Financial Services Commission of Ontario

Neutral Citation: 2019 ONFSCDRS 36 FSCO A16-004703

BETWEEN:

YESHITLA DADI Applicant

and

AVIVA CANADA INC. Insurer

DECISION ON EXPENSES

Before: Anne Sone Heard: By written submissions and teleconference calls. Final oral submissions were received on May 13, 2019.

Appearances: Alan J. Clausi for Mr. Dadi James Brown for Aviva Canada Inc.

Issues:

The Applicant, Yeshitla Dadi, was injured in a motor vehicle accident on June 15, 2015. In a decision dated September 20, 2017, Arbitrator Matheson dealt with his claims for statutory accident benefits under the Schedule.¹ He made the following orders, while reserving on the issue of expenses:

1. Mr. Dadi is entitled to receive the medical benefit of $1,822.04 for the treatment plan dated October 23, 2015.
2. Aviva is not liable to pay a special award.
3. Mr. Dadi is entitled to interest for the overdue payment of benefits.

Aviva subsequently appealed Arbitrator Matheson’s Order of September 20, 2017.

Director’s Delegate Murray confirmed the Arbitrator’s Order and dismissed the appeal.

The issue in this further hearing is:

1. Is Mr. Dadi or Aviva Canada Inc. entitled to expenses incurred in respect of this arbitration hearing, and if so, in what amount?

Result:

1. Mr. Dadi is entitled to its expenses incurred in respect of this arbitration in the amount of $12,037.37, inclusive of fees, disbursements and H.S.T.

EVIDENCE AND ANALYSIS:

Entitlement to Expenses:

Pursuant to subsection 282(11) of the Insurance Act:

The Arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer all or part of such expenses incurred in respect of an Arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.

The criteria an adjudicator shall consider when deciding whether to award expenses are found in Ontario Regulation 664, in Rule 75.2 and Section F of the Dispute Resolution Practice Code (Fourth Edition — Updated January 2014) (the “Code”). I will discuss each of these criteria in order.

(a) Each party’s degree of success in the outcome of the proceeding:

Mr. Dadi submits that he was entirely successful with the only two substantive issues in dispute; however, Mr. Dadi was not entirely successful in the arbitration. He did not succeed in obtaining a special award from Aviva. On the other hand, he did succeed on the substantive issue of a medical benefit for an in-home assessment. In addition, Aviva conceded the issue of whether Mr. Dadi was to remain in the Minor Injury Guideline (MIG) on April 24, 2017, three weeks prior to the hearing. Although not part of the hearing, this issue did require significant correspondence and preparation.

During the hearing, Mr. Dadi was successful in his motion to have two of Aviva’s adjusters produced for cross-examination. He was unsuccessful in an attempt to add the previously unmediated issue of attendant care benefits to the proceeding and to obtain production of contractual documents Aviva had with LifeMark and CBI physiotherapy.

In its submissions, Aviva concedes that Mr. Dadi achieved a greater degree of success overall at the hearing.

(b) Any written offers to settle made in accordance with Rule 76:

On May 1, 2017, Mr. Dadi served an Offer to Settle to resolve the issues in dispute based on the following terms:

• Aviva approve the in-home assessment; and
• Aviva pay Mr. Dadi’s expenses of $6,075 plus H.S.T. based on 45 hours of time at $135 per hour.

Aviva did not respond to this offer and on May 5, 2017, Mr. Dadi withdrew his May 1, 2017 Offer to Settle.

On May 5, 2017, Mr. Dadi served another Offer to Settle to resolve the issues in dispute based on the following terms:

• Aviva approve the in-home assessment;
• Aviva pay Mr. Dadi’s expenses of $9,450 plus H.S.T. based on 70 hours of counsel time; and
• Aviva pay Mr. Dadi’s expenses of $3,050 for various incurred disbursements.

Aviva did not respond to this offer either. It was subsequently withdrawn on May 12, 2017. The hearing before Arbitrator Matheson started on May 17, 2019.

(c) Whether novel issues are raised in the proceeding:

Not applicable to this proceeding.

