Neutral Citation: 2002 ONFSCDRS 99
FSCO A97-001771
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
WAYNE CLIPPERTON
Applicant
and
ZURICH NORTH AMERICA CANADA
Insurer
DECISION ON EXPENSES
Before:
David J. Evans
Heard:
By telephone conference call on March 22, 2002.
Appearances:
Gordon Good for Mr. Clipperton
Ian M. Boundy for Zurich North America Canada
Issues:
The Applicant, Wayne Clipperton, was injured in a motor vehicle accident on February 8, 1996. In a decision dated December 29, 2000, I dealt with his claims for statutory accident benefits under the Schedule.1 I ordered that Mr. Clipperton was entitled to receive income replacement benefits (IRBs) based on a gross annual income from employment of $15,331.17. I reserved the issue of expenses.
The issue in this further hearing is:
- What are the expenses to which Mr. Clipperton is entitled in respect of this arbitration hearing, pursuant to s. 282(11) of the Insurance Act, R.S.O. 1990, c. I.8?
Result:
Mr. Clipperton is entitled to expenses incurred in the arbitration of $36,098.46 less the amount of $30,503.20 already paid by Zurich.
The GST owing on disbursements, if any, still has to be determined.
EVIDENCE AND ANALYSIS:
Background:
Mr. Clipperton was injured in a motor vehicle accident on February 8, 1996. He applied for and received IRBs pursuant to the Schedule. These were terminated on December 31, 1996. After mediation failed, Mr. Clipperton's former solicitor filed for arbitration on October 28, 1997. The arbitration was delayed as Mr. Clipperton underwent a discectomy on January 16, 1998. The arbitration, originally scheduled for December 14, 1998, was adjourned at the former solicitor's request to November 8, 1999, and then further adjourned to May 9, 2000. The former solicitor brought a motion and was removed as solicitor of record as of February 24, 2000. Mr. Good, Mr. Clipperton's current solicitor, assumed carriage of the file April 17, 2000, that is, less than a month before the start of the hearing.
Mr. Good explained in his Factum that he incurred the expenses because of the nature of the issues in dispute. These issues were the amount of the IRBs, based on Mr. Clipperton's gross annual income from employment before the accident, and disability. However, Mr. Clipperton, self-employed as a taxi driver, had incomplete income and expense records to support his claimed pre-accident income. Furthermore, Mr. Clipperton's prior medical complaints complicated the issue of the source of his disability. Accordingly, once retained, Mr. Good obtained outstanding productions, medical assessments, and a forensic accountant's opinion. He also contacted and interviewed witnesses, and on April 28, 2000, Zurich advised him that it planned to call four expert witnesses.
The arbitration commenced on May 9, 2000 as scheduled, and over the first two-and-a-half days Mr. Good called witnesses on the issues of disability and quantum of weekly benefit. Counsel for Zurich did not want to start his cross-examination of Mr. Clipperton at that point, so the cross-examination and the rest of the evidence was adjourned to September 5, 2000 for a further four days.
During the interim, Mr. Good obtained a further opinion from the forensic accountant. He also brought a motion on August 11, 2000 for interim benefits limited to disbursements, which I granted on August 22, 2000 in the amount of $8,503.20.
On the morning of the resumption on September 5, 2000, Zurich conceded the disability issue. The hearing proceeded over three days solely on the issue of the IRB amount.
On September 26, 2000, after the hearing concluded, Zurich forwarded $61,989.78 based on its assessment of the weekly IRB amount. In my order dated December 29, 2000, I increased that amount and Zurich subsequently forwarded a further $16,675.61 on March 15, 2001.
Mr. Clipperton appealed my findings on the IRB amount. The appeal was denied.2 Both parties were ordered to pay their own expenses.
The total for expenses and disbursements claimed by Mr. Clipperton in this bill is $30,854.33. Zurich has paid $22,000. In addition, it paid $8,503.20 pursuant to my earlier order for interim disbursements.
