Financial Services Commission of Ontario

Neutral Citation: 2017 ONFSCDRS 293 FSCO A15-000744

BETWEEN:

EXZOR AN Applicant

and

INTACT INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Arbitrator Marshall Schnapp

Heard: By written submissions completed on August 31, 2017

Appearances: Mr. Fawad Siddiqui, Lawyer, participated for Mr. Exzor An Ms. Tracy Brooks, Lawyer, participated for Intact Insurance Company

Issues:

The Applicant, Mr. Exzor An, was injured in a motor vehicle accident on October 29, 2013 and sought accident benefits from Intact Insurance Company (“Intact”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. An, 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 issue in this Expense Hearing is:

1. Pursuant to section 282(11) of the Insurance Act, is either party liable to pay the opposing party’s expenses in respect of the Arbitration proceeding and, if so, in what amount?

Result:

1. The Applicant is liable to pay to the Insurer its expenses in respect of the Arbitration proceeding, fixed in the amount of $5,580.14 (inclusive of all fees, disbursements, and any applicable taxes).

EVIDENCE AND ANALYSIS:

Background

The Applicant, Exzor An (hereinafter the “Applicant”) was involved in a motor vehicle accident on October 29, 2013. As a result of the accident, the Applicant initially applied for and received various accident benefits from Intact. As the result of a dispute between Insurers, State Farm later assumed handling of the Applicant’s claim on or about January 26, 2016. State Farm assumed carriage of all aspects of the Applicant’s accident benefits claim, save and except for this ongoing dispute with respect to a claim for a special award. The Applicant’s claim for a special award was limited to whether or not Intact properly handled his claim for attendant care benefits.

My decision for this matter dated June 26, 2017 found that the Applicant was not entitled to a special award. I found that I had no jurisdiction to order a special award. Pursuant to Rules 75 to 79 of the Dispute Resolution Practice Code (“Code”), the parties were given 30 days to request adjudication of expenses of the Arbitration proceeding. Written submissions were received from both parties and this decision is based on those submissions.

Position of the Parties

Intact

In its submissions, the Insurer went through the criteria of Ontario Regulation 664, section 12 and Rule 75 of the that an Arbitrator shall consider in awarding all or part of the expenses of an Arbitration proceeding.

With regard to the first criterion being degree of success, the Insurer noted that it prevailed on all issues in dispute. With respect to offers to settle, it noted that it had made offers to resolve this matter prior to the commencement of the Arbitration Hearing that were more favourable to the Applicant as compared to the final decision, and acceptance of these offers would have avoided the need for the Arbitration Hearing.

The Insurer takes the position that no novel issues were raised in the proceeding and the issue at the Hearing was not complex.

The Insurer submits the conduct of the Applicant or his representative tended to prolong the proceeding in that as of August 12, 2016, the day the Applicant settled his claim on a full and final basis, this Arbitration became unnecessary. The Insurer notes it outlined its position in an e-mail to counsel and received no response and the Applicant failed to respond or provide any legal authority in respect to his position regarding a special award. As well, the Applicant did not comply with the October 1, 2016 Pre-Hearing letter, specifically he did not provide any material to be relied on, or witness lists, within the required time frames. The Applicant only advised of witnesses on April 19, 2017, and at that time advised that he would be calling two witnesses but at the start of the Hearing, counsel for the Applicant advised that no witnesses were to be called. Thus, the Insurer had to prepare for and attend at the oral Hearing, only to have the matter converted to a written Hearing. The Insurer submits this has resulted in the Insurer incurring costs related to oral Hearing preparation, and costs associated with the day lost for a Hearing that did not take place.

Lastly, with respect to whether any aspect of the proceeding was improper, vexatious or unnecessary, the Insurer submits the entirety of the proceeding was unnecessary as the law in this area was clear, was provided to counsel in advance of the Arbitration, and yet the Applicant insisted on proceeding with the Arbitration.

Intact is seeking expenses based on 108 hours of time for a law clerk, junior counsel and senior counsel who all worked on this file at the appropriate legal aid tariff rates.

The Applicant’s Position

While the Applicant accepts the criteria set out by the Insurer for Hearing expenses, he disputes the awarding of any expenses on the following grounds:

i. novel issues were raised in the proceeding; and

ii. the Applicant’s conduct did not tend to prolong, obstruct or hinder the proceeding, nor was there a failure to comply with undertakings and orders.

As well, the Applicant submits the expenses being claimed by the Insurer are exaggerated and duplicative.

