Neutral Citation: 2017 ONFSCDRS 115 FSCO A16-002434

BETWEEN:

CHENG ZHANG Applicant

and

AVIVA CANADA INC. Insurer

REASONS FOR DECISION

Before: Arbitrator Charles Matheson Heard: In person at ADR Chambers on April 6, 2017

Appearances: Ms. Wei Guo, Paralegal, participated for Mr. Cheng Zhang Ms. Andrea D’Addese, Lawyer, participated for Aviva Canada Inc.

Issues:

The Applicant, Mr. Cheng Zhang, was injured in a motor vehicle accident on May 20, 2014 and sought accident benefits from Aviva Canada Inc., (“Aviva”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Zhang, 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.

The issues in this Hearing are:

Should the Applicant be allowed to withdraw his Application for Arbitration?
Is the Applicant liable to pay Aviva’s reasonable legal costs of the Arbitration?

Result:

The Applicant is allowed to withdraw his Application for Arbitration, with the condition of paying the Insurer’s reasonable legal expenses.
The Applicant shall pay the Insurer its legal expenses of $3,992.68, inclusive of disbursements and all applicable taxes.

EVIDENCE AND ANALYSIS:

Authorities Considered

Dispute Resolution Practice Code (“DRPC”) Legal Aid Services Act, 1998, S.O. 1998, C.26 and its Regulation 107/99

Background

The Applicant has brought this Application for Arbitration which contained such disputes as a Non-Earner Benefit, treatment plans and costs of exams, which were noted in the first Pre-Hearing letter, dated August 11, 2016. A second Pre-Hearing was held on February 17, 2017, where Counsel for the Insurer was seeking productions as discussed in the August 2016 Pre-Hearing and relief of some sort because the Insurer had not been able to conduct any Insurer’s Examinations as the Applicant was in China. At both of the Pre-Hearings, the Applicant did not participate, and did not give reasons why he could not participate.

The Pre-Hearing Arbitrator acknowledged the Applicant’s withdrawal of the Special Award being sought and denied any adjournment requests or Technical Hearings based on time constraints. The Pre-Hearing Arbitrator did, however, outline the importance and the consequences of not showing up to the Hearing in-person, in both his Pre-Hearing letter, dated February 17, 2017, and again in his clarification letter, dated March 20, 2017, and made it peremptory on all parties to appear and participate at this Hearing.

The Applicant’s representative brought a verbal Motion to withdrawal this Application for Arbitration, with prejudice. Insurer’s Counsel suggested that they would be bringing a Motion for costs.

Decision

The Applicant’s representative brought her Motion to withdraw this Application for Arbitration, with prejudice. She argued that the Applicant had given her verbal instructions very recently for same, as the Applicant is currently out of the country, now resides in China, and is currently working there.

The Insurer’s Counsel did not object to the withdrawal of the Application FOR Arbitration but did argue that the DRPC allows me to attach conditions to the withdrawal under the Rule 70 and to award costs as contemplated under the Rule 75. The respective Rules read as follows:

Withdrawal

70.1 A party may seek permission to withdraw all or part of a dispute by:

(a) serving a request to withdraw on all parties; and

(b) filing the request to withdraw together with a Statement of Service in Form F; or

(c) making an oral request to withdraw all or part of a dispute during a neutral evaluation, pre-hearing discussion, settlement discussion, preliminary conference or at a hearing.

70.2 An adjudicator may permit a party to withdraw all or part of a dispute where all parties agree.

70.3 Where a party does not agree to the withdrawal, an adjudicator may:

(a) permit the withdrawal on such terms and conditions as he or she considers just;

(b) award expenses to either party as permitted by Rule 75 and following.

(Underlined for emphasis)

Award of expenses

75.1 An adjudicator may award expenses to a party if the adjudicator is satisfied that the award is justified having regard to the criteria set out in Rule 75.2. The items and amounts which may be awarded are found in Rule 78 and the Schedule to the Expense Regulation found in Section F of the Code.

