Neutral Citation: 2003 ONFSCDRS 35

FSCO A01-000215

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PAMELA SIMPSON

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON INTEREST AND EXPENSES

Before:

David Leitch

Heard:

September 27, 2002 , at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

David S. Wilson for Ms. Simpson

John D. Dean for Allstate Insurance Company of Canada

Issues:

The Applicant, Pamela Simpson, was injured in a motor vehicle accident on May 4, 2000. In decisions dated November 16, 2001 and February 6, 2002, I dealt with her claims for statutory accident benefits under the Schedule.¹ In the second of these decisions, I ordered Allstate to pay the Applicant's hearing expenses but the parties have been unable to agree on the amount owing. A dispute has also developed as to whether the Applicant is entitled to interest under section 46 of the Schedule in respect of her reinstated income replacement benefits.

The issues in this further hearing are, therefore:

1. Is the Applicant entitled to interest under section 46 of the Schedule in respect of her reinstated income replacement benefits?

2. What amount must Allstate pay the Applicant in respect of her hearing expenses?

Result:

1. The Applicant is entitled to interest under section 46 of the Schedule in respect of her reinstated income replacement benefits. Interest is to be calculated in accordance with this decision. I will remain seized of this issue in the event of any remaining disputes in relation to it, provided that the parties inform me of such disputes in writing within 30 days of the date of this decision.

2. Allstate will pay the Applicant's hearing expenses in accordance with this decision. I will remain seized of this issue in the event of any remaining disputes in relation to it, provided that the parties inform me of such disputes in writing within 30 days of the date of this decision.

Issue 1: Interest on reinstated benefits

As indicated in my decision of February 6, 2002, Allstate paid the Applicant income replacement benefits from one week after the accident of May 4, 2000, i.e, from May 11, 2000 to November 22, 2000 when it terminated benefits. In early May 2001, Allstate reinstated the Applicant's income replacement benefits, retroactively for the period November 22, 2000 to April 25, 2001, and ongoing from June 26, 2001. However, Allstate also took the position that it was entitled to deduct from the Applicant's reinstated benefits the amount of money she had received from Trafalgar Insurance a few days prior to her benefits being reinstated by Allstate. Trafalgar's payment was in a lump sum form but it related to the Applicant's claim, in respect of an earlier accident, to a weekly supplement under section 32 of the 1993-1996 Schedule.²

The parties agreed that if Allstate was entitled to make this deduction, its monetary value was to be calculated at the rate of $250 per week for the period May 11, 2000 to April 25, 2001.

In my decision of February 6, 2002, I decided that Allstate was entitled to make this deduction. I also noted that the parties had agreed on both the amount to be deducted and the method by which it would be deducted. However, my decision did not explicitly deal with the question of whether, in making this deduction, Allstate was obliged to recognize the Applicant's right to interest under section 46 of the Schedule on her reinstated benefits.

Mr. Dean argued that I had not dealt with this question because Mr. Wilson never claimed interest on the Applicant's reinstated benefits. Mr. Wilson only claimed a special award and, Mr. Dean contended, by granting a special award, I had effectively addressed any concern about delay in the payment of the reinstated benefits. According to Mr. Dean, the issue of interest on the reinstated benefits was not raised in these proceedings and is now res judicata.

Mr. Wilson responded that he had specifically requested, at the outset of these proceedings, that I remain seized of issues relating to the amounts payable to the Applicant as a result of my decisions. He submitted that the "arithmetic implementation" of my decisions on vacation pay and supplement deduction was thus "left for later". He denied that the Applicant had ever agreed to abandon interest under section 46 in respect of her reinstated benefits.

In my view, I have already explicitly recognized the Applicant's right to interest under section 46 of the Schedule on her reinstated income replacement benefits. I did so in the course of deciding that the Applicant was entitled to a special award. The relevant portion of my decision of February 6, 2002 reads as follows:

The accepted formula for the calculation of a special award is the percentage of the special award, as determined by the arbitrator, multiplied by the total of: (a) the amount of the overdue benefit; (b) overdue interest calculated at the rate of 2 percent per month, compounded monthly, in accordance with section 46 of the Schedule; and, (c) special award interest on both the overdue benefit and the overdue interest calculated at the rate of 2 per cent per month, compounded monthly, in accordance with section 282(10) of the Insurance Act. [emphasis added]

The fact that the special award thus recognized the Applicant's right to interest on her reinstated benefits does not, in my opinion, mean that she is precluded from making a separate claim for such interest under section 46. Interest is payable as a simple consequence of the finding that the benefits were "overdue" under section 46. It is payable whether or not there is also a finding that the insurer acted unreasonably under section 282(10) of the Insurance Act.³ In this case, for example, I disregarded my earlier ruling on vacation pay in calculating the Applicant's special award because I was unable to describe Allstate's position on vacation pay as unreasonable. There is, however, no reason to disregard my ruling on vacation pay in calculating interest owing to the Applicant under section 46. I further note, as I did in my earlier decision, that the Applicant's income replacement benefits only became overdue as each two week benefit period went by without a payment and that they stopped being overdue when Allstate reinstated benefits on or about May 1, 2001.

