Background:

James Tustin was injured in a motor vehicle accident on August 23, 1994. In a Decision, dated December 30, 1998, I made the following orders:

Canadian General Insurance Group shall pay Mr. Tustin income replacement benefits of $457.33 per week from August 30, 1994 to August 23, 1996.
Canadian General Insurance Group shall pay Mr. Tustin LEC benefits of $463.91 per week, based on a PEC of $515.45, from August 23, 1996, ongoing.
Canadian General Insurance Group shall pay Mr. Tustin attendant care benefits of $413.33 per month from July 1, 1997, until the report of the attendant care DAC is received.
Canadian General Insurance Group shall pay Mr. Tustin $503 in unpaid supplementary medical and rehabilitation benefits.
Canadian General Insurance Group shall pay Mr. Tustin interest on amounts outstanding, according to the provisions of section 68 of the Schedule and shall have credit for all amounts paid to date for IRBs, LECs and attendant care.
Canadian General Insurance Group shall pay Mr. Tustin a special award, according to the provisions of section 282(10) of the Act, on the difference in the attendant care benefit between the amount awarded ($413.33 per month) and the amount paid ($262.50 or $271.25, depending on the month), from July 1, 1997, of 25 percent of the amount to which Mr. Tustin is entitled, together with interest on all amounts owing to him (including unpaid interest) at 2 percent per month, compounded monthly, from August 1997 as the benefits became payable under the Schedule.

Subsequently, after an appeal by Canadian General, paragraphs 1 and 2 of my order were rescinded, with the following paragraphs substituted:

Canadian General Insurance Group shall pay Mr. Tustin income replacement benefits of $366.08 from August 30, 1994 to August 23, 1996.
Canadian General Insurance Group shall pay Mr. Tustin loss of earning capacity benefits from August 23, 1996, at the rate of $366.08 per week based on a pre-accident earning capacity of $406.76, less any amounts already paid. This order is subject to the reviews established in sections 33, 35 of the SABS-1994.

In my decision of December 30, 1998 I reserved my decision on the issue of expenses. The Insurer now concedes that Mr. Tustin is entitled to his expenses, but the parties cannot agree about the amount that should be paid.

The Insurer accepts some of the amounts claimed. These include the filing fee for arbitration, long distance telephone charges, postage, mileage and parking, on-line research, agency fees, delivery and service, conduct money paid to three witnesses, service of summons, and expert fees of two witnesses.

The Insurer disputes the rate to be paid for Michael F. Head, barrister, for attendance at the arbitration hearing. His time is claimed at $150 per hour. Canadian General also disputes that law clerk Marysia Colvin's attendance was required at the hearing, although it accepts the rate claimed of $23 per hour as appropriate.

Canadian General also disputes both the amount of time claimed by Mr. Head in preparation for the hearing (45 hours), as well as the hourly rate claimed (again $150). In addition, it disputes that it should pay for 115 hours of the clerk's time in preparation for the hearing.

Turning to disbursements, Canadian General disputes $341.40 charged for photocopies (at $0.25 per page), $101.70 charged for facsimile charges (at $0.30 per page), travel expenses for Mr. and Mrs. Tustin billed at $31.50, and $254.23 characterized as "accommodation" expense.

Submissions with respect to Counsel and Clerk's Time:

In support of his contention that Mr. Tustin's counsel is entitled to a rate of $150 per hour, the Applicant submitted that Mr. Head was called to the bar in 1976, is an experienced counsel, certified as a specialist in civil litigation by the Law Society, who was President of the Advocates' Society in 1998-99. The Applicant is claiming only 45 hours of preparation time for Mr. Head in an arbitration hearing that the Insurer accepts lasted 26.75 hours. This is a ratio of less than two hours of preparation per hour of hearing time. The Applicant submitted that some decisions on expenses have allowed ratios of four or even five times.

The Applicant submitted that the bulk of the preparation for the hearing was done by Marysia Colvin, the law clerk who also attended the hearing. The Applicant submitted that Ms. Colvin knew where the required documents could be found amongst several cartons, and that her presence was necessary to insure the smooth running of the hearing. The Applicant also submitted that although a considerable amount of time was spent by Donald I. Harvey, barrister, both at the hearing and in preparation for the hearing, none of Mr. Harvey's time was being claimed as an expense in the proceeding for which payment was requested of the Insurer.

The Insurer submitted that the presumption underlying the provision of expenses, found in Rule 76 of the Code is that reimbursement is at the "legal aid rate." Canadian General submitted that this was not a case that merited the maximum hourly rate, nor the most senior counsel, particularly with respect to the hours of preparation. Canadian General also disputed the time spent by Mr. Head meeting with his law clerk. The Insurer felt that the clerk's preparation time claimed of 115 hours was extraordinary, in that it translated into full-time work for some three weeks.

Decision on Counsel and Clerk's Time:

Rule 76.1 of the Code establishes that the maximum amount that can be awarded to an insured person or an insurer for legal fees is an amount calculated using the hourly rates established under the Legal Aid Act, adjusted, in the case of lawyers, according to their years of experience. However, the rule goes on to say:

...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.

This provision was added to the third revision of the Code in April 1997. On its face, it plainly applies only to insured persons' counsel, not counsel for insurers, where an insured person is ordered to pay the legal fees of the insurer.¹ I believe this provision was inserted in the regulation and the rules in recognition of the fact, of which I take notice, that the very modest rates accorded under the Legal Aid Act do not approximate the hourly rates charged by counsel to their private clients of moderate means. Accordingly, even if an applicant were to be wholly successful on an arbitration, since the claim is often one of modest value, given the high cost of legal representation, his success could be pyrrhic-- or a victory won at too great a cost to be of use.

