Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 68
FSCO A12-004383
BETWEEN:
KYLE NICHOLSON
Applicant
and
CERTAS DIRECT INSURANCE COMPANY
Insurer
DECISION ON EXPENSES
*Minor error on page 2 and Order corrected on April 13, 2018 in accordance with the Dispute Resolution Practice Code and section 21.1 of the Statutory Powers Procedure Act.
Before: Alan Mervin
Heard: Written submissions received by November 8, 2017 and a telephone conference call on November 30, 2017.
Appearances: Vic Purewall for Mr. Nicholson
Kevin Motley for Certas Direct Insurance Company
Issues:
The Applicant, Kyle Nicholson, was injured in a motor vehicle accident on August 21, 2010. In a decision dated July 30, 2015, Arbitrator Bayefsky held a preliminary issue hearing to determine whether Mr. Nicholson was involved in an “accident within the meaning of section 2(1) of the Schedule.” Mr. Nicholson nor a representative for him did not appear at the preliminary issue hearing, and Arbitrator Bayefsky made the following orders with respect to his claims for statutory accident benefits under the Schedule.1
The arbitration is dismissed.
Mr. Nicholson shall pay to Certas Direct Insurance Company its expenses of the arbitration, in an amount to be agreed or assessed.2
The issue in this further hearing is:
- What is the quantum of the award Certas entitled with respect to its expenses incurred in respect of this arbitration hearing?
Result:
- Certas is entitled to its expenses for legal fees of $22,422.38, plus HST of $2,914.91 and disbursements of $6,324.61, for a total of $31,661.90.
EVIDENCE AND ANALYSIS:
In this arbitration, the Applicant submitted a claim to Certas for accident benefits as a result of injuries allegedly sustained in an accident which took place on August 21, 2010. Certas denied all of Mr. Nicholson’s claims from the outset, taking the position that Mr. Nicholson had participated in a staged accident, and was therefore not involved in an “accident” within the mearing of section 2(1) of the Schedule. Mr. Nicholson applied for arbitration at FSCO, and an in person hearing to decide the preliminary issue of whether Mr. Nicholson had been involved in an accident was scheduled to proceed on July 29 and 30, 2015.
Neither Mr. Nicholson nor anyone on his behalf appeared at the preliminary issue hearing on July 29, 2015 and the hearing arbitrator, Arbitrator Bayefsky, dismissed all of Mr. Nicholson’s claims. He found that Certas was entitled to its expenses of the hearing, in an amount to be agreed upon or assessed. Despite several attempts to settle the issue of expenses since the issuance of the decision, the parties could not agree on expenses, and an expense hearing was scheduled to proceed on February 27, 2017, before Arbitrator Stramwasser, who had been assigned the file to deal with the expense hearing. The hearing was adjourned at that time as the Applicant was to provide written confirmation of the withdrawal of Mr. Isabella as representative, and the appointment of Mr. Grillone. The parties were also requested to provide, by March 20 2017, case law on the issue of whether the Applicant was responsible for the expenses incurred in obtaining 3rd party records by March 20 2017. I have reviewed the file, and found no written submissions on this issue.
Since that time, despite seizing herself of the file, Arbitrator Stramwasser has taken an extended leave of absence, and as a result, after attempts at settlement of the expense issue before Arbitrator Snider, who is no longer at FSCO, I was assigned this file. I scheduled an expense hearing by teleconference which took place on November 30, 2017, at which time both representatives made oral submissions. Prior to the hearing I received written submissions from Certas. I received no written submissions on behalf of Mr. Nicholson.
THE LAW
Subsection 282(11) 3of the Insurance Act provides that:
The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.
The criteria for determining entitlement to expenses of an arbitration proceeding are enumerated in section 12(2) of Ontario Regulation 664, R.R.O. 1990, as amended. The criteria are:
Each party’s degree of success in the outcome of the proceeding.
Any written offers to settle made in accordance with subsection (3).
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, including a failure to comply with undertakings and orders.
Whether any aspect of the proceeding was improper, vexatious or unnecessary.
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 under subsection 42(10) of the Schedule.
SUBMMISSIONS OF THE PARTIES:
The Insurer:
Certas’entitlement to arbitration expenses was determined by Arbitrator Bayefsky in his decision in this case. The issue left for me to decide is the quantum of those expenses.
At the oral hearing, Certas submitted that it was entirely successful in obtaining dismissal of all of the Applicant’s claims.
