Neutral Citation: 1997 ONICDRG 151

OIC A-007954

ONTARIO INSURANCE COMMISSION

BETWEEN:

DENIS HENRI

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION - Assessment of Expenses

In my decision dated August 16, 1996, I denied the Applicant's claims for further statutory accident benefits but ordered the Insurer to reimburse the Applicant for his arbitration expenses. The Applicant claimed $18,463.76 (inclusive of GST) for legal fees payable to his counsel, Catherine Coplea, and $15,090.32 for disbursements. The Insurer disputed the amount claimed. As the parties were unable to agree on the amount payable, I heard their submissions by telephone conference on February 13, 1997. Prior to the telephone conference, I received written submissions from the Applicant dated December 4, 1995 (including a breakdown of Ms. Coplea's fees and disbursements) and February 13, 1997. The Insurer forwarded Arbitrator Renahan's assessment of expenses in Kasap and Allstate¹ on February 12, 1997. After the telephone conference, I received submissions from the Applicant dated February 14, 1997, February 17, 1997, and February 18, 1997 and from the Insurer dated February 17, 1997.

Having considered the submissions of both counsel, I find that the Applicant is entitled to be reimbursed for the following arbitration expenses.

Fees:

Ms. Coplea billed 16.4 hours between November 25, 1993 and January 24, 1994 for preparation for and participation in mediation at the Commission. She conceded that the Expenses Schedule ("the Schedule")² does not provide for this item, but submitted that equity requires that mediation expenses be reimbursed.

Nothing in Ms. Coplea's submissions convinces me to depart from previous decisions in which arbitrators have consistently held that mediation expenses are not recoverable.³ I am not persuaded that I have authority to disregard the clear intention of the drafters, as set out in the Schedule, whatever my views of its fairness.

Ms. Chadwick submitted that the approximately 257 hours Ms. Coplea billed for services provided between January 24, 1994, when mediation was completed, and October 27, 1995, when she met with the Applicant following the parties' closing submissions, was "grossly excessive." Ms. Chadwick submitted that a reasonable bill would be 30 hours for attendance at the hearing, on the basis of four 7-hour days of attendance plus 2 hours for submissions by telephone conference. She submitted that the Legal Aid Tariff allows for one hour of hearing preparation for every hour of attendance, and argued that the Applicant should be allowed only 30 hours for hearing preparation on that basis.

General principles governing Expenses Assessments

The following general principles have emerged from the arbitration decisions with regard to the assessment of an applicant's arbitration expenses:

• An arbitrator's authority to award an applicant his or her arbitration expenses arises from section 282(11) of the Act:

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. [emphasis added]⁴

• The assessment of expenses is governed by the Schedule, which forms part of Regulation 664.

• Section 2(1) of the Schedule gives an arbitrator power to award the insured person his or her legal fees for all services performed before an arbitration hearing.

• The overriding consideration in fixing arbitration expenses is reasonableness.⁵

• A line-by-line assessment of the expenses claimed is not appropriate. Rather, the Arbitrator should make a global assessment of reasonable expenses.⁶

• Although section 2(2) of the Schedule mandates that the hourly rate to be paid is the rate set out in the Legal Aid Tariff, the Schedule does not set out the maximum number of hours to be allowed.

In fixing the number of hours to be paid, Arbitrators have considered the maximums set out in the Legal Aid Tariff. In Kasap and Allstate,⁷ Arbitrator Renahan said:

... the amount of time provided by the Legal Aid Regulation for a particular service is a relevant consideration [in fixing arbitration costs]. One of the purposes of the Ontario Insurance Commission policy of awarding expenses to unsuccessful applicants whose claim has some merit is to give people, who might not otherwise be able to afford legal representation, access to this forum. In my view, this purpose is similar to one of the purposes of the Legal Aid Act. Therefore, I consider that the maximum time allowed under the Legal Aid Regulation for a particular service can be used as a guideline to determine whether the time charged for preparation for an arbitration is reasonable.

I gave the Legal Aid Tariff maximums less weight in Ahmadi-Nadoushan and Allstate:

... in fixing arbitration expenses, an arbitrator should consider the nature of the particular proceeding, the factors set out in Rule 58.06 [Rules of Civil Procedure], the fees and disbursements allowable under Rule 58.05 (Tariff A), and the fees and disbursements allowable under the Legal Aid Tariff."⁸

In the absence of express language, I am not satisfied that the Legal Aid Tariff, which governs payments out of the Legal Aid Fund, applies to the assessment of costs between applicants and insurers in arbitration proceedings.

