Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 27
FSCO A14-006170
BETWEEN:
BAGWANDAT (RON) DOOBAY
Applicant
and
CO-OPERATORS GENERAL INSURANCE COMPANY
Insurer
DECISION ON EXPENSES
Before:
Arbitrator Anne Morris
Heard:
In person at Cambridge on November 28, 2017 and by written submissions completed on December 1, 2017
Appearances:
Ms. Georgiana Masgras, legal counsel for Applicant
Mr. Jonathan Kahane-Rapport, legal counsel for Insurer
Issues:
The Applicant, Mr. Doobay, was injured in a motor vehicle accident on April 27, 2009 and sought accident benefits from Co-operators Insurance Company (“Co-operators”), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Mr. Doobay, 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 amended.
The issues in this Expense Hearing are:
- Is the Insurer entitled to its expenses pursuant to Rules 70 and 75 of the Dispute Resolution Practice Code (“Code”) as a result of the Applicant withdrawing his dispute?
Result:
- The Insurer is entitled to its expenses pursuant to Rules 70 and 75 of the Code in the amount of $5,500.00 inclusive of fees, disbursements and applicable taxes.
EVIDENCE AND ANALYSIS:
Background
This Expense Hearing arises out of a request by the Applicant to withdraw his application for arbitration.
The Applicant was involved in a motor vehicle accident on April 27, 2009 as a result of which he claimed to be catastrophically impaired and the Insurer accepted that he was catastrophically impaired (“CAT”). The Insurer subsequently reconsidered its determination based on misrepresentation and ceased paying benefits.
The Applicant commenced this Application for Arbitration on July 28, 2014. The issues in dispute included entitlement to ongoing income replacement benefits, ongoing housekeeping benefits, and ongoing attendant care benefits at the CAT rate of $6,000.00 per month. The Insurer included a claim for repayment of benefits in its response and this is also an issue in dispute in the arbitration.
The Insurer commenced a claim in Superior Court on September 10, 2014, claiming, among other things, damages in the amount of $135,000.00 for breach of the contract of insurance between the Applicant and the Insurer, and misrepresentation. The claim initially did not proceed further than the pleadings stage.
In the meantime, the arbitration proceeded and a Hearing commenced on March 8, 2016 and proceeded for three days during which time the Applicant gave evidence. The matter then appeared to settle but the Applicant rescinded the settlement. The Insurer then brought a motion in the Superior Court Action referred to above, seeking to enforce the settlement. The motion was ultimately heard on September 29, 2017 and subsequently denied.
In the meantime, the Applicant commenced an action in Superior Court on March 14, 2016, shortly after the settlement was rescinded, seeking benefits pursuant to the SABS arising from the accident of April 27, 2009. There is also a claim in Superior Court commenced in 2014 by the Applicant against the municipality. The subject motor vehicle accident involved the Applicant’s vehicle falling into a sink hole. There is also an action in Superior Court by the Applicant against an assessment centre and this claim also is related to the motor vehicle accident.
Also in the meantime, a new arbitration Hearing was set to commence on October 30, 2017. On October 19, 2017, according to a Pre-Hearing Letter dated October 25, 2017, Ms. Masgras requested that the Hearing Arbitrator (from the March, 2017 Hearing) recuse himself as details of the settlement had been disclosed to him in a confirmation email. The Arbitrator recused himself.
Ms. Masgras also asked, according to the Pre-Hearing Letter, that the arbitration be stayed pending the outcome of the motion to Superior Court to enforce the settlement. It appears that the result of the motion had not yet been provided to the parties. The Pre-Hearing Arbitrator declined this request.
Ms. Masgras also asked for an adjournment of the Hearing for personal reasons. That request was granted on this basis and a new Hearing was set to commence on Monday, November 27, 2017
On Thursday, November 23, 2017, the Applicant gave notice that he wished to withdraw the Application for Arbitration. The Insurer objected and requested its expenses.
