and interest, totalling $4,930.06. In reviewing the itemized list of benefits and amounts that he testified had been paid, however, the total is only $2,862.48. While there are attachments generated by TPIC’s computer systems listing claims and amounts including denied claims attached to the Affidavit, I am entitled to rely on the sworn statement of Mr. Rodrigues as to the benefits paid and the amounts. I therefore am limiting recovery to the total of the expenses listed in paragraph 4 of the Affidavit: $2,862.48.
Section 52(1)(a) of the new SABS provides as follows:
Subject to subsection (3), a person is liable to repay to the insurer,
a) Any benefit described in this Regulation that is paid to the person as a result of an error on the part of the insurer, the insured person or any other person, or as a result of wilful misrepresentation or fraud;…2
Subsection 3 requires notice of the repayment to be given within 12 months after the payment of the amount that is to be repaid unless the repayment is being sought because of misrepresentation or fraud. On February 28, 2012, TPIC gave notice to the Applicants of the claim for repayment.3 This followed notification in 2011 to both Applicants that their claims were under investigation and no payment would be made pending that investigation.4 At the time of the Pre-Hearing, the Applicants were represented by counsel who also represented them at the Hearing. I am prepared to accept that no issue was raised at the Pre-Hearing and none was raised at the Hearing as to the notice required under subsection 52(3), i.e., at no time did the Applicants protest that TPIC’s claim for repayment was statute barred. Given my findings on the Preliminary Issue Hearing, the time limit does not, in my view, apply and, if it does, TPIC has met the requirements.
It is clear that the claims for accident benefits were not properly made and indeed were made under a misrepresentation, and the Applicants should repay the money they received from TPIC.
Issue 2 - Expenses
TPIC was successful on the Preliminary Issue Hearing and has requested an Order that the Applicants pay its expenses.
The Hearing was held in part in person for the purpose of receiving evidence over two full days, and closing argument was made in writing at the request of counsel for the Applicants.
The claim for expenses by TPIC is for $24,973.36, including disbursements and HST. I have received a two page summary of the number of hours spent by each member of the legal team representing TPIC, their hourly rates and the year of call to the Bar. Also included is a listing of disbursements.
The recovery of expenses is dealt with in the Schedule to O. Reg. 664 under the Insurance Act (“Expense Regulation”). The quantum of the expenses that may be ordered are set out in the Schedule to the Expense Regulation, and are also found in Section F of the Code. The quantum must be reasonable and the Arbitrator must consider the criteria set out in Rule 75.2 of the Code. As is the case here, it is generally accepted that a line by line assessment of the expenses is not appropriate; rather the Arbitrator should make a global assessment of reasonable expenses.
I have considered the various relevant criteria from Rule 75.2 of the Code as set out below.
Criteria 1: Each party’s degree of success in the outcome of the proceeding
TPIC was entirely successful in this proceeding.
Criteria 2: Any written offers to settle that were made in accordance with the rules of practice and procedure applicable to the proceeding after the conclusion of Mediation and before the conclusion of the Arbitration
I have not been advised in the submissions as to any offers in writing.
Criteria 3: Whether any novel issues are raised in the proceeding
The issues were not novel.
Criteria 4: The conduct of a party or a party’s representative that tended to prolong, obstruct or hinder the proceeding, including the failure to comply with undertakings and orders
No conduct to prolong, obstruct or hinder the proceedings through failure to comply with undertakings or Orders or to drag out the proceedings unnecessarily was alleged by TPIC. I note, however, that it was counsel for the Applicants who insisted on written argument while counsel for TPIC was prepared to go ahead with oral argument.
Criteria 5: Whether any aspect of the proceeding was improper, vexatious or unnecessary
This criterion reflects not just procedural steps that might have been taken but “any aspect” of the Arbitration. I have found that no accident occurred. The entire Arbitration process was therefore improper and unnecessary.
The total amount claimed for expenses is more than four times the total amount paid to both Applicants for benefits. Seven witnesses testified, of which two were expert witnesses who testified on accident reconstruction. Both Applicants testified, as did Mr. Rodrigues of TPIC and two lay people who attended under summons. There were no complex legal issues though both parties provided case books. The preliminary issue of whether or not there had been an accident depended on findings of fact and credibility.
With respect to the legal team, three lawyers of varying degrees of experience (including one with over 30 years’ experience) were identified in the claim for expenses, as well as articling students and a clerk. Only one lawyer appeared at the Hearing for TPIC, though two appeared for the Applicants. The total number of hours spent by the legal team is in excess of 170 hours. This is not a reasonable claim for expenses, given the usual range of preparation time to Hearing time is less than 4:1.
I recognize that in cases where the outcome depends on credibility and non-party witnesses, there may be considerable time spent in locating the witnesses needed or documents. In this matter, another Insurer identified the issue of whether or not an accident had in fact occurred and its Insureds who had also claimed benefits were the witnesses called to support TPIC’s position. This was not a case where witnesses had to be searched for.
I also recognize that frequently, written argument is more costly than oral submissions made at the end of the Hearing, both in terms of the time taken to prepare the submissions and also the filing and service of additional paper copies. I have reflected the requirement of written argument in the ratio of the Hearing time (which I set at 12 hours) and the lawyers’ and articling students’ preparation time, which I assess as reasonable at the top end of 4:1. This ratio also reflects the fact that the whole Arbitration proceeding was brought based on a false claim that there was an accident entitling the Applicants to accident benefits. I have reduced the clerk time by approximately one-half. I recognize that the support of law clerks considerably assists in the management of accident benefit files; the time, however, appears excessive in my experience, particularly given the time spent on the file by lawyers and articling students.
