Neutral Citation: 2018 ONFSCDRS 91 FSCO A16-000346

BETWEEN:

TOMA IVANOVIC Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA Insurer

DECISION ON EXPENSES

Before: Arbitrator Anne Morris

Heard: By written submissions completed on March 23, 2018

Appearances: Mr. Jonah Waxman for Applicant Mr. Curtis Zizzo for Insurer

Issues:

The Applicant, Mr. Toma Ivanovic (the “Applicant”), was injured in a motor vehicle accident on January 30, 2014 and sought accident benefits from the Allstate Insurance Company of Canada (the “Insurer”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and the Applicant, 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.

The issue in this Expense Hearing is:

Is either party entitled to its expenses of the arbitration and, if so, in what amount?

Result:

The Applicant is entitled to his expenses of the arbitration (including the Expense Hearing) in the amount of $15,462.58 inclusive of fees, disbursements and HST.

EVIDENCE AND ANALYSIS:

The Arbitration Hearing was held before Arbitrator Mongeon from November 20 to 24, 2017. The decision was as follows:

The Applicant did not suffer a catastrophic impairment as a result of the accident.
The Applicant is entitled to receive a weekly income replacement in the amount of $326.00 per week, less amounts paid, from February 6, 2014 to date and ongoing.
The Applicant is not entitled to the claimed medical benefit.
The Applicant is not entitled to the attendant care benefits claimed.
The Applicant is not entitled to a special award.
The Applicant is entitled to interest at the rate of 1% per month on any unpaid benefits.
If the parties are unable to agree on the entitlement to, or quantum of, the expenses of this matter, the parties may request an appointment with me for determination of same in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.

The parties were unable to resolve the issue of expenses and since Arbitrator Mongeon is no longer available, the Expense Hearing by way of written submissions was scheduled before me.

Authority to Award Expenses

Rule 75.1 of the Dispute Resolution Practice Code (the “Code”) provides that:

An adjudicator may award expenses to a party if the adjudicator is satisfied that the award is justified having regard to the criteria set out in Rule 75.2. The items and amounts which may be awarded are in Rule 78 and the Schedule to the Expense Regulation found in Section F of the Code.

Rule 75.2 of the Code, which sets out the criteria to be considered in awarding expenses, states the following:

The adjudicator will consider only the criteria referred to in the Expense Regulation found in Section F of the Code. These criteria are:

a. Each party’s degree of success in the outcome of the proceeding;

b. Any written offers to settle made in accordance with Rule 76;

c. Whether novel issues are raised in the proceedings;

d. 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;

e. Whether any aspect of the proceeding was improper, vexatious or unnecessary;

f. Whether the insured person refused or failed to submit to an examination as required under section 42 of 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

g. 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 – 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.

Criteria

The only significant criteria argued by the parties in their submissions on expenses were the degree of success and offers to settle. Both parties agreed that the degree of success was mixed with the Insurer arguing that the success of the Insurer far outweighed the success of the Applicant.

The Insurer was successful on four of the five substantive issues at the Hearing. It was successful on the significant issue of determination of catastrophic impairment (“CAT”), as well as on the attendant care benefit (“ACB”). The amount of that claim was $2,036.27 per month. The Insurer was also successful on the medical benefit issue in the amount of $5,005.45 and on the special award issue.

The Applicant was successful on the income replacement benefit (“IRB”). The Applicant argued that the importance of this issue could not be overstated. Both the Insurer and the Applicant pointed to an offer by the Insurer made in November 2017, one which the Applicant argued was in any event outside the time period for making offers to settle. The offer was an all-inclusive one of $106,000.00. All-inclusive offers are difficult to assess in the context of an Expense Hearing where the underlying policy itself is not at issue in the arbitration. The Applicant indicated that the value of his success on the IRB in relation to arrears and interest alone amounted to approximately $53,000.00, leaving just over $50,000.00 for the future value of IRBs, estimated by the Applicant to be worth $200,000.00, quite aside from other benefits available under the policy.

While the Applicant did not receive any further monetary benefit in addition to the IRB as a result of the Hearing, given his loss on the ACB and CAT issues, he did receive an overall monetary benefit from the Hearing in the form of the IRB. This represented a monetary “win”, money he would not have had without the Hearing. It is on this basis in essence that the Applicant seeks his expenses. He also argues that evidence in relation to the IRB was also relevant to consideration of the issue of marked impairment in one of the spheres of functioning in the CAT aspect of the Hearing. The Applicant submitted that he was forced to a hearing to receive further benefits in that an earlier offer by the Insurer in May 2017 was in the “nuisance” value amount of $8,500.00.

The Insurer, for its part, stated that the Applicant, prior to the Hearing, would not resolve the matter without consideration being made for benefits beyond the non-CAT limits of the policy. In this regard, I note that an offer made by the Applicant in March 2017, for reinstatement of the IRBs and ACBs to the two-year mark, was careful to stipulate that that this did not settle ACBs into the future in the event that the Applicant was deemed to be catastrophically impaired. An offer by the Applicant in excess of $500,000.00 closer to the Hearing clearly anticipated settlement beyond the non-CAT limits.

The Applicant submitted that CAT was added at the Insurer’s insistence and he agreed to avoid duplication of proceedings. The CAT was added, however. It would likely have had to be argued at some point in any event, and it was in fact argued at this Hearing. The Insurer won on that issue. On the other hand, the inference is that the Insurer was unwilling, without a hearing, to reinstate and pay IRBs to the extent that these benefits were awarded at the Hearing.

The Insurer submitted, as an alternative to claiming its own expenses, that each party should bear its own costs and I have considered that. I note, however, that from a monetary perspective, the Applicant did come out ahead. I also note the first party insurer nature of the Schedule, the consumer protection nature of the legislation and the issue of access to justice. I will grant the Applicant his expenses. I cannot just ignore, however, the Insurer’s considerable success at the Hearing, particularly on the issue of CAT. I award the Applicant one-half of his expenses as submitted.

The Applicant submitted expenses for legal fees in the amount of $19,210.00 inclusive of HST for one lawyer, student-at-law and law clerk based on a ratio of 4:1 preparation time to hearing time. While, in his submissions, the Applicant indicated that this amount took into consideration the Insurer’s degree of success, I consider the amount reasonable overall and award half of that amount or $9,605.00.

The Applicant submitted expenses for disbursements in the amount of $11,715.15 which he indicated he reduced from $18,826.15 in consideration of the amounts allowed under Section F of the Code and in consideration of the Insurer’s degree of success. It is not clear to me that the Insurer’s degree of success is adequately considered. I consider the amount reasonable overall and reduce the amount by one half to $5,857.58

The Applicant is therefore entitled to his expenses of the arbitration (including the Expense Hearing) in the amount of $15,462.58 inclusive of fees, disbursements and HST.

EXPENSES:

The costs associated with the Expense Hearing are included in the overall expense award.

April 30, 2018

Anne Morris Arbitrator

Date

Financial Services Commission of Ontario

FSCO A16-000346