Neutral Citation: 2003 ONFSCDRS 57

FSCO A00-000291

BETWEEN:

JIM HORNE

Applicant

and

CIBC GENERAL INSURANCE COMPANY

Insurer

Before: Anne Sone

Heard: By telephone conference call on January 30, 2003, and all written submissions were received by March 12, 2003.

Appearances: Christopher A. Caston for Mr. Horne Thomas H. Clemenhagen for CIBC General Insurance Company

The Applicant, Jim Horne, was injured in a motor vehicle accident on June 2, 1997. In a decision dated December 20, 2001, I dealt with his claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

Mr. Horne is entitled to weekly income replacement benefits from June 2, 1999 to date and ongoing, pursuant to section 5 of the Schedule. CIBC may deduct from the amount of the income replacement benefit 80 percent of the net income received by Mr. Horne in respect of any employment subsequent to the accident, pursuant to section 6 of the Schedule.
Mr. Horne is not entitled to a custom-made spinal corset or to payment for invoices submitted by Dr. Cowan, pursuant to section 14 of the Schedule.
Mr. Horne is not entitled to expenses for housekeeping and home maintenance, pursuant to section 22 of the Schedule.
Mr. Horne is entitled to payment of $96 in connection with invoices submitted by Rehabilitation Management Inc., pursuant to section 24 of the Schedule. He is entitled to payment under this section for invoices totalling $3,410 submitted by Dr. Doxey. He is not entitled to payment under this section for invoices submitted by Dr. Cowan.
Mr. Horne is not entitled to a special award under subsection 282(10) of the Insurance Act.

The issues in this expense hearing are:

Is Mr. Horne entitled to his expenses incurred in respect of this arbitration hearing?
If so, what amount of expenses must be paid?

Mr. Horne is entitled to his expenses incurred in respect of this arbitration hearing.
CIBC shall pay Mr. Horne $8,954.64 for fees and disbursements, including GST, less any amounts already paid, in reimbursement of Mr. Horne's arbitration expenses.

Entitlement to Expenses

This hearing was conducted in an expert and efficient manner by experienced counsel. Mr. Horne was ultimately successful in his claim for income replacement benefits, subject to a statutory deduction for income received after the date of his motor vehicle accident. The most substantial portion of time spent at the hearing pertained to this issue. There were a number of other items claimed, upon which little time was spent, including a spinal corset, housekeeping and home maintenance, and reimbursement for invoices submitted by Rehabilitation Management Inc., Dr. Doxey and Dr. Cowan. Mr. Horne had limited success with respect to these items.

The criteria for an order of expenses are set out in Rule 73 of the Dispute Resolution Practice Code, 3rd Edition (the "Code"). Rule 73.1 establishes the jurisdiction of an arbitrator to award expenses, while Rule 73.2 reflects the principles for an award, as set out in the Expense Regulation.²

Rule 73.2 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 74 and 75, 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.

There have been no settlement offers tendered pursuant to Rules 74 and 75. As previously mentioned, Mr. Horne enjoyed success on the major issue of income replacement benefits in the hearing. CIBC pointed out that the other issues were equivalent with this issue in terms of the monetary value in dispute, but admitted that this was not the case from the perspective of the time spent at the hearing. As indicated in many previous expense decisions, it is not mandatory for applicants to be successful in order to obtain an order for expenses.³ This concept provides applicants, with reasonable claims, the ability to access the relatively inexpensive, speedy and informal dispute resolution process at the Commission, with reduced fear of adverse economic consequences.

CIBC also pointed out that there had been delays (three adjournments on consent) with respect to the expense hearing. Mr. Horne addressed this concern by agreeing to forego docketed fees after October 11, 2002 (the date of the first adjournment). CIBC acknowledged that there had not been any undue delay or fraudulent positions taken at the main hearing. In addition, this was one of the first hearings to address the issue of an applicant's entitlement to post 104-week income replacement benefits after the test for disability was amended by Bill 59, and hence a matter of some novelty as well as significance and complexity.

Based on Mr. Horne's success with respect to the income replacement benefit issue, the professional manner in which the hearing was conducted, and the other considerations noted above, I find that Mr. Horne should receive his reasonable arbitration expenses.

Hourly Rates

As a senior counsel with extensive litigation experience, CIBC agreed that Mr. Horne's counsel, Mr. John McLeish, should receive the maximum hourly rate I can allow for senior lawyers of $150 per hour. I agree. CIBC was also prepared to accept whatever the maximum was under the Legal Aid Tariff, for the junior lawyers and the clerk who worked on the file. Ms. Jill MacEachern was called to the bar in 2001. As such, she had under four years of civil litigation experience at the time of the hearing. Accordingly, I award her the maximum hourly legal aid rate for lawyers of her level of experience of $70.35. Mr. Chris Caston, who conducted the expense hearing, also fits into this category and I make the same award for him. Ms. Karen Fletcher is an accident benefits clerk who works with Mr. Horne's legal counsel. I find that the legal aid rate of $23 per hour is an appropriate rate for her services.

