Neutral Citation: 1999 ONFSCDRS 237

FSCO A97-001629

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

ELHAM RAYMOND (Formerly Elham El Hitti)

Applicant

and

HALIFAX INSURANCE COMPANY

Insurer

EXPENSE ASSESSMENT

Before:

Joyce Miller

Heard:

Written submissions received September 10 and 16, 1999. Oral submissions received by telephone conference call held September 17, 1999.

Appearances:

Catherine L. Coplea for Mrs. Raymond

Debbie Orth for Halifax Insurance Company

Issues:

The Applicant, Elham Raymond, was injured in a motor vehicle accident on November 6, 1994. In a hearing conducted over nine days,¹ I dealt with her claims for statutory accident benefits under the Schedule.² On March 8, 1999, I made the following orders:

Halifax shall pay Mrs. Raymond weekly income benefit income replacement benefits pursuant to subsection 7(1) of the Schedule from December 5, 1994 to March 15, 1995, from May 20, 1995 to July 31, 1995 and from March 30, 1996 ongoing.
Pursuant to paragraph 10(3)(b) of the Schedule, Halifax shall deduct from the weekly income replacement benefits of $267.54 payable to Mrs. Raymond 90 per cent of the net income received by Mrs. Raymond for the period December 5, 1994 to March 15, 1995 in respect of employment subsequent to the accident.
Halifax shall pay Mrs. Raymond a special award of $3,500 inclusive of interest.
Halifax shall pay Mrs. Raymond interest on amounts owing pursuant to section 68 of the Schedule.
Halifax shall pay Mrs. Raymond her expenses incurred in respect of the arbitration pursuant to subsection 282(11) of the Insurance Act.

The issue in this expense hearing is:

What expenses is Mrs. Raymond entitled to in this arbitration hearing?

Result:

Mrs. Raymond is entitled to legal fees for Ms. Coplea's services for 260 hours at $150 an hour plus GST.
Mrs. Raymond is entitled to legal fees for the services rendered by Jess I. Goldman, (33.7 hours), Thomas V. Ozere (2.5 hours), William A. Garay (0.4 hours), and Roxanne G. Cooligan (1 hour), at the Legal Aid rate appropriate for their level of experience for a total of 36.6 hours, plus GST.
Mrs. Raymond is entitled to legal fees for the services of Beth Quigley, articling student, at the Legal Aid rate for 118.2 hours, plus GST.
Mrs. Raymond is entitled to the expenses for the services of three law clerks in the amount of $98.90, plus GST.
Mrs. Raymond is entitled to disbursements of $7,094.91 inclusive of GST.

BACKGROUND:

Mrs. Raymond was injured in a motor vehicle accident on November 6, 1994. She applied for and received accident benefits from her insurer, Halifax Insurance Company ("Halifax"), pursuant to the Schedule. After her income replacement benefits were terminated on March 19, 1996, Mrs. Raymond retained the law firm of Garay and Associates and applied for mediation. After mediation failed, she applied for arbitration. At the pre-hearing conference, a hearing date was set for October 14 and 15, 1998. In April 1998, because of a limitation issue regarding the tort claim, Ms. Catherine Coplea, from the law firm of Cooligan Ryan, took over Mrs. Raymond's case.

Shortly after Ms. Coplea took over the case, a number of pre-arbitration procedural matters arose which included adjournment requests, productions requests and whether Halifax was entitled to an Insurer's Medical Examination (IME). These procedural matters resulted in a resumption of the pre-hearing and adjournment requests to the Registrar. On October 6, 1998, Halifax appealed the orders made by the pre-hearing arbitrator and the Registrar. Leave to appeal was denied.

On October 7, 1998, Mrs. Raymond, through her counsel sent Halifax an offer to settle the issues in dispute in this arbitration proceeding. This offer to settle was not accepted by Halifax. The hearing proceeded as scheduled. Mrs. Raymond was successful at the arbitration and was awarded her expenses pursuant to subsection 282(11) of the Insurance Act.

Subsection 282(11) of the Insurance Act provides that:

The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.

In the decision of Henri and Allstate,³ Arbitrator Nancy Makepeace outlined a number of general principles that have emerged from the arbitration decisions regarding the assessment of arbitration expenses. These principles include the following:

The overriding consideration in fixing arbitration expenses is reasonableness.
A line-by-line assessment of the expenses claimed is not appropriate. Rather, the arbitrator should make a global assessment of reasonable expenses.

