Wen Ping Lu v. Unifund Assurance Company, 2017 ONFSCDRS 272

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 272

FSCO A15-003624

BETWEEN:

WEN PING LU

Applicant

and

UNIFUND ASSURANCE COMPANY

Insurer

DECISION

Before:

Paulina Gueller, Arbitrator

Heard:

By written submissions completed on August 16, 2017

Appearances:

Mr. Philip Kai Kwong Yeung for the Applicant

Mr. Nicholas Carmichael for the Insurer

Issues:

The Applicant, Mr. Wen Ping Lu, was injured in a motor vehicle accident on August 17, 2013 and sought accident benefits from Unifund Assurance Company (“Unifund”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Lu, 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:

Is Mr. Lu permitted to withdraw his Application for Arbitration pursuant to Rule 70.2 of the Dispute Resolution Practice Code (“DRPC”)?
Is Unifund entitled to recover its expenses pursuant to Rule 70.3(b) and 75 of the DRPC, and If so, what is the amount?

Result:

Mr. Lu is permitted to withdraw his Application for Arbitration, pursuant to Rule 70.2 of the DRPC.
Unifund is entitled to its expenses in the amount of $1,500.00 inclusive of all fees, disbursements and HST.

BACKGROUND

The Applicant filed an Application for Arbitration on May 25, 2015. A Pre-Hearing was held on July 11, 2016. The Pre-Hearing letter reflects the following:

The issues in dispute were identified by the parties as follows:

a) cost of examinations for an attendant care assessment in the amount of $940.00;

b) expenses of the Hearing; and

c) interest;

The Applicant withdrew the issue of entitlement to attendant care benefits;
A Hearing date was scheduled for July 12, 2017; and,
Arbitrator Davies issued an Order compelling the Applicant to produce several documents.

On July 7, 2017, the Applicant withdrew the Application for Arbitration and requested a written Expense Hearing.

By email dated July 11, 2017, addressed to ADR Chambers, the Insurer stated that “Both parties have agreed to the Applicant’s withdrawal from Arbitration and subsequent written Expense Hearing”.

On July 11, 2017, Arbitrator Davies cancelled the Arbitration Hearing scheduled for July 12, 2017 and scheduled an Expense Hearing by written submissions.

EVIDENCE AND ANALYSIS:

Withdrawal of the Application for Arbitration

Rule 70.2 and 70.3 of the DRPC state:

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 to the withdrawal, an adjudicator may:

(a) permit the withdrawal on such terms and conditions as he or she considers just; (b) award expenses to either party as permitted by Rule 75 and following.

On July 11, 2017, Arbitrator Davies cancelled the Hearing scheduled for July 12, 2017 and directed the parties to submit their material in writing regarding the Expense Hearing.

I find that no formal Order from an Arbitrator ordering the withdrawal was ever made.

Therefore, I am exercising my discretion pursuant to Rule 70 of the DRPC, and I permit the withdrawal, subject to liability for expenses in accordance with Rules 70.3 and 75 of the DRPC and subsection 282(11) of the Insurance Act.

ENTITLEMENT TO EXPENSES

The Insurer’s Position

The Insurer submitted that it was successful in defending the Application for Arbitration, as ultimately the Applicant was awarded zero dollars in this process and conceded that the Insurer was not responsible for paying the attendant care benefits or the cost of examinations for an attendant care assessment in the amount of $940.00.

The Insurer submitted that the Applicant did not serve any documents he intended to rely on at the Hearing 30 days before the Hearing in accordance with Rule 39.1 of the DRPC; and, did not attend a Section 44 Insurer’s Examination with a Psychologist in June 2014.

The Insurer submitted that the total amount of its expenses is $6.166.85, which consisted of $5,250.69 for legal fees and $916.16 for disbursements.