75.2 The adjudicator will consider only the criteria referred to in the Expense Regulation found in Section F of the Code. These criteria are:

(a) each party's degree of success in the outcome of the proceeding;

(b) any written offers to settle made in accordance with Rule 76;

(d) 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;

(e) whether any aspect of the proceeding was improper, vexatious or unnecessary.

(f) whether the insured person refused or failed to submit to an examination as required under section 42 of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996) made under the Act or refused or failed to provide any material required to be provided by subsection 42 (10) of that regulation; and

(g) 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.

The Insurer’s Counsel provided me with a copy of their Bill of Costs and its breakdown which is listed as Exhibit #1. I provided a copy of the Exhibit to the Applicant’s representative for her appraisal of the document, accompanied by a short adjournment of the Hearing to allow for her preparation for same.

The Applicant’s representative did argue and objected that the hourly rate being charged by the firm was excessive as was the total number of hours being charged. I was reminded that the Legal Aid Services Act, 1998 dictates the hourly rates to be assessed by an Arbitrator as per Rule 78 of the DRPC, which reads as follows:

Expenses of representatives

78.1 The maximum amount that may be awarded to an insured person or an insurer for legal fees, is an amount calculated using:

(a) the hourly rates established under the Legal Aid Services Act, 1998 for professional services in civil matters before the Ontario Superior Court of Justice; or

(b) the hourly rate referred to in Rule 78.1(a) adjusted to include, where appropriate, the experience allowance established under the Legal Aid Services Act, 1998

Where an adjudicator is satisfied that a higher amount for legal fees to an insured person is justified, an hourly rate of up to $150 may be awarded.

78.2 The maximum amount that may be awarded to an insured person or an insurer for agent’s fees is an amount calculated using the hourly rates established under the Legal Aid Services Act, 1998 for law clerks, articling students and investigators.

The Insurer’s Counsel suggested that I should award the costs against the Applicant’s representative personally, without any evidence of any outrageous wrongdoing by the representative. Without any evidence presented to this Commission at the time of the Motion, it is my view that this Commission operates on the assumption that the legal representatives operate as per the instructions of their clients, and as such, without any other evidence to the contrary, I must use extreme caution when ordering costs against a legal representative directly. I am unconvinced that such conditions are evident today.

In my view, the Applicant has the right to withdraw an Application for Arbitration at any time; however, the timing of the withdrawal is critical. As the Applicant waited to such a late date to withdraw his Application, it has impacted the Insurer and its costs for preparing for the Hearing.

As such, I am allowing the Applicant to withdraw his Application for Arbitration, with the condition of paying the Insurer’s reasonable legal expenses.

The Insurer’s Counsel asked that I order the Applicant’s representative to provide any and all contact information and/or processes of speaking to the Applicant including how she contacted the Applicant in the last month. I saw no need for this order as the Applicant’s representative agreed to this undertaking during the Hearing.

EXPENSES:

With respect to the legal costs of the Insurer, I agree with the Insurer that reasonable legal costs should be awarded as the Applicant waited until the start of the Hearing to withdraw the Application for Arbitration. To these ends, I note that the s. 24.2 of the Legal Aid Service Act, 1998, Regulation 107/99, allows that senior lawyers are able to receive an added premium for experience which is 25% above the base rate of $109.13 per hour, or $136.41 per hour. I find this is appropriate for the two senior lawyers and the three hours of their combined effort.

I find the bulk of the work was performed by Ms. D’Addese, who is captured by the $109.13 per hour rate.

In considering expenses after listening to the parties, it is my view that it is well-established jurisprudence by FSCO Arbitrators to award expenses based on a 4:1 ratio for preparation and hours spent at the Hearing itself. In this case, this would equate to 28 hours for a 7 hour single day Arbitration for Ms. D’Addese.

In regards to disbursements, I find the requested $529.81, which captures the expenses of a witness who was to be called at the Hearing, to be reasonable.

Therefore, I now find and order that the Applicant shall pay the Insurer its legal expenses of $3,992.68 for the expenses of this Hearing, inclusive of disbursements and all applicable taxes.

April 17, 2017

Charles Matheson Arbitrator

Date

Financial Services Commission of Ontario