Cindee Milan v. Aviva Canada Inc., 2018 ONFSCDRS 95

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

Neutral Citation: 2018 ONFSCDRS 95

FSCO A15-005751

BETWEEN:

CINDEE MILAN

Applicant

and

AVIVA CANADA INC.

Insurer

DECISION ON EXPENSES

Before:

Arbitrator Anne Morris

Heard:

By written submissions completed on March 5, 2018

Appearances:

Mr. Randy F. Knight, legal counsel, for the Applicant Mr. Derek Greenside, legal counsel for the Insurer

Issues:

The Applicant, Ms. Cindee Milan (the “Applicant”), was injured in a motor vehicle accident on May 17, 2011 and sought accident benefits from Aviva Canada Inc. (the “Insurer”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and the Applicant, through her 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 Insurer is entitled to its expenses of the Arbitration (including the Expense Hearing) in the amount of $5,000.00 inclusive of fees, disbursements and HST.

EVIDENCE AND ANALYSIS:

Background

The Arbitration Hearing was held before Arbitrator Matheson on September 26-28, 2017, with written submissions due October 31, 2017. The decision was as follows:

I find the Applicant is not entitled to receive a weekly income replacement benefit in the amount of $325.00 from July 3, 2013 to date and on-going.
Is the Applicant entitled to receive the following medical benefits?

a) I find that the Applicant is entitled to the treatment plan of $680.71 for an Occupational Therapy Re-Assessment, dated March 7, 2014.

b) I find that the Applicant is not entitled to $3,048.20 for Physical rehabilitation, dated December 19, 2013.

c) I find that the Applicant is entitled to $379.77 for physical rehabilitation, dated July 8, 2013.

d) I find that the Applicant is not entitled to $1,100.00 for orthotics devices, dated July 26, 2013.

e) I find that the Applicant is not entitled to the treatment plan of $1,766.25 for physical rehabilitation and assessment, dated February 13, 2015.

f) I find that the Applicant is entitled to the assessment plan of $2,683.26 for a vocational assessment dated February 20, 2015.

I find that the Insurer is not liable to pay a special award to the Applicant.
I find that the Applicant is entitled to interest for these overdue amounts, at the rate of 2% compounded monthly in accordance with the Schedule.
Should the parties become unable to resolve [the] issue [of costs], they shall subsequently schedule an Expense Hearing before me in accordance with Rules 75 to 79 of the provisions of the Dispute Resolution Practice Code.

The parties were unable to resolve the issue of expenses and because Arbitrator Matheson 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

Both parties claimed success in the Arbitration with the Insurer being successful on the post 104-week income replacement benefit (“IRB”) issue and on three of the six medical issues. The Applicant submitted that although the Insurer won on the post 104-week IRB issue, the Applicant won on aspects of the issue, including whether the limitation period applied. The Applicant also noted that the finding by the Arbitrator that the Applicant suffered from chronic pain with fibromyalgia was significant even though the Arbitrator found in the circumstances that the condition did not disable the Applicant to the extent that she met the post 104-week test for disability. The Applicant also noted that she was successful on the quantum of interest issue based on the then existing case law. The Insurer noted success on the special award issue.

The Insurer referred to an offer to settle made to the Applicant to resolve the underlying insurance policy (full and final basis) in the amount of $25,000.00. It is difficult to assess the weight of this offer given that the underlying insurance policy was not at issue in the Arbitration, given the medical limits available under the transitional policy, and given the Arbitrator’s findings with respect to chronic pain.

There were no real novel issues at the Arbitration, although the Applicant suggested that having an arbitration on an IRB issue where the Insurer had not conducted insurer examinations was novel. This may or may not be a novel procedural matter but it is not a novel issue, in my view.

