Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 108
FSCO A14-001776
BETWEEN:
ABDULRAHMAN AL-TAEE
Applicant
and
WEST ELGIN MUTUAL INSURANCE COMPANY
Insurer
EXPENSE DECISION
Before:
Charles Matheson
Heard:
By written submissions completed on May 25, 2018
Appearances:
Mr. L. Scott Smith, lawyer for Mr. Al-Taee
Mr. T. Bond lawyer, for West Elgin Mutual Insurance Company
Issues:
The Applicant, Mr. Abdulrahman Al-Taee, was injured in a motor vehicle accident on September 16, 2011. He applied for and received statutory accident benefits from West Elgin Mutual Insurance Company (“West Elgin”), payable under the Schedule.1 West Elgin denied certain claims made by Mr. Al-Taee. The parties were unable to resolve their disputes through mediation, and Mr. Al-Taee, through his 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.
The issue in this hearing is:
- Is the Applicant entitled to expenses arising from this proceeding and, if so, in what amount?
Result:
- The Applicant is entitled to his reasonable expenses of $11,996.64, inclusive of H.S.T. and disbursements and the expenses of the hearing.
Background
The applicant’s car was hit on the rear passenger’s side by an unidentified driver who did not stop at a stop sign. The Applicant submitted an OCF-1, or application for accident benefits, where he applied for medical rehabilitation benefits and an income replacement benefit (“IRB”). The Insurer initially denied these benefits and kept the Applicant within the Minor Injury Guidelines (“MIG”) of the Schedule. The Applicant continued to receive long term disability benefits from his employer and had made a claim for Canada Pension Plan benefits, since the accident.
The original arbitration was set for June 9, 2015, and the Applicant had commenced a tort action against his own Insurer. On March 31, 2015, counsel for the Insurer contacted the Applicant and advised that the Insurer had obtained an Engineering Report that suggested that the accident was staged. This report had been shared with the accident benefit adjuster and the accident benefits carrier had now taken the position that there had been a misrepresentation in this case and denied any further on-going accident benefits and demanded repayment of all benefits paid. This precipitated a motion by the applicant to exclude the reports that were provided by the tort adjuster.
The motion arbitrator allowed the reports, and the appeal of this decision denied the appeal as being premature, without prejudice to the applicant to raise the issue again after the final decision had been rendered. The final arbitration on this matter was adjourned when the parties agreed to bifurcate the tort action and have the issue of whether the accident was staged go to trial first. The parties also agreed they would be bound by the jury’s decision on the liability trial. The jury found the accident was not staged.
As a result of the jury’s decision on liability the arbitration was settled in principle and the Applicant was provided with an IRB retroactively from the date of the accident, with interest in the amount of $32,779.39, once he had proven his entitlement to same. The Applicant hired an accountant, Mr. J. Hoare, to provide a report to determine the quantum of the IRB, and the interest which had accrued.
Arguments
The Applicant argues that the FSCO Dispute Resolution Practice Code2 (the “Code”) Rule 75, 78 and Section F of the Expense Regulation sets out what items should be considered and the amounts to be awarded by an arbitrator when making an expense hearing award.
The relevant sections of the Expense Regulation found in Section F of the Code reads as follows:.
- 2 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 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.
(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 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.
The Applicant agues the above first three criteria are relevant in this case.
Under criteria a) the Applicant argues that it was the wholly successful party at the arbitration. The settlement was not a compromise and provided the applicant full indemnity for the complete IRB.
Under criteria b), the Applicant suggests that there were no explicit settlement offers, unless the correspondence between the parties in 2012 could be considered a settlement offer. The letter sent at that time by the Applicant requested the full payment of the IRB and the Insurer’s response letter was its denial of the request.
Under criteria c), the Applicant argues that the Insurer took an adversarial approach to the Applicant’s claim. The Applicant was required to participate in an Examination Under Oath, the Insurer kept the Applicant within the MIG, and it chose to share reports between the accident benefit adjuster and the tort adjuster without his permission. The Applicant argues that the issue of improperly sharing information between the two departments, although decided by the interim orders of the motion hearing arbitrator, would have continued to be an issue at the arbitration.
The Applicant is seeking $8,376.77 for legal fees, which reflects the work of counsel who represented the Applicant in regards to the IRB application. The Applicant seeks disbursements costs of $10,064.82 for those expenses apportioned to the IRB arbitration, even though some of the disbursements were also used in the tort context. The total expenses claimed including H.S.T. is $21,438.06. The Applicant argues that his Bill of Costs were calculated in accordance with Rule 78.1 of the Code, as directed under the Legal Aid Services Act, 1998.
The Applicant argues that the accumulated disbursements and fees were apportioned between the tort and the accident benefits arbitration, motion, and subsequent mediations. The Applicant is not seeking a double recovery of his claimed disbursements.
