Quoc Nguyen v. TD Home and Auto Insurance Company, 2017 ONFSCDRS 198

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2017 ONFSCDRS 198

Appeal P16-00007

OFFICE OF THE DIRECTOR OF ARBITRATIONS

QUOC NGUYEN Appellant

and

TD HOME AND AUTO INSURANCE COMPANY Respondent

BEFORE: David Evans

REPRESENTATIVES: Peter B. Cozzi for Mr. Quoc Nguyen Daniel Siu for TD Home and Auto Insurance Company

HEARING DATE: July 7, 2017

APPEAL ORDER

Under section 283 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, R.R.O. 1990, as amended, it is ordered that:

1. Mr. Quoc Nguyen shall pay TD Home and Auto Insurance Company its legal expenses of the appeal proceedings herein, fixed in the amount of $4,000, inclusive of disbursements, HST, and the preparation for this expense hearing.

July 12, 2017

David Evans Director’s Delegate

Date

REASONS FOR DECISION

I. BACKGROUND AND ANALYSIS

In an appeal decision dated February 9, 2017, I upheld Arbitrator Mervin’s order of December 14, 2015, in which the Arbitrator found that Mr. Nguyen was not catastrophically impaired and was not entitled to any of the benefits he claimed.

TD Home and Auto Insurance Company now seeks its legal appeal expenses.

On a preliminary note, Mr. Nguyen raises a jurisdictional issue that expenses are a matter of procedure, so they should now be governed by the rules of the Licence Appeals Tribunal. Subsection 280(6) of the current Insurance Act provides that regulations may provide for and govern costs under the provisions of the SABS–1996.¹ He submits that the Licence Appeal Tribunal Rules of Practice dated May 1, 2014, provide that costs may only be awarded for claims which are unreasonable, frivolous, or vexatious or for bad faith behaviour, none of which apply here. He submits that in Somers v. Fournier, 2002 CanLII 45001 (ON CA), the Court of Appeal held that an award of costs is a matter of procedural law and is not properly part of the “lis” or suit, action, controversy or dispute between the litigants. He submits that procedural regulations apply retrospectively, so the LAT rules apply to this proceeding.

However, the Act, regulations and Rules that were in force before the transition date of April 1, 2016, continue to apply to this proceeding. This is set out in the Act and the related Regulation 664, R.R.O. 1990.

Section 283 of the Act deals with transitional matters. It provides that regulations may be made governing transitional matters about disputes about statutory accident benefits that arose before the transition date of April 1, 2016.

The relevant regulation is R. 664. Under Transition, it provides in s. 20(1) that the Office of the Director of Arbitrations (and hence the Director’s Delegates) and Arbitrators appointed under section 8 of the pre-transition date Act are continued after the transition date. Subsection 20(3) provides that their powers continue as well.

With respect to existing arbitrations and appeals, subsections 21(1) and (2) provide that an arbitration under section 282 or an appeal under s. 283 of the pre-transition date Act that was commenced but not completed before the transition date is continued after that date.

This appeal was commenced before the transition date, so it is continued under s. 21(1).

Most relevant to this alleged jurisdictional issue is s. 21(3):

21(3) The following apply, with necessary modifications, and with the modifications specified in subsections (4) and (5) [extending mediation], with respect to proceedings continued under subsection (1):

1. The pre-transition date Act.

2. The regulations under the pre-transition date Act.

3. The rules under section 21 of the pre-transition date Act.

The pre-transition date Act provided for expenses of arbitrations and appeals. The pre-transition date regulations included the Expense Regulation. Section 21 of the pre-transition date Act provided for the Rules set out in the Dispute Resolution Practice Code. These rules include the provisions for expenses. Pursuant to s. 21(3), all those provisions regarding expenses continue to apply to continued arbitrations and appeals.

I will add that s. 22 provides that appeals may be commenced after the transition date for completed or continued arbitrations that fit within s. 21, and s. 22(3) provides that s. 21(3) – that provides for the continued application of the Act, the Regulations, and the Code – applies to such appeals as well.

Mr. Nguyen submits that, regardless, an award of expenses is a separate hearing, as it deals with costs consequences, so Somers should still apply.

However, our process deals with issues. That is the mandate under the pre-transition Act s. 282(3): “The arbitrator shall determine all issues in dispute, whether the issues are raised by the insured person or the insurer.” Virtually all pre-hearing letters list expenses as one of these issues to be determined at the arbitration hearing. Furthermore, the Code show that expenses should normally be determined at the hearing itself. Thus, Rule 77 provides that, if there are no offers to settle to be “considered by the adjudicator in connection with an award of expenses, the parties will jointly inform the adjudicator of that fact at the conclusion of the hearing; and the adjudicator will make an award of expenses as part of his or her order on the substantive issues in dispute.” The expense determination is thus not necessarily a separate hearing. Pursuant to R. 79.1, a separate hearing for expenses is necessary only “Where an adjudicator has issued an order determining all issues in dispute except expenses” [Italics added] and the parties cannot agree about expenses, a request can be made “within 30 days from the date the decision on all other issues in dispute was issued.” But even there, expenses are still seen as part of all the issues in dispute. As such, their determination is not a separate process.

Accordingly, I find that the Expense Regulation and the Code provisions regarding expenses apply to continued arbitrations and appeals, like this appeal.

Turning to the appeal expenses in this case, TD claims a total of $18,422.56 inclusive of disbursements and HST.

There is no dispute that TD was completely successful in its defense of the appeal. It is therefore entitled to its legal expenses.

However, the amounts claimed far exceed the average amounts awarded to insurers on appeal. A review of such expense awards was set out in Bains and RBC General Insurance Company, (FSCO P09-00005, September 8, 2010). The average was around $2,800 for successful insurers. Although the case is an older one now, it still continues to be a benchmark: see for instance Randhawa and State Farm Mutual Automobile Insurance Company, (FSCO P15-00064, April 21, 2017).

While there was much to review by TD, and there is not necessarily a correlation between the length of time of an appeal hearing and the amount of preparation needed for it, I find that the claim is excessive. I am prepared to allow a bit more than the average, so I find that Mr. Nguyen shall pay TD Home and Auto $4,000 in appeal legal expenses, inclusive of disbursements, HST, and preparation for this appeal expense hearing.

July 12, 2017

David Evans Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.