Neutral Citation: 2003 ONFSCDRS 179
FSCO A02-000493
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
DOLORES STRACHAN
Applicant
and
WAWANESA MUTUAL INSURANCE COMPANY
Insurer
DECISION ON EXPENSES
Before:
John Wilson
Heard:
By telephone conference call on October 24, 2003.
Appearances:
Harvey Dennis for Ms. Strachan
Darrell March for Wawanesa Mutual Insurance Company
Issues:
The Applicant, Dolores Strachan, was injured in a motor vehicle accident on April 28, 2001. In a decision dated February 28, 2003, Arbitrator Wacyk dealt with her claims for statutory accident benefits under the Schedule.1 She made the following orders, while reserving on the issue of expenses:
Ms. Strachan's application for arbitration is dismissed as abandoned.
Ms. Strachan must pay Wawanesa $3,000 pursuant to subsection 282(11.2) of the Insurance Act, because she commenced an arbitration that is vexatious and an abuse of process.
Ms. Strachan is liable to pay Wawanesa's expenses pursuant to subsection 282(11) of the Insurance Act for its expenses thrown away in respect of the arbitration.
The issue in this further hearing is:
- What is the amount of the expenses incurred by Wawanesa in respect of this arbitration hearing that it may recover from Ms. Strachan pursuant to Arbitrator Wacyk's order?
Result:
- Ms. Strachan shall forthwith pay to Wawanesa the amount of $750 as its fixed expenses in this matter.
EVIDENCE AND ANALYSIS:
The criteria for an order of expenses are set out in Rule 75 of the Dispute Resolution Practice Code (the "Code"). Rule 75.1 establishes the jurisdiction of an arbitrator to award expenses, while Rule 75.2 reflects the principles for an award, as set out in the Expense Regulation (Regulation 664, R.R.O. 1990, as amended)
Rule 75.2 of the Code reads as follows:
The adjudicator will consider the criteria referred to in the Expense Regulation found in Section F of the Code. These criteria are:
a) each party's degree of success in the outcome of the proceeding;
b) 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;
c) 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.
d) the degree of complexity, novelty or significance of the factual or legal issues raised in the proceeding;
e) at the request of either party, any written offer to settle made in accordance with Rules 76 and 77, having regard to the outcome of the proceeding;
f) any other matter related to the proceeding that the adjudicator considers relevant to the issue of whether an award of expenses is justified.
The Expense Regulation uses the term "expenses" instead of the more usual word "costs" in the context of a reimbursement of legal expenses incurred by a party to an arbitration. While "costs" generally refers to the practice of providing an allowance to a successful party, based on known scales or tariffs, to indemnify him or her for some of the expenses incurred, "expense" seems to have a more simple meaning. The Canadian Oxford Dictionary describes "expense" as:
1 cost incurred; payment of money. 2 a costs incurred in doing a particular job etc. (will pay your expenses) b an amount paid to reimburse this.
Clearly, the legislature in using the word "expense" meant to indemnify a party for its actual incurred expenses up to any statutory limit.
The Schedule, however, sets very strict limits to the reimbursement of an insurer's expenses, in effect limiting them to legal aid tariff.
In this matter, Arbitrator Wacyk has already ordered Ms. Strachan to pay Wawanesa's expenses.
Rule 79.2(a) of the Code provides that where a party requests an expense order setting out the amounts payable, it shall provide the other party with "an account describing each of the expenses claimed, services received and the costs."
The Code makes it clear that it is incumbent upon a party claiming expenses to serve such a copy on the opposing party well before the date set for the hearing of the issue.
In this case, the Insurer served a copy of its Bill of Expenses on May 28, 2003.
The Bill of Expenses that was served totals some $7,696.28, a somewhat unusual sum for a hearing that lasted, at most, some three hours. As part of this bill Mr. March included compensation for himself at a rate of $150 per hour and $67 per hour for two junior counsel.
Mr. March also included the $3,000 assessment fee as part of his Bill of Expenses.