In short, I find that the Applicant is entitled to interest under section 46 on her reinstated benefits, calculated in accordance with this decision, unless she has lost the right to claim such interest because she did not assert that right at an earlier stage in these proceedings. In my opinion, such a finding would be both inaccurate and unfair.

To begin with, Ms. Simpson's Application for Arbitration indicated that she was claiming interest. Then, in identifying the issues for arbitration, the pre-hearing letter stated: "Ms Simpson claims interest on any amounts owing". In my decision of November 16, 2001, I acknowledged that the "underlying entitlement issue [with respect to income replacement benefits] was effectively withdrawn by agreement of the parties and was not subject to adjudication". I was not, however, made aware of any agreement with respect to the Applicant's claim for interest on her reinstated benefits. Further, as demonstrated above, the issue of the Applicant's right to interest on reinstated benefits was necessarily raised and resolved in my decision of February 6, 2002, albeit in the context of her claim for a special award. Finally, while there may have been a regrettable lack of precision at the outset of these proceedings about the issues of which I was to remain seized, clarification could have been requested by either me, as Arbitrator, or Mr. Dean, as counsel for Allstate. It would, therefore, be unfair to attribute solely to Mr. Wilson the confusion at the end of the hearing about the issues of which I was to have remained seized.

For these reasons, I make the following findings: first, I remain seized of the issue of the Applicant's right to claim interest on her reinstated benefits, second, the Applicant is entitled to claim such interest in accordance with this decision and third, I continue to remain seized of this issue in the event of any remaining disputes in relation to it, provided that the parties inform me of such disputes in writing within 30 days of the date of this decision.

Issue 2: assessment of the Applicant's expenses

Mr. Dean disputed the following items in the Applicant's Bill of Costs⁴:

1. Time spent preparing the Applicant's motion for interim benefits (as itemized in entries dated April 16, 25, May 14, 15 and part of May 16, 2001). Time reduction sought: 8.1 hours.

The Applicant's motion for interim benefits was to have been heard at the pre-hearing on May 16, 2001. Since that was the same day that Allstate undertook to reinstate Ms. Simpson's benefits and since she had also recently received the lump sum payment from Trafalgar, Arbitrator Evans held that the motion for interim benefits was premature. He did not, however, dismiss the motion for interim benefits. "Instead," he wrote, "should Ms. Simpson's benefits be terminated again, a preliminary issue hearing date of Wednesday, August 15, 2001 at our offices at 10:00 a.m. is available, where Ms. Simpson can then bring her motion for interim benefits."⁵

In my view, the Applicant could have sought to recover her motion expenses by either claiming them at the preliminary issue hearing scheduled for August 15, 2001 or by requesting that they be added as an issue for arbitration at the main hearing. She did neither. Consequently, my decision of February 6, 2002 only ordered Allstate to pay the Applicant's expenses in relation to the main hearing on October 29 and 30, November 1 and December 14, 2001. In my opinion, the Applicant's motion expenses were not properly included in her hearing expenses and are not recoverable under my order. The reduction of 8.1 hours sought by Allstate is, therefore, granted.

2. Time spent (as itemized in entries dated September 10, 11 and 19, 2001) and disbursements incurred obtaining the reports of Dr. Dacre⁶ (January 19, 2001 and September 6, 2001), Dr. Gershon (March 15, 2001 and September 12, 2001), Dr. Kirsh (June 4, 2001 and August 31, 2001) and the Canada Accident Rehab Group - CARG (September 12, 2001). Time reduction sought: 1.35 hours. Disbursement reduction sought: one half the amount charged, excluding GST, for the reports of Dr. Dacre, Dr. Gershon and for the August 31, 2001 report of Dr. Kirsh, and a $1,000 deduction from the amounts charged, excluding GST, for the June 4, 2001 report of Dr. Kirsh and the September 12, 2001 report of CARG.

