Financial Services Commission of Ontario

Neutral Citation: 2017 ONFSCDRS 237 FSCO A16-001803

BETWEEN:

IAN GOLDEN Applicant

and

AVIVA CANADA INC. Insurer

DECISION ON EXPENSES

Before: Arbitrator Morris J. Winer Q.C.

Heard: By written submissions completed on August 8, 2017

Appearances: Mr. Ian Golden Mrs. Margaret Gratsias, Lawyer and Mr. Kwaku Bona, Licensed Paralegal, participated for the Applicant Mrs. Danielle Wilkinson, Lawyer and Mrs. Kim Tye, Lawyer, participated for the Insurer Ms. Pamela Duca, on behalf of Aviva Canada Inc

Issues:

The Applicant, Mr. Ian Golden, was injured in a motor vehicle accident on November 16, 2013, and sought accident benefits from Aviva Canada Inc. (“Aviva”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Golden, 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.

The issues in this Expense Hearing are:

1. Is the Applicant permitted to withdraw from this Application?
2. If so, is the Insurer entitled to its expenses of this Application, and for what amount?

Result:

1. The Applicant is permitted to withdraw from this Application.
2. The Insurer is entitled to its expenses of this Application, in the amount of $6,000.00 inclusive of fees, fees of this hearing, disbursements, and taxes.

EVIDENCE AND ANALYSIS

The Insurer claims expenses as follows:²

Fees: Danielle Wilkinson, (Civil Tier 2), 37 hours @ $135.06 = $4,997.20 Kimberly Tye, (Civil Tier 2), 6.5 hours @ $135.06 =$877.89 Hughes Amys, Flat Fee $6,146.26 (HST Included) HST on Fees from Wilkinson and Tye = $763.76 Total Fees = $12,785.11

Disbursements (including HST): Preparation by Dr. Lexier $500.00 Late cancellation fee of Dr. Lexier $847.50 Cancellation fee of Dr. Ratti $750.00 Total $2,097.50 HST $272.68 Total = $2,370.17

Total Fees and Disbursements including taxes = $15,155.28

The Hearing was commenced before me on July 19-21, 2017. After I had sworn the Reporter and opened the Hearing, a five-minute adjournment was requested by the Applicant. The Applicant purported to withdraw from the Arbitration. The Insurer was ready to proceed with expert witnesses available. The Insurer agreed to the withdrawal, but demanded its costs. Insurer’s Counsel did not wish to specify the quantum of costs at that time, because she did not have the accounts for the cancellation fees of the experts. I then ordered this Expense Hearing by written submissions which were completed August 8, 2017.

The only outstanding benefit issue for this Hearing was the Non-Earner Benefit (“NEB”). The Application for Arbitration was defended initially by the firm of Hughes Amys from April 2016 to February 2017 through file review, opinion, Response and pre-arbitration, on a monthly flat fee basis totalling $6,146.26. The defence was then transferred to the present in-house lawyers.³

The Insurer made twelve production requests, in particular, for the Applicant’s Ontario Works file which is claimed to be relevant to the NEB claim. The productions were provided in June 2017. Also, the Applicant produced a medical report, dated December 2016, in June 2017 outlining chronic pain. This resulted in the Insurer being late in producing a rebuttal report dated July 4, 2017. The Applicant on July 17, 2017 informed the Insurer that he would raise a Preliminary Issue to exclude all documents that the Insurer relied upon on the basis that the actual brief had not been provided prior to 30 days of the Hearing, even though the Brief Index was provided prior to the 30 days. The Insurer in fact had supplied the documents before the 30 day requirement. The Pre-Hearing report stated that the draft index (emphasis added) of the brief should be prepared prior to the 30 days. It also provided that the brief (prepared solely by the Insurer), was to be a Joint Brief. The Insurer relies upon these facts to indicate unnecessary delay and vexatious activities by the Applicant.⁴

The Insurer would not consent to a withdrawal without costs. Ms. Wilkinson wrote:

I do not have instructions from my client on a Withdrawal without costs at this point; however, once I incur costs of meeting with my experts I will not likely be able to make a recommendation to that effect.⁵

The Applicant has taken the position that the parties should bear their own costs or at the most the Insurer should be awarded $2,000.00. He provided a number of written and oral offers going back and forth, which are not germane here. He doesn’t specify why he is mentioning the offers. The Applicant says that the switch of lawyers and the flat fees claim increased the costs. He also objects, on the grounds of cost effectiveness, to the fact that he decided to proceed with documentary evidence rather than live witnesses, while the Insurer would not do likewise. He claimed the cancellation fees of the experts are excessive and unnecessary because documentary evidence would have been sufficient.

