Neutral Citation: 1999 ONFSCDRS 254

FSCO A97-001239

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

TOULA ATHANASIADIS

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

EXPENSE ASSESSMENT

Before:

Joyce Miller

Heard:

Oral submissions received by telephone conference call held August 6, 1999.

Written submissions received from both parties by November 1, 1999.

Appearances:

Ava M. Hillier for Mrs. Athanasiadis

Darrell P. March for Zurich Insurance Company

Issues:

The Applicant, Toula Athanasiadis, was injured in a motor vehicle accident on July 22, 1995. An arbitration hearing was held before me on August 4, 5 and 21, 1998, to deal with outstanding issues between Mrs. Athanasiadis and Zurich Insurance Company ("Zurich") regarding her claims for statutory accident benefits under the Schedule.¹

In my decision dated October 2, 1998 I made the following orders:

1. The arbitration is dismissed.

2. Athanasiadis shall pay Zurich its expenses in respect of this arbitration except for expenses, including preparation time, incurred for August 21, 1998.

The issues in this further hearing are:

1. What amount should I award Zurich for the expenses it incurred in this arbitration proceeding?

2. Is Zurich entitled to be awarded $3,000 for its assessment fee pursuant to subsection 282(11.2) of the Insurance Act as part of this expense assessment?

3. Is Zurich entitled to its expenses for this Expense Assessment?

Result:

1. Zurich is entitled to legal fees for 36 hours for the services of Mr. Darrell March, (12 hours for attendance and 24 hours for preparation) at the legal aid rate appropriate for his experience, plus GST.

2. Zurich is not entitled to its expenses for student and clerk fees.

3. Zurich is entitled to the following disbursements: Telex/Fax Usage, $39.50; Courier Services, $96.05; Postage, $8.26; Travel Expenses, $20; service of witnesses, $296.17; Photocopying, $50; Mileage, $24; Clinical notes and Records of Dr. Dahl, $15; plus the conduct money paid to Dr. Dahl, $53; Dr. Cranstoun, $53; and Mr. M. Ciervo, $70.16, less any conduct money that was returned by the witnesses who did not attend.

4. Zurich is not entitled to its assessment fee in the amount of $3,000.

5. Zurich is not entitled to its expenses for this assessment hearing.

Background:

This arbitration hearing, which was scheduled for two days and had only one witness, Mrs. Athanasiadis, took three days to complete. The issues in dispute were whether Mrs. Athanasiadis was substantially disabled from working as a waitress as a result of injuries she sustained in the accident and whether she could include her tips in the calculation of the amount of her weekly income benefit.

In my decision of October 2, 1998, I dismissed the arbitration and awarded Zurich its expenses, except for its expenses, including preparation time, for the resumption on August 21, 1998. The issues for this expense assessment are the amount of the legal fees and disbursement expenses that Zurich is entitled to, and whether or not Zurich is entitled to its assessment fee pursuant to section 282(11.2) of the Insurance Act.

The Law:

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.

Section 3 of the Expenses Schedule² provides the following:

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

1. For all services performed before an arbitration, appeal, variation or revocation hearing.

2. For the preparation for an arbitration, appeal, variation or revocation hearing.

3. For attendance at an arbitration, appeal, variation or revocation hearing.

4. For services subsequent to an arbitration, appeal, variation 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.

Rule 76.1 of the Dispute Resolution Practice Code (Third Ed., April 15, 1997) 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.

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:

1. Each party's degree of success in the outcome of the proceeding.

2. 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.

3. 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.

4. The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.

5. 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.

6. Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.

In the decision of Henri and Allstate Insurance Company,³ Arbitrator Makepeace outlined a number of general principles that have emerged from the arbitration decisions with regard to 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, what are the amount of legal fees, hourly rate and disbursements that Zurich is entitled to for the services rendered by Mr. March, I will adhere to the above principles of "reasonableness" and "global assessment."

EVIDENCE AND ANALYSIS:

1. Legal Fees

(a) Mr. Darrell March

Zurich claims legal fees for its counsel, Mr. Darrel March, for a total of 59.2 hours (43.5 hours for preparation and 15.7 hours for attendance at the hearing) at the legal aid rate appropriate for his level of experience.

