Financial Services Commission of Ontario

Neutral Citation: 2018 ONFSCDRS 24

FSCO A15-000521

BETWEEN:

NEIL CONDISON Applicant

and

TD GENERAL INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Lynda Tanaka, Arbitrator

Heard: By written submissions completed December 12, 2017

Appearances: Mr. David J. Levy, Counsel for the Applicant Ms. Jennifer Beresford, Counsel for the Insurer

Issues:

The Applicant, Mr. Neil Condison, was injured in a motor vehicle accident on August 1, 2013 and sought accident benefits from TD General Insurance Company (“TD”), 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 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.

A decision was issued dated October 12, 2017.

The issues in this Expense Hearing are:

1. Is either the Applicant or TD liable for the opposing party’s expenses incurred respecting the Hearing?

2. If one of the parties is liable for the other party’s expenses, what is the quantum of the expenses incurred respecting the Hearing for which the other party is liable?

3. Is either party liable for the expenses incurred respecting the Expense Hearing and, if so, in what amount?

Result:

1. The Applicant is liable for the expenses of TD incurred respecting the Hearing except for the expenses of TD incurred respecting the Pre-Hearing held November 13, 2015.

2. The Applicant is liable for the expenses of TD and disbursements in the amount of $23,055.31 inclusive of HST.

3. Each party shall bear their own expenses for the Expense Hearing.

EVIDENCE AND ANALYSIS:

At the Arbitration Hearing, the Applicant was found to be entitled to approximately three months of income replacement benefits and interest on overdue benefits, but not to any of the medical rehabilitation benefits or the cost of examinations claimed. The decision that flowed from the Arbitration provided as follows with respect to expenses:

If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, any party requesting expenses shall file with me and with the opposing party written submissions setting out the request for expense and any supporting material within 30 days of the issuance of this decision. The opposing party shall file with me and with the party requesting expenses its responding submissions within 15 days of receipt of the request for expenses. The party requesting expenses shall file with me and the opposing party its reply material within 10 days of receipt of the responding material. I will determine the entitlement and quantum of expenses in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code (“DRPC”).

TD’s submissions requesting an Order for expenses was served by letter dated November 17, 2017. The Applicant responded with his own request for an Order awarding him expenses by letter dated December 5, 2017. TD replied with further submissions dated December 12, 2017.

TD requests an Order awarding it expenses and disbursements in the amount of $28,856.84 including HST. The Applicant’s claim for expenses and disbursements is in the amount of $60,499.93 including HST.

I have considered the various relevant criteria from the DRPC as set out below. The two criteria related to attendances for examinations under either section 42 or section 44 of the Schedule were not relied on by TD and are not relevant.

Criteria 1: Each party’s degree of success in the outcome of the proceeding

TD submits that it was the party that was substantially successful in the arbitration. The Applicant failed to obtain an Order with respect to income replacement benefits for any period beyond a few months. The Applicant was not successful on the majority of his claims.

The Applicant submits that he was very successful in the Arbitration. He relies on the admission by TD about two weeks prior to the Pre-Hearing before Arbitrator Schnapp that the Applicant’s injuries fell outside the Minor Injury Guideline (“MIG”).² Within six months of that admission, TD had approved benefits up to the $50,000 limit for treatment plans and expenses.

Criteria 2: Any written offers to settle that were made in accordance with the rules of practice and procedure applicable to the proceeding after the conclusion of Mediation and before the conclusion of the Arbitration

The parties agree that there were no offers made in accordance with the rules of practice and procedure applicable to the Arbitration at any point in the process. The Applicant submits that he was genuinely interested in settlement but makes no explanation for the failure to use the settlement offer process under the DRPC.

Criteria 3: Whether any novel issues are raised in the proceeding

There were no novel issues raised.

Criteria 4: The conduct of a party or a party’s representative that tended to prolong, obstruct or hinder the proceeding, including the failure to comply with undertakings and orders.

