Babs Ibrahim Yakubu v. Wawanesa Mutual Insurance Company, 2018 ONFSCDRS 56

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2018 ONFSCDRS 56

FSCO A16-001336

BETWEEN:

BABS IBRAHIM YAKUBU

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before:

Arbitrator Janette Mills

Heard:

In writing, submissions received on December 21, 2017

Appearances:

Ms. S. Chorney, Lawyer, participated for Mr. Yakubu

Mr. D. March, Lawyer, participated for Wawanesa Mutual Insurance Company

Background

The Applicant, Mr. Babs Ibrahim Yakubu, was injured in a motor vehicle accident on May 21, 2015 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 Mr. Yakubu, 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 Arbitration Hearing was held on June 21, July 24-27 and August 2, 2017. On October 19, 2017, Arbitrator Gueller issued her decision. Subsequently, the parties applied for an Expense Hearing in regard to their respective expenses.

The Issue:

Is the Insurer barred from proceeding with its application for expenses due to non-compliance with Rule 79.1?
If not, is the Insurer entitled to its expenses and, if so, in what amount?
Is the Applicant entitled to his expenses and, if so, in what amount?

The Result:

The Insurer is not barred from proceeding with its application for expenses due to non-compliance with Rule 79.
The Insurer is not entitled to its expenses.
The Applicant is entitled to his expenses in the amount of $26,754.28 plus HST for legal expenses; $15,695.81 plus HST for disbursements and $3,600.00 plus HST for expert witness preparation and attendance fees. The Applicant is also entitled to the expenses incurred as a result of the Insurer’s late payment of Arbitrator Gueller’s Order, in the amount of $868.50. For a total payable by the Insurer to the Applicant of $46,918.59 (with HST payable on $46,050.09).

Analysis

Timelines

The Dispute Resolution Practice Code (“DRPC”), Rule 79 is as follows:

79.1 Where an adjudicator has issued an order determining all issues in dispute except expenses, and the parties cannot agree on the entitlement to or amount of the expenses of the proceeding, either party may request, in writing, an appointment before an adjudicator to determine expenses provided that the request is made within 30 days from the date the decision on all other issues in dispute was issued.

The Applicant submits that the Insurer is out of time to apply for its expenses as the Insurer did not submit its application within the 30-day time frame. The Insurer submits that because the Applicant applied for an Expense Hearing within the time frame it is not required to make an additional application and is not barred from proceeding with its own expense claim. In the alternative, the decision of Arbitrator Gueller whilst initially issued on October 19, 2017 was reissued on October 25, 2017, after typographical errors were corrected. As a result, the time starts running from the October 25, 2017 date and it is within the 30-day time frame.

In my view, the time in which to apply for an Expense Hearing runs from October 19, 2017, the date that the decision of Arbitrator Gueller was issued. That decision determined all issues, with the exception of expenses, and falls squarely within Rule 79.1. The amended decision issued on October 25, 2017 was to correct typographical errors only and did not impact or change Arbitrator Gueller’s ruling.

Further, I agree with the Applicant that the Rule requires an application to be filed for an Expense Hearing by the party wishing their expenses and confers a positive obligation on each party. As such, I find that the Insurer did not make a request for an Expense Hearing within the stipulated time frame.

Notwithstanding, in my view it is appropriate to exercise my discretion and waive the 30-day time limit.² The Insurer is five days late in requesting its expenses. There is no evidence before me that the Applicant has been prejudiced by the delay and I accept the Insurer’s position that it did not anticipate having to file an application given the Applicant had done so. For these reasons, the Insurer’s application for expenses will be considered together with the Applicant’s application for expenses.

Applications for expenses

The criteria for awarding an expense claim is outlined in Rule 75 of the DRPC as follows:

75.1 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 found in Rule 78 and the Schedule to the Expense Regulation found in Section F of the Code. 75.2 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 proceeding; (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 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 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.

The issues in dispute were income replacement benefits, medical benefits, transportation expenses, the cost of examinations and a special award. Arbitrator Gueller found that the Applicant was entitled to income replacement benefits from May 2016 to May 2017, he was entitled to the medical benefits claimed and he was entitled to the transportation expenses claimed. He was not entitled to income replacement benefits post May 2017 nor was he entitled to the cost of an examination, or a special award. He was awarded interest on the benefits outstanding. Having regard to Arbitrator Gueller’s decision, I am in agreement with the Applicant and consider him to have been significantly successful in the proceeding.

No offer to settle was made in accordance with Rule 76. However, Wawanesa did make two written offers for $2,500.00 and for $5,000.00 on June 9 and June 15, 2017 respectively. These offers were on an all-inclusive full and final basis. Having regard to the Applicant’s success at the Hearing and that Arbitrator Gueller’s decision had the effect of removing the Applicant from the Minor Injury Guideline, I do not consider the Insurer’s offers to settle to have been reasonable in the circumstances.

The Insurer submits that the Applicant’s conduct prolonged the proceeding. Specifically, the Applicant did so by making a claim for attendant care benefits that was later withdrawn, making a claim for duplicate medical benefits which was later withdrawn, claiming for cost of examinations despite not having filed the treatment plan, at the Hearing, bringing a motion for file materials unnecessarily and bringing a motion to call five expert witnesses at the Hearing despite the directive of the DRPC. The Applicant submits that the conduct of the Insurer’s representative unnecessarily prolonged the Hearing. The Insurer made repeated, unnecessary and improper objections to evidence and throughout examination-in-chief and cross-examination, which necessitated a further day be scheduled for closing submissions. Further, the Insurer’s representative continued with his argumentative and improper conduct throughout the Applicant’s closing submissions.