Expenses
The Insurer provided a Bill of Costs in the amount of $55,662.55 which included $26,145.00 for 174.3 hours of legal time at the rate of $150.00 per hour and $25,695.55 in disbursements.
The Applicant submits that he should not have to pay expenses because his withdrawal was undertaken to avoid a multiplicity of proceedings, given that proceedings had been commenced in Superior Court on the same issues as are in the arbitration.
Authority to Award Expenses
Rule 70.3 of the Code states that:
Where a party does not agree to the withdrawal, an adjudicator may:
(a) permit the withdrawal on such terms and conditions as he or she considers just;
(b) award expenses to either party as permitted by Rule 75 and following.
Rule 75.1 of the Code provides that:
An adjudicator may award expenses to a party if the adjudicator is satisfied that the award is justified having regard to the criteria set out in Rule 75.2. The items and amounts which may be awarded are in Rule 78 and the Schedule to the Expense Regulation found in Section F of the Code.
Rule 75.2 of the Code, which sets out the criteria to be considered in awarding expenses, states the following:
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 proceedings;
d. The conduct of a party or 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 – 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.
As regards degree of success, the withdrawal in this case cannot be said to amount to a success since the issues appear to be actively pursued in a different forum. Items “d” and “e”, however are applicable to the circumstances of this withdrawal in my view. I find the Applicant’s argument that the arbitration was withdrawn to avoid a multiplicity of proceedings somewhat disingenuous. The Insurer had commenced a proceeding in Superior Court in 2014 and neither party sought to withdraw the arbitration for that reason. The arbitration in fact went to a Hearing in March 2017, with no apparent concern for the Superior Court proceeding. After the settlement was rescinded in March 2017, the Applicant commenced his own proceeding in Superior Court. He did not seek to withdraw the arbitration and a new Hearing date was set for October 30, 2017.
The matter came up again on October 19, 2017, some six or seven months later, shortly before the new Hearing date, when Ms. Masgras asked that the Arbitrator recuse himself. The request for recusal is understandable in the circumstances but the delay in making the request less so. The recusal of the Arbitrator raised an issue with respect to transcripts. It was decided that the rescheduled Hearing would be “de novo”. This prompted the Insurer to expedite transcripts for possible impeachment purposes at the new Hearing. This seems reasonable.
Ms. Masgras also asked for a stay because of the motion in Superior Court. When this was denied she asked for an adjournment and an adjournment of about a month to November 27, 2017 was granted in the circumstances. The Applicant did not seek to withdraw the arbitration.
On November 23, 2017, the Thursday before the week that the Hearing had been again rescheduled to proceed, the Applicant advised the Insurer that he wanted to withdraw the arbitration. In those circumstances, of late withdrawal of a claim involving CAT issues, when much preparation for the new Hearing would have taken place, the Insurer is entitled to an award of expenses in my view.
I do not accept Ms. Masgras’ argument that expenses should not be payable because the Applicant withdrew the arbitration to avoid a multiplicity of proceedings. If that was the case, the arbitration should have been withdrawn a lot sooner than on the eve of the new adjourned Hearing date. In addition, Ms. Masgras, did not file a claim in Superior Court on behalf of the Applicant, (thus adding to the “multiplicity of proceedings”) until after a Hearing had proceeded for 3 days on the same issues at ADR Chambers.
Ms. Masgras submitted that she did not request a withdrawal earlier because she was awaiting the outcome of the motion. That does not follow in my view. If the Superior Court Justice had agreed with the Insurer that would have been the end of the matter. If not, as was the case, the matter would have proceeded as it is doing, in Superior Court. I see no need to wait for the result of the motion before withdrawing the arbitration when the Applicant had already commenced his own proceedings in Superior Court against the Insurer in March, 2017 shortly after the first Hearing had proceeded and stopped because of apparent settlement.
