Neutral Citation: 1996 ONICDRG 77

File No.: A-008488

ONTARIO INSURANCE COMMISSION

BETWEEN:

SHIVA AHMADI-NADOUSHAN

Applicant

And

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION - EXPENSES ASSESSMENT

In my decision in this matter, dated May 23, 1995, I awarded the Applicant her expenses incurred in the arbitration. Under section 282(11) of the Insurance Act, R.S.O. 1990, c.I.8, as amended, an arbitrator may award expenses to an insured person, subject to the Expenses Schedule (Schedule 1 to the Dispute Resolution Practice Code, Regulation 664 under the Act).

Mr. Harvey Dorsey represented the Applicant at the arbitration hearing. He presented the Insurer with his bill of costs by letter of January 3, 1996. In response, Mr. Ian Kirby, on behalf of the Insurer, disputed certain items of the bill of costs by letter of January 26, 1996.

An assessment of expenses hearing was held on March 6, 1996 at 9:30 a.m. in North York, Ontario. Mr. Dorsey participated by telephone. Mr. Kirby attended at the offices of the Ontario Insurance Commission. Also attending was Hugh Campbell, the Applicant's new representative.

Preliminary issue:

Mr. Campbell advised that the Applicant has retained him and that Mr. Dorsey no longer represents the Applicant. He submitted that Mr. Dorsey should turn his file over to him, as the Applicant's new representative. According to Mr. Campbell, Mr. Dorsey has no further standing in the proceeding, and stands in the same position as any other creditor.

After hearing the submissions of Mr. Campbell, Mr. Dorsey and Mr. Kirby, I ruled that Mr. Campbell had no standing in the proceeding, and that Mr. Dorsey properly represented the Applicant in this proceeding. My reasons follow.

The purpose of this hearing is to fix the Applicant's expenses in the arbitration hearing. Subsequent to that hearing, Mr. Dorsey obtained an Order that any expenses paid by the Insurer pursuant to my ruling in this proceeding will be paid into court, pending resolution of the assessment process there.¹ Accordingly, whether the Applicant is represented in this expenses hearing by Mr. Dorsey or Mr. Campbell, the expenses ordered must be paid into court, and I have no power to order them paid to the Applicant, Mr. Dorsey or Mr. Campbell. The dispute between the Applicant, her former counsel and her new representative must be resolved in another forum.

Finally, Mr. Campbell admitted that he had no knowledge of Mr. Dorsey's bill of costs, and could not point to any particular item he disputed. I find that Mr. Dorsey is in a better position to present the Applicant's expenses and can be expected to represent her interests.

After I made my ruling, Mr. Campbell chose to leave the assessment. I then heard submissions from Mr. Kirby and Mr. Dorsey about the disputed items on Mr. Dorsey's bill of costs. My reasons are based on their oral submissions, as well as Mr. Dorsey's bill of costs and Mr. Kirby's January 26, 1996 letter.

Pre-hearing preparation:

Mr. Dorsey billed .6 hours of senior counsel time, 13.9 hours of junior counsel time, and .3 hours of law clerk time for pre-hearing preparation. Mr. Kirby submitted that expenses at arbitration are to be paid in accordance with the Legal Aid Tariff.²He submitted that an arbitration pre-hearing is similar to a pre-trial conference in a civil proceeding. Under the Legal Aid Tariff, the maximum allowable time for a pre-trial conference is three hours. Mr. Kirby submitted that arbitration expenses are subject to the Legal Aid Tariff rules about the maximum number of hours for particular tasks.

Section 2(2) of the Expenses Schedule says that the Legal Aid Tariff sets the maximum hourly rate for legal fees in arbitration, but it says nothing about the maximum number of hours. Given the Schedule's silence on the point, I find that Tariff A (Solicitors' Fees and Disbursements Allowable under Rule 58.05) can also be considered by arbitrators in fixing arbitration expenses. Tariff A applies to proceedings before quasi-judicial tribunals as well as civil trials. Rule 58.06 sets out the factors an assessment officer may consider in fixing costs, including the complexity of the proceeding, the importance of the issues, the duration of the hearing, any conduct of either party tending to shorten or lengthen the proceeding, whether any step in the proceeding was improper, vexatious or unnecessary, or taken through negligence, mistake or excessive caution, and any other relevant factors. Arbitrators have considered such factors in previous expenses assessments. I find that the criteria to be considered by assessment officers under Rule 58.06 are appropriate in fixing arbitration expenses.

