L. C. v. Pafco Insurance Company Limited, 2004 ONFSCDRS 6

Financial Services Commission of Ontario

Neutral Citation: 2004 ONFSCDRS 6 FSCO A97-002212

Between:

L. C. Applicant

and

Pafco Insurance Company Limited Insurer

Assessment of Expenses

Before: David Leitch Heard: By telephone conference call on November 14, 2003.

Appearances: No one for Mr. C Derek E. Wilson for Pafco Insurance Company Limited

Issues:

The Applicant was injured in a motor vehicle accident on August 18, 1993. In a decision dated May 30, 2002, I dismissed, with one exception, all of Mr. C's claims for statutory accident benefits under the Schedule.¹ The exception related to a minor claim which may have also been dismissed by reason of Mr. C.'s failure to submit documents to the Insurer Pafco Insurance Company ("Pafco") within a prescribed time period. My decision of May 30, 2002 also awarded Pafco its expenses in relation to the hearing before me on April 15 and 16, 2002.

I further ordered the assessment of this expense award and the four previous expense awards in Pafco's favour.

The issue in this further hearing is:

1. What amount does Mr. C. owe Pafco in respect of all the expense awards issued in its favour during the course of this proceeding.

Result:

1. Mr. C owes Pafco $8,605.44 for hearing expenses in relation to this proceeding.

The conduct of the expense hearing:

Mr. C's mailing address appears to have remained unchanged throughout this proceeding. Certainly the Financial Services Commission of Ontario ("FSCO") has never been advised by Mr. C of any change in his address and FSCO correspondence sent to that address has never been returned. Mr. C has appeared at many hearings for which notice was sent to that address. There is, therefore, no reason to doubt that Mr. C received proper notice of the expense hearing and of Pafco's Bill of Costs, both of which were sent to him at that address. In accordance with the notice, the hearing was conducted by teleconference. At 2:00 p.m. on November 14, 2003, I initiated a telephone conference by first calling Mr. Wilson. He responded and was placed on the line while I attempted to call Mr. C. There was no answer at Mr. C's number but an answering device permitted me to state the purpose of my call. I then heard Mr. Wilson's submissions and concluded the hearing. FSCO received no communication from Mr. C during or after the telephone conference. It should be noted that the notice of expense hearing provided him with a FSCO toll free telephone number.

In the course of preparing this decision on December 1, 2003, I noticed that the telephone number I had used to contact Mr. C was different from the telephone number which appeared on his original Application for Arbitration. I therefore telephoned the number which appeared on the original Application for Arbitration and asked for the Applicant by name. A male person answered and stated that the Applicant had gone out for about an hour. I left my name and telephone number and said that I would telephone later that day. A few hours later, I telephoned again and asked for the Applicant by name. A female person answered and informed me that the Applicant was still not in but that my earlier message would be given to him. The next day, December 2, 2003, I telephoned the same number a third time and asked for the Applicant by name. A male person answered and stated that the Applicant was not in. When I asked to whom I was speaking, the person responded that I had the wrong telephone number and that I should not call again. He then hung up. I immediately called the number a fourth time but there was no answer.

In view of the above, it appeared to me that I had not used the correct telephone number when I called the Applicant on November 14, 2003, I therefore informed Mr. Wilson of this and arranged to conduct the expense hearing again on January 6, 2004. A new notice of expense hearing was forwarded to both parties on or about December 2, 2003. FSCO received no communication from the Applicant between December 2, 2003 and January 6, 2004. Using the telephone number I had used on December 1 and 2, 2003 to contact the Applicant, I attempted to initiate a second telephone conference on January 6, 2004. Again, I was only able to reach Mr. Wilson; there was no answer at the number I used to contact the Applicant.

Based on the above, I find that I used the Applicant's correct telephone on December 1 and 2, 2003 and January 6, 2004, that he received proper written notice of the expense hearing on both November 14, 2003 and January 6, 2004 and that he had no interest in participating in the expense hearing.

The four previous expense awards:

Mr. C's Application for Arbitration was registered by FSCO on December 31, 1997. At a pre-hearing on November 6, 1998, the matter was scheduled for hearing in November 1999 but did not proceed and was rescheduled to May 2000. On May 8, 2000, Mr. C appeared at the hearing with a letter from his lawyer requesting that the matter be adjourned. The presiding Arbitrator granted the request subject to an award in Pafco's favour for costs thrown away to be assessed.

When the matter came on for hearing again on October 23, 2000, Mr. C requested another adjournment, this time to retain the services of a different lawyer. The presiding Arbitrator ultimately granted the adjournment to July 2001, again subject to an award in Pafco's favour for costs thrown away to be assessed.

The matter first came before me on July 9, 2001 at which time Mr. C requested another adjournment. While I rejected Mr. C's reasons for requesting this further adjournment, I felt compelled to adjourn the hearing to December 2001 to permit the mediation of an additional issue which could then be arbitrated at the same hearing. However, since Mr. C had been clearly informed of his right to mediate the additional issue at the pre-hearing in November 1998, I again granted the adjournment subject to an award in Pafco's favour for costs thrown away to be assessed.

On December 17, 2001, I adjourned the matter yet again to the actual hearing dates in April 2002. This final adjournment was intended primarily to permit Mr. C to file for the mediation of still further issues. Since I was satisfied that Mr. C was well aware of the need to mediate issues prior to arbitration, I made a fourth award in Pafco's favour for costs thrown away to be assessed.

