Jeffrey Blake v. Jevco Insurance Company, 2000 ONFSCDRS 81

Neutral Citation: 2000 ONFSCDRS 81

FSCO A98-000102

BETWEEN:

JEFFREY BLAKE

Applicant

and

JEVCO INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before:

Suesan Alves

Heard:

By telephone conference call on March 10, 2000.

Appearances:

Robert H. Littlejohn for Mr. Blake

Brian Bangay for Jevco Insurance Company

Jeffrey Blake seeks an assessment of his expenses pursuant to section 77 of the Dispute Resolution Practice Code —ThirdEdition, April 15, 1997 (the "Code"). He also claims a special award. Jevco submits the account is excessive. Jevco made no submissions with respect to the claim for a special award.

The issues in this further hearing are:

What amount is Mr. Blake entitled to be paid as legal fees?
Is Mr. Blake entitled to a special award pursuant to section 282(10) of the Insurance Act, R.S.O. 1990, c. I.8?

Mr. Blake is entitled to be paid legal fees in the amount of $18,180.00 plus GST in the amount of $1,272.60.
Mr. Blake is not entitled to a special award pursuant to section 282(10) of the Insurance Act, R.S.O. 1990, c.I.8.
Mr. Blake is entitled to his expenses for preparation and attendance on the assessment of expenses, fixed at $150.

Jeffrey Blake sustained severe soft-tissue injuries to his right ankle in a motorcycle accident on October 13, 1994. His post-traumatic degenerative arthritis in his right ankle became highly symptomatic following this accident. Mr. Blake applied for arbitration for a determination of the correct amount of his income replacement benefit, pre-accident earning capacity, residual earning capacity, and of his loss of earning capacity benefits, (the IRB, PEC, REC and LEC issues).

He also claimed housekeeping expenses, interest on overdue benefits and his expenses in respect of the arbitration. Jevco disputed all of Mr. Blake's claims and claimed its expenses in respect of the arbitration.

The hearing with respect to housekeeping expenses and a series of motions took place over one and a half days, on July 19 and 20, 1999. Mr. Blake succeeded on his claims for housekeeping expenses, interim income replacement benefits and interest, and partially succeeded on his claim for interim disbursements. I awarded Mr. Blake his expenses.

The Account:

Jevco paid the Applicant's disbursements. Mr. Littlejohn, counsel for the Applicant, submitted his account for fees first to counsel for the Insurer in November 1999, then to Jevco, but had no response. In February 2000, he requested an assessment of expenses. At the assessment, he amended his billing rate to $150 per hour and deleted the amounts claimed in respect of mediation. Counsel for the Insurer agreed that an hourly rate of $150 per hour was appropriate having regard to Mr. Littlejohn's experience. I am satisfied that this is an appropriate hourly rate given the nature of the case and the competent representation provided.

The amended account for legal fees reflects approximately 9.7 hours of hearing time and 111.5 hours of preparation time, plus GST.

Number of hours:

Jevco submitted that counsel for the Applicant should have expended fewer hours given the hearing time of approximately one and a half days, and counsel's experience. Jevco submits the Applicant's account is excessive and that fees in the range of $12,000 to $15,000 would be more appropriate.

An arbitrator determines the number of hours for which legal fees may be awarded having regard to specific criteria set out in section 12(2) of the Regulation, and any other matter the arbitrator considers relevant.¹ In this case, in addition to the specific criteria, I find reasonableness and the circumstances leading up to the hearing to be relevant considerations.

Mr. Blake was assessed by a REC DAC which issued a report that failed to address many of the required issues under section 27(5) of the Schedule. Counsel reached an agreement at the pre-hearing, on certain terms, that Jevco would schedule a further REC DAC with a view to obtaining a report which addressed the requirements of the Schedule. This did not occur. One of the agreed assessors refused to be bound by the terms of the agreement; the other had staffing issues and could not perform the assessment.

As the hearing of July 19, 1999 approached, counsel canvassed the possibility of seeking a consent adjournment to permit the assessment to be conducted. On July 8, 1999, a lawyer in the offices of counsel for the Insurer sent a letter to counsel for the Applicant stating amongst other things: "For the record, we are prepared to proceed to arbitration with the original RECDAC [sic] report." However, at the beginning of the hearing, counsel for the Insurer moved for a stay of the arbitration to allow a further REC DAC to be held. The Applicant opposed the stay.

I refused the stay, but granted an adjournment of the IRB, PEC, REC and LEC issues, so that a REC DAC could conduct an assessment and issue a report which complied with the requirements of section 27(5) of the Schedule. I severed the claim for housekeeping benefits and permitted Mr. Blake to proceed with the hearing on that discrete issue. I also heard the Applicant's motions for interim benefits, interim expenses and interim disbursements.

Counsel for the Applicant submits that based on a letter dated July 8, 1999 from the offices of counsel for the Insurer, he was prepared to proceed with the four day arbitration hearing in respect of all the issues since his client had the burden of proof. On July 9, 1999, Mr. Littlejohn confirmed to counsel for the Insurer that he had instructions from his client to proceed with the arbitration.