Allowable Hours

In his Bill of Expenses, Mr. Horne claimed a total of $16,790.50 for fees, not including GST. This was in part based on hourly fees which exceeded the maximum I can award, as set out above. I do not propose to go through a line-by-line analysis of the account. This is clearly not required.⁴ However, there are some items where commentary is appropriate. Mr. Horne withdrew his claim for a number of listed items dated from February 25 to March 22, 2001 because they related to a motion and other matters in connection with Mr. Horne's tort action. The charges for these items totalled $915.20.

The hearing took place over three days. Mr. McLeish represented Mr. Horne. At times, he was assisted by Ms. MacEachern. Mr. McLeish conducted the hearing in a very able and efficient manner. He provided me with a written copy of his oral submissions on the third day of the hearing, which was very helpful. Mr. McLeish claimed 17.1 hours for preparation and attendance at the three days of hearing. Ms. MacEachern claimed 43.8 hours for preparation and attendance at the hearing. The total number of hours for hearing preparation and attendance for the two lawyers comes to 60.9. If I deduct 15 hours for Mr. McLeish's attendance at the hearing over three days, this comes to 45.9 hours for preparation. This is approximately a 3:1 ratio, which is within the up to 4:1 ratio which arbitrators have found to be reasonable.⁵

CIBC questioned some 12-hour days Mr. McLeish and Ms. MacEachern claimed just prior to and during the hearing. However, given that they were preparing Mr. Horne's written submissions in addition to conducting the hearing, I find 12-hour days for Mr. Horne's representatives plausible. In addition, they should not be penalized where additional time spent in preparation is reflected in decreased time spent at the formal arbitration hearing.⁶

CIBC also challenged many items after the completion of the arbitration. In particular, it noted that some items dealt with the Bill of Costs in the tort action. It also objected to the extreme delay and inconvenience of three adjournments (albeit on consent), with respect to the expense hearing. In addition, Mr. Horne did not provide any materials in connection with the expense hearing until December 24, 2002. In order to deal with these objections, Mr. Horne withdrew his claim for fees for the entries in the Bill of Expenses from February 5 to March 22, 2002 because they related to his tort action. In addition, he withdrew his claim for fees after the date of the first adjournment in October 2002. This dealt with CIBC's concern that there might be double charges relating to the preparation of the Bill of Expenses (once by Ms. MacEachern and once by Mr. Caston after Ms. MacEachern left the firm).

I am prepared to allow some items of Ms. MacEachern's time in the period from February 21 to March 4, 2002 for preparation for the expense hearing, which clearly dealt with expenses of the arbitration. They total 1.2 hours. In addition, I am allowing items claimed by Ms. MacEachern during the period from December 31, 2001 to February 4, 2002, which totalled 2.3 hours, most of which CIBC agreed to at the expense hearing. This amounts to a total of 3.5 hours for the post hearing period, which I find is reasonable. This comes to a total of $246.23 for Ms. MacEachern's time during the post hearing period. I am also prepared to order the payment of three hours of time for Mr. Caston's attendance at the expense hearing. Calculated at the same hourly rate as Ms. MacEachern, this comes to a total of $211.05.

In addition, Mr. Horne is claiming for 1.2 hours of Ms. Karen Fletcher's time, for the period from February 26 to March 14, 2002. As previously noted, Ms. Fletcher is an accident benefits clerk who works for Mr. Horne's counsel's office. She spent this time reviewing correspondence and communicating with the client and other staff members. Since her hourly rate as a law clerk is lower than Ms. MacEachern's, and the time spent is not excessive, I find this claim to be reasonable. It comes to a total of $27.60.

In summary, I order payment of the following for fees:

John McLeish 17.1 hours @ $150.00 per hour $2,565.00

Jill MacEachern 47.3 hours @ $70.35 per hour 3,327.56

Chris Caston 3.0 hours @ $70.35 per hour 211.05

Karen Fletcher 1.2 hours @ $23.00 per hour 27.60

Total $6,131.21

GST 429.18

Total Fees with GST $6,560.39

Disbursements

In his Bill of Expenses for the arbitration held April 24, 25 and 26, 2001, counsel for Mr. Horne claimed the following as Disbursements under the heading: "Dr. N.C.S. Doxey & Associates":

Report of Dr. Neville C.S. Doxey dated September 11, 2000 $2,600

Provision of raw test data $60

Response to critique of R. Katz $750

Witness Fees for attendance at Arbitration for Dr. N.C.S. Doxey $190

I ordered payment of the first three items totalling $3,410 in my decision dated December 20, 2001, pursuant to section 24 of the Schedule. In my decision at page 31, I indicated that Mr. Horne had admitted that these were also prepared for the purposes of his tort action. I dealt with this issue by stating the following:

Notwithstanding their relevance in the tort action...Dr. Doxey's 30 pages of reports were comprehensive, detailed, well-written, and very helpful in determining the accident benefits issue of income replacement benefits. Accordingly, I find the cost of these reports at $3,410 to be reasonable expenses for the purpose of this Regulation.