Arbitrator Wacyk, in her decision, already ordered that Ms. Strachan repay the Insurer’s assessment fee. Claiming the same assessment fee as part of the expenses would result in double recovery by the Insurer. It would also, in any event, be outside the jurisdiction of an arbitrator hearing the issue of expenses.
As well, given that the maximum rate that can be ordered, pursuant to Rule 78 of the Code, for Insurer's counsel is the hourly rate established for legal aid, the Insurer's account is somewhat distant from reality. Mr. March has billed at about twice the legal rate for Insurer’s counsel. In addition, the Bill of Expenses does not specify when the work on the file was done nor in what context the work was performed. Potentially, it could relate to any number of matters, more properly included in mediation or claim adjustment, none of which would be recoverable at arbitration.
It should also be remembered that there is an evidentiary onus upon an insurer to provide some evidence that the amounts claimed are proper, relate to the expense order made by the arbitrator, and are reasonable in the context of an arbitration. The comments of Taxing Officer McBride in Re Solicitors 1972 CanLII 658 (ON HCJ), [1972] 2 O.R. 565-567 are illuminating:
When I pointed out to him that he might have difficulty putting before me the evidence necessary to justify this bill, his response was that he had the file with him and the necessary documents and correspondence were in it. He displayed the normal, very common and utterly indefensible inability to comprehend that the ordinary rules of evidence apply and were intended to apply as much to solicitors as parties to proceedings as to any other group or segment of society. It is with a fascination that is in danger of degenerating into abject admiration that I sit as quietly as I can, day after day, week after week, month after month, and listen to solicitors explain away the failure of the solicitor who actually did the work in question to attend to prove his bill, on the patently implausible ground that, in effect, the rules of evidence do not apply to solicitors as parties to a proceeding, but presumably, they feel satisfied that such rules were designed only for the common herd, the laymen. At the risk of breaking new ground, in fact if not in law, I say that a solicitor seeking to tax his bill against a client, or former client, must prove his bill in the normal way, by offering the best evidence and by being prepared to face the rejection of hearsay evidence.
The parameters for expense claims at the Commission have long been established. Mr. March, as a senior counsel and respected member of the Bar, should be well aware of the nature of such a claim, and the manner in which it should be presented.
The delivery of such a bare-bones of a bill of expenses, and the failure to provide any supporting evidence of its validity reflects poorly on counsel, and does little to advance his client’s case.
The Bill of Expenses in question is in non-compliance with Rule 79.2 of the Code since it fails to fully describe "each of the expenses claimed, services received and the costs." As well, it purports to claim amounts that are beyond the jurisdiction of the arbitrator. In fact, the inclusion of such impossible and unmeritorious claims in the Bill of Expenses can be seen as not merely surplusage but also frivolous and vexatious in its essence as considered in Rule 75.2(c).
Vexatious litigation includes situations where the court has no power to grant the relief sought (see Dreyfus v. Peruvian Guano Co. (1889) 41 Ch.D. 151), or if no reasonable person can possibly expect to obtain relief in it (see Lawrance v. LordNorreys et al. (1888) 39 Ch. D. 213). I find that both these comments apply to items in the Insurer’s Bill of Expenses.
As noted earlier, a precondition for an expense order is the service of a Bill of Expenses that complies with Rule 79.2. It could well be argued that the service of a significantly flawed Bill is no service, and hence no expense order may issue.
Citing with approval a passage by Wright J. in Petty v. Murphy (1926) 1926 CanLII 327 (ON SCHCD), 59 O.L.R. 209, Laidlaw J.A., in Bo/and v. Bunker Hill Extension Mines Ltd. [1944] O.J. No. 28, concluded that a "defect in the sufficiency of a bill cannot be cured by the delivery of particulars after the action is brought, nor does a sufficient description of the services at that time remedy the fault of non-compliance with the statute." In the circumstances of this particular matter, I do not accept such an interpretation.
