Neutral Citation: 2018 ONFSCDRS 64 FSCO A15-001101

BETWEEN:

SUZANNE CLANCY Applicant

and

AVIVA CANADA INC. Insurer

DECISION ON EXPENSES

Before: Arbitrator Anne Morris Heard: By written submissions completed on January 26, 2018

Appearances: Mr. Ammar Hussein, legal counsel, represented the Applicant Ms. Frances Munn, legal counsel, represented the Insurer

Issues:

The Applicant, Ms. Suzanne Clancy (the “Applicant”), was injured in a motor vehicle accident on November 5, 2012 and sought accident benefits from Aviva Canada Inc. (“Aviva”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and the Applicant, through her 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 issue in this Expense Hearing is:

Is either party entitled to expenses arising from this proceeding and, if so, in what amount?

Result:

The Applicant shall pay to the Insurer $5,419.07 inclusive of disbursements and HST.

EVIDENCE AND ANALYSIS:

Background

According to the Pre-Hearing Letter of July 15, 2015, a Hearing was scheduled on the following issues (as well as expenses and interest):

Preliminary Issue: Whether the Applicant is precluded from arbitrating the cost of examination issue because she failed to attend a section 44 examination, within the meaning of section 55 of the Schedule?
Are Ms. Clancy’s impairments, as a result of the accident, minor injuries within the meaning of the Minor Injury Guidelines and the Schedule?
Is Ms. Clancy entitled to payments for the cost of examinations in the amount of $1378.68 for an In-Home assessment per an OCF 18 dated July 24, 2014, denied August 7, 2014 on the basis that the Applicant was in the MIG?

While it appears from the expense submissions of both parties that both parties prepared for a Hearing on the merits, a Hearing on the merits did not proceed. Instead, Arbitrator Smith heard the preliminary issue by way of written submissions and rendered a decision on the same dated December 19, 2016. He concluded that because of the Applicant’s failure to attend section 44 insurer examinations, she was precluded from proceeding to arbitration for the determination of the issues raised in the Application for Arbitration, and the Application for Arbitration was dismissed. This decision was upheld on appeal to the Director’s Delegate.

The Insurer now requests its expenses. In her materials responding to the Insurer’s submission on expenses, the Applicant also requests her expenses.

Authority to Award Expenses

Rule 75.1 of the Dispute Resolution Practice Code (“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.

The Insurer was clearly successful and the Applicant was not.

It appears that both parties exchanged offers to settle on the basis of a settlement of the entire underlying policy (i.e. full and final settlement). The underlying policy was not in dispute and offers to settle on that basis in the context of an Expense Hearing related to the specific issues in dispute is difficult to assess. I will therefore not take the offers into consideration.

Both parties agreed in their submissions that no novel issues were raised and I agree.

The Insurer suggested that the Applicant’s failure to attend insurer examinations was conduct that tended to prolong, obstruct or hinder the proceeding. This failure, however, was the crux of the issue in dispute in which the Insurer was completely successful and, in the circumstances, should fall under the “degree of success” criterion. The same applies with respect to failure “to submit to an examination” under criterion g (or f under the former Schedule). The Insurer did not allege that the Applicant’s conduct in disputing the failure to attend an examination was frivolous or vexatious and neither the Arbitrator nor the Director’s Delegate found that it was so.

The Applicant for her part submitted that the Insurer’s failure to schedule a Preliminary Issue Hearing in advance of the Hearing was conduct which prolonged the proceeding. The Applicant submitted that there was no evidence for the Insurer’s assertion that it asked the Pre-Hearing Arbitrator to schedule a Preliminary Issue Hearing and was denied. The Applicant stated that the Insurer’s version of events was false. This is so even though the Pre-Hearing Letter clearly listed the preliminary issue as an issue without scheduling a separate Preliminary Issue Hearing.

The matter was also raised on appeal and I note the following from the Director Delegate’s decision of October 19, 2017 (at p. 6):

Counsel did raise an issue that is properly described as one of procedural fairness, but he did not identify it as such. He claimed that the issue of preclusion for failure to attend IEs came as a surprise because Aviva did not raise it until the matter came for hearing. As I noted earlier, that allegation is false because Aviva identified the issue in its Response, and raised it again at the pre-hearing discussion. The pre-hearing Arbitrator could have scheduled a preliminary issue hearing on the issue, but she did not. That was within her discretion. Her other option was to leave the issue to be heard by the hearing Arbitrator, which she did. Aviva was not required to do anything else in order to pursue a hearing on the issue.

The hearing Arbitrator decided to conduct a preliminary issue hearing on the issue. That too was within his discretion. Counsel for Ms. Clancy should not have been taken by surprise.

Both parties claim to have been put to extra expense in preparing for a full Hearing as well as a Preliminary Issue Hearing, but the scheduling in this regard was within the discretion of the Pre-Hearing Arbitrator and was not the obligation of either party. I also note that the only substantive issue in dispute in the Hearing, without the Preliminary Issue Hearing, was one assessment in the amount of $1,378.68. Whether this was payable was dependent on a finding with respect to the Minor Injury Guideline. It is not to be expected that a hearing of these issues would be unduly time consuming. As it happened, the decision on the preliminary issue made a further hearing, even a relatively short one, unnecessary and shortened the process further.

The Applicant, in his expense submissions, submitted that, “the considerations underlying the principles in the Code relevant to an award of expenses, fairness, reasonableness, access to justice and the administration of justice, justify an award of expenses in favour of the applicant despite the insurer's success”.

I see no reason based on these considerations to deny the Insurer its expenses and instead award expenses to the Applicant, especially when the right to an insurer examination, denied by the Applicant, is rooted not only in legislation but in the concept of procedural fairness as reiterated by the Director’s Delegate at page 8 of his decision in this matter, referred to above:

The two leading decisions on when IEs are available are State Farm Mutual Automobile Insurance Company v. Ramalingam² and Certas Direct Insurance Company v. Gonsalves.³ These cases establish the principle that fairness of the process is an overriding consideration in deciding whether an insurer is entitled to an IE. It defies logic to suggest that it is fair to deny Aviva any opportunity to investigate the opinions on which Ms. Clancy relies.

The overriding consideration in this case in my view is degree of success. The Insurer was successful and is entitled to its expenses. In assessing quantum, I take into consideration principles of reasonableness, consumer protection and access to justice. In addition, it is trite law that a line by line assessment is not necessary and I prefer a broad strokes approach which takes these principles into consideration. I also take into consideration that the issues in dispute were not complex. There should be some degree of proportionality between the amounts in dispute and the expenses awarded.

I will allow 12 hours in legal fees for the Preliminary Issue Hearing including written submissions and including expense submissions, and a 2:1 ratio for preparation time for one lawyer (24 hours) at the legal aid rate of $109.14 for a total of $3,929.04 plus HST of $510.78. The total amount for legal fees is therefore $4,439.82. The Insurer claims $1,131.59 for disbursements which includes reporting services of $265.00 which I will not allow. It is the Insurer’s choice to bring or not bring a reporter and it is not an allowable expense. Allowable disbursements therefore add up to $866.59 plus HST of $112.66 for a total of $979.25. The total allowed for fees and disbursements including HST is therefore $5,419.07.

The Applicant shall pay to the Insurer $5,419.07 inclusive of disbursements and HST.

EXPENSES:

Expenses for the Expense Hearing are included in the general award of expenses in favour of the Insurer.

March 26, 2018

Anne Morris Arbitrator

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 Applicant shall pay to the Insurer $5,419.07 inclusive of disbursements and HST.