Neutral Citation: 2018 ONFSCDRS 76

FSCO A16-000329

BETWEEN:

S.P. Applicant

and

RBC GENERAL INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Arbitrator Jeff Musson

Heard: By written submissions completed March 5, 2018

Appearances: Ms. Aliza Karoly for S.P. Mr. Harry Brown for RBC General Insurance Company

Issues:

The Applicant, S.P., was injured in a motor vehicle accident on November 6, 2010 and sought accident benefits from RBC General Insurance Company ("RBC" or the "Insurer"), 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.

I conducted the Hearing for the issues in dispute on May 23-26, 29-30, July 18, 24-28, September 5-8, 2017 and by written submissions on October 20, 2017. I issued my written decision with reasons for accepting the Applicant's catastrophic impairment claim on January 2, 2018. On the issue of expenses, I ruled that since the parties made no submissions on expenses, if they are unable to agree on the legal expense of this case, an Expense Hearing shall be requested within 30 days of the date of my decision in accordance with Rule 79 of the Dispute Resolution Practice Code, which the Applicant subsequently requested.

The issue in this Expense Hearing is:

What is the quantum that the Insurer is liable to pay with regards to the Applicant's expenses in respect of the Arbitration proceeding under section 282(11) of the Insurance Act?

Result:

The Insurer is liable to pay to the Applicant her expenses in respect of the Arbitration proceeding, fixed in the amount of $135,568.78 (inclusive of fees, disbursements and HST).

EVIDENCE AND ANALYSIS:

Introduction

The Applicant is claiming expenses in the total amount of $154,064.95 including HST, comprised of $107,271.25 in fees and $46,973.70 in disbursements. The Insurer submits that the fees and disbursements are not reasonable and therefore should be reduced.

Rule 79.1 of the Dispute Resolution Practice Code ("DRPC") states that where an arbitrator has determined all issues in dispute except expenses, and the parties cannot agree on entitlement or amount of expenses, either party may request, in writing, an expense hearing within 30 days from the date of the decision on all other issues in dispute. My jurisdiction to conduct an Expense Hearing is set out in subsection 282(11) of the Insurance Act.²

In addition, an arbitrator shall, under Rule 75.2 of the DRPC, consider only the following six criteria for the purposes of awarding all or part of the expenses incurred in respect of an arbitration proceeding:

Each party's degree of success in the outcome of the proceeding.
Any written offers to settle made in accordance with Rule 76.
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 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.

Entitlement to Expenses

Degree of Success

In her submissions, the Applicant stated that she was 100% successful as it related to the one issue in dispute which was whether the injuries that she suffered as a result of the MVA on November 6, 2010 were deemed to be catastrophic. The Insurer in its submission did not address this matter, so I assume that it concedes this point as it is clear in my decision of January 2, 2018 that the Applicant proved her entitlement to a catastrophic determination.

Written Offers to Settle

The Applicant states that there were no written offers to settle prior to the start of the Hearing. The Insurer in its submission states that there was an offer to settle for $89,000 and this offer was presented to the Applicant on several occasions after the mediation concluded. Further, the Insurer states that the Applicant initially agreed to accept the offer but then subsequently declined it prior to executing any releases.

Novel Issues Raised in the Proceeding

The Applicant in her submission states that the designation of catastrophic impairment is not a novel issue. However, the novel issues raised at the Hearing occurred as a direct result of the Insurer's conduct, specifically as it related to the Insurer's theory as to the Applicant's current medical condition. As a result, the Applicant found herself having to defend against numerous falsehoods and unconventional conduct which are not typically part of an arbitration hearing for accident benefits. The Insurer in its submission failed to comment on the novel aspects raised in the proceeding.

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

The Applicant stated that there were numerous times when the Insurer caused the Hearing to be prolonged and the Insurer's conduct obstructed and hindered the proceeding on numerous occasions. In her submission, the Applicant states that she requested her full accident benefits file from the Insurer, only to be refused numerous times. It was only when I, as the Arbitrator, ordered the entire file to be produced that the Applicant was able to see the file in its entirety. The Applicant states that this necessitated the need to call further witnesses based on information that was contained in her accident benefits file. The Applicant also made submissions on the Insurer's conduct as it related to arrest warrants and other harassment of lay witnesses. It is the Applicant's position that this caused unnecessary delay in the arbitration proceedings in addition to court costs that had to be incurred by Applicant's counsel. The Applicant states that the Insurer's use of photocopied, pre-signed summons caused further delay in the proceedings because extra time was spent dealing with improperly obtained documents and witnesses who unwittingly breached the Applicant's rights. Further delay of the proceedings occurred when the Insurer, without the Applicant's approval, obtained her employment records from Bradford Greenhouses as well as her academic records from the Simcoe School Board. The Applicant also in her submissions states that the Insurer's counsel swore a false affidavit affirming that the Applicant was identified as the person in the Toronto Sun Sunshine Girl photos that were entered into evidence at the Hearing. This affidavit and subsequent misinformation were sent to witnesses prior to their testimony. The Applicant takes the position that the Insurer pursued a rigorous defense of the Applicant's claim for catastrophic impairment using the theory that the Applicant suffered a psychological disorder because of genetics, not because of the MVA. There was no credible medical evidence to support this position. Finally, the Applicant was prepared to submit a joint brief prior to the commencement of the Hearing, however, the Insurer insisted that it wanted to include documentation related to the Applicant's mother. The Applicant was not in agreement and subsequently both the Insurer and Applicant had to submit separate briefs.

