Neutral Citation: 2017 ONFSCDRS 32

FSCO A13-013882 and A14-003591

BETWEEN:

SAHRA GULED and ISMAIL GULED

Applicant

and

PERSONAL INSURANCE COMPANY OF CANADA

Insurer

DECISION ON EXPENSES

Before: Arbitrator Alan G. Smith

Heard: By written submissions due December 7, 2016

Appearances:

Ms. Sahra Guled and Mr. Ismail Guled did not participate Ms. Gabriella Deokaran did not participate for Ms. Sahra Guled and Mr. Ismail Guled Ms. Catherine Zingg participated for Personal Insurance Company of Canada

Issues:

The Applicants, Ms. Sahra Guled and Mr. Ismail Guled, were injured in a motor vehicle accident on February 7, 2012 and sought accident benefits from Personal Insurance Company of Canada ("Personal"), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Ms. Sahra Guled and Mr. Ismail Guled, through their representative, applied for arbitration at the Financial Services Commission of Ontario ("FSCO") under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

I conducted the Arbitration Hearing in person at ADR Chambers on June 15, 16 & 19, 2015; November 30, 2015; December 2, 3 & 4, 2015; February 3 & 4, 2016; and by written submissions completed on July 19, 2016. On October 5, 2016, I issued my written Decision with reasons, dismissing all the Applicants' claims. On the issue of expenses, I ruled expenses were payable. In the event that the parties could not come to an agreement on the matter of expenses, either party could request in writing an appointment before me to determine expenses, provided the request was made within 30 days from the date the Decision on all other issues in dispute was issued. I therefore remain seized of the expense issue. Personal subsequently requested that a determination of expenses be made, and I requested written submissions from the parties. Written submissions were received from the Insurer. The Applicants' Counsel made no submissions.

The issue in this Expense Hearing is:

What is the quantum that the Applicants are liable to pay with regards to the Insurer's expenses in respect of the Arbitration proceeding under section 282(11) of the Insurance Act?

Result:

The Applicants are jointly and severally liable to pay to the Insurer its expenses in respect of the Arbitration proceeding, fixed in the amount of $27,592.37 (inclusive of fees, disbursements and any applicable taxes).

EVIDENCE AND ANALYSIS:

INTRODUCTION

The Insurer is claiming expenses in the total amount of $27,592.37, including H.S.T., which is comprised of $24,204.20 in legal fees and $3,388.17 in disbursements.

Rule 79.1 of the FSCO Dispute Resolution Practice Code ("the DRPC") provides that where an Arbitrator has determined all issues in dispute except expenses, and the parties cannot agree on entitlement or amount of expenses, either party may request, in writing, an Expense Hearing within 30 days from the date the Decision on all other issues in dispute. My jurisdiction to conduct an Expense Hearing is set out in section 282(11) of the Insurance Act.

Pursuant to Rule 75.2 of the DRPC, an Arbitrator is to consider only the following six 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; and
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.

In this present Expense Hearing, three of the above criteria are relevant: the degree of success in the outcome; the written offers to settle in accordance with Rule 76; and the conduct of the parties (or party representatives) that tended to prolong the proceedings.

ENTITLEMENT TO EXPENSES

Degree of Success

The Insurer was 100% successful in defending all the issues that were in dispute at the Arbitration Hearing. Therefore, the Insurer is entitled to expenses.

Written Offers to Settle

On March 4, 2015, the Insurer made a written offer to have the Applications for Arbitrations dismissed without seeking expenses. This offer was repeated on May 4, 2015, approximately six weeks prior to the Hearing. This offer was declined by the Applicants. On June 9, 2015, approximately one week before the start of the Arbitration Hearing, the Applicants made an offer to settle on a full-and-final basis for $60,000.00. This offer was declined by the Insurer. Obviously, given the present expense award, the Insurer's offer was better than the Applicants' ultimate result at the Arbitration.

Conduct of the Parties and/or their Representatives

In its written submissions, the Insurer states that "the Arbitration was delayed several times because the Applicants and their witnesses arrived late or took time to prepare for the Hearing during time that was scheduled for the Hearing". I agree. Furthermore, as I noted in my Arbitration Decision, further time was wasted in the Hearing dealing with Ms. Guled's request to enter photocopies of birth certificates into evidence which, contrary to the DRPC, had never been disclosed to the Insurer.

In my view, the Arbitration Hearing was also made unduly complex and lengthy due to lack of preparation on the part of the Applicants' counsel. For example, a Joint Document Brief was entered into evidence which contained OHIP Records from Ms. Guled. The OHIP Records clearly contradicted Ms. Guled's testimony regarding what periods of time she was outside Canada. It was not until the Applicant's testimony at the Hearing that she advanced the theory that her OHIP card had been stolen and that someone else had been using it. No evidence was presented to support this allegation.

The Arbitration Hearing stretched over nine days and eight months. The Insurer had to defend two Applications which included claims for Caregiver Benefits, Income Replacement Benefits, Housekeeping and Home Maintenance Benefits as well as numerous Medical Benefits.

CONCLUSION

For all these reasons, I have determined that the Insurer is entitled to its expenses from this Arbitration proceeding.

Assessment of Expenses

The Insurer submitted a comprehensive Bill of Costs, detailing the hours spent at the applicable Legal Aid Ontario Rates in defending the Applicants' claims. I was also provided with a detailed list of the disbursements incurred by Personal. The total legal fees claimed are $24,204.20. The total disbursements being claimed are $3,388.17. Therefore, the total expenses being claimed by the Insurer, including applicable taxes, are $27,592.37.

Given my comments above regarding the length and complexity of the Hearing, especially the fact that there were two Applications in dispute, I find the Insurer's fee breakdown reasonable. Parenthetically, I note that the Insurer has not included any fees for preparing its submissions on expenses.

I am also accepting the disbursement list as presented by the Insurer's counsel. All the amounts claimed by the Insurer appear to be within the maximum limits permitted under the Expense Regulation.

EXPENSES:

After considering the complexity of this Arbitration Hearing, the time spent, the applicable Legal Aid Fee structure, written submissions of the Insurer, the supporting documentation filed, and using the maximum amounts permitted under the Expense Regulation² as guidance, I find it appropriate to fix the Insurer's expenses at $27,592.37, inclusive of all fees, disbursements and any applicable taxes.

February 6, 2017

Alan G. Smith Arbitrator

Date

Financial Services Commission of Ontario