While I am prepared to make an award of expenses in favour of the Insurer, those expenses, however, should be in the nature of “costs thrown away” and within the parameters of general jurisprudence as to expenses generally in the context of the FSCO dispute resolution process. Principles of reasonableness, consumer protection and access to justice are applicable in the FSCO dispute resolution process.
In Reid and ING Insurance Company of Canada,2Arbitrator Killoran held with respect to arbitration legal expenses, that:
The relationship between insurer and insured is a contractual one. The insured is entitled to access the dispute resolution process at FSCO as a result of that contract. The Insurance Act and its regulations must be interpreted in such a way as to uphold the protective and remedial nature of the legislation of which it follows.
In Halim and Security National Insurance Co./Monnex Insurance Mgmt Inc., Director’s Delegate, Lawrence Blackman held3:
I find that these expense criteria do not exist in a vacuum segregated from the overall legislative intent. Rather, the criteria are defined by and help define the broader, overarching legislative intentions, including consumer protection, as set out by the Supreme Court of Canada in Smith v. Co-Operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, which encompasses a fair and reasonable measure of access to justice.
Mr. Kahane-Rapport has submitted what appears to be a bill of costs encompassing the entire dispute in this matter. The dispute has not concluded but rather has been moved to a different forum. There will be some added legal expense, however, given how far the arbitration had proceeded.
There was some discussion at the Expense Hearing in this matter as to whether or not transcripts were a proper disbursement in the circumstances. The Insurer did not use the transcripts in this arbitration because the arbitration was withdrawn but the Insurer may be permitted to use the transcripts in the Superior Court proceeding. The same applies to what appears to be disbursements for expert reports and other hearing expenses which may very well be recoverable at least in part if the Insurer is successful in Superior Court. They are not recoverable as expenses at this time.
The arbitration proceeded for three days and then stopped because of a settlement which was then rescinded. The Applicant was found to have been entitled to rescind the settlement. It was not his fault that the Hearing Arbitrator became privy to the terms of the settlement and properly recused himself, necessitating a new Hearing. The Applicant has chosen, however, and at a very late date, to pursue that new Hearing in a different forum, increasing the expenses to the Insurer by making much of the legal time already spent on the arbitration superfluous.
A line-by-line assessment of the expenses claimed is not required.4 It is established case law that the overriding consideration in fixing legal expenses is reasonableness.5 The task involves taking a pragmatic, broad-strokes approach with a view to fixing an amount that is reasonable.
In all of the circumstances of this unduly prolonged case, I find that an amount of $5,500.00, inclusive of fees, disbursements and applicable taxes, payable by the Applicant to the Insurer is reasonable.
February 1, 2018
Anne Morris
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 27
FSCO A14-006170
BETWEEN:
BAGWANDAT (RON) DOOBAY
Applicant
and
CO-OPERATORS GENINSURANCE 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 Insurer is entitled to its expenses pursuant to Rules 70 and 75 of the Dispute Resolution Practice Code in the amount of $5,500.00 inclusive of fees, disbursements and applicable taxes.
February 1, 2018
Anne Morris
Arbitrator
Date
Footnotes
- Effective September 1, 2010, the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the “new SABS”) came into force. The transition rules in the new SABS 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 SABS”) shall be paid under the new SABS, but in amounts determined under the old SABS.
- Reid and ING Insurance Company of Canada, (FSCO A05-002870, May 22, 2008), Arbitrator Killoran.
- Halim and Security National Insurance Co./Monnex Insurance Mgmt Inc. (FSCO P07-000035, November 21, 2008).
- Lunn and State Farm Mutual Automobile Insurance Company, (OIC A-013960, March 15, 1996), Arbitrator Kirsch.
- Henri and Allstate Insurance Company of Canada, (OIC A-0007954, August 8, 1997), Arbitrator Makepeace; Hurmz and Wawanesa Mutual Insurance Company, (FSCO Appeal P13-000022, May 30, 2014), Lawrence Blackman, Director’s Delegate.