Mr. Wilson confirmed that Allstate's decision not to contest the Applicant's entitlement to income replacement benefits was finalized only about a week before the start of the main hearing on October 29, 2001. He nevertheless denied Mr. Wilson's assertion that these reports were prepared to address that issue at a hearing, maintaining instead that these reports were "prepared in the normal course" and hence more properly claimed under section 24 of the Schedule. I reject this argument. Having regard to their contents and their dates, I am satisfied that Mr. Wilson requested the earliest of these reports in order to challenge at an eventual hearing Allstate's termination of the Applicant's income replacement benefits in November 2000. The Applicant's benefits were, of course, reinstated in May 2001 but, as explained in my decision of November 16, 2001, Allstate reserved its right to contest her continued entitlement to these benefits at the main hearing. In doing so, Allstate effectively obliged Mr. Wilson to obtain the later medical reports supporting his client's continued entitlement.

Subject to Mr. Dean's further argument, not yet heard as of the date of this decision, that all of the disbursements itemized in the Applicant's Bill of Costs were recovered, in part, in a related tort action, I find that the expenses the Applicant incurred obtaining the aforementioned medical reports were, with one modification, reasonable and recoverable. The modification relates to the cost of Dr. Kirsh's report which exceeded the $1,500 maximum set by the Schedule to the Expense Regulation.⁷ Mr. Wilson agreed to abandon the amount claimed in excess of this maximum.

3. (a) Time spent sending and reviewing correspondence "in addition to correspondence as [otherwise] noted" in the Bill (the entry at the top of page 4 of the Bill indicated that there were 55 letters of this kind, claimed .2 hours in respect of each letter and added 11 hours to the Bill). Time reduction sought: 5.5 hours.

(b) Time spent travelling to and from the hearing (1.5 hours each day included in the entries for the four hearing dates of October 29, 30, November 1 and December 14, 2001). Time reduction sought: 6 hours.

I estimate that this hearing took approximately 20 hours to complete. Applying the modest ratio of 2.5 hours of preparation time for every hour of hearing time, Allstate can be reasonably required to pay the Applicant for approximately 70 hours of her counsel's time. Seen from this perspective, the Bill, as presented, was entirely reasonable; it charged for 72 hours of Mr. Wilson's time. The Bill is even more reasonable once the time spent preparing the Applicant's motion for interim benefits is deducted, as ordered above. For this reason, I resolve in the Applicant's favour any doubts I might have had about the reasonableness of the particular items disputed under this heading. The deductions sought by Allstate are, therefore, denied.

4. Time spent preparing for and attending the assessment hearing on September 27, 2002.

I allow the Applicant an additional two and a half hours of her lawyer's time in respect of his preparation for and attendance at the assessment hearing on September 27, 2002.

5. GST on fees for medical reports

Mr. Dean maintained that the Applicant was not entitled to recover GST on fees for medical reports unless the providers of those reports charged her GST. Mr. Wilson maintained that his client was obliged to recover GST on fees for medical reports regardless of whether she was charged GST by the providers of those reports. The parties were to have exchanged, and provided me with, further submissions on this issue but, as of the date of this decision, it remains the subject of further argument.

I will remain seized of the issue of expenses provided that the parties inform me in writing of the remaining disputes with respect to expenses within 30 days of the date of this decision.

March 11, 2003

David Leitch

Arbitrator

Date

Neutral Citation: 2003 ONFSCDRS 35

FSCO A01-000215

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PAMELA SIMPSON

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The Applicant entitled to interest under section 46 of the Schedule in respect of her reinstated income replacement benefits. Interest is to be calculated in accordance with this decision. I will remain seized of this issue in the event of any remaining disputes in relation to it, provided that the parties inform me of such disputes in writing within 30 days of the date of this decision.

2. Allstate will pay the Applicant's hearing expenses in accordance with this decision. I will remain seized of this issue in the event of any remaining disputes in relation to it, provided that the parties inform me of such disputes in writing within 30 days of the date of this decision.

March 11, 2003

David Leitch

Arbitrator

Date

Footnotes

1. 1The 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.
2. 2The 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.
3. 3Graper and Liberty Mutual Fire Insurance Company (FSCO A00-000133, July 20, 2001); appeal decision Bajic and Pafco Insurance Company Limited and Zurich Insurance Company (FSCO P00-00050, June 5, 2001).
4. 4Exhibit 17.
5. 5Exhibit 13.
6. 6The parties agreed there should be no expense recovery in respect of Dr. Dacre's report dated November 6, 2000.
7. 7Regulation 664, R.R.O. 1990, as amended. I see no authority in the Schedule for Mr. Dean's argument that a lower maximum applies to the CARG report.