Pius Boniface v. Liberty Mutual Insurance Company, 2002 ONFSCDRS 114

Neutral Citation: 2002 ONFSCDRS 114

FSCO A97-002106

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PIUS BONIFACE

Applicant

and

LIBERTY MUTUAL INSURANCE COMPANY

Insurer

ASSESSMENT OF EXPENSES

Before:

Joyce Miller

Heard:

By telephone conference call on June 21, 2002.

Appearances:

David S. Wilson for Mr. Boniface

Pamela Brownlee for Liberty Mutual Insurance Company

Issues:

The Applicant, Pius Boniface, was injured in three motor vehicle accidents on June 30, 1995, April 12, 1996 and September 15, 1996. In a decision dated March 12, 2002, I dealt with his claims for statutory accident benefits under the Schedule¹ Mr. Boniface was not successful on all issues claimed at the arbitration. The results were as follows:

1. Mr. Boniface is not entitled to receive income replacement benefits as a result of the April 12, 1996 and September 15, 1996 accidents.

2. Mr. Boniface is not entitled to a loss of earning capacity benefit offer pursuant to s.20 of the Schedule with respect to either the April 12, 1996 or September 15, 1996 accidents.

3. The date from which Mr. Boniface is entitled to be paid his LECB is April 12, 2001.

4. Mr. Boniface is not entitled to a special award.

Despite the fact that Mr. Boniface was not successful in his claim I nevertheless awarded him his expenses for the following reasons:

Although Mr. Boniface was not successful in this arbitration I, nevertheless, find that Mr. Boniface had legitimate claims to dispute that entitled him to apply for arbitration. Mr. Boniface raised novel issues that involved complicated legislation that had not been considered in previous decisions. Mr. Boniface presented his case in a timely manner and did not unnecessarily prolong the proceedings. As well, issues that could have been settled were settled prior to the arbitration.

Liberty Mutual does not dispute the amount of Mr. Boniface's disbursements ($2,179.06), nor does it dispute the hourly rate of $150 claimed for legal fees. It does, however, dispute the amount of time Mr. Boniface is claiming for his counsel's legal fees.

The issue in this further hearing is:

1. What is the amount of expenses for legal fees to which Mr. Boniface is entitled to in respect of this arbitration hearing?

Result:

1. Mr. Boniface is entitled to his arbitration expenses of $11,745, plus GST.

Submissions:

Mr. Boniface claims that he is entitled to be paid his legal fees for 90.5 hours of work performed by his counsel (which includes 2.5 hours of preparation of his account and attendance at the assessment hearing). Liberty Mutual's position is that the amount of hours claimed is excessive based on the fact that the arbitration hearing lasted only one day.

Liberty Mutual's Submissions

First, Liberty Mutual submits that Mr. Boniface's claim of 10 hours attendance at the hearing is unreasonable. It submits that at the most this one-day hearing lasted 8 hours. It therefore submits that 8 hours is the maximum that Mr. Boniface should be entitled to.

Second, Liberty Mutual disputes Mr. Boniface's claim of 33 hours for preparing for the hearing. It submits that it is reasonable in the circumstance of this case to allot 2 hours preparation for each hour of attendance at hearing. Accordingly, it submits that Mr. Bonifice should only be entitled to 16 hours for preparation.

Third, Liberty Mutual submits the amount of time claimed for written submissions is excessive. It submits that the time of 15.8 hours claimed for written submissions should be reduced by 50 percent and that the reply submission should be reduced from 5 hours to 4 hours.

Fourth, Liberty Mutual submits that Mr. Boniface's claim of 24.2 hours for 121 letters at .2 hour (12 minutes) per letter is excessive. Liberty Mutual pointed out that its counsel had sent out about 60 letters at the rate of .1 hour (six minutes). This amounts to a total of 6 hours.

Liberty Mutual submits that Mr. Boniface in his Bill of Costs is claiming the same amount of hours that he claimed in his counsel's dockets. Liberty Mutual submits that as a rule applicants at arbitration who are awarded their expenses are not entitled to a full payment of their actual legal fees, but are only meant to be indemnified for some of their reasonable costs. Taking this rule into consideration and based on the above submissions Liberty Mutual submits that in total Mr. Boniface should only be entitled to 42 hours for his legal fees.

Mr. Boniface's Submissions

First, Mr. Boniface submits that he agrees that attendance at the hearing was 8 hours. The additional 2 hours that were claimed should be attributed to the further preparation that his counsel did on the same day of the hearing before it began.

Second, Mr. Boniface submits that the ratio guide of hours of preparation that is tied to hours of attendance at the hearing is not reasonable in this case. Specifically, he submits that an issue regarding housekeeping was settled a few days prior to the hearing. He submits that besides his testimony on this issue, there were to be three other witnesses who had to be prepared by his counsel. Two of the witnesses, his parents, did not speak English very well, and interviewing them took time. Mr. Boniface submits that if this issue had gone to arbitration, the hearing would have taken one and a half days longer. Mr. Boniface submits that he should not be deprived of his expenses for the preparation of this issue, even thought it was settled just before the hearing began.

