After much anticipation, the Statutory Accident Benefits world has received the first known decision from the LAT. In Thompson v. Intact Insurance, 16-000041/AABS, the LAT has provided its first guidance on the issue of costs in a proceeding under Rule 19.1 of the LAT Rules of Practice and Procedure.

The origin of this dispute was mundane.  The applicant had submitted a treatment and assessment plan to Intact, which Intact denied.  The applicant then submitted an application for dispute resolution at the LAT, and a case conference was scheduled.  Prior to the case conference, Intact agreed to approve the denied treatment plan. 

At the start of the case conference, the parties informed the adjudicator that the disputed plan had been approved.  Instead of a simple withdrawal, the applicant indicated that he wished to seek his costs in preparing his application to the LAT, alleging that Intact had acted unreasonably.  As the parties could not resolve the matter of costs at the case conference, the adjudicator scheduled a preliminary issue hearing to determine the question of whether the LAT has jurisdiction to consider a request for costs after the original issues in dispute had been settled prior to the case conference. 

Three propositions of law arise out of Thompson v. Intact:

  1. The LAT’s authority to award costs flows from Rule 19.1 of the LAT Rules, which states that a party may make a request to the Tribunal for its costs where a party believes that another party in the proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith.  Previously, FSCO was empowered to award costs on the basis of a variety of other criteria in addition to considerations of vexatious, unreasonable, frivolous and bad faith behaviour under s. 282(11) of the Insurance Act.  Here, the LAT panel held that the legislature’s repeal of s. 282(11) on April 1, 2016 signaled a clear intention to limit the circumstances where the LAT can award costs in a proceeding, and that the Tribunal may only award costs under Rule 19.1.
  2. Under Rule 19.1, costs may be requested in a proceeding where a party believes that the other party has acted unreasonably, frivolously, vexatiously, or in bad faith.  The panel determined that a proceeding starts once an application is submitted to the LAT, and ends with either a notice of withdrawal, the resolution of all issues, or the Tribunal has rendered a decision.  The panel found that even where the initial issues had settled, such as by way of a decision by the insurer to pay the treatment and assessment plan in dispute at the LAT, a party remains able to raise the issue of costs during a proceeding where a) the costs are not a stand-alone issue; and b) the application to the LAT had not been withdrawn by the applicant. 

The panel did not provide a decision on the merits of the applicant’s claim for costs under Rule 19.1, and instead reserved judgment for a second hearing by teleconference on that issue.  

This brief decision has important implications for insurers and injured persons alike, showing that the LAT does intend to remove the prospect of a cost award in most cases.  Whether the applicant will be successful in seeking his costs for this application remains to be seen, and on the face of the decision there does not appear to be anything patently unreasonable in Intact’s decision to approve the disputed treatment plan after the commencement of the LAT proceeding but prior to the case conference. 

Insurers and claimants alike are anxiously awaiting clarity over the interpretation of section 19.1 of the LAT Rules.  If claimant’s counsel are only going to be able to secure costs and even disbursements in support of a valid claim to the LAT in very limited circumstances of misconduct by the Insurer, fewer of them will bother with the LAT, especially if they can assert the claims in tort where they can recover costs as part of the claim.