I agree with Mr. Kirby that a typical arbitration proceeding is no more difficult than a typical civil trial. Many arbitration proceedings will be less complex than a typical civil trial. On the other hand, some litigation counsel who appear in arbitration hearings are unfamiliar with the Statutory Accident Benefits Schedule and the dispute resolution process at the Commission, and this may tend to expand their necessary preparation time. Where the Insurer is well-represented, as it was in this case, the participation of competent and well-prepared counsel representing the Applicant is important to ensure a full and fair hearing for both parties. It also facilitates an expeditious hearing. I find that any ambiguity in the Expenses Schedule should be interpreted so as to encourage counsel to prepare adequately for arbitration hearings and pre-hearings.

The Applicant was not successful in her application for arbitration. Arbitrators have consistently awarded unsuccessful applicants their arbitration expenses, unless the arbitration is found to be frivolous, vexatious or an abuse of process, or the conduct of the applicant or applicant's counsel unduly prolonged the process. This policy is more generous to applicants than the rule in civil proceedings, where unsuccessful plaintiffs are normally ordered to pay the defendant's party and party costs. I find that in fixing arbitration expenses, it is appropriate for arbitrators to consider that in many cases, as in this one, a successful insurer is being asked to pay the arbitration expenses of an unsuccessful applicant. Moreover, an overly generous assessment of arbitration expenses may encourage applicants' representatives to over-prepare. For these reasons, I find that the Legal Aid Tariff should also be considered by arbitrators in fixing arbitration expenses.

In summary, I find that in fixing arbitration expenses, an arbitrator should consider the nature of the particular proceeding, the factors set out in Rule 58.06, the fees and disbursements allowable under Rule 58.05 (Tariff A), and the fees and disbursements allowable under the Legal Aid Tariff.

Both the Tariff under Rule 58.05 and the Legal Aid Tariff allow for the exercise of discretion in fixing costs.³ I find that the overriding consideration for an arbitrator in fixing expenses is the reasonableness of the expenses claimed, and the matter is one for the arbitrator's discretion.

In addition to the 3-hour maximum for a pre-trial conference, the Legal Aid Tariff also allows a maximum of 6.5 hours for instituting a proceeding, 16 hours for discoveries and examinations, 11.5 hours for motions and other interlocutory hearings, and 5 hours for correspondence and communications; Tariff A is considerably more generous. Many of these tasks are analogous to tasks a competent lawyer will do in the early stages of an arbitration proceeding. In initiating the proceeding and preparing for pre-hearing, applicant's counsel will normally advise the client and receive instructions, prepare and deliver the Application for Appointment of an Arbitrator, conduct preliminary interviews with lay and expert witnesses, and obtain and review medical reports. Although there is no formal discovery process in arbitration, a lawyer preparing for a pre-hearing must prepare production requests and consider possible production requests by the insurer. A pre-hearing may also involve procedural motions. There may be correspondence and other communication before the pre-hearing.

Arbitrators have stated in previous expenses decisions that the Regulation does not require a line-by-line examination of the applicant's expenses, but rather a reasonable global estimate.

I heard little detail about Mr. Dorsey's work in preparing for the pre-hearing. The Application for Appointment of an Arbitrator includes a brief statement of the applicant's claim, with a computerized print-out of the applicant's schedule of payments attached. As well as the usual correspondence initiating the arbitration, Mr. Dorsey filed a medical brief (letter of April 19, 1994), and a supplementary document brief following the May 18, 1994 pre-hearing (letters of October 17 and 18, 1994). He sent a letter dated October 24, 1994 concerning a production issue.