The Applicant argues that when considering the reasonableness of his claimed expenses, in order to uphold the “protective and remedial nature of the legislation” the arbitrator must recognize the difference in position of the Insurer and that of the Insured. In support of this the Applicant relies on the FSCO arbitration decision of Reid and ING Insurance Company of Canada3. The arbitrator in this case suggests that the relationship between the Insured and the Insurer is a contractual one, including the Dispute Resolution process, and the Insurance Act must be interpreted in such a way as to uphold the protective and remedial nature of the legislation.
The Applicant relies on the FSCO arbitration decision Tesgagiogis and State Farm Mutual Automobile Insurance Company4. The Applicant argues that that case is instructive in determining the issue of quantum of expenses. The Applicant argues that the objective of the arbitrator is to fix an amount that is fair and reasonable given the issues, their complexity and the amounts in dispute. Further a pragmatic and broad stroke approach should be used.
The Insurer argues that in relation to the settlement, the Applicant seeks expenses of $21,438.06. None of the amounts claimed pertain to preparation of the arbitration scheduled for September 6, 2017. Essentially, the applicant seeks $0.65 in expenses for every dollar paid in benefits. This offends the rule of proportionality. It is trite to say that the onus is on the Applicant to prove that the expenses claimed are reasonable.
Settlement of the IRB could not have been possible without the Applicant confirming the status of the LTD and CPP claims (June 19, 2017) as well as providing the Insurer with a quantification of the claim (July 21, 2017 while at private mediation). Once this was provided, and the Insurer received their own accounting advice, the IRB issue settled on or before August 18, 2017. There was no full and final release since there continues to be a dispute about the quantification of post age 65 payments. The catastrophic determination is outstanding. In fact, all claims remain open.
The Insurer argues in regards to criteria a) above, that the Applicant argued the liability issue successfully in the tort action and was awarded costs. These have not been disclosed. The Insurer was successful in defeating the Applicant’s motion to exclude the engineering report from the accident benefits claim. The file remains open. Only past and ongoing payments were resolved, thus the outcome was a mixed result.
The Insurer argues in regards to criteria b) above, that there were no settlement offers made in accordance with Rule 76. The amounts at stake did not warrant a hearing on quantum. Simply because the Insurer agreed to pay the claim does not mean they were incorrect in taking he position they did when they took it.
The Insurer argues in regards to criteria c) above, Applicant’s counsel sought to exclude the engineering report which was clearly admissible. This caused a delay from the time it was first disclosed until Arbitrator Alves’ decision in March 2016. Once it was ruled admissible, then the Applicant and Insurer could agree to accept the tort finding which had to be scheduled.
Furthermore, the mediation was fundamentally undermined by the late service of the accounting report, Applicant counsel’s late arrival, and the two-hour delay before an offer was made. It cannot be said that the mediation was conducted in good faith.
The Insurer points out that most importantly, settlement was not possible without some clear demand of what the Applicant was looking for. The Applicant did not provide an actual demand with an accounting report until the eve of the private mediation on July 28, 2017. It could not have been settled earlier.
Finally, the Insurer argues in response to the Applicant’s complaint about being placed in the MIG, not only did this not have anything to do with the issue in dispute, but the Insurer reviewed updated records and removed him from the MIG on its own accord. This is entirely in keeping with its obligations. There had never been an issue with respect to properly claimed and submitted medical benefits. The Applicant’s submissions suggest ongoing adversarial or aggressive positions. No Special Award was paid or even litigated.
In regards to the issue of legal fees the Insurer argues that the dockets cannot be reasonably used to support the claimed costs, as some entries make no sense and some entries have clear mistakes in them. The Applicant’s claim for 10.5 hours in relation to the motion to exclude the engineering report is entirely unreasonable. The Applicant lost the motion because the law was settled that the report was properly admissible. The motion was ill-advised.
The Insurer argues the following in its written submissions:
Filing a Notice of Appeal was not reasonable. The Applicant failed to appreciate that ruling on evidence cannot be appealed until a final decision is rendered, and there was no indication that the evidence would have an impact on the decision. As it happened, the opinion was rejected at the tort trial and a similar finding could have occurred if the matter proceeded to arbitration;
No amounts should be payable for the Applicant’s failed motion and appeal. There is no authority which would allow the Applicant to recover costs for a failed motion and appeal since they were neither reasonably brought nor were they won. The Applicant provides no authority where such claims for expenses were awarded;
The Applicant also seeks 6.65 hours in relation to the tort trial on liability. Nothing should be awarded for this. The Applicant had to prove liability in respect of the tort action regardless of any accident benefits being disputed;
There is no authority, statutory or case law jurisprudence, which grants authority for an arbitrator to make a costs award incurred in relation to a companion tort proceeding. Because the Applicant was successful at the trial, he was awarded his costs. He has been indemnified. The details of this award is not disclosed and therefore the Applicant cannot prove that any claim for expenses have not been indemnified already, regardless of the lack of authority for the claim. Finally, there are no corresponding dockets. The claim is unsupported by any evidence in any event.