Previous arbitration decisions reveal a fair amount of variation in the ratio of pre-hearing or hearing attendance time to preparation time and other services provided before a hearing. In Ahmadi-Nadoushan and Allstate, which involved a two day hearing, I allowed 16.6 hours of senior counsel time, 7.3 hours of junior counsel time and 31.3 hours of law clerk time. In Lunn and State Farm, Arbitrator Kirsch allowed the Applicant's claim for 50.75 hours for preparation and attendance at a 22-day hearing involving complex issues of fact and law. She also noted that while the Insurer's counsel had only docketed 28 hours, the Applicant was an unsophisticated individual and bore the burden of proof in the matter. In Kasap and Allstate, a five-day hearing followed by written submissions, the parties agreed that 71.6 hours of hearing attendance was reasonable. Arbitrator Renahan allowed a further 70 hours of preparation time based on a ratio of one or one and one-half hours of preparation for every hour of trial attendance.⁹ Arbitrator Allen allowed the Applicant's claim for 102.45 hours for preparation and attendance at a six-day hearing held over six months, involving two resumptions and complex issues, in Milevski and State Farm.¹⁰ In Davidson and Pafco,¹¹ a proceeding that settled shortly before the pre-hearing, Arbitrator Alves allowed .7 hours of senior lawyer time, about 10 hours of junior lawyer time, 1. 9 hours of paralegal time, and .5 hours of law clerk time for services provided to the Applicant.

In this case, Ms. Coplea billed 21.4 hours between January 25, 1994, when mediation was completed, and October 6, 1994, when the Applicant filed application for appointment of an arbitrator, and a further 6.6 hours between October 7, 1994 and January 31, 1995, the date of the initially-scheduled pre-hearing, which was adjourned. She billed another 7.65 hours between February 3, 1995 and March 1, 1995, when the rescheduled pre-hearing was held.

The arbitration hearing was initially scheduled for April 24 and 25, 1995, and Ms. Coplea billed 4.8 hours between March 11, 1995 and April 21, 1995. The hearing was adjourned and rescheduled for July 19 and 20, 1995. It was adjourned again on June 28, 1995. Ms. Coplea billed 19.4 hours between April 26 and June 28, 1995, and another 4.9 hours between June 30 and July 18, 1995. The hearing finally went ahead on October 2, 3, 4, 5 and 27, 1995. Ms. Coplea billed 88.4 hours for hearing preparation and other services provided in advance of the hearing. She also billed 1.5 hours for her attendance at the expenses assessment hearing on February 13, 1997, as well as 4.5 hours for preparation.

This was a case of moderate factual complexity. I heard from 14 witnesses over four days of hearing totalling about 30 hours; the parties' closing submissions took another two hours. Twenty-seven exhibits were filed, including about a dozen medical, accounting and correspondence briefs. The Applicant, a self-employed general contractor responsible for both administrative and physical job tasks, was in the midst of completing several construction projects at the time of the accident. He claimed ongoing weekly benefits, including weekly benefits after 156 weeks, when the test for entitlement changes (broadly speaking) from an "own occupation" test to an "any occupation" test. He also sought vocational retraining. I received conflicting evidence about the Applicant's pre-accident activities, his pre-existing medical condition, his post-accident medical condition and functional abilities, and his activities on the worksite after he returned to work a few weeks after the accident.

I also received conflicting accounting evidence about the Applicant's pre-accident income. The Applicant operated through four companies, and, as is often the case with self-employed persons, had some difficulty in preparing records sufficient to satisfy the Insurer's requests for information. Moreover, the parties disagreed about how to interpret the phrase "business expenses which cease" in section 12(7)3 of the Statutory Accident Benefits Schedule ("SABS"), a provision to which arbitrators have taken various approaches. In addition to these disputes, the Insurer sought repayment of benefits paid and the Applicant sought a special award. These factors support an order that the Insurer reimburse the Applicant for the total number of hours billed by his counsel.

On the other hand, the Applicant's counsel spent a great deal of time on her submission that the Insurer was estopped from disputing the Applicant's approach to calculating his pre-accident income. In my view, this was a position that had little likelihood of success. In general, I find Ms. Coplea's account of 257 hours (which represents about seven hours of pre-hearing preparation for every hour of hearing) excessive considering the nature of this case and Ms. Coplea's experience in accident benefit matters.

In my view, ensuring that competent counsel who prepare for an arbitration hearing are fairly reimbursed for their efforts helps promote an efficient dispute resolution process with fair and reliable outcomes. A countervailing consideration is encouraging counsel to put forward a reasonably focused case. On balance, I find that an award of 134 hours, in addition to 33.5 hours for hearing attendance (a ratio of four hours preparation for every hour of attendance), recognizes the Applicant's reasonable legal expenses.

