Neutral Citation: 2005 ONFSCDRS 38

FSCO A02-001646

BETWEEN:

KULAVEERASINGAM RAMALINGAM

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON ASSESSMENT OF EXPENSES

Before:

Suesan Alves

Heard:

By teleconference call on March 4, 2005

Appearances:

David S. Wilson for Mr. Ramalingam

Todd McCarthy for State Farm Mutual Automobile Insurance Company

In my decision of December 1, 2004, I awarded the Applicant expenses. The Applicant delivered his bill of expenses. The Insurer did not respond, and the Applicant then requested an assessment of expenses. At the assessment hearing, the Applicant requested an additional hour for preparation for and attendance on the assessment.

The Insurer submitted the amount claimed for fees was excessive, and that the issue of disbursements should be reserved to the hearing arbitrator. The Insurer submitted that 50 minutes was a reasonable amount for preparation and attendance on the assessment.

The issue is:

What amount should be awarded to the Applicant for expenses in relation to the variation motion, cross-motion for continuing interim income replacement benefits heard April 29, 2004, for an expenses hearing and for preparation and attendance on the assessment of expenses?

Mr. Ramalingam is entitled to expenses of $3,605 in fees, $252.35 GST on fees, disbursements of $6,043.50 and $423.05 GST on disbursements.

Background and position of the parties

Mr. Ramalingam's bill of expenses is in the amount of $3,480 for fees and GST of $243.60 on fees, $6,043.50 for disbursements and GST of $423.05 on disbursements. The Applicant claimed 23.2 hours and submitted the time expended was reasonable. The expenses claimed relate to what were in essence two motions heard on April 29, 2004: The Insurer's variation application and the Applicant's cross-motion for post-104 week interim benefits. Subsequently, there was a hearing by written submissions dealing with entitlement to expenses, and more recently an assessment of expenses hearing. The Applicant claimed a further hour for preparation and attendance on the assessment of expenses hearing at that hearing

State Farm submitted the hours claimed were excessive. The Insurer submitted that $1,500 plus GST or $1,800 was a reasonable amount to be paid for fees, with the issue of disbursements being reserved to the hearing arbitrator. This reflects approximately 10 to 12 hours of time including a half day attendance on the proceeding on April 29, 2004. The Insurer submitted that 50 minutes should be allowed for preparation and attendance at the assessment hearing.

Law:

Section 282(11) of the Insurance Act gives an arbitrator a discretion to award expenses. Section 3 of The Schedule, Dispute Resolution Expenses, prescribed for the purpose of subsection 282(11) of the Insurance Act, states:

3(1) The legal fees payable by the insured person or the insurer for the following matters may be awarded:

For all services performed before an arbitration, appeal, variation or revocation hearing.
For the preparation for an arbitration, appeal, variation or revocation hearing.
For attendance at an arbitration, appeal, variation or revocation hearing.
For services subsequent to an arbitration, appeal, variation or revocation hearing.

(2) The number of hours for which legal fees may be awarded shall be determined by the arbitrator, having regard to the criteria set out in subsection 12(2) of this Regulation.

Subsection 12(2) of the Regulation states:

(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:
Each party's degree of success in the outcome of the proceeding.
Any written offers to settle made in accordance with subsection (3).
Whether novel issues are raised in the proceeding.
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.
Whether any aspect of the proceeding was improper, vexatious or unnecessary.

Thus, the same criteria are used for determining entitlement to expenses and for determining the amount of the legal fees which may be awarded.¹

In determining the reasonableness of fees, arbitrators have historically used the Legal Aid Tariff guidelines as a reference point, or allowed a ratio of between one and four hours of preparation time for every hour of hearing time.² Arbitrators have also concluded that such a yardstick is too crude a device to determine the reasonableness of fees claimed, particularly when additional time spent in preparation is reflected in decreased time spent in a formal arbitration hearing.

For example in Argirovski and Allstate Insurance Company of Canada (FSCO A98-000816, March 14, 2000), Arbitrator Palmer stated: "Efficient use of the Commission's time for hearings should be encouraged, not discouraged by setting inflexible ratios for preparation to hearing time."

In this case, I find the ratio of between one to four hours of preparation time in relation to hearing time would be inappropriate because subsection 12(2) of the Regulation prescribes the sole criteria to be used in guiding my discretion. I also find that such a ratio would be inappropriate in this case because of the efficient use of hearing time, as detailed below.

