Financial Services Commission of Ontario

Neutral Citation: 2017 ONFSCDRS 163 FSCO A14-009799

BETWEEN:

PIRASHANTHINI SHANMUGANATHAN Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: M. J. Winer, Q.C.

Heard: In person at ADR Chambers on May 15, 2017 and by written submissions completed May 19, 2017

Appearances: Mr. David S. Wilson for Ms. Pirashanthini Shanmuganathan Mr. Michael P. Taylor for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Ms. Pirashanthini Shanmuganathan, was injured in a motor vehicle accident on January 10, 2009 and sought accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and the Applicant, through her 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 Expense Hearing are:

1. Is either party entitled to their expenses and, if so, in what amount?
2. Should costs of this Expense Hearing be awarded and, if so, at what amount?

Result:

1. The Applicant is entitled to its expenses in the amount of $29,589.48, inclusive of HST.
2. The Applicant is entitled to costs of this Expense Hearing of $209.50, inclusive of HST.

EVIDENCE AND ANALYSIS:

The Arbitration took place and the Reasons for Decision and Order were delivered October 17, 2016. I made the following Order:²

1. The Applicant is entitled to payment of $2,002.96 for a rehabilitation services plan, dated May 26, 2014.
2. The Applicant is entitled to payment of $6,594.75 for an occupational therapy services plan, dated August 18, 2014.
3. The Applicant is entitled to payment of $7,152.36 for a rehabilitation support worker services plan, dated November 19, 2014.
4. The Applicant is entitled to payment of $2,294.54 for a psychological services plan, dated October 6, 2014.
5. The Applicant is entitled to payment of $1,619.05 for a services plan, dated May 25, 2015.
6. The Applicant is entitled to payment of $1,557.29 for a rehabilitation services plan, dated January 22, 2016.
7. State Farm is not liable to pay a special award because it unreasonably withheld or delayed payments to the Applicant.
8. The Applicant is entitled to interest on overdue benefits found to be due herein.
9. If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

The Applicant’s Bill of Costs was for $16,983.90, including HST, for fees, plus $12,605.58, including HST, for disbursements, making a total of $29,589.48.

The parties were unable to agree on only three items in the disbursements section of Applicant’s Bill of Costs, and as a result, this Hearing was arranged. The three items totalling $4,000.00 are:

• Dr. J Wong report, April 3, 2013, for $1,300.00;
• Dr. J Wong report, March 3, 2014, for $1,500.00; and
• Mr. Atila Balaban, report April 30, 2013, for $1,200.00.

They agreed on the quantum of these items but joined issue on whether these were allowable disbursements under Section F of the Expense Regulation.

Sections 4 and 5 of the Expense Regulation are as follows:³

4. The amounts of the following disbursements made by or on behalf of the insured person or the insurer may be awarded:

5. For long distance telephone, facsimile and other telecommunication charges.

6. For typing, printing and reproducing copies of documents.

7. For the delivery, by mail or courier, of items relating to the arbitration, appeal, variation or revocation hearing.

8. For other out-of-pocket expenses incurred in furtherance of the arbitration, appeal, variation or revocation hearing. (Emphasis added).

9. Any applicable taxes paid in respect of the expenses referred to in this section.

11. The amount of the following witness fees paid by or on behalf of the insured person or the insurer may be awarded:

12. For the attendance of witnesses, in accordance with subsection (2).

13. For the attendance of an expert witness who gives opinion evidence at the arbitration or hearing or whose attendance is necessary, in accordance with subsection (3).

14. For a report prepared by an expert, provided to the other parties to the arbitration or hearing and necessary for the conduct of the arbitration or hearing, in accordance with subsection (4). (Emphasis added).

15. The maximum amount that may be awarded for the attendance of a witness is the amount of the attendance allowance for the witness that may be allowed under Rule 58.05 of the rules of court as a disbursement.

16. The maximum amount that may be awarded for the attendance of an expert witness is $200 per hour of attendance, up to a maximum of $1,600 per day.

17. The amount of the expenses paid by or on behalf of the insured person or the insurer to an expert witness for preparation for a hearing at which the witness testifies may be awarded, to a maximum of $500.

18. The amount of the expenses paid by or on behalf of the insured person or the insurer to an expert for the preparation of a report may be awarded, to a maximum of $1,500. (Emphasis added).

19. Despite subsection (5), the maximum amount that may be awarded in respect of expenses paid by or on behalf of the insured person or the insurer to a member of a designated body within the meaning of the Public Accounting Act, 2004 for the preparation of a report in connection with a claim for income replacement benefits is $2,500.

The Expense Regulation is enacted pursuant to Section 228(11) of the Insurance Act, Part VI, which states as follows:⁴

(11) Expenses. The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.