In deciding the issues in this expense assessment, namely, the amount of legal fees, hourly rate and disbursements that Mrs. Raymond is entitled to for the services rendered by Ms. Coplea's office and by Mrs. Raymond's previous counsel, I will adhere to the above principles of "reasonableness" and "global assessment."

EVIDENCE AND FINDINGS:

This arbitration hearing took place over nine days, including one day for oral submissions. In addition, further written submissions were filed. At the expenses' assessment, Mrs. Raymond claimed legal fees for 65 hours for Ms. Coplea's attendance at the hearing (48 hours for eight days of hearing, at six hours a day and a further nine hours on the last day for oral submissions as well as eight hours for written submissions). Mrs. Raymond claims 235 hours for preparation by Ms. Coplea based on a ratio of fours hours of preparation to one hour of attendance at the hearing.

1. Legal Fees

(a) Ms. Coplea

(i) Preparation Time

Halifax disputes the amount of the ratio of four hours of preparation to one hour of hearing. Halifax submitted that this was a straightforward chronic pain case and that the factual and legal issues raised at the hearing were not particularly complex, novel or significant. Halifax submitted that the reasonable ratio in this type of case should be two hours of preparation to one hour of hearing.

Section 3 of the Expenses Schedule,⁴ which outlines the rules regarding the payment of legal fees, provides the following:

(1) The legal fees payable by the insured person or the insurer for the following matters may be awarded:

For all services performed before an arbitration, appeal, variation or revocation hearing.
For the preparation for an arbitration, appeal, variation or revocation hearing.
For attendance at an arbitration, appeal, variation or revocation hearing.
For services subsequent to an arbitration, appeal, variaton or revocation hearing.

(2) The number of hours for which legal fees may be awarded shall be determined by the arbitrator, having regard to the criteria set out in subsection 12(2) of this Regulation.

(3) The maximum amount that may be awarded for legal fees is the amount calculated using the hourly rates set out in the Dispute Resolution Practice Code published by the Ontario Insurance Commission, as it may be amended from time to time.

Subsection 12(2) of the Expense Regulation provides as follows:

(2) An arbitrator may award expenses to an insurer or insured person under subsection 282 (11) of the Act if the arbitrator is satisfied that the award is justified, having regard to the following criteria:

Each party's degree of success in the outcome of the proceeding.
Conduct of the insurer or the insured person that tended to shorten or facilitate the proceeding or that tended to prolong, obstruct or hinder the proceeding, including failure to comply with undertakings or orders.
Whether the proceeding or any position taken by the insurer or the insured person during the proceeding was manifestly unfounded, frivolous, vexatious, fraudulent or an abuse of process.
The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.
If the insurer or the insured person requests, any written offers to settle made after the conclusion of mediation and before the conclusion of the arbitration in accordance with the rules of practice and procedure applicable to the proceeding, including the terms of the offers, the timing of the offers and the responses to the offers, having regard to the result of the proceeding.
Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.

Taking the above criteria as well as the case law into consideration, I find that Mrs. Raymond is entitled to be paid for 195 hours preparation time for Ms. Coplea's services, for the following reasons.

As noted by Arbitrator Makepeace in the case of Henri and Allstate,⁵ arbitration decisions reveal a fair amount of variation in the ratio of hours of pre-hearing or hearing attendance time to preparation to hours of hearing attendance time. The ratio has ranged from one hour⁶ to four hours⁷ of preparation time for every hour of hearing attendance time.

Although this arbitration hearing was lengthy, I agree with Halifax that this was a straightforward chronic pain case. It did not involve complex factual or legal issues. Nor did it involve any complex accounting issues. The only quantum issue that had to be decided was how much should be deducted from Mrs. Raymond's weekly income benefit for part-time work. This was easily done by the evidence presented by Mrs. Raymond's employer as to how much money Mrs. Raymond earned for her part-time work.

Normally in such a straightforward case, taking into consideration Ms. Coplea's experience in accident benefit matters, I would allow for a two to one ratio. However, this was a lengthy hearing, therefore, in this particular case I would allow for a three to one ratio. Accordingly, I find that Mrs. Raymond is entitled to be paid for 260 hours (195 hours for preparation and 65 hours for attendance at the arbitration) for Ms. Coplea's legal fees.

