In the matter of an Application pursuant to subsection 280(2) of the Insurance Act, RSO 1990, c I.8., in relation to statutory accident benefits.
Between:
Afshan Jamal
Applicant
and
Security National Insurance Company
Respondent
COST DECISION
ADJUDICATOR: Rebecca Hines
APPEARANCES:
For the Applicant: Imtiaz Hosein, Counsel
For the Respondent: Patricia Hill, Counsel
HEARD: By written submissions
OVERVIEW
1The applicant was injured in an automobile accident on May 27, 2016 and sought benefits from the respondent pursuant to O. Reg. 34/10: Statutory Accident Benefits Schedule – Effective September 1, 2010 (the “Schedule”). The respondent refused to pay for certain benefits and the applicant applied to the Licence Appeal Tribunal - Automobile Accident Benefits Service (the “Tribunal”) for resolution of this dispute.
2This matter arises from the applicant’s claim for an award as a result of the respondent’s denial of her entitlement to a non-earner benefit (NEB). The matter proceeded to a teleconference hearing on October 8 and 9, 2020, where I heard the testimony of the adjuster. At the conclusion of that hearing, the applicant requested that costs be added as an issue in dispute. In my decision dated April 29, 2021, I granted the applicant’s request and asked the parties to file written submissions addressing the issue of costs.
ISSUE
3I have been asked to decide whether the applicant is entitled to costs pursuant to Rule 19 of the Licence Appeal Tribunal, Animal Care Review Board, and Fire Safety Commission Common Rules of Practice and Procedure, Version I (October 2, 2017) as amended (the “Rules”)1?
RESULT
4After reviewing the parties’ submissions I find that the applicant is entitled to costs in the amount of $500.00.
ANALYSIS
5Rule 19.1 provides that a party may request costs of the proceeding, if they believe that the other party has acted unreasonably, frivolously, vexatiously, or in bad faith during the proceedings. Rule 19.4 further sets out the requirements for that request, which must include the reasons for the request and the particulars of the alleged conduct.
6The applicant has requested an order for costs in the amount of $12,500.00. She alleges the respondent’s conduct during the course of the proceedings was unreasonable, frivolous, vexatious, and in bad faith. In particular, she argues that the respondent:
i) Raised a preliminary issue seeking to bar her claim for a NEB for failing to attend insurer examinations (IE) when it knew that it had not followed its procedural obligations in arranging the IEs pursuant to s.44 of the Schedule; and
ii) Failed to comply with a production order of this Tribunal which resulted in delay and prevented a fair and cost-efficient hearing.
7The respondent argues that the applicant is relitigating issues that have already been decided by this Tribunal as Adjudicator Norris already decided that costs were not warranted in his decision on the preliminary issue dated May 29, 2019. It also submits that the applicant’s other allegations do not meet the high threshold for costs. Finally, it maintains that I should not consider the conduct of counsel in determining whether costs are appropriate.
8The purpose of Rule 19.1 is to deter conduct by parties that is unreasonable, frivolous, vexatious, or in bad faith. This is a high bar for conduct to attract a cost award and is an exceptional remedy. For the following reasons, I find in this case the threshold has been met.
9Since the applicant has made several allegations, I will first address the conduct which I do not find meets the threshold for costs. I agree with the respondent that part of the applicant’s submissions was an attempt to relitigate issues that have already been decided by this Tribunal. For example, the issue of whether the applicant was entitled to costs as a result of the preliminary issue hearing was an issue before Adjudicator Norris and he determined that costs were not appropriate. As a result, I have not considered that conduct in rendering this decision.
10Furthermore, the applicant submits that the respondent failed to meet its procedural obligations in responding to her application for NEBs in her submissions for costs. Rule 19 specifically states that the conduct that forms the basis for the request for costs must have occurred during the course of the proceedings. Therefore, whether or not the respondent met its procedural obligations in scheduling IEs is not conduct that I will consider in this analysis. In addition, I already addressed this issue in paragraphs [29] and [30] of my decision on the award issue. I agree with the respondent that the applicant is again relitigating issues that have already been decided by this Tribunal.
11Although I do not find the above conduct meets the threshold for costs, I do find the respondent’s failure to comply with the Tribunal’s production order meets the definition of unreasonable conduct and is worthy of an award. A case conference report and order dated April 16, 2020 ordered the respondent to produce any records relating to the denial of the applicant’s NEB claim. That included any invoices issued by IE assessors; any written communications between the respondent or its counsel and its IE assessors subject to redactions for privilege and reserves; and all records relating to the respondent arranging IE assessors. During the applicant’s cross-examination of the adjuster at the hearing it became evident that the respondent failed to comply with the Tribunal’s order as several pages of the e-flow records were not produced to the applicant as per the Tribunal’s order. This required the need to take a lengthy break to provide the applicant’s counsel time to review the records and prepare questions for cross-examination. I reject the respondent’s submission that it failed to comply with the Tribunal’s order as a result of an administrative oversight due to the following factors:
(i) Prior to the hearing, counsel for the applicant wrote to the respondent on two separate occasions seeking confirmation that it had complied with the Tribunal’s order regarding the above-noted records. Counsel for the respondent wrote back indicating that it had provided everything. Counsel for the applicant wrote back challenging the respondent, to which the respondent simply replied, “you have our position.”; and
(ii) During the cross-examination of the adjuster, counsel for the respondent frequently objected to questions asked by counsel for the applicant in relation to the arrangement of IE assessments. The respondent took the position that this information was protected by litigation privilege which I rejected. While a few of the objections were valid I find the majority interfered with the applicant’s ability to carry out an efficient cross-examination of the adjuster and resulted in delay.