In summary, the Applicant is entitled to his legal fees for 167.5 hours at the rate of $75.38 per hour¹² ($12,626.15) plus GST of $883.83, for a total of $13,509.98.

Disbursements:

Dr. Baribeau's curriculum vitae:

Dr. Baribeau charged the Applicant $25 for his curriculum vitae ("CV"). The Insurer submitted that a doctor's CV is not a medical "report" under paragraph 5(1)3 of the Schedule and therefore the Schedule does not authorize reimbursement.

Paragraph 38.1 of the Dispute Resolution Practice Code (August 1, 1995 edition) says:

If a party intends to introduce a report by an expert, the name and qualifications of the expert who prepared the report must accompany the report.

Dr. Baribeau was the Applicant’s family doctor, and his reports and CV were filed into evidence. It would be a perverse result if an applicant could not recover a cost he was obliged to incur in order to properly participate in an arbitration hearing. I find that a doctor’s CV forms part of "a report prepared by an expert, provided to the other parties to the arbitration ... and necessary for the conduct of the arbitration ..." and is therefore a recoverable expense. Though Dr. Baribeau's CV is very brief, and I would normally expect a doctor’s CV to be included with his medical report, Dr. Baribeau’s charge was minimal. This item is allowed.

Dr. Baribeau's reports of April 30, 1995 and July 9, 1995:

Ms. Coplea billed $150 for Dr. Baribeau’s April 30, 1995 report and $350 for his July 9, 1995 report. The Insurer submitted that a more appropriate fee for the two reports was $50 and $100 respectively.

I agree that $50 is a more reasonable fee for Dr. Baribeau’s April 30, 1995 report, which is only seven lines long and includes no reasons for Dr. Baribeau’s stated opinion that the Applicant cannot return to the physical tasks of a contractor and needs vocational or occupational counselling. This report was of very little assistance in the arbitration.

I found Dr. Baribeau's second report somewhat more useful. It was a page and a half long, and involved a review of his records for a year and a half. I allow $250 for this report.

Dr. Ouellette's report of July 24, 1995:

The Applicant claimed $1,418 for Dr. Ouellette’s report of July 24, 1995. I allow $800, which is the maximum set out in paragraph 5(4) of the Schedule for an expert report.

Dr. Ouellette's attendance on October 5, 1995:

Dr. Ouellette billed $700 for his attendance for half a day on October 5, 1995, $612 for 32 hours spent reviewing his records in preparation for his testimony, $21 for 70 km of travel, and $6 for parking, for a total bill of $1,339. The Insurer conceded only the $700 attendance cost.

Dealing with another expenses issue in my decision in this matter, I adopted Arbitrator Draper’s view in Donohue and State Farm,¹³ that the Schedule does not allow reimbursement for an expert’s preparation time in addition to his or her attendance allowance and the fee for expert reports. I heard nothing from Ms. Coplea during the course of the assessment proceeding and I am aware of no arbitration case-law which might persuade me to take a different view. Accordingly, the claim for Dr. Ouellette’s preparation time is denied.

Arbitrator Draper also held that the Schedule allows for an expert to receive a travel allowance, but not travel time. Ms. Coplea offered no authority for an award of travel time, and I am not persuaded that I have authority to make such an order. The Insurer offered no authority for its submission that a person who receives an expert witness allowance is barred from receiving a travel allowance. I do not accept Ms. Chadwick’s submission that the applicable rate is $.24/km, as set out in Tariff A under the Rules of Civil Procedure. Arbitration expenses are governed not by the Rules but by the Schedule, which expressly sets out a rate of $.30/km.¹⁴ Accordingly, I find that Dr. Ouellette is entitled to a travel allowance of $21, as claimed.

Ms. Coplea submitted, in the alternative, that if Dr. Ouellette’s preparation time, travel time and parking expenses are not allowed, the Applicant should be awarded $800 - the maximum attendance allowance under paragraph 5(3) of the Schedule for half a day - instead of the $700 Dr. Ouellette actually billed. However, the party claiming a disbursement must prove that "the disbursement was made or that the party is liable for it."¹⁵ In any event, as my notes indicate that Dr. Ouellette testified for only about half the morning, I am not satisfied that he is entitled to bill more than $700 for his attendance.

Witness fees:

On behalf of the Applicant, Ms. Coplea claimed attendance allowance (conduct money of $53 each) and travel allowance (at $.30/km) for the following witnesses: Monique Henri (the Applicant’s wife), Paul Mineault (one of the Applicant’s suppliers), Jacques Menard (the Applicant’s subcontractor), Richard Cousineau (the Applicant’s bookkeeper), Raymond Brazeau (another supplier), and Denis Houle (the Applicant’s accountant).