With respect to novel issues, the Applicant submits there was no case law that addressed the underlying issue – that of liability for a special award against an insurer, whose priority was superseded by another insurer, during the course of the former’s adjusting of the claim.

While the Insurer was successful, it was only due to a “technical basis”. According to the Applicant, as the Arbitrator ruled he had “no jurisdiction to order a special award”; this is not a ruling that the Insurer’s conduct did not rise to the level meriting an order for a special award. The Applicant submits that the case law presented by the Insurer did not address the specific issue of whether an insurer, whose priority is superseded, is still liable for a special award during its adjusting of a claim. This in fact was a novel issue raised by the Applicant and one which he had every right to pursue. The Applicant takes the position that by awarding the Insurer expenses, this may result in a chilling effect on insureds from holding an insurer to the standards for reasonableness and good faith.

With respect to the conduct of the Applicant or its representative, the Applicant denied that his conduct or that of his representative tended to prolong the proceeding. The Applicant takes the position that at the resumed Pre-Hearing on May 4, 2016 it provided its witness lists but the Pre-Hearing Arbitrator appears not to have submitted a Pre-Hearing letter. As well, the Applicant notes a three-day Hearing was scheduled to start on September 12, 2016 and Applicant’s counsel submitted its witness list and list of productions required in separate letters dated August 9, 2016. The Applicant further submits it had to follow-up on a number of occasions with the Insurer with respect to productions and the joint document brief. The Applicant also submits that the Insurer attempted to restrict and hinder the Applicant’s ability to mount a full prosecution of its claim, by refusing to make all adjusters who worked on the file available for cross-examination.

With respect to the expenses being claimed, the Applicant submits that after reviewing the dockets of counsel for the Insurer, there is much duplication of work being claimed and the amount of time being claimed is excessive for the issue in dispute at the Hearing. Although the Applicant submits that no expenses should be awarded, if it is found that expenses are warranted, the Applicant submits that a sum in the range of $1,000 to $4,000, inclusive of HST and disbursements, should be considered.

Entitlement to Expenses

Based on the criteria I am to evaluate, the Insurer is entitled to its expenses for this matter. While I appreciate there is a difference in opinion on whether or not the issues before me were novel and if either party or representative prolonged the proceeding, overall the Insurer was the successful party in this proceeding and as such expenses should be awarded based on that fact.

In deciding on the amount to award, I do keep in mind that there was some novelty in the issues in dispute, in that the Applicant was attempting to obtain an order for a special award based on attendant care benefits after he had already agreed to a full and final settlement which the settlement documents show that the Insurer allocated no monies towards attendant care benefits to settle the file.

The Insurer is claiming the following for expenses:

Senior counsel at the rate of $136.43/hour (legal aid tariff rate) 1 day (4 hours) for hearing: $545.72 4 days (32 hours) for preparation/drafting: $4,365.76

Law Clerk at the rate of $32.37 4 days (32 hours) of preparation: $1,035.84

Jr. Counsel at the rate of $109.14 1 day (4 hours) for hearing: $436.56 4 days (32 hours) of preparation: $3,492.48

TOTAL: $9,876.36 + 13% HST ($1,283.92) = $11,160.28

This was not a complicated proceeding. It involved one issue and was ultimately dealt with in writing. In reviewing the total amount of hours being claimed by the Insurer, I am of the view that given the lack of complexity of this file and the single issue to be decided, the hours are excessive. I also keep in mind in making an award for expenses that the Schedule is consumer-oriented legislation, designed so that access to justice is available to the public without fear of excessive costs. Decisions on expenses have found that the overriding consideration in fixing arbitration expenses is reasonableness; a line-by-line assessment of the expenses claimed is not appropriate, and rather the Arbitrator should make a global assessment of reasonable expenses. I find that it would be appropriate to award the Insurer 50% of the expenses it is seeking.

EXPENSES

Having considered the relevant criteria in awarding expenses, the duration of the proceeding, the reasonable amount of legal services that can be claimed, the applicable legal aid rates, and the written submissions of the parties, for the reasons set out above, I find it appropriate to fix Intact’s expenses at $5,580.14 (inclusive of all fees, disbursements, and any applicable taxes) and to order the Applicant to pay this amount to Intact.

November 9, 2017

Marshall Schnapp 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 liable to pay to the Insurer its expenses in respect of the Arbitration proceeding, fixed in the amount of $5,580.14 (inclusive of all fees, disbursements, and any applicable taxes).

November 9, 2017

Marshall Schnapp Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule - Effective September 1, 2010, Ontario Regulation 34/10, as amended.