Neutral Citation: 2017 ONFSCDRS 267 FSCO A15-004250

BETWEEN:

ZHU EN WANG Applicant

and

PRIMMUM INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Arbitrator Kimberly Parish

Heard: Written submissions completed on August 31, 2017

Appearances: Mr. Philip Kai Kwong Yeung, Licensed Paralegal, for Mr. Zhu En Wang Mr. Aaron J. Wachna, Lawyer, for Primmum Insurance Company

Issues:

The Applicant, Mr. Zhu En Wang ("Mr. Wang"), was injured in a motor vehicle accident on October 24, 2013 and sought accident benefits from Primmum Insurance Company ("Primmum"), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Wang, 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 decision on expenses originates from a Preliminary Issue Hearing held in person on the dates of May 8 and 9, 2017. The preliminary issue addressed whether there was there an "accident" within the meaning of s. 3(1) of the Schedule and, if so, was Mr. Wang entitled to payment for the cost of examinations and medical benefits in dispute. On June 22, 2017, I issued my written decision with reasons, which found there was no "accident" within the meaning of s. 3(1) of the Schedule. I dismissed all Mr. Wang's claims and reserved my decision on the issue of expenses of the Arbitration.

The issue in this Expense Hearing is:

Is Mr. Wang liable to pay Primmum's expenses in respect of the Arbitration proceeding under section 282(11) of the Insurance Act?

Result:

Mr. Wang is liable to pay Primmum its expenses in respect of this Arbitration, fixed in the amount of $8,419.18 (inclusive of fees, disbursements, and HST).

Evidence and Analysis:

On July 19, 2017, the Insurer's counsel requested an Expense Hearing. I proposed to both parties that the Expense Hearing proceed in writing and the parties did not object to this. ADR Chambers received written correspondence from Yeung & Associates on July 27, 2017 which requested that they be removed from the record as the legal representative for Mr. Wang for this Arbitration as they have not been able to make contact with him and requested a Motion date to address this request. A Motion date was scheduled.

On August 4, 2017, a Motion was heard by telephone conference. Mr. Nick Hamilton, legal counsel, participated on behalf of Yeung & Associates and Ms. Jing Wang, a licensed paralegal from Yeung & Associates, participated. Mr. Aaron J. Wachna, legal counsel, participated on behalf of Primmum. Mr. Hamilton stated that Yeung & Associates had been unsuccessful in making contact with Mr. Wang following the Hearing and therefore was unable to obtain instructions from their client regarding the Expense Hearing. Mr. Hamilton stated this constituted a breakdown in the solicitor-client relationship and requested I remove Yeung & Associates from the record as Mr. Wang's legal representative. Mr. Wachna opposed the Motion. I made an oral ruling and did not grant Yeung & Associates to be removed from the record as Mr. Wang's legal representative for this Arbitration. I provided oral reasons for not granting Yeung & Associates to be removed from the record. These reasons included that the Hearing had not concluded as the issue of expenses still needed to be determined. I found there would be significant prejudice to Mr. Wang by allowing his legal representative to be removed from the record. It would also be difficult for Mr. Wang to retain alternate legal representation at this stage in the Arbitration process. A timetable was then established for each party to provide their written submissions for the Expense Hearing. A letter dated August 4, 2017 was issued to the parties outlining my written reasons for not granting the removal of Yeung & Associates from the record and the timetable was also noted for the Expense Hearing.

On August 21, 2017, ADR Chambers received Primmum's written cost submissions.

ADR Chambers received two letters dated August 31, 2017 from the Applicant's legal representative, Mr. Philip Kai Kwong Yeung of Yeung & Associates which requested I reconsider my decision of August 4, 2017 and to allow Yeung & Associates to be removed from the record as Mr. Wang's legal representative for this Arbitration proceeding. The Insurer's counsel, Mr. Wachna, was copied on the correspondence.

Yeung & Associates submitted through their correspondence letters of August 31, 2017 their reasons for requesting their withdrawal as Mr. Wang's legal representative. The only new information which Yeung & Associates provided through their correspondence letters of August 31, 2017 was with regard to their position that to proceed without instruction from their client may violate their professional obligations under the Rules of Professional Conduct and may amount to "professional negligence" and their obligations are governed by the Law Society of Upper Canada. Yeung & Associates further submitted they were in receipt of the Insurer's cost submissions dated August 21, 2017 and that they believed to respond to these cost submissions without instructions from their client would place them in violation of their obligations under the Law Society.

Section 3.7 of the Rules of Professional Conduct² states:

SECTION 3.7 WITHDRAWAL FROM REPRESENTATION

Withdrawal from Representation

3.7-1 A lawyer shall not withdraw from representation of a client except for good cause and on reasonable notice to the client.

[Amended - October 2014]

Commentary

1Although the client has the right to terminate the lawyer-client relationship at will, the lawyer does not enjoy the same freedom of action. Having undertaken the representation of a client, the lawyer should complete the task as ably as possible unless there is justifiable cause for terminating the relationship.

2An essential element of reasonable notice is notification to the client, unless the client cannot be located after reasonable efforts. No hard and fast rules can be laid down about what will constitute reasonable notice before withdrawal and how quickly a lawyer may cease acting after notification will depend on all relevant circumstances. Where the matter is covered by statutory provisions or rules of court, these will govern. In other situations, the governing principle is that the lawyer should protect the client's interests to the best of the lawyer's ability and should not desert the client at a critical stage of a matter or at a time when withdrawal would put the client in a position of disadvantage or peril. [Emphasis mine]

3Every effort should be made to ensure that withdrawal occurs at an appropriate time in the proceedings in keeping with the lawyer's obligations. The court, opposing parties and others directly affected should also be notified of the withdrawal.

