Narain v. ING Insurance Company of Canada, 2005 ONFSCDRS 178

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2005 ONFSCDRS 178

FSCO A03-001749

BETWEEN:

HARRICHAN NARAIN

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

AND

FSCO A03-001748

BETWEEN:

MEENAWATTI MANGROO

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

DECISION ON EXPENSES

Before:

Richard Feldman

Heard:

By written submissions received on September 23, 2005 and by teleconference on September 30, 2005.

Appearances:

Robert N. Franklin for Mr. Narain and Ms. Mangroo

Dan Rabinowitz for ING Insurance Company of Canada

Issues:

The Applicants, Harrichan Narain and Meenawatti Mangroo, were injured in a motor vehicle accident on April 10, 2003. They each applied for and received statutory accident benefits from ING Insurance Company of Canada ("ING"), payable under the Schedule.¹ Those benefits were later terminated by ING. The Applicants disputed the termination of those benefits. The parties were unable to resolve their disputes through mediation, and the Applicants applied (separately) for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The parties requested, and the Commission agreed, that these two applications for arbitration ought to be heard together (but not joined). The hearing was held over seven days between February 21 and March 2, 2005. On June 24, 2005, I issued a decision dismissing the application of Ms. Mangroo and granting, in part, the application of Mr. Narain. Initially the parties requested that I reserve my decision on the expenses of these arbitrations. Subsequently, the parties advised me that they could not agree on the issue of expenses and requested a hearing of that issue pursuant to Rule 79 of the Dispute Resolution Practice Code, 4th Edition (as amended). Although the parties' request was received late (i.e., more than 30 days after the issuance of the June 24, 2005 order), I exercised my power under Rule 81.1 to set aside the usual time limit and hear the submissions of the parties with respect to this matter.

The issues in this further hearing are:

1. Is either Mr. Narain or ING entitled to his/its expenses in respect of his application?

2. Is either Ms. Mangroo or ING entitled to her/its expenses in respect of her application?

Result:

1. ING shall pay Mr. Narain's arbitration expenses in the amount of $7,624.83 with respect to application number FSCO A03-001749.

2. Ms. Mangroo shall pay ING's arbitration expenses in the amount of $5,233.67 with respect to application number FSCO A03-001748.

EVIDENCE AND ANALYSIS:

THE LAW

Subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8 (as amended), provides that:

The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations. 1996, c. 21, s. 38 (4).

Regulation 664, R.R.O. 1990, made under the Insurance Act, as amended to O.Reg. 275/03 reads as follows:

12.(1) The expenses set out in the Schedule are prescribed for the purpose of subsection 282 (11) of the Act.

(2) An arbitrator shall, under subsection 282 (11) of the Act, consider only the following criteria for the purposes of awarding all or part of the expenses incurred in respect of an arbitration proceeding:

1. Each party's degree of success in the outcome of the proceeding.

2. Any written offers to settle made in accordance with subsection (3).

3. Whether novel issues are raised in the proceeding.

4. 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.

5. Whether any aspect of the proceeding was improper, vexatious or unnecessary.

(3) Upon the request of the insurer or the insured person, the arbitrator shall, for the purposes of awarding expenses, take into account all written offers to settle, if any,

(a) that were made after the conclusion of mediation and before the conclusion of the arbitration; and

(b) that were made in accordance with the rules of practice and procedure applicable to the proceeding.

(4) If the arbitrator is requested to take into account a written offer under subsection (3), the arbitrator shall have regard to the terms of the offer, the timing of the offer, the response to the offer and the result of the proceeding.

HARRICHAN NARAIN

Entitlement to Expenses

In his application, Mr. Narain claimed the following:

1. approximately $5,100.00 for income replacement benefits;

2. $3,331.00 for the cost of certain treatment;

3. $890.00 for housekeeping and home maintenance services; and

4. $750.00 for the cost of the examination and report of Dr. Chizen.

The total amount being claimed by Mr. Narain (not including any interest or expenses) was about $10,000.00.

