Vladislav Sorokin v. Wawanesa Mutual Insurance Company, 2004 ONFSCDRS 142

FINANCIAL SERVICES COMMISSION OF ONTARIO

Neutral Citation: 2004 ONFSCDRS 142 FSCO A00-001163

BETWEEN:

VLADISLAV SOROKIN Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Beth Allen Heard: Written submissions were received by July 8, 2004.

Appearances: Jadranka Cavrak for Mr. Sorokin Darrell March for Wawanesa Mutual Insurance Company

Issues:

The Applicant, Vladislav Sorokin, was injured in a motor vehicle accident on May 27, 2000. He applied for accident benefits under the Schedule.¹ Wawanesa Mutual Insurance Company ("Wawanesa") denied his claim for income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mr. Sorokin applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The arbitration hearing took place on December 16, 17, 18 and 20, 2002 and July 4, 2003. In an arbitration decision dated February 9, 2004, I awarded the Applicant income replacement benefits, the cost of medical services and the cost of a disability certificate, and imposed a special award against Wawanesa of $15,000 for its conduct in unreasonably denying the Applicant benefits.

The issues in this hearing are:

1. Is the Applicant entitled to his arbitration expenses pursuant to subsection 282(11) of the Insurance Act?

2. Is Wawanesa entitled to its arbitration expenses pursuant to subsection 282(11) of the Insurance Act?

3. Is Wawanesa entitled to an amount not exceeding its assessment fee pursuant to subsection 282(11.2) of the Insurance Act?

Result:

1. The Applicant is entitled to his arbitration expenses fixed at $20,000 inclusive of GST pursuant to subsection 282(11) of the Insurance Act.

2. Wawanesa is not entitled to its arbitration expenses pursuant to subsection 282(11) of the Insurance Act.

3. I need not decide Wawanesa's entitlement to an amount under subsection 282(11.2) of the Insurance Act.

EVIDENCE AND ANALYSIS:

Background:

The Applicant sought income replacement benefits under subsection 4(1), paragraph 3, (i) and (ii) of the Schedule for the 104-week period after the accident on the basis of a contract of employment he obtained before the accident. He also claimed medical benefits under section 14 and the cost of a disability certificate under section 24 of the Schedule. The Applicant further claimed a special award under subsection 282(10) of the Insurance Act. Wawanesa paid no income replacement benefits and refused to fund the medical treatment and the cost of the disability certificate.

REASONS FOR DECISION:

Expenses:

Subsection 282(11) of the Insurance Act gives arbitrators the discretion to award expenses to parties to an arbitration hearing. The parties bring their claims for expenses under Regulation 664² of the Insurance Act, which is repeated in Rules 75 and 76 of the amended Dispute Resolution Practice Code.³

Regulation 664 requires an arbitrator to apply the following criteria: (a) each party's degree of success in the outcome of the proceeding; (b) any written offers to settle made in accordance with Rule 76; (c) whether novel issues are raised in the proceeding; (d) the conduct of a party or a party's representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders; and (e) whether any aspect of the proceeding was improper, vexatious or unnecessary.

Entitlement:

Both parties claim the expenses they incurred in relation to the arbitration hearing. I award the Applicant her expenses for the following reasons:

I apply criterion (a) of Rule 75 in the Applicant's favour since he was clearly successful in the outcome of the hearing on all issues.

Criterion (b) does not apply since neither party filed an Offer to Settle.

Regarding criterion (c), I find the issues in dispute are not novel or complex.

Concerning the issue of delay under criterion (d), I find the conduct of Wawanesa's counsel caused undue delays in the proceedings. I find Wawanesa's counsel pursued lines of questioning on cross-examination that were fruitless and time-consuming and were directed at trying to elicit evidence that was not germane to the issues in dispute in the arbitration. For instance, he questioned the Applicant at length about whether he was employed by a pizzeria at the time of the accident. The Applicant had testified that, on the day of the accident while on his way home from a pizzeria, he had volunteered for no pay to deliver a pizza as a favour to a friend who worked at or owned the pizzeria. The Applicant testified that he was not employed by the pizzeria. Furthermore, there was no evidence at the hearing that the Applicant was employed by a pizzeria at the time of the accident. Wawanesa questioned him over and over about whether he was paid for the delivery; whether he received a tip; whether he considered tips as earnings; whether he reported the tips as earnings; and whether the Applicant had made a workers' compensation claim in relation to the accident.

I find that this style of questioning, which he also did in other areas of his cross-examination despite my queries as to relevance, led to a waste of time that needlessly prolonged the hearing.

In looking at criterion (d), I find on the whole that the Applicant's counsel was diligent in conducting her case and made procedural suggestions directed at expediting the process. However, I took into account the Applicant's failure to satisfy production undertakings in a timely manner, which I find was one of the factors in the arbitration hearing being rescheduled from October 2001 to July 2002.

