Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2018 ONFSCDRS 138
Appeal P17-00026
OFFICE OF THE DIRECTOR OF ARBITRATIONS
CHRISTINA PELLEGRINO Appellant
and
SECURITY NATIONAL INSURANCE CO./MONNEX INSURANCE MGMT. INC. Respondent
BEFORE: David Evans
REPRESENTATIVES: Joseph Campisi Jr. for Ms. Christina Pellegrino Yasna Beheshti for Security National Insurance Co./Monnex Insurance Mgmt. Inc.
HEARING DATE: By written submissions received by July 24, 2018
APPEAL EXPENSES ORDER
Under section 283 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 Regulation 664, R.R.O. 1990, as amended, it is ordered that:
- The parties shall bear their own legal expenses of this appeal.
August 21, 2018
David Evans Director’s Delegate
Date
REASONS FOR DECISION
In an appeal decision dated March 26, 2018, I upheld Arbitrator Winer’s order dated March 20, 2017, that Canada Pension Plan (CPP) payments by an employer should not be included in calculating “gross employment income” for the purposes of income replacement benefits under the SABS–2010.1
Security National now seeks its legal appeal expenses based on its success in resisting the appeal.
The first issue I must determine is entitlement to expenses.
One criterion for consideration in awarding expenses, aside from success, is “whether novel issues are raised in the proceeding”: Rule 75.2(c) of the Dispute Resolution Practice Code.
Ms. Pellegrino submits that, considering the novelty of the issue, no costs should be payable by either side.
Security National submits that the novel issue was determined at the initial hearing, so the only relevant criterion is success.
However, I do not agree that an issue that is novel at arbitration loses its novelty on appeal, at least where the appeal was warranted. In that regard, while I ultimately dismissed the appeal brought by Ms. Pellegrino, I found that the analysis of the Arbitrator was problematic.
For instance, I noted the Arbitrator’s error when he turned gross pay into net. Since the 2010 SABS determine IRBs on gross pay before such deductions, this was incorrect.
Further, I found that neither the Arbitrator’s analysis of “received” nor his application of the ejusdem generis rule that relied upon that analysis were correct.
In addition, I found that the Arbitrator erred in distinguishing Howden and Pafco Insurance Co., (FSCO P00-00028, June 22, 2001) because IRBs were determined based on net income. However, I found that Howden is still relevant because the starting point was and still is gross employment income.
I also rejected Security National’s submission that I owed the Arbitrator any deference regarding his interpretation of the law. I also rejected its submission that the law should be interpreted to reflect the government’s failure to raise the maximum IRB for 22 years.
Rather, I find this case is most similar to J.S. and Guarantee Company of North America, (FSCO P10‑00016, February 16, 2012). In that case, too, there was an unsuccessful appeal of a novel issue. However, I found that the appeal was warranted because of the guidance it provided to insurers and insureds. I ruled that the parties should bear their own legal expenses of that appeal.
I find the same applies here. I find that, given the errors in the Arbitrator’s reasoning, the appeal was warranted. Further, I find that, since the relative merits of success and novelty balance each other, the parties shall bear their own legal expenses of this appeal. In light of this finding, it is not necessary for me to deal with the quantum of expenses.
Since the parties had agreed to argue the arbitration hearing on a without cost basis, this concludes the matter.
August 21, 2018
David Evans Director’s Delegate
Date
Footnotes
- The Statutory Accident Benefits Schedule — Effective September 1, 2010, Ontario Regulation 34/10, as amended.