Personal Insurance Company of Canada v. James Brady, 1999 ONFSCDRS 132

Financial Services Commission

Commission des services financiers de l’Ontario

Neutral Citation: 1999 ONFSCDRS 132

Appeal P98-00017

Appellant

and

Respondent

Before:

David R. Draper, Director's Delegate

Counsel:

Derek E. Wilson (for Personal Insurance Company of Canada)

Anne Marie Frauts (for James Brady)

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

Personal Insurance Company of Canada shall pay James Brady's appeal expenses, assessed at $3,059.52.

July 13, 1999

David R. Draper

Director’s Delegate

Date

In my decision dated November 26, 1998, I dismissed the appeal brought by Personal Insurance Company of Canada ("The Personal") and awarded the respondent, James Brady, his reasonable appeal expenses. The parties were unable to agree on the amount and, therefore, have asked for an assessment.

A. The Hourly Rate

The hourly rate for legal fees is established in Rule 76.1 of the Dispute Resolution Practice Code, pursuant to R.R.O. 1990, Reg. 664, as amended by O.Reg. 464/96 ("the Expenses Regulation"):

76.1 The maximum amount that may be award to an insured person or an insurer for legal fees is an amount calculated sing:

(a) the hourly rates established under the Legal Aid Act for professional services in civil matters before the Ontario Court (General Division); or

(b) the hourly rate referred to in Rule 76.1(a) adjusted to include, where appropriate, the experience allowance established under the Legal Aid Act;

however, where an adjudicator is satisfied that a higher amount for legal fees is justified, an hourly rate of up to $150 may be awarded.

Mr. Brady's lawyer, Ms. Frauts, prepared two calculations. The first is based on the maximum hourly rate of $150 for her legal fees, the rate she contends should be applied. In the alternative, the second calculation uses $83.75. This represents the legal aid rate, increased to reflect Ms. Frauts' more than 10 years experience. The Personal argues that the proper hourly rate is $83.75, ot $150.

The parties also were not able to agree on arbitration expenses. As a result, the arbitrator did an assessment that was pending at the time of the appeal hearing. In December 1998, he awarded legal fees at $83.75 per hour, not $150, on the basis that the matter was not particularly complicated.

On appeal, Mr. Wilson argues on behalf of The Personal that the arbitrator's decision on the rate is determinative. I do not agree. This was not the understanding at the appeal hearing. I simply followed the general practice of hearing submissions on whether appeal expenses should be awarded, but not the amount. Although there was some expectation that the arbitrator's decision might inform the parties' discussion of appeal expenses, there was no suggestion that it would be binding. Arbitration and appeal expenses are separate matters that may involve very different legal services.

The starting point for appeal expenses is the legal aid rate. The party seeking a higher rate must show why it is justified. In her submissions, Ms. Frauts referred to the criteria for awarding expenses set out in s.12(2) of the Expenses Regulation and repeated in the Practice Code. It is not obvious, however, that these criteria apply. Although s.3(2) of the Schedule to the Expenses Regulation makes them applicable to the number of hours to be awarded, the rate is governed by the Practice Code [s.3(3)]. As noted above, the rate is established in Rule 76.1, with no reference to the criteria.

In my view, the main factors affecting the rate are the complexity and importance of the issues raised in the appeal, and the relevant expertise and experience of counsel. While Mr. Brady received effective representation, I am not persuaded that the issues raised in the appeal were unusually complicated. Counsel had to respond to The Personal's stay request and the issues raised by the appeal, including the scope of appeals, the appellant's right to introduce new evidence, and the consequences of a failure to object to evidence at the arbitration hearing. I conclude, however, that this should be recognized through the time spent, not by increasing the hourly rate for legal fees.

Therefore, the rate to be used for legal fees in relation to Ms. Frauts is $83.75 per hour, plus GST.

B. The Time Spent

On behalf of Mr. Brady, Ms. Frauts claimed expenses of $3,523.69, calculated as follows:

RESEARCH FOR APPEAL

(including research case law on OIC website, to obtaining secondary source material on administrative law and to research on adducing fresh evidence on appeal.

$826.70

Anne Marie Frauts - 1.0 hrs.@ $83.75/hr.

Adrien P. Cameron - 10.1 hrs.@ $67/hr.

PREPARATION OF APPEAL DOCUMENTS

(including drafting of Response to Appeal, Written Submissions and Volume of Case Authorities)

$1,664.95

Anne Marie Frauts - 18.6 hrs. @ $83.75/hr.

Adrien P. Cameron - 1.6 hrs. @ $67/hr.

(Response to Appeal - 6 pages)

(Written submissions - 10 pages)

(Volume of Case Authorities - 81 pages)

PREPARATION AND ATTENDANCE AT APPEAL

held by telephone conference on November 20, 1998 (including preparation for appeal, reviewing of appellant's material and to attending and arguing the appeal)

Preparation:

Anne Marie Frauts - 4.3 hrs. @ $83.75/hr

$360.13

Attendance:

Anne Marie Frauts - 2 hrs. @ $83.75/hr

Jennifer Attenborough - 2 hrs. @ $23/hr

$213.50

CORRESPONDENCE

(preparation and review of all correspondence income and outgoing)

$156.00

12 letters sent (@ $6.00) $ 72.00

14 letters received (@$6.00) $ 84.00

PREPARATION OF BILL OF COST

Jennifer Attenborough - 1.8 hrs. @ $23/hr

$41.40

FEE:

GST (7%)

$3,196.43

$223.75

$3,420.18

TOTAL FEE:

$3,420.18

TOTAL DISBURSEMENTS (Inclusive of GST):

$103.51

TOTAL FEES AND DISBURSEMENTS:

$3,523.69

In response, The Personal agreed to pay $2,728.41. It did not quarrel with the amounts claimed for research, preparation and attendance at the appeal hearing, correspondence or disbursements. It claimed however, that the amount for preparation of the appeal documents was too high, suggesting that 10 hours for Ms. Frauts and 1.6 hours for the junior lawyer would be more appropriate. The Personal also objected to the amount claimed for the preparation of the Bill of Costs. While acknowledging that the amount was small, it argued that 1.8 hours was excessive, suggesting 0.8 hours for this task.

Ms. Frauts then provided a more detailed time sheet. After reviewing this document, Mr. Wilson made some additional arguments, objecting to the times allocated for research and preparation of the appeal documents and bill of costs.

The initial stages of this appeal were marked by some uncertainty due to The Personal's change of counsel. As a result, counsel for Mr. Brady had to prepare for issues that were later abandoned or modified. This influences my view of the initial legal services, particularly the research, which I find reasonable. While the time allocated for preparation of the appeal documents seems high, the material filed reflects a careful review of the law and the arbitration evidence, including a transcript of the four-day hearing. In the circumstances, I am prepared to recognize the bulk of the claim.

In conclusion, The Personal shall pay Mr. Brady appeal expenses of $3059.52, calculated as follows:

RESEARCH:

Senior lawyer - 1 hr. @ $83.75/hr.

Associate - 10 hrs. @ $67/hr.

$753.75

PREPARATION OF APPEAL DOCUMENTS,

including written submissions:

$1,256.25

Senior lawyer - 15 hrs. @ $83.75/hr.

PREPARATION AND ATTENDANCE AT APPEAL:

$573.63

Senior lawyer - 6.3 hrs. @ $83.75/hr.

Law clerk - 2.0 hrs. @ $23/hr.

CORRESPONDENCE:

$156.00

PREPARATION OF BILL OF COSTS:

$23.00

FEE:

GST (7%):

$2,762.63

$193.38

$2,956.01

TOTAL DISBURSEMENTS (Including GST):