Costs at the LAT – Unlikely to Act as a Deterrent to Future Conduct

By Alon Barda

One of the more controversial changes when the adjudication of SABS disputes was transferred from FSCO to the LAT is the ability of the Tribunal to award costs. At FSCO, the arbitrator could award “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.” This included various types of expenses, such as filing fees, legal fees, and disbursements, which were specifically set out in a Schedule attached to the Regulation.

The legislative authority now to award costs is within the Common Rules of Practice & Procedure applicable to LAT proceedings and the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (“SPPA”).

Section 17.1(1) of the SPPA states that a Tribunal “may, in the circumstances set out in rules made under subsection (4), order a party to pay all or part of another party’s costs in a proceeding.” However, there are limitations.

Section 17.1(2) of the SPPA states that the Tribunal shall not make an order to pay costs unless the following apply: “a) the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or a party has acted in bad faith; and b) the tribunal has made rules under subsection (4).”

As such, while the Tribunal may order a party to pay all or part of another party’s costs in a proceeding, the cost award is statutorily limited to circumstances wherein the conduct of a party has been unreasonable, frivolous or vexatious, or a party has acted in bad faith.

The section in the LAT Rules for costs mirror that in the SPPA. Section 19.1 of the LAT Rules states that, “where a party believes that another party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith, that party may make a request to the Tribunal for costs.”

Section 19.5 and 19.6 were added to the LAT Rules when they were updated on October 2, 2017 (the previous rules were known as the Licence Appeal Tribunal Rules of Practice and Procedure).

Section 19.5 sets out the factors that will be considered by the Tribunal in awarding costs, such as the seriousness of the misconduct, prejudice to other parties and the potential impact an order for costs would have on individuals accessing the Tribunal system.

Furthermore, while the SPPA allows an order for a party to pay “all or part of another party’s costs in a proceeding”, s.19.6 of the LAT Rules outlines that the amount of costs shall not exceed $1,000 for each full day of attendance at a motion, case conference or hearing.

As such, while the LAT has jurisdiction to allow for the payment of the other party’s costs under very limited circumstances, the LAT exercised its jurisdiction pursuant to ss.17.1(4) to limit even the amount of costs recoverable.

As we approach almost six years at the LAT, it remains that, in the rare circumstances where costs were awarded, it is an exceedingly low amount. This was once again seen in the recent case of Blas v. Aviva Insurance Canada, 2021 CanLII 127471 (ON LAT).

The Decision

In Blas v. Aviva Insurance Canada, the claimant was injured in an accident on August 24, 2017. The claimant sought benefits from her insurer, including various medical benefits and costs of examinations. The insurer denied the benefits on the basis that they were not reasonable and necessary.

The Tribunal ultimately found entitlement to a psychological assessment and a medical benefit for psychological services. The Tribunal found that there was no entitlement to the other seven medical benefits/cost of examinations in dispute.

On the issue of costs, the Tribunal noted that the awarding of costs is a discretionary remedy applicable where the Tribunal finds that a party has acted unreasonably, frivolously, vexatiously, or in bad faith in accordance with Rule 19.1 of the Tribunal’s Common Rules. Furthermore, the adjudicator stated that Rule 19.5 provides “the discretion to deny or grant the request for costs or award an amount I deem appropriate.”

Notably, the Tribunal does not reference Rule 19.6, which states that the amount of costs shall not exceed $1,000 for each full day of attendance at a motion, case conference or hearing.” The amount that the Tribunal may deem appropriate cannot exceed $1,000 pursuant to the LAT Rules.

The Tribunal highlighted that “in considering the test for costs, the Tribunal may look at the level of seriousness of the misconduct, whether the conduct was in breach of any Tribunal orders, or whether the alleged behaviour in some way interfered with the Tribunal’s ability to carry out a fair, efficient, and effective process.”

Furthermore, “the Tribunal may consider whether the alleged conduct resulted in prejudice to the other parties, and the potential impact a costs award may have on individuals relying on the Tribunal process.”

The claimant argued that an award for costs was warranted since the insurer waited approximately 16 months to remove her from the MIG after the insurer’s s. 44 assessor found that her injuries fell outside the MIG.

While the Tribunal found that the claimant had not established that a number of the disputed OCF-18’s were reasonable and necessary, the Tribunal nevertheless found that the insurer acted unreasonably and awarded $200 in costs. In particular, the Tribunal found that the insurer’s conduct in removing the claimant from the MIG was unreasonable.

The Tribunal noted that it did not agree with the insurer’s position on removing the claimant from the MIG as it occurred well after the insurer’s examination and the delayed removal blocked the claimant’s “access to an increased pool of funds for an unreasonable period of time.” Further, the insurer ultimately approved an OCF-18 that would likely have been approved much sooner had the claimant been removed from the MIG “in a more timely manner”.

The Tribunal ultimately levied a $200 award against the insurer for the unreasonable 16-month delay in removing the claimant from the MIG. The Tribunal noted that the insurer, as a sophisticated party, should have known that its delay could result in a costs award against it.

The Takeaway

The insurer waited too long to remove the claimant from the MIG after the finding by its own assessor that the claimant’s injuries do not fall within the MIG. This likely impacted the file handling and appears to represent the type of unreasonable conduct that warrants a cost award. Nevertheless, this is unlikely to act as any form of deterrent for future practice considering the amount.

The Tribunal also addressed another important point that appears to come up from time to time in these MIG cases. The Tribunal noted that the insurer “appears to assert that because J.B. was removed from the MIG on psychological grounds, the OCF-18’s for physical assessments and/or treatment were not reasonable and necessary.”

The Tribunal disagreed and held that a “removal from the MIG does not limit an applicant to treatment solely on the grounds they were removed from the MIG. Removal from the MIG allows an applicant to seek funding for treatment both within and outside of the grounds on which they were removed from the MIG.”

It is important for insurers to remember that a removal from the MIG on either psychological or physical grounds means a removal from the MIG entirely.