Mohamad Sediq v. State Farm Mutual Automobile Insurance Company, 2017 ONFSCDRS 186

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 186

FSCO A15-001936

BETWEEN:

MOHAMAD SEDIQ

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

Before: Caroline King

Heard: Written submissions received by April 24, 2017

Appearances: Mr. Sediq, self-represented Jonathan Schrieder for State Farm Mutual Automobile Insurance Company`

Issues:

The Applicant, Mohamad Sediq, was injured in a motor vehicle accident on December 28, 2012. In a decision dated July 19, 2016, Arbitrator Bayefsky dealt with Mr. Sediq’s claims for statutory accident benefits under the Schedule¹ and dismissed Mr. Sediq’s claims in their entirety. Specifically, the Arbitrator found that Mr. Sediq was not entitled to medical benefits, costs of the assessments, or interest. The issue of expenses was not resolved. State Farm requested an expense hearing to resolve the outstanding issue of expenses.

The issues in this further hearing are:

Is State Farm entitled to its expenses incurred in respect of this arbitration hearing?
What is the amount of expenses to which State Farm is entitled?

Result:

State Farm is entitled to its expenses incurred in respect of this arbitration hearing.
State Farm is entitled to $14,988.86 in expenses.

EVIDENCE AND ANALYSIS:

Background:

The hearing of this application took place on May 31, June 1, and June 2, 2016. The Applicant was represented by Majid Yazdani throughout that hearing process. The arbitrator found that Mr. Sediq’s evidence was wholly lacking in credibility. The Applicant was unsuccessful in all his claims. The arbitrator issued his decision on July 19, 2016 which dismissed the application. No appeal of the decision was filed and the decision remains unchanged.

State Farm requested an expense hearing. On November 3, 2016 I sent the parties a letter to set up the expense hearing process to take place by written submissions. This letter was sent out to the Applicant by courier to the Applicant’s address. This letter was returned by the courier to FSCO on November 17, 2016.² FSCO’s Case Administrator contacted the Applicant by phone and it was confirmed that the Applicant’s address was unchanged. I sent out an additional letter to the Applicant (copy to the Insurer) dated November 18, 2016. Neither party disagreed with conducting the expense hearing by way of written submissions.

Applicant participation:

The Applicant is self-represented for this expense hearing, however, throughout the hearing process, and for more than two months after the decision was issued, the Applicant was represented by licensed paralegal, Majid Yazdani.

On October 19, 2016, FSCO received a letter under the name of the Applicant which stated that Majid Yazdani was no longer representing the Applicant and to please remove Majid Yazdani as the Applicant’s representative. Majid Yazdani was removed from the record as the Applicant’s representative. Since, November 3, 2016, subsequent letters have been sent to and received from the Applicant. On April 7, 2017, the Applicant raised an issue regarding his prior representative, Majid Yazdani, but matters between the Applicant and his representative are not within the scope of my authority to resolve.

I have taken extra steps to provide the Applicant with opportunities to participate in this expense hearing process. For example, the Applicant was initially given until January 4, 2017 to respond to the Insurer’s submissions on expenses. The Applicant did not respond. On my own initiative I wrote to the Applicant again, and provided him with another opportunity to provide his submissions by April 4, 2017. On April 7, 2017, I received brief reply submissions from the Applicant which, while late, were accepted and considered.

Is State Farm entitled to its expenses of the hearing?

An arbitrator has the authority to order one party to pay the other party’s expenses. The only criteria that I can refer to are set out in the Expense Regulation,³ which is set out in the Dispute Resolution Practice Code, Rule75.2. For ease of reference, I have copied the relevant portions of the Expense Regulation here.

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. [My emphasis]

A) The Insurer’s Degree of Success

In this case, the Insurer was successful on all of the issues in the arbitration. The arbitrator found the Applicant’s evidence to be wholly lacking in credibility stating: “…[The Applicant’s] evidence is so fraught with inconsistencies, evasions and denials, that I find his complaints cannot be considered credible”.⁴ The arbitrator found that the Applicant withheld relevant medical information without justification and found in general that “[I]n all of the circumstances, I find [the Applicant’s] evidence to be wholly lacking in credibility, and…that this disentitles him to the benefits claimed”.⁵

B) The Written Offer to Settle

In a written offer to the Applicant dated February 3, 2016, the Insurer offered to settle the Applicant’s claim. The Applicant did not accept the settlement offer.

C) Novel Issues

There were no novel issues in this claim.

D) 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.

Upon reviewing the arbitration file and the arbitration decision, I find that the conduct of both the Applicant and the Applicant’s representative tended to obstruct, hinder, and prolong the hearing process.

