Joan Kennedy v. Traders General Insurance Company, 2004 ONFSCDRS 157

FINANCIAL SERVICES COMMISSION OF ONTARIO

Neutral Citation: 2004 ONFSCDRS 157 FSCO A02-001715

BETWEEN:

JOAN KENNEDY Applicant

and

TRADERS GENERAL INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: David Muir

Heard: By telephone conference call on October 8, 2004. Written submissions were received on April 14, 2004.

Appearances: David S. Wilson for Mrs. Kennedy Mark Donaldson for Traders General Insurance Company

Issues:

The Applicant, Joan Kennedy, was injured in a motor vehicle accident on June 23, 1997. On the day scheduled for the first day of hearing, the parties resolved their disputes concerning Mrs. Kennedy's claims for statutory accident benefits under the Schedule.¹ At the request of the parties, I made the following orders:

1. On consent, Traders General Insurance Company shall pay ongoing weekly income replacement benefits in the amount of $351.00 commencing February 28, 2004.

2. Traders General Insurance Company shall pay Mrs. Kennedy her reasonable expenses as agreed, or assessed in accordance with Rule 79 of the Dispute Resolution Practice Code.

The parties were unable to resolve the issue of expenses and Mr. Wilson, on behalf of Mrs. Kennedy, requested an assessment pursuant to Rule 79.

The issue in this further hearing is:

1. Is Mrs. Kennedy entitled to her expenses in the amount of $40,658.73, incurred in respect of this arbitration hearing?

Result:

1. Mrs. Kennedy is entitled to her expenses in the amount of $37,622.11, GST included.

EVIDENCE AND ANALYSIS:

Although counsel for Mrs. Kennedy has provided Traders with an account describing the expenses claimed, counsel for Traders has never complied with Rule 79.2 (1)(b) and provided a written response to the account identifying the issues in dispute. Mr. Wilson submits that this disentitles Traders from making any substantive submissions attacking the account. Mr. Donaldson, who has only recently acquired this file from counsel who has left the employ of the Firm of record in this case, was not able to offer any explanation for this failure.

I reserved on this preliminary question and considered to hear the parties' submissions on the expenses issue in dispute.

In respect of the preliminary question, I have decided that, despite the non-compliance by Traders with the Rule in question, I am able to hear the substantive issues between the parties. Although Mr. Wilson's argument has some technical merit, in these circumstances there is no prejudice to him in having to respond to the issues in dispute. Had there been any material prejudice to Mr. Wilson I might have taken a different view of the matter.

At the expense hearing, the parties were agreed that Mrs. Kennedy was entitled to be reimbursed to a maximum of $1,500 for the report of David Antflick and not the $3,156.50 on the account. The parties were not in agreement about whether this maximum figure includes GST. I find that the maximum amount for expenses set out in section 5 of the Schedule to Regulation 664 are maximums exclusive of GST. There is no obvious correct answer to this issue, however if the legislature had intended that they be inclusive of GST, it would have been easy enough to make that explicit. Drafted as it does, the provision affords some level of certainty over what this regime can speak to, leaving whatever levies another regime might impose to be determined in accordance within those parameters. Accordingly, Mrs. Kennedy is entitled to be reimbursed in the amount of $1,605.00, including GST for this report.

An issue arose with respect to the treatment of an order of expenses made by Arbitrator Wilson in the context of a motion heard on January 16, 2004. Mr. Wilson was agreed that his account was in error in part in including 5.5 hours for preparing for and appearing at the motion as a consequence of the expense order in question. The expense order in Mrs. Kennedy's favour has not yet been paid. Traders submitted that in addition to that time, 3.75 hours of legal fees were properly attributable to the motion and the expense order made therein.

Having reviewed the material, including Arbitrator Wilson's letter of January 9, 2004 and the decision on the motion dated February 3, 2004, I find that the order of expenses was intended to include the entire interim proceeding including the pre-hearing of January 9, 2004. Accordingly, the total billable hours should be reduced by the amounts attributed to that interim proceeding, which I find to be 9.25 hours. Concomitant with that is the requirement that Traders pay forthwith the amount of the outstanding expense order made by Arbitrator Wilson on February 3, 2004 in the amount of $650.00.

Traders took issue with a number of hours in relation to 10.5 hours billed on June 30, July 2, 4 and 8, 2004 in preparation and attendance at a private mediation involving both the accident benefit and related tort issues. Traders submitted that these hours ought to be split between the tort proceeding and the instant matter. While conceding that Mr. Wilson ought not bill twice for this time, he submitted that the time was necessary and counsel for Traders agreed to go with no agreement beforehand that payment for that time be unbillable.

I agree. As Mr. Wilson stated, the mediation was a reasonable step to take in proceeding with this matter. Whether or not the third party was present at the mediation is not relevant to the issue of Mrs. Kennedy's entitlement to reimbursement for the expenses associated with it. Unless there is an allegation of double recovery for these expenses, whether or not Mrs. Kennedy may be able to recover them in the tort proceeding is entirely speculative.

Traders also took issue with the total number of hours that Mr. Wilson had billed. While acknowledging that the case was complex, Traders submitted that it was only scheduled for four days of hearing. Traders also agreed that the case would not have finished in those four days, but submitted in that regard that further time for preparation would be available between the first and second set of hearing days. Mr. Wilson submitted that it is the responsibility of counsel to prepare for the complete hearing before it begins. Mr. Wilson also submitted that it was in part at least because of his preparation that he was able to persuade Traders to settle the case.

I agree with the submissions of Mr. Wilson that a representative is expected to be fully prepared for the hearing and all the issues in the hearing, at its commencement.

Arbitrators have developed a series of ratios of hours of hearing to hours of preparation. These range from 1:1 for straightforward cases to 1: 4 for the most complex. This case, for a number of reasons, falls closest to the most complex end of the scale. This is not disputed by Traders. The hearing was expected to take considerably more than the four days. Mr. Wilson suggested that it would have run at least eight days and perhaps more than that. There was also an appeal of the Arbitrator's order which required 3.8 hours of preparation. The hours billed by Mr. Wilson are not disproportionate when examined in light of the complexity of the issues in this case.

The account of Mr. Wilson ought to be adjusted as follows:

1. Disbursements - David Antflick's report reduced from $3,156.50 to $1,500 + GST $105 = $1,605. Total Disbursements: $11,517.28

2. Legal Fees - reduced by 9.25 hours. New total fees 171.9 - 9.25 = 162.65 x $150/hr = $24,397 + GST $1,707.83 = $26,104.83.

Total Account: $37,622.11

October 22, 2004

David Muir Arbitrator

Date

Neutral Citation: 2004 ONFSCDRS 157 FSCO A02-001715

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

JOAN KENNEDY Applicant

and

TRADERS GENERAL 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:

1. Mrs. Kennedy is entitled to her reasonable expenses in the amount of $37,622.11. Traders shall pay her this amount forthwith.

2. Traders shall comply forthwith with the order of Arbitrator Wilson dated February 3, 2004 requiring it to pay to Mrs. Kennedy her expenses of the motion fixed at $650.00.

October 22, 2004

David Muir 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.