Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2018 ONFSCDRS 98

Appeal P17-00017

MIKE KOZUMPLIK Appellant

and

AVIVA CANADA INC. Respondent

BEFORE: Delegate Jeffrey Rogers

REPRESENTATIVES: Mr. Douglas Bryce, solicitor for Mr. Kozumplik Mr. David Contant, solicitor for Aviva

HEARING DATE: Heard by written submissions, completed on April 13, 2018

APPEAL EXPENSES ORDER

Under section 283 of the Insurance Act, R.S.O. 1990 c. I.8 as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Regulation 664, R.R.O. 1990, as amended, it is ordered that:

Mr. Kozumplik shall pay Aviva its expenses of the appeal in the amount of $3,500, inclusive of disbursements and HST.

May 3, 2018

Jeffrey Rogers Director’s Delegate Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

In a decision dated February 2, 2018, I dismissed Mr. Kozumplik’s appeal of the Arbitrator’s order, while reserving the decision on appeal expenses. I ruled that the Arbitrator correctly determined that Mr. Kozumplik was not entitled to payment of further income replacement benefits (IRBs) because the income he earned during the relevant post-accident period reduced his entitlement to the amounts Aviva had already paid. Aviva now seeks $4,611.35 for its expenses of the appeal. The amount claimed includes $3,976.59 for fees, $104.25 for disbursements, plus HST of $530.51.

Mr. Kozumplik submits that the unique history of this dispute supports the conclusion that the parties should bear their own expenses of the appeal. In the alternative, he submits that Aviva’s claim for expenses is excessive, and that a maximum of $1,104.46 should be awarded.

For the reasons that follow, I find that Aviva is entitled to its expenses, based upon its complete success. However, I agree with Mr. Kozumplik that the amount claimed is excessive, but I do not agree with his assessment of the maximum.

II. ANALYSIS

Entitlement

Section 12(2) of the Expense Regulation¹ and Rule 75.2 set out 7 criteria to be considered in awarding expenses:

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 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.
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. O. Reg. 275/03, s. 4; O. Reg. 548/05, s. 1; O. Reg. 36/10, s. 2.

As noted above, I find that Aviva is entitled to its reasonable expenses of the appeal. Aviva’s complete success is the only criterion in the Expense Regulation, relevant to entitlement. Mr. Kozumplik’s submission that this dispute has a unique history must be considered under the “novel issue” criterion. I reject this submission.

The order appealed before me dealt with Mr. Kozumplik’s entitlement to payment of further IRBs. That dispute was the subject of an earlier order, by a different arbitrator. Mr. Kozumplik successfully appealed the earlier order. He submits that it was reasonable for him to appeal again because the order in his successful appeal was in conflict with the order in the appeal before me. I disagree.

Mr. Kozumplik was successful in the earlier appeal because the arbitrator failed to address the issue. The arbitrator did not make findings that were in conflict with the findings in this appeal. Furthermore, the arbitrator’s decision that was the subject of this appeal, turned almost entirely upon assessing credibility and making findings of fact. An earlier decision could not have influenced the outcome.

Quantum

It is trite to say that a line-by-line assessment of expenses is not appropriate. Rather, a global assessment of reasonable expenses should be made. In assessing reasonableness, I am guided by Delegate Blackman’s review in Bains and RBC General Insurance Company.² He found that the average expense award to successful insurers was $2,812.91. I am not satisfied that this case was such an outlier that it is reasonable to award $1,104.46, as Mr. Kozumplik suggests. Mr. Kozumplik used a ratio of hearing time to preparation time in order to gauge reasonableness. That technique has been endorsed for arbitration expenses, but it has not been adopted for appeal expenses. I agree with Delegate Blackman’s statement in Mr. C and Kingsway General Insurance Company:

Given that the bulk of work done in appeals is preparing written submissions in advance of relatively short oral submissions, such a ratio is of limited assistance. Further, the sometimes relative brevity of written submissions in appeals reflects significant and considered effort in paring submissions to that which is truly helpful to the appeals adjudicator. Such specific labour should not be discouraged.³

However, I am also not satisfied that Aviva’s claim of $4,611.35 is reasonable. This appeal was not particularly complicated. Considering that rates for counsel have increased since Bains, and that this appeal involved an oral hearing, I find that $3,500 is reasonable for Aviva’s appeal expenses, inclusive of disbursements and HST.