The Insurer Counsel commented in an email dated June 21, 2017 as follows:

If Mr. Golden is successful in arbitration, Ontario Works is going to seek reimbursement for the NEB payments resulting in a net $0.00 benefit… What is your intention with this hearing in light of the $nil benefit?

Analysis:

Whether the nil benefit comment is correct or not, I believe it is unnecessary, and it detracts from a consideration of merits of the NEB claim and the reasonable resolution of same. Also the Insurer was invited to a non-mandatory settlement conference by an experienced mediator of ADR Chambers and did not see fit to attend. The tenor of the Schedule is to obtain early resolution of claims with Arbitration as a last resort. I believe that the comment and the non-attendance were hindrances to the proceeding. The Applicant, on the other hand, hindered the proceeding by his delay in satisfying productions, and in particular the delay in producing the Ontario Works file. He also prolonged the Hearing with a meritless Preliminary Issue, regarding the late service of the Joint Brief which he failed to contribute to, and even though he actually had received the Joint Brief Index on time as ordered in the Pre-Hearing letter. He had received the documents that went in to the Joint Brief prior to the 30 day period before the Hearing.

The Applicant contends that the refusal of the Insurer to engage in a settlement conference arranged by ADR Chambers prevented the likelihood of settlement of the proceeding. Finally, the Applicant alleges that the Insurer exhibited bad faith negotiating tactics by refusing to offer a reasonable settlement because it claimed, the Applicant being on the Ontario Works Program, would end up with a zero sum, as the Ontario Works Program would have to be reimbursed for its payments to the Applicant.⁶

The Applicant relies upon Bortolussi and Security National,⁷ a decision which involved an issue of an offer to settle under the Dispute Resolution Practice Code (“DRPC”). Was the money offer in exchange for a full and final release more favourable than the Applicant withdrawing from the proceeding, a month or so before the hearing, without financial recovery, because the acceptance of a full and final settlement would preclude any possible future claims that the Applicant would or could pursue? The Arbitrator held that the parties in this “unusual” case should bear their own expenses. The facts and issues in the Bortolussi case are unique, and do not apply to this case.

The Applicant also relies upon the case of Jarabat and State Farm, a Motion decided by Arbitrator Shapiro.⁸ The Applicant requested a withdrawal without costs and filed submissions on costs. The Insurer demanded its costs. Arbitrator Shapiro granted the Motion but with terms, and the terms were that State Farm was entitled to expenses. This case supports the Insurer’s position in this case.

Section 282(11) of the Insurance Act provides:⁹

Expenses

(11) 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 criteria for awarding expenses are found in the following excerpt from Regulation 664, R.R.O. 1990, made under the Insurance Act, as amended:

13. The expenses set out in the Schedule are prescribed for the purpose of subsection 282(11) of the Act.

14. An arbitrator shall, under subsection 282(11) of the Act, consider only the following criteria for the purposes of awarding all or part of the expenses incurred in respect of an arbitration proceeding:

    1. Each party's degree of success in the outcome of the proceeding.
    2. Any written offers to settle made in accordance with subsection (3).
    3. Whether novel issues are raised in the proceeding.
    4. 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.
    5. Whether any aspect of the proceeding was improper, vexatious or unnecessary.

15. Upon the request of the Insurer or the insured person, the arbitrator shall, for the purposes of awarding expenses, take into account all written offers to settle, if any,

16. If the arbitrator is requested to take into account a written offer under subsection (3), the arbitrator shall have regard to the terms of the offer, the timing of the offer, the response to the offer and the result of the proceeding.

SCHEDULE

DISPUTE RESOLUTION EXPENSES

(Subsection 282 (11) of the Act)

3 (1) The legal fees payable by the insured person or the Insurer for the following matters may be awarded:

1. For all services performed before an arbitration, appeal, variation or revocation hearing.
2. For the preparation for an arbitration, appeal, variation or revocation hearing.
3. For attendance at an arbitration, appeal, variation or revocation hearing.
4. For services subsequent to an arbitration, appeal, variation or revocation hearing.