With respect to the Applicant’s offers to settle, the Insurer submitted that Justice L.M. Walters in Roma Construction (Niagara) Ltd. v Dykstra Bros Roofing (1992) Limited et al. stated,

first and most importantly the offer was contained in a letter to the defendants’ counsel specifically marked “without prejudice”. Nowhere in the letter did plaintiff’s counsel reveal the right to refer the offer with respect to the issue of costs following judgement. In such a case an offer to settle is not admissible on the issue of costs.²

The Applicant’s position

The Applicant’s submissions were as follows:

a) The Applicant made efforts to resolve this matter in order to reduce the costs;

b) There is no successful party as the Application for Arbitration was withdrawn before the Hearing;

c) The Applicant participated in every stage of the process;

d) The Insurer offered $2,500.00 all-inclusive in exchange for a full and final release;

e) On July 5, 2017, the Applicant offered $0.00 without costs to resolve the issues in dispute, but the Insurer did not respond;

f) This file is related to another case and the Insurer refused to settle the Applicant’s individual claim without settling the other matter, which prolonged the process;

g) The Applicant sent 3 letters on June 20, July 4 and July 6, 2017 to the Insurer offering to resolve this matter, without response of the Insurer.

The Applicant also submitted that the Insurer’s Bill of Costs is “grossly excessive, exaggerated, uncertain as to the time spent on specific tasks, not proportionate to the amounts in dispute, duplicative, unwarranted and/or vague”³ considering the size of the claim and the issues in dispute.

Analysis

Rule 75 of the DRPC sets out the criteria to be considered in awarding expenses, and provides:

Award of expenses 75.1 An adjudicator may award expenses to a party if the adjudicator is satisfied that the award is justified having regard to the criteria set out in Rule 75.2. The items and amounts which may be awarded are found in Rule 78 and the Schedule to the Expense Regulation found in Section F of the Code. 75.2 The adjudicator will consider only the criteria referred to in the Expense Regulation found in Section F of the Code. These criteria are:

(a) each party's degree of success in the outcome of the proceeding; (b) any written offers to settle made in accordance with Rule 76; (c) whether novel issues are raised in the proceeding; (d) 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; (e) whether any aspect of the proceeding was improper, vexatious or unnecessary. (f) whether the insured person refused or failed to submit to an examination as required under section 42 of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996) made under the Act or refused or failed to provide any material required to be provided by subsection 42 (10) of that regulation; and (g) 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.

As this matter did not proceed to a Hearing, I am unable to determine whether there was a successful party. The Arbitration process commenced with the Applicant filing his Application, but ended with an Order allowing the withdrawal on consent, and not with an Order of any type about the only issue in dispute for an Attendant Care Assessment for $940.00.

Both parties made submissions on whether the other did not comply with undertakings. However, as the Hearing did not proceed, I will not consider that criterion.

The Insurer submitted that it was the successful party because the Applicant withdrew his claim. I am not persuaded that a request to withdraw could be compared with a final decision rendered by an Arbitrator after a full hearing was held.

Unifund also submitted that the offer to settle should not be taken seriously as it was specifically marked “without prejudice”. Conversely, Unifund failed to prove it actively engaged in settlement discussions. I am convinced that could be a factor causing a delay in the final withdrawal date.

On the other hand, the Applicant submitted that he could not withdraw the Application for Arbitration earlier as the Insurer wanted to settle both related files together. I cannot accept the Applicant’s submissions; Rule 70 of the DRPC sets out the process when a party may request to withdraw all or part of the issues before an Arbitrator. The Applicant would have been able to make his request to withdraw at any time during the proceeding, without waiting for the Insurer’s consent.

The Applicant submitted that the Bill of costs was excessive related to a relatively simple case as the attendant care benefit was withdrawn at the Pre-Hearing.

Conclusion

The Applicant submitted that he did not want to settle his claim on a full and final basis for $2,500.00. I accept that settling an accident benefits file on a full and final basis is very different from an offer to settle the issues in dispute. Considering the well-recognized consumer protection aspect of the Schedule, I accept that the Applicant is not obligated to settle only on a full and final basis.

The Applicant participated in the process. I find the Insurer failed to prove that the Applicant’s Application for Arbitration was vexatious or in bad faith. Also, the Applicant had agreed to an Expense Hearing as a condition of the withdrawal, which would give the Insurer the possibility to exercise its right to claim the expenses of the proceeding.

Therefore, in awarding expenses, I have taken into consideration the amount in dispute, the conduct of both parties and the amount of time I find reasonable for the Insurer to spend in preparing its Response to the Application for Arbitration, attending one Pre-Hearing and preparing for the Arbitration.

Accordingly, I exercise my discretion pursuant to subsection 282(11) of the Insurance Act and Order Mr. Lu pay Unifund its expenses that I have assessed in the amount of $1,500.00 inclusive of all fees, disbursements and HST. The amount is payable forthwith.

October 25, 2017

Paulina Gueller

Arbitrator

Date