Jaromir Kozumplik v. Aviva Canada Inc., 2018 ONFSCDRS 80

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2018 ONFSCDRS 80

FSCO A12-006180

BETWEEN:

JAROMIR KOZUMPLIK

Applicant

and

AVIVA CANADA INC.

Insurer

DECISION ON EXPENSES

Before:

Arbitrator Jeff Musson

Heard:

Written submissions completed on March 20, 2018

Appearances:

Mr. Douglas Bryce for Mr. Jaromir Kozumplik

Mr. David Contant for Aviva Canada Inc.

Issues:

The Applicant, Mr. Jaromir Kozumplik (the “Applicant”), was injured in a motor vehicle accident on August 29, 2004. There were numerous claims for accident benefits made against Aviva Canada Inc. (“Aviva”), payable under the SABS.¹ The parties were unable to resolve their disputes through mediation, and Mr. Kozumplik, 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.

I conducted the Hearing for the issues in dispute on September 13 & 14, 2016. I issued my written decision with reasons dismissing all of the Applicant’s claims in the Arbitration. On the issue of expenses, I ruled that if the parties were unable to mutually agree on expenses, then either party would be entitled to request an Expense Hearing, which Aviva subsequently requested.

The issue in this Expense Hearing is:

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

Result:

The Applicant is liable to pay to the Insurer its expenses in respect of the Arbitration proceeding, fixed in the amount of $5,634.95 (inclusive of fees, disbursements and HST).

EVIDENCE AND ANALYSIS:

Introduction

In this Expense Hearing, the Insurer is claiming expenses in the total amount of $12,714.78 including HST, which is comprised of $10,407.05 in fees and $2,307.73 in disbursements.

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. Both parties were prepared, absent an agreement as to expenses, to have the matter determined by me. My jurisdiction to conduct an Expense Hearing is set out in subsection 282(11) of the Insurance Act² as amended.

In addition, an arbitrator shall, under Rule 75.2 of the DRPC, 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.
Whether the insured person refused or failed to submit to an examination as required under Section 42 of the 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
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.

At this Expense Hearing, both parties are focused on five areas: their degree of success in the outcome; the written offers to settle in accordance with Rule 76; novel issues; the conduct of the parties (or party representatives); and finally, whether any aspect of the proceeding was improper, vexatious or unnecessary.

Entitlement to Expenses

Degree of Success

In its submissions, the Insurer stated that it was 100% successful in defending all of the issues that were in dispute at the Hearing. In addition, there was no ambiguity in terms of its success in this matter. I agree with the Insurer’s conclusion in regards to this and the Applicant does not dispute this fact.

Written Offers to Settle

In its submissions, the Insurer states that it made a written offer to settle pursuant to Rule 76. This offer remained open until one minute after the commencement of the Hearing. The Insurer offered $15,000 inclusive of interest, costs, taxes and disbursements. The Applicant chose not to accept the offer and instead to proceed to an Arbitration Hearing.

Novel Issues

The Insurer stated in its submission that there were not any novel issues at the Hearing. The Applicant didn’t provide evidence to the contrary.

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

In its submissions, the Insurer did not provide evidence that the Applicant’s conduct prolonged, obstructed or hindered the proceeding. The Applicant also did not provide evidence that the Insurer’s conduct prolonged, obstructed or hindered the proceedings.

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

The Insurer did not submit evidence that any aspects of the proceeding was improper, vexatious or unnecessary. The Applicant also did not submit evidence regarding this point.

Analysis

The objective of this Expense Hearing is to determine an appropriate amount to be awarded in expenses by the unsuccessful party to the successful party. The Insurer is requesting that the Applicant pay costs of $12,714.78 inclusive of fees, disbursements and HST.

The Applicant has put forward the position that each party should bear their own costs of this arbitration and in the alternative, that only a moderate amount for expenses be ordered against the Applicant. I agree with the Applicant in his submission when he stated that it was his right to proceed to a Hearing and the legislation allows an Applicant to take that approach. Further, the Applicant stated in their submission that when considering expenses, arbitrators have long emphasized the importance of going beyond the results of the proceedings and considering the foundational principles of consumer protection and access to the dispute resolution process.

The Applicant submitted the case of Shreet and RBC General Insurance Company ³ as well as the case of Reid v. ING Insurance Co. of Canada ⁴ in support of his position that the approach and methodology utilized by an arbitrator when assessing expenses, cannot be entirely results-based or the legislative purpose of the Insurance Act could be undermined. Further, the Applicant also emphasized the importance of access to the dispute resolution process when considering arbitration expenses.

Based on the evidence produced at the Hearing, this was a case where the Insurer and Applicant had a difference of opinion and the Applicant is entitled to exercise his right to dispute the findings of the Insurer.

For all these reasons, I have determined that the Insurer is entitled to its expenses from this Arbitration proceeding up to and including preparing for this Expense Hearing. However, in applying the principle of fairness, the amount the Insurer is claiming for expenses will be reduced.

Assessment of Expenses

This case had a very narrow focus when it came to the issues in dispute. The main issue in dispute was related to IRBs and it ultimately turned heavily upon the credibility of the witnesses and the presence or lack of corroborating evidence related to this one main issue. The Insurer submitted a fee breakdown of expenses related to the Hearing. The Insurer and their associates docketed 56.8 hours of work to prepare for this Arbitration. In terms of the Arbitration Hearing itself, as well as work completed post Hearing, the Insurer is claiming 25.35 hours of work. In terms of disbursements, the Insurer is claiming $2307.73 inclusive of HST.

Principle of Fairness

Case law has determined that the SABS is consumer protection legislation. This file had a unique history prior to being heard by myself. As such, in my role as arbitrator I am able to have discretion as it relates to awarding of expenses. Therefore, I am fixing the Insurer’s costs at a 50% discount, which is $5,203.53 (including HST).

Disbursements for the Arbitration Hearing:

I will allow the list of disbursements as filed except for the costs of travel, meal expenses as well as the discovery/court reporting services. These costs submitted by the Insurer are in my opinion costs that are related to the operation of a business, for which the Applicant should not be held responsible. In addition, it was the Insurer’s choice to have a reporter. A reporter is not required and this expense is not payable. Therefore the disbursement amount is calculated at $381.79 + HST for a total disbursement expense of $431.42.

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 Insurer's expenses at $5,203.53 for fees and $431.42 for disbursements for a total of $5,634.95 inclusive of all fees, disbursements and HST.

April 20, 2018

Jeff Musson Arbitrator

Date