Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 100
FSCO A15-006347
BETWEEN:
EUGENE BOTEZATU
Applicant
and
CERTAS HOME AND AUTO INSURANCE COMPANY
Insurer
DECISION ON EXPENSES
Before:
Arbitrator Alan G. Smith
Heard:
By written submissions due April 23, 2018
Appearances:
Mr. Carlos Ortiz participated for Mr. Eugen Botezatu
Mr. Patrick M. Baker participated for Certas Home and Auto Insurance Company
BACKGROUND:
Mr. Botezatu was injured in an automobile accident on July 24, 2013, and sought accident benefits from Certas Home and Auto Insurance Company (“Certas”) under the applicable Accident Benefit Schedules.1 An Application for Arbitration (the “Application”), was filed with the Financial Services Commission of Ontario (“FSCO”) on September 9, 2015. Subsequently an arbitration hearing was scheduled to begin on August 8, 2017. The only substantive issue in dispute was Non-Earner Benefits (“NEB”).
On August 2, 2017, the parties reached a settlement agreement which was reported to FSCO. Pursuant to the FSCO Dispute Resolution Practice Code (the “Code”) the Application was administrative closed by FSCO 20 days later.
The Insurer did not receive an executed Full and Final Release or Settlement Disclosure Notice from the Applicant. On August 28, 2017, the Applicant filed a new Application for Arbitration with the Ontario License Appeal Tribunal (“LAT”). The only substantive issue in dispute was the same NEB which had been claimed in the now closed FSCO Application.
The Insurer subsequently requested that the FSCO Application be re-opened on the basis that FSCO was properly seized of the NEB dispute and should maintain jurisdiction over it. A resumed pre-hearing discussion was held on March 8, 2018. During the course of the discussion, the Applicant’s counsel advised that the Applicant wished to withdraw the FSCO Application and proceed with an arbitration hearing at the LAT. The Insuer did not consent to the withdrawl and advised it would be seeking its expenses in defending the Application.
The LAT Application was withdrawn by the Applicant on March 8, 2018, just prior to the commencement of a hearing at that Tribunal.
ISSUES:
The issue in this Expense Hearing is:
- Is the Insurer entitled to expenses arising from this proceeding and, if so, in what amount?
Result:
- The Applicant shall pay to the Insurer $6,037.84 inclusive of disbursements and all applicable taxes.
THE LAW
The Insurer is claiming expenses in the total amount of $9,631.91, including legal fees, disbursements and H.S.T. The Applicant submits that the Insurer should bear its own expenses in defending the Application.
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 of 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:
(a) Each party’s degree of success in the outcome of the proceeding;
(b) Any written offers to settle made in accordance with subsection (3);
(c) Whether novel issues are raised in the proceeding;
(d) 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;
(e) Whether any aspect of the proceeding was improper, vexatious or unnecessary; and
(f) 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, four of the above criteria are relevant: the degree of success in the outcome, whether novel issues were raised in the proceeding, whether the conduct of a party or a party’s representative tended to prolong, obstruct or hinder the proceeding, and whether any aspect of the proceeding was improper, vexatious or unnecessary.
ARGUMENT AND ANALYSIS
Degree of Success
In its written submissions the Insurer argues: “…it was completely successful in defending the Application for Arbitration. Mr. Botezatu was not successful in any aspect of the arbitration”.
The Applicant responds in his written submissions: “The Arbitration Hearing never took place, therefore, it cannot be determined [sic] each party’s degree of success with respect to the issues in dispute”.
I agree with the Applicant. Rule 75.2 (a) refers to relative success “in the outcome of a proceeding” which, in my view, means after an adjudication of the merits of the Application. In the present case the Application did not proceed to a hearing, therefore I am unable to determine which party enjoyed a greater degree of success. As a result, the first criteria has no bearing on the award of expenses.
Whether Novel Issues were Raised in the Proceeding
In its written submissions, the Applicant states that:
A novel preliminary issue was raised concerning Mr. Botezatu’s non-compliance with an EUO request properly made, and the impact that non-compliance with an EUO [request for an Examination Under Oath] has on an arbitration. Mr. Botezatu complied with the EUO prior to the release of the preliminary issue decision, rendering that aspect moot.
As with Rule 75.2 (a), in my view the phrase “raised in the proceeding” refers to an adjudication on the merits of the Application. In the present case the issue of non-compliance with the EUO never proceeded to an arbitration hearing. As a result, the third criteria also has no bearing on the award of expenses.
