Can Applicant Recover Cost for Application Preparation

October 03, 2016, Kitchener, Ontario

Posted by: Robert Deutschmann, Personal Injury Lawyer

The Applicant was injured in a car accident on October 26, 2011 and sought benefits pursuant to the Statutory Accident Benefits Schedule - Effective September 1, 2010. On April 12, 2016, he submitted an application for dispute resolution services to the Tribunal because Intact had denied his Treatment & Assessment Plan for psychological services dated November 14, 2015 for $2,320.00. He retained counsel to prepare an application on an issue.

The Tribunal scheduled and held a case conference on June 22, 2015. At the start of the case conference, the parties informed the adjudicator that Intact had approved the Treatment Plan. However, the Applicant wanted to recover his costs for preparing his application and alleged that the Insurance Company had acted unreasonably.

This left the Safety, Licensing Appeals and Standards Tribunals with two issues to determine:

1. Can the Applicant recover fees/costs from the other party incurred for preparing an application on an issue that was resolved prior to the case conference?
2. If yes, is the Applicant entitled to recover the costs of this proceeding pursuant to Rule 19.1 of the LAT Rules of Practice and Procedure?

As the parties could not come to settlement on this issue, the Tribunal, with the agreement of the parties, scheduled a preliminary issue hearing for July 11, 2016. The Tribunal decided they would only address the question of whether it has the jurisdiction to consider the Applicant’s request for costs after he settled the original dispute with Intact before the case conference.

The Tribunal’s jurisdiction is defined by its governing legislation. The Tribunal’s authority to award costs comes from two sources: Section 17.1 of the Statutory Powers and Procedure Act (“SPPA”); and Rule 19.1 of the Rules.

Section 17.1(1) of the SPPA empowers the Tribunal to order a party to pay another party’s costs in a proceeding according to rules made under s. 17.1(4). Section 17.1(2) states the Tribunal shall not order a party to pay costs unless the conduct or course of conduct of that party has been unreasonable, frivolous or vexatious, or has acted in bad faith.

Rule 19.1 of the Rules mirrors the language of s. 17.1(2) of the SPPA, and provides that a party may make a request to the Tribunal for its costs where a party believes that another party in a proceeding has acted unreasonably, frivolously, vexatiously or in bad faith.

Prior to April 1, 2016, under s. 282(11) of the Insurance Act (the “Act”), an arbitrator’s jurisdiction and discretion to award costs was broad. Unlike Rule 19.1, arbitrators at the Financial Services Commission Ontario (“FSCO”) could consider criteria other than vexatious, unreasonable, frivolous and bad faith behaviour of a party, such as a party’s degree of success in the outcome of the proceeding, the conduct of a party, the failure of a party to comply with undertakings or orders, any written offers to settle, and/or any other matter that the arbitrator considered relevant to awarding costs.

Section 281 (11) of the Act was repealed on April 1, 2016. The Tribunal’s opinion is that the repeal of s. 281(11) is a clear statement of legislature’s intent to limit the circumstances where the Tribunal can award costs in a proceeding. However, the repeal of s. 281(11) does not prevent parties from negotiating costs and disbursements between themselves as they settle files.

This Tribunal only has jurisdiction to award costs under Rule 19.1 where a party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith and may consider this claim for Costs after the dispute with Intact settled prior to the case conference. The question is when does a proceeding begin and end? Rule 2.17 defines “a proceeding” as the “entire Tribunal process from the start of an appeal to the time a matter is finally resolved.” In short, a proceeding starts once the Applicant submits an application to the Tribunal and ends once all issues in dispute between the parties are resolved.

In this case, the Applicant accepted Intact’s approval of the treatment plan and raised another issue regarding costs. The Applicant was not willing to withdraw the application until Intact paid his costs and disbursements. The Tribunal took the view that the Applicant’s acceptance of Intact’s approval of the treatment plan did not end the proceeding.

It is the Tribunal’s opinion; the matter did not stop being a proceeding because the initial issue in dispute had been settled prior to the case conference. A proceeding ends when there is a notice of withdrawal, all issues in dispute have been resolved, or the Tribunal has given its decision after a hearing.

In this case, the Tribunal finds that the Applicant could raise the issue of costs during the proceeding, even though the initial issue had been settled, for the following reasons:

• The issue of costs was associated with the main issue that was in his Application. It was not a stand-alone issue; and
• The Applicant did not withdraw his application.

As such, we find the Tribunal has the jurisdiction to consider the Applicant’s request for costs. The Tribunal has the jurisdiction to award costs but only under Rule 19.1 where a party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith.

The Tribunal orders a second hearing by teleconference, to consider the following issues:

• Is the Applicant entitled to recover the costs pursuant to Rule 19.1 of the LAT Rules of Practice and Procedure?
• Did the Insurer unreasonably withhold or delay payments to the Applicant pursuant to section 10 of O. Reg. 664?

About Deutschmann Law

Deutschmann Law serves South-Western Ontario with offices in Kitchener-Waterloo, Cambridge, Woodstock, Brantford, Stratford and Ayr. The law practice of Robert Deutschmann focuses almost exclusively in personal injury and disability insurance matters. For more information, please visit www.deutschmannlaw.com or call us at 1-519-742-7774.

The opinions expressed here, while intended to provide useful information, should not be interpreted as legal recommendations or advice.