(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:

Mr. Dadi alleges that Aviva should have removed Mr. Dadi from the MIG earlier in the proceeding. He also alleges that Aviva was late in providing productions to him.

Aviva submits that Mr. Dadi did not make requests for productions relating to this proceeding from Aviva until April 14, 2017, one month before the hearing, and contrary to the pre-hearing order.

Aviva also raises Mr. Dadi’s late motions to add the unmediated issue of attendant care and to seek further productions. In addition, it submits that Mr. Dadi insisted on the testimony of unnecessary witnesses.

(e) Whether any aspect of the proceeding was improper, vexatious or unnecessary:

Mr. Dadi impugns the credibility of Aviva’s adjusters who testified at the hearing.

Aviva submits that this criterion is not a platform to re-litigate a previously unsuccessful claim for a special award.

Mr. Dadi also reports that the Financial Services Commission of Ontario (FSCO) offered Settlement Discussions on two occasions to the parties. Mr. Dadi agreed to attend, but Aviva refused on both occasions, despite this being an opportunity to resolve or narrow the issues in dispute.

(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.

Not applicable to this proceeding.

(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 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.

Not applicable to this proceeding.

Conclusion with respect to Entitlement to Expenses:

I agree with Aviva that Mr. Dadi’s allegations about the testimony of Aviva’s adjusters seem to be an attempt to re-litigate the issue of special award. On the other hand, Arbitrator Matheson found that Mr. Dadi was entitled to the in-home assessment, so I do not find that any of Mr. Dadi’s witnesses were unnecessary. He could have made his requests for production sooner.

I also note that Aviva failed to respond to Mr. Dadi’s attempts to settle this matter before the hearing and even refused to attend Settlement Discussions offered by the LAT. It is also possible that Aviva could have removed Mr. Dadi from the MIG sooner.

Aviva has conceded that Mr. Dadi achieved a greater degree of success in these proceedings. I find that this is the most important criterion, and I award expenses to Mr. Dadi mainly on this basis.

Amount of Expenses:

Statutory Framework:

The amount of expenses I may award is set out in section 3 of the Schedule to the Expense Regulation (Dispute Resolution Expenses) pursuant to subsection 282(11) of the Insurance Act. It states as follows:

3(1) The legal fees payable by the insured person or the insurer for the following matters may be awarded:

1. For all services performed before an arbitration, appeal, variation or revocation hearing.
2. For the preparation for an arbitration, appeal, variation or revocation hearing.
3. For attendance at an arbitration, appeal, variation or revocation hearing.
4. For services subsequent to an arbitration, appeal, variation or revocation hearing.

(2) The number of hours for which legal fees may be awarded shall be determined by the arbitrator, having regard to the criteria set out in subsection 12(2) of this Regulation.

(3) The maximum amount that may be awarded for legal fees is the amount calculated using the hourly rates set out in the Dispute Resolution Practice Code published by the Ontario Insurance Commission or the Financial Services Commission of Ontario, as it may be amended from time to time.

Mr. Dadi’s Claim for Expenses:

In his Bill of Costs, Mr. Dadi claimed $28,058.18, including H.S.T., for fees and $11,817.48, including H.S.T., for disbursements.

Analysis and Findings:

The overriding consideration in fixing arbitration expenses for legal fees is reasonableness.

As it pointed out in its submissions, Aviva has the right to refuse to respond to Mr. Dadi’s settlement offers and to refuse to engage in FSCO’s offered Settlement Discussions; however, if it conducts a proceeding in this manner, and loses, it runs the risk of increased liability for expenses.

In addition to the criteria set out above in subsection 282(11) of the Insurance Act, this is because Aviva has willfully foregone opportunities to resolve this matter prior to the hearing and thereby thwarted the aim set out in the Preamble to the Dispute Resolution Practice Code (Fourth Edition — Updated January 2014) (the “Code”) of “timely, cost-effective and fair dispute resolution services”.

In its submissions, Aviva has emphasized the modest dollar amount at stake in this case. I note that in this respect this case bears some resemblance to the tort case of Persampieri v. Hobbs.² In that case, Sanderson, J. states as follows:

Insurers can, of course, pursue whatever strategy options they deem fit, but especially where such strategies may have wide ranging and adverse implications involving widespread denial of access to justice, the use of such strategies should not be encouraged by the giving of cost breaks on foreseeable costs consequences.

