Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2018 ONFSCDRS 38

FSCO A14-007665

BETWEEN:

D.F.

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

Before: Alan Mervin

Heard: December 18, 2017, at the offices of the Financial Services Commission of Ontario in Toronto.Written submissions were received from Wawanesa on January 5, 2017, none received from D.F.

Appearances: Andrew Kerr for D.F.

Ian D. Kirby for Wawanesa Mutual Insurance Company

Issues:

The Applicant, D.F., was injured in a motor vehicle accident on October 13, 2002. She applied for and received statutory accident benefits from Wawanesa Mutual Insurance Company (“Wawanesa”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and D.F. 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 hearing are:

Should this arbitration be adjourned to allow the Applicant to obtain expert opinions to support her request for a CAT determination
Should the Applicant’s Application for Arbitration be dismissed?
Is either party entitled to expenses?

Result:

The adjournment request is denied.
The Applicant’s Application for Arbitration is dismissed.
Wawanesa is entitled to its expenses in the amount of $4,015.54 inclusive of disbursements and applicable taxes.

EVIDENCE AND ANALYSIS:

The Adjournment Request:

This arbitration was scheduled to proceed for 3 days, December 18, 19 and 20, 2017. The only issue left to be determined was whether the Applicant was entitled to a determination that she was catastrophically impaired as a result of the motor vehicle accident of October 13, 2002.

The Insurer had completed a multidisciplinary catastrophic assessment. The last component of the assessment was a psychiatric assessment, which had to be rescheduled from the initial appointment of May 4, 2017 to July 17, 2017, due to difficulties in completing the assessment at the first appointment. The Insurer’s assessors completed their reports, and the Insurer received them on September 5, 2017. The Insurer’s assessors found that the Applicant was not catastrophically impaired.

As a result, the parties requested a resumption of pre-hearing to set a date for the arbitration. The resumption took place before me on September 29, 2017, by teleconference, as both parties had previously indicated their availability on that date. However, when the pre-hearing was convened, Mr. Kerr was unavailable, and a law clerk from his office represented the Applicant.

At the commencement of the pre-hearing, I asked the parties to confirm that the only issue in this arbitration, aside from expenses, was whether or not the Applicant was entitled to a determination that she was catastrophically impaired. Both parties agreed that this was the only issue to be decided, and on that basis, the arbitration was scheduled to take place for 3 days in December 2017.

Shortly after the conclusion of the pre-hearing, I received a letter from Mr. Kerr advising that he had been unable to attend the pre-hearing, but was amenable to the dates chosen, with the caveat that he was requesting funding for responding catastrophic assessments for the Applicant, to rebut the Insurer’s findings. However, since the last amendments to the Schedule, funding for responding reports was no longer available. A motion would therefore be necessary to determine if the requested reports could be funded by the Insurer, possibly as an interim expense.

I then received a letter from the Applicant dated December 7, 2017 advising that the Applicant was not ready to proceed with the hearing as she did not have any expert opinion to support her position that she has suffered a catastrophic impairment, and that, as such if the hearing were to proceed as scheduled, the Applicant would be unsuccessful.

A further telephone resumption of pre-hearing took place at 4 p.m. that day, at which time the issues of the funding and adjournment request were again raised. I advised the parties that should the Applicant continue her request for funding of the CAT reports, a motion would be required, as funding for Applicant rebuttal CAT reports was no longer available under the Schedule.

At this point in time, had such a motion been brought, it would have almost certainly necessitated an adjournment of the hearing until the motion could be heard and a decision rendered. Mr. Kerr requested that the matter be adjourned so that the Applicant could endeavour to obtain evidence that she was catastrophically impaired and suggested dates in April and May, 2018 for the hearing.

Mr. Kirby, on behalf of the Insurer, objected to a further adjournment. He submitted that Mr. Kerr had known since 2014, that the Applicant would be arguing that she sustained a catastrophic impairment, and under all the circumstances, he had over 3 years to obtain his assessments. He submitted it would be unfair to grant an adjournment at the “11th hour” and that the matter should proceed.

Under the circumstances of this case, I denied the adjournment request. A further delay at this time would be unfair to the Insurer. The prospect of obtaining funding for the assessments was minimal, given that funding was no longer available under the Schedule, and even if the motion was successful, it is doubtful whether the motion could be heard, a decision rendered, and the assessments and the reports could be completed, obtained, and served on the Insurer by April or May of 2018. The parties were both aware, and have known for some time, that FSCO is in the process of winding down the Dispute Resolution Group. Resources are limited, and the need for an adjournment for the reasons given, with the request made only two weeks before the hearing was scheduled to commence, could have been anticipated and brought at a much earlier time. In my view, a further delay of the hearing at this point in time to April or May of 2018 was unreasonable under the circumstances.

On that basis, I refused the adjournment request, advising the Applicant that the request could be renewed before the hearing arbitrator.

As it turns out, I was assigned this hearing. At the commencement, Mr. Kerr renewed his request for an adjournment. Both parties essentially repeated the submissions made at the pre-hearing.

There had been no change in circumstances, or progress since the initial request at the pre-hearing. Having heard from Mr. Kerr that the Applicant was not in a position to fund the reports on her own, without funding from the Insurer, the prospect of obtaining reports, even if I were to allow a further adjournment of the hearing for that purpose to April or May 2018, as requested, appeared dim at best. I denied the adjournment, and ordered the matter to proceed.

The Hearing:

At the commencement of the hearing, Mr. Kerr confirmed that the only issue to be decided was with respect to catastrophic determination. The burden of proof is always on the Applicant to prove its case. It was acknowledged on her behalf by her counsel, that there no basis upon which the Application could be successful.