There was no written statement of agreed facts provided to me.

TD argues that the Applicant prolonged, obstructed and hindered the proceedings by failing to comply with orders and undertakings concerning production of his income records (including his income tax returns and employment records) and his OHIP summary. When the Applicant failed to produce documents in a timely manner, the Hearing was adjourned for a year to allow that production to occur. TD requested a resumption of the Pre-Hearing before Arbitrator Schnapp but withdrew the request when the Applicant agreed to provide further documents.

The Applicant faced a number of issues with respect to production: he did not have records in part because he did not file income tax returns for several years and he apparently paid little or no attention to keeping proper records. He failed to produce records that he did have and some he should have had. The production that did come on the income replacement benefits issue was undeniably late in the proceedings and was inconsistent and incomplete. Indeed the Applicant’s evidence and income documents were inconsistent with what the Applicant had told the witness Frank Martino both as to the history of his employment and as to his annual income. As a result Mr. Martino’s evidence was not helpful to me.

The Applicant complains of TD’s failure to pay interest and expenses when it approved and paid outstanding treatment plans in March 2016. He submits that TD’s position on the issue of an application for catastrophic impairment was inconsistent and the correspondence sent was confusing.

Criteria 5: Whether any aspect of the proceeding was improper, vexatious or unnecessary

TD argues that the Applicant’s claims had little, if any, chance of success and therefore were vexatious and unnecessary. TD also argues that the pursuit of medical benefits in excess of the statutorily mandated limits for non-catastrophic cases was an improper and vexatious claim. Further, the Applicant failed to quantify his claim for income replacement benefits in a timely way.

The Applicant argues that his claim was meritorious and genuine and that there was no frivolous or vexatious conduct on his part or that of his counsel. He did not provide any response as to why he did not provide the documents that were requested by TD in a timely manner. Nor did he explain the claim to entitlement to treatment plans that were in excess of the $50,000 limit when his real interest was the interest claim.

ISSUE ONE: Is either the Applicant or TD liable for the opposing party’s expenses incurred respecting the Hearing?

I find that TD was the successful party. The medical benefits, cost of examinations and the cost of the x-ray that were claimed could not be approved under the policy limit. The Applicant’s claim for income replacement benefits was dismissed based on the evidence. He was claiming benefits for two years after the accident and post-104 week benefits. He did not succeed beyond securing confirmation of a few months of entitlement to income replacement benefit (which had already been paid by the time of the Hearing) plus interest.

I find that the Applicant’s claims were vexatious and improper. As noted above, the evidence in the documents and the Applicant’s testimony was inconsistent with the facts given to Mr. Martino on which his report was based. That inconsistency should have been apparent to the Applicant at some point in the Hearing preparation. Also, the Applicant was working and employed during a period for which he was claiming and receiving income replacement benefits. A careful study of the chronology of his employment would have flagged the issue prior to the Hearing.

I find the Applicant is liable for TD’s Expenses incurred for the Arbitration Hearing, including preparation for it, including the expenses related to:

1. the production issues that remained outstanding after the first Pre-Hearing conference and that required third party summons to be issued,

2. the time spent on the request for resumption of the Pre-Hearing and resolution of the production issues, and

3. Preparation for and attendance at the Hearing.

I accept the Applicant’s submission that his Application for Arbitration was appropriate and justified. Until the report of Dr. Oshidari two weeks prior to the Pre-Hearing conference, the Applicant was denied benefits on the basis that his injuries fell within the MIG. In those circumstances it was reasonable for him to pursue his options through mediation and arbitration. Therefore I find that the Applicant is not liable for TD’s expenses for the preparation for and attendance at the Pre-Hearing of November 13, 2015.