The parties argued orally whether the 3 reports were “in furtherance of the arbitration”, under Section 4.4. The Applicant’s position was that these reports were, while the Insurer denied that the reports were “in furtherance of the arbitration”. Upon reviewing the Sections, I requested written submissions regarding the applicability of Section 5 to this Expense Hearing.

The Applicant’s counsel takes the position that Section 5 only deals with amounts which in this case are not in dispute, and therefore, Section 5 has no bearing. He maintains that Section 4.4 applies and these 3 reports are “in furtherance of the arbitration”. The word “furtherance” has been defined as “helping forward, advancement, [or] aid”.⁵ He submitted that the reports were relevant to my Decision, and as such, they are “in furtherance of the arbitration”. I disagree with Applicant’s counsel when he says that Section 5 solely deals with amounts properly payable. Section 5 speaks of a report being “necessary for the conduct of the arbitration”. Also, subsections 3, 4, and 5 of Section 5 make use of the phrase “up to a maximum…”. The section speaks of an “amount … [that] may be awarded.” It deals with the question whether the items therein can be allowed as an expense.

Insurer’s counsel states that under Sections 5.1.1 and 5.3, the costs of these reports are payable if I find that they are “necessary for the conduct of the arbitration or hearing.” He says that this phrase and the phrase, “incurred in furtherance of the arbitration” found in Section 4.4 are equivalent. He refers to Personal Insurance Company of Canada and Thevaranjan, an Appeal Decision of Delegate Evans, as authority for the equivalence of the two phrases.⁶ Not quite. The Delegate decided that whatever test one uses, the report in question satisfied neither of them.

In my view, Section 4 allows for disbursements which facilitate the Hearing such as mail, courier, typing, printing, copying, HST, telephone, and fax. Section 4.4 is the catch all for “other out of pocket expenses incurred in furtherance of the arbitration”, such as interpreters’ fees, Quick Law research, costs for hospital records, clinical notes, health clinic, and employee records.

I believe Section 5 is preferable in this situation. Sections 5.1.3 and 5.5 are the operative provisions to apply to determine whether expert reports are to be allowed as expenses in an Arbitration Hearing under the Schedule. The section is direct and specific to experts, witnesses, expert reports, and evidence of experts. I believe that the 3 reports were “necessary for the conduct of the arbitration”. The word “necessary” has been defined as “useful; probative of an issue.”⁷ All of the reports, these among them, as I stated in my Reasons, “supplied proof of the continuity and consistency of symptoms of pain, depression and disability over the years.” The Insurer’s medical evidence tended to indicate that the Applicant was back to normal in 2010.

Mr. Balaban, an Exercise Physiologist, who did not give oral evidence, concluded that the Applicant could not perform the majority of household tasks or sedentary work on a sustained basis. Dr. Wong testified in support of the rehabilitation plans, a personal support worker, and psychotherapy. He diagnosed Chronic Pain Syndrome, a condition that the Insurer’s experts failed to address. Both experts supplied other reports over the years. Dr. Wong⁸ authored reports in 2010, 2011, 2013, 2014, and 2016. Mr. Balaban prepared reports in 2011, 2012, and 2013. The failure to file these three relevant reports would have damaged the narrative of the continuity of the symptoms of disability.

I conclude that costs of the 3 reports are allowable items under Sections 5.1.3 and 5.5 of the Expense Regulation.

Costs of this Hearing

The Applicant has succeeded, even though the expenses were allowed under Section 5 and not under Section 4, and therefore, I assess costs of this Expense Hearing at the Legal Aid rate for 1 hour, or $150.00 plus HST, in favour of the Applicant.

EXPENSES:

The Applicant is entitled to its expenses in the amount of $29,589.48, inclusive of HST and to costs of this Expense Hearing of $209.50, inclusive of HST.

June 12, 2017

M. J. Winer, Q.C. Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2017 ONFSCDRS 163 FSCO A14-009799

BETWEEN:

PIRASHANTHINI SHANMUGANATHAN Applicant

and

STATE FARM MUTUAL AUTOMOBILE 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 Regulation 664, as amended, it is ordered:

1. The Applicant is entitled to its expenses in the amount of $29,589.48, inclusive of HST.
2. The Applicant is entitled to costs of this Expense Hearing of $209.50, inclusive of HST.

June 12, 2017

M. J. Winer, Q.C. Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Shanmuganathan and State Farm Mutual Automobile Insurance Company, FSCO A14-009799.
3. 3Schedule to Reg. 664, R.R.O. 1990, made under the Insurance Act, subsection 282(11) as amended.
4. 4R.S.O. 1990 c. I.8.
5. 5Pocket Dictionary of Canadian Law 5th, ed., Dukelow.
6. 6FSCO Appeal P11-00016, June 8, 2012.
7. 7Pocket Dictionary of Canadian Law, 5th ed., Dukelow.
8. 8Ex. 4 - Medical Brief of the Insured.