Neutral Citation: 2017 ONFSCDRS 306 FSCO A12-000889

BETWEEN:

THERESA HARDI-FRAIL Applicant

and

TD HOME AND AUTO INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: David Snider Heard: By written submissions Appearances: Ben Fortino for Ms. Hardi-Frail Daniel Himelfarb for TD Home and Auto Insurance Company

Issues:

The Applicant, Theresa Hardi-Frail, was injured in a motor vehicle accident on October 27, 2006. Through a series of steps finalized on June 26, 2017 Ms. Hardi-Frail withdrew all of the claims for statutory accident benefits under the Schedule¹ which she had originally set out in her application for arbitration. There was no completed hearing with regard to any preliminary or final issue(s) in this matter, although there were a large number of procedural steps, pre-hearing resumptions and adjournments prior to the final withdrawal of all of the issues in this arbitration. There was a letter decision issued by Arbitrator S. Alves dated June 23, 2016 in which she simply confirmed that the Applicant had withdrawn some of the issues in dispute in May 2015. Arbitrator Alves had been requested by the parties to deal with the question of "entitlement to and the amount of expenses" to that point in the process but she specifically deferred these questions "to the hearing arbitrator at the conclusion of the arbitration". When the Applicant withdrew all remaining issues as of June 26, 2017 the arbitration had reached its conclusion, except for this issue of expenses, as of that date. The question of final expenses has now been given to me and I requested written submissions on the matter from the parties.

The issue in this further hearing is:

Is Ms. Hardi-Frail entitled to her expenses incurred in respect of this arbitration hearing, or an order denying an award of costs entirely?
Is TD Home and Auto Insurance Company entitled to its expenses incurred in respect of this arbitration hearing?

Result:

Ms. Hardi-Frail is not entitled to her expenses incurred in respect of this arbitration hearing, nor an order denying an award of costs entirely.
TD Home and Auto Insurance Company is entitled to its expenses incurred in respect of this arbitration hearing, totalling $10,244.44.

EVIDENCE AND ANALYSIS:

Having thoroughly examined the letter decision issued by Arbitrator Alves on June 23, 2016, which I have attached hereto, I believe that I have an accurate and detailed history of the sequence of events which occurred up to the date of the written submissions she received, namely November 12, 2015. I do not intend to restate the findings of Arbitrator Alves up to the date of her letter decision.

The Insurer has provided me with two detailed Bills of Costs in this matter. The first, which totals $5,797.32, was prepared to cover the period up to October 16, 2015 and was the Bill of Costs presented to Arbitrator Alves for purposes of her consideration before she issued the letter decision dated June 23, 2016. She chose not to make an order with regard to those expenses and stated, in part:

I generally prefer to leave expenses of an interim proceeding in the discretion of the hearing arbitrator, unless there is an issue of impecuniosity or a desire to make a punitive award of expenses. … Given the Applicant's advice that she intends to add a further issue to the agenda of issues to be arbitrated, in my view it would be preferable to determine entitlement as well as the amount of expenses at the conclusion of the arbitration hearing, once the remaining issues in the arbitration and any issues which may be added, have been decided.

I note, as well, that Arbitrator Alves found that on May 8, 2015 the Applicant withdrew the issue of Income Replacement Benefits (IRBs) and requested a resumption of the pre-hearing on the file to address her request to withdraw the IRB claim. That resumption of the pre-hearing process resulted in the order issued by Arbitrator Alves on June 26, 2016, although not directly. There had been a preliminary issue hearing scheduled for May 13, 2015 which was to deal with the question of whether the Applicant was statute-barred from continuing with her IRB claim because more than two years had passed between the date it was denied and the date she commenced her action regarding the issue. The need for the preliminary issue hearing was removed entirely when the Applicant withdrew her claim for IRB's, which resulted in the cancellation of the preliminary issue hearing on consent of the parties. There was at least one more procedural loop in the file concerning this preliminary issue and instead of a reconvened prehearing, Arbitrator Alves actually proceeded only on the basis of a motion filed by TD Home and Auto Insurance Company (TD) for its costs concerning the partial withdrawal. Arbitrator Alves did her best in the aforesaid letter order to sort out the history of the procedures and the sequence of events, which, as I have stated, I have no intention of revisiting in this order. In the end, though, I find that due to the Applicant's late withdrawal of the issue, the Insurer's counsel was forced to prepare for the preliminary issue hearing and revisit it prior to the scheduled preliminary hearing date of May 13, 2015 and that these preparation costs were effectively thrown away.

I find, on balance of probabilities, that despite the Applicant's counsel's protestations to the contrary, the Applicant was not responsive to the Insurer's correspondence on these issues for an extended period. I saw no evidence that the Applicant's counsel did actually respond to the many pieces of correspondence sent by the Insurer's counsel for about a year between the June 23, 2016 date of Arbitrator Alves letter order and the final withdrawal date of June 26, 2017. As a consequence, the entire matter was unduly delayed by the actions of the Applicant's counsel.

