Rajwantie Bharat and Tirbhawan Bharat v. State Farm Mutual Automobile Insurance Company, 2019 ONFSCDRS 12

Commission des services financiers de l’Ontario

Neutral Citation: 2019 ONFSCDRS 12

Appeal P17-00047 and P17-00048

RAJWANTIE BHARAT and TIRBHAWAN BHARAT Appellants

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Respondent

BEFORE:

David Evans

Cecil Jaipaul for Ms. Rajwantie Bharat and Mr. Tirbhawan Bharat Brenda Cuneo for State Farm Mutual Automobile Insurance Company

April 5, 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:

State Farm Automobile Insurance Company shall pay to Ms. Rajwantie Bharat and Mr. Tirbhawan Bharat their legal appeal expenses in the amount of $4,200, inclusive of disbursements and HST.

March 7, 2019

David Evans Director’s Delegate

Date

REASONS FOR DECISION

In a decision dated July 5, 2018, I allowed the appeals by Ms. Rajwantie Bharat and Mr. Tirbhawan Bharat of the Arbitrator’s orders of June 14 and June 15, 2017. He found that they were out of time to seek arbitration of their housekeeping and home maintenance claims denied by their insurer, State Farm Mutual Automobile Insurance Company.

The Arbitrator found that the denial forms State Farm sent the Bharats were valid. Since the Bharats filed for mediation more than two years after receiving the denial forms, they could not proceed to arbitration.

However, on appeal, I noted that the denials were OCF-9 Explanation of Benefits claims forms. At the time State Farm sent these forms, they were no longer claims forms approved by the Superintendent. Further, the forms referred to a step in the dispute resolution process that no longer existed, namely a rebuttal medical report.

Therefore, I found the denials were invalid for failure to describe the dispute resolution process after a denial, and so the limitation period never began to run. I concluded Ms. Rajwantie Bharat and Mr. Tirbhawan Bharat could proceed to arbitration on their housekeeping and home maintenance claims.

The Bharats now seek their legal appeal expenses, consisting of $2,500 each for fees for their legal representation by Cecil Jaipaul, paralegal, and approximately $4,000 for disbursements, totaling about $10,000 inclusive of HST.

I note their submissions contain references to alleged settlement offers regarding fees. That is inappropriate, so I ignore those submissions.

The criteria for awarding expenses are set out in Rule 75.2 of the Dispute Resolution Practice Code. The parties agree that the Bharats were successful under criterion (a). The parties then make submissions regarding criteria (d), (e) and (f). However, those submissions relate to State Farm’s adjustment of the file, or the failure of the Bharats to attend insurer examinations, or other conduct matters. I do not find those criteria particularly relevant where the only issue on appeal was a technical argument about State Farm’s failure to send the correct forms. Accordingly, I find the Bharats are entitled to their appeal expenses.

With respect to fees, the Bharats claim entitlement to the maximum of $150 an hour under Rule 78.1, which deals with legal fees for the provision of legal services based on the hourly rates established under the Legal Aid Services Act, 1998. Mr. Jaipaul is a licensed paralegal and therefore, under Rule 9.1(a), he is licensed to provide legal services by the Law Society. However, while an hourly rate of up to $150 may be awarded under Rule 78.1 where justified, the Legal Aid rate is $32.36 for a paralegal. I find a nearly five-fold increase in fee inappropriate. I allow $70 per hour.

State Farm does not dispute the claimed 43 billable hours. That comes to $3,010; I allow $3,400 inclusive of HST for fees.

The Appellants also seek the cost of the transcript, noting that transcript costs were awarded in Nguyen and TD Home and Auto Insurance Company (FSCO A04-002390, April 9, 2018). However, in that same decision, the Arbitrator refused to allow court reporter fees, stating:

There is no provision in the Schedule [to the Expense Regulation] for allowing court reporter fees. Section 4.4 of the Expense Regulation allows an award for other out of pocket expenses incurred “in furtherance of the arbitration, appeal, variation or revocation hearing.” In my view, court reporter attendance fees are not covered by this section.

Beyond that, in my appeal decision Kingsway General Insurance Company and Pereira (FSCO P05-00031, September 17, 2007), I also discussed s. 4.4 of the Schedule to the Expense Regulation in Section F of the Code, noting that while this “basket clause” provides for the payment of “other out-of-pocket expenses incurred in furtherance of the arbitration, appeal, variation or revocation hearing,”

the other items listed in s. 4 are telecommunication charges (4.1), typing, printing and reproducing copies of documents (4.2), mail or courier delivery (4.3), and taxes on these expenses (4.5). I find the costs of transcripts (or the cost of a court reporter, for that matter) do not fit into that context and that the phrase “other out-of-pocket expenses” more likely refers to the relatively small expenses referred to in the rest of that section.

Further, as Arbitrator Leitch pointed out in Bhada and Security National Insurance Co./Monnex Insurance Mgmt. Inc. (FSCO A07-001972, September 25, 2009), if these kinds of expenses were recoverable, one would expect them to be specifically mentioned in the Schedule to the Expense Regulation as they are in Schedule 6 of the Legal Aid Tariff.

While the Bharats raise the issue of access to justice to allow reimbursement of the transcript cost, that cuts both ways. In my experience, insurers order transcripts more often than insureds, so then insureds would have to face additional costs that can easily run to several thousand dollars. For instance, in Randhawa and State Farm Mutual Automobile Insurance Company (FSCO A13-003076, March 13, 2017), Arbitrator Sone denied State Farm the $4,154 costs of the transcripts, based on existing case law. She cited in particular Shah and Personal Insurance Company of Canada (FSCO A11-002437 and A11-002549, May 26, 2014), which in turn cited Pereira. Randhawa was issued on March 13, 2017, and yet a scant 17 days later on March 30, 2017, the same insurer’s counsel from Randhawa claimed transcript costs before Arbitrator Snider. By way of contrast, he awarded $5,303.99 as the expenses of the transcripts in a decision dated November 16, 2017, which I then overturned in Yogesvaran and State Farm Mutual Automobile Insurance Company (FSCO P17-00086, October 5, 2018).

Therefore, transcript costs are not recoverable, and the cost of the transcript is denied.

The Bharats are entitled to their filing fees totaling $500. They also claim other miscellaneous but undocumented charges for parking, photocopying, and courier of $550. I allow $300 for these expenses, inclusive of HST. Disbursements thus total $800.

The total amount awarded is therefore $4,200.00, inclusive of disbursements and HST.

March 7, 2019

David Evans Director’s Delegate

Date