Zurich disputes the hourly rate and the total amount of hours claimed by Mr. Clipperton. It also disputes some individual disbursements. In general, it submits that the hearing was neither quick nor inexpensive, contrary to the principles set out in the Dispute Resolution Practice Code, Third Edition (DRPC).3
Hourly rate and total hours claimed:
Mr. Clipperton claims 141.9 hours in total for Mr. Good's time at $150 an hour. He also claims 21 hours for a law clerk's work at $35 an hour. However, I have noticed an initial error in calculation. The clerk work for May 4, 2000 appears to have been added to Mr. Good's time (see Appendix 1). Therefore, I find that at most Mr. Clipperton can claim 139.9 hours for Mr. Good, which at $150 an hour totals $20,985. The law clerk's 23 total hours at $35 an hour equal $805. The total fee claimed should be $20,985 and not the $22,020 set out in the Schedule of Expenses.
Rule 76.1 provides that the maximum amount I may award Mr. Clipperton for legal fees should be calculated using "the hourly rates established under the Legal Aid Act4 for professional services in civil matters before the Ontario Court (General Division)"5 as adjusted for an experience allowance.6 However, Rule 76.1 further provides that "where an adjudicator is satisfied that a higher amount for legal fees to an insured person7 is justified, an hourly rate of up to $150 may be awarded."
Mr. Good was called to the Bar in 1982 and, according to the factum, "practices almost exclusively in the area of personal injury litigation including claims for Accident Benefits ... and is a member and director of the Ontario Trial Lawyers' Association." Zurich submitted that Mr. Good's services did not require the maximum rate and that they should be valued at $83.75 per hour (based on the experience allowance).
Mr. Clipperton cited a number of principles in favour of a higher amount for his legal fees, starting with Mr. Good's years of practice and experience.8 Thus, in Tustin,9 Arbitrator Palmer found that the maximum rate can be awarded "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" in order to facilitate access to justice.
Zurich submitted that Mr. Good took too long to complete the hearing and that the matter was not complex. I consider the number of hours claimed below, where in general I find that Mr. Good has not made excessive claims for his preparation for and attendance at the hearings. Furthermore, the matter was made more complex due to Mr. Clipperton's documentation problems and pre-existing condition. As pointed out by Mr. Good, Mr. Clipperton's disability was not conceded until the start of the second half of the hearing, and only then after Mr. Clipperton successfully moved for interim expenses. In any event, I find that the length and complexity of the hearing do not detract from the principle set out by Arbitrator Palmer.
Mr. Clipperton submitted that "limiting an award of costs to the Legal Aid hourly rate should be done in order to discourage frivolous and vexatious claims, but not to limit those claims brought in good faith, with serious issues to be tried." This appears to be an extension of the discussion in Reid,10 where Arbitrator Blackman noted that subsection 282(11) of the Insurance Act seeks a balance between providing "an accessible system of dispute resolution to those who bring claims in good faith" and deterring "those claimants who bring, for example, frivolous, vexatious or abusive proceedings." I find there has been a general tendency to allow increased hourly rates for experienced counsel, and I do not find support in recent cases for the principle that only very rarely should a representative receive the highest rate. I also take note that the current rate has not been increased for 15 years, that criminal lawyers are protesting the rate by taking various actions, and that they are seeking an increase to $100 to $125 an hour.11 Accordingly, I find that the minimal Legal Aid hourly rate should be more the exception rather than the norm when setting the rate for an experienced counsel acting for an insured.
I find that Mr. Good is an experienced counsel. I find that he pursued his client's case vigorously. I find that the case he had to present was not as simple as Zurich suggests. I find that the issues were clearly of importance to Mr. Clipperton. I find that Mr. Good's actions such as bringing his motion for interim expenses ultimately shortened the hearing. I find it significant that Mr. Good was retained only one month before the hearing and nonetheless proceeded expeditiously and successfully. Accordingly, I find that Mr. Clipperton is entitled to receive the maximum hourly rate of $150 for Mr. Good's services.