In these circumstances, I do not consider Mr. Dorsey's claim excessive, especially considering the importance of early preparation and Mr. Dorsey's reliance on law clerk and junior counsel assistance.

Preparation for arbitration hearing:

Mr. Dorsey billed 16.6 hours of senior counsel time, 7.3 hours of junior counsel time, and 31.3 hours of law clerk time for hearing preparation. On behalf of the Insurer, Mr. Kirby submitted that the Legal Aid Tariff allows a maximum of 20 hours for trial preparation.

Again, I heard little detail about Mr. Dorsey's work in preparing for the hearing. In preparing for an arbitration hearing, competent counsel will normally prepare the applicant and other witnesses, prepare for examination-in-chief and cross-examination, review the law, prepare briefs and factums, and prepare opening and closing remarks.

The hearing of this matter lasted two full days. Mr. Dorsey was prepared for the hearing, and conducted the Applicant's case effectively and without unduly prolonging the hearing. Eleven witnesses testified. Seven exhibits were marked, including medical briefs containing multiple documents and reports. In addition to the Applicant's claim for ongoing weekly income benefits, there was a legal issue as to whether the Applicant's severance award was deductible under section 12(4)(b) of the Schedule.

In the circumstances, I find Mr. Dorsey's bill for this item reasonable.

Attendance at arbitration hearing:

In addition to his own hours for hearing attendance, Mr. Dorsey billed 11.5 hours for attendance by a law clerk, Gail Pearson. Mr. Dorsey and Mr. Kirby agreed that the appropriate hourly rate for a law clerk is $23, and that the total claimed under this item ($264.50) reflects this rate. On behalf of the Insurer, Mr. Kirby submitted that this matter did not necessitate that a law clerk attend with senior counsel.

In my view, nothing in the Expenses Schedule precludes attendance by a law clerk as well as counsel, where appropriate. I do not accept Mr. Kirby's submission that the Legal Aid Tariff does not provide for attendance by a law clerk.⁴ In any event, for the reasons given above, I find that I am not bound by the Legal Aid Tariff on this point, and may consider as well the fees allowable under Rule 58.05.

In this case, the Insurer's counsel was able to consult throughout the hearing with Brad Barber, the Insurer's Claims Manager. Mr. Barber has had many opportunities to participate in the arbitration process. Although Mr. Barber attended the hearing as a party to the proceeding, he could be expected to assist Insurer's counsel throughout the hearing. I accept that the Applicant in this case was much less able to assist Mr. Dorsey.

I will allow the claim for 11.5 hours of law clerk time at $23 an hour.

Dr. Kachooie's report of December 23, 1993 (Exhibit 3, Tab 13):

The Insurer paid Dr. Kachooie's invoice for $374.50 pending resolution of the dispute. However, on behalf of the Insurer, Mr. Kirby submitted that this amount was excessive for a report of 1 1/2 pages. I agree. The report summarizes the Applicant's complaints, Dr. Kachooie's findings and treating recommendations, and Dr. Kachooie's opinion with respect to the Applicant's disability, as set out in Dr. Kachooie's consultation notes to Dr. Virani, which were copied to Mr. Dorsey with the medical-legal report. Dr. Kachooie did not examine the Applicant for the purpose of preparing this report.

Section 5(4) of the Expenses Schedule allows a maximum of $800 for preparation of an expert's report. Mr. Dorsey presented no evidence as to the basis of Dr. Kachooie's $374.50 fee. I was able to read Dr. Kachooie's clinical notes and records to the date of the report in less than 30 minutes. I cannot imagine that Dr. Kachooie would have needed more than one hour to prepare the report. Considering Dr. Kachooie's work in preparing the report, and the work of his staff in photocopying his chart and preparing and sending out the report, I will allow $250 for this report.