I find it was reasonable for counsel for the Applicant to rely on a written representation, made for the record, that counsel for the Insurer was prepared to proceed to the hearing based on the existing REC DAC. I accept that counsel for the Applicant spent time preparing for the arbitration with respect to all of the issues. Mr. Littlejohn's preparation was evident; he made efficient use of the allocated time, and presented the Applicant's case in a focused way.²

However, he was permitted to proceed only on the claim for housekeeping benefits and various interim motions. In the result, there were costs thrown away, and Jevco is obliged to pay those costs.

Jevco submits that some of the amounts relate to preparation for issues which did not take place before me, but have since been heard before another arbitrator. In my view it is not open to Jevco to assert that it may be faced with a similar account following the issuance of the decision with respect to the IRB, PEC, REC and LEC issues. A significant amount of time has been expended in preparation which would have to be repeated. That is the very nature of "costs thrown away."

The criteria specified by the Regulation are:

Each party's degree of success in the outcome of the proceeding.
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.
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.
The degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding.
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.
Any other matter related to the proceeding that the arbitrator considers relevant to the issue of whether an award of expenses is justified.

I have considered that the Applicant was entirely successful on his claims for interim income replacement benefits and housekeeping benefits, and partially successful on his claim for interim disbursements. Counsel for the Applicant advised that Mr. Blake recovered in the vicinity of $48,000 as a result of the various motions and the hearing on July 19 and 20, 1999. Counsel were prepared, which tended to shorten the hearing time. The Insurer called no witnesses and relied on its cross-examination of witnesses called by the Applicant.

The Applicant had the burden of proof. The issues were significant to both parties, and the legislation in relation to the interim income replacement benefits, loss of earning capacity entitlement, assessment and computation is complex. The stay, interim disbursements, interim expenses, and housekeeping expenses issues were of average complexity. Neither party asserted manifestly unfounded positions, or requested consideration of an Offer to Settle. I have reviewed the Applicant's detailed account for fees, and find nothing improper in the time expended.

Frequently, arbitrators have considered it appropriate to assess bills of expenses globally, instead of on a line-by-line basis. In Henri and Allstate Insurance Company of Canada (OIC A-007954, August 8, 1997), Arbitrator Makepeace noted that depending on the circumstances of the case, arbitrators have found a ratio of between one and four hours of preparation time, to one hour of hearing time to be reasonable. In the circumstances of this case, I find that I should consider the anticipated hearing time — approximately 28 hours — in determining what amount of preparation time is reasonable. Given the number and complexity of some of the issues, reasonable preparation time would be at the high end of the above range, and up to 112 hours of preparation time could be considered reasonable. Mr. Blake's bill reflects 111.5 hours of preparation time, and is within the range noted above. I find that Mr. Blake is entitled to be paid $18,180 for fees (111.5 hours of preparation time and 9.7 hours of hearing attendance, for a total of 121.2 hours at the hourly rate of $150). Mr. Blake is also entitled to be paid GST in the amount of $1,272.60.

In the circumstances of this case I also find it appropriate to award a fee for preparation and attendance on the assessment to Mr. Blake, which I fix at $150.

Claim for a special award:

Counsel for the Applicant sent his account to counsel for Jevco on September 23, 1999. Following this, he was contacted by Jevco's adjuster, and forwarded his account to her as well. His requests for payment were ignored. Having received no response to his account, he sought an assessment of expenses on February 9, 2000. He submitted that Jevco unreasonably delayed, and/or unreasonably withheld payment of his account. Counsel for the Applicant advised Jevco of his intention to seek a special award in a letter dated February 28, 2000. His first indication that Jevco took issue with his account came during the teleconference call on the assessment of expenses.

Section 282(10) of the Insurance Act provides:

(10) If the arbitrator finds that an insurer has unreasonably withheld or delayed payments, the arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled under the Statutory Accident Benefits Schedule, shall award a lump sum of up to 50 per cent of the amount to which the person was entitled at the time of the award together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.

Initially the section speaks of unreasonably withheld or delayed "payments." The term "payments," read by itself, is sufficiently broad to encompass a bill of expenses. Arbitrators adjudicate entitlement to and the amount of both benefits and expenses. However, in my view section 282(10) as a whole is directed toward the late payment of statutory accident benefits and interest on those benefits. This is particularly so when one looks at the time from which an award is calculated, namely, from the time the benefits first became payable under the Schedule. I conclude that when the term "payments" is read in the context of the entire section, it does not encompass a bill of expenses. For these reasons I find that section 282(10) does not permit me to make a special award in relation to the unreasonable delay or withholding of payment of a bill of expenses.

Section 77 of the Code sets out the process to be followed in relation to expenses. Section 77.1(b) provides: "the party paying expenses must promptly provide the other party with a written response to the account, identifying the items in dispute and the reasons for the dispute;". Jevco did not comply with its obligations under the Code. In these circumstances, the Applicant's remedy was to promptly request an early date from the Registrar for an assessment of his expenses, following which he could register and enforce the Order by virtue of Rule 64 of the Code.

I find it appropriate to order Jevco to pay Mr. Blake the fees and expenses awarded in this decision by June 2, 2000.

May 2, 2000

Suesan Alves Arbitrator

Date