12If I accepted that the respondent failed to comply with the production order due to an administrative oversight, I would not find costs payable. However, based on the above facts, I believe the respondent deliberately did not comply with the Tribunal’s order to produce the records. If it disagreed with the case conference adjudicator’s production order it could have brought a motion disputing same. However, it did not. I also find that the respondent’s conduct needs to be deterred as the Tribunal’s orders need to be respected or it will render them meaningless and prevent timely and cost-efficient access to justice. In what was supposed to be a one-day hearing turned into a two-day hearing. Although other procedural issues were raised during the hearing which contributed to the delay, (such as the applicant’s motion requesting to add a bad faith claim for punitive damages) I find the respondent’s conduct to be the main reason for the length of the delay. Since I have determined that an order for costs is appropriate, I must now address the quantum.
13Rule 19.5 sets out the powers of the Tribunal in deciding whether to order costs and the amount of costs. The Tribunal shall consider all relevant factors including:
(i) The seriousness of the misconduct;
(ii) Whether the conduct was in breach of a direction or order issued by the Tribunal;
(iii) Whether or not a party’s behaviour interfered with the Tribunal’s ability to carry out a fair, efficient and effective process;
(iv) Prejudice to other parties; and
(v) The potential impact an order for costs would have on individuals accessing the Tribunal system.
14I find the respondent’s conduct was serious in that it disregarded the Tribunal’s production order which I find to be a blatant disrespect of the Tribunal’s process. Further, the applicant has a right to transparency in understanding the adjustment of her claim especially when it comes to the denial of her benefits. The respondent’s lack of transparency interfered with the parties’ ability to have meaningful settlement discussions which could have prevented the need for a costly hearing. In my view, there is a power imbalance between the insurer who is a sophisticated party and the insured. Therefore, the need for transparency is that much more important.
15As already highlighted, I find that the respondent’s behaviour interfered with the Tribunal’s ability to carry out a fair, efficient and effective process as it resulted in the need for an additional hearing date and resources to address these cost submissions. I also find the applicant was prejudiced by the respondent’s conduct as its failure to produce the records prevented her from preparing for the hearing and properly advocating her position. Having said that, the case law establishes that an order for costs is not meant to punish the unsuccessful party as to do so would be a barrier to other individuals accessing the Tribunal’s system. However, at the same time individuals accessing the Tribunal’s system need to be reassured that the Tribunal can maintain its own process and that that process will be respected.
16The respondent submits that the case law establishes that a party should not penalized for the conduct of its counsel. It relied on the Tribunal’s decision in 16-000546 v Primmum Insurance Company (16-000546)2 in support of its position where the adjudicator determined that the claimant’s counsel, but not the claimant, was to blame for the unreasonable conduct. I find this decision distinguishable from the matter before me as in that case the costs were brought against the claimant who is an unsophisticated party. Further, there was evidence of a lack of proper advocacy. In this case, we are dealing with the insurer who is a sophisticated party who is familiar with the Tribunal’s process. In addition, 16-000546 also highlights that counsel along with their client are considered one party. Further, the evidence supports that the respondent purposely disregarded the Tribunal’s production order in advance of the hearing based on a legal position in which its client would have provided instructions.
17The applicant requests $12,500.00 for costs which represents the attendance of two counsel at the award hearing for an extra day and an additional three hours for preparing these written submissions on costs. The applicant did not submit a bill of costs with a break down of counsel’s fees in support of her request for costs. Further, she did not produce any authority supporting the quantum of the costs she seeks or that I have the authority to grant the relief sought. Overall, I did not find the award hearing was proportionate to the issues in dispute. In my view, it was unnecessary for both parties to be represented by two counsel each at the hearing when the issue in dispute was not complex. Therefore, I have only considered the attendance of one counsel in considering this factor.
18The respondent submits that Rule 19.6 provides that the amount of costs shall not exceed $1000 for each full day of attendance at a motion, case conference or hearing. Since the respondent’s conduct was primarily responsible for the need for another full hearing day on the award issue, I order it to pay $500.00 in costs. I find this amount proportionate to its conduct.
ORDER
19For all of the above-noted reasons, the respondent is ordered to pay the applicant costs in the amount of $500.00.
Released: May 27, 2022
Rebecca Hines Adjudicator
Footnotes
- Common Rules of Practice and Procedure (Licence Appeal Tribunal; Animal Care Review Board; Fire Safety Commission, version October 2, 2017.
- 16-000546 v Primmum Insurance Company, 2017 CanLII 46355 (ON LAT)