Without any medical evidence or expert opinion in support her claim that she sustained a catastrophic impairment as a result of the accident, of her case, and upon her counsel’s acknowledgement that, without such evidence, there appeared to be no basis on which to proceed, Mr. Kirby moved for a dismissal of the Arbitration. I granted his request and dismissed the arbitration.

EXPENSES:

Authority to Award Expenses:

In making an award of expenses under Section 282(11) of the Insurance Act, the arbitrator may award all or part of such expenses to the maximum set out in the regulations. An arbitrator shall consider only the criteria set out in Rule 75.2 of the Dispute Resolution Practice Code and Section 2 of the Expense Regulation. Those 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;

(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 the Schedule or refused or failed to provide any material required to be provided by subsection 42(10); and,

(g) whether the insured person refused or failed to submit to an examination as required under section 44 of the Schedule, or refused or failed to provide any material required to be provided under subsection 44(9).

Insurer’s Submission as to Expenses:

At the conclusion of the hearing, I requested written submissions from both parties as to their position on expenses, with the Insurer’s submission due January 8, 2018, the Applicant’s on January 22, 2018, and the Insurer’s response, if any due on January 29, 2018.

I received Mr. Kirby’s written submission and bill of costs on January 5, 2018. I have received no submission from the Applicant to date.

Mr. Kirby requested that I order expenses in favour of Wawanesa and claims fees in the amount of $ 5,145.02 plus HST in the amount of $668.85, and disbursements in the amount of $613.66.

The total claimed for fees of lawyers and law clerks at the appropriate hourly rates, disbursements and HST total $6,427.53.

Legal fees for Arbitrations are set in accordance with the hourly rates allowed by the Ontario Legal Aid Plan. Having reviewed Mr. Kirby’s account as submitted, it appears to be in accord with the hourly rates in the Ontario Legal Aid Plan tariff.

Mr; Kirby submits that the criteria that I should consider relevant to the award of expenses in this arbitration are (a) the Insurer’s degree of success and (e) whether any aspect of the proceeding was improper, vexatious or unnecessary.

Although this hearing was dismissed, and the actual time at hearing was ½ day, or approximately 4 hours, the hearing was scheduled to take 3 days, and I take that into account when reviewing the amount of preparation time involved. Had it proceeded to a hearing on the merits, approximately 24 hours of hearing time would have been required.

As the Application for Arbitration was dismissed, the Insurer was therefore 100% successful in this arbitration.

Mr. Kirby submits, with respect to criterion (e), that the Applicant had never obtained any expert opinion to the effect the Applicant had, in fact sustained a catastrophic impairment, despite having had more than three years from the issuance of the Application to do so. Mr. Kirby submits therefore, that the Application for Arbitration and the resultant expense to the Insurer was an unnecessary proceeding.

With respect to criterion (e), I do not entirely agree with the Insurer. The Insurer’s CAT reports were to be completed in May 2017, but because of difficulties in completing the assessment, some of which can be attributed to the Insurer’s assessor, the reports were not delivered until September 2017.

The costs of these assessments are prohibitively expensive to a private individual, and without funding by the Insurer, an insured of modest means would, out of necessity, await the results of the Insurer’s assessments before undertaking the cost of its own assessments.

Should the Insurer’s assessment find that the Applicant was catastrophically impaired, the additional assessments may not have been necessary. Further, because of the delay in completing the Insurer’s CAT assessments and reports, it is doubtful that the Applicant’s CAT assessments, even if privately funded could have been completed and served upon the Insurer in time for the December hearing. I also note that the Insurer opposed the Applicant’s earlier request to withdraw without costs, and pursue her Application in another venue, which, had the Insurer agreed, would have avoided the necessity of this hearing.

When the dates were set at the resumed pre-hearing in September 2017, the parties confirmed that the only issue in dispute at the hearing would be the CAT determination. The issue of funding of the CAT reports was only raised 2 days after the last pre-hearing, after the dates were set, in Mr. Kerr’s correspondence.

Had this issue been raised at the pre-hearing, perhaps some other resolution could have been canvassed.

I do not consider the Application of the Applicant frivolous. While in the end, her Application was dismissed, it was not until the receipt of the Insurer’s CAT assessments in September 2017, that it became clear that she would have to obtain evidence to rebut the Insurer’s reports. To get that evidence would require considerable expense and time, almost certainly resulting in further delay of this arbitration.

However, in assessing the amount to award, while I am prepared to make an award to the Insurer, as the Insurer was 100% successful, those expenses should be 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 flows.

In Halim and Security National Insurance Co./Monnex Insurance Mgmt Inc.,³ Director’s Delegate, Lawrence Blackman held:

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., which encompasses a fair and reasonable measure of access to justice.

Recent decisions with regard to expenses suggest that 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 In assessing expenses, therefore, the arbitrator should take a pragmatic, broad-strokes approach with a view in awarding an amount that is reasonable.

I take into account the principles of reasonableness, consumer protection and access to justice which are applicable in the FSCO dispute resolution process when assessing the amount to be awarded. While the Insurer’s account does not appear on its face to be excessive on a line by line approach, nevertheless, I find that under the circumstances of this case, the amount awarded should be reduced from what is claimed by the Insurer.

In this case, the Applicant’s earlier request to withdraw the Application, when faced with the fact that no expert reports could be obtained in time for the hearing, was met with an objection by the Insurer. The Insurer also requested an expense award should she be allowed to withdraw. I find an award of $3,000.00 for fees is appropriate in this case.

I also award the Insurer $553.66. I have reduced the Insurer’s claim by $60.00 for parking costs at FSCO. The Insurer is also entitled to HST. The total award for fees, disbursements and HST is $4,015.54.

February 15, 2018

Alan Mervin Arbitrator

Date