Neutral Citation: 1999 ONFSCDRS 178

FSCO A96-001785

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

MANJINDER KAUR CHAHAL

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before:

Shari L. Novick

Heard:

May 14, 1999, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Michael J. Henry for Mrs. Chahal

Aldo Piccetti for Zurich Insurance Company

Issues:

The Applicant, Manjinder Kaur Chahal, was injured in a motor vehicle accident on November 5, 1994. In a decision dated August 27, 1998, I dealt with her claims for statutory accident benefits under the Schedule.¹ I ordered Zurich to resume paying Mrs. Chahal weekly income replacement benefits, and determined the appropriate quantum of benefits. I also awarded the Applicant her expenses of the arbitration.

The parties were unable to agree on the amount of expenses to be paid to Mrs. Chahal, and an oral hearing with counsel was convened for me to hear submissions on the matter. There are four main areas of dispute — the number of hours that the Applicant should be reimbursed for her counsel's preparation time for the hearing, the applicable hourly rate for legal fees, the amount of various disbursements claimed and the appropriate number of hours the Insurer can set off against the amount owing to the Applicant for costs thrown away as a result of an earlier adjournment of this matter.

Legal fees - preparation time

Counsel for both parties exchanged correspondence prior to convening the expense hearing, setting out their respective positions on the issues. Applicant's counsel sought payment for 88 hours of his time, 162.5 hours of clerk time, and 4 hours of an articling student's time for a total of 254.5 hours. I note, however, that the total time spent on the file as shown on the dockets filed at the hearing amounts to 161.5 hours. Mr. Henry did not explain this discrepancy and I have not reviewed the very lengthy docket to determine where it lies.

Earlier expense decisions have established that the main criterion in assessing an applicant's claim for arbitration expenses is reasonableness, and that the factors set out in the expense regulation must be considered in arriving at a determination of what is reasonable in each case. It is generally accepted that rather than conduct a detailed "line by line" inquiry into an applicant's claim for expenses, arbitrators should fix a reasonable ballpark figure based on all of the circumstances of the case, including the dockets submitted and the length and complexity of the hearing.²

This hearing took three days to complete and featured three witnesses - the Applicant, her husband and one medical witness. The main issue in dispute centred on the nature and extent of Mrs. Chahal's ongoing disability and how (or whether) it impacted on her ability to return to work. Other issues included whether she was employed or self-employed for the purpose of the Schedule, the quantum of benefits she was entitled to and to a lesser degree, whether the Insurer had acted improperly in terminating her benefits. The injury that was the focus of the case, a spiral fracture of the index finger of her left hand, was not very complicated but was somewhat unusual. Several medical reports were filed from various doctors, including the surgeon who performed the operations on Mrs. Chahal's hand, two physiatrists, two hand specialists, the DAC assessors, two IE doctors and her family doctor.

The Applicant was successful in most aspects of her claim. Both parties conducted themselves in an appropriate manner throughout the hearing. From a factual perspective, I consider this case to be moderately complex. And, while it did not raise any novel legal points, I would assess the legal issues as being moderately difficult, given the nature of the Applicant's employment and the question of whether she was employed or self-employed. Having considered all of the criteria set out in subsection 12(2) of the regulation, I think it is reasonable to award Applicant's counsel preparation time at the rate of 3 hours of preparation time to one hour of hearing time. Rounding off the Insurer's estimate of 19.5 hours of hearing time to 20 hours, the Applicant would then be entitled to be reimbursed for 80 hours of legal fees for preparation and attendance at the hearing (20 hours plus 3 times 20).

The Applicant also seeks payment for counsel's time spent at the two mediations in this matter, and for a significant number of hours spent by three law clerks dealing with various matters. The Insurer takes the position that costs incurred prior to the commencement of the Application for Arbitration are not recoverable. I agree with the many arbitrators who have held that mediation expenses are not recoverable, as they predate the commencement of the Application for Arbitration.³

I am prepared to allow 40 hours of clerk time on this file, given the amount of legwork required to coordinate the medical information presented and the dispute surrounding the amount of wages Mrs. Chahal earned before the accident as a homeworker.

I do not accept the 4 hours of student time claimed, as it relates either to time spent at a mediation, or falls under the category of hearing preparation. No submissions were made by Mr. Henry which would persuade me that a duplication of efforts in this regard was necessary.

Legal fees - appropriate hourly rate

Mr. Henry claims that the hours he spent attending and preparing for the hearing should be compensated at the rate of $150 per hour. That is the maximum hourly rate permitted by section 76.1 of the Dispute Resolution Practice Code - Third Edition, April 15, 1997 (the Practice Code). Counsel for the Insurer submitted that as the Application for Arbitration in this matter was submitted in November of 1996 prior to the third edition of the Practice Code coming into effect, the hourly rates set out in the second edition of the Practice Code should apply to his matter. The second edition provides for legal fees to be paid at the hourly rates established under the Legal Aid Act.

