Neutral Citation: 2018 ONFSCDRS 18

FSCO A15-005769

BETWEEN:

MIHAELA CARIATI Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Arbitrator Alan G. Smith

Heard: By written submissions due December 19, 2017

Appearances: Mr. Stanley Razenberg participated for Mrs. Mihaela Cariati Mr. Paul Omeziri participated for Wawanesa Insurance Company

BACKGROUND:

The Applicant, Mrs. Mihaela Cariati, was injured in a motor vehicle accident on March 5, 2014, and sought accident benefits from Wawanesa Mutual Insurance Company ("Wawanesa"), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mrs. Cariati, through her representative, applied for arbitration at the Financial Services Commission of Ontario ("FSCO") under the Ontario Insurance Act, R.S.O. 1990, c. I.8, as amended.

I conducted the Arbitration Hearing in person at ADR Chambers on June 21, 22, 23, and July 10, 11, 13, and 14, 2017, and by written submissions completed August 28, 2017. On October 30, 2017, I issued my written Decision with reasons. The Decision contained a provision that, if the parties could not come to an agreement on the matter of expenses, either party could request in writing an appointment before me to determine expenses, provided the request was made within 30 days from the date the decision on all other issues in dispute was issued. I therefore remain seized of the expense issue. The parties subsequently requested that a determination of expenses be made, and I requested written submissions from the parties. Written submissions were received from the Applicant and Insurer.

ISSUES:

The issues in this Expense Hearing are:

Is Mrs. Cariati entitled to her expenses of this arbitration?
Is Wawanesa entitled to its expenses of this arbitration?

Result:

Mrs. Cariati is not entitled to her expenses of this arbitration.
Wawanesa is not entitled to its expenses of this arbitration.

EVIDENCE AND ANALYSIS:

INTRODUCTION

The Insurer is claiming expenses in the total amount of $28,382.37, including legal fees, disbursements and H.S.T. The Applicant submits that each party should bear its own expenses of the Hearing.

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:

Each party's degree of success in the outcome of the proceeding;
Any written offers to settle made in accordance with subsection (3);
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, including a failure to comply with undertakings and orders;
Whether any aspect of the proceeding was improper, vexatious or unnecessary; and
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, the parties agree, and I concur, that three of the above criteria are relevant: the degree of success in the outcome, whether novel issues were raised in the proceeding and whether any aspect of the proceeding was improper, vexatious or unnecessary.

ENTITLEMENT TO EXPENSES

Degree of Success

In its written submissions the Insurer argues:

...the key factor supporting a significant award of expense is the fact that Wawanesa was successful with respect to the Arbitration in that the bulk of the Applicants' claims were dismissed. As Arbitrator Smith noted [in the decision]: "In this case the Applicant has only been successful on four relatively minor claims. The vast bulk of the Applicant's claims are denied."

The Applicant responds in her written submissions:

The Applicant acknowledges that the Insurer was largely successful on the issues at the hearing. However, the Applicant was not without recovery, having been awarded approximately $12,750.00 plus interest, in medical, rehabilitation and cost of examination benefits.

I agree with the Applicant. Although the income replacement and attendant care claims were denied, some weight must be given to the Applicant's success regarding the medical, rehabilitation and examination benefits.

Whether Novel Issues were Raised in the Proceeding

In its written submissions, the Applicant states that:

...there was a novel issue within this arbitration proceeding...namely: the issue of whether the monies paid to the third party domestic worker are deductible from the income replacement benefits was a novel issue.

Neither party was able to bring to the Commission's attention any case that considered the issue. The closest decision was that of Perth Insurance Co. v. Surani² which...was of no assistance as it dealt strictly with the interpretation of [Schedule] s.7 (3) (b), not s.7 (3) (a).

Again, I agree with the Applicant that the characterization of the funds provided to the domestic worker constitutes a novel issue. Moreover, although not argued by the parties, I find that the Applicant's argument regarding her entitlement to attendant care benefits vis-à-vis the interpretation of Schedule s. 3 (8) was also novel. It was not unreasonable for her to have sought adjudication of these issues. This also weighs in favour of the Applicant regarding an expense award.

Whether any aspect of the proceeding was improper, vexatious or unnecessary

In its written submissions Wawanesa argues:

...the Applicant's claims for attendant care and income replacement benefits were vexatious or unnecessary in that the Applicant proceeded to an arbitration hearing without supplying the necessary evidence to support or prove the claims.

Mrs. Cariati counters in her written submissions:

With respect to the income replacement benefits claim, all of the necessary evidence that the Applicant had access to for the adjudication of this issue was before the Tribunal. The Tribunal was able to reach its conclusion based on the evidence before it.

With respect to the claim for attendant care benefits, it is respectfully submitted that the Applicant's argument was not without merit. Although the Tribunal did not accept the Applicant's argument on the Application of s. 3 (8) of the Statutory Accident Benefits Schedule to the facts of this case, it cannot be said that the argument was vexatious or improper.

Once again, I concur with the Applicant. Having found, supra, that the Applicant's argument regarding her entitlement to income replacement benefits and attendant care benefits were novel, it cannot therefore be said that it was vexatious or improper to have them adjudicated.

In my view, there also was sufficient evidence before me at the Arbitration Hearing to decide the issues.

CONCLUSION

For all these reasons, I have determined that neither party is entitled to its expenses from this Arbitration proceeding.

EXPENSES:

After considering the degree of success in the outcome of the arbitration, whether novel issues were raised in the proceeding and whether any aspect of the proceeding was improper, vexatious or unnecessary, I find it appropriate that each party should bear their own costs of the arbitration.

January 22, 2018

Alan G. Smith Arbitrator

Financial Services Commission of Ontario