Whether the conduct of a party or a party’s representative tended to prolong, obstruct or hinder the proceeding
The Insurer argues that the Application has been ongoing since August 4, 2015, and that the conduct of Mr. Botezatu and his representatives have prolonged the proceeding. In its written submission it states:
Mr. Botezatu delayed this proceeding by longstanding refusal to submit to an EUO, which led Certas to bring a preliminary issue hearing to determine whether non-attendance was sufficient to preclude this proceeding. Mr. Botezatu attended an EUO prior to the preliminary issue hearing, rendering that preliminary issue moot. However, prior to attending the EUO, Mr. Botezatu continued to be non-compliant in spite of his purported agreement to submit to same.
This repeated pattern of non-attendance led to increased costs and disbursements to Certas. It required that Certas make submissions on the EUO issue, where he did not comply until after Certas’ submissions were due. Certas therefore submits that the costs associated with arranging and conducting the EUO should be considered in this expense hearing, where the EUO issue was a key issue for much of the life of this proceeding.
The Insurer also wishes me to note the Applicant’s rescinding of the reported settlement on August 2, 2017 and his subsequent, “unnecessary resistance” to the re-opening of the FSCO Application.
The Applicant responds that, “A settlement offer was made and accepted by Mr. Botezatu, however, he had the right to change his mind, in accordance with the cooling off period”.
I agree with the Insurer that the Applicant’s initial resistance to attending an EUO and the resulting preparation for a preliminary issue hearing prolonged, obstructed and hindered the process. This is a factor I will take into account with regard to the Insurer’s expense request.
In my view, it is also true that the Applicant had a right to rescind from the settlement agreement during the “cooling off” period provided in the applicable settlement regulation. Notwithstanding that, I also agree that the re-convened pre-hearing teleconference held on March 8, 2018, unnecessarily prolonged and hindered the process. The Applicant could have, concurrent with filing the LAT Application, made a request to FSCO to withdraw the Application with the acceptance of possible expense consequences. This is also a factor which I will take into account with regard to the Insurer’s expense request.
Whether any aspect of the proceeding was improper, vexatious or unnecessary
In its written submissions the Insurer cites Director’s Delegate Evans decision in Omarashvili v. Echelon General Insurance2 for the proposition that where a proceeding was unlikely to have much chance of success, costs should be awarded in favour of the Insurer. The Insurer further argues that:
… prior to the commencement of this Application for Arbitration, Mr. Botezatu knew or ought to have known that he had little chance of success and his actions were completely devoid of merit. It can only be presumed this was Mr. Botezatu’s motivation…on August 2, 2017, when he decided to accept Certas’ settlement offer.
There is no indication that Mr. Botezatu intended to follow through with this settlement agreement, and instead appears to have accepted Certas’ settlement offer in order to avoid the need to withdraw this arbitration (along with the costs consequences of such a withdrawal).
Instead of signing the settlement documents, Mr. Botezatu instead commenced a dispute resolution proceeding before the LAT. No costs consequences typically attach under the LAT system. A hearing was scheduled to take place before the LAT on March 13—14, 2018. Mr. Botezatu’s primary argument against reopening this arbitration at the motion on March 8, 2018 was the fact that the parties were on the verge of a hearing before the LAT on NEB, and that it would be inefficient and duplicative to abandon that proceeding and pursue this arbitration at the eve of the LAT hearing.
…[the Applicant] had no intention of following through with the LAT hearing on NEB. Mr. Botezatu withdrew his LAT dispute on March 12, 2018, further illustrating the futility of the NEB claim that has been pursued, at considerable and unreasonable expense to Certas, since 2015.
Mr. Botezatu counters in his written submissions:
Mr. Botezatu appealed bona fide to the Licence Appeal Tribunal due to the fact that FSCO was no longer accepting applications for arbitration….There is ongoing LAT Litigation, costs will be awarded pursuant to the Licence Appeal Tribunal Common Rules of Practice and Procedure.
I cannot accept the Insurer’s argument that the Applicant’s NEB claim was unlikely to have been successful at an arbitration hearing. It was never adjudicated on the merits. I also reject the submission that the settlement agreement is evidence that the Applicant, “knew or ought to have known that he had little chance of success” with regard to the NEB claim. It is well known that a party may enter into settlement agreements for a variety of reasons besides having a weak case. The fact that the Applicant withdrew the LAT Application is also not evidence that his NEB claim was “futile”. The Applicant’s representative states that the LAT litigation is “on-going”. I take this to mean that the Applicant’s intention is not to abandon the LAT Application but to refile in the future. Given the Law Society of Ontario’s Paralegal Rules of Conduct proscription of attempting to deceive a tribunal3, I will take the representative’s statement as factual.
In the result, I find that there is no evidence that any aspect of the proceeding was improper or vexatious. As far as there being unnecessary elements of the proceeding, I have addressed that above, having found that the some of the Applicant’s actions (or inactions) unnecessarily prolonged, obstructed and hindered the process. This is also a factor which I will take into account with regard to the Insurer’s expense request.
