Neutral Citation: 2000 ONFSCDRS 156 FSCO A97-002019

Between:

Joyce Swain Applicant

and

Zurich Insurance Company Insurer

Decision on Expenses

Before: Beth Allen Heard: By telephone conference call on August 11, 2000.

Appearances: James E. S. Allin for Mrs. Swain Ian M. Boundy for Zurich Insurance Company

Issues:

The Applicant, Joyce Swain, was injured in a motor vehicle accident on September 4, 1995. In a decision dated October 8, 1999, Arbitrator Bayefsky dealt with her claims for statutory accident benefits under the Schedule.¹ He made the following orders, while remitting to the parties the calculation of the income replacement benefit.

The dividend income Mrs. Swain received in the 52 weeks prior to the accident shall be included in her gross annual income for the purposes of calculating the quantum of her income replacement benefits.
Unemployment insurance premiums shall not be deducted from her gross annual income in calculating the quantum of her income replacement benefits.
The parties shall calculate the quantum of benefits now owing to Mrs. Swain, with interest.
Zurich shall pay to Mrs. Swain her reasonable expenses of the arbitration.
Zurich's request for its expenses of the arbitration is denied.

The issue in this further hearing is:

Is Mrs. Swain entitled to the amounts claimed in respect of this arbitration hearing for legal fees and for the expenses associated with her accountants?

Result:

Mrs. Swain is entitled to $3,000 for legal fees in relation to the original bill of expenses.
Mrs. Swain is entitled to a total of $627.07 for legal fees in relation to the supplementary bill (as broken down in the summary to this decision).
Mrs. Swain is entitled to a total of $2,800 for the services of her accountants, Bailey Kearney Ferguson Inc. and Rich Rotstein Limited (as broken down in the summary to this decision).

EVIDENCE AND ANALYSIS:

In his decision dated October 8, 1999, Arbitrator Bayefsky allowed the Applicant her expenses for the arbitration hearing. The parties dispute the amount of some of those expenses.

In support of her expense claim, the Applicant submitted a bill of expenses together with the following documents: an invoice dated August 11, 1999, from the Applicant's accountants, Bailey Kearney Ferguson Inc.; a breakdown analysis dated May 5, 2000 from Bailey Kearney Ferguson of its September 9, 1999 account; a further breakdown analysis dated June 16, 2000 of the Bailey Kearney Ferguson account; two invoices (one designated as detailed) from Applicant's accountants, Rich Rotstein Limited, both dated January 30, 1999; and a supplementary account for the Applicant's counsel's legal expense dated August 11, 2000.

Legal Expenses:

The Applicant claims a total of $5,864.94 on the original bill and $1,341.93 on a supplementary bill. The Insurer disputes the $4,556.25 amount claimed for the Applicant's counsel's time on the original bill and the $1,341.03 claimed on the supplementary bill.

Under the Expense Regulation,² an arbitrator has the discretion to allow expenses to a party up to certain prescribed maximums. Rule 76 of the Dispute Resolution Practice Code³ (the ”Code”) provides that when assessing legal fees, an arbitrator may use the hourly rates established under the Legal Aid Act for professional services in civil matters before the Ontario Court (General Division) (now the Superior Court of Ontario), assessing the rate in appropriate circumstances to take into account an extra allowance for experienced counsel. This Rule further provides that a higher rate of up to $150 per hour may be assessed if an arbitrator is satisfied that a higher amount is justified.

The Applicant's counsel billed his time at $125 per hour for a total amount of $4,556.25. The Insurer's counsel did not dispute the hourly rate, but submitted that the 36.45 hours billed is excessive considering that the duration of the hearing was six hours (10:00 a.m to 4:00 p.m.) and that, in his view, the issues in dispute were not exceptionally complex.

The Applicant's counsel submitted that arbitral expense decisions have allowed ratios of hearing time to preparation of between 2:1 to 4:1, or from 24 to 40 hours, if one rounds off the time for a day-long hearing to eight hours. The Applicant's counsel further argued that the issues in the hearing were complex from the Applicant's point of view since to make the case, he raised novel arguments to distinguish the Applicant's case from other matters dealing with employment income versus investment income.

After considering the parties arguments, I conclude that a reasonable time for preparation for and attendance at the hearing is 24 hours (6 hours hearing time + 18 hours preparation), a ratio of three hours for each hour of hearing. Accordingly, I allow $3,000 (24 hours x $125 per hour), plus the appropriate GST, for the Applicant's counsel's legal services. I find that the issues in dispute were moderately complex and raised relatively novel arguments.

The Applicant's counsel charged a total of $1,341.93 on his supplementary bill dated August 11, 2000 for legal services. He billed $766.64 for 6 hours 8 minutes preparation time. Arbitrator Bayefsky remitted the calculation of the income replacement benefit to the parties, remaining seized of the matter in the event that the parties were unable to settle the amount. At the expense hearing, the Applicant's counsel indicated that he thought that the quantum issue would be dealt with in this proceeding and further stated that he spent about one-half of the preparation time for the expense hearing preparing for the quantum issue.