I will now turn to the total number of hours claimed by Mr. Clipperton for Mr. Good's services. The legal fees and disbursements that may be awarded are set out in the Dispute Resolution Expenses Schedule (DRES) to section 12 of the Expense Regulation.12 Subsection 12(2) of the Regulation sets out a number of criteria an arbitrator must consider in determining entitlement to expenses. However, subsection 3(2) of the DRES also requires me to consider those same criteria when determining the number of hours for which legal fees may be awarded.13 Based on the submissions of the parties, I find that the most relevant criteria are numbers 1, 2, 4 and 6:
Each party's degree of success in the outcome of the proceeding.
Conduct of the insurer or 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.
The degree of complexity, novelty or significance of the factual or legal issues raised in 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.
Regarding criterion 1, Mr. Clipperton was successful in the proceeding. As already noted, Zurich eventually conceded his disability. Although I did not award as much as Mr. Clipperton claimed for IRBs, I did award an amount higher than that calculated by Zurich. I find that in general Mr. Good's efforts in obtaining these results deserve to be rewarded.
Regarding the other criteria, Zurich essentially submitted that Mr. Good's total number of hours were excessive. However, I find that criterion 2 has a neutral effect between the parties in this case because both parties took hearing time that eventually proved unfruitful for them: Mr. Clipperton had to respond to Zurich's denial of his disability during the first set of hearing days, and Zurich had to respond to Mr. Clipperton's claim for increased benefits based on unreported income.
Regarding criterion 4, Zurich submitted that Mr. Good devoted too much time to the case in light of its complexity. However, I find that Mr. Good had to prepare for the disability issue, where the evidence showed that Mr. Clipperton had pre-existing problems. Regarding the unreported income issue, as noted in the appeal decision: "This is an ambitious claim, one that, by its nature, attracts close scrutiny." However, in addition to retaining the forensic accountant, Mr. Good presented evidence by lay witnesses that deserved to be reviewed.14 I find that the issues were sufficiently complex to require considerable effort on Mr. Good's part, as reflected in the success he achieved in a difficult case.
Regarding criterion 6, Zurich submitted that the hours Mr. Good worked before he was formally retained on April 17, 2000, should be removed. By my calculation, these total 8.1 hours. However, Zurich provided no legal basis for me to deny these hours. Zurich also submitted that Mr. Good could not claim to be an expert counsel and at the same time claim research time "to get up to speed." However, by my calculation, he devoted seven hours to research prior to the interim benefit motion. This does not appear to be time devoted to simply learning how our system works.15 I find that it is not incompatible for an expert lawyer to need to do research. Zurich also submitted that Mr. Good claims for too many hours over the summer between the sets of hearing days. However, it was during this period that he prepared for and brought the interim motion and also developed the evidence for the increased IRB claim. I find these extra hours were warranted.
Accordingly, I find that Mr. Clipperton is entitled to 139.9 hours for Mr. Good, which at $150 an hour totals $20,985, and 23 hours for the law clerk, which at $35 an hour equals $805. The total fee allowed is $21,790 plus GST at 7 per cent of $1,525.30, for a total of $23,315.30.
Individual disbursements:
Mr. Clipperton agreed that the amount claimed for MacDonald & Bryant's medical report should be reduced by $30 to $1,500.
Mr. Clipperton claims $2,900 paid to Marcus & Associates for the accountant's report for arbitration. Zurich noted that subsection 5(5) of the DRES allows a maximum of $1,500 for the preparation of an expert's report. However, Mr. Good noted that these experts provided more than one report and that the first report dealt with Zurich's use of a mistaken tax rate and whether or not employment insurance premiums can be included in income. I allow the expense as claimed.
Mr. Clipperton claims $1,925 paid to Dr. Finestone for preparation for and attendance at the arbitration. Zurich disputed the total, but that amount was already ordered in my interim expense order. It is allowed as it stands.
Mr. Clipperton claims $1,200 for the attendance of Dr. Tham at the arbitration. Zurich noted and I agree that he did not attend to give evidence. That amount is excluded.
Mr. Clipperton claims $1,050 for Dr. Hugh Barr’s preparation for the arbitration. Zurich noted that, as stated already, the maximum allowable for preparation is $500. I allow $500, for a deduction of $550.
