Neutral Citation: 2017 ONFSCDRS 256 FSCO A13-014632

BETWEEN:

MOSES COHEN Applicant

and

AVIVA CANADA INC. Insurer

DECISION ON EXPENSES

Before: Arbitrator Jeff Musson Heard: Written submissions completed on July 28, 2017 Appearances: Mr. Andrew Stein for Mr. Moses Cohen Mr. Raymond Murray for Aviva Canada Inc.

Issues:

The Applicant, Mr. Moses Cohen (the "Applicant"), was injured in a motor vehicle accident on March 28, 2006. There were numerous claims for accident benefits made against Aviva Canada Inc. ("Aviva"), payable under the SABS.¹ The parties were unable to resolve their disputes through mediation, and Mr. Cohen, 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.

I conducted the Hearing for the issues in dispute on September 21-23, November 28-30, and December 1, 2 & 19, 2016. I issued my written decision with reasons dismissing all of the Applicant's claims in the Arbitration. On the issue of expenses, I ruled that if the parties were unable to mutually agree on expenses, then either party would be entitled to request an Expense Hearing, which Aviva subsequently requested.

The issue in this Expense Hearing is:

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

Result:

The Applicant is liable to pay to the Insurer its expenses in respect of the Arbitration proceeding, fixed in the amount of $52,334.19 (inclusive of fees, disbursements and HST).

EVIDENCE AND ANALYSIS:

Introduction

In this Expense Hearing, the Insurer is claiming expenses in the total amount of $125,698.25 including HST, which is comprised of $99,964.19 in fees and $26,004.06 in disbursements.

Rule 79.1 of the Dispute Resolution Practice Code ("DRPC") states that where an arbitrator has determined all issues in dispute except expenses, and the parties cannot agree on entitlement or 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. Both parties were prepared, absent an agreement as to expenses, to have the matter determined by me. 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 (6) 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 subsection (3).
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.

At this Expense Hearing, both parties are focused on five areas: their degree of success in the outcome; the written offers to settle in accordance with Rule 76; novel issues; the conduct of the parties (or party representatives); and finally, whether any aspect of the proceeding was improper, vexatious or unnecessary.

Entitlement to Expenses

Degree of Success

In its submissions, the Insurer stated that it was 100% successful in defending all of the issues that were in dispute at the Hearing. In addition, there was no ambiguity in terms of its success in this matter. I agree with the Insurer's conclusion in regards to this and the Applicant does not dispute this fact, however the Applicant noted that he was successful with a couple of motions.

Written Offers to Settle

In its submissions, the Insurer states that it made a written offer to settle pursuant to Rule 76. This offer remained open until five minutes after the commencement of the Hearing. The Applicant chose not to accept the offer and to proceed to an arbitration Hearing.

Novel Issues

The Insurer stated in its submission that there were not any novel issues at the Hearing. The Applicant 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

In its submissions, the Insurer stated that the Applicant continued to an arbitration Hearing despite the Applicant's evidence being weak and insufficient. In the Insurer's opinion, this unnecessarily prolonged the proceedings. The Applicant in his submission denied this. Further, there were a multitude of motions brought forward by the Applicant, the majority of which the Applicant lost; these contributed to the length of the Hearing. Finally, the Applicant withdrew the issues of medical benefits at the conclusion of the Hearing instead of prior to the start, which caused a further prolonging of the Hearing.

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

The Insurer submitted that the Applicant's dispute was unnecessary. It stated that the evidence given by the Applicant was not credible and this had led to a Hearing, which was not necessary. The Applicant strongly denies this assertion and the generalizations that this implies. The Applicant stated that the relationship between the Insurer and the Applicant is a contractual one and as a result, the Applicant is entitled to access the dispute resolution process. The Applicant submitted this was a case involving a difference of opinion between the Insurer and the Applicant. However, the Insurer counters that the Applicant's conduct ultimately was improper and vexatious.