Mr. Narain was successful on his claim for income replacement benefits and for the cost of Dr. Chizen’s report but was unsuccessful on his claim for the cost of treatment and of housekeeping and home maintenance services. Mr. Narain was, therefore, successful on two of the four substantive issues raised in his application, representing about 60% of the total amount being claimed. After the issuance of the order of June 24, 2005, the parties agreed that the amount owing by ING to Mr. Narain as a result of my order, including interest, was $9,396.75 (which ING has paid to Mr. Narain).

The parties agree that, of the five criteria listed in subsection 12(2) of the Expense Regulation, the last three have no relevance to this case.

On behalf of Mr. Narain, Mr. Franklin submits that Mr. Narain was substantially successful and that he ought to be awarded his expenses. Furthermore, Mr. Franklin points out that on February 15, 2005, Mr. Narain made a written offer to settle this arbitration for $10,000.00 plus expenses, a figure that is very close to the amount awarded after the hearing. It is submitted that ING's failure to accept this offer should be a factor I take into consideration in deciding Mr. Narain’s entitlement to expenses.

On behalf of ING, Mr. Rabinowitz submits that since the success of the parties was mixed, they should each bear their own expenses. In the alternative, it is suggested since Mr. Narain only received approximately 60% of the total amount he originally claimed, he should only be awarded (at most) 60% of his arbitration expenses. With respect to Mr. Narain’s offer of February 15, 2005, Mr. Rabinowitz points out that it is for an amount that exceeds the amount awarded to Mr. Narain; it is, therefore, submitted that it was reasonable for ING to have rejected that offer.

The two relevant factors in deciding the issue of expenses in this case are: (1) each of the parties' degree of success; and (2) the offer made by Mr. Narain on February 15, 2005. With respect to the first criterion, Mr. Narain was largely successful on his application and that certainly weighs in his favour. With respect to the second criterion, it is clear that Mr. Narain’s offer was a reasonable one. While it may have been slightly higher than the amount ultimately awarded, had ING accepted the offer, both parties could have avoided the cost of preparing for and participating in this fairly lengthy hearing.

In these circumstances, I find that Mr. Narain is entitled to his arbitration expenses (and not a proportion thereof as suggested by ING).

Quantum

Counsel for both parties agreed that they each spent approximately 106 hours in total in preparing for and attending on the hearing of both applications. They also agreed that this time was divided roughly equally between the two applications. There is no dispute between the parties, therefore, that 52.4 hours was a reasonable amount of time for Mr. Franklin to spend in representing Mr. Narain with respect to this matter (not including any time spent in preparation for, or attendance on, the expense hearing).

Based upon his experience (i.e., the year he was called to the Bar), Mr. Franklin is normally entitled on this type of application to claim his fees at an hourly rate of $92.34 ($73.87/hr. plus a bonus of 25%). Pursuant to Rule 78.1 of the Commission's Dispute Resolution Practice Code (4th edition, as amended), however, an arbitrator may award an hourly rate of up to $150.00 to an applicant's counsel, where it is justified. Mr. Franklin submits that the hourly rate of $150.00 is appropriate in these circumstances because he has 15 years' experience in personal injury litigation, because the case was not simple and involved issues of credibility and because the file was "document-heavy", which made it more complex and time-consuming.

ING opposes Mr. Franklin being awarded an hourly rate greater than $92.34. ING submits that this case was not particularly complex, that the amount of time spent in preparing for and attending on the hearing are already factored into any calculation of expenses and that Mr. Franklin's experience is already provided for in the 25% bonus built into the hourly rate of $92.34. Furthermore, Mr. Rabinowitz points out that Mr. Narain was only successful on two of four of the substantive issues raised in his application for arbitration.

I find that the issues raised with respect to Mr. Narain's claim were not particularly novel or complex and the success of the parties was mixed. Nevertheless, Mr. Franklin's skill and experience may have contributed to the more efficient handling of this matter than might otherwise have been the case and I find that this justifies an hourly rate higher than $92.34. The Dispute Resolution Practice Code authorizes an hourly rate of up to $150.00. That does not mean that the maximum is appropriate in all cases. I have decided that, in this particular case, the appropriate hourly rate is $110.00.

