Neutral Citation: 1994 ONICDRG 44
File No. A-003552
ONTARIO INSURANCE COMMISSION
BETWEEN:
ERNESTO IERITANO
Applicant
and
SECURITY NATIONAL INSURANCE COMPANY
Insurer
DECISION ON EXPENSES
Issues:
On the date scheduled for the arbitration hearing, counsel for the Applicant conceded that the claim would not succeed, but asked that the Applicant be awarded his expenses related to the arbitration. The Insurer submitted that no expenses should be awarded.
The issues to be determined are:
Is Mr. Ieritano entitled to his expenses related to the arbitration?
If Mr. Ieritano is entitled to expenses, what is the proper amount?
Result:
Mr. Ieritano is entitled to expenses of $750, all inclusive.
Hearing:
The hearing was to be held in North York, Ontario, on December 23, 1993, before me, David R. Draper, Arbitrator.
Present at the Hearing:
Applicant's Representative:
Frank Loreto Barrister and Solicitor
Insurer's Representative:
Douglas Strelshik Barrister and Solicitor
Documents:
Security National filed a Brief of Authorities which contained the following:
- Frezludeen v. Safeco Insurance Co. of Canada (1984), 1984 CanLII 2130 (ON HCJ), 47 O.R. (2d) 258.
- Pineda v. Co-operators Group Ltd. (1985), 1985 CanLII 2094 (ON HCJ), 51 O.R. (2d) 787.
- Paese v. United States Fidelity & Guaranty Co. (1985), 1985 CanLII 1984 (ON HCJ), 54 O.R. (2d) 43.
- Parks v. The Guarantee Company of North America, [1989] I.L.R. 9688.
- McCormick and Economical Mutual Insurance Company, Decision of Senior Arbitrator Naylor, dated October 2, 1991 (O.I.C. #A-000139)
- Morin and The Personal Insurance Company of Canada, Decision of Senior Arbitrator Rotter, dated June 16, 1992 (O.I.C. #A-000468)
- Morin and The Personal Insurance Company of Canada, Appeal decision of the Director of Dispute Resolution, dated February 26, 1993 (O.I.C. #P-000468).
Both parties provided written submission with respect to the calculation of Mr. Ieritano's expenses, according to Ontario Regulation 664, Dispute Resolution Expenses.
The following documents were also in the Ontario Insurance Commission file:
- Report of Mediator, dated April 19, 1993.
- Application for Appointment of an Arbitrator, dated May 26, 1993.
- Response by Insurer, dated July 24, 1993.
- Letter, dated August 6, 1993, confirming the pre-hearing discussion held on that date.
Reasons for Decision:
The Applicant, Ernesto Ieritano, was injured in a motor vehicle accident on July 21, 1990. He applied for and received benefits, including weekly income benefits, from the Security National Insurance Company ("Security National"), payable under Ontario Regulation 6721.
In or about September 3, 1992, Mr. Ieritano was found to be eligible for Canada Pension Plan disability benefits, retroactive to August 1991. Security National took the position that according to section 12(4) of the No-Fault Benefits Schedule, Canada Pension Plan disability benefits are to be deducted from weekly income benefits. Section 12(4) provides (emphasis added):
12.-(4) Subject to subsection (5), the weekly benefit under subsection (1) will be the lesser of,
(a) $600 plus, if Optional Benefit 2 has been purchased, the amount of the benefit chosen; and
(b) 80 per cent of the insured person's gross weekly income from his or her occupation or employment, less any payments for loss of income, except Unemployment Insurance benefits,
(i) received by or available to the insured person under the laws of any jurisdiction or under any income continuation benefit plan, or
(ii) received under any sick leave plan.
Mr. Ieritano claimed that his Canada Pension Plan disability benefits were not "payments for loss of income" and, therefore, should not be deducted from his weekly income benefits. He applied for mediation, but the dispute was not resolved. He then applied for arbitration.
On December 23, 1993, the date of the arbitration hearing, Mr. Loreto conceded that Mr. Ieritano's claim would fail. He submitted, however, that expenses should be awarded, according to section 282(11) of the Insurance Act, R.S.O. 1990, C.I.8, which provides:
282 (11) The arbitrator may award to the insured person such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations to the maximum set out in the regulations.
The prescribed expenses and amounts are set out in Ontario Regulation 664, R.R.O. 1990, Dispute Resolution Expenses, and in Schedule 1 of the Dispute Resolution Practice Code.