In order to award the $150 hourly rate an adjudicator need only be "satisfied" that a higher amount for legal fees is "justified." In my view, the $150 hourly rate can be awarded equally in circumstances where the claim is complex and requires superior skills of representation or in circumstances where an experienced advocate has attended on a hearing, leaving a sizeable gap between his or her fees per hour and the hourly rates accorded under the Legal Aid Act. This provision facilitates access to justice for all applicants and their access to experienced counsel.

In this case, Marysia Colvin, a law clerk, was largely responsible for the preparation for the arbitration hearing held over four days, or about 26.75 hours. I had the opportunity to observe Ms. Colvin in the hearing and consider that her attendance was most useful, perhaps even indispensable, as Mr. Harvey submitted. It was obviously an effective allocation of financial resources for Ms. Colvin to spend more hours preparing for arbitration, leaving consultation with Mr. Head and his personal preparation to less than one-third of Ms. Colvin's time spent in preparation for the hearing. Some of the issues at the hearing were novel. Further, the issues in dispute were of considerable importance to the Tustins, since Mr. Tustin sustained a permanently disabling injury and the amount and entitlement to a pension that could be payable for his lifetime, called a loss of earning capacity benefit (LECB), was in issue. The attendant care issue was also an issue of ongoing importance to the Applicant and his family.

The amount claimed for Mr. Head's time in preparation for the hearing is $6,750 based on 45 hours at $150 per hour. The amount claimed for Ms. Colvin's time is $2,645 based on 115 hours at $23 per hour. Taken together, on a global basis, I am satisfied that each claim is justified and award the amounts claimed.

The amount claimed for Mr. Head's time in attendance at the hearing is $4,012.50 based on 26.75 hours at $150 per hour. The amount claimed for Ms. Colvin's time is $615.25 based on 26.75 hours at $23 per hour. I am satisfied that each claim is justified and award the amounts claimed.

Disbursements:

With respect to the photocopies and facsimile charges, done in-house at the Applicant's solicitors offices, the Insurer's counsel submitted that there was some duplication in photocopying because no discussions were held about the production of a joint brief. I applaud every effort by counsel and their staff to produce joint briefs of documents. In this case, however, I will not visit the failure of both parties to prepare a joint brief entirely on Applicant's counsel's claims for photocopying expense. I find the amount claimed is reasonable and justified, given the amount of documentary evidence presented at the hearing. The charges for facsimile are more modest and I allow them, both because they qualify under paragraph 4 (1.) of Schedule F to the Code, and because they appear in lieu of claims for postage and courier expenses, the latter of which are minimal in this account.

The travelling expense of Jim and Karen Tustin for the hearing, set out as $31.50, is allowed, following the provisions of paragraph 6(2)(b) of Schedule F to the Code. The amount represents less than 30 cents per kilometre per return trip from the Tustin's home in Pickering to the site of the hearing in Whitby.

$254.23 is claimed for the cost of a witness room or retiring room at the hearing site. The hearing was held, by agreement between the parties, at a hotel in Whitby. I do not know how that arrangement was concluded, or who paid for the hearing room. A reporter was in attendance at the hearing, and the cost of the hearing room may have been included in the reporting charges. Mr. Tustin was not able to be in attendance during the whole of the hearing; he required a place to rest, intermittently. In my view, in the unique circumstances of this hearing, a charge representing the cost of a room where he could rest is sustainable under paragraph 4 (4.) of Schedule F to the Code that is "for other out-of-pocket expenses incurred in furtherance of the arbitration ... hearing." I find that the applicable charge is $75.00 plus $5.25 GST per day or $240.75.

In summary then,

Legal Fees:

For attendance at arbitration hearing

Michael F. Head

26.75 hours @ $150

$4,012.50

Marysia Colvin

26.75 hours @ $ 23

615.25

For preparation for arbitration hearing

Michael F. Head

45 hours @ $150

$6,750.00

Marysia Colvin

115 hours @ $ 23

2,645.00

Total legal fees

$ 14,022.75

GST

981.59

Total legal fees and GST Other Expenses:

$15,004.34

Filing Fee - Application for Arbitration

$100.00

Long distance telephone

5.12

Photocopies

341.40

Facsimile

101.70

Postage

2.25

Mileage and Parking

27.50

on-line Research

68.53

Mileage - Mr. and Mrs. Tustin attend hearing

31.50

Agency fees, deliveries and service

70.00

Witness/retiring room at hearing

240.00

Subtotal other expenses

988.75

Witness fees and expert fees

1,520.64

Service of summons

340.00

Total other expenses

$2,849.39

GST on other expenses

86.96

Subtotal other expenses

$2,936.35

TOTAL:

$17,940.69

ASSESSED and ALLOWED at this 21st day of February 2000.

$17,940.69

K. Julaine Palmer

Arbitrator

Neutral Citation: 2000 ONFSCDRS 39

FSCO A97-001209

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JAMES TUSTIN

Applicant

and

CANADIAN GENERAL INSURANCE GROUP

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, I order:

Canadian General Insurance Group shall pay Mr. Tustin's arbitration expenses in the total amount of $17,940.69.

February 21, 2000

K. Julaine Palmer

Arbitrator

Date

Footnotes

See, for example the Assessment of Expenses of Arbitrator Seife in Nguyen and Kingsway General Insurance Company, (FSCO A98-000673, September 29, 1999), a letter decision.

James Tustin v. Canadian General Insurance Group, 2000 ONFSCDRS 39

Case Summary

Background:

Submissions with respect to Counsel and Clerk's Time:

Decision on Counsel and Clerk's Time:

Disbursements:

Footnotes