FINANCIAL SERVICES COMMISSION OF ONTARIO

Neutral Citation: 2000 ONFSCDRS 105 FSCO A99-000016

BETWEEN:

JANE CHAFE-MOOTE Applicant

and

PRUDENTIAL OF AMERICA GENERAL INSURANCE COMPANY (CANADA) Insurer

DECISION ON EXPENSES

Before: Judith Killoran Heard: By telephone conference call on April 14, 2000.

Appearances: Monique R. Bennett for Mrs. Chafe-Moote Deborah G. Neilson for Prudential of America General Insurance Company (Canada)

Issues:

The Applicant, Jane Chafe-Moote, was injured in a motor vehicle accident on January 16, 1994. In a decision dated August 6, 1999, I dealt with her claims for statutory accident benefits under the Schedule.¹ I made the following orders:

1. Prudential did not comply with section 65 of the Schedule when it requested that Mrs. Chafe-Moote attend insurer examinations in Toronto on February 19 and 20, 1998.
2. Prudential did not comply with section 65 of the Schedule when it requested that Mrs. Chafe-Moote attend insurer examinations in London on August 25, September 14, 15, and 18, 1998.
3. Prudential must pay a special award to Mrs. Chafe-Moote equal to 50 per cent of the outstanding benefits owed to her together with interest on all amounts owing at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.
4. Prudential must pay Mrs. Chafe-Moote's expenses of the preliminary issues hearing.

However, on consent of the parties, pursuant to section 283 of the Insurance Act, on February 15, 2000, Director's Delegate Draper ordered that paragraph 4 of the Arbitration Order be rescinded and referred back to the arbitrator.

The issues in this further hearing are:

1. Is Mrs. Chafe-Moote entitled to her expenses of the preliminary issues hearing?
2. Is Mrs. Chafe-Moote entitled to have her expenses assessed in respect of the preliminary issues hearing?
3. What is the amount of expenses to which Mrs. Chafe-Moote is entitled?

Result:

1. Mrs. Chafe-Moote is entitled to her expenses of the preliminary issues hearing.
2. Mrs. Chafe-Moote is entitled to have her expenses assessed.
3. Prudential shall pay Mrs. Chafe-Moote her expenses of $15,150 plus GST for legal fees and disbursements of $9,103.41 plus GST on those disbursements to which GST is applicable.

EVIDENCE AND ANALYSIS

Is Mrs. Chafe-Moote entitled to her expenses of the preliminary issues hearing?

Under subsection 282(11) of the Insurance Act, an arbitrator may award expenses to the insurer or the insured person 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.

On Friday, May 28, 1999, prior to the start of the Monday, May 31, 1999 preliminary issues hearing in this matter, the Insurer offered to settle all issues on a without-prejudice basis by way of the following:

1. The Insurer will pay up all the outstanding benefits to date plus interest;
2. The Insurer will continue to pay caregiver, housekeeping, and maintenance for six months from today's date; and
3. The Insurer will continue funding counselling sessions with Mr. Lindenberger for six months from today's date.

However, the Insurer was willing to reinstate benefits only if Mrs. Chafe-Moote agreed to attend an insurer's examination ("IE") within six months with a physiatrist, a psychiatrist, and an in-home occupational therapist of the Insurer's choice in London. This offer was to remain open until the Insurer had made its final submissions to the arbitrator at the hearing. I have reviewed this Offer to Settle in the context of Rule 74 of the Dispute Resolution Practice Code (the "Code"). The Offer meets the criteria outlined in Rule 74.1 which specifies that:

An adjudicator will consider an offer to settle in connection with an award of expenses provided that:

(a) it was made in writing, was served on the other parties and contains:

(i) the full terms of the Offer to Settle; (ii) the date when the Offer was served and the time period during which it remained open for acceptance;

AND

(b) the Offer was made after the conclusion of mediation and before the conclusion of the hearing, with particular consideration given to any Offer served after the conclusion of the pre-hearing discussion or preliminary conference as the case may be, up to five days before the commencement of the hearing.

However, as the Offer was not made up to five days before the commencement of the hearing, it does not merit special consideration.