In a letter dated March 27, 2002, counsel for CIBC requested clarification of these reasons. He stated the following:

In particular, I would refer to page 31 of your reasons, a copy of which I enclose. You indicated that Mr. Horne was claiming $3,410.00 for reports prepared for Dr. Doxey. You found that Mr. Horne admitted that these were also prepared for the purposes of his tort action. You then went on to find that these would be reasonable expenses for the purpose of this regulation.

We have reason to believe that the accounts of Dr. Doxey were submitted for payment in the tort action. We also have reason to believe that these accounts may have been paid prior to your decision by the insurer in the tort action. Under the circumstances, Mr. Horne's solicitor has submitted the bill for payment to us as well. I would like some clarification with regard to your finding.

Given that you were aware that the account was prepared only partially for this action. If in fact the account has been either fully or partially paid already and is not an outstanding expense as of the date of rendering your decision, did you intend that the account be paid in any event. I would point out that this would result in a double payment of this expense. Our position would be that if this expense was reasonably related to both actions and if in fact it was either fully or partially paid in the other action that it ought not to be paid twice. We would take the position that we should only have to pay what part of this expense would be outstanding, if any.

Counsel for Mr. Horne has advised that no monies have ever been paid with respect to costs in the tort action. In fact, in view of my decision, he has given an undertaking to counsel for the tort insurer that no claim will be advanced for the $3,410, payable to Dr. Doxey.

I appreciate CIBC's concern that Mr. Horne should not be reimbursed twice for the same expense; however, the tort insurer has not paid Mr. Horne the $3,410 mentioned in my decision. My decision of December 20, 2001 was not appealed, and my order still stands. The $3,410 payable to Dr. Doxey does not form part of my expense order.

In its submissions, CIBC agreed to pay the $190 witness fee for Dr. Doxey

CIBC strongly objects to paying for other items which may also pertain to Mr. Horne's tort action. There are two items in this category. Mr. Horne is claiming $1,500 for the report of Dr. Robert G. Gordon dated October 11, 2000. He is also claiming $200 for the report of Dr. Maher dated October 20, 2000. CIBC admitted that I could order payment of these disbursements if they meet the base criteria set out in paragraph 5.1(1)(3) of the Expense Regulation of being "provided to other parties to the arbitration and necessary for the conduct of the arbitration or hearing." I referred to Dr. Gordan's report at page 11 of my decision dated December 20, 2001. I find that both of these reports were provided to CIBC, and were necessary for the conduct of the hearings. Although both of these reports are equally applicable to Mr. Horne's tort action, I have jurisdiction to order payment in full, provided that they meet the criteria set out in the Expense Regulation. However, since it is likely that the tort insurer will pay for one-half of the amount claimed for these reports, I order CIBC to pay for one-half of these amounts. CIBC agrees to pay for the total amount of both of these reports, if Mr. Horne does not receive an award for one-half of these amounts in the tort action, and the reason that these amounts are not awarded is that they are not related to the tort action.

CIBC also objected to paying for amounts Mr. Horne claimed as a disbursement under the heading, "Salaries-Overtime." It challenged these amounts due to a lack of information. These amounts were set out as follows:

May 11, 2001 $15.45

May 25, 2001 $52.75

June 22, 2001 $11.43

February 15, 2002 $4.12

February 15, 2002 $12.36

Counsel for Mr. Horne indicated that these figures are the exact amount which staff have billed to the law firm for time spent working on Mr. Horne's file after hours. I note that this overtime work was done after the hearing was completed. Since there was no explanation as to why Mr. Horne's file, in these instances, was worked on after hours, as opposed to normal working hours, I am not prepared to order payment of these amounts.

CIBC did not object to paying for the following other disbursements. I find them reasonable and order their payment:

Agency Fees $472.00

Courier $48.05

Filing Fee $200.00

Facsimile Charges $16.50

Long Distance Charges $4.66

Photocopies $253.25

Postage $22.93

QL/Lexis/Westlaw $180.23

Accordingly, I order CIBC to pay Mr. Horne for disbursements in the amount of $2,237.62 which, after GST, totals $2,394.25.

Interest

Mr. Horne made a claim for interest on expenses, which was later withdrawn.

Summary

I order CIBC to pay Mr. Horne's expenses for fees in the amount of $6,131.21 which, with GST, comes to a total amount of $6,560.39. In addition, I order CIBC to pay Mr. Horne for disbursements, including GST, in the total amount of $2,394.25. In summary, I order CIBC to pay Mr. Horne a total of $8,954.64 for fees and disbursements, including GST, less any amounts already paid in reimbursement of Mr. Horne's arbitration expenses.

April 10, 2003

Anne Sone Arbitrator

Date