Arbitrators have consistently granted expenses, regardless of the outcome of the hearing, unless the claim was manifestly frivolous or vexatious, or the applicant's conduct unreasonably prolonged the proceedings. This approach was articulated by Senior Arbitrator Naylor in Ralph McCormick and Economical Mutual Insurance Company, October 21, 1991, OIC File No. A-000139:
The discretion to award expenses should be exercised, having regard to the intent and purpose of the legislative scheme. The arbitration process has been established under the Insurance Act, as amended, in order to facilitate applicants' access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits. The discretion to award expenses should be exercised in accordance with this objective, having regard to the individual circumstances of each case.
Accordingly, it is appropriate to award an applicant his or her expenses, unless, in the circumstances of the particular case, it is determined that the application for appointment of an arbitrator was manifestly frivolous or vexatious, or that the applicant's conduct unreasonably prolonged the proceedings.
The Director of Arbitrations approved this statement of the principles guiding an award of expenses in the appeal decision in Vito Luigi Calogero and The Co-Operators General Insurance Company, February 13, 1992, OIC File No. P-000251.
The arbitration decisions reflect a concern that applicants have reasonable access to legal services. I share that concern. The dispute resolution system will not be served by making it difficult for applicants to obtain legal assistance, or in discouraging applicants' representatives from developing creative arguments. Therefore, I accept Mr. Loreto's submission that it may be appropriate in some cases to award expenses even though the claim was abandoned prior to the completion of the arbitration hearing.
This case involved a narrow, but important, legal issue - whether Mr. Ieritano's Canada Pension Plan disability benefits were "payments for loss of income" and, therefore, deductible from his weekly income benefits. The facts were not in dispute. There is no question that the existing case law presented significant obstacles for Mr. Ieritano. I am not persuaded, however, that the issue was so clearly determined that it was unreasonable for him to apply for arbitration.
The leading decision on the deductibility of Canada Pension Plan benefits at the time of Mr. Ieritano's application for arbitration was the Director's decision in Michael Morin and The Personal Insurance Company of Canada, June 16, 1992, OIC File No. P-000468, affirmed by the Divisional Court on judicial review. As indicated by Mr. Loreto in the Application for Appointment of an Arbitrator, however, the applicant in the Morin case conceded that Canada Pension Plan payments are "payments for loss of income".
In my opinion, it was reasonable to do some work to determine the strength of Mr. Ieritano's claim and, therefore, some expenses should be awarded. I agree, however, with the submissions made on behalf of Security National that the amount claimed is excessive. Mr. Loreto's Statement of Account is for $2,416.97, plus a request for a discretionary increase. This amount is comprised of $1,515.88 for legal fees (18.10 hours at $83.75 an hour) and disbursements of $739.48, plus GST on the legal fees and some of the disbursements.
This case required a limited amount of research. Mr. Loreto needed to consider the decision in the Morin case and the arbitration and court cases cited in the decision, and determine whether there were any more recent cases dealing with the issue. The following entries (paraphrased) from the Statement of Account all appear to relate to these tasks and, in my view, significantly overlap:
Disbursement - Paid to another lawyer for fees and disbursements for a research memorandum, dated December 10, 1993.
$660.67
May 26, 1993 - Research for and preparation of Application for Appointment of an Arbitrator and sending it to the other party and the OIC.
2.6 hours
Aug. 5, 1993 - Review of file to prepare for pre-hearing discussion.
1.5 hours
Dec. 21, 1993 - Review of all documents and relevant arbitration decisions and case law (including Insurer's Book of Authorities) and preparation for arbitration hearing.
8.5 hours
I do not feel that it is reasonable for Mr. Loreto to claim this amount of time for preparation, at the rate for experienced counsel, and also retain another lawyer to prepare a basic research memorandum. While I have no quarrel with the contents of the memorandum, it simply reviews the Morin decision and updates it by referring to three additional arbitration decisions. I conclude, therefore, that the expenses must be less than claimed.
I am also sympathetic to the Insurer's argument that Mr. Ieritano's concession should have happened much earlier, before it was required to prepare for the arbitration hearing. I do not believe that it was reasonable to wait until December 21, 1993, two days before the hearing, to evaluate the legal argument. In my view, the matter was "unreasonably prolonged", using the language of the McCormick decision, above.
I conclude that Mr. Ieritano is entitled to expenses of $750, all inclusive, representing roughly 10 hours of legal work, plus the filing fee and minimal disbursements, discounted to take into account the delay in deciding to concede the claim.
Order:
Mr. Ieritano is entitled to expenses of $750, all inclusive.
May 10, 1994
David R. Draper Arbitrator
Date