It further submitted that it was a complex matter, with novel issues and requiring several motions. The Insurer submitted that it was necessary to bring a Wagg4application against the Crown, in order to obtain statements and other evidence which formed part of a criminal proceeding against two other parties. The other two parties gave statements in a homicide trial.
Their statements indicated that they were not involved in the homicide, and gave alibi evidence that at the time of the homicide, they participated in a staged accident involving the Applicant and the two vehicles described in the police accident report. The Insurer submitted that this delayed the proceedings, as the evidence was crucial to the Insurer’s case and could not be obtained through other means. The matter could not proceed until the Wagg application was completed.
The Insurer further submitted that the proceeding was frivolous. The evidence indicated that the accident was staged, the arbitration should not have proceeded at all, and that I should draw an adverse inference against the Applicant, as neither he nor anyone on his behalf appeared at the hearing.
The Applicant:
The Applicant chose not to provide written submissions. At the oral hearing, The Applicant representative submitted that Ms. Kleiman, on behalf of the Insurer, had advised the Applicant in February that a second person, Ricardo Carter was involved in the accident, and the Crown file was needed for his case as well. However, at the oral hearing, neither party could offer any concrete information as to whether another claim had actually been submitted stemming from this accident, but notwithstanding this the Applicant suggested that if there was another claimant, some of the costs, particularly with respect to the Wagg application, and the transcription of the witnesses statements in the criminal matter may have been or should have been shared.
The Applicant’s representative also suggested that the Applicant’s non appearance at the hearing, may have been that Applicant was in jail, and unable to attend the hearing.
However, neither party could confirm or deny this.
The Applicant further submitted that the Insurer’s bill was excessive, but did not particularize in what way, other than suggesting that the costs for the Wagg application and transcription of the witness statements ought not to be entirely borne by the Applicant. The delay of the hearing and resultant adjournment (which the Applicant had opposed) at an earlier date was caused by the Insurer’s insistence on obtaining the Crown evidence before proceeding to arbitration.
FINDINGS
With respect to the criteria set out in the Expense Regulation, I make the following findings:
- Each party’s degree of success in the outcome of the proceeding.
Certas was completely successful in the motion hearing.
- Any written offers to settle made in accordance with subsection (3).
Neither party made any written offer to settle.
- Whether novel issues are raised in the proceeding.
Despite the submission of the Certas that the criminal trial proceedings and the resultant Wagg application raise a novel issue, although this prolonged the case, I do not find it to to be a novel issue.
- 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.
Although the Wagg application resulted in delay of the hearing, the delay was caused by the length of time it took for evidence to be obtained from the Crown. I do not find that either party prolonged or obstructed or hindered the progress of the arbitration.
- Whether any aspect of the proceeding was improper, vexatious or unnecessary.
Certas submitted that it incurred significant costs because the Applicant knowingly pursued an unmeritorious claim, and then failed to appear without explanation. There was no finding which determined whether or not this was a fraudulent claim, although no explanation was advanced as to why the Applicant did not appear, except for the unconfirmed speculation that the Applicant was in jail. I am not prepared to find that the arbitration was improper, vexatious or unnecessary.
ASSESSMENT OF EXPENSES
The amount of expenses which I may award is set out in section 3 of the Schedule to the Expense Regulation,5 which states:
3(1) The legal fees payable by the insured person or the insurer for the following matters may be awarded:
For all services performed before an arbitration, appeal, variation or revocation hearing.
For the preparation for an arbitration, appeal, variation or revocation hearing.
For attendance at an arbitration, appeal, variation or revocation hearing.
For services subsequent to an arbitration, appeal, variation or revocation hearing.
3(2) The number of hours for which legal fees may be awarded shall be determined by the arbitrator, having regard to the criteria set out in subsection 12(2) of this Regulation.
In the decision of Henri and Allstate Insurance Company of Canada,6 Arbitrator Makepeace outlined a number of general principles that have emerged from the arbitration decisions with regard to the assessment of arbitration expenses. These principles include the following:
The overriding consideration in fixing arbitration expenses is reasonableness.
A line-by-line assessment of the expenses claimed is not appropriate. Rather, the Arbitrator should make a global assessment of reasonable expenses.
Certas has submitted that its account is reasonable and appropriate in the circumstances, as this was a somewhat complex matter. Certas submitted that the central issue was whether Mr. Nicholson was involved in a staged accident. Certas submits that in order to support its case, Certas had to obtain third party evidence from the Crown. Because of this issue, it incurred additional costs, in addition to the costs associated with preparing for the Preliminary Issue Hearing, communicating with various parties, and attendance for proceedings at FSCO.