Analysis

The objective of this Expense Hearing is to determine an appropriate amount to be awarded in expenses by the unsuccessful party to the successful party. I agree with the Applicant in his submission when he stated that it was his right to proceed to a Hearing and the legislation allows an Applicant to take that approach.

The Applicant submitted Tesfagiorgis and State Farm³ in support of his position that the Insurer's expenses were unreasonable. I agree with Arbitrator Reilly when she stated in her decision that "the objective of an expense hearing is to fix an amount that is fair and reasonable."

Based on the evidence produced at the Hearing, this was a case where the Insurer and Applicant had a difference of opinion and the Applicant is entitled to exercise his right to dispute the findings of the Insurer.

For all these reasons, I have determined that the Insurer is entitled to its expenses from this Arbitration proceeding up to and including preparing for this Expense Hearing. However, in applying the principle of fairness, the amount the Insurer is claiming for expenses will be reduced.

Assessment of Expenses

This case was made more difficult due to the extreme length of time between the Applicant's date of loss, the filing of the Applicant's OCF-1, OCF-3 and the date of the Hearing. It was further complicated by the weak documentation and witness testimony. In terms of testimony, this case relied heavily upon the credibility of the Applicant and the presence, or lack, of corroborating evidence. In the end, the onus was on the Applicant to prove his entitlement to benefits and he failed to do so. The Insurer submitted the following fee breakdown for the individuals working on its case for the Hearing.

Expenses for the Arbitration Hearing:

WORK COMPLETED	LEGAL AID RATE	TIME	TOTAL AMOUNT
1. Defending Application for Arbitration, including initial retainer; meetings with client; initial review of Aviva claim file; legal research; preparation of Insurer's initial Response and Amended Response to Application for Arbitration; request for and ongoing follow-up re: productions; follow-up regarding other documentary evidence required for Arbitration hearing; ongoing review and organization of medical and financial documentation; ongoing receipt and review of SABS documentation; correspondence with client, opposing counsel, experts, FSCO and others, as relevant; Preparing Notice of Motion, Affidavit, Factum and Book of Authorities, correspondence with opposing counsel, FSCO and others, as relevant, re: motion to compel Applicant to produce financial documentation
Raymond Murray (tier 3)	$136.43	77.10	$10,518.75
David Contant (tier 3)	$136.43	0.70	$ 95.50
Ludmilla Jarda (tier 1)	$109.14	44.80	$ 4,889.47
Law Clerk	$ 32.37	45.20	$ 1,463.12
SUB-TOTAL			$16,966.84
2. Pre-Arbitration hearing: Correspondence or meetings with client and opposing counsel; preparation for and participation in pre-hearings (x3) and relevant follow-up
Raymond Murray (tier 3)	$136.43	4.50	$ 613.94
David Contant (tier 3)	$136.43	6.70	$ 914.08
Ludmilla Jarda (tier 1)	$109.14	0.50	$ 54.57
SUB-TOTAL			$1,582.59
3. Preparation for Arbitration: including notifying and following up with expert witnesses required for arbitration; telephone conversations, meetings, and/or correspondence with client, expert witnesses, opposing counsel and FSCO re: further issues to be added and adjournment of arbitration; settlement discussions
Raymond Murray (tier 3)	$136.43	202.20	$27,586.15
Ludmilla Jarda (tier 1)	$109.14	25.30	$ 2,761.24
Alessia Petricone-Westwood (tier 1)	$109.14	31.20	$ 3,405.17
Student-at-law	$64.74	94.20	$ 6,098.51
Law Clerk	$32.37	43.70	$ 1,414.57
SUB-TOTAL			$41,265.64
4. Preliminary issues re: Request for Adjournment, Productions and Motion to Exclude Documentary Evidence: including preparation and service of insurer's motion materials and written submissions, review of claimant's written submissions; preparing and serving response to claimant's written submissions; review of arbitrator's decision and relevant follow-up
Alessia Petricone-Westwood (tier 1)	$109.14	0.50	$ 54.57
Student-at-law	$64.74	73.10	$4,732.49
Law Clerk	$32.37	0.30	$ 9.71
SUB-TOTAL			$4,796.77
5. Attendance at Arbitration (9 days): including preparation and service of insurer's closing submissions, review of claimant's closing submissions
Raymond Murray (tier 3)	$136.43	127.50	$17,394.83
Student-at-Law	$64.74	92.30	$ 5,975.50
SUB-TOTAL			$23,370.33
6. Bill of Costs: Research, preparation of Bill of Costs, cost submissions and other services after Arbitration (time estimated and ongoing)
Law Clerk	$32.37	7.50	$ 242.78
SUB-TOTAL			$ 242.78
Total Fees			$88,224.95
HST (13%)			$11,469.24
TOTAL FEES & HST			$99,694.19

