Neutral Citation: 2018 ONFSCDRS 66 FSCO A16-001847

BETWEEN:

KAHLIL COUSINS Applicant

and

CERTAS DIRECT INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Arbitrator Marcel D. Mongeon

Heard: By written submissions completed on February 16, 2018

Appearances: Ms. Jessie Tran, for the Applicant Mr. Christian Farahat, for the Insurer

Issues:

The Applicant, Mr. Kahlil Cousins (the “Applicant”), was injured in a motor vehicle accident (“MVA”) on October 3, 2013 and sought accident benefits from Certas Direct Insurance Company (“Certas” or the “Insurer”), 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 amended.

The issue in this Expense Hearing is:

What expenses, if any, is either party entitled to?

Result:

Expenses of $11,311.31, including HST and disbursements, are awarded to the Insurer and are payable forthwith by the Applicant.

EVIDENCE AND ANALYSIS:

This is related to my Hearing decision dated November 17, 2017 in the above-captioned matter. The Applicant was seeking a declaration that his injuries or impairments were outside of the Minor Injury Guideline (“MIG”) and that he was entitled to payment of various rehabilitation benefits and assessments. I denied the Applicant all of the relief which he was seeking.

The parties were unable to agree on entitlement to the expenses of the Hearing which lasted four days and concluded with written submissions and have sought my determination.

Submissions

The Insurer has submitted that it should be entitled to be paid (at the lowest amount submitted) $27,852.64, including disbursements of $3,461.36 and applicable HST of $3,204.29. It argues its entitlement to these amounts on the basis of two lawyers’ attendance and preparation for the Hearing.

The Applicant submits that the Insurer’s costs should be significantly limited given that the total amounts in dispute were also limited. It submits that costs for the Hearing should be limited to $500 to $1,000 with an additional $500 for the costs submissions.

The Applicant has also submitted that I should rely on the Rules of Practice and Procedure for Proceedings before the Financial Services Tribunal² and that, accordingly, I am limited to awarding expenses where there is also a finding of frivolous, vexatious, unreasonable, or bad faith conduct. The Insurer’s reply submissions have addressed that the Applicant’s submissions should be over-ruled on the basis given in the Insurer’s submissions. I agree and do not consider them further.

Analysis

Expenses in an arbitration hearing are governed by Regulation 664, R.R.O. 1990, Automobile Insurance made under the Insurance Act, as amended. Section 12 thereof, as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, sets out a number of criteria that an arbitrator shall consider in awarding all or part of the expenses of an arbitration proceeding. These criteria are (with some editing):

Each party’s degree of success in the outcome of the proceeding.
Any written offers to settle […]
Whether novel issues are raised in the proceeding.
The conduct of a party or a party’s representative that tended to prolong, obstruct or hinder the proceeding […]
Whether any aspect of the proceeding was improper, vexatious or unnecessary.
Whether the insured person refused or failed to submit to an examination […]

To respond to each of these criteria in turn, I note:

The Insurer won on all points in the Arbitration.

The Insurer advised me that it had offered to settle the matter on without costs withdrawal by the Applicant on September 8, 2017 and that the Applicant had offered to settle for $15,000 on an all-inclusive basis on September 26, 2017.

The issue of whether or not the Insurer waived the MIG by paying benefits in excess of $3,500 was novel. However, my disposition of the issue was easy to make by analogizing other circumstances which would amount to a waiver. My findings of facts were not difficult to make and were apparent in the material even before the Hearing.

On the conduct of the parties, the Insurer suggests that the Applicant’s position advanced at the start of the Hearing, that he suffered from chronic pain syndrome, prolonged the Hearing. I disagree. This issue seemed to be central to the Applicant’s case all along. There was no other reasonable position for the Applicant to take on the Hearing. I consider that there were no factors in which I considered either party prolonged, obstructed or hindered the proceeding.

No aspect of the proceeding was improper, vexatious or unnecessary in my view.

The Hearing on the benefits payable took three days and concluded in oral submissions.

Based on the foregoing, the Insurer is entitled to an expense award.

The parties themselves through their settlement offers had signalled that this was a limited financial risk matter by the offers of $0 and $15,000. I also note that even if the Applicant had prevailed in every expense that he was seeking in the Hearing (even though some of the amounts appear to be duplicated and my Reasons for Decision indicate that there was no entitlement to many of the assessments), the amount in dispute was a maximum of $27,704.32.

The expense award must be in proportion to the parties’ reasonable expectations as to the amounts in dispute.

I am not prepared to assess the Insurer’s expenses based on its time. I do this because it was not reasonable for the Insurer to have been represented by two lawyers and for a significant amount of preparation work to have been invested given the nature of the dispute.

In setting applicable rates for the Insurer’s representative, I am guided by section 78 of the Dispute Resolution Practice Code. The normal legal aid rate for one lawyer is what I find to be reasonable and appropriate in this case, namely $136.43 per hour (Tier 3 rate).

I then consider three days of hearing at eight (8) hours per day. I use a preparation proportion of 1:1. I calculate 6 days x 8 hours x $136.43 which is $6,548.64. Applicable HST on this amount is $851.33.

I have examined the disbursements being sought by the Insurer of $3,911.34 inclusive of HST. All of the disbursements are reasonable and allowable within the provisions of the Schedule. I note that the expert witness allowance has been appropriately adjusted to comply with the provisions of the Schedule.

The Insurer shall have its expenses of $6,548.64 plus applicable HST ($851.33) plus its disbursements of $3,911.34 (inclusive of HST) for a total of $11,311.31. I find that this amount is proportionate to the amount in dispute.

EXPENSES:

Expenses of $6,548.64 plus HST of $851.33 and disbursements of $3,911.34 are awarded to the Insurer, for a total of $11,311.31, payable forthwith by the Applicant.

March 26, 2018

Marcel D. Mongeon Arbitrator

Financial Services Commission of Ontario