At the expenses hearing, Ms. Coplea agreed that Mr. Houle is not entitled to the $53 attendance allowance because he testified as an expert and billed for his attendance accordingly. The Applicant claimed $1,070 for Mr. Houle’s attendance. In my initial decision, I fixed the amounts for Mr. Houle’s reports but invited the parties to bring forward any dispute about his attendance allowance if they were unable to agree on the amount payable, based on the rate of $200 per hour, to the daily maximum of $1,600, under para. 5(3) of the Schedule. The parties did not address the appropriate amount for this item at the expenses assessment and they appear to have assumed (wrongly) that I fixed the amount in my decision. My notes indicate that Mr. Houle testified for about three hours on October 4, 1995. I award $600 for his attendance.

The parties also agreed at the expenses assessment that Mr. Cousineau, the Applicant’s bookkeeper, had testified as an expert and had billed as an expert witness. However, I am unable to find any entry in Ms. Coplea’s bill of costs for Mr. Cousineau’s attendance allowance, other than the claim for $53 conduct money. Moreover, my notes indicate that he was not qualified as an expert, and his CV was not filed, as required of an expert witness under paragraph 5(1)3 of the Schedule. I award $53 conduct money for his attendance as a lay witness.

For the reasons given above, I do not accept the Insurer’s submission that a witness who receives conduct money or attendance allowance is not entitled to receive a travel allowance. I allow the Applicant’s claim of $85.50 for travel allowance for the six witnesses (285 km at $.30/km).

The Insurer also submitted that the Applicant should not be reimbursed for conduct money which was not actually paid to the Applicant’s lay witnesses. Ms. Coplea stated that the Applicant’s wife had to be subpoenaed so that she could take time off from work. On this basis I find that the Applicant should be reimbursed for $53 payable to Monique Henri further to her subpoena. Ms. Coplea also stated that the Applicant told other witnesses that they would be paid conduct money if he were reimbursed for the expense. I heard no evidence as to what subpoenas were issued. I am not satisfied that the Applicant incurred an expense or liability with respect to these other witnesses.

Statement of Claim:

The Applicant claimed $132 for issuance of the statement of claim. This expense is not recoverable because it was not incurred in relation to the arbitration proceeding.

Interest on Assessment:

On behalf of the Applicant, Ms. Coplea sought interest of 2% a month on the Applicant’s expenses from late 1995, when Ms. Coplea served the Insurer’s counsel with a statement of the Applicant’s expenses. Ms. Chadwick submitted that I have no authority to order interest on expenses.

The Applicant relied on section 24(4) of the SABS, which states that the insurer "will pay interest on overdue payments from the date they become overdue at the rate of 2 per cent per month" [emphasis added]. Subsections 24(1) and (2) say when "amounts payable" [emphasis added] under Parts II, III, IV and V become overdue. Parts II-V of the SABS describe the benefits available to insured persons, without reference to arbitration expenses. As nothing in the SABS deals with arbitration expenses, I find that the word "payments" in subsection 24(4) refers to payments of benefits, not arbitration expenses. An arbitrator’s jurisdiction to award arbitration expenses is found in section 282(11) of the Act, which says nothing about interest on expenses.¹⁶

I find that I have no jurisdiction to order interest to be paid on the Applicant’s arbitration expenses.¹⁷

Summary:

In summary, the Insurer shall reimburse the Applicant for the following arbitration expenses incurred:

Fees: -

($12,626.15 plus GST of $883.83)

$13,509.98

Disbursements: -

Dr. Baribeau’s CV

25.00

Dr. Baribeau’s reports

300.00

Dr. Ouellette’s report

800.00

Dr. Ouellette’s attendance allowance, parking and travel allowance

727.00

Mr. Houle’s attendance allowance

600.00

Mr. Cousineau’s attendance allowance

53.00

Mrs. Henri’s attendance allowance

53.00

Travel allowance for Mrs. Henri, Mr. Mineault, Mr. Menard, Mr. Cousineau, Mr. Brazeau and Mr. Houle (285 km at $.30/km)

85.50

Total:

$2,643.50

In addition to the disputed items, the Applicant claimed taxable disbursements of $1,024.96, plus GST of $71.75, for a total of $1,096.71.

