Neutral Citation: 2017 ONFSCDRS 211 FSCO A13-013246

BETWEEN:

CATERINA SERAFINI Applicant

and

SECURITY NATIONAL INSURANCE CO./MONNEX INSURANCE MGMT. INC. Insurer

DECISION ON EXPENSES

Before: Arbitrator Jeff Musson Heard: By written submissions due June 23, 2017

Appearances: Mr. Ben Fortino for Ms. Caterina Serafini Ms. Be Nazeer Damji for Security National Insurance Co./Monnex Insurance Mgmt. Inc.

Issues:

The Applicant, Ms. Caterina Serafini, was injured in a motor vehicle accident on January 14, 2008. She applied for statutory accident benefits from Security National Insurance Co./Monnex Insurance Mgmt. Inc. (“Security National”), payable under the SABS.¹ The parties were unable to resolve their disputes through mediation and Ms. Serafini, 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.

I conducted the Hearing for the issues in dispute on April 12-15, 21-22, 2016 and May 24 and 27, 2016. I issued my written decision with reasons, dismissing the Applicant’s income replacement benefit claim, but approving the Applicant’s claims for medical benefits, catastrophic impairment determination and interest. On the issue of expenses, I ruled that since the parties made no submissions on expenses, if they are unable to agree on the legal expense of this case, an Expense Hearing shall be requested within 30 days of the date of this decision in accordance with Rule 79 of the Dispute Resolution Practice Code (“DRPC”), which the Applicant subsequently requested.

The issue in this Expense Hearing is:

What is the quantum that the Insurer is liable to pay with regards to the Applicant’s expenses in respect of the Arbitration proceeding under section 282(11) of the Insurance Act?

Result:

The Insurer is liable to pay to the Applicant her expenses in respect of the Arbitration proceeding, fixed in the amount of $16,122.84 (inclusive of fees, disbursements and HST).

EVIDENCE AND ANALYSIS:

Introduction

The Applicant is claiming expenses in the total amount of $66,656.94, including HST, comprised of $26,871.40 in fees and $39,785.54 in disbursements. The Insurer submits that both parties should bear their own expenses since it was, in its opinion, a split decision.

Rule 79.1 of the DRPC states that where an Arbitrator has determined all issues in dispute except expenses, and the parties cannot agree on entitlement to or the amount of expenses, either party may request, in writing, an Expense Hearing within 30 days from the date of the decision on all other issues in dispute. My jurisdiction to conduct an Expense Hearing is set out in subsection 282(11) of the Insurance Act.²

In addition, an Arbitrator shall, under Rule 75.2 of the DRPC, consider only the following six 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 made in accordance with Rule 76.
Whether novel issues are raised in the proceeding.
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.
Whether any aspect of the proceeding was improper, vexatious or unnecessary.
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.

Both parties agree that criterion 6 is not applicable.

Entitlement to Expenses

Degree of Success

In her submissions, the Applicant stated that she was 75% successful (3 out of 4 issues) in arguing entitlement to the issues that were in dispute at the Hearing, and in her opinion, there was no ambiguity. The Applicant submits she was successful with the most important issue, that being the catastrophic impairment determination. The Insurer submits that both parties had mixed success, and that the Applicant’s withdrawal of a cost of an examination for a Functional Abilities Evaluation in the amount of $13,686.40 should also be taken into account in determining the degree of success.

Written Offers to Settle

The Applicant states that the provision of the DRPC with respect to written Offers to Settle doesn’t apply in this case, and the Insurer was seeking a full-and-final release in exchange for the money offered. She submits this was an inappropriate requirement because the Applicant was deemed catastrophic and requires future care needs. The Insurer submits it offered the Applicant $75,000.00, all-inclusive, to settle the claim.

Novel Issues Raised in the Proceeding

The Applicant states that there were no novel issues raised at this Hearing, and the Insurer didn’t provide evidence to the contrary.