I am mindful that Arbitrator Gueller’s decision does not reflect either the position of the Applicant or the Insurer. I am also mindful that no party has produced a transcript of the proceedings for my consideration. The Applicant withdrew the request for attendant care benefits at the direction of Arbitrator Gueller on the first day of the Hearing. However, I note that he had indicated his intention to do so on a no-cost basis prior to the Hearing commencing. Further, I accept that the duplicate accounts were an oversight which was corrected without prejudice to the Insurer. I also note that on July 24, 2017, the second day of the Hearing, the Insurer brought a motion for costs because of the withdrawal of the attendant care benefits, which Arbitrator Gueller dismissed. Arguably, that motion would have had the effect of prolonging the Hearing, as did other motions brought by each side. In my view, based on the evidence before me, the proper determination regarding this criterion is that both sides must bear the burden of the Hearing having been prolonged.

No novel issues were raised in the proceeding. There was no evidence to suggest that any aspect of the proceeding was improper, vexatious or unnecessary. Nor was there any suggestion that the Applicant failed to attend at an examination as required under Section 44 of the Schedule.

Having found that the Applicant was significantly successful at the Hearing and having found that the offers put forth by the Insurer were unreasonable in the circumstances, I am guided by the reasons of Arbitrator Blackman in McLellan v. Aviva Canada Inc. at para 13-17 as follows:

To use the vernacular, I find that the Expense Regulation, in this type of situation, necessitates seeing the container as half-full, rather than half-empty. Mr. McLellan has had a significant degree of success. It would, in the absence of other persuasive reasons, be an odd result if that significant degree of success was subsequently penalized in requiring one to bear one's entire legal costs, or being further penalized in having to pay part of the other side's legal costs.³

In my view, there is no persuasive reason why the Applicant should be required to bear his own costs or the other side’s costs. Having considered the degree of success of the Applicant, the preliminary motions addressed by Arbitrator Gueller and the pre-hearing offers made to the Applicant, I do not consider it appropriate to award the Insurer its expenses.

The Quantum to be awarded to the Applicant

The overriding consideration in determining quantum is reasonableness.⁴ The appropriate approach is to look at the ratio of preparation time to the attendance at a hearing.⁵

Having regard to these principles, the Bill of Costs provided by the Applicant, and the Applicant’s degree of success at the Hearing, I find that the Applicant is entitled to his expenses for the cost of legal representation by Ms. Chorney on a 3:1 ratio as requested, calculated based on five and a half days of Hearing time payable at the Legal Aid Tier 2 hourly rate of $136.43. I also find that the Applicant is entitled to paralegal and law clerk expenses as outlined in the Bill of Costs. However, as stated above there were no novel issues determined at the Hearing and nothing before me suggests that this was a complicated or difficult file. Therefore, I do not think it reasonable to include the cost of second counsel and this expense is not awarded.

On a 3:1 basis the Applicant is entitled to 115.5 hours of preparation in addition to the court time of 38.5 hours for a total of 154 hours paid at an hourly rate of $136.43 for a total of counsel fees of $21,010.22. In addition, the Applicant is entitled to paralegal and law clerk expenses totaling $5,744.06 for total legal expenses of $26,754.28 plus HST.

No issues were raised by the Insurer regarding the disbursements and I award the Applicant’s disbursements as outlined in the Bill of Costs, with the exception of the disbursement for parking at $178.40, which I do not consider to be an appropriate disbursement, and which shall be deducted.

Nor did the Insurer address the cost of the outstanding accounts or the costs with respect to the reports requested to be considered for payment, both of which are outlined in the Bill of Costs. With respect to the reports to be considered for payment, they were not directly related to the issues in dispute and I see no reason to include them in the award.

With respect to the cost of the outstanding accounts, the amounts requested are either unclear or do not reflect the amounts payable under the Schedule. Regarding the expert witness fees for attendance and preparation for Dr. Sodhi, Dr. Sharma, Dr. Dhaliwal and Dr. Tavazzani, the fees are not payable to the extent that they exceed the allowable amount under the Schedule and they shall be paid in accordance with the Schedule for a total amount of $3,600.00 plus HST. Because I am unable to determine if the outstanding amount owed to Dr. Sodhi’s clinic is reflected in the medical benefits claimed and awarded by Arbitrator Gueller, they are not included.

On January 10, 2018 the Applicant submitted a further request for expenses because the Insurer had failed to pay the outstanding amounts as ordered by Arbitrator Gueller. As a result, the Applicant was required to incur costs to ensure compliance. The Insurer paid the amounts owing 72 days after Arbitrator Gueller’s Decision was issued. The Insurer has provided no reason for the delay in paying. Considering the length of the delay, the efforts undertaken by the Applicant and the subsequent Bill of Costs submitted, which I consider to be reasonable, I am awarding the Applicant a further $868.50.

March 14, 2018

Janette Mills

Arbitrator

Date