The Applicant's counsel also charged a total of $487.50 for time spent preparing and answering 39 pieces of correspondence to and from the accountants between November 1999 and the date of the expense hearing.

The Insurer's counsel disputed the supplementary legal bill, stating that $1,341.93 is excessive for the time involved in assembling materials and communicating with the Applicant's accountants. He submitted that 39 letters seem an unreasonable amount of correspondence.

After considering the parties' submissions, I conclude that the Applicant's supplementary bill is excessive. Accordingly, I allow one-half of the $766.64 preparation time for the expense hearing or $383.32, plus the appropriate GST. I do not allow the charge for time used preparing the quantum issue since, as the "Notice of Assessment of Expenses" dated June 29, 2000 indicates, the expense issue is the sole issue to be determined.

I find that the time spent in relation to 39 pieces of correspondence to and from the accountants is somewhat excessive as well. The Applicant's counsel submitted little documentation to support the reasonableness of this expense item. I therefore allow one-half of the amount billed or $243.75, plus the appropriate GST.

Fees for Services of Accountants:

Under the Expense Regulation, an arbitrator has the discretion to allow expenses for expert witnesses up to certain prescribed maximums. The Regulation allows the following expenses for expert witnesses: $200 per hour to a maximum of $1,600 for attendance at the hearing; a maximum of $500 for preparation for the hearing; and a maximum of $1,500 for preparation of a report.

The Applicant claims the following disbursements for the services of her accountants:

The Bailey Kearney Ferguson account:

$4,959.45 (for preparation of report, preparation for the hearing and attendance at hearing).

The Applicant's counsel stated in his submissions that Bailey Kearney Ferguson reduced the total amount of its account to $3,845.

Bailey Kearney and Ferguson, chartered accountants, prepared a report dated December 8, 1998. Mr. J. D. Kearney, a chartered accountant, attended the hearing as an expert witness. Counsel for the Applicant submitted that this firm deals "hands-on" with the Applicant's day-to-day business accounting concerns. According to the Applicant's counsel, Mr. Kearney and his firm provided expert testimony and a report from this perspective.

The Rich Rotstein account:

$3,179.56 (for preparation of report, preparation for the hearing and attendance at the hearing).

Rich Rotstein, business valuators and forensic accountants, also prepared a report dated December 10, 1998, and provided expert advice to the Applicant's counsel in preparation for the hearing. It appears from the Applicant's original bill that an accountant from Rich Rotstein attended at the hearing. However, the Rich Rotstein account does not seem to contain an expense item for this. Neither does the hearing record indicate that an accountant from this firm testified. Nor did the Applicant's counsel provide details at the expense hearing about the attendance of a Rich Rotstein accountant at the arbitration hearing. I therefore assume in my assessment that there was no such attendance, unless I am apprised otherwise.

According to the Applicant's counsel, Rich Rotsein's accounting expertise involved applying the income replacement benefit and other provisions of the Schedule to the Applicant's employment and income arrangements.

The Insurer's counsel disputes both the Bailey Kearney Ferguson and Rich Rotstein accounts as excessive. Regarding the former account, it submits that it is not sufficiently detailed and that the services of the chartered accountants and certain clerical staff and other non-professional staff were billed for excessive amounts.

The Insurer disputes the Rich Rotstein account as unreasonable because it is not sufficiently precise as to which personnel in the firm dealt with which matter in the report. The Insurer further disputes this expense because it involves, in part, matters not at issue in this arbitration, for instance, loss of earning benefit and present value calculations.

After considering the parties' submissions and the documents before me I conclude the following:

I received no submissions as to the actual length of Mr. Kearney's attendance at the hearing. The Insurer's counsel submitted that all evidence was completed within three hours. Since the hearing lasted about six hours, I allow three hours or $600 for Mr. Kearney's attendance which permits time for his testimony and any delay before hand. I allow $300 for preparation for the hearing and $800 for preparation of the three-page report (with a one-page attachment), plus the appropriate GST. I considered that the issues in dispute were moderately complex and novel.

Regarding the Rich Rotstein account, as noted above, I assume that no one from this firm testified at the hearing. I also take into account that a considerable portion of the 5-page report (with a 6-page attachment) deals with matters not in dispute at the arbitration hearing. I allow $300 for time advising the Applicant's counsel in preparation for the hearing and $800 for preparation of the report, plus the appropriate GST.

Summary:

I allow the Applicant the following expenses, plus the appropriate GST:

Original bill: For legal services for hearing $3,000.00

Supplementary bill: For legal services for expense hearing $383.32

For time re. correspondence b/w hearing and expense hearing $243.75

Disbursements: For Bailey Kearney Ferguson accountants' services $1,700.00

For Rich Rotstein accountants' services $1,100.00

Any further expenses which might be incurred subsequent to this order, that are not settled between the parties, may be brought before Arbitrator Bayefsky, in the event that the hearing is resumed, or otherwise before me.

August 25, 2000

Beth Allen Arbitrator

Date

ARBITRATION ORDER