The Applicant submits that the Insurer should not be entitled to its expenses due to the fact that the entire matter was ultimately withdrawn. I find this submission to be completely without merit. This arbitration was commenced in 2012 and I can see from the record that at least twelve individual procedural steps were scheduled and processed by this Commission. I note further that TD had to close and then reopen its preliminary issue hearing request due to the actions of the Applicant in delaying its withdrawal of the IRB issue and failing to correspond with the Insurer's counsel. I find that the ultimate withdrawal of all issues amounts to a completely successful defence of the claims made by the Applicant in this arbitration. Accordingly, I find that the Insurer is entitled to its expenses in this matter and I will turn to a brief examination of the final Bill of Costs submitted to me by the Insurer.

The expenses set out in the Schedule are prescribed for the purpose of subsection 282 (11) of the Insurance Act in Ont. Regulation 664, R.R.O. 1990. Further explanations of the allowable expenses are set out in Rule 75 and Section F of the Dispute Resolution Practice Code.

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:

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 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.
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 by subsection 44 (9) of that regulation.

FINDINGS:

Applying these criteria to the facts of the case at hand, I make the following findings:

Each party's degree of success in the outcome of the proceeding.

TD was completely successful in this proceeding.

Any written offers to settle made in accordance with subsection (3).

There were offers to settle made by the parties with regard to these expenses.

Whether novel issues are raised in the proceeding.

The issues were not novel. The file history is quite complex.

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.

I find that the Insured's counsel unduly delayed the process.

Whether any aspect of the proceeding was improper, vexatious or unnecessary.

This criterion will not be a significant factor in my conclusions.

The sixth and seventh criteria were not raised and are not applicable to this arbitration.

I find that TD made efforts to settle the question of expenses in this matter and that they offered to simply close the file without costs to either party if the Applicant would sign a full and final release. The Applicant refused this offer and continued to suggest, in its submissions on this expense hearing, that it may be pursuing additional issues including a Catastrophic Impairment determination. However, the Applicant produced no evidence to suggest that any new issues have been initiated under the Schedule and the insurer confirmed in its submissions that they have received no application for a CAT eligibility determination or any other benefit. Clearly, then, there is no claim pertaining to catastrophic determination which has been denied at this point. It should be remembered that the date of loss in this matter was October 27, 2006, so one questions the validity of this step at this late stage as we are now over 11 years post accident.

I have examined the two Bills of Costs provided by the Insurer. These two combined bills were added together by TD to create its Final Costs Submission dated June 28, 2017. The first bill relates, as stated at the outset of this decision, to the period up to October 16, 2015 and was the Bill of Costs presented to Arbitrator Alves for purposes of her consideration before she issued the letter decision dated June 23, 2016. It totalled $5,797.32. The second bill covers the period between October 17, 2015 and June 28, 2017. It totals $3,935.50. The combined total is $10,244.44 inclusive of HST. The disbursement total, also including HST, formed only $1.19 out of this total. Clearly, there is no problem with the disbursement claim.

The Applicant submitted that the Insurer's counsel double-counted certain hours due to the fact that it sought to bring its preliminary issue hearing back on after closing it. Firstly, I have found that the Insurer was forced to reopen the preliminary issue hearing because of the lack of response of the Applicant, so that argument has no foundation. Secondly, I find that there are only minimal amounts of time involved in the billing for the restart on that issue.

I have noted that the Insurer's counsel meticulously followed the requirements and limitations on hourly fee rates set out in section 78.1 (b) (final paragraph) of the Dispute Resolution Practice Code (DRPC). That subsection specifically allows the Insurer's counsel, his law clerk and more junior counsel to receive no more than the specified legal aid rates set out in The Legal Aid Tariff. This tariff encompasses a sliding scale based upon the years of experience of the lawyer making the claim. I am fully satisfied that the billing rates were correct according to the tariff and appropriate for himself, the two law clerks and the one recently called lawyer who worked on his final billing submissions.

I find further that the scheduled preliminary issue hearing which never actually occurred on this file was set for three days. This required preparation time by the Insurer's counsel and the time allotted for this in the Bill of Costs is reasonable, in my opinion. The Insurer's counsel also participated in three pre-hearings and sent a significant amount of correspondence to the Applicant's counsel without receiving the courtesy of a reply to a large percentage of it. As well, the Insurer was put to the task of twice creating Bills of Costs on this matter. The file was continued for about 5 years, so the task of preparing the two cost analyses was undoubtedly time-consuming.

Accordingly, I find it entirely appropriate to order that the Applicant pay the Insurer's full costs as set out in its Final Cost Submissions dated June 28, 2017, namely $10,244.44 inclusive of HST.

November 17, 2017

David Snider Arbitrator

Financial Services Commission of Ontario