Ontario Regulation 464/96 amended the previous expense regulation promulgated in 1990. Aside from prescribing the criteria to be considered by arbitrators in determining whether an expense award is justified, it addresses various other matters including the provision that the maximum that may be awarded to a party for legal fees is the amount calculated using the hourly rates set out in the Practice Code, as it may be amended from time to time.⁴

The regulation was promulgated on November 1, 1996 along with the Automobile Insurance Rate Stability Act. Thus, the Commission (known then as the Ontario Insurance Commission) had the authority to provide for an hourly rate for legal fees above that set out in the Legal Aid Act as of that date. The Application for Arbitration in this case was received on November 4, 1996. While the increased maximum for legal fees was not set out until the third edition of the Practice Code was published in April of 1997, I find that the power to award fees in excess of the rates in the Legal Aid Act existed at the time this application was filed.

Considering Mr. Henry's length of time at the bar and his significant experience in the area of accident benefits, I find that an hourly rate of $100 is justified.

Section 76.2 of the Practice Code provides for agent's fees to be calculated using the hourly rates established under the Legal Aid Act. The 40 hours of clerk time should therefore be paid at $23 per hour.⁵

Disbursements

The Insurer disputes the $1,400 claimed by the Applicant for a report from Dr. Ouchterlony, as well as the $1,500 charge for the AIM Clinic report. Counsel also challenges the $405.20 claimed for conduct money provided to witnesses who were not called to testify at the hearing, as well as an amount of $299.60 for serving summonses on the witnesses who did not appear.

Finally, the Insurer disputes the Applicant's claim for $610 for photocopying. Applicant's counsel stated that copies were charged out at 40 cents per page.

While the expense regulation referred to above increased the maximum payable for the preparation of an expert's report to $1,500, I agree with the Insurer's contention that the amounts charged in the above two cases are excessive. Dr. Ouchterlony's report consists of six pages, only half of which relate to her examination, findings and prognosis, with the other three pages setting out background details of the accident and the medical treatments the Applicant received. While I did rely on this report and Dr. Ouchterlony's evidence at the hearing, I find that $750 is a more appropriate fee for the report filed. Similarly, the report of the physiatrist at the AIM Clinic contains only two pages of conclusions. An Occupational Therapist at the clinic also performed a Functional Capacity Evaluation, which was fairly involved. I will allow a fee of $800 for this report.

The expense regulation provides for an award of witness fees "for the attendance of witnesses." As the conduct money and charge for the service of summonses relate to witnesses who did not attend at the hearing, I do not allow these expenses.

Finally, the amount claimed by the Applicant for photocopying is excessive. I find that a more reasonable amount for photocopying charges in this case is $300, roughly half of the amount claimed.

Costs thrown away by Insurer

This matter was originally scheduled for hearing in December of 1997. Due to the late filing of the Applicant's medical reports, the parties agreed to adjourn the matter. A term of the adjournment was that no benefits or interest would be paid to Mrs. Chahal if she were ultimately successful at the hearing and that the Insurer would be entitled to its costs thrown away as a result of the adjournment.

Counsel for the Insurer claims payment for the 31.6 hours he spent preparing for and attending at the Commission in December of 1997. The Applicant does not dispute that the Insurer is entitled to recoup the time spent by counsel attending at the Commission on the day of the adjournment, but claims that only a few hours of preparation time would actually have been "thrown away", as that time would have reduced the number of hours that counsel would have ultimately had to spend preparing for the hearing in June 1998.

Insurer counsel claims that the case that he had to meet changed substantially after the adjournment, as the Applicant subsequently obtained reports from Dr. Ouchterlony and Dr. Anastakis that bolstered her claim that she was unable to perform the essential tasks of her employment. He stated that as a result of these new medical reports, there was not much duplication in his preparation the second time around.

I agree that the two medical reports referred to above bolstered the Applicant's case and changed the nature of that aspect of the hearing. I cannot, however, agree that no part of the 31.6 hours claimed for preparation in December would have shortened the time required to prepare the following June, although I appreciate that a six-month time lag between the hearing dates would require some material to be reviewed. I am prepared to accept that 20 hours were thrown away" by the Insurer as a result of the adjournment. Section 76.1 of the Practice Code restricts the awarding of an hourly rate above that specified in the Legal Aid Act to counsel for an insured person. Mr. Picchetti's fees would therefore be payable at the rate of $67 per hour.

Summary:

In summary, the Applicant is entitled to recover the following fees and disbursements:

Fees:

Legal fees (88 hrs. @ $100 per hr.)

$8,800

Clerk time (40 hrs. @ $23 per hr.)

$ 920

TOTAL

$9,720

Disbursements:

As set out in the attachment to Mr. Henry's letter of October 28, 1998, less $405.20 for conduct money and $299.60 for serving the summonses. The amounts for the two reports discussed above, as well as the charge for photocopies, should be reduced as noted. My calculations of the revised total of disbursements owing amounts to $4,048.40.

The total of fees and disbursements owing to the Applicant is therefore $13,768.40, plus GST. The amount that should be deducted for the Insurer's costs "thrown away" is $1,340 (20 hrs. @ $67 per hr.), plus GST. I leave it to the parties to perform the final calculations.

September 22, 1999

Shari L. Novick Arbitrator

Date