The Insurer submitted that the request for a special award by the Applicant was frivolous and vexatious. While the Arbitrator did not impose a special award, he did make the following statement,² as submitted by the Applicant:

I agree with the Applicant that constant misstatements within an explanation of benefits letters are more than an inconvenience to an applicant, and as such the passive-aggressive actions of a “sophisticated party” strays too far from an insurer’s obligation of utmost good faith in a first party system and the standard of consumer protection as set out by cases such as Smith v. Co-operators General Insurance Co.³ It is quite distasteful and should not happen. However, regarding the circumstances in this case, I am unable to hold the Insurer to a level of perfection, and as such the discrepancies do not rise to the level of an unfair or deceptive practice.

The Applicant suggested that the introduction by the Insurer of surveillance evidence, not even alluded to in the decision, was conduct which tended to prolong the Hearing, but an insurer is entitled to introduce surveillance evidence.

The Applicant alluded to consumer protection and access to justice issues in submitting that the Applicant should be found entitled to her expenses. The Insurer pointed to arbitral decisions⁴ suggesting that there is no language in the expense criteria referred to which allows for consumer protection and imbalance of power considerations.

I prefer the analysis by Arbitrator Killoran in Reid and ING Insurance Company of Canada,⁵ with respect to arbitration legal expenses, that:

The relationship between insurer and insured is a contractual one. The insured is entitled to access the dispute resolution process at FSCO as a result of that contract. The Insurance Act and its regulations must be interpreted in such a way as to uphold the protective and remedial nature of the legislation of which it follows.

I note also the decision of Director’s Delegate Blackman in Halim and Security National Insurance Co./Monnex Insurance Mgmt Inc., where he held:⁶

I find that these expense criteria do not exist in a vacuum segregated from the overall legislative intent. Rather, the criteria are defined by and help define the broader, overarching legislative intentions, including consumer protection, as set out by the Supreme Court of Canada in Smith v. Co-Operators General Insurance Co., 2002 SCC 30, [2002] 2 S.C.R. 129, which encompasses a fair and reasonable measure of access to justice.

Conclusions

In all of the circumstances, and noting the Insurer’s degree of success, I find that the Insurer is entitled to its expenses but in an amount reduced to also reflect the degree of success of the Applicant and to reflect principles of reasonableness, consumer protection and access to justice.

The Insurer submitted a bill of costs in the amount of $22,912.12 in legal fees for three lawyers, a student-at-law and two law clerks. The rate submitted for the lawyers was $150.00 per hour. While Rule 78 of the Code provides for a non-legal aid rate of $150.00 per hour for applicant counsel in complex cases, the non-legal aid rate, even if reasonable, is not available to insurers. The principal lawyer in this case was called to the Bar in 1987. He is likely a tier 3 lawyer with a legal aid rate of $136.43 per hour. This was a three-day Hearing on issues which were not very complex. Even allowing, in circumstances of complete success, a 2:1 ratio of preparation time to hearing time of 48 hours to 24 hours, the fees would come to $9,822.96 ($136.43 x 72).

The Insurer claimed disbursements of $8,351.16. $2,175.25 of this amount is for a court reporter. A court reporter is the choice of an insurer and is not required. It is not an allowable expense. $1,834.40 is claimed for Dr. Daugherty, the only allowable part of which is $112.80 for testifying. Another medical expert invoice of $2,500.00 for preparation and attendance at the Hearing does not show time actually spent. The other expenses are largely administrative in nature. The Applicant also had success in this Arbitration and also had to pay medical and other experts as well as incurring expenses of an administrative nature. In all of the circumstances of this case, both parties should bear the expense of their own disbursements.

It is trite law that a line by line assessment of expenses is not necessary but rather the establishment of an amount that is reasonable. In my view of the circumstances of this case including degree of success, consumer protection and access to justice, I fix expenses payable by the Applicant to the Insurer at $5,000.00. This includes legal fees, disbursements, HST, and expenses associated with the Expense Hearing.

EXPENSES:

The amount fixed for expenses in the Arbitration includes expenses associated with the Expense Hearing.

May 2, 2018

Anne Morris Arbitrator

Date