The Conduct of a Party or Party’s Representative that Tended to Prolong, Obstruct or Hinder the Proceeding, Including a Failure to Comply with Undertakings and Orders

The Applicant states that the Insurer raised a section 55 preliminary issue that was denied, and there was no basis for it, which should be taken into account. The Insurer submits that the Applicant delayed the Hearing by a year in order to add the catastrophic impairment determination as an issue in dispute. In addition, by only withdrawing the $13,686.40 for a Functional Abilities Evaluation at the beginning of the Arbitration, both actions by the Applicant caused an unnecessary increase in legal fees.

Whether any Aspect of the Proceeding was Improper, Vexatious or Unnecessary

Both parties reiterated in their submissions that the preceding paragraph should apply to this criteria.

Conclusion

The objective of this Expense Hearing is to determine an appropriate amount to be awarded from the unsuccessful party to the successful party. Based on the evidence presented and the guidance provided by the DRPC, neither party’s positions are reasonable nor just.

The Applicant was not 100% successful in proving her case; she in fact lost the largest monetary issue, which was income replacement benefits. The Applicant was in her mid-30s at the time the accident occurred. The income replacement benefits that she claimed at this Arbitration were ongoing until she reached age 65. The Applicant’s claim for a catastrophic impairment was limited only to the determination of whether the Applicant’s injuries were considered catastrophic. Therefore, the Applicant must still prove entitlement to ongoing benefits; there is no monetary value automatically associated with this determination. I have taken these facts into account when weighing the parties’ degree of success at the Hearing. It should also be noted that the Applicant withdrew her second largest monetary benefit claim, which was the cost of an assessment (Functional Abilities Evaluation) in the amount of $13,686.40. There were two relatively small medical benefits claimed, to which the evidence showed that the Applicant was entitled.

For all these reasons, I have determined that the Applicant is entitled to her expenses from this Arbitration proceeding; however, in applying the principle of fairness, the amount that the Applicant is claiming in terms of expenses will be reduced.

Assessment of Expenses

This was not an overly complex case, but at the same time, it was not a simple case either due to differences of opinions between the parties’ experts. This case ultimately turned heavily upon the credibility of the expert witnesses and the presence or lack of corroborating evidence. The onus was always on the Applicant to prove her entitlement to benefits and designations. The Applicant submitted a lengthy fee breakdown of expenses related to the Hearing. There were three lawyers who worked a combined 158.6 hours, for a total cost of $26,871.40, including HST. Considering the parties’ degrees of success, the Insurer questions the reasonableness of these fees. I agree and find them excessive. In my opinion, the Applicant is entitled to 3/5 of her legal costs because she was only successful in being awarded three benefits, with the other two benefits either being denied or withdrawn. Therefore, I am fixing the Applicant’s costs at $14,268.00 plus HST, for a total of $16,122.84.

Disbursements Claimed for the Arbitration Hearing

The Applicant submitted a lengthy list of disbursements.

I am reducing some of the disbursement expenses as presented by the Applicant. There were many disbursements that were claimed that either are not allowed under the Expense Regulation or that should have been claimed as denied benefits. The Insurer also already reimbursed the Applicant for $6,170.75 in disbursements prior to this Expense Hearing.

Dr. Kaplan’s CAT Report and CAT Re-Assessment will not be included in the disbursements because they should have been claimed as issues in dispute. Dr. Levitt’s preparation fee and costs will be reduced to $1,380.00 (the amount allowed in the Expense Regulation) from the $13,983.75 claimed. Interest costs on Dr. Kaplan’s reports and the Mediation fee will not be payable. In calculating the remaining amounts allowable as disbursements, it is less than the amount already paid by the Insurer—therefore, there are no further disbursements owing.

EXPENSES:

After considering the complexity of this Arbitration Hearing, written submissions of the parties, the supporting documentation filed, and applying the principle of fairness as guidance, I find it appropriate to fix the Applicant’s expenses at $16,122.84 for fees, including HST, and $0.00 for disbursements.

July 31, 2017

Jeff Musson Arbitrator

Date

Financial Services Commission of Ontario