I also considered the delays caused by Dr. Phillip Zeldin's failure, without an explanation to the tribunal, to comply with summonses to appear as a witness at the hearing. There were several months of undue delay in concluding the hearing because of Dr. Zeldin's unavailability.

I also considered the conduct of Wawanesa's representative, Ms. Carmela Pontieri, who testified at the hearing. I found she behaved in a belligerent and uncooperative manner on cross-examination. She refused to answer many questions critical to my decision, causing the Applicant's counsel to repeat questions more than once. Ms. Pontieri also displayed a remarkable lack of knowledge about the file which led to further waste of time while she searched the file for pertinent documents. For the purposes of criteria (d) and (e), I find this conduct to be improper and high-handed and a cause of undue prolongation of the hearing.

I therefore award the Applicant a portion of his arbitration expenses. For the reasons set out above, I decline Wawanesa's claim for expenses.

Quantum:

The Applicant filed a Bill of Costs recording total legal fees of $23,360.40 including GST, for the following: 16.6 hours by Mr. Henry Goldentuler, billed at $135.00 per hour; 155.30 hours by Ms. Jadranka Cavrak, billed at $125.00 per hour; and 2.6 hours for law clerk fees, billed at $60.00 per hour. In her reply to Wawanesa's expense submissions, Ms. Cavrak requested fees at $135.00 per hour for an additional three hours for preparation of her submission on expenses.

Total disbursements billed were $481.50, including GST, for faxes, courier service and photocopying.

Total expenses billed were $14,811.71 including GST for: medical and police records and reports; preparation time and attendance of medical and other witnesses; the cost of summonses to witnesses; the cost of a process server summons; and the cost of school transcripts.

The total amount billed by the Applicant's counsel is $38,662.61 inclusive of GST, plus an additional $433.35 inclusive of GST for time spent preparing expense submissions, for a grand total of $39,095.96.

Wawanesa's counsel submits that the Applicant's counsel is not entitled to the arbitration expenses she has claimed. He asserts, pursuant to Rule 78.1 of the Code and the Tariffs under the Legal Aid Services Act⁴, that neither Mr. Goldentuler's nor Ms. Cavrak's call to the bar dates warrant their houly billing rate. Wawanesa's counsel further argues that Mr. Goldentuler and the law clerk should not receive their legal and law clerk fees because they did not participate in the arbitration hearing. He pointed out as well that Mr. Goldentuler's bill was not particularized as to when his services were provided. Wawanesa's counsel also submits that it is not apparent from the Applicant's Bill of Costs what part of the legal fees was incurred in relation to the tort action. He also challenges the amounts of expenses for conduct money because this item is not particularized. He further questioned the cost billed for the Applicant's medical-legal reports and the amount billed for the attendance of the related experts, as being unreasonable and not in compliance with the criteria set out in the Code.

Decision:

Having reviewed the Applicant's counsel's Bill of Costs and considered counsel's submissions, I award the Applicant his expenses fixed at $20,000 inclusive of GST.

I arrived at this amount having regard to several factors, including: Wawanesa's, its counsel's and Dr. Zeldin's conduct in relation to the hearing; Wawanesa's contribution to the delay in the hearing; the Applicant's contribution to the delay in the hearing; the lack of complexity of the issues; the lack of particularization in the Applicant's counsel's Bill of costs for Mr. Goldentuler's services and the conduct money; and the amount billed for Dr. Andrei Tchernov's attendance at the hearing over and above the maximum set out in the Code. I also found the total amount of time billed by Mr. Goldentuler and Ms. Cavrak for their services, 171.90 hours, to be excessive in view of the fact that the hearing took five days and involved issues that were neither novel nor complex.

For all of these reasons, I deny Wawanesa its arbitration expenses under subsection 282 (11) of the Schedule. I order Wawanesa to pay the Applicant's arbitration expenses fixed at $20,000 inclusive of GST. I need not decide Wawanesa's claim under the new repealed subsection 282(11.2) of the Insurance Act.

September 27, 2004

Beth Allen Arbitrator

Neutral Citation: 2004 ONFSCDRS 142 FSCO A00-00163

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

VLADISLAV SOROKIN 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:

I order Wawanesa Mutual Insurance Company to pay the Applicant's arbitration expenses fixed at $20,000 inclusive of GST pursuant to subsection 282(11) of the Insurance Act.

September 27, 2004

Beth Allen Arbitrator

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. 2R.R.O. 1990, as amended, to O. Reg. 275/03.
3. 3Updated fourth edition - October 2003.
4. 4Legal Aid Services Act, R.S.O. 1998, c. 26, as amended.