With respect to the preparatory work leading up to the Hearing, the time spent at the Hearing and the relative nature of the issues in dispute, the total hours spent by the Insurer seemed to be a little high. However, the Applicant did not provide its hours or costs as a comparison.

Principle of Fairness

Case law has determined that the SABS is consumer protection legislation. As such, it is not reasonable to expect an Applicant to pay an Insurer $99,964.19 in fees. Based on my analysis above, I am fixing the Insurer's costs at a 50% discount, which is $49,982.10 (including HST).

Disbursements for the Arbitration Hearing:

DISBURSEMENTS	AMOUNT
Photocopies (7,987 x $0.10)	$798.70
Outside photocopy charges	$38.83
Long Distance	$96.50
Courier	$31.90
Transcripts	$3,072.50
Service of Documents re: Summons to Witness	$231.35
Case law search	$271.28
Airfare re: attendance at arbitration	$2,937.24
Train fare re: attendance at arbitration	$112.00
Hotel re: attendance at arbitration hearing	$4,564.61
Taxi/Transit/Parking	$1,008.20
Meals re: attendance at arbitration hearing	$1,164.36
Mileage re: attendance at arbitration hearing	$59.48
Reporting services re: arbitration hearing (8 x $505.50)	$4,044.00
Dr. Oshidri re: preparation for and attendance at arbitration	$3,600.00
Paid for various medical records - no tax	$205.03
Paid for Dr. Kazdan's records - no tax	$66.50
Paid for Dr. Hand's records - no tax	$400.00
Paid for Dr. Warner's records - no tax	$363.56
Paid for OHIP Claim History- no tax	$74.00
Sub-Total Disbursements	$ 23,140.04
HST on Taxable Disbursements ($22,030.95 x 13%)	$ 2,864.02
Total Disbursements including HST	$ 26,004.06

I am reducing the disbursement expenses as presented by the Insurer. I will allow only the cost of Dr. Oshidiri and the medical record expenses. Dr. Oshidiri's testimony was required in order to properly defend this claim. Pursuant to Section 5 of the Expense Regulation, the maximum amount that may be awarded to an expert witness for preparation at a hearing at which the witness testifies is $500.00. Further, the maximum amount that may be awarded for the attendance of an expert witness is $200.00 per hour of attendance up to a maximum of $1,600.00 per day. Therefore, I am reducing the amount of the expense for Dr. Oshidiri to $1,100.00, $500.00 for preparation time and $600.00 for the time spent testifying at the Hearing. The other costs submitted by the Insurer are in my opinion costs that are related to the operation of a business, for which the Applicant should not be held responsible. Therefore the disbursement amount is calculated at $1,100.00 + HST = $1,243.00 plus $1,109.09 including HST for a total disbursement expense of $2,352.09.

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 Insurer's expenses at $49,982.10 for fees and $2,352.09 for disbursements for a total of $52,334.19 inclusive of all fees, disbursements and HST.

September 28, 2017

Jeff Musson 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:

The Applicant is liable to pay to the Insurer its expenses in respect of the Arbitration proceeding, fixed in the amount of $52,334.19 (inclusive of fees, disbursements and HST).