Neutral Citation: 2017 ONFSCDRS 337 FSCO A15-004823

BETWEEN:

SATNAM SANDHU Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Arbitrator Anne Morris Heard: By written submissions completed on November 7, 2017 Appearances: Ms. Samia Alam and Mr. Tamur Shah represented the Applicant Mr. Arthur Camporese represented the Insurer

Issues:

The Applicant, Mr. Satnam Sandhu, was injured in a motor vehicle accident on May 25, 2006 and sought accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Sandhu, 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.

An Arbitration Hearing, including the issue of catastrophic impairment determination, was scheduled to commence on July 31, 2017. The parties advised at the outset of the Hearing that, on consent, the Applicant had withdrawn all issues in dispute except the cost of catastrophic (“CAT”) assessments and expenses.

The parties made oral submissions on the issue of the cost of CAT assessments, further to which I provided a decision in favour of the Insurer. I found that the $2,000.00 cap on assessments under the new SABS applied to rebuttal CAT assessments conducted under the old SABS. The Applicant was therefore not entitled to the balance of the cost of the rebuttal CAT assessments.

The Insurer now seeks its expenses in the amount of $10,868.34 for legal fees and $13,063.08 for disbursements, for a total of $23,931.42. The Applicant proposes that each party should bear their own expenses.

The issues in this Expense Hearing therefore are:

Is either party entitled to its expenses of the Arbitration, and if so, in what amount?

Result:

The Insurer is entitled to its expenses of the Hearing in the amount of $1,500.00, inclusive of disbursements and applicable taxes.

EVIDENCE AND ANALYSIS:

Authority to Award Expenses

Rule 75.1 of the Dispute Resolution Practice Code (“the Code”) provides that:

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 in Rule 78 and the Schedule to the Expense Regulation found in Section F of the Code.

Rule 75.2 of the Code, which sets out the criteria to be considered in awarding expenses, states the following:

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 proceedings;

d. The conduct of a party or 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 – 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.

The Insurer relies on its degree of success and submitted that it had served an offer to settle on the Applicant in which it offered to pay a medical benefit in dispute in the amount of $1,230.00 to settle the arbitration. The Applicant withdrew the claim for this benefit, along with the CAT issue from the arbitration. The Insurer did not make an offer to settle with respect to the cost of rebuttal CAT reports, which was the only substantive issue argued at the Hearing.

The Applicant submitted that the issue argued was a novel one, and there is some merit to that position in that there did not appear to be a case directly on point. The Applicant also points to the consumer protection aspect of the dispute resolution process and access to justice issues noting that under the new dispute resolution process at the License Appeal Tribunal (“LAT”), the parties bear their own expenses absent extreme circumstances.

While this decision is not made pursuant to the LAT rules, principles of reasonableness, consumer protection and access to justice are applicable in the FSCO dispute resolution process.

In Reid and ING Insurance Company of Canada,² Arbitrator Killoran held with respect to arbitration legal expenses, that:

The relationship between insurer and insured is a contractual one. The insured is entitled to access the dispute resolution process at FSCO as a result of that contract. The Insurance Act and its regulations must be interpreted in such a way as to uphold the protective and remedial nature of the legislation of which it follows.

In Halim and Security National Insurance Co./Monnex Insurance Mgmt Inc., Director’s Delegate, Lawrence Blackman held:³

I find that these expense criteria do not exist in a vacuum segregated from the overall legislative intent. Rather, the criteria are defined by and help define the broader, overarching legislative intentions, including consumer protection, as set out by the Supreme Court of Canada in Smith v. Co-Operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, which encompasses a fair and reasonable measure of access to justice.

In the case at hand, I note from the Applicant’s submissions that his request for a CAT determination does not appear to have been frivolous. The Applicant has what appears to be severe pre-existing injuries from a workplace accident in addition to whatever injuries were alleged to have occurred in the motor vehicle accident. The Applicant’s submission in this regard was unopposed. I also note that the CAT issue, which would have likely been the most time-consuming issue at the Hearing, was withdrawn by the Applicant.

I also note, however, that the CAT issue was not withdrawn until shortly before the Hearing. The withdrawal of this issue suggests that the Insurer was successful with respect to this issue. While the Applicant’s arguments with respect to the cost of the CAT assessments appear to be novel, it was nevertheless a losing argument (subject to appeal). I therefore find that the Insurer is entitled to some expenses in an amount which takes into consideration all of the circumstances of this case.

The Insurer’s claim for expenses is excessive. No supporting documentation was provided for the disbursements so that it is impossible to see, for example, what the approximately $9,500.00 claimed to be owing to “Pearce, Cohen” was for.

It is established case law that the overriding consideration in fixing legal expenses is reasonableness.⁴ A line-by-line assessment of the expenses claimed is not required.⁵ The task involves taking a pragmatic, broad-strokes approach with a view to fixing an amount that is reasonable.

In all of the circumstances of this case, I find that an amount of $1,500.00, inclusive of fees, disbursements and applicable taxes, payable by the Applicant to the Insurer is reasonable.

December 20, 2017

Anne Morris 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:

The Insurer is entitled to its expenses of the Hearing in the amount of $1,500.00, inclusive of disbursements and applicable taxes.