Mylvaganam Ponniah v. Northbridge General Insurance Corporation, 2018 ONFSCDRS 81

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2018 ONFSCDRS 81

FSCO A15-000272 & A16-003255

BETWEEN:

MYLVAGANAM PONNIAH

Applicant

and

NORTHBRIDGE GENERAL INSURANCE CORPORATION

Insurer

DECISION ON EXPENSES

Before: Arbitrator Jeff Musson

Heard: Written submissions completed on March 23 & 26, 2018

Appearances:

Mr. Eric Heath for Mr. Mylvaganam Ponniah

Mr. Jason Goodman for Northbridge General Insurance Corporation

Issues:

The Applicant, Mr. Mylvaganam Ponniah (the “Applicant”), was injured in a motor vehicle accident on August 29, 2012. There were numerous claims for accident benefits made against Northbridge General Insurance Corporation. (“Northbridge”), payable under the SABS.¹ The parties were unable to resolve their disputes through mediation, and Mr. Ponniah, 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 October 23-26, 30, 31, November 1-3 and December 12-14, 2017. 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 Northbridge 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 $52,167.11 (inclusive of fees, disbursements and HST).

EVIDENCE AND ANALYSIS:

Introduction

The Insurer is claiming expenses in the total amount of $74,193.26 including H.S.T., comprised of $44,569.65 inclusive of HST for fees and $29,623.61 inclusive of HST in disbursements. The Applicant took a different position with respect to expenses in his written submission. They submit that both parties should bear their own expenses. In the alternative, the Applicant claims that an amount of $15,000 inclusive of fees, disbursement and HST is reasonable as opposed to the Insurer’s request of $74,193.26 for costs.

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, as amended.²

In addition, an arbitrator shall, under Rule 75.2 of the DRPC, consider only the following seven 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 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.

The Applicant and Insurer only provided submissions of the sections under Rule 75.2 that were relevant to this case. 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, however the Applicant notes that he was successful at the Preliminary Issue Hearing that was held prior to this Hearing on April 13, 2017.

Written Offers to Settle

In its submission, the Insurer states that there was no written offer to settle pursuant to Rule 76. In his submission the Applicant stated that on November 29, 2017, mid-way through the Arbitration proceeding, the Applicant made a written offer to settle this proceeding and the tort proceeding on a global basis for an all-inclusive amount of $812,950.00. The Applicant also stated that this offer expired on December 12, 2017 at the commencement of the Insurer's case. The Applicant confirmed that no response was received from the Insurer.

Even though the Insurer did not provide the Applicant a written offer to settle, it submitted evidence that it tried on numerous occasion to settle this file including at the Pre-Hearing discussions, at Mediation and at the settlement meetings prior to the commencement of the Hearing. All of these efforts were unsuccessful due to a variety of factors, not the least of which related to the behavior of the Applicant.

Novel Issues

The Insurer stated in its submission that there were not any novel issues presented at the Hearing. The Applicant agreed with the Insurer’s position as it related to this section.

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 stated that the conduct of the Applicant, and his counsel, prolonged, obstructed, and hindered the Arbitration Hearing which resulted in numerous unnecessary delays. These factors in the Insurer’s opinion considerably lengthened the Arbitration Hearing. Further, the Applicant proceeded to an Arbitration Hearing despite the Applicant’s evidence being weak and insufficient.

The Insurer submitted evidence that the Applicant’s conduct as it related to witnesses caused a prolonging of the proceedings. Approximately 30 days prior to the Hearing, Applicant’s counsel provided its draft arbitration brief index, and a list of 26 witnesses to be called by the Applicant in addition to 16 witnesses to be cross-examined. The Applicant only reduced this list once the Hearing was started. The Insurer states that this caused them to have to prepare for the Hearing not knowing which individuals from this list would be called.

The Insurer submits that the Applicant’s failure to produce documents prior to the commencement of the Hearing caused the proceedings to be prolonged as well as obstructed the Insurer from properly preparing their defense of this case. In fact, the Insurer raised a preliminary issue on the first day of this Hearing, October 23, 2017. This issue was in regards to requesting the complete production of the Applicant's Ontario Disability Support Program (“ODSP”) file which included the Applicant's significant pre-accident medical history as well as providing definitive proof that the Applicant was accepting ODSP benefits while working one year pre-accident. In addition, there was also information contained in this file relating to an Ontario Works file which the Applicant and his family was receiving.

This ODSP file which was provided only under order by myself as the Arbitrator on the first day of the Hearing consisted of 61 pages. Evidence in the file showed that on August 22, 2017, the Applicant’s counsel was in possession of the complete medical file. There was other information contained in the file that shows that some documents had been delivered to the Applicant's counsel's office on January 6, 2017. The information contained in this file in the Insurer’s submissions became a pertinent focus of the balance of the Hearing, since it uncovered serious issues with the Applicant and his family's credibility.

In the Insurer’s submissions, it states that failing to produce the ODSP file was a significant obstruction and hindrance to this Hearing. The voluminous ODSP file required a detailed review by the Insurer, and a significant alteration to its approach to this Hearing. Much of the Insurer's preparation for the Arbitration Hearing was altered by the ODSP file.