Dr. Kachooie's report of May 20, 1994:

Dr. Kachooie billed $500 for this report (Exhibit 1, Tab 4), a 3 1/2 page critique (double-spaced) of Dr. Ameis' report of January 17, 1994 (Exhibit 3, Tab 38). Dr. Ameis' report is ten pages long, single-spaced. Dr. Kachooie responded to Dr. Ameis' comments about the Applicant's character (her motivation, maturity, and level of sophistication), as well as Dr. Ameis' medical findings. Dr. Kachooie did not examine the Applicant again.

I did not find either of these medical-legal reports particularly useful, because both doctors were acting as advocates rather than impartial experts. However, the Insurer chose to rely on Dr. Ameis' lengthy report, and in my view, the Applicant is entitled to respond. Considering the length and broad scope of Dr. Ameis' report, I am prepared to allow the claim for $500 for Dr. Kachooie's response.

Dr. Kachooie's attendance at the hearing on October 26, 1994:

Although this item was billed as a report, Mr. Dorsey conceded that it actually relates to Dr. Kachooie's attendance at the hearing on October 26, 1994.

Section 5(3) of the Expenses Schedule allows $200 an hour, per hour of attendance, to a maximum of $1,600 a day, for attendance by an expert witness. Mr. Dorsey billed $802.50 for Dr. Kachooie's attendance. My hearing notes confirm Mr. Dorsey's recollection that Dr. Kachooie was present for 2 or 2 1/2 hours on the first day of hearing. I will allow $500 for this item.

Dr. Kachooie's review of the surveillance videotape:

Mr. Dorsey claimed $480 for Dr. Kachooie's time reviewing the Insurer's surveillance videotape. Mr. Kirby submitted that while the Expenses Schedule provides for payment for report preparation and hearing attendance, it does not provide an additional fee for an expert witness to prepare for the hearing. This position is supported by at least two arbitration decisions.⁵ I do not find it necessary to resolve this issue. The videotape (Exhibit 7) lasted less than 15 minutes. Dr. Kachooie did not prepare an additional report dealing with the videotape. He was briefly examined in chief about it, but was not cross-examined about it. I did not place much weight on Dr. Kachooie's comments about the videotape. This item is not allowed.

Summary:

Accordingly, the Applicant is awarded the following expenses.

Fees:

Pre-hearing preparation

$988.45

Pre-hearing attendance

67.00

Hearing preparation

2,599.25

Hearing attendance

264.50

Disbursements - Taxable (undisputed)

833.20

Disbursements - Non-taxable

Dr. Kachooie, report of December 23, 1993

$250.00

Dr. Kachooie, report of May 20, 1994

500.00

Dr. Kachooie, attendance at hearing

500.00

Dr. Virani, clinical notes and records

35.00

York Central Hospital, medical records

80.00

Arbitration filing fee

100.00

Witness fee, Ms. Araujo

53.00

Issue summons to witness

18.00

Total fees and disbursements

$6,288.40

Order:

The Applicant is entitled to her expenses in the amount of $6,288.40, with GST as appropriate.

May 14, 1996

Nancy Makepeace

Arbitrator

Date

"The maximum amount that may be awarded for legal fees is the amount calculated using the hourly rates established under the Legal Aid Act for professional services in civil matters before the Ontario Court (General Division)".

Footnotes

1. 1Order of Mr. Justice Roberts, Ontario Court (General Division), dated December 19, 1995.
2. 2Schedule 3 to the Legal Aid Regulations, Section 2(2) of the Expenses Schedule states:
3. 3Legal Aid Tariff, Schedule 3 ("Fees in Civil Matters"), Notes, paragraph C(a) and H: the assessment officer's discretion is reiterated throughout Rule 58.05.
4. 4Legal Aid Regulation, section 80, Legal Aid Tariff, Schedule 3, Notes, paragraph J.
5. 5See Frank Donohue and State Farm Mutual Automobile Insurance Company: Assessment of Expenses, OIC File No. A-006756, dated February 7, 1995, Arbitrator David Draper, and Glenn M.J. Epps and Co-operators General Insurance Company: Decision on Expenses, OIC File No. A-002340, dated September 3, 1993, Arbitrator Janice Mackintosh.