Although only decided in 2018, this case has already been cited with approval in six subsequent cases.³

Fees:

In terms of the hearing time, Arbitrator Makepeace confirmed in Henri and Allstate Insurance Company of Canada,⁴ that “a line-by-line assessment of the expenses claimed is not appropriate. Rather, the Arbitrator should make a global assessment of reasonable expenses.”

As a rule of thumb, Arbitrators have allowed expenses for preparation for hearing time to the actual hearing time on a ratio of between 1:1 and 4:1.

As mentioned previously, this hearing only dealt with the issues of a medical benefit and a special award. It was originally scheduled for two days, and even though there were five witnesses, it was completed within that time frame.

The parties agree that the hearing took 11.5 hours. I also allow one hour for the expense hearing. I am prepared to allow a ratio of 3 hours for preparation for every hour of hearing time. This was not an extremely complicated case. But more time was required, as the issues were hotly contested and there was substantial correspondence. In addition, as noted above, Aviva refused to engage in any meaningful settlement discussions. This ratio allows Mr. Dadi to have compensation for a total of 46 hours.

Accordingly, in connection with his legal fees, I allow Aviva 46 hours of Mr. Clausi’s time at his Legal Aid rate of $136.43 per hour. This comes to $6,275.78. I also allow H.S.T. in the amount of $815.85. This totals $7,091.63 for fees, including H.S.T.

Disbursements:

Mr. Dadi prepared and called two experts, Dr. McKee and Dr. Payne.

Under subsection 5(3) of the Dispute Resolution Expenses Regulation⁵, the maximum amount that may be awarded for the attendance of an expert witness is $200 per hour of attendance up to a maximum of $1,600 per day.

Under subsection 5(4) of the same Regulation, $500 is the maximum amount that may be awarded for preparation of an expert witness at which the witness testifies.

Under subsection 5(5) of the same Regulation, $1,500 is the maximum amount that may be awarded for the preparation of an expert report.

Mr. Dadi agrees that he is only entitled to the $1,500 maximum amount for Dr. McKee’s report, $400 for witness preparation and $500 for his attendance. This comes to a total of $2,400 for Dr. McKee.

Mr. Dadi also agrees that he is only entitled to $500 for witness preparation and $200 for attendance, totalling $700 for Dr. Payne.

I also note that Ms. Nicole Van Gent was not qualified as an expert, and therefore do not allow the $190 Mr. Dadi has claimed for a preparation and attendance fee for her.

Mr. Dadi has also requested $3,263.80 for the cost of transcripts. There is no provision in the Code for reimbursement for transcripts. Accordingly, I am not ordering this amount.

I find that the remaining disbursements requested are in accordance with the Expense Regulation, and therefore payable. In all, the allowable disbursements total $4,945.73, including applicable H.S.T.

Conclusion:

For the reasons set out above, I order Aviva to pay Mr. Dadi his expenses in respect of this arbitration proceeding, fixed at $12,037.37, inclusive of fees, disbursements and H.S.T.

July 24, 2019

Anne Sone Arbitrator

ARBITRATION ORDER

Under section 282 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, as amended, it is ordered that:

1. Aviva Canada Inc. pay Mr. Dadi his expenses in the amount of $12,037.37, inclusive of fees, disbursements and H.S.T.

July 24, 2019

Anne Sone Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 22018 ONSC 368
3. 3Dhar v. McGuinness, 2019 ONSC 2603, Poonwasee v. Plaza, 2018 ONSC 4968, Jamieson v. Kapashesit, 2019 ONSC 2831, Brophy v. Harrison, 2019 ONSC 4377, 688857 Ontario Limited v. Aviva Insurance Company of Canada, 2019 ONSC 2034, St. Marthe v. O’Connor, 2019 ONSC 4279.
4. 4(OIC A-007954, August 8, 1997).
5. 5Schedule to R.R.O. 1990, Reg. 664, made under section 282 (11) of the Insurance Act, as amended.