In his written submissions, Mr. Franklin also claimed certain disbursements, but amended these figures during his oral submissions made during the telephone conference held on September 30, 2005.

Based upon the submissions of the parties, I find that Mr. Narain is entitled to the following expenses:

Fees

52.4 hours @ $110.00/hr.

$5,764.00

Disbursements

Records of Dr. Halman

50.00

OHIP Summary

80.00

Photocopies (including P.S.T.)

404.36

Records of Accident Injury Rehab.

75.00

Conduct Money - Dr. Chizen

53.00

Conduct Money - Dr. Garber

26.50

Preparation of Dr. Chan

175.00

Attendance at hearing by Dr. Chan

500.00

Mileage (re service of summons)

18.59

Service of Summons

74.90

Fees and Disbursements

$7,221.35

G.S.T. on Fees

403.48

TOTAL FEES, DISBURSEMENTS AND G.S.T.

$7,624.83

Accordingly, pursuant to subsection 282(11) of the Insurance Act, I find that Mr. Narain is entitled to his expenses with respect to his application for arbitration in the amount of $7,624.83 (inclusive of G.S.T. and disbursements).

MEENAWATTI MANGROO

Entitlement to Expenses

In her application, Ms. Mangroo claimed income replacement benefits, benefits for the cost of treatment and for housekeeping and home maintenance services (as well as interest on any outstanding amounts). Ms. Mangroo's application was dismissed in its entirety.

The parties agree that, of the five criteria listed in subsection 12(2) of the Expense Regulation, the last three have no relevance to this case.

On behalf of ING, Mr. Rabinowitz submits that since Ms. Mangroo was completely unsuccessful on her application, ING is entitled to its expenses for the part of the proceeding related to her application.

On behalf of Ms. Mangroo, Mr. Franklin submits that even though Ms. Mangroo was unsuccessful, she should be awarded her expenses or, in the alternative, each party should bear its own expenses and Ms. Mangroo should not be ordered to pay any expenses to ING. This argument is based upon two things.

First, Ms. Mangroo made an offer to ING on February 3, 2005 to settle her application for $19,000 plus expenses. ING did not provide any written counter-offer. Mr. Franklin argues that ING should not be awarded any of its expenses because of its failure to respond to this offer and he has referred me to Viffers and Pioot Insurance Company (FSCO A03-000993, August 11, 2005) in support of this argument.

Second, Mr. Franklin submits that Ms. Mangroo commenced and pursued this application in good faith and that to deny her an order for her expenses or to force her to pay ING’s expenses will create financial hardship for her and will deter other applicants who may have meritorious cases from pursuing their claims. This is, essentially, an argument founded upon public policy. Mr. Franklin has referred me to the following decisions in support of his argument: M/oreOOi and Zurich Insurance Company (FSCO A97-001997, June 27, 2000) ("Morelli), Stelzer and Zurich Insurance Company (FSCO A99-000170, August 17, 2000) Stelzer), Adabi-Ghomi' and Allstate Insurance Company of Canada (FSCO A-013683, December 6, 2000) ("Adabi-fihomi) and Pooler and Guardian Insurance Company of Canada (FSCO A99-000592, July 17, 2000) ("Pooler).

As pointed out by Director Draper in Pembridge Insurance Company (PAFCO INS. CO.) and Howden (FSCO P02-00031, May 17, 2004), two significant changes were made to the Expense Regulation effective October 1, 2003: (1) the list of criteria is now exhaustive, requiring the adjudicator to consider only the criteria listed in paragraphs 1-5 of subsection 12(2) of the Regulation; and (2) there is no longer a broad sixth criterion for "any other matter . . . the arbitrator considers relevant." Director Draper had the following to say about these changes:

The new criteria, introduced on October 1, 2003, continue the move toward a more results-based approach to expenses. The list of criteria have been changed to some extent, but more significantly, the criteria are now the only factors that can be considered and there is no longer a broad, "any other matter" criterion.²