For the following reasons I find that Zurich is entitled to 36 hours for preparation and attendance at the hearing for the legal services of Mr. March.

(i) Attendance Time

Zurich claims legal fees for 15.7 hours for Mr. March's attendance at the hearing which includes his travelling time to and from the hearing, in addition to his travel expenses.

Pursuant to section 3 of the Expense Schedule, legal fees are payable for the preparation and attendance at an arbitration as well as for services performed before and subsequent to an arbitration hearing. There is no provision in section 3 that legal fees are payable for the travel time to and from an arbitration hearing. In my view, legal fees for travel time cannot be read into any of the four categories for which legal fees are payable under section 3. I therefore conclude that Zurich is not entitled to legal fees for Mr. March's travel time to and from the hearing. Accordingly, I find that Zurich is entitled to its legal fees for 12 hours of attendance at the hearing on August 4 and 5, 1998.

(ii) Preparation Time

Zurich claims legal fees for 43.5 hours of preparation. For the following reasons I award Zurich 24 hours for preparation.

As noted by Arbitrator Makepeace in Henri,⁴ arbitration decisions reveal a fair amount of variation in the ratio of preparation time and other services provided before a hearing to hearing attendance time. The ratio has ranged from one hour⁵ to four hours⁶ of preparation for every hour at hearing attendance.

In this case, taking into consideration that this hearing had only one witness, the Applicant; that Zurich did not call any witnesses; that this was not a factually complex or novel case; that the burden of proof rested with the Applicant; and that Zurich was not awarded its preparation expenses for the third day of the hearing, I find that the reasonable time to allot for preparation is a ratio of two hours of preparation to one hour of attendance at the hearing.

Accordingly, I find that Zurich is entitled to legal fees for 36 hours for the services of Mr. March (12 hours for attendance and 24 hours for preparation) at the legal aid rate appropriate for his experience plus GST.

(b) Student and Clerk Fees

Zurich claims 6.3 hours for "student and clerk fees" at the legal aid rate. I find that this is a reasonable expense. I was not provided with any documentation to substantiate this claim. Accordingly, I find that Zurich is not entitled to the expenses for student and clerk fees.

2. Disbursements

Zurich claims disbursements for the following items: Telex/Fax Usage, $39.50; Courier Services, $96.05; Postage, $8.26; Travel Expenses, $20; service of witnesses, $296.17; Photocopying, $271.75; Mileage, $24; and Clinical Notes and Records of Dr. Dahl, $15.

Zurich also claims conduct monies for Dr. Dahl, $53; Dr. Cranstoun, $53; and Mr. M. Ciervo, Mrs. Athanasiadis' employer, $70.16. None of these witnesses summoned by Zurich were called to testify. Mrs. Athanasiadis disputed these expenses paid to witnesses who did not testify.

The Expense Regulation provides that witness fees and travelling expenses for witnesses may be ordered. I accept that the witnesses summoned by Zurich were reasonably required to attend and I find that Zurich is entitled to these expenses. However, since these witnesses did not attend at the hearing, I also find that Mrs. Athanasiadis is not liable to pay the conduct money that was returned by the witnesses who did not attend.

The one expense that I did not find reasonable is $271.75 for photocopying, which Zurich itemized as: copying, time spent for copying, binders, tabs and cereloxing. Zurich, however, did not present a breakdown of these expenses, i.e., how many pages were copied, how much time was spent on copying and how much the binders, tabs and cereloxing cost. At the hearing I only received one binder from Zurich — its arbitration brief.

Although Zurich has not provided any documents to substantiate its expense of $271.75 for photocopying, I, nevertheless, find that Zurich is entitled to some reasonable expense for photocopying, Accordingly, I find that in this case $50 for the expenses of photocopying is reasonable.

Accordingly, I find that Zurich is entitled to the following disbursements: Telex/Fax Usage, $39.50; Courier Services, $96.05; Postage, $8.26; Travel Expenses, $20; service of witnesses, $296.17; Photocopying, $50; Clinical notes and Records of Dr. Dahl, $15; plus the conduct money paid to Dr. Dahl, $53; Dr. Cranstoun, $53; and Mr. M. Ciervo, $70.16, less any conduct money that was returned by the witnesses who did not attend.

