Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2017 ONFSCDRS 314
Appeal P16-00085
OFFICE OF THE DIRECTOR OF ARBITRATIONS
DIESHA CHAMBERS
Appellant
and
AVIVA CANADA INC.
Respondent
BEFORE:
David Evans
REPRESENTATIVES:
Shahen Alexanian for Ms. Diesha Chambers
Alexander Hartwig for Aviva Canada Inc.
HEARING DATE:
By teleconference on October 27, 2017
APPEAL EXPENSES ORDER
Under section 283 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 Regulation 664, R.R.O. 1990, as amended, it is ordered that:
- Aviva Canada Inc. shall pay Ms. Chambers her legal expenses of the appeal proceedings herein, fixed in the amount of $3,750.00, inclusive of disbursements, HST, and the preparation for this appeal expense hearing.
November 24, 2017
David Evans Director’s Delegate
Date
REASONS FOR DECISION
I. BACKGROUND AND ANALYSIS
In a decision dated June 1, 2017, I allowed an appeal of an arbitration order dated November 7, 2016. I found that, notwithstanding the failure of Ms. Chambers to attend mediation, she was not precluded from pursuing accident benefits from her insurer, Aviva Canada Inc., pursuant to the SABS–2010.1
The Arbitrator had relied mainly on the arbitration decision in Pararajasingam and State Farm Mutual Automobile Insurance Company, (FSCO A13-012792, October 30, 2015), which I reversed in Pararajasingam and State Farm Mutual Automobile Insurance Company, (FSCO P15-00065, February 2, 2017).
In this case, Ms. Chambers filed her appeal, Aviva responded, and then I issued Pararajasingam. Ms. Chambers’ submissions then incorporated a good part of what I said in Pararajasingam. After the submissions were received, and in light of my decision in Pararajasingam, Aviva advised that it would be taking no position on the appeal and would not be filing submissions. The parties could not agree about appeal expenses, so it was agreed that I would issue a decision on the record, with the appeal expenses to be dealt with later.
Ms. Chambers now seeks her appeal expenses of approximately $4,400, including preparing the Bill of Costs and expense submissions. Counsel is claiming the maximum $150 hourly fee available under Rule 78.1 of the Dispute Resolution Practice Code (Fourth Edition — Updated January 2014).
The criteria for an award of expenses are set out in Rule 75.2. Ms. Chambers principally relies on Rule 75.2(a), each party’s degree of success in the outcome of the proceeding, noting that she was entirely successful. She also submits that Rules 75.2(d) – conduct prolonging, obstructing or hindering the proceeding – and 75.2(e) – whether any aspect of the proceeding was improper, vexatious or unnecessary – might also apply. She submits that the novelty criterion in Rule 75.2(c) does not apply, as both Pararajasingam and this case were essentially applications of the Court of Appeal decision in Cornie v. Security National Insurance Co. (c.o.b. TD Meloche
Monnex), 2012 ONCA 837.
Aviva submits that success is not the only criterion, that it neither hindered the proceeding nor acted vexatiously, and that the issue was indeed novel. It also submits that the expense claim is too high, and raises some ancillary issues as well. I will deal with those ancillary issues first.
Aviva submits that even if Aviva had not initially responded to the appeal, the appeal was necessary regardless, so Ms. Chambers would have incurred the same expenses. However, if Aviva had not responded, Ms. Chambers would not have had to spend time and effort preparing submissions. And if Aviva had not brought the motion in the first place, Ms. Chambers would not have had to file the appeal at all. I do not see how this point, even if it is relevant, assists Aviva.
Aviva submits that the interests of justice are in its favour, relying on the appeal decision Nahsari and Belair Insurance Company Inc., (FSCO P02-00002, September 9, 2002). In that case, between the initial arbitration decision finding that several issues were statute barred and the appeal, the Supreme Court issued Smith v. Co-operators General Insurance Co., [2002] S.C.J. No. 129. Based on Smith, Delegate McMahon allowed the appeal. The insurer nonetheless argued that it should not pay expenses because of the change in law, which the Delegate rejected: “On release of the decision the Insurer had two choices. One, concede that the decision disposed of the appeal. Two, argue that the decision was not determinative. It chose the latter, but was not successful.” He fixed expenses at $500, taking account of the fact that all of the preliminary steps in the appeal were conducted by a paralegal whose hourly rate was $23 per hour.