The Morelli Stelzer Adabf-Ghomi'and Pooler decisions were all issued under the former version of the Expense Regulation (i.e., prior to October 1, 2.003). These decisions are not binding upon me and I do not find them to be persuasive precedents, especially given the above-noted changes to the Expense Regulation. The Expense Regulation confers no jurisdiction upon me to consider any criteria other than those specifically listed therein.³

I acknowledge that Director Draper indicated that the door may still be open in "rare cases" to apply the old criteria,⁴ but that is only in cases where the application was commenced prior to October 1, 2003 but the hearing is not concluded until on or after that date. In this case, the application was commenced in December 2003 and it cannot be argued that the former Expense Regulation has any relevance.

In Villers, the arbitrator ordered the insurer to pay the applicant's arbitration expenses (after a preliminary issue hearing) despite the fact that the insurer had been successful on the central preliminary issue upon which the arbitrator had adjudicated. According to the reasons for the decision, the arbitrator awarded expenses to the applicant in this case because the applicant had been at least partially successful on a number of issues raised within the context of the preliminary issue hearing (although unsuccessful on the ultimate question) and because of the applicant's reasonable efforts to resolve the application through negotiation and the insurer's "lack of responsiveness" to those overtures.

In the case before me, ING takes the position that, given the outcome of the application, the February 3, 2005 offer made on behalf of Ms. Mangroo was not a reasonable one and that ING was justified in rejecting it. I agree. There is also no reason, on the facts of this case, to penalize ING for failing to respond to this relatively late offer with a formal counter-offer.

Although I did not go so far as to find that Ms. Mangroo brought this application in bad faith, I had serious concerns about her credibility and she was completely unsuccessful on her application. While an order against her for expenses may cause Ms. Mangroo some financial hardship, I really have no evidence before me as to her assets or current income, nor would such information be relevant under the Expense Regulation as it is currently formulated.

I find that ING is entitled to its expenses of this arbitration.

Quantum

As previously indicated, Mr. Franklin (on behalf of Ms. Mangroo) does not dispute that 53 hours was a reasonable amount of time for Mr. Rabinowitz to spend in representing ING with respect to this matter. There is also no dispute that Mr. Rabinowitz is entitled, under the Expense Regulation, to claim his time at the rate of $73.87 per hour (plus GST). In his written submissions, Mr. Rabinowitz also claimed certain disbursements, but amended these figures during his oral submissions made during the telephone conference held on September 30, 2005.

Based upon the submissions of the parties, I find that ING is entitled to the following expenses:

Fees

53 hours @ $73.87/hr.

$3,915.11

Disbursements

Photocopies

400.00

Conduct Money

69.50

Preparation of Dr. Lexier

175.00

Attendance at hearing by Dr. Lexier

400.00

Fees and Disbursements

$4,959.61

G.S.T. on Fees

274.06

TOTAL FEES, DISBURSEMENTS AND G.S.T.

$5,233.67

Accordingly, pursuant to subsection 282(11) of the Insurance Act, I find that ING is entitled to its expenses with respect to the arbitration commenced by Ms. Mangroo in the amount of $5,233.67 (inclusive of G.S.T. and disbursements).

December 19, 2005

Richard Feldman Arbitrator

Date

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2005 ONFSCDRS 178

FSCO A03-001749

BETWEEN:

HARRICHAN NARAIN

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

AND

FSCO A03-001748

BETWEEN:

MEENAWATTI MANGROO

Applicant

and

ING INSURANCE COMPANY OF CANADA

Insurer

ORDER

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

1. ING shall pay Mr. Narain's arbitration expenses in the amount of $7,624.83.

2. Ms. Mangroo shall pay ING's arbitration expenses in the amount of $5,233.67.

December 19, 2005

Richard Feldman Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule —Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Pembridge Insurance Company (PAFCO INS. CO.) and Howden (P02-00031, May 17, 2004) at p. 15.
3. 3See Nur and Aden and Western Assurance Company (FSCO A03-001207 and A03-001173, December 8, 2004).
4. 4Pembridge Insurance Company (PAFCO INS. CO.) and Howden (P02-00031, May 17, 2004) at p. 11.