3. Zurich's Assessment Fee

As part of its expense assessment, Zurich claims $3,000 for its assessment fee, pursuant to subsection 282(11.2) of the Insurance Act. Neither at the pre-hearing nor at any time during the hearing did Zurich make a claim for its assessment fee.

Mrs. Athanasiadis disputed Zurich's claim for its assessment fee stating that she had no notice of Zurich's claim and that Zurich cannot now ask for this expense once the arbitration has concluded and the arbitration decision has been issued.

In my view, an award for an insurer's assessment fee pursuant to subsection 282(11.2) of the Insurance Act is distinct from an expense award pursuant to subsection 282(11) of the Insurance Act. The Expense Schedule⁷ clearly states that an allowable expense of arbitration is the assessment fees paid by an insured person when applying for arbitration. No mention, however, is made that an insurer's filing fees is an allowable expense. This is because pursuant to subsection 282(11.2) the issue of whether an insured is required to pay the insurer its filing fee is a substantive issue that is adjudicated on at an arbitration hearing.

In a recent expense decision, Jelisic and Guarantee,⁸ Arbitrator Manji denied the insurer its request for expenses and an award pursuant to subsection 282(11.2) of the Insurance Act when it omitted to advance such claims prior to and during the course of the arbitration hearing. She held that it would be unfair to an applicant to allow an insurer to advance these claims after the hearing has concluded. She pointed out that had the applicant been notified that the insurer was going to advance such claims, the applicant may not have proceeded with the hearing, or may have adduced evidence to respond to these claims.

I agree with Arbitrator Manji's conclusion that where an insurer omits to ask for its assessment fee at the arbitration hearing it cannot, after an arbitrator has rendered her decision, use the process of an expense assessment to ask for that expense.

Accordingly, I find that Zurich is not entitled to its assessment fee in the amount of $3,000.

EXPENSES:

Zurich claims its costs in the amount of $735.81 inclusive of GST for its expenses in preparation for this expense assessment hearing.

While I agree with Zurich that a party to an expense assessment may receive its costs for the assessment hearing,⁹ I find that, on the facts of this particular expense, no expenses will be awarded. Mrs. Athanasiadis was successful in disputing Zurich's claim for its assessment fee, which was a significant issue in this expense assessment. Accordingly, I find that Zurich is not entitled to its expenses for this assessment hearing.

December 23, 1999

Joyce Miller

Arbitrator

Date

Neutral Citation: 1999 ONFSCDRS 254

FSCO A97-001239

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

TOULA ATHANASIADIS

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mrs. Athanasiadis shall pay Zurich legal fees for 36 hours for the services of Mr. March (12 hours for attendance and 24 hours for preparation) at the legal aid rate appropriate for his experience.

2. Mrs. Athanasiadis shall pay Zurich the following disbursements: Telex/Fax Usage, $39.50; Courier Services, $96.05; Postage, $8.26; Travel Expenses, $20; service of witnesses, $296.17; photocopying, $50; Mileage, $24; Clinical notes and Records of Dr. Dahl, $15; plus the conduct money paid to Dr. Dahl, $53; Dr. Cranstoun, $53; and Mr. M. Ciervo, $70.16, less any conduct money that was returned by the witnesses who did not attend.

December 23, 1999

Joyce Miller

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98.
2. 2Ontario Regulation 664, R.R.O. 1990, as amended by Ontario Regulation 464/96 made under the Insurance Act
3. 3(OIC A-007954, August 8, 1997)
4. 4Henri and Allstate Insurance Company of Canada (OIC A-007954, August 8, 1997)
5. 5For example, Kasap and Allstate Insurance Company of Canada (OIC P96-00071, March 13, 1998)
6. 6For example, Henri and Allstate Insurance Company of Canada (OIC A-007954, August 8, 1997)
7. 7The Expense Schedule states that "The filing fees paid by the insured person when applying for arbitration may be awarded to the insured person." Regulation 1, of the Schedule, Dispute Resolution Expenses, of the Ontario Regulation 664, R.R.O. 1990, as amended by Ontario Regulation 464/96 made under the Insurance Act.
8. 8Jelisic and Guarantee Company of North America (FSCO A98-000029, October 21, 1999).
9. 9See Folkes and Security Insurance Company of Hartford (FSCO A96-001142, November 30, 1998).