Insurers Have a High Bar to Meet to When Seeking Costs from Accident Benefits Claimants at the Licen
In January 2017 LAT released two related decisions in which the Tribunal awarded costs for the first time. In B.F. v Wawanesa, 16-000433/AABS and M.M.S. v Wawanesa, 16-000435/AABS. The LAT ordered the insurer to pay $250 to each claimant for ignoring a procedural order.
The parties had agreed at the Case Conference to exchange documents by October 25, 2016. The Tribunal issued an Order in accordance with their consent. The same counsel represented both applicants. On October 27, 2016, she wrote to the LAT that the insurer had not complied with the Order and requested costs. The LAT sent a letter to the parties ordering the insurer to produce its documents by November 4, 2016. The lawyer for the insurer did not abide by the second Order as well. On November 7, the applicant filed submission on the issue of costs seeking $1,000 for each claimant. The next day, the LAT was copied in a letter by the insurer’s counsel to opposing counsel stating he had requested the documents from his client and would forward them when he received them.
Adjudicator Chloe Lester confirmed the Tribunal has the power to award costs to either party pursuant to section 17.1(4) of the Statutory Powers Procedure Act, RSO 1990, c S.22 and Rule 19.1 of the Licence Appeal Tribunal (LAT) Rules of Practice and Procedure, Version 1 (April 1, 2016). Under Rule 19.1, the Tribunal may award costs where a party in a proceeding “has acted unreasonably, frivolously, vexatiously, or in bad faith.” A “proceeding” is defined in Rule 2.17 as “the entire Tribunal process from the start of an appeal to the time a matter is finally resolved.” The adjudicator concluded that the insurer had been “disrespectful of the Tribunal’s process” without a reasonable explanation. The delay caused by the insurer had caused prejudice to the applicants and “interfered with the Tribunal’s capacity to maintain an efficient proceeding.” Consequently, the insurer had acted “unreasonably” and had to pay $250 to each claimant. The adjudicator considered this amount proportional to the specific behaviour.
The two decisions were subsequently cancelled on Reconsideration on March 17, 2017 by Executive Chair Lamoureux on the basis that the parties had settled both disputes before the Tribunal had issued its decisions. In her reasons, Executive Chair Lamoureux noted that the applicant’s counsel had a duty to notify the LAT of the parties’ settlement. Her failure to clarify the record in these proceeding “resulted in a waste of the Tribunal’s time and resources.”
More than a 100 LAT decisions later we have learned that the Tribunal has jurisdiction to award costs unless the Application is withdrawn, all issues have been resolved or the Tribunal has given its decision after the hearing (Thompson v Intact Insurance Company, 16-000041/AABS). In Thompson the Tribunal explicated that the repeal of section 282(11) (Expenses) of the Insurance Act signalled a clear intention by the legislature to limit the circumstances where the Tribunal can award costs in a proceeding. Oftentimes, LAT decisions reiterate that costs under Rule 19.1 is an exceptional remedy that requires particulars. There must be evidence before the Tribunal that a party has acted unreasonably, frivolously, vexatiously, or in bad faith in the course of the Tribunal’s proceeding (N.C. v RBC, 16-000282/AABS). This is a high bar for conduct to attract a cost award. In P. B. v RBC, Adjudicator Sewrattan remarked that:
Cost awards under Rule 19 are to maintain civility and order during proceedings, to deter conduct that threatens the orderly and civil resolution of an application, and to ensure that the Tribunal’s process and the other participants are respected. They are not to compensate parties for the cost of bringing or defending claims, or to punish.
To date, ignoring two consecutive LAT procedural orders without a reasonable explanation has been deemed “unreasonable.” However, ignoring one procedural order may not be enough where it causes little prejudice to the other party and does not impact the Tribunal’s timelines to achieve a resolution of the dispute within a six month timeframe (J.B. v Meloche Monnex Financial Services, 16-000766/AABS).
Rule 19 does not give the Tribunal jurisdiction to award costs for behaviour that happened before the filing of an application. For example, in M.K. v Dumfries, 16-000501/AABS adjudicator Theoharis stated that whether the insurer denied benefits arbitrarily or that the applicant lied to the adjuster concerned behaviour prior to the LAT proceedings and denied costs on that basis. Another important consideration when seeking costs is whether it hampers access to justice. Access to justice is a central mandate of the LAT and Rule 19.1 will not be applied in a way that deters applicants from bringing claims to the Tribunal (A.A. and State Farm, 16-000448/AABS). The fact that a claim may have obviously little merit will not likely invite costs, so long as the applicant pursued the claim in good faith (O.O. v Aviva Insurance, 16-000946/AABS).
So, forget what you knew about cost awards at FSCO – it is a new dance at the LAT. The spotlight is exclusively on the proceeding. What happens before the LAT appeal is irrelevant. The only relevant consideration is whether there is enough evidence to support a finding that a party’s conduct while litigating a matter at the LAT rises to the level of being unreasonable, frivolous, vexatious, or in bad faith.