On February 27, 2017, the LAT (AABS) released its latest decision interpreting the costs sanctions contained in Rule 19.

In her decision of O.O. and Aviva Insurance Company (Tribunal File No.: 16-000946/AABS) Adjudicator Truong showed again that the LAT (AABS) will be reading Rule 19 of the Licence Appeals Tribunal Rules of Practice and Procedure  strictly and will consider awarding costs  only in exceptional circumstances.

In this case, the claimant was involved in an accident on November 24, 2014 and sought statutory accident benefits from Aviva.  Certain benefits were denied, including income replacement benefits and a psychological assessment. The claimant appealed the denial.

A hybrid hearing was conducted on October 27, 2016 and Adjudicator Truong found that the claimant was not entitled to either of the benefits in dispute. Both parties made arguments that they were entitled to costs.

Rule 19 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

The claimant, the losing party, argued that Aviva acted unreasonably by:

1. Not agreeing to fund the disputed assessment partially, despite there being funds available within the $3,500.00 MIG limit.
2. Not paying for the costs of the OCF-18 or pre-screening report.
3. Failing to inform the claimant why he was not entitled and failing to send him for an insurer’s examination.
4. Acting in bad faith by denying the claimant’s request for an assessment, but conducting it’s own.

Adjudicator Truong disagreed and awarded no costs to the claimant.  She stated,

Rule 19.1 is clear that it is the party’s conduct within a proceeding which attracts cost consequences. Rule 2.17 defines “proceeding” as “the entire Tribunal process from the start of an appeal to the time a matter is finally resolved.” None of the conduct that the applicant has alleged to be unreasonable and in bad faith occurred during the proceeding, so I cannot order any costs.

On the other hand, Aviva, the successful party,  argued that the claimant acted unreasonably and frivolously in that the he appealed the Insurer’s denial but “failed to produce a single piece of evidence” that supported his claim (including no Affidavit from the claimant nor his family doctor). Aviva argued that by pursuing a claim with a complete lack of evidence is “unquestionably unreasonable and undoubtedly frivolous”. Aviva further stated that a lack of a costs award would render Rule 19 meaningless.

Again, Adjudicator Truong disagreed and awarded no costs to the Insurer. She stated,

The purpose of Rule 19.1 is clear: to compensate for and 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 an exceptional remedy. “Unreasonableness” and “frivolous” must be read in context with the rest of the rule, and in this case, the applicant’s behaviour does not meet this bar. Pursuing a claim for a benefit should not attract cost consequences. There is no evidence before me that the applicant pursued the claim for a reason other than to receive the benefit.

Adjudicator Truong’s decisions on costs are noteworthy for a few reasons.

Firstly, while Rule 19 is also silent, it is well worth noting that there is a no reference nor consideration to success or degree of success. Rule 19 is being read strictly and the sole considerations appear to be actions of the parties involved in the proceeding.

Secondly, with respect to the claimant’s demand for costs, it is clear that the LAT (AABS) is consistently restricting the time period for it’s consideration to the “proceeding”. It appears that no evidence prior to the Application by an Injured Person being served will be considered by the LAT in considering the application of Rule 19.

Finally, with respect to Aviva’s demand for costs, Adjudicator Truong has again shown that Rule 19 will be read strictly and only invoked as an “exceptional remedy”. The purpose of the Rule being to deter bad conduct rather than deter bad or weak claims. She has clearly stated that pursuing benefits poorly or half-heartedly will not equate to bad conduct and will not attract a costs award.

Peter Durant is the co-chair of the firm’s License Appeal Tribunal practice group. If you have a question about this blog or a LAT file, please contact Peter here.