The Applicant made his cross-motion for interim benefits returnable on the same day as the variation motion. This resulted in a decreased amount of hearing time on April 29, 2004. A second factor which decreased the amount of hearing time was the preparation of Applicant's counsel. His preparation resulted in focussed materials and submissions which addressed the issues to be decided. Similarly, the hearing dealing with entitlement to expenses took place by way of written submissions. Again, this was an efficient use of the Commission's time and accommodated the schedules of two busy counsel. However, the result is that there is no hearing time which could be used as a measure with respect to that hearing.

With respect to the criteria in the Regulation, the Applicant had a greater degree of success in the outcome of the proceedings as set out in the decision on entitlement to expenses. The continuation of interim benefits was a matter of considerable importance to the Applicant. The issues were somewhat novel, in that there have been few variation proceedings, and few cases in which interim benefits have been sought and awarded in the post-104 week period. In my view, preparation for a hearing involving novel issues, and arguing those issues tends to take a greater amount of time.

I did not find any aspect of the proceeding improper or unnecessary; rather, as noted above, there was an efficient use of the Commission's time. In the circumstances, I am satisfied that counsel for the Applicant has justified the time expended, and that having regard to the prescribed criteria, the hours expended and claimed are reasonable. For these reasons, I allow the Applicant's bill for fees as submitted. I also allow a further 50 minutes for preparation and attendance at the assessment of expenses hearing as this was not disputed by the Insurer and appears to me to be reasonable.

There was no dispute concerning the appropriateness of the hourly rate of $150 claimed by counsel for the Applicant. I conclude that the Applicant is entitled to fees of $3,480 as billed, and 7% GST on those fees of $243.60. In addition, I allow the Applicant the further sum of $125 for fees for 50 minutes preparation and attendance at the assessment of expenses hearing and GST on those fees of $8.75. The total payable for fees is therefore $3,605 and the total GST on fees is therefore $252.35.

Disbursements:

The Applicant claimed disbursements of $6,043.50 for medical reports, parking charges, mileage and photocopies, and GST of $423.05 on disbursements. The Applicant submitted the expenses were necessary for the motion and the arbitrator relied upon the reports in making her decision. The Insurer submitted that the medical reports were not relevant and were usually paid for only after the main hearing on the merits was concluded.

I accept that in most cases expenses are awarded following the main hearing on the merits, which has not as yet taken place in this case. This case has unfolded differently. The proceeding before me involved a relatively discrete aspect of the case, namely, a variation proceeding and a cross-motion for continued interim benefits. Expenses were sought by each party in relation to that proceeding. In the circumstances of this case, I exercised my discretion to deal with the expenses of the proceeding as requested by both parties.

The Dispute Resolution Practice Code—Fourth Edition, updated October 2003, provides for a two step process in relation to expenses of arbitration proceedings, failing agreement by the parties. Firstly, an arbitrator determines which party is entitled to expenses. Secondly, an arbitrator determines how much is payable.

In my view, the time for making the argument— that these expenses should be awarded at the conclusion of the hearing— was during the first part of the expenses process which dealt with entitlement to expenses. In my view, in the absence of a provision in the expenses order to the contrary, once expenses are awarded, they become payable, subject only to their quantification by agreement or assessment.

I find the reports claimed were necessary for use on the motion. The Applicant filed three medical reports on April 29, 2004 which addressed the post-104 week test for entitlement to income replacement benefits, causation and the need for surgery. Two of the medical practitioners make specific reference to earlier medical reports and state they have reviewed them. This conveyed a familiarity with Mr. Ramalingam's background, his health and work related issues, and gave weight and context to their opinions. I therefore conclude that all of the reports claimed were relevant to and necessary for the April 29, 2004 motion for interim benefits. The amount billed for each of the medical reports is within the limits permitted under the Tariff.

There was no dispute as to the photocopying charges and I allow them. I find the parking and mileage charges reasonable and allow them. Thus, I find the disbursements claimed reasonable and allow them as billed. In the result, the Applicant is entitled to $6,043.50 for disbursements and $423.05 for GST on disbursements.

Conclusion:

I have assessed the Applicant's fees, disbursements and GST in the total amount of $10,323.90.

March 24, 2005

Suesan Alves Arbitrator

Date