Certas submits that in order to properly defend this case, an Examination Under Oath was necessary, as well as motions for the production of the Crown’s homicide file.
Certas has submitted a Bill of Costs for legal fees in the amount of $22,422.38. I have reviewed the Bill of Costs submitted7 and find that the amounts charged and hourly rates appear to be in accord with those corresponding to the Legal Aid Tariff. Further, the amounts for legal fees, considering the amount of work involved and the difficulty of this case, appear to be reasonable under the circumstances. Had the Applicant advised at an earlier time that it did not plan to attend and pursue its claims, the additional costs incurred by the Insurer may well have been considerably less.
With respect to disbursements claimed, I find that the items listed are reasonable and appropriate under the circumstances, with the exception of the full cost of the homicide investigation account, billed at $8,155.21. I find that this is an allowable expense under the regulation as preparation for the hearing,
However, there was no concrete evidence submitted with respect to the involvement of other parties. If Mr. Nicholson is being asked to bear the entire amount for this investigation, in my view, it is incumbent on the Insurer to ascertain that the evidence it required to defend its case pertained in its entirety to this case. I am not satisfied that this was the case.
I am therefore apportioning the amount billed to Mr. Nicholson, and find that $4,000.00 is a reasonable amount for his portion of the investigative expenses under the circumstances.
I am also deducting the $3,000.00 filing fee claimed by the Insurer.
Section 7 of the Schedule to the Expense Regulation, sets out conditions in which the Insurer may be entitled to an award of the filing fee. It states as follows:
There may be awarded to an insurer the total of all amounts in respect of a claim by an insured person that are included under section 4 of Ontario Regulation 11/01 (Assessment of Expenses and Expenditures) made under the Financial Services Commission of Ontario Act, 1997 in determining the amount of the insurer’s total assessment for arbitrations under section 282 of the Act, total assessment for appeals under section 283 of the Act or total assessment for applications under section 284 of the Act, if the insured person, on or after March 1, 2006,
(a) refused or failed to submit to an examination relating to the claim under section 42 of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996) made under the Act or under section 44 of Ontario Regulation 34/10 (Statutory Accident Benefits Schedule — Effective September 1, 2010) made under the Act; or
(b) refused or failed to provide any material relating to the claim that was required to be provided by subsection 42 (10) of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996), made under the Act, or by subsection 44 (9) of Ontario Regulation 34/10 (Statutory Accident Benefits Schedule — Effective September 1, 2010), made under the Act.
None of the stated conditions apply to this case.
Further, should I be wrong in the application of the above section to this case, I am not prepared to make an inference that this claim had no merit in the absence of a finding of fraudulent behaviour, and without any explanation for his non-attendance I am reluctant to, in essence penalize the Applicant by saddling him with the Insurer’s $3,000.00 filing fee.
I am therefore deducting $7.000.00 from the Insurer’s submitted Bill of Costs, representing the reduced amount for the investigative expenses, and the Insurer’s Application fee.
With respect to the other disbursements listed in the Insurer’s Bill of Costs, I find that the amounts claimed by the Insurer for the Hearing are reasonable, and within the maximum limits permitted under s. 4 of the Expense Regulation.
Having been completely successful in this arbitration, which I find to be the most determinative factor in assessing expenses, I find that Certas is entitled to its expenses for legal fees in the amount of $22,422.38 plus HST of $2,914.91, and disbursements in the amount of $6,324.61 for a total of $31,661.90 for fees, disbursements and HST.
March 27, 2018
Alan Mervin Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2018 ONFSCDRS 68
FSCO A12-004383
BETWEEN:
KYLE NICHOLSON
Applicant
and
CERTAS DIRECT INSURANCE 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 Regulation 664, as amended, it is ordered that:
- Certas is entitled to its expenses for legal fees in the amount of $22,422.38 plus HST of $2,914.91, and disbursements in the amount of $6,324.61 for a total of $31,661.90 for fees, disbursements and HST.
March 27, 2018
Alan Mervin Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- Nicholson and Certas Direct Insurance Company (FSCO A12-004383, July 30, 2015)
- Insurance Act R.S.O. 1990, Chapter I.8, as amended
- A Wagg application is a third party application, requesting the Crown to disclose information from the Crown’s file in a criminal proceeding.
- Regulation 664, R.R.O. 1990, made Under the Insurance Act, as amended.
- Henri and Allstate Insurance Company of Canada (FSCO A–007954 August 8, 1997)
- Written Cost submission of Certas, Dated February 16, 2017, at Tab A