Mr. Clipperton claims $217.48 paid to Mastercard for telephone costs for arbitration. As I understand it, this appears to have been incurred because Mr. Good was out of the country and charged the calls to his card. While DRES 4.1 allows disbursements for "long distance telephone, facsimile and other telecommunication charges," I do not find it reasonable for the Insurer to pay such expenses simply due to counsel travelling. That amount is also deducted.
Mr. Clipperton claims almost $1,100 for photocopying costs, including $496.38 paid to the Corporate Imaging Centre and $596.75 "Paid for Photocopies." Mr. Good advised that the amounts were based on a 25 cents-per-page rate. Zurich submitted that the rate should be closer to 5 cents. However, it provided no evidence. I note that Zurich's objections to these disbursements were only raised on the day of the expense hearing, contrary to the provisions of the DRPC. Accordingly, in the circumstances, I find that the burden was on Zurich to prove that a lower rate was appropriate, which it has not done. I allow the full rate.
Mr. Clipperton had claimed $14,780.64 in disbursements. The deductions I have ordered total $1,997.48, leaving $12,783.16. In addition, Zurich has already paid $8,503.20 towards disbursements. Accordingly, I find Mr. Clipperton entitled to $4,279.96 in disbursements.
Mr. Clipperton has also claimed GST on these disbursements. However, a number of the disbursements include items such as conduct money or the application for mediation; I doubt that GST applies to these items. Further, most of the other disbursements are at the maximum allowed under the DRES. The DRES does not allow those amounts plus GST; once the maximum is reached, no further amount is payable. In addition, some disbursements already have GST added. Mr. Clipperton will have to recalculate the GST payable, if any, on the disbursements.
Accordingly, the calculation of the total expenses is as follows:
TIME SPENT:
Solicitor: 139.9 hrs x $150.00/hr
$20,985.00
Law Clerk: 23 hrs x $35.00/hr
$805.00
Total Fee:
$21,790.00
GST of 7%
$1,525.30
TOTAL:
$23,315.30
$23,315.30
Disbursements allowed:
$12,783.16
TOTAL EXPENSES AND DISBURSEMENTS:
$36,098.46
Amount already paid on disbursements:
$8,503.20
Amount owing:
$4,279.96
$4,279.96
GST on disbursements:
to be determined
Total determined amount:
$27,595.26
Amount already paid by Zurich:
$22,000.00
Amount currently owing:
$5,595.26
June 25, 2002
David J. Evans Arbitrator
Date
Neutral Citation: 2002 ONFSCDRS 99
FSCO A97-001771
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
WAYNE CLIPPERTON
Applicant
and
ZURICH NORTH AMERICA CANADA
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Mr. Clipperton is entitled to expenses incurred in the arbitration of $36,098.46 less the amount of $30,503.20 already paid by Zurich.
GST owing on disbursements, if any, still has to be determined.
June 25, 2002
David J. Evans Arbitrator
Date
APPENDIX
DATE
SERVICE PERFORMED:
LAWYER
CLERK
22-Feb-00
Receipt of file etc
2.4
23-Feb-00
Office consultation client
0.8
31-Mar-00
review file for arb
0.5
02-Apr-00
review file for arb
2.3
07-Apr-00
review file for arb
1.9
11-Apr-00
office consult; review docmts
0.2
17-Apr-02
hours worked up to time retained
8.1
20-Apr-00
review file; call witnesses
2.7
21-Apr-00
review file for arb
4.6
24-Apr-00
review file for arb
7.8
01-May-00
telephone talks with experts
0.8
02-May-00
review file for arb
2.0
03-May-00
witness discussion; prep
2.6
03-May-00
correspondence
1.0
04-May-00
doc prep clerk
2.0
05-May-00
call arb; meet witness
4.1
07-May-00
arb prep; meet client
6.9
08-May-00
doc prep clerk
6.0
08-May-00
review file; meet witnesses
9.2
09-May-00
prep for arb
0.8
09-May-00
attend arb
9.0
10-May-00
consult expert; attend arb
8.6
11-May-00
prep for arb and attend