4Deleted

[Amended - June 2017]

I have also noted and bolded the relevant portion of section 3.7 of the Rules of Professional Conduct above which I find has significant bearing on this matter. Yeung & Associates will remain on the record for this Arbitration as the legal representatives for Mr. Wang. My decision issued within my letter of August 4, 2017 remains in effect.

There were no further written submissions received from the parties after the correspondence dated August 31, 2017 received from Yeung & Associates. Yeung & Associates provided no written response to Primmum's written cost submissions.

Written Submissions of Primmum on Expenses:

Primmum has requested expenses in the total amount of $15,328.17, with a breakdown as follows: $10,747.40 for fees (representing about 103 hours for legal services), $2,817.35 for disbursements, and $1,763.42 for HST.

Primmum has submitted that the legal fees which it is seeking are solely related to the preparation and attendance at the Arbitration. Primmum submitted that some of its legal fees have been reduced as some of the legal fees have been allocated to time spent on a preceding priority dispute between Primmum and the Motor Vehicle Accident Claims Fund, through whom Mr. Wang initially sought accident benefits.

Primmum submitted that Mr. Wang should be ordered to pay Primmum's expenses as the only issue which I determined in my June 22, 2017 decision was that an "accident" did not occur, and therefore Mr. Wang was not entitled to any benefits. Primmum submitted that Mr. Wang knew his claim was frivolous, which was based upon his own testimonial evidence at the Hearing. This caused Primmum to spend unnecessary time and expense defending this claim in which Mr. Wang filed an Application for Mediation, an Application for Arbitration, and then proceeded to a Hearing.

Primmum further submitted that the Applicant's story which he provided at the Hearing was, on a balance of probabilities, fabricated. Lastly, Primmum submitted that all of Primmum's expenses were incurred as a result of the fabrication, but would not have been incurred if it were not for the fabrication.

Entitlement to Expenses:

In considering an award for expenses, I am required to only consider the criteria listed under the Expense Regulation. I only find two of the criteria are relevant. Primmum was 100% successful at the Hearing. The evidence and the testimony presented at the Hearing led me to the conclusion that an "accident" did not happen within the meaning of s. 3(1) of the Schedule. It is Primmum's position that on a balance of probabilities, Mr. Wang fabricated his story at the Hearing and that the Hearing should not have proceeded as Mr. Wang's claim was frivolous. Mr. Wang's testimony at the Hearing and the lack of credibility I found with his testimony apportioned a significant amount of weight to the decision which I reached, along with the lack of corroborating evidence to support his claim. As a result, I find that Mr. Wang proceeding all the way to an Arbitration Hearing was unnecessary.

Quantum:

The Hearing took two days. I heard testimony from Mr. Wang, plus three other witnesses for the Insurer: Police Constable Kris Bodi, Mr. Nate Ramawad, and Ms. Ying Li.

Primmum is seeking expenses in relation to 103 hours of legal services. I find a ratio of 2:1 is appropriate in considering an award for legal fees. Primmum had to summons and prepare for the attendance of three witnesses. It had to prepare its defence to primarily address the Preliminary Issue in dispute and also the medical benefits in dispute, if I were to find that an "accident" did happen. The non-credible testimony provided by Mr. Wang at the Hearing caused Primmum to incur unnecessary costs to defend the action filed by Mr. Wang against Primmum. I find a reasonable amount of hours attributable for legal fees for this Hearing would be about 55 hours. Based upon Mr. Wachna's year of call, the hourly rate according to the Legal Aid Tariff Rates is $103.94 per hour. Therefore the legal fees would equate to an amount of $5,716.70 plus HST.

For disbursements, Primmum has requested subpoena fees for: Mr. Ramawad in the amount of $57.05, $63.45 for Mr. Raymond Khan, and $70.60 for Ms. Li. Primmum has requested $1,606.25 for process server fees in which Primmum has noted multiple attempts in serving the summons to witness forms. Primmum lastly claimed an amount of $1,020.00 for court reporting fees and the transcript. The witness Mr. Khan was not produced as a witness for the Hearing; therefore I am not awarding an amount for subpoenaing his attendance. The expense claimed by Primmum for the attendance of a court reporter and the production of the transcript are not expenses which are permitted under the Expense Regulation and I will therefore not be awarding an amount for the attendance of the court reporter, nor the transcript. The amount of disbursements that I find Primmum is entitled to: $127.65 for subpoena fees, and $1,606.25 for process server fees. This amount equals $1,733.90 plus HST.

Upon consideration of the length of the Hearing, the legal fees and disbursements submitted by Primmum, along with its written submissions, and in accordance with the guidelines outlined within the Expense Regulation, I find a reasonable and appropriate amount to fix Primmum's Expenses is in the amount of $7,450.60 ($5,716.70 legal fees plus $1,733.90 disbursements) plus HST $968.58 for a total amount of $8,419.18 (inclusive of fees, disbursements, and HST).

For the reasons which have been stated above, Mr. Wang is ordered to pay Primmum its expenses in the amount of $8419.18 (inclusive of fees, disbursements, and HST).

October 18, 2017

Kimberly Parish Arbitrator

Financial Services Commission of Ontario