In regards to disbursements the Insurer argues in its written submissions the following:
It is trite to say that it is incumbent on the party making a claim for payment must prove that the payment is reasonable;
None of the reports, except Dr. Newell’s report of July 26, 2017 (improperly identified as May 1, 2017), speaks to the issue of entitlement to IRBs. They only speak to issues of disability in relation to tort issues. The reports of Drs. Bailey, Iezzi, Sequiera and Freedman are not payable because they could not be relied upon in terms of giving an opinion regarding accident benefits. None of them opined on accident benefits tests, only tort issues. The Insurer had its s. 44 reports upon which it intended to rely;
Dr. Newell’s report of July 26, 2017 (she saw the Applicant on May 1) was served immediately prior the private mediation on July 28, 2017. The only accident benefits issue that Dr. Newell addresses relates to a catastrophic determination. She thought he met the designation on mental and behavioural grounds even though she is a physiatrist and not qualified to give the opinion. It contained no opinion regarding the test for eligibility for IRBs;
The basis for the settlement agreement was the information that the Applicant was approved for CPP and continued to receive LTD in the amount advised on June 19, 2017. Once this was known and the Applicant provided a quantum calculation, the matter then simply resolved within weeks;
It has never been made clear why the Applicant waited so long to provide the information necessary to resolve this claim.
In summary the Insurer submits that Applicant should be awarded costs based upon 12.75 hours in relation to settling this action: $1,739.99 in fees plus GST of $226.20 for a total of $1,966.19.
The Insurer argues for me to find that the Applicant should receive payment for none of the reports save for the accounting report if this has not already been paid, plus the remaining disbursements. This includes $900.00 for the Hoare Dalton report plus $157.49 for the Medicentre records, $100 for the Application for Arbitration, and $505.70 for photocopies for a total of $1,663.19 for disbursements, less amounts paid for a reasonable total payable amount in the sum of $3,629.38. This is proportional to the amount of the actual settlement.
Decision
It is trite law that the objective of an expense hearing is to fix an amount that is fair and reasonable.
In my view, because of the parties’ different and contentious perspectives on the criteria to award expenses in this convoluted case I will take a broad stroke approach.
In my view of this case, the Applicant did have to pursue his interest and rights to arbitration in order to dispute the Insurer’s position. Therefore expenses are applicable in this case. This is not to say that a settlement of the disputed issues means either party was 100% successful, as there was never such a finding or a subsequent award.
In regards to legal fees, the hearing, if it had commenced, would have been completed in two days or 14 hours. I come to this conclusion as I estimate that this is the amount of time required for two witnesses and some reports to be admitted into evidence plus final oral submissions. In my view, half of the normally regarded FSCO 4:1 ratio of hearing time to preparation time is reasonable. A 2:1 ratio for preparation time is a reasonable ratio considering actual preparation time for the hearing did not occur, but the pre-arbitration preparation did. This brings me to a total of 28 hours at the undisputed rate of $136.47, for a total of $3,821.16.
In regards to the legal fees for the expense hearing, the fee being claimed of $818.82 is reasonable.
In regards to legal fees for the tort, I am unpersuaded that this is recoverable, as the Applicant has already been indemnified for this winning action by the court.
In regards to disbursements, I agree with the Insurer that tort reports and catastrophic impairment reports are not reimbursable, as I am unpersuaded that they have or they would have had any bearing on the issues in dispute at the hearing, had it occurred. There is no evidence that catastrophic impairment or any other issues were being contemplated to be added to the hearing by the parties. Disbursements are therefore fixed in the amount of $5,976.52.
This brings a total of $10,616.50 for legal fees and disbursements plus H.S.T. of $1,380.14 for a total amount of $11,996.64.
In my view of the circumstances of this case including degree of success, consumer protection and access to justice, I find that the Insurer is liable to pay the expenses of the Applicant which is fixed in the amount of the $11,996.64. This includes legal fees, disbursements, H.S.T., and expenses associated with this expense hearing.
Charles Matheson
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 108
FSCO A14-001776
BETWEEN:
ABDULRAHMAN AL-TAEE
Applicant
and
WEST ELGIN MUTUAL 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 is entitled to his reasonable expenses of $11,996.64, inclusive of H.S.T. and disbursements and the expenses of this hearing.
Charles Matheson
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule –Accidents on or after September 1, 2010, Ontario Regulation 34/10, as amended.
- Dispute Resolution Practice Code, Fourth Edition, January 2014.
- (FSCO A05-002870, May 22, 2008)
- (FSCO A14-003779, April 24, 2017)