(ii) Hourly rate

Rule 76.1 of the Dispute Resolution Practice Code-ThirdEdition (the "Code") provides that:

The maximum amount that may be awarded to an insured person or an insurer for legal fees is an amount calculated using:

(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 to an insured person is justified an hourly rate of up to $150 may be awarded.

Mrs. Raymond claims $150 an hour for her counsel's services. Halifax disputes this amount as being excessive and submitted that this was a straightforward chronic pain case and Mrs. Raymond should only be entitled to the Legal Aid rate of $75.83.

In the particular circumstances of this case, I do not agree with Halifax's submission. I accept Mrs. Raymond's submission that, by declining her offer to settle the case,⁸ Halifax put her through the unnecessary expense of a nine-day hearing. Although Mrs. Raymond was successful at the arbitration, because Halifax refused her settlement offer, Mrs. Raymond is now required to pay counsel fees in excess of $75.38 an hour (that is, the difference between the legal aid rate and Ms. Coplea's hourly rate of $200 an hour). Mrs. Raymond submits that this is unfair. I agree.

One of the primary reasons for offers of settlement is to encourage parties to resolve the issues in dispute in a reasonable manner. The way of encouraging the parties to accept a reasonable setlement offer is to attach negative consequences when a party refuses the offer, namely costs. This is specifically set out in subsection 2(5) of the Code.

Pursuant to Mrs. Raymond's offer on October 7, 1998, the issues in arbitration could have settled for approximately $25,000 inclusive of interest. In this offer, Mrs. Raymond agreed to waive any claim she may have for unpaid income replacement benefits up to March 20, 1996, offered to accept $267.54 for income replacement benefits from March 20, 1996 up to and including October 22, 1998 and agreed to accept one half the rate of interest prescribed by the Schedule on the outstanding benefits. In my view this was a reasonable settlement offer. More so when it is compared to the amount of approximately $77,000 that she was awarded as a result of the hearing. In my view, this case is a clear example of why a party to an arbitration hearing should give careful consideration to a reasonable settlement offer before proceeding to arbitration.

Although Mrs. Raymond will not recoup all of her legal fees, I find that awarding her an hourly rate of $150, in the circumstances of this case, is justified. Accordingly, I find that Mrs. Raymond is entitled to legal fees for her counsel of $150 an hour for 195 hours plus GST.

(b) Previous Counsel

As noted above Mrs. Raymond was represented by law firm of Garay and Associates when she applied for arbitration. However, because of a limitation problem Ms. Coplea took over the case after the arbitration hearing date was set. Mrs. Raymond claims 33.7 hours for the services of Jesse I. Goldman, 2.5 hours for Thomas V. Ozere and 0.4 hours for William A. Garay at the Legal Aid rate.

These legal services were not disputed by Halifax and I would allow them at the Legal Aid rate. Accordingly, I find that Mrs. Raymond is allowed her legal fees for 36.6 hours for the services of her previous counsel at the Legal Aid rate appropriate for their level of experience, plus GST.

(c) Roxanne G. Cooligan

Mrs. Raymond claims the legal fees for the services of Roxanne G. Cooligan for one hour at the Legal Aid rate of $75.83. Halifax did not dispute this claim. Accordingly, I find that Mrs. Raymond is entitled to $75.83 plus GST for the services of Ms. Cooligan.

(d) Beth Quigley - Articling Student

Mrs. Raymond claims 118.2 hours for the legal services of Ms. Beth Quigley, the student who assisted Ms. Coplea during the hearing. Halifax disagrees that any fees should be paid for the services of Ms. Quigley. Halifax submitted that Ms. Quigley attended at the hearing for her own experience and as a note taker and that this should not be compensable.

I accept Mrs. Raymond's submission that Ms. Quigley attended the hearing, not as a note taker but to assist Ms. Coplea. Although Ms. Quigley was taking notes during the arbitration, I observed that she was very much involved in assisting Ms. Coplea in marshalling the evidence during examination and cross-examination. I note that Mrs. Raymond retained a Court Reporter for the specific purpose of making a record of the proceedings. This was a lengthy hearing and I accept Mrs. Raymond's submission that Ms. Quigley played an important role in providing assistance to Ms. Coplea throughout the hearing. Accordingly, I find that Mrs. Raymond is entitled to her expenses for the services of Ms. Quigley for 118.2 hours at the Legal Aid rate plus GST.