The Offer differed from my order in many respects. The Offer was conditional on Mrs. Chafe-Moote's attendance at IEs. There was no payment of a special award in the Offer. Further, there was no payment of expenses in the Offer. At the time that the Offer was faxed on Friday, May 28, 1999, at 2:00 p.m., almost all of the preparation for the hearing had been completed

The Offer must be evaluated in the context of the other criteria to be considered. Mrs. Chafe-Moote was entirely successful in this proceeding and my order differed markedly from the Offer. Accordingly, I find that Mrs. Chafe-Moote is entitled to her expenses of the preliminary issues hearing.

Is Mrs. Chafe-Moote entitled to have her expenses assessed?

Under Rule 77 of the Code, where expenses are awarded, and the parties cannot agree on the amounts to be paid, a party may request an assessment of expenses, as follows:

(a) within 30 days from the date of the decision awarding expenses, the party awarded expenses must provide the other party with an account describing each of the expenses claimed, services received and the costs;

The Insurer objected that Mrs. Chafe-Moote's request for an assessment of her expenses was not made within the 30-day time limit required by the Code. Mrs. Chafe-Moote submitted that she had prepared her expenses on August 11, 1999 and the account was being finalized by accounting in her counsel's office when she received the Insurer's Notice of Appeal. The Insurer appealed the decision in question on September 4, 1999, including the award of expenses. Mrs. Chafe-Moote was occupied preparing a Response to the Appeal and she assumed that the question of expenses would be dealt with in the context of the entire appeal.

This is an appropriate case for the application of Rule 79.1 of the Code which specifies that:

Subject to the requirements of the Insurance Act and the SPPA, the adjudicator may on such terms as he or she considers appropriate:

(a) set aside any time limit set out in these Rules for doing any act, serving any notice, filing any document or holding any hearing; (b) decide that any Rule does not apply in respect of a proceeding.

I exercise my discretion to set aside the 30-day time limit due to the particular circumstances of this case.

Assessment of expenses:

Subsection 282(11) of the Insurance Act R.S.O. 1990, c.I.8, provides that:

The arbitrator may award, according to criteria prescribed by the regulation, 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 Insurance Company of Canada,² Arbitrator Makepeace listed a number of general principles that have emerged from arbitration decisions regarding assessments of expenses. I agree with her conclusion that: "the main criterion in assessing an applicant's claim for arbitration expenses is reasonableness, subject to the rules set out in the expense regulation," and "rather than a 'line by line' enquiry into an applicant's claim for expenses, arbitrators should fix a reasonable ballpark figure based on all the circumstances, including the dockets submitted, and the length and complexity of the hearing."

Legal fees:

Section 3 of Ontario Regulations 664, R.R.O. 1990, as amended, 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 Code (Third Edition, April 15, 1997) provides that:

The maximum amount that may be awarded to an insured person or an insurer for 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.

Counsel for Mrs. Chafe-Moote requested the maximum hourly rate of $150 per hour as set out in Section 76.1 of the Code. I am satisfied that the maximum hourly rate is justified. Ms. Bennett has specialized exclusively in the area of personal injury litigation and accident benefits for the past eight years. Ms. Bennett provided excellent representation for her client and presented the evidence and submissions in an organized, cogent and concise manner. Her expertise and advocacy skills contributed to Mrs. Chafe-Moote's success at the hearing. For these reasons, I find that Ms. Bennett is entitled to an hourly rate of $150 per hour.

Preparation and attendance time for Ms. Bennett:

The Insurer claimed that counsel for Mrs. Chafe-Moote should only be compensated for 25.2 hours of attendance time at the hearing and preparation time should be calculated using a ratio of 2:1 compared to attendance time. Using this method, the total would be approximately 51 hours of preparation time. According to the Insurer, this case was not complex. I disagree. Counsel for Mrs. Chafe-Moote was required to spend extensive time interviewing and preparing expert medical witnesses. As well, she expended considerable effort in preparing her case for a special award. It was partly as a result of Mrs. Chafe-Moote's counsel's precision and thoroughness in preparation and presentation that her client was successful.

Arbitration decisions reflect a variation in the ratio of number of hours of attendance time to preparation time. As noted by Arbitrator Makepeace in Henri,³ the ratio has ranged from one hour to four hours of preparation time to every hour of hearing attendance time. This preliminary issues hearing required a good deal of preparation, particularly with respect to the claim for a special award.