5.1
16-May-00
consult FSCO etc
0.6
17-May-00
call counsel, adjuster
0.5
25-May-00
research; write Ins; call client
0.3
26-May-00
prep for continuation of arb
0.6
12-Jun-00
doc prep clerk
7
13-Jun-00
conducting research
1.5
21-Jun-00
correspondence
0.2
22-Jun-00
review file; meet witnesses
0.6
23-Jun-00
consult expert
0.1
26-Jun-00
consult client
0.5
27-Jun-00
consult client, expert
0.2
30-Jun-00
consult client, expert
3.0
18-Jul-00
consult expert
0.2
25-Jul-00
consult expert; call adjuster
1.4
27-Jul-00
research; reply to interim exp
4.0
28-Jul-00
research
0.3
11-Aug-00
prep motion interim exp
0.8
17-Aug-00
consult adjuster
0.8
22-Aug-00
prep arbitration
0.9
23-Aug-00
expert; review file; meet client
7.0
24-Aug-00
call counsel, prev counsel, witnesses
3.5
24-Aug-00
prep arbitration
1.8
25-Aug-00
prep arbitration
0.5
26-Aug-00
Research
1.2
28-Aug-00
doc prep clerk
8
04-Sep-00
review file; meet witnesses; prep
8.5
05-Sep-00
attend arb; consultations
10.1
06-Sep-00
attend arb; prep
10.3
07-Sep-00
prep argument; attend arb
5.6
12-Sep-00
corresp to adjuster; consult expert
0.7
28-Sep-00
review file; corresp to adjuster
0.3
14-Oct-00
corresp to counsel etc.
0.6
139.9
23
at $150 an hour $20,985.00
$35 an hour $805.00
Total fee: $21,790.00
GST $1,525.30
Mr. Clipperton submits that the arbitrator provided inadequate reasons for his conclusion. In particular, the decision makes no reference to the testimony of Jim Clipperton and George Walker ... An arbitrator's reasons must be sufficient to explain why he rejected the main evidence presented by the unsuccessful party. The arbitrator's reasons fell short of the ideal." [footnotes in original omitted]
Footnotes
- The 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.
- Clipperton and Zurich Insurance Company, (FSCO Appeal P 01-00008, August 24, 2001)
- The Third Edition of the DRPC applies to this hearing: see Rule 1.6(b) of the Fourth Edition, which came into effect on May 31, 2001. Rule 1.1 of the Third Edition reads: "These Rules will be broadly interpreted to produce the quickest, most just and least expensive resolution of the dispute." The very similar Rule 1.1 of the Fourth Edition reads: "These Rules will be broadly interpreted to produce the most just, quickest and least expensive resolution of the dispute." Presumably, the swapping from "quickest, most just" to "most just, quickest" is to reinforce our primary goal of reaching a just result. However, in either rule, "least expensive" comes last in the order.
- Now the Legal Aid Services Act, 1998, S.O. 1998, c. 26
- The names of the Ontario Court (General Division) and Ontario Court (Provincial Division) changed effective April 19, 1999. These changes were made under Part IV of the Courts Improvement Act, 1996, which was proclaimed on that date. The Ontario Court (General Division) has been renamed the Superior Court of Justice.
- Paragraphs (a) and (b) of Rule 76.1.
- Thus, the higher amount is not available to the insurer.
- Chafe-Moote and Prudential of America General Insurance Company (Canada), (FSCO A99-000016, June 15, 2000); Oppedisano and Zurich Insurance Company, (FSCO A99-001137, February 11, 2000); Slater and Loyalist Insurance Company, (FSCO A00-000358, January 29, 2001).
- Tustin and Canadian General Insurance Group, (FSCO A97-001209, February 21, 2000)
- Reid and Royal SunAlliance Company of Canada, (FSCO A99B000959, November 30, 2001)
- Jane Sims, "Protest to silence courthouse," The London Free Press, June 10, 2002, p. A3.
- O. Reg. 664, as amended by O.R. 464/96.
- DRES 3(2): The number of hours for which legal fees may be awarded shall be determined by the arbitrator, having regard to the criteria set out in subsection 12 (2) of this Regulation.
- As noted in the appeal decision:
- Even that may be compensable.