In the recent case of Tripkovic v. Glober 2003 CanLII 43027 (ON CA), [2003] O.J. No. 1930, the Court of Appeal revisited the question of the sufficiency of a solicitors bill. Gillese J.A. stated that the "cases where generalised bills were not held to be bills for the purposes of time running pursuant to s. 11 have been incorrectly decided." According to him2:
Boland was decided in 1944. In my view, it is time for the test to be revisited. Bills lacking in particulars are not unknown to the practice of law and there are situations, in my view, where a generalised form of Bill is sufficient. In making such comments, it should not be taken that I am suggesting that generalised bills are generally acceptable. Clearly, much legal work is performed in situations where a bill with sufficient particulars is required so that the client is both informed of the services rendered on his or her behalf and able to obtain advice as to the reasonableness and propriety of the bill. Equally clearly, there are situations in which a generalised form of bill is sufficient. What is "sufficient in form" and gives a "reasonable statement or description of the services rendered" is surely dependent upon the context and any new formulation of the test must take that into account.
In the context of this expense hearing there are other factors at play. Rule 1.3 of the Code provides a saving feature for procedural irregularities. Unless the Bill itself is a complete nullity this provision removes mere technical defects from the consideration of whether the Bill was in compliance with the Rule 9.2 pre-conditions.3
I find that, although flawed, the Bill is not a nullity, since its shortcomings could properly have been addressed by a request for particulars.
The Applicant was properly put on notice as to the scale of the expense claim. The Applicant did have time to request further particulars of the billing, but did not. As well, the agent for the Applicant is now prepared to waive any technical non-compliance with the form of the Bill.
I find, therefore, that the Bill of Expenses served by the Insurer was technically sufficient to trigger this assessment hearing. That does not mean, however, that the Insurer has provided any evidence that it is entitled to the monies claimed.
While I accept that the Insurer is entitled to some compensation, and Arbitrator Wacyk has so ordered, it is not entitled to payment based on the bill it has tendered.
This hearing was a "no show." The record indicates that Mr. DeWitt, agent for Ms. Strachan, had not been responding to requests for the production of documents, or for setting up discussions for some time. In fact, Arbitrator Wacyk characterized Ms. Strachan's application as "abandoned."
I have no reason to believe that in these circumstances, over 27 hours of preparation was required by Wawanesa's legal team. As stated, I have absolutely no evidence suggesting that the time expended by counsel was reasonable or even compensable.
I am also faced with a frivolous and vexatious further claim for an assessment fee that has already been ordered by the hearing arbitrator and a claim for a counsel fee that grossly exceeds the maximum permitted by the regulations.
Rather than requiring the parties to incur further expenses in re-drafting and re-filing material, and making further appearances on this matter, I will proceed to fix expenses based on the information contained in the record.
I order that the Insurer's expenses be fixed in the amount of $750, which would cover some three hours hearing time at legal aid rates, its necessary disbursements, together with some time for preparation of both the hearing and pre-hearing. This is significantly less than claimed by the Insurer, but reflects the complete absence of evidence to support the quantum claimed by the Insurer for its expenses and the "double-dipping" with regard to the assessment claim.
Given my findings that several of the claims made in this assessment hearing were unfounded and vexatious, and my comments on the shortcomings of the Bill, as well as the total lack of supporting evidence, I make no allowance for any expenses related to the assessment itself.
December 18, 2003
John Wilson
Arbitrator
Date
Neutral Citation: 2003 ONFSCDRS 179
FSCO A02-000493
FINANCIAL SERVICES COMMISSION OF ONTARIO
BETWEEN:
DOLORES STRACHAN
Applicant
and
WAWANESA 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:
- Ms. Strachan shall forthwith pay to Wawanesa the amount of $750 as its fixed expenses in this matter.
December 18, 2003
John Wilson
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96, 303/98, 114/00 and 482/01.
- At p. 11 of Tripkovic (supra)
- Panet J., in Hudson v. State Farm Mutual Automobile Insurance Co. [1999] O.J. No. 136, interpreted this section of the Code, "I conclude that it would be a strained interpretation and an inappropriate application of the Code to require, in all circumstances, an absolute adherence to the requirements of the Code and indeed, paragraph 42.2 would indicate that a liberal interpretation is to be given."