Yu Ting Zhang v. TTC Insurance Company Limited, 2017 ONFSCDRS 207

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 207

FSCO A15-007159

BETWEEN:

YU TING ZHANG

Applicant

and

TTC INSURANCE COMPANY LIMITED

Insurer

DECISION ON EXPENSES

Before:

Arbitrator Deborah C. Anschell

Heard:

By written submissions due May 12, and 26, 2017

Appearances:

Mr. Pavlos Achlioptas for Mr. Yu Ting Zhang

Ms. Tamara Broder for TTC Insurance Company Limited

Issues:

The Applicant, Mr. Yu Ting Zhang, was injured in a motor vehicle accident on January 7, 2013 and sought accident benefits from TTC Insurance Company Limited (“TTC Insurance”) payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and the Applicant, 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.

With the exception of the entitlement to expenses, the issues in dispute were resolved immediately prior to the scheduled Arbitration.

The issue in this Expense Hearing is:

What reasonable expenses flow from the settlement of this matter?

Result:

Neither party is entitled to its expenses.

EVIDENCE AND ANALYSIS:

Under subsection 282(11) of the Insurance Act (as reiterated in Rule 75.2 of the Dispute Resolution Practice Code (“DRPC”)), an Arbitrator shall consider only the following criteria for the purposes of awarding all or part of the expenses incurred in respect of an Arbitration proceeding:

Each party’s degree of success in the outcome of the proceeding;
Any written Offers to Settle;
Whether novel issues are raised;
The conduct of a party or the party’s representative;
Whether any aspect of the proceeding was improper, vexatious or unnecessary.

Both parties provided detailed written submissions with respect to the issue of expenses. Mr. Achlioptas is seeking a total amount of $12,532.83, inclusive of HST and disbursements, in accordance with his Bill of Costs.

Mr. Achlioptas submitted that the outcome of this proceeding was mixed. He submitted that Mr. Zhang had to seek resolution of various issues in dispute through this proceeding and that he was partly successful.

With respect to written Offers to Settle, TTC Insurance made a written offer on November 22, 2016 to settle Mr. Zhang’s claim on a full and final basis for $2,350.00, all-inclusive. Mr. Achlioptas submitted that Mr. Zhang was far more successful on the issues in dispute compared to TTC Insurance’s written Offer to Settle on a full and final basis.

Mr. Achlioptas submitted that certain issues in this matter were novel. In particular, Mr. Zhang was seeking reimbursement for the attendant care service provider’s unpaid parking expense and airline ticket. The novel issue was whether this constituted an economic loss for the purposes of Attendant Care Benefits. Further, the issue of whether the approved but unpaid Medical Benefits of $1,069.68 were payable by TTC Insurance was a novel issue.

Mr. Achlioptas submitted that TTC Insurance failed to comply with the Pre-Hearing Order that the parties submit a joint brief of documents. TTC Insurance also filed motion materials seeking to exclude some of Mr. Zhang’s documents that had previously been disclosed to TTC Insurance. TTC Insurance was not forthcoming with accurate information with respect to what Medical Benefits had been paid. This caused Mr. Zhang additional and unwarranted preparation expenses.

TTC Insurance made several attempts to seek security for costs in this proceeding that were ultimately abandoned. Further, counsel for TTC Insurance acted on both Mr. Zhang’s Accident Benefits matter and his Tort matter arising from the same accident, without Mr. Zhang’s consent. Mr. Achlioptas submitted that this was improper.

Mr. Achlioptas submitted that the hourly rate for legal fees is governed by the maximums as prescribed by Rule 78 of the DRPC. Rule 78.1 reads as follows:

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.

Ms. Broder submitted that only two of the criteria are relevant to the issue of expenses in this matter: 1) the conduct of a party or a party’s representative that tended to prolong, obstruct or hinder the proceedings, including a failure to comply with undertakings and orders; and 2) whether any aspect of the proceeding was improper, vexatious or unnecessary.