Aviva submits that since it conceded that Pararajasingam disposed of the appeal, it should not be liable for expenses. It submits that it only initially opposed the appeal for valid reasons, considering the previous law, and that it might have been able to distinguish Pararajasingam on its facts or argued that the appeal was invalidated for being filed two days late. It also submits that this expense decision will set a precedent, in that if costs are assessed even where an appeal is abandoned, appeals without significant merit are more likely to carry on.
I find little merit in the suggestion that Pararajasingam and this case could have been distinguished on the facts. In addition, I know of no case where an appeal was dismissed for being filed two days late. I do not see how this decision will have any precedential value, considering the entirely different costs scheme at the successor tribunal. Nor do I think that appeals without significant merit are more likely to carry on if expenses are assessed after an effective withdrawal, considering the vastly greater expenses that would be incurred by doing so. Rather, Aviva’s actions are analogous to a withdrawal request under R. 70. Rule 70.3(b) provides that, if a withdrawal is not agreed to, the adjudicator may award expenses. So even in the Code, a withdrawal does not guarantee that no expenses will be awarded.
As for Smith and how it affected the appeal in Nahsari, I find that Smith was a far more surprising and consequential case than my decision in Pararajasingam. In Smith, both the Superior Court of Justice and the Court of Appeal had found that the issues were statute-barred, so the Supreme Court overturned two court levels in arriving at its decision. Smith did represent a true change in the law, for as Delegate McMahon noted in Nahsari, the Smith decision dramatically altered the course of that appeal, which would otherwise have failed based on previous FSCO case law. However, the issue of how a failure to attend mediation affects arbitration had never gone beyond the arbitral level. The arbitrators in Pararajasingam and this case relied on the old case of Couraud and Co-operators General Insurance Company, (OIC A‑006346, October 31, 1994), but the facts in Couraud were different, because the prescribed time for mediation had not even expired. However, the Court of Appeal in Cornie held that once that prescribed (or agreed) time had expired, then the insured could request a report of failed mediation. So my decision was really just an application of Cornie. The change of law, such as it was, occurred when the Court of Appeal issued its decision.
As for the other criteria, I do not find that Aviva either prolonged the proceedings or acted vexatiously, considering that it had decisions of two arbitrators in favour. That leaves only success and novelty as the main criteria to consider. And in light of what I said above about the difference between Smith and Pararajasingam, I do not find novelty outweighs success. Beyond that, I find Ms. Chambers’ submission that, generally speaking, the novelty criterion has been applied to aid insureds under access to justice principles has merit, considering that insurers do not have equal problems with access to justice.
Accordingly, I find that Ms. Chambers is entitled to her appeal expenses based on her success.
Aviva submits that the amount claimed is excessive, noting that only $500 was awarded in Nahsari, and Ms. Chambers is claiming nearly eight times as much. However, that award was based mostly on the legal clerk fee of $23, whereas Mr. Alexanian is entitled to the $150 hourly counsel fee, or 6.5 times as much. And Nahsari is 15 years old. The more relevant case in assessing the quantum of expenses is Bains and RBC General Insurance Company, (FSCO P09‑00005, September 8, 2010), a case on which we still rely: see for instance Green and Belair Insurance Company Inc., (FSCO P15-00007, September 19, 2017). As Delegate Blackman noted in Bains, the twenty cases he reviewed indicated an average appeal expenses award of $3,389.11–$4,733.58 where insureds were successful.
I note that Ms. Chambers’ expense claim of $4,402.75 falls at the high end of that average. Further, while the largest part of the expenses on appeal are preparation, Ms. Chambers did not have to proceed to an appeal hearing, so some expenses were saved on that account. I also find the hours claimed for research somewhat high, considering that much had already been done for the motion. As Arbitrator Makepeace stated in Henri and Allstate Insurance Company of Canada, (OIC A‑007954, August 8, 1997), the overriding consideration in fixing expenses is reasonableness. Accordingly, I am reducing the award by a few hours to $3,750.00.
I find that Aviva Canada Inc. shall pay Ms. Chambers $3,750.00 in appeal legal expenses, inclusive of disbursements, HST, and preparation for this appeal expense hearing.
November 24, 2017
David Evans Director’s Delegate
Date
Footnotes
- The Statutory Accident Benefits Schedule — Effective September 1, 2010, Ontario Regulation 34/10, as amended.