Neutral Citation: 2017 ONFSCDRS 64 FSCO A15-005804

BETWEEN:

JOSE FREITAS Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

REASON FOR DECISION

Before: Arbitrator Marcel D. Mongeon

Heard: In person at ADR Chambers on February 8, 2017

Appearances: Mr. Fawad Siddiqui participated for Mr. Jose Freitas Mr. Jonathan Schrieder participated for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Mr. Jose Freitas, was injured in a motor vehicle accident on December 1, 2013 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 the Applicant, 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 issues in this Hearing are:

Is the Applicant entitled to withdraw his Application for Arbitration?
What expenses, if any, is either party entitled to?

Result:

This Application for Arbitration is withdrawn on a with-prejudice basis.
The Applicant shall pay the Insurer $4,535.23 forthwith, comprising $250.00 for disbursements (no HST) and $4,285.23 for expenses ($3,792.24 plus HST of $492.99).

EVIDENCE AND ANALYSIS:

This matter was scheduled for a three-day Hearing beginning February 8, 2017. At the outset of the Hearing, the Applicant sought to withdraw the Application for Arbitration. The Insurer was prepared to agree to the withdrawal on a with-prejudice basis provided that I also consider its request for its expenses.

Rule 70.3 of the Dispute Resolution Practice Code (“DRPC”) makes it clear that “Where a party does not agree to the withdrawal” I may permit the withdrawal on such terms and conditions as I consider just, and I may award expenses as permitted by Rule 75.

Given the Applicant’s withdrawal request and the Insurer’s request for its expenses, I order the Application for Arbitration withdrawn on a with-prejudice basis. I further consider the awarding of expenses pursuant to Rule 70.3 as follows.

Expenses in an Arbitration Hearing are governed by Regulation 664, R.R.O. 1990, Automobile Insurance made under the Insurance Act, as amended. Section 12 thereof, as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, sets out a number of criteria that an Arbitrator shall consider in awarding all or part of the expenses of an Arbitration proceeding. These criteria are (with some editing):

Each party’s degree of success in the outcome of the proceeding.
Any written offers to settle […]
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 […]
Whether any aspect of the proceeding was improper, vexatious or unnecessary.
Whether the insured person refused or failed to submit to an examination […]

To respond to each of these criteria in turn, I note:

Given the withdrawal, the Insurer prevailed in all matters in dispute.

There were no offers to settle that were brought to my attention. The Insurer advised that it was not aware that the withdrawal was contemplated by the Applicant until that intention was expressed at the outset of the Hearing.

There were no novel issues presented.

Given that the Insurer had to prepare for a full three-day Hearing and had to attend at the outset of the Hearing, the Insurer has spent time on this matter that could have been avoided if the Applicant had signified his intention to withdraw the Application for Arbitration at an earlier point to the Insurer.

It was not improper, vexatious or unnecessary for the Applicant to wait until the outset of the Hearing to indicate his intention to withdraw the Application for Arbitration.

No relevant circumstances of missing examinations were brought to my attention.

Based on the foregoing, the Insurer is entitled to an expenses award.

In setting applicable rates for representatives, I am guided by Rule 78 of the DRPC. This provides that the legal aid rates should be used unless I am satisfied that a higher rate should be used. Under the foregoing criteria, I find that the normal legal aid rates are appropriate.

I also find that the appropriate amount of time to be awarded for expenses for the Hearing is for one day of Hearing (at 8 hours per day at the appropriate legal aid rate for the Insurer’s counsel); and two days of preparation for the Hearing (at 8 hours per day for each of the counsel and a clerk). Although the actual amount of time spent in the Hearing to consider the withdrawal request was far less than the day which I am allowing, I am allowing one day of the three days that were originally contemplated for the Hearing.

I do not use the full three days of Hearing that were contemplated because Insurer’s counsel admitted that he would be suitably occupied with alternate work in the next two days. However, the cost of one Hearing day is awarded on the basis of time “thrown away”.

I also find that one Hearing day – of the three originally scheduled – is an appropriate indemnity to be awarded to discourage Applicants from leaving their requests for withdrawal to the very last minute. I note that criterion 4 cited above allows me to consider the Applicant’s behaviour which tends to hinder the proceeding. Had the Applicant advised the Insurer earlier of his request to withdraw, it is likely that this matter could have been dealt with more efficiently without requiring the parties’ presence.

The current legal aid tariff rates for the Insurer’s counsel are $136.43 per hour, and $32.37 for a clerk.²

I calculate this to mean 24 hours (1 day of Hearing; 2 days of preparation x 8 hours per day) for the counsel (24 x $136.43 = $3,274.32); and 16 hours (2 days of preparation x 8 hours) for the clerk (16 x $32.37 = $517.92) for a sub-total of $3,792.24, plus HST of 13% ($492.99), for a grand total of $4,285.23.

I also consider appropriate disbursements and note that the Insurer suggested a total of $250.00. I consider this amount eminently reasonable given the volume of documents that were prepared.

EXPENSES:

The total of my award is $4,535.23, comprising $250.00 for disbursements (no HST) and $4,285.23 for expenses ($3,792.24 plus HST of $492.99).

February 27, 2017

Marcel D. Mongeon Arbitrator

Date

Financial Services Commission of Ontario