Neutral Citation: 2005 ONFSCDRS 78

FSCO A97-000312 and A97-000814

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

RICHARD DESROCHES

Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before:

Lawrence Blackman

Heard:

The Applicant filed correspondence dated December 14, 2004, January 19, January 21 (two letters), February 14, February 22 and March 18, 2005.

The Insurer filed correspondence dated January 4 and 28, 2005.

The Hearing was held by telephone conference calls on January 7 and May 6, 2005.

Appearances:

Rhona DesRoches for Mr. DesRoches

Gordon L. Robson for Economical Mutual Insurance Company

Issues:

The Applicant, Mr. Richard DesRoches, was injured in a motor vehicle accident on November 2, 1994. He applied for and received statutory accident benefits from Economical Mutual Insurance Company ("Economical") payable under the Schedule,¹ including payment of weekly income replacement benefits ("IRBs"). The parties agreed that Mr. DesRoches was entitled to a Loss of Earning Capacity Benefit ("LECB") as he continued to qualify for IRBs 104 weeks after the onset of his disability. The parties, however, disagreed on the amount of the LECB, as well as Mr. DeRoches' entitlement to certain other benefits. These disputes were not resolved through mediation and Mr. DesRoches applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended (the "Insurance Act").

The arbitration hearing proceeded before me on March 1, 2, 3, and 4, and June 23, 24 and 25, 1999 in Midland, Ontario, and on June 28, 1999 by telephone conference. In a decision dated November 10, 1999, I made the following orders:

1. Economical Mutual Insurance Company shall pay Mr. DesRoches a weekly LECB of $488.87 from February 24, 1997, together with interest on overdue payments in accordance with section 68 of the Schedule.

2. Economical Mutual Insurance Company shall pay Mr. DesRoches the reasonable labour cost relating to the following maintenance expenses, together with interest on any overdue amounts, in accordance with section 68 of the Schedule:

• driveway repair;

• rearranging the insulation in his lower attic;

• checking the insulation airways from his lower to upper attic;

• recaulking his chimney flashing; and,

• moving sand to the inside of his garage.

3. The parties may now speak to the issue of the expenses of this arbitration proceeding.

Both parties appealed this decision. Director's Delegate McMahon dismissed Mr. DesRoches' appeal (FSCO P99-00062, June 7, 2002). Economical's appeal was allowed in part, the weekly LECB being reduced from $488.87 to $358.10. This was based on the Director's Delegate finding that Mr. DesRoches had a residual earning capacity ("REC") of $145.30 per week (90% of which was $130.77) rather than zero, as determined in the arbitration decision. Mr. DesRoches was allowed one half of his expenses of the combined appeals, notwithstanding his lack of success in his own appeal and the Insurer's partial success on its appeal.

Mr. DesRoches subsequently applied for a variation of the appeal order, based on a 2003 opinion of a REC DAC (designated assessment centre) that he had a zero REC. By letter decision dated October 18, 2004, Director's Delegate Evans dismissed Mr. DesRoches' application, finding the 2003 REC DAC not to be retrospective. The Director's Delegate determined the new assessment was not relevant and did not meet the test of evidence not available at the arbitration or at the appeal.

The Commission was then asked to address the still outstanding issue of the legal expenses of the arbitration hearing. A Notice of Assessment of Expenses dated November 18, 2004 was served on the parties, returnable by telephone conference call on January 7, 2005.

On January 7, 2005, I arranged the telephone conference call. Mr. DesRoches participated, assisted by his wife, Mrs. Rhona DesRoches. Mr. DesRoches confirmed that he is no longer represented by counsel. Mrs. DesRoches advised that she was assisting her husband without remuneration. Economical indicated that it had no objection to Mrs. DesRoches' participation.

Economical confirmed that it was not seeking its legal expenses of these arbitration proceedings. It was, however, disputing the Applicant's entitlement to his full expenses as claimed.

At the initial telephone conference, the Applicant, who was not represented by counsel, was not able to advise the precise quantum of legal expenses he was seeking. As a result of this and other difficulties that arose during this discussion, I did not feel that it was appropriate to proceed with the expense hearing at that time. Rather, I set time lines for the exchange of documentation and submissions. These dates were agreed to by the parties. The expense hearing was then resumed before me by telephone conference on May 6, 2005. The outstanding issue was:

1. What entitlement does Mr. DesRoches have in respect of payment of the legal expenses of these arbitration proceedings?

Result:

1. Mr. Richard DesRoches is entitled to payment of $38,409.44, inclusive of G.S.T., in respect of his legal expenses of these arbitration proceedings.

EVIDENCE AND ANALYSIS:

Mr. DesRoches seeks the sum of $48,530.11 in respect of his legal expenses of these arbitration proceedings, including the eight-day arbitration hearing. This includes $19,044.79 for legal disbursements.

