Rizk v. Allstate Insurance Company of Canada, 2005 ONFSCDRS 52

Neutral Citation: 2005 ONFSCDRS 52

FSCO A03-000562 and A03-001119

BETWEEN:

ELIE CHAHER RIZK and NARSAI ISHO

Applicants

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION ON EXPENSES

Before:

Rosemary Muzzi

Heard:

December 10, 2004, at the Offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

No one for Mr. Rizk

Joseph Rizzotto for Mr. Isho - subsequently removed from the record

Ian D. Kirby for Allstate Insurance Company of Canada

The applicants, Mr. Rizk and Mr. Isho, claimed that they were injured in a motor vehicle accident on October 14, 2002. In a decision dated June 11, 2004, Arbitrator Catherine Skinner dealt with their claims for statutory accident benefits under the Schedule and ordered each applicant to pay 50% of Allstate's reasonable arbitration expenses. On behalf of Allstate, Mr. Kirby wrote to both applicants' counsel providing them with the Insurer's Bill of Expenses. He did not receive a response and requested an expenses hearing.

The issue in this further hearing is:

What is the amount of expenses that each applicant is required to pay to Allstate?

Each applicant is required to pay Allstate its expenses in the amount of $5,111.71.

Notice and Representation

Neither of the applicants appeared at the expenses hearing. I was satisfied that in the circumstances, the expenses hearing should proceed as both applicants had been duly notified of the proceedings. I so concluded on the basis of the following facts.

A letter from the Commission dated September 16, 2004, confirming the date for this expenses hearing, was sent to both of the applicants at the addresses on file for them, and to the counsel who represented them at the arbitration hearing. It stated that an expenses hearing had been set for December 10, 2004. By Notice of Hearing dated September 20, 2004 both counsel and Mr. Rizk were provided with formal notice of the hearing date. The Notice itself does not appear to have been sent to Mr. Isho.

Mr. Vickar, counsel for Mr. Rizk at the arbitration hearing, did not appear at the expenses hearing. Instead, before me was his letter, dated December 8, 2004, indicating that he had lost contact with his client and would therefore not be appearing at the expenses hearing. Counsel also indicated that his letter was not to be considered as a request for an adjournment of the expenses hearing.

Mr. Rizzotto, counsel for Mr. Isho at the arbitration hearing, did appear at the expenses hearing and asked to be removed as counsel of record on the basis of these facts:

He had been be unable to obtain instructions from Mr. Isho despite his best efforts:

♦ After Allstate had provided its expenses to him, Mr. Rizzotto met with Mr. Isho on July 21, 2004 to review the decision of the arbitrator and to seek instructions. He also told Mr. Isho about the expenses award and the amount claimed by Mr. Kirby on behalf of Allstate;

♦ Mr. Rizzotto sent a letter dated August 18, 2004 to Mr. Isho's address and asked for instructions regarding the expenses assessment;

♦ On the Monday before the expenses hearing date, Mr. Rizzotto called Mr. Isho's home and spoke to his son and explained that Mr. Isho should call him back and that, in any event, he should appear at the hearing on Friday. Mr. Rizzotto called Mr. Isho's home again Tuesday and Wednesday but was unable to speak with Mr. Isho.

Mr. Rizzotto sent a letter dated December 8, 2004 to FSCO and the parties stating that if he was unable to obtain instructions, he would be asking the arbitrator to remove him from the record pursuant to Rule 9.7 of the Dispute Resolution Practice Code.
As at the date of the expense hearing, he still had no instructions.
Mr. Rizzotto confirmed that both he and Mr. Isho had received FSCO's letter of September 16 confirming the expenses hearing date.

As he was unable to obtain instructions from his client despite his best efforts, I made an order removing Mr. Rizzotto as counsel of record for Mr. Isho. Furthermore, because I was satisfied that all parties had been duly notified of the proceedings, I concluded that the hearing could proceed in their absence.

Reasonableness of Allstate's expenses

Allstate's Bill of Expenses indicates legal fees of $5,753.97 and disbursements of $4,020.69, plus GST. These other facts are clear from a review of the Bill:

the hearing took two days to complete;
counsel worked 56.8 hours in preparation for and attendance at all proceedings including the hearing. The hourly rate claimed by counsel is $87.94.
a law clerk worked 33 hours on the cases. The hourly rate claimed is $23.

The total bill is $10,223.42.

Mr. Kirby asked me to find that the expenses claimed were reasonable having regard to the following factors:

There were a number of proceedings in this case: two applications for arbitration requiring a response; two substantive issues in Mr. Rizk's case and one in Mr. Isho's case; two pre-hearing discussions following which a decision was made to hold a common hearing.
A preliminary issue arose at the hearing which resulted in a withdrawal of the claims and a finding that an accident had not occurred.
Any expense order I make should be consistent with the award of the hearing arbitrator which divided the expenses equally between the two applicants.

The criteria to be considered for awarding all or part of the expenses incurred are set out in section 12(2) of the Expense Regulation of Regulation 664 of the Insurance Act, as amended. Criteria 1, 4 and 5 are relevant here and were considered by Arbitrator Skinner in deciding that Mr. Rizk and Mr. Isho were equally responsible for Allstate's reasonable expenses. She concluded in this way:

Having regard to these criteria, I find that Mr. Rizk and Mr. Isho are responsible for paying Allstate's reasonable expenses of arbitration. Allstate was entirely successful in this proceeding. The claims being advanced by Mr. Rizk and Mr. Isho were not clarified until the first morning of the hearing, with both Applicants withdrawing some or all claims for medical benefits at the last minute. I find that this conduct attracts an award of expenses because the discussion around the withdrawal consumed a significant amount of hearing time and because the Insurer was obligated to prepare to respond to claims that were not pursued. And, most significantly, I found that Mr. Rizk and Mr. Isho wilfully misrepresented material facts with respect to their applications for accident benefits. I was satisfied that they were not involved in an accident as they described and that the basis for their claims was a misrepresentation. I find that the Applicants' conduct in advancing a claim based on false allegations is improper.

I adopt her findings in concluding that the expenses claimed by Allstate are in fact reasonable. Given the number of proceedings in these two cases, the fact that the matters were only joined at the hearing stage, and that counsel had to prepare for issues that were not pursued at arbitration, I find the number of hours claimed for preparation and participation in the hearing to be reasonable. Also, I find that the amounts claimed for disbursements are not unreasonable.

Consequently, I conclude that Mr. Rizk and Mr. Isho are each liable to pay Allstate $5,111.71.

April 22, 2005

Rosemary Muzzi Arbitrator

Date