The legal team representing TPIC included senior counsel, whom I shall refer to as Mr. Rogers. I am not including approval of any fees for Mr. Rogers’ time. It is not clear what services Mr. Rogers actually performed but in the evidence, I learned that Mr. Rogers provided a summary of the transcript of Examinations Under Oath to the expert retained by TPIC, rather than simply letting the witness read the transcripts himself. This was not helpful and to the extent that Mr. Rogers’ time likely includes the briefing of the witness, I refuse to order that the Applicants pay anything towards that expense. Also, the bulk of the counsel time was spent by Mr. Griffiths.
I find that the reasonable quantum of the expenses that the Applicants should pay for legal fees is the following:
48 hours at $109.13 per hour $5,238.24
29 hours at $32.36 per hour $938.44
Total: $6,176.68
HST $802.97
Total including HST: $6,979.65
With respect to the disbursements, the onus is on TPIC to prove the expenditures claimed and that they are properly recoverable under the accident benefits system. The claim includes the cost of an interpreter, but all Hearings where an interpreter is required have the interpreter provided by ADR Chambers at no cost to the parties. There was no interpreter provided for the two lay witnesses whose first language was Afghani. Therefore it is not clear why there is a disbursement for an interpreter in the amount of $457.27, and I deny that claim.
Also, the cost of the court reporter in the amount of $430.00 is not properly recoverable.
There is a claim for travel costs to meet with witnesses in the amount of $276.09 at a rate of $0.46 per km, representing more than 600 km of travel. I have not been provided with any further detail and the expense is, in my view, larger than I would expect in this case. One of the claims for transportation costs is for witnesses to and from the Hearing in the amount of $312.00. Again, no particulars are given of dates, people transported or distances, but at the per km rate of $0.46, it represents more than 675 km of travel. The transportation costs represent considerable distance. Without proper support, these amounts are not recoverable against the Applicants.
The balance of the disbursements includes a disbursement for copies, fax and long distance charges in the amount of $1,828.15. While the headings are the usual types of expenses, the amount is very large and is not supported by any break down of the three headings, invoices or explanation. I am therefore not prepared to allow such a large expense, especially where the Insurer is requesting recovery from Insureds. I well recognize that these Hearings require considerable documentation but this is not one where there were many volumes of documents. Therefore, I am reducing the amount payable under this heading to $500.00. This amount is, in my experience, generous for this heading. I also approve the courier charges of $161.34.
TPIC is claiming fees for two reports by its accident reconstruction expert, Robert Seaton, in the amount of $1,500.00 per report. The first report was prepared while Mr. Seaton was an independent consultant. The second report was prepared in the period leading up to his taking up his position as a fulltime employee of TPIC. The circumstances concerning this report were addressed in the Hearing and my decision. In these circumstances, I do not think it is appropriate to charge the Applicants with this disbursement. Therefore, I approve only the fee for the first report in the amount of $1,500.00. I also approve the witness conduct fees of $100.00. Therefore, the disbursements are recoverable in the amount of $2,261.34, inclusive of HST.
The total of the fees and disbursements recoverable by TPIC from the Applicants is $9,240.99. Each of the Applicants should be liable for one-half of the expenses and disbursements, but because the number is not equally divisible by 2, Mr. Emmanuel Usengbuwa shall be liable for $4,620.50 and Mrs. Rosemary Usengbuwa shall be liable for $4,620.49.
EXPENSES:
The Applicants are liable to repay the benefits paid to them, including any interest paid by TPI in the amount of $2,862.48 (Mr. Emmanuel Usengbuwa) and $4,929.66 (Mrs. Rosemary Usengbuwa). The Applicants are liable to pay to TPIC its expenses of this Arbitration in the amount of $9,242.96. Mr. Emmanuel Usengbuwa shall repay $4,620.50 and Mrs. Rosemary Usengbuwa shall repay $4,620.49.
January 3, 2017
Lynda Tanaka Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2017 ONFSCDRS 1
FSCO A13-002910 and A13-002912
BETWEEN:
ROSEMARY USENGBUWA and EMMANUEL USENGBUWA
Applicants
and
THE PERSONAL INSURANCE COMPANY
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c. I.8, as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Ontario Regulation 664, as amended, it is ordered that:
The Applicants are liable to repay the benefits paid to them, including any interest paid by TPIC as follows: Mr. Emmanuel Usengbuwa shall repay $2,862.48 and Mrs. Rosemary Usengbuwa shall repay $4,929.66.
The Applicants are liable to pay to TPIC its expenses of this Arbitration in the amount of $9,242.96, as follows: Mr. Emmanuel Usengbuwa shall repay $4,620.50 and Mrs. Rosemary Usengbuwa shall repay $4,620.49.
January 3, 2017
Lynda Tanaka Arbitrator
Date
Footnotes
- Effective September 1, 2010, the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the “new SABS”) came into force. The transition rules in the new SABS provide that, subject to certain exceptions, benefits that would have been available pursuant to the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996 (the “old SABS”) shall be paid under the new SABS, but in amounts determined under the old SABS.
- Note that the old SABS has similar terms in s. 47(1)(a) and (3).
- Exhibit 2 on the Preliminary Issue Hearing, Arbitration Brief of the Insurer, Tab 15.
- Ibid., Tabs 14 and 18; see also Tabs 26 to 28 inclusive of Exhibit 1B, Preliminary Issue Hearing Document Brief of the Applicants.