Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2018 ONFSCDRS 79
Appeal P17-00009 and P17-00010
OFFICE OF THE DIRECTOR OF ARBITRATIONS
AVIVA CANADA INC.
Appellant
and
TAHSEEN AL-KHUNFUSI and DHAKEAA ABBAS
Respondents
BEFORE:
David Evans
REPRESENTATIVES:
Meredith Harper for Aviva Canada Inc. Samia Alam for Mr. Tahseen Al-Khunfusi and Mrs. Dhakeaa Abbas
HEARING DATE:
On the record with submissions received by December 1, 2017
APPEAL EXPENSES ORDER
Under section 283 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, R.R.O. 1990, as amended, it is ordered that:
- Tahseen Al‑Khunfusi and Dhakeaa Abbas shall pay Aviva Canada Inc. its legal expenses of the appeal proceedings herein, fixed at the amount of $4,000, inclusive of disbursements and HST.
April 20, 2018
David Evans Director’s Delegate
Date
REASONS FOR DECISION
I. BACKGROUND OF THE EXPENSE CLAIM
In a decision dated January 10, 2018, I allowed appeals of two related decisions released on January 9, 2017, by Arbitrator Stramwasser. She allowed the Respondents, Mr. Tahseen Al‑Khunfusi and Mrs. Dhakeaa Abbas, to add issues after April 1, 2016, the transition date, to their existing FSCO arbitration proceedings against their insurer, Aviva Canada Inc. She did this notwithstanding the amendments to the Insurance Act that as of that transition date, pursuant to s. 280 of the revised Insurance Act, disputes about entitlement to or the amount of accident benefits are brought exclusively before the Licence Appeal Tribunal (LAT).
Shortly afterwards, in Aviva Canada Inc. and Duong, (FSCO P16-00048, January 12, 2017), I held that, except in limited circumstances, new issues cannot be added to existing arbitration proceedings after the transition date.
Aviva appealed based on Duong.
On appeal in this case, I found that none of the issues added in the arbitration proceedings by the Arbitrator fell within the Duong exception. I also found the fact that Mrs. Abbas might have missed a limitation period to pursue one of her claims at the LAT was not a reason to interpret the legislation differently, as the change in the legislation did not cause the problem. I found that the consumer protection intent of the legislation did not override the legislative intent to move cases to the LAT. I found that the change was procedural, so it applied immediately. Further, even if there was some alleged “vested right” to proceed at FSCO, the presumption that legislation is not meant to interfere with vested rights may be rebutted by the clear intent of the legislature: see State Farm Automobile Insurance Co. v. Kulaveerasingam, 2017 ONSC 6278.
Accordingly, I found that Duong applied equally to the cases appealed.
Aviva now seeks $7,300.39, inclusive of HST and disbursements, for its legal expenses of the appeal.
II. ANALYSIS
Section 282(11) of the Insurance Act gives arbitrators jurisdiction to award expenses “according to criteria prescribed by the regulations.” The criteria are set out in the Expense Regulation.1 It states:
An arbitrator shall, under subsection 282 (11) of the Act, consider only the following 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 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.
[Paragraphs 6 and 7 deal with failure to attend examinations and are not relevant here.]
Note that the Regulation states that an arbitrator [or delegate] shall consider only those criteria.
With respect to entitlement to expenses, the Respondents cited a number of cases dealing with access to justice. However, they were mostly older cases, decided before the Regulation was amended to state that the criteria are now the only factors that can be considered and that there is no longer a broad, “any other matter” criterion.
Beyond that, an insured’s impecuniousity is also not one of the criteria listed in the Regulation.
Similarly, I find the parties’ conduct and proceedings at the LAT are irrelevant to costs and expenses of this appeal, as that is not a listed criterion either.
The Respondents submit that novelty is a relevant criterion. However, there was no novelty by the time of the appeal, as I had already issued my decision in Duong.
I find the only relevant criterion for entitlement was success. Since Aviva was successful on appeal, it follows that it is entitled to its appeal expenses.
As to quantum, the overriding consideration in fixing arbitration expenses is reasonableness.
While the Respondents take issue with some of the hours claimed, a line-by-line assessment of the expenses claimed is not appropriate. Rather, one should make a global assessment of reasonable expenses. I do note some apparent duplication in the hours claimed. Aviva has also not persuaded me that the shortfall between its lawyers’ actual rates and the tariff rates is a listed criterion, nor am I concerned that this discrepancy will discourage it from seeking competent representation in the future. However, the fact that I decided the matter on the record does not reduce the calculation by much, since most of the work for an appeal is in the preparation.
Bains and RBC General Insurance Company, (FSCO P09-00005, September 8, 2010), in reviewing twenty appeal expense awards, found that the average appeals expense award was close to $3000 where expenses were awarded to insurers. Legal Aid rates for insurer counsel have risen since then, however. Accordingly, I find that a global assessment of $4,000 is reasonable in this case, which I consider to be of average difficulty.
April 20, 2018
David Evans Director’s Delegate
Date