(e) Law Clerks

Mrs. Raymond claims the expenses for the services of three law clerks, $16.10 for Pauline Howard; $64.40 for Crystal Schultz and $18.40 for Carol Thompson. This expense was not disputed. Accordingly, I find that Mrs. Raymond is entitled to her expenses for the services of the law clerks at the Legal Aid rate plus GST.

2. Disbursements

Mrs. Raymond claims disbursement expenses of $7,094.91 inclusive of GST. These expenses include disbursements from her previous counsel in the amount of $899.42 inclusive of GST. This latter amount was not disputed by Halifax and I would allow it as a reasonable expense. With respect to the disbursement expenses incurred by Mrs. Raymond after Ms. Coplea took over the case, Halifax disputes only two disbursement expenses: the witness fee and preparation time for Dr. Martin Gillen and the services of a court reporter.

(a) Expenses for Dr. Gillen

Dr. Gillen attended at the hearing for six hours, from 10 a.m. to 4 p.m., and testified on behalf of Mrs. Raymond. Mrs. Raymond claims $1,500 for witness fees and preparation time for Dr. Gillen.

Pursuant to Section F of the Code, which incorporates section 5 of the Expense Schedule, the maximum amount that may be awarded for the attendance of an expert witness is $200 per hour of attendance, up to a maximum of $1,600 per day.

Halifax submitted that Dr. Gillen should only be paid for four and a half hours. While Halifax accepted that Dr. Gillen was entitled to $200 an hour for his attendence at the hearing, it submitted that Dr. Gillen should not be paid for any time, such as lunch hour or breaks when he was not testifying. I disagree.

Dr. Gillen's attendance was required for an entire day. The fact that reasonable breaks, including a lunch hour were taken should not affect the fact that he was required to attend at the hearing and testify over a period of six hours. Accordingly, I find that Dr. Gillen is entitled to his witness fee as an expert for six hours' attendance at the hearing in the amount of $200 an hour plus GST.

Mrs. Raymond also claimed the expense of $300 for preparation for the hearing by Dr. Gillen as an expert witness. Halifax disputed this amount on the basis that in its view, preparation time is not compensable. I disagree. Subsection 5(3) of the Expenses Schedule permits me to award up to $500 for preparation of an expert who testifies at a hearing. I find that the amount of $300 for preparation time is reasonable.

Accordingly, I would allow the expense of $1,500 plus GST for witness fee for preparation time and attendance for Dr. Gillen.

(b) Reporting Services

Mrs. Raymond claims the amount of $1,718 for the services of a court reporter. Halifax disputes this expense. Halifax pointed out that Rule 72 of the Code states that a party who hires a reporting service must "directly pay the person or agency providing the reporting service." As well, Halifax submitted that court reporting services are not a necessary expense in the furtherance of the arbitration hearing.

Mrs. Raymond submitted that there is nothing in Rule 72 which precludes a party from ultimately claiming the services of court reporter as an expense pursuant to the Expense Regulation. As well, she submitted that the services of a court reporter was a necessary "out-of-pocket" expense in furtherance of the arbitration. She submitted that there are situations where not having a transcript of the arbitration proceeding for the purposes of appeal can be fatal to a party's case. For example, in a case where there is a conflict in the evidence and the appeal is based on the ground that the arbitrator erred in his or her assessment of the evidence, an applicant who was not successful in the first instance, would be at a disadvantage if a transcript was not available for appeal purposes. Mrs. Raymond further pointed out that in this arbitration, Halifax itself made use of the court reporting service to obtain a transcript for appeal, thus benefiting from the fact that she had hired a court reporter.

I agree with Mrs. Raymond's submissions. I do not find anything in Rule 72 which would preclude a party from claiming the services of a court reporter as an expense. As well, I agree for the reasons she stated that this expense is a reasonable out-of-pocket expense in furtherance of the arbitration.

Accordingly I find that the expense for the court reporting services is allowed.

In conclusion, I find that Mrs. Raymond is entitled to disbursements of $7,094.91 inclusive of GST.

December 7, 1999

Joyce Miller Arbitrator

Date