THE INSURER’S BILL OF COSTS
The Jurisprudence
In Henri and Allstate Insurance Company of Canada,4 Arbitrator Makepeace provided guidance to the general principles arbitrators should consider when deciding these cases, including, but not limited to:
the overriding consideration in fixing arbitration expenses is reasonableness.
a line-by-line assessment of the expenses claimed is not appropriate. Rather, the Arbitrator should make a global assessment of reasonable expenses.
It has long been accepted that the Statutory Accident Benefit Schedule is consumer-oriented legislation, designed so that access to justice is available to the public without fear of exorbitant costs or other consequences5.
The Supreme Court of Canada's decision in Smith v. Co-operators General Insurance Co6 established that consumer protection is one of the main objectives of automobile insurance law. In that decision, Justice Gonthier reasoned:
There is no dispute that one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance. The Court of Appeal was unanimous on this point and the respondent does not contest it. In Insurance Law in Canada (loose-leaf ed.), Professor Craig Brown observed, that, “In one way or another, much of insurance law has as an objective the protection of customers”.
Bearing these principles in mind, a line-by-line analysis of the bill of costs is virtually impossible. The breakdown in the Insurer’s bill of costs submitted does not provide sufficiently detailed information to do so for the several staff members who worked on the file. A more “global” approach to assessing expenses under these circumstances makes sense.
Fees
I found above that the Applicant (or his representative’s) initially refused to attend an EUO, forcing the Insurer to prepare for a preliminary issue hearing. He (or his representative) also necessitated a further pre-hearing conference before withdrawing the Application. These actions prolonged, obstructed and unnecessarily hindered the proceeding. Any work hours incurred by the Insurer with regard to those actions will therefore be reimbursed.
As I also explained above, I find that the NEB claim is still alive, and will eventually be dealt with by the LAT. As a result, the hours spent by the Insurer defending the NEB claim cannot be properly characterized as time “thrown away”. I therefore conclude that any hours spent by the Insurer in the normal course of preparing a defence to that claim are within the purview of the LAT. As a result, I decline to reimburse the Insurer for those hours.
Accordingly, the following number of hours will be reimbursed at the applicable Legal Aid Ontario rates:
Counsel Schrieder: 11. 9 hours @ $136.43 = $1,623.51
Counsel Hanna: 1.8 hours @ $109.13 = $196.43
Counsel Low: 11.4 hours @ $109.13 = $1,244.08
Counsel Baker: 9.8 hours @ $109.13 = $1,069.47
Law Clerk Cheung: 15.2 hours @ $32.37 = $492.02
Total Reimbursable: = $4,625.51
Disbursements
Disbursements are claimed for mail, photocopies, courier expenses, expert conduct fees and EUO Fees. All the disbursements requested appear to be allowable under the FSCO Expense Regulation. They also all seem reasonable. I will therefore allow the full amount claimed: $717.71.
CONCLUSION
Total Legal Fees:
Disbursements:
$4,625.51
$717.71
HST @ 13%:
$694.62
TOTAL AWARD FOR ALL FEES, DISBURSEMENTS AND HST:
$6,037.84
For the reasons set out above, the Applicant shall be ordered to pay to the Insurer its expenses in respect of the Application, fixed in the amount of $6,037.84 (inclusive of fees, disbursements and any applicable taxes).
May 8, 2018
Alan G. Smith
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 100
FSCO A15-006347
BETWEEN:
EUGENE BOTEZATU
Applicant
and
CERTAS HOME AND AUTO INSURANCE COMPANY
Insurer
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 Applicant shall pay to the Insurer $6,037.84 inclusive of disbursements and all applicable taxes.
May 8, 2018
Alan G. Smith
Arbitrator
Date
Footnotes
- Effective September 1, 2010, the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the ''New Regulation'') came into force. The transition rules in the New Regulation provide that, subject to certain exceptions, benefits that would have been available pursuant to the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996 (the ''Old Regulation'') shall be paid under the New Regulation, but in amounts determined under the Old Regulation. As a result, both the Old Regulation and the New Regulation are applicable to accidents that occurred on or after November 1, 1996 and before September 1, 2010 and both should be considered.
- (FSCO Appeal P08-00029, December 23, 2010).
- See, Rule 4.01 (5) (c).
- (FSCO A-007954, August 8, 1997), see also (Nguyen and TD Home, FSCO A04-002390, April 9, 2018).
- (Nguyen and TD Home), Supra, Footnote 4.
- [2002] 2 S.C.R., 129, 2002 SCC 30.