Neutral Citation: 2000 ONFSCDRS 221

FSCO A96-001123

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JOSE HERNANDEZ

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before:

Joyce Miller

Heard:

By telephone conference call on August 17, 2000. Written submissions were all received by September 6, 2000.

Appearances:

William A. Garay for Mr. Hernandez Kenneth Wright for Zurich Insurance Company

Issues:

The Applicant, Jose Hernandez, was injured in a motor vehicle accident on November 5, 1994. In a hearing conducted over eight days,¹ I dealt with his claims for statutory accident benefits under the Schedule.² On August 28, 1998 I made the following orders:

1. Zurich shall pay Mr. Hernandez income replacement benefits pursuant to subsection 7(1) of the Schedule from February 27, 1996 and ongoing.

2. Zurich shall pay Mr. Hernandez a special award of $5,000 pursuant to subsection 282(10) of the Insurance Act.

3. Zurich shall pay Mr. Hernandez interest on all outstanding amounts owed pursuant to section 68 of the Schedule and subsection 282(10) of the Insurance Act.

4. Zurich shall pay Mr. Hernandez' expenses incurred in this arbitration pursuant to subsection 282(11) of the Insurance Act.

The issue in this expense hearing is:

1. What expenses is Mr. Hernandez entitled to in this arbitration proceeding?

Result:

1. Mr. Hernandez is entitled to the following legal expenses plus GST for the services of: Mr. William A. Garay for 131.2 hours at the rate of $83.75 an hour; Mr. Thomas V. Ozere for 1.9 hours at the rate of $83.75; Mr. Jesse Goldman for 3.0 hours at the rate of $67 an hour; $213.90 for law studen time; and Ms. Carol Thomson, litigation law clerk, for 76.2 hours at the rate of $23 an hour.

2. Mr. Hernandez is entitled to his disbursement expenses of $8,889.42 plus any applicable GST.

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. [Emphasis added]

In the decision of Henri and Allstate,³ Arbitrator 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 Mr. Hernandez is entitled to, I will adhere to the above principles of "reasonableness" and "global assessment."

EVIDENCE AND ANALYSIS:

1. Legal Fees

Mr. Hernandez claims $22,006.63 plus GST for his legal expenses. These legal expenses include $19,680 for the services of Mr. William A. Garay for 131.20 hours (98.2 hours for preparation and 33 hours for attendance at the hearing) at the rate of $150 an hour; $159.13 for Mr. Thomas V. Ozere for 1.9 hours at the rate of $83.75; $201 for Mr. Jesse Goldman for 3.0 hours at the rate of $67 an hour; $213.90 for law student time; and $1,752.60 for Ms. Carol Thomson, litigation law clerk, for 76.2 hours (43.2 hours for preparation and 33 hours for attendance) at the rate of $23 an hour.

Zurich disputes the hourly rate claimed by Mr. Hernandez for the services of Mr. Garay. Zurich submitted that at the time Mr. Hernandez applied for arbitration on July 10, 1996, Ontario Regulation 464/96,⁴ which gives an arbitrator the discretion to award an hourly rate of up to $150, had not yet been promulgated. Zurich submitted that pursuant to the provisions of Ontario Regulation 664, which was in force when Mr. Hernandez applied for arbitration, Mr. Hernandez was limited to the rates prescribed by the Legal Aid Act. Zurich submitted that according to the Legal Aid Act, Mr. Garay is entitled to the rate of $83.75 per hour and that, pursuant to the Ontario Regulation 664, an arbitrator did not have the discretion to award a higher amount than the rates prescribed by the Legal Aid Act.

In support of its submission Zurich relies on the appeal decision Pinto and General Accident⁵which stands for the proposition that expenses are assessed in accordance with the regulation in existence at the time that the Application for Arbitration was filed and not as of the date of the hearing. Zurich submitted that this proposition has been consistently accepted by arbitrators and the Director's Delegate in determining their decisions to award expenses.⁶

Mr. Hernandez agreed that the award of expenses must be dealt with pursuant to the provisions of Ontario Regulation 664 which was in force on July 10, 1996. Nevertheless, he submitted that the amendment to the expense provisions in Ontario Regulation 464/96 was only there for the purpose of restricting the adjudicator's discretion from awarding an hourly rate of more than $150 an hour. Mr. Hernandez submitted that since Regulation 664 did not specifically exclude an arbitrator from awarding a higher hourly rate than $83.75, then the arbitrator still had the discretion to do so.

Section 2 of the Expense Schedule⁷ in Ontario Regulation 664 provides the following:

2.—(1) The legal fees payable by the insured person for the following matters may be awarded:

1. For all services performed before a hearing.

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

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

(2) The maximum amount that may be awarded for legal fees is the amount calculated using the hourly rates established under the Legal Aid Act for professional services in civil matters before the Ontario Court (General Division).