When I considered what ratio to allow for preparation time to hearing time, I weighed the complexity of the evidence, the importance of the issues and the degree of preparation reflected in the representation provided by Ms. Bennett. Therefore, I find that the proper ratio in this case is approximately 3:1 for hearing and preparation time in relation to attendance time. I have allowed for 101 hours of preparation and attendance time at the rate of $150 per hour which equals $15,150 plus GST for legal fees.

Disbursements:

The Insurer objected to the disbursement of $1,529.50 for photocopying expenses. Counsel for Mrs. Chafe-Moote explained that her firm's photocopier automatically bills to the client's account which has been keyed in by the operator. In any case, I consider $1,529.50 in photocopying expenses more than reasonable in this case.

With respect to Dr. Merskey's account, the Insurer did not object to the $1,391 billed for his medico-legal report. However, the Insurer did object to the preparation and attendance time attributed to Dr. Merskey. Subsection 5(4) of the Expense Regulation stipulates that a maximum of $500 may be paid for an expert witness's preparation time. However, Dr. Merskey was paid $1,000 for preparation time. I find that Dr. Merskey should be paid $500 for preparation time and $500 should be subtracted from the amount of allowable disbursements.

Subsection 5(3) of the Expense Regulation stipulates that an expert witness may be compensated at a rate of $200 per hour for attendance at a hearing to a maximum of $1,600 for the day. Dr. Merskey billed for five hours of attendance time. The Insurer calculated that Dr. Merskey was entitled to a maximum of two hours for attendance time. However, my notes indicate that Dr. Merskey spent a good deal of time waiting to be called as a witness. I find that compensating Dr. Merskey for five hours of attendance time is reasonable.

The Insurer objected to the amount of Dr. Fleming's account which was $2,100. The Insurer submitted that Dr. Fleming was entitled to $500 maximum for preparation plus four hours of attendance at $200 per hour for a total of $1,300. Counsel for Mrs. Chafe-Moote submitted that Dr. Fleming was entitled to $500 for preparation time, $800 for attendance, and $800 for her report for a total of $2,100. I find that Dr. Fleming is entitled to payment of her account of $2,100.

The Insurer questioned the phone records submitted by Mrs. Chafe-Moote's counsel. Mrs. Chafe-Moote's counsel explained that the firm's phones bill automatically to the client's account which has been keyed in by the user. In any case, I find that a total of $104.49 is a very moderate expense for telephone calls and should be allowed.

Mrs. Chafe-Moote's expenses included the cost of transportation from Texas for her brother as a witness. The Insurer questioned the necessity of including Michael Chafe as a witness. I disagree. Mr. Chafe's testimony was extremely compelling and was a strong addition to the testimony from other family members. His testimony made an important contribution to my decision-making. Therefore, Mr. Chafe's transportation costs are allowed.

Conclusion:

I find that Prudential shall pay Mrs. Chafe-Moote's legal fees of 101 hours at $150 per hour which equals $15,150 plus GST. I also find that Mrs. Chafe-Moote is entitled to be paid for disbursements totalling $9,103.41 plus GST on disbursements to which GST is applicable.

June 15, 2000

Judith Killoran Arbitrator

Date

ARBITRATION ORDER

Neutral Citation: 2000 ONFSCDRS 105 FSCO A99-000016

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JANE CHAFE-MOOTE Applicant

and

PRUDENTIAL OF AMERICA GENERAL INSURANCE COMPANY (CANADA) Insurer

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

1. Mrs. Chafe-Moote is entitled to her expenses of the preliminary issues hearing.
2. Mrs. Chafe-Moote is entitled to have her expenses assessed.
3. Prudential shall pay Mrs. Chafe-Moote's expenses of $15,150 plus GST for legal fees and disbursements of $9,103.41 plus GST on those disbursements to which GST is applicable.

June 15, 2000

Judith Killoran 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. O.R. 776/93 was extensively modified by O.R. 781/94; accordingly, where necessary, "1994 Schedule "refers to the original O.R. 776/93, and "1995 Schedule "refers to O.R. 776/93 as amended.
2. 2(Decision on expenses, OIC A-007954, August 8, 1997)
3. 3supra, see note #2