I find that TD is not liable for any of the Applicant’s expenses for the period up to and including the Pre-Hearing conference, even though the Applicant was acting reasonably in commencing the Arbitration. TD denied the benefits based on the independent assessment reports that it had obtained and, on receipt of Dr. Oshidari’s opinion, it changed its position. I am persuaded by the submissions of TD, when considered with the evidence led at the Hearing, that the Applicant unduly prolonged the arbitration process and Hearing and further that he pursued claims that had no chance of success. He did not utilize the settlement offer process to resolve the matter. His success was extremely limited, especially when compared to what he was claiming. TD will have to absorb part of its own costs and it would not be reasonable to impose greater expenses on TD in the circumstances of this case. It was the successful party in a proceeding marred by vexatious claims and delay on the part of the Applicant.

ISSUE TWO: If one of the parties is liable for the other party’s expenses, what is the quantum of the expenses incurred respecting the Hearing for which the other party is liable?

With respect to the expenses claimed, I have ruled that the Applicant is not liable for the expenses related to the teleconference Pre-Hearing held in November 2015. TD claims $4,788.42 for preparation for that teleconference and $36.83 for attendance at the Pre-Hearing. Those amounts are deducted from the total claim. The balance of the expenses claimed are approved as reasonable, bearing in mind the difficulties with production, the volume of documents related to the income replacement benefit claim in particular, and the length of the Hearing. The Hearing was held over six days, and six witnesses testified, including the Applicant’s family doctor and four health care professional experts. I therefore find that the Applicant is liable for TD’s expenses in the amount of $17,147.78 plus HST in the amount of $2,229.21.

There are three disbursements claimed:

1. $2,281.70 for copies of the arbitration briefs produced by Print Three (and HST of $296.62);

2. $500.00 for the expert witness who testified, Dr. Oshidari, plus $65.00 for HST; and

3. $600.00 for Dr. Oshidari’s attendance at the Hearing to testify plus HST of $78.00.

Dr. Oshidari testified from 10:00 a.m. to approximately 12:30 p.m. on July 6, 2017. The Expense Regulation³ is specific that the total amount that can be awarded for expert witness preparation is $500.00 and for attendance at the Hearing is $200.00 per hour of attendance. Therefore HST should not be included in the disbursements claimed and the claims are reduced by $143.00.

While Dr. Oshidari’s testimony itself did not take three hours in total, I find that it is reasonable to approve his being paid for the three hours, so as to account for his setting up his file in the Hearing room and meeting with counsel that morning in preparation to testify. The total disbursements claim is approved in the amount of $3,678.32 inclusive of HST where properly recoverable.

In summary, the Applicant is liable for the expenses of TD in the amount of $23,055.31, being composed of $17,147.78 plus HST in the amount of $2,229.21 and for disbursements in the amount of $3,678.32 inclusive of HST.

ISSUE THREE: Is either party liable for the expenses incurred respecting the Expense Hearing and if so, in what amount?

Each party should bear their own expenses related to this Expense Hearing. I have given effect to the Applicant’s submission that instituting the arbitration proceeding was reasonable by denying TD recovery of its expenses for the Pre-Hearing process. Therefore TD’s success is mixed for this Expense Hearing, as is the Applicant’s.

January 31, 2018

Lynda Tanaka Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2018 ONFSCDRS 24

FSCO A15-000521

BETWEEN:

NEIL CONDISON Applicant

and

TD GENERAL 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:

1. The Applicant is liable for the expenses of TD incurred respecting the Hearing except for the expenses of TD incurred respecting the Pre-Hearing held November 13, 2015.

2. The Applicant is liable for the expenses of TD and disbursements inclusive of HST in the amount of $23,055.31.

3. Each party shall bear their own expenses for the Expense Hearing.

January 31, 2018

Lynda Tanaka Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule - Effective September 1, 2010, Ontario Regulation 34/10, as amended.
2. 2Superintendent’s Guideline No. 02/10.
3. 3O. Reg. 664, Schedule, Dispute Resolution Expenses, subsections 5(3) and 5(4).