(2) The number of hours for which legal fees may be awarded shall be determined by the arbitrator, having regard to the criteria set out in subsection 12 (2) of this Regulation. (3) The maximum amount that may be awarded for legal fees is the amount calculated using the hourly rates set out in the Dispute Resolution Practice Code published by the Ontario Insurance Commission or Financial Services Commission of Ontario, as it may be amended from time to time. …

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

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

7. 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.

8. 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.

9. 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.

In the case of Bortolussi and Security National,¹⁰ a useful guide to the general principles Arbitrators should consider when deciding Expense Hearings is adopted as follows:

Henri and Allstate …provided guidance to the general principles arbitrators should consider when deciding these cases…

• the overriding consideration in fixing arbitration expenses is reasonableness.
• a line-by-line assessment… is not appropriate.
• Rather the arbitrator should make a global assessment of reasonable expenses.

Additionally…SABS are consumer-oriented legislation, designed so that access to justice is available to the public without fear of exorbitant costs….

The indication in the authorities and the legislation is to award a modest allowance for expenses.

The DRPC provides, in relevant part:

70.2 An adjudicator may permit a party to withdraw all or part of a dispute where all parties agree.

70.3 Where a party does not agree …an adjudicator may:

(a) permit the withdrawal on such terms and conditions as he or she considers just,

(b) award expenses to either party….

Applying the legislation, the authorities, and having considered the facts and the submissions of counsel, I have concluded that the Insurer is entitled to costs and expenses. I would have awarded a bit more but for the comments above regarding the “$nil benefit” and the refusal to participate in a settlement conference. On the other hand, the meritless preliminary objection tended to increase the costs a bit more. The missteps cancel each other out. The Applicant doesn’t have the right to dictate how the Insurer should present its case or what lawyers it uses.

The Insurer agreed to the withdrawal by the Applicant, but only subject to the payment of costs by the Applicant. The Insurer was successful in getting the claim withdrawn and as such didn’t have to pay the claim, and in accordance with s. 12.2.1 of the Expense Regulation and Rule 70.3 (a) and (b) of the DRPC, is entitled to reasonable costs and expenses.

This proceeding was not arbitrated and so I have nothing to measure the offers against regarding s. 12.3. of the Regulation. I do not see the offers whether written or oral as a factor in this case.

I believe that the hours claimed for fees are excessive, having regard for the requirement to obtain the most just, quickest and least expensive result. There isn’t much detail in the monthly flat fee invoices from the Hughes Amys firm although I note that the Response filed was quite detailed. I do not think co-counsel was necessary in this case. There were no dockets or other indications of the work done in the hours claimed. The case was relatively uncomplicated. I will allow $2,000.00, taxes included, as a reasonable fee for the carriage of the proceeding until transfer to the present in-house lawyers, and $2,500.00, taxes included, for fees including those for this Hearing, of the in-house lawyers.

I will allow $500.00, taxes included, for the preparation fee for Dr. Lexier. I also allow, by way of analogy to the preparation fee allowance, the sum of $500.00, taxes included, for each of the cancellation fees of Drs. Lexier and Ratti, as reasonable allowances.

I therefore allow expenses of $6,000.00 including fees, fees of this Hearing, disbursements, and taxes.

EXPENSES:

1. The Applicant is permitted to withdraw from this Application.
2. The Insurer is entitled to its expenses of this Application, in the amount of $6,000.00 inclusive of fees, fees of this Hearing, disbursements, and taxes.

September 13, 2017

Morris J. Winer, Q.C Arbitrator

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 Ontario Regulation 664, as amended, it is ordered that:

1. The Applicant is permitted to withdraw from this Application.
2. The Insurer is entitled to its expenses of this Application, in the amount of $6,000.00 inclusive of fees, fees of this Hearing, disbursements, and taxes.

September 13, 2017

Morris J. Winer Q.C. Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule – Effective September 1, 2010, Ontario Regulation 34/10 as amended.
2. 2Insurer Submissions, Tab I.
3. 3Idem par. 6, 7, & 8.
4. 4Idem par. 9- 15.
5. 5Applicant’s Submission, email dated June 21, 2017, Wilkinson to Gratsias.
6. 6Applicant’s Submission.
7. 7Bortolussi and Security National (FSCO A15-005030) Dec. 6, 2016.
8. 8Jarabat and State Farm (FSCO A13-014028) Nov. 4, 2015.
9. 9Insurance Act, R.S.O 1990, c.1.8
10. 10Supra p.5