The late production of the ODSP file also required the Insurer to provide this new information to its experts so they would be prepared for attendance at this Hearing. Further, two of the Applicant's key witnesses had not been provided with any pre-accident clinical notes and records. Dr. Kanagaratnam (Clinical Psychologist) testified that she was not given any pre-accident clinical notes and records, nor any other medical reports to review when she prepared her reports. Dr. Guscott (Psychiatrist) testified that he was unaware of the ODSP file or pre-accident medical history. In fact, Dr. Guscott’s testimony was postponed until he was able to review the documents in this file.

In the Insurer’s opinion, this unnecessarily prolonged the proceedings. The Applicant in his submission denied this.

The Insurer in their submission also stated that the Applicant changed the structure of their case during the Hearing. This caused a further prolonging of the arbitration. For example, on October 31, 2017 (day 6 of the Hearing), the Applicant advised that any claim with regards to an economic loss on Abhira Ponniah's (one of the Applicant’s daughters) behalf for attendant care benefits was being withdrawn. Up until the Hearing, the Applicant advised that claims would be sought on behalf of both Vithusha, and her sister Abhira.

In another instance, it was not until receipt of the Applicant's closing submissions that Applicant's counsel conceded that the Applicant could not receive $400 per week on the basis of section 4(3) of the SABS, and that no issue with regards to quantum of income replacement benefits was being raised. Instead, the Applicant wanted to make submissions instead as it related to a special award. The Insurer stated that this was another example of prolonging the Hearing because the Insurer called Dr. Kiraly to testify with regards to income replacement benefits. This caused the Insurer to incur substantial costs ($7,119.00).

Ultimately the Insurer states for all of these reasons, the Applicant’s behavior caused the Hearing to be prolonged, hindered this Hearing, and resulted in significant additional legal costs and other expenses to the Insurer.

The Applicant denies that their behavior caused a prolonging of the Hearing.

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

The Insurer submits that the entirety of this proceeding should be considered improper, vexatious, and unnecessary. It stated that the evidence given by the Applicant was not credible and this had led to a Hearing, which was not necessary. They also submit that significant evidence was withheld from the Insurer with regards to the Applicant's pre-accident medical history. The Insurer stated that the contents of the Applicant’s ODSP file also revealed fraudulent activities on behalf of the Applicant as well as misrepresentations made by the Applicant and his family. The Insurer stated that they have incurred extensive legal costs in relation to this matter because of his behaviour. The Applicant strongly denies this assertion and the generalizations that this implies.

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 submitted Tesfagiorgis and State Farm³ in support of its position. I agree with Arbitrator Reilly when she stated in her decision that “the objective of an expense hearing is to fix an amount that is fair and reasonable.” She also stated that in that case, the Insurer was 100% successful in defending that Applicant’s claim for benefits and that there was no reason to vary from the standard practice that expenses should follow success.

Based on the evidence produced at the Hearing I presided over, this was a case where the Insurer and Applicant had a significant difference of opinions. After reviewing the submissions of both parties, I also find merit in the Applicant’s submission when he comments that the SABS is viewed as consumer protection legislation and that it was his right to proceed to a Hearing and the legislation allows an Applicant to take that approach.

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 was made more difficult due to the conduct of the Applicant leading up to and including the Hearing. Documents were not produced to the Insurer and in the case of the Applicant’s ODSP file, were ordered to be turned over to the Insurer. This case was further complicated by the weak documentation and unreliable evidence given by the Applicant. In terms of testimony, this case relied heavily upon the credibility of the Applicant and the presence, or lack, of corroborating evidence. In the end, the onus was on the Applicant to prove his entitlement to benefits and he failed to do so.

The Insurer submitted that its counsel spent approximately 360 hours preparing and defending this file at the Arbitration Hearing. With respect to the preparatory work leading up to the Hearing, the time spent at the Hearing and the relative nature of the issues in dispute, the total hours spent by the Insurer seemed to be within a reasonable range.

Principle of Fairness

Case law has determined that the SABS is consumer protection legislation. As such, it is not reasonable to expect an Applicant to pay an Insurer $44,569.65 in fees. Based on my analysis above, I am fixing the Insurer’s costs at a 25% discount, which is $33,427.24 (including HST). This amount is reflective of the Applicant’s success at the one day Preliminary Issue Hearing that took place prior to this Hearing. Arbitrator Tanaka deferred the issue of costs of the Preliminary Issue Hearing to the Hearing Arbitrator; in this case, myself.

Disbursements for the Arbitration Hearing:

I am reducing the disbursement expenses as presented by the Insurer. I will allow all expenses related to disbursements for everything claimed other than the cost of surveillance.

The Insurer claimed $29,623.61 inclusive of HST in disbursements. The total cost of the surveillance was $10,883.74 inclusive of HST. The cost of surveillance is in my opinion costs that are related to the operation of a business and were not a necessary requirement in terms of defending this case. Therefore, the difference is $18,739.87 including HST which will be assessed against the Applicant for the Insurer’s disbursements.

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 $33,427.24 for fees and $18,739.87 for disbursements for a total of $52,167.11 inclusive of all fees, disbursements and HST.

April 20, 2018

Jeff Musson Arbitrator

Date