Terry Dacosta v. State Farm Mutual Automobile Insurance Company, 2018 ONFSCDRS 82

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2018 ONFSCDRS 82

FSCO A15-008668

BETWEEN:

TERRY DACOSTA

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before:

Arbitrator Jeff Musson

Heard:

By written submissions completed March 9, 2018

Appearances:

Mr. Terry Dacosta self represented

Mr. Talaal Bond for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Mr. Terry Dacosta, was injured in a motor vehicle accident on May 25, 2013. He applied for statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the SABS.¹ The parties were unable to resolve their disputes through mediation and Mr. Dacosta 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 10, November 9, December 18-20, 2017 and subsequently issued my written decision with reasons, wherein I dismissed 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 State Farm 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, as amended?

Result:

The Applicant is liable to pay to the Insurer its expenses in respect of the Arbitration proceeding, fixed in the amount of $500.00 (inclusive of fees, disbursements and HST).

EVIDENCE AND ANALYSIS:

Introduction

The Insurer is claiming expenses in the total amount of $11,529.41, including HST; the amount is comprised of $11,049.16 in fees and $480.25 in disbursements.

My jurisdiction to conduct an Expense Hearing is set out in subsection 282(11) of the Insurance Act, as amended.² An arbitrator shall, under Rule 75.2 of the Dispute Resolution Practice Code, 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 didn’t comment directly on all 7 sections, however, the Insurer did comment on those sections which were applicable. They were sections 1, 4, 5 with the remaining sections not considered relevant to this case.

Entitlement to Expenses

The Insurer was successful in this Arbitration Hearing. The main issue in dispute was income replacement benefits, both pre and post 104 weeks. The Insurer claimed a total of 113.4 hours to work on the preparation of this file as well as attend and successfully defend this case at a Hearing.

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

No evidence by either party was submitted to show that there were any written offers to settle this file prior to the commencement or duration of the Hearing.

Novel Issues

No evidence was submitted by either party that there were not any novel issues at the Hearing.

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 prolonged the Arbitration Hearing, specifically when the Applicant dismissed his legal counsel on the eve of the original Hearing date of June 2017.

In addition, it was also noted that the matter was adjourned due to a death in the Applicant’s family and the Insurer clearly states on the records that they do not take issue with this unfortunate circumstance.

Evidence was submitted that the Applicant promised to retain counsel by the new Hearing date of Monday, October 10, 2017. However, on Monday October 10, 2017, the Applicant submitted into evidence a medical note suggesting that his health prevented him from proceeding to a Hearing and that he had not been successful in retaining legal counsel. As such, the Applicant was preparing to proceed at Hearing as self-represented and would require time in which to prepare. I, as the Hearing Arbitrator, granted this request for adjournment and subsequent Hearing date in December.

In the Insurer’s opinion, this unnecessarily prolonged the proceedings. The Applicant denies that in fact this was the case.

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

The Insurer submits that the Applicant’s behavior at some points in the proceeding should be considered improper, vexatious, and unnecessary. For example, the Applicant sought to call his former counsel and State Farm’s counsel as witnesses at this Hearing. He went so far as to issue summonses to both parties. As a result, this required the Insurer to request an emergency motion in order to vacate these summons which was granted. The Insurer in its submission states that at the very least, this was most improper. At worst, it was intended to threaten and intimidate counsel in order to secure a favourable settlement.

As another example, the Insurer in its written submissions states that on the first day of the Hearing on December 18, 2017, the Applicant served an accounting report and sought to call the author, Mr. Gary Phelps, to give evidence that very day. Both the report’s submission and its authors testimony were contested by the Insurer, however, was ultimately allowed by myself as the Hearing Arbitrator to be entered into evidence. The Insurer submits that this tactic hindered their ability to proceed fairly and with due process. They also state that this tactic breached the rules of natural justice.

The Applicant, in their submissions, did not address these issues directly.

Both parties are in agreement that sections 6 and 7 of Rule 75.2 of the Dispute Resolution Practice Code do not apply to this Expense Hearing.

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. As arbitrator at this Hearing, I went to great lengths to accommodate the Applicant’s lack of procedural knowledge as it related to the rules that apply to a hearing since he was self-represented. Further, the Insurer’s counsel should be commended on showing patience as well as accommodating the Applicant’s lack of legal knowledge since it was the Applicant’s first ever attempt at self representation at a hearing. In some instances, it is more difficult for an experienced lawyer such as the one representing the Insurer in this case to face off against an Applicant who is self-represented versus opposing an experienced counsel because a lay person does not understand the rules and procedures at a hearing which are second nature to an experienced counsel.

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 because the Applicant was self-represented. He did a very commendable job in this regard except for the fact that in the end, the evidence showed that he was not entitled to either pre or post 104 IRB benefits. 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 113 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

The Applicant in their submission states that case law has determined that the SABS is consumer protection legislation and the Supreme Court of Canada has reinforced this to be true. As such, it is not reasonable to expect an Applicant to pay an Insurer $11,049.16 in fees. Based on my analysis above, I am fixing the Insurer’s fees at $350.00 (including HST). This amount is reflective of the Applicant’s argument that he should not be financially penalized for not being successful at the Hearing.

Disbursements for the Arbitration Hearing:

I am reducing the disbursement expenses as presented by the Insurer. I will set the amount of disbursements at $150.00 inclusive of HST. Again, I am viewing the cost of disbursements through a similar lens as the Insurer’s fees. The Applicant should not be financially punished for proceeding to an arbitration hearing and losing. Case law has confirmed such a position as just when addressing the issue of costs.

EXPENSES:

Considering the principles of fairness, the Applicant should not be punished by having to pay the substantial legal costs of the Insurer. The SABS is consumer protection legislation and its authors never intended to financially penalize those who have legitimate disputes but disagree with how an insurer has handled their file.

Therefore, after considering the complexity of this Arbitration Hearing, written submissions of the parties and the supporting documentation filed, I find it appropriate to fix the Insurer's expenses at $500.00 for fees, disbursements and HST.

April 20, 2018

Jeff Musson

Arbitrator

Date