Pafco's Bill of Costs

1. Legal fees

Pafco only seeks to recover its legal fees at the Legal Aid rate of $67 per hour, the lowest rate payable for the services of a lawyer. I accept this rate and turn to the question of the number of hours recoverable.

As indicated above, an aborted expense hearing took place on November 14, 2003. In a decision dated November 20, 2003 in the case of Pafco Ins. Co. And Howden², the Director of Arbitrations addressed the issue of whether a party is entitled to recover expenses in relation to the mediation process. He noted that the Arbitrator in that case had "largely ignore[d] the distinction between mediation and arbitration, apparently treating everything other than the mediation meeting itself as 'expenses incurred in respect of an arbitration proceeding,' the phrase used in the Insurance Act." The Director of Arbitrations disagreed with this approach. He wrote:

In my opinion, the legislation cannot reasonably bear this interpretation. Mediation is a distinct step. Because the insured person can choose to go to either court or arbitration following a failed mediation, mediation cannot be viewed as part of the arbitration process. For whatever reason, the legislators have chosen not to provide for mediation expenses, and that must be respected.

Under the current legislation, an arbitration proceeding is not commenced until one of the parties files an application. While I have no difficulty with the proposition that steps taken after the mediation directly related to completing the arbitration application are part of the arbitration proceeding, expenses that precede the mediation are doubtful at best. In this case, I find no legal basis for the Arbitrator's conclusion that the pre-mediation expenses are recoverable.

Pafco's Bill of Costs provided no breakdown of legal fees incurred before, during or after mediation. However, because the Howden decision was issued after the aborted expense hearing on November 14, 2003, I allowed Pafco additional time to prepare and file such a breakdown.

In a submission dated December 18, 2003, a copy of which was sent to Mr. C, Mr. Wilson stated that he was not retained until after mediation. He further stated that he spent eight hours preparing for and attending two pre-hearings and that he spent 27 hours preparing for and 15 hours attending at the aborted hearings. Pafco's Bill of Costs indicated that Mr. Wilson spent 60 hours preparing for and 36 hours attending at the actual hearing in April 2002 and an additional two hours preparing its claim for expenses.

I accept Mr. Wilson's statements with respect to his time spent preparing for and attending the two pre-hearings and the four aborted hearings. This time totals 50 hours. However, the actual hearing took place over two days and required no more than 15 hours of hearing time to complete. In view of the relatively straightforward issues involved, I find that the appropriate ratio of preparation to hearing time is two to one. I, therefore, find that Pafco is entitled to recover the cost of 45 hours' worth of legal services for preparation and attendance at the actual hearing and an additional two hours' worth of legal services in respect of the preparation of the Bill of Costs and the expense hearing. In sum, I find that Pafco is entitled to recover 95 hours' worth of legal services plus GST at the rate of 7%. The total amount Mr. C therefore owes Pafco in respect of its legal fees is $6,810.55.

2. Disbursements

Pafco's Bill of Costs itemizes disbursements for long distance calls, printing and copying, delivery charges, parking and travel. Mr. Wilson further indicated that the cost of Dr. Adler's records, which appears in the Bill under witness fees, should have been charged as a disbursement. I find that all these items, plus GST at the rate of 7%, are recoverable expenses. Accordingly, Mr. C owes Pafco an additional $1,794.89 in respect of its disbursements.

3. Witness Fees

Pafco's Bill of Costs claims an additional $14,125³ in respect of witness fees but Mr. Wilson acknowledged that the Schedule to the Expense Regulation⁴ only permits his client to recover a maximum of $3,600 under this heading.

These fees are all claimed in connection with Dr. Ross's evidence. As explained in the decision, Dr. Ross's diagnosis of malingering was based, in part, on the assumption that Mr. C was provided with appropriate psychological treatment after the accident but that he refused to actively participate in it. Other doctors did recommend that Mr. C receive psychological treatment after the accident but there was no evidence to substantiate Dr. Ross's statements that such treatment was actually provided or that Mr. C actively refused to participate in it. I, therefore, rejected Dr. Ross's diagnosis of malingering.

In my opinion, Pafco should not be entitled to recover any of the expenses it incurred in its unsuccessful attempt to prove that Mr. C was a malingerer.

4. Total amount recoverable

Adding the amounts recoverable in respect of legal expenses and disbursements, I conclude that Mr. C owes Pafco $8,605.44 for hearing expenses in relation to this proceeding.

January 12, 2004

David Leitch Arbitrator

Neutral Citation: 2004 ONFSCDRS 6 FSCO A97-002212

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

L.C. Applicant

and

PAFCO INSURANCE COMPANY LIMITED Insurer

ARBITRATION ORDER

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

1. Mr. C owes Pafco $8,605.44 for hearing expenses in relation to this proceeding.

January 12, 2004

David Leitch Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents Before January 1, 1994, Regulation 672 of R.R.O. 1990, as amended by Ontario Regulations 660/93 and 779/93.
2. 2Howden and Pembridge Insurance Company (Pafco Insurance Company) (FSCO P02-000031, November 20, 2003)
3. 3It actually claimed $14,178 but the $53 witness fee in respect of Dr. Adler was withdrawn at the hearing.
4. 4Schedule to Regulation 664, R.R.O.1990, as amended by O. Reg. 464/96 made under the Insurance Act.