Moreover, Mr. Boniface submits that the issues dealt with at the hearing were complex. He submits that the issues involved matters that had never been previously litigated and for which there were no precedent cases. He submits that these novel issues required more preparation than the usual case. In fact he submits the ratio guide in this case should be more than 2:1.

Mr. Boniface submits, nevertheless, that if one were to apply the 2:1 ratio of preparation to hearing that Liberty Mutual claimed, then he should be entitled to 40 hours for preparation for a two and a half day hearing. He is only claiming 35 hours.

Third, regarding the written submissions, Mr. Boniface submits that given the complex novel issues that were arbitrated, 15.8 hours is appropriate in this case. He submits that his written submissions were 49 pages in length and referred to a number of cases. He submits it is impossible to prepare this type of submission in 8 hours as Liberty Mutual contends.

With respect to the reply submission, Mr. Boniface submits that 5 hours to prepare 32 pages is reasonable and not the 4 hours claimed by Liberty Mutual.

Fourth, regarding the time spend on correspondence, Mr. Boniface submits it is not surprising that his correspondence file is larger than Liberty Mutual's since an insured must take steps to pull the evidence together from various sources where this obligation may not be the same for the insurer.

With respect to the time allotted to write the letters, Mr. Boniface submits that while some letters may have taken less then .2 hours, others took considerably more, and that .2 was the average.

In conclusion, Mr. Boniface submits that he should not be penalized in the amount claimed for his expenses because of his lack of success at the arbitration. Consideration must be given to the complexity of the matters arbitrated and the fact that they were novel issues, never litigated before. For these reasons he claims his expenses for legal fees in the amount of $13,575 (90.5 at $150 per hour) is reasonable.

The Law:

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

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.

Subsection 12 (2) of the Expense Regulation² provides:

(2) An arbitrator may award expenses to an insurer or insured person under subsection 282 (11) of the Act 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.

In Carr and Lombard General Insurance Co. of Canada,³ Arbitrator Sapin made the following remarks which I agree with:

Arbitrators must consider these legislated criteria and apply them to both parties, having regard to the intent and purpose of the overall statutory scheme. They must balance the applicant's need for access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits with a "relatively mild deterrent to undeserving claims or undesirable behaviour."

The above criteria can also be useful in assessing the amount of expenses.

Under the subsection 282(11) of the Insurance Act,⁴ legal fees may be awarded for all services performed before an arbitration, including preparation for, attendance at and services subsequent to an arbitration hearing.

In Henri and Allstate Insurance Company of Canada,⁵ 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."

Findings:

As noted above, Mr. Boniface was not successful in this arbitration, nevertheless, he was awarded his expenses. In assessing the amount of his expenses I have chosen not to reduce the amount he is claiming based on his lack of success. While in certain circumstances an arbitrator has the discretion to do so, I find in this case it is not applicable. In my view, Mr. Boniface's lack of success was balanced by the fourth criteria in the expense regulations, namely "[t]he degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding."

The issues involved in the arbitration hearing were complex and novel. I agree with Mr. Boniface that more time is needed for preparation and writing submissions on these issues. I also agree that he should be compensated for his counsel's preparation of an issue for arbitration which was settled just before the arbitration. The fact that the housekeeping issue was settled just prior to the arbitration does not take away from the fact that time was spent preparing this issue for arbitration.

The one area that I agree with Liberty Mutual's submissions is the excessive amount of the expense claimed for correspondence, namely, 24.2 hours. Even if I were to accept Mr. Boniface's submission, that an insured has a greater burden in putting together their case than are typically faced by insurers, I find in this case that 24.2 hours is excessive.

Liberty Mutual submits that its correspondence in this case took a total of 6 hours. If one were to accept Mr. Boniface's submission that his counsel had more correspondence than the Insurer, then doubling the amount of the Insurer's time of 6 hours, 12 hours would be reasonable in this case.

Accordingly, for these reasons I find Mr. Boniface is entitled to his legal fees for 78.3 hours at the agreed rate of $150 an hour for a total amount of $11,745, plus GST.

July 24, 2002

Joyce Miller

Arbitrator

Date

Neutral Citation: 2002 ONFSCDRS 114

FSCO A97-002106

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PIUS BONIFACE

Applicant

and

LIBERTY MUTUAL 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. Liberty Mutual shall pay Mr. Boniface his arbitration expenses of $11,745, plus GST.

July 24, 2002

Joyce Miller

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.
2. 2Ontario Regulation 664, R.R.O. 1990, as amended by O.Reg 464/96 enacted on November 1, 1996
3. 3(FSCO A00-000441, April 12, 2002)
4. 4Ontario Regulation 664, R.R.O. 1990, as amended by O.Reg. 464/96 enacted on November 1, 1996
5. 5Assessment of Expenses (OIC A-007954, August 8, 1997)