The Insurer takes the position that it did not cause a prolonging of the Hearing nor did it obstruct or hinder the proceedings. The Insurer is of the belief that its conduct in relying upon pre-signed summons is standard policy by FSCO and FSCO never notified Insurer's counsel that this policy had changed. Further, the practice of using pre-signed subpoenas is also standard operating procedure in Superior Court. When it came to the complete accident benefits file, the Insurer stated that the Applicant had all of the relevant information contained in the file prior to the Hearing and was not prejudiced in any manner once the complete file was order to be turned over. The Insurer stands by its conduct throughout the Hearing.

Whether any Aspect of the Proceeding was Improper, Vexatious or Unnecessary

The Applicant stated that the Hearing was based on the issue of catastrophic impairment and that both parties' assessors in 2014 and 2015 agreed that the Applicant was catastrophically impaired. Further, the Insurer's position that the Applicant is bi-polar was never corroborated by expert evidence at the Hearing and this caused improper, vexatious and unnecessary aspects of the Hearing. Finally, it is the Applicant's position that the Insurer was informed as early as December 2016 that the Insurer's Sunshine Girl photos were not of the Applicant, yet the Insurer stood by its position that they were. Finally, the Insurer's use of photocopied, pre-signed subpoenas and the manner in which they were served was completely vexatious in the opinion of the Applicant.

The Insurer denied the allegation that its behaviour at the Hearing met the threshold of being improper, vexatious or unnecessary. All aspects of its defense of this claim were necessary and warranted even though the Applicant was successful in proving entitlement to benefits.

Conclusion

The objective of this Expense Hearing is to determine an appropriate amount to be awarded from the unsuccessful party to the successful party. Based on the evidence presented and the guidance provided by the DRPC, neither party's position related to expenses is satisfactory. I have determined that the Applicant is entitled to her expenses from this Arbitration proceeding; however, in applying the principle of fairness, the amount that the Applicant is claiming in terms of expenses will be reduced.

Assessment of Expenses

This was not an overly complex case, but at the same time it was not a simple case either due to numerous motions, witnesses and the sheer volume of evidence. This case ultimately turned upon the credibility of the Applicant, the witnesses and medical evidence. In the end, the Applicant was 100% successful in proving her case.

The Applicant submitted a lengthy fee breakdown of expenses related to the Hearing. There were 2 lawyers, with one being senior counsel, along with 3 law clerks who worked on the Applicant's behalf. I find that this was appropriate based on the size and length of this Hearing. The Applicant claimed $107,271.25 in fees which includes HST and as part of her written submissions included her legal team's docket which commenced as of November 25, 2014. The Insurer questions the reasonableness of these fees. I agree and find them excessive.

The actual filing of the Application for Arbitration occurred on January 19, 2016. The Insurer is correct when it stated in the submissions that the Applicant's fees should be calculated from the date of the completed Application for Arbitration and not from the date when the lawyer's services were first retained by the Applicant. As a result, I am reducing the Applicant's legal fees by $5,040.37, which is inclusive of HST and represents the total dollar amount of fees incurred prior to January 19, 2016. Therefore, I am fixing the Applicant's fees at $102,230.88 including HST.

Disbursements Claimed for the Arbitration Hearing:

The Applicant submitted a lengthy list of disbursements.

I am reducing some of the disbursement expenses as presented by the Applicant. There were some disbursements that were claimed under the Expense Regulation but at an amount which is above the allowed amounts.

I am reducing the Halton Health orthopedic and physiatry reports from $4,124.69 to $1,500.00 as well at the Omega OCF-19 and Cat assessment from $4,972.00 to $1,500.00. Dr. Rajani's fee for preparation and attendance is being reduced from $5,910.00 to $3,700.00. Dr. Davidson's fees are also being reduced from $3,390.00 to $2,100.00. The cost of Mr. Joel Kumove's Vocational Assessment is being set at $1,500.00 from $3,616.00 and the NRS occupational therapy report is being set at $1,500.00 from $2,831.39. Therefore I am fixing the disbursement costs at $33,337.90 including HST.

EXPENSES:

After considering the complexity of this Arbitration Hearing, written submissions of the parties, the supporting documentation filed, and applying the principle of fairness as guidance, I find it appropriate to fix the Applicant's expenses at $135,568.78 including fees, disbursements and HST.

April 17, 2018

Jeff Musson 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 Insurer is liable to pay to the Applicant her expenses in respect of the Arbitration proceeding, fixed in the amount of $135,568.78 (inclusive of fees, disbursements and HST).