(3) For the purposes of subsection (2), the hourly rate may be adjusted to include, in appropriate circumstances, the experience allowance established under the Legal Aid Act for more experienced solicitors.

The Ontario Regulation 464/96 provisions regarding hourly rates are basically the same as Ontario Regulation 664 except for the amendment which provides:

...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.⁸

In my view, this amendment gives an additional discretion to an arbitrator to not only, in "appropriate circumstances," award a counsel the experience allowance under the Legal Aid Act but in addition, where "justified," allows the arbitrator to award an hourly rate of up to $150. Subsection 2(2) of Ontario Regulation 664 specifically restricts the maximum award for legal fees to the Legal Aid Act. In my view, there is nothing in Ontario Regulation 664 which would allow me to read in a provision that an arbitrator has the discretion to award an hourly rate which is greater than the experience allowance under the Legal Aid Act. Accordingly, I find that Mr. Hernandez is only entitled to an hourly rate of $83.75 for the services of Mr. Garay.

2. Disbursements

Mr. Hernandez claims disbursements in the amount of $11,136.64 for his filing fee, expert reports, witness fees, interpreter services, witness summons and conduct money, transcripts, couriers, photocopies, telecopiers, long distance charges, postage, binding charges and case law charges.

With regard to these expenses, Zurich only disputes the witness fees and preparation time claimed for Dr. Martin Gillen ($1,600), Dr. Juan Tejeda ($1,137.50), and Dr. Juan Escudero ($1,419.72). Specifically, Zurich submits that subsection 5(3) of Regulation 664 "... limits the amount which can be assessed in respect of the attendance of an expert witness to $200 per hour of attendance to a maximum of $1,600 per day" and that unlike subsection 8(4) of Ontario Regulation 464/96 "no amount may be assessed for an expert's preparation time."

Zurich submits that Dr. Gillen's attendance at the hearing was 3 hours and 20 minutes and that the amount that he should be awarded is the sum of $660. Similarly, Dr. Escudero should only be paid $650 for 3 hours and 15 minutes of attendance. Zurich submitted Dr. Tejeda should only be paid $400 for two hours of attendance based on the time for which he gave evidence and not the lunch break.

I agree with Zurich that Ontario Regulation 664, unlike Ontario Regulation 496/96, does not allow for expenses to be awarded for an expert's preparation time. However, I disagree with Zurich's submission that Dr. Tejeda's payment for his attendance at the hearing should not cover the lunch break since it included his time of attendance at the hearing. Accordingly, I find that Mr. Hernandez is entitled to his expenses for the expert witnesses' attendance fees of $600 for Dr. Tejeda; $660 for Dr. Gillen and $650 for Dr. Escudero.

Conclusion

I find that Mr. Hernandez is entitled to the legal expenses plus GST for the following services of: Mr. William A. Garay for 131.20 hours at the rate of $83.75 an hour; Thomas V. Ozere for 1.9 hours at the rate of $83.75; Jesse Goldman for 3.0 hours at the rate of $67 an hour; $213.90 for law student time; and Carol Thomson, litigation law clerk, for 76.2 hours at the rate of $23 an hour. Mr. Hernandez is also entitled to disbursement expenses of $8,889.42 plus any applicable GST.

December 8, 2000

Joyce Miller Arbitrator

Date

Neutral Citation: 2000 ONFSCDRS 221

FSCO A96-001123

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JOSE HERNANDEZ

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. Zurich shall pay Mr. Hernandez $13,100.73 plus GST for legal expenses and $8,889.42 plus any applicable GST for disbursements.

December 8, 2000

Joyce Miller Arbitrator

Date

Footnotes

1. 1June 2, 3, 4, 5, October 20, 21, 22 and 23, 1997; written submissions were received by March 4, 1998.
2. 2The 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.
3. 3Henri and Allstate Insurance Company of Canada (OIC A-007954, August 8, 1997)
4. 4Ontario Regulation 464/96 was promulgated on November 1, 1996
5. 5Pinto and General Accident Assurance Co. of Canada, (OIC P97-00031, November 26, 1997)
6. 6For example, see Pinheiro and GAN Canada Insurance Company (OIC A96-000369, June 30, 1998); S.M. and Markel Insurance Company of Canada (OIC A96-000258, January 15, 1998); McLennon and Pilot Insurance Company (FSCO P98-00055, April 28, 1999); Molina and Pafco Insurance Company Limited (OIC A96-000804, August 28, 1997); Salvaggio and Simcoe & Erie General Insurance Company and Wellington Insurance Company (OIC A96-000978, October 14, 1997); and Worthman andAxa Insurance (Canada) (OIC A96-000486, January 30, 1997).
7. 7Ontario Regulation 664, R.R.O. 1990, as amended by Ontario Regulation 464/96 made under the Insurance Act.
8. 8Rule 16.1 of the Dispute Resolution Practice Code (April 15, 1991, Third ed.)