Ms. Broder acknowledged that since the matter did not proceed to a Hearing, there can be no assessment of the degree of success in the strict sense. However, she submitted that TTC Insurance achieved a significant degree of success in the outcome of this proceeding, with Mr. Zhang withdrawing 12 issues the day before the start of the Hearing, reducing the amount claimed from approximately $102,505.14 to $5,698.71. Ms. Broder submitted that the proceeding did not raise any novel issues. Further, neither party made any written Offers to Settle in accordance with Rule 76 of the DRPC.

Ms. Broder is seeking costs in the amount of $17,220.24 that is broken down as follows:

$7,980.70 for fees
$1,036.49 for HST on fees
$8,202.05 for Disbursements

Ms. Broder submitted that there was no justification for Mr. Zhang’s decision to wait until the day before the commencement of the Hearing to withdraw such a significant number of issues. Ms. Broder argued that Mr. Zhang could have withdrawn his non-earner and attendant care claims at any stage of this proceeding. However, he chose not to do so until the eve of the Hearing.

Ms. Broder argued that the balance of the issues ultimately withdrawn were from the outset improper, vexatious and unnecessary. Ms. Broder submitted that Mr. Zhang could have withdrawn all of the issues he withdrew on May 1, 2017 at any stage of the proceeding. Instead, he continued to advance claims for which there was no coverage, claims that were vexatious and misleading, and claims for which there was no support in the medical evidence or in his own daily activities.

In reply, Mr. Achlioptas argued that there was evidence in the Disability Certificate, dated September 3, 2015, stating that Mr. Zhang suffered a complete inability to carry on a normal life. Therefore, it was not improper, vexatious or unnecessary for Mr. Zhang to have pursued a claim for Non-Earner Benefits in these circumstances.

Further, Mr. Achlioptas argued that the issue of attendant care was complex as it was intertwined with the various visitor expenses being claimed in terms of proof of economic loss. It was TTC Insurance’s refusal to pay both the Attendant Care Benefits submitted and the visitor expenses that prolonged this proceeding.

Mr. Achlioptas also pointed out that a Hearing on the merits did not take place. As such, there is no evidence that Mr. Zhang’s pursuit of Non-Earner Benefits or Attendant Care Benefits prolonged, obstructed or hindered the proceeding. There is no evidence that Mr. Zhang’s pursuit of Non-Earner Benefits or Attendant Care Benefits was improper, vexatious or unnecessary. He argued that Mr. Zhang’s mere pursuit of a benefit should not attract costs consequences in these circumstances – especially in light of the mixed outcome of the proceeding.

I agree with Ms. Broder that where the matter did not proceed to a Hearing, it is difficult to assess the degree of success of either party. As noted in Ni and State Farm:² “At best, I can say that both parties derived some degree of success in the outcome of the proceedings.”³ It is clear that most of the issues in dispute were withdrawn on April 28, 2017 and on May 1, 2017. After May 1, 2017, three issues remained:

Rent expense of $5,489.86
Parking expense of $208.85
Medical benefits from Inner Balance of $1,069.69.

Two significant issues were withdrawn before the Hearing was scheduled to commence i.e. Non-Earner Benefits and Attendant Care Benefits. Given that these two large issues were withdrawn on the eve of the Hearing, I cannot find that Mr. Zhang succeeded to any great extent. However, Mr. Zhang did recover a settlement with respect to the three outstanding issues, thus it was not a total victory for TTC Insurance. The result was mixed, and I am directing both parties to bear responsibility for their own expenses.

I am not satisfied that Mr. Zhang’s pursuit of Non-Earner Benefits and Attendant Care Benefits was improper, vexatious or unnecessary. It is impossible for me to make this finding in hindsight, and without the benefit of the Hearing. Furthermore, I do not find that the conduct of either representative prolonged or hindered this matter. But for the settlement, the matter would have proceeded to a Hearing on the date originally scheduled - May 2, 2017. Finally, I do not find that the issues raised are novel.

EXPENSES:

No expenses are payable to the Applicant or to the Insurer.

July 24, 2017

Deborah C. Anschell

Arbitrator

Date