The following GST -

exempt disbursements were also undisputed:

OPP accident report

$20.00

• Arbitration filing fee

100.00

• Dr. Baribeau’s clinical notes and records

25.00

• Dr. Duff’s clinical notes and records

200.00

• Dr. Quintal’s clinical notes and records

25.00

• Dr. Ouellette’s report of September 26, 1994

30.00

• Dr. Ouellette’s clinical notes and records

30.00

Total:

$430.00

In my initial decision, I ordered the Insurer to pay the Applicant $856.00 ($800.00 plus GST) for the reconciliation report prepared by Denis Houle, his accountant, and $363.80, inclusive of GST, for the services of his bookkeeper, Richard Cousineau.

In total, the Applicant is entitled to be reimbursed for his arbitration expenses in the amount of $18,899.99 less any amounts already paid.

Order:

1. The Insurer shall pay the Applicant $18,899.99, less any amounts already paid, in reimbursement of the Applicant’s arbitration expenses.

August 8, 1997

Nancy Makepeace

Arbitrator

Date

The maximum amount that may be awarded for the attendance of a witness is the amount of the attendance allowance for the witness that may be allowed under rule 58.05 of the rules of court as a disbursement.

Paragraph 5(1), which allows for the awarding of witness fees, including an attendance allowance for an expert witness, "paid by or on behalf of the insured person," also implies that only actual disbursements or liabilities are recoverable.

Footnotes

1. 1Kasap and Allstate Insurance Company of Canada (January 15, 1997), OIC A-012020
2. 2The Expenses Schedule is included in Regulation 664, R.R.O. 1990, made under the Insurance Act, as amended. The August 1, 1995 version of the Schedule applies to this proceeding.
3. 3Ajzenstadt et al. and CAA Insurance Company (Ontario) et al., (February 6, 1992), OIC A-000185, A-000076, A-000162, A-000250, A-000206 and A-000355, confirmed on appeal (July 13, 1992), OIC P-000185; Chamale and Wellington Insurance Company (September 25, 1992), OIC A-000849, confirmed on appeal on another point (July 9, 1996), OIC P-000849; Edwards and State Farm Mutual Automobile Insurance Company, (July 12, 1993), OIC A-001797, confirmed on appeal on another point (February 26, 1996), OIC P-001707
4. 4This provision was amended effective November 1, 1996, well after the completion of the hearing in this matter.
5. 5Ahmadi-Nadoushan and Allstate Insurance Company of Canada (May 14, 1996), A-008488; Lunn and State Farm Mutual Automobile Insurance Company (March 15, 1996), A-013960; Milevski and State Farm Mutual Automobile Insurance Company (February 7, 1997), A-010292
6. 6Lunn and State Farm Mutual Automobile Insurance Company (March 15, 1996), A-013960
7. 7Kasap and Allstate Insurance Company of Canada (January 15, 1997), OIC A-012020
8. 8Ahmadi-Nadoushan and Allstate Insurance Company of Canada (May 14, 1996), OIC A-008488
9. 9Arbitrator Renahan relied on Mark M. Orkin's book, The Law of Costs (Aurora, Ontario: Canada Law Books Inc., 1995), paragraph 705.7
10. 10Milevski and State Farm Mutual Automobile Insurance Company (February 7, 1997), OIC A-010292
11. 11Davidson and Pafco Insurance Company Limited (March 26, 1997), OIC A96-000055
12. 12The Insurer conceded that Ms. Coplea is entitled to the experience premium of 12.5% on the Legal Aid Tariff base rate of $67 per hour.
13. 13Donohue and State Farm Mutual Automobile Insurance Company (February 7, 1995), OIC A-006756
14. 14Paragraph 6(2)(b)(i) of the Schedule.
15. 15As set out in Rule 58.05(3) of the Rules of Civil Procedure, which is incorporated into the Schedule by paragraph 5(2):
16. 16Subsection 282(14) of the Insurance Act says that on being filed in General Division, an arbitrator’s order "shall ... be enforceable in the same way as a judgment or order of the court". As nothing in the Insurance Act refers to interest on arbitration expenses, and the Courts of Justice Act does not apply to arbitration proceedings, it may be queried whether an Assessment Officer has authority to order payment of interest on arbitration expenses. In any event, while subsections 129(1) and (4) of the Courts of Justice Act provide for post-judgment interest on costs, subsection 128(4)(c) states that there is no pre-judgment interest on costs.
17. 17In Zagorac and Canadian General Insurance, (September 20, 1996), OIC A-006192, Arbitrator Mackintosh ordered the insurer to pay the applicant 2% per month simple interest on arbitration expenses. It appears that the issue between the parties was whether the interest payable was simple or compound interest. The Insurer appears not to have disputed the Arbitrator’s authority to award interest on arbitration expenses.