The arbitrator found that:

[The Applicant] unreasonably and without justification withheld relevant medical information from his treating practitioners and assessors…at the hearing, [the Applicant] attempted to portray himself as having been significantly more injured in the accident than he was at the time⁶.

The Applicant prolonged, obstructed, and hindered the hearing process, by unreasonably refusing to answer relevant questions and stating that he “didn’t want to answer [the Insurer’s Counsel’s] questions”⁷ and by threatening to leave the hearing room if the Insurer’s counsel asked him any more questions about his life prior to 2012.⁸

The Applicant’s representative obstructed, hindered, and prolonged the proceeding by not complying with undertakings (e.g. regarding the disclosure of the Applicant’s income tax returns, employment records, prescription records); and by withdrawing two issues (income replacement benefits, attendant care benefits) only at the hearing, which necessitated the Insurer needlessly spending time preparing to respond to these issues.

E) Was any aspect of the proceeding was improper, vexatious or unnecessary?

The Applicant’s conduct in the hearing was improper, as discussed above, in that the Applicant evaded and refused to answer relevant and reasonable questions, threatened to leave the hearing room if the Insurer’s counsel continued to ask him certain relevant and reasonable questions. When the Applicant was asked how many accidents he had had before 2012, the Applicant’s response was improper. The arbitrator described it as follows:

…[the Applicant] stated that he had had ‘5-6 accidents before 2012, but that this was ‘not relevant to this case’. [Insurer’s counsel] asked [the Applicant] to clarify how many accidents he had before 2012, and [the Applicant] responded by saying that he had had ‘more than a hundred, maybe none’ and that it was ‘not your business’ ⁹

When I consider the arbitrator’s findings that the Applicant was “completely lacking in credibility”, that the Applicant conducted himself in an inappropriate manner during the hearing, that he was found to have “unreasonably, and without justification withheld relevant medical information from his treating practitioners and assessors,”¹⁰ and, most importantly, that all of the Applicant’s his claims were dismissed, I find that the Applicant unnecessarily proceeded with an unmeritorious claim.

The Applicant has stated that he is not able to pay the Insurer’s Expenses. This issue was also raised in Gayathri and State Farm Mutual Insurance Company¹¹ issued on December 3, 2013, where the arbitrator found that a party’s ability to pay was not something that he should take into account when awarding expenses. As noted above, the only criteria which I have the legal authority to consider are set out in the Expense Regulation. I note that the Applicant was put on notice about the criteria for awarding expenses in the September 18, 2015 pre-hearing letter and the Applicant had time, and legal representation, to consider how to proceed. I also note that the legal fees rate the Insurer is entitled to claim is reduced as the legal rates are set in accordance with legal aid rate. Based on the criteria set out in the Expense Regulation, and in consideration of the circumstances and outcome of this case, I find that the Insurer is entitled to its expenses incurred in respect of this arbitration hearing.

What is the amount of expenses to which State Farm is entitled?

I have reviewed the Insurer’s claim for disbursements and, and accept that the reasonable amount of disbursements required to prepare and respond to the Applicant’s application is $5,388.86. These disbursements and costs are supported by the invoices, and records submitted and therefore the Applicant will be ordered to pay disbursements in the amount of $5,388.86.

I am guided by the often cited FSCO decision in Henri and Allstate Insurance Company of Canada ¹² and have taken a “ballpark” approach in assessing expenses and not a line-by-line assessment.

I disagree with the Insurer’s position that it should be entitled to up to $150.00 per hour for its senior counsel. As found in Almaliah and Dominion of Canada General Insurance Company,¹³ I have no jurisdiction to increase the Insurer’s counsel fee to $150.00.

The Insurer submitted that it was entitled, at a minimum, to $13,442.72 in expenses for legal fees. I find this amount to be excessive. I have considered the length of the 3 day hearing (which includes the additional time required at the hearing due to the improper behaviour and conduct of the Applicant), the time necessary to prepare for the hearing (which included the additional time required due to the Applicant’s lack of providing relevant medical information to practitioners, the Applicant’s production issues). I have also considered the general rule in assessing legal fees is anywhere between one hour of preparation time for each hour of hearing time; up to four hours of preparation time to one hour of hearing time. I have also considered the legal aid rate for law clerks which is substantially less than what the Insurer is claiming for his law clerk. Based on these considerations, for the proper preparation and presentation of its case, the Insurer is entitled to $9,600.00 in legal fees. The Applicant will therefore be required to pay the Insurer $9,600.00 in legal fees.

Pursuant to section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended I hereby order the Applicant, Mr. Mohamad Sediq, to pay State Farm Mutual Automobile Insurance Company arbitration expenses in the amount of $14,988.86. This amount represents $5,388.86 for disbursements plus $9,600.00 in legal fees.

June 28, 2017

Caroline King

Arbitrator

Date