Economical submits that Mr. DesRoches should, at best, be awarded only one half of his reasonable expenses for these arbitration proceedings, based on the following arguments:

– success at the arbitration hearing was divided. Economical submits that the Applicant was unsuccessful on three of the seven home maintenance expenses claimed as well as on his claim for payment of the labour required to complete his home. The Insurer further submits that Mr. DesRoches did not establish his entire LECB claim; specifically, his prior work in renovating the family home was not accepted as employment activity;

– the evidence of two of the Applicant's witnesses, namely Mr. Joel Kumove, a rehabilitation counsellor, and Mr. Ronald Mix, a chartered accountant, was not accepted; and,

– the evidence of Mrs. DesRoches was not relied upon. During her cross-examination, Mrs. DesRoches conceded that she had discussed her husband's evidence with him, notwithstanding my exclusion order. I declined the Insurer's request to strike Mrs. DesRoches' evidence, indicating that what Economical submits was probably an unintentional violation, should go to weight.

Economical further argues that only those expenses incurred after the filing of the Applications for Arbitration should be considered (submitting that the first Application for Arbitration was filed in February 1997). It submits that expenses incurred in respect of issues settled during this proceeding should not be taken into account.

Mr. DesRoches responds that he brought these Applications in good faith. He submits that he is entitled to payment of all legal expenses from the date he first retained counsel in August 1995 (subject to the maximum rates allowed) which can be distinguished from legal work in respect of his wife (who also had a claim arising from this accident) or work in respect of his tort action. The Applicant submits that he incurred extra legal expenses as a result of Economical's alleged bad faith, and that such extra expenses should be compensated.

The parties dispute whether the criteria I should consider in determining entitlement to and the quantum of legal expenses should be the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003) (the "Fourth Code") which is presently in effect (as argued by the Insurer) or the Dispute Resolution Practice Code (Third Edition, April 15, 1997) (the "Third Code") which was in effect when the arbitration decision was issued (as argued by the Applicant).

I do note the decision of Director Draper in Pembridge Insurance Company (Pafco Ins. Co.) and Howden (FSCO P02-00031, May 17, 2004) in which he states, relying upon court decisions, that:

... the starting point is clear — changes in the cost provisions are procedural and, absent transition rules to the contrary, apply to any determination of expenses after they come into effect.

I also note the recent decision of Truong and Lumbermans Mutual Casualty Company /Kemper Canada (FSCO P03-00007, March 31, 2005), in which Director's Delegate Makepeace states that:

I am uncertain whether the court decisions are directly applicable in the arbitration context because rules about costs or expenses are specific to the particular forum. The dispute resolution scheme at FSCO was intended, amongst other remedial purposes, to provide a more accessible alternative to the courts. This remains its mandate, despite the amendments to the 1990 version of the expenses regulation that have progressively tilted expenses towards the successful party.

Entitlement to Legal Expenses

I find Mr. DesRoches entitled to his full reasonable legal expenses, based on the criteria of either the Third Code or the Fourth Code. For simplicity, I will review the criteria of the Fourth Code:

each party's degree of success

In this case, by far the most important issue, taking up the majority of my decision, was the amount of the LECB. Economical submitted that the correct LECB was $26.47 a week, based on a February 1997 REC DAC report and the opinion of the Insurer's accounting expert.

Although the arbitration LECB award of $488.87 per week was less than half the Applicant's claimed weekly LECB of $1,000, it was more than eighteen times the Insurer's calculations. The subsequent events of the partial reduction on appeal and its evident reinstatement upon the subsequent REC DAC, if relevant at all, seem to cancel each other out.

Mr. DesRoches was also successful regarding the reasonable labour costs on most of the various maintenance expenses claimed. The Insurer was unable to refer me to any cases where an applicant was awarded a percentage of his or her legal costs based on the percentage of issues the applicant had won.

any written offers to settle

I was not advised of any written offers to settle.

whether novel issues were raised in the proceeding

The Applicant was not successful in his argument that his pre-accident earning capacity should include his average annual profit from buying, building/renovating and selling property or in his claim for the labour costs necessary to complete his house. However, I find that these were rather novel arguments, especially the latter. In my November 10, 1999 decision, I stated that:

I agree, however, with the approach of Arbitrator Sampliner, in Zettler and Pilot Insurance Company (OIC A97-000674, March 31, 1998) and find that some measure of replacement labour might qualify as a reasonable expense under section 40 of the Schedule, if, as part of his rehabilitation, it would assist the Applicant in resuming his completion of his house.

conduct which tended to prolong, obstruct or hinder the proceeding

I found both counsel extremely professional and efficient with their time. The Applicant did call as witnesses both Mr. Kumove, a rehabilitation counsellor, and Mr. Mix, a chartered accountant. Ultimately, I did rely on other expertise and evidence. Nonetheless, I found their evidence helpful in appreciating the parameters of the case. I find that it was reasonable for these experts to be retained and, further, to be called to give oral evidence.

I accept the Insurer's characterization of Mrs. DesRoches' violation of my exclusion order as probably inadvertent. In any event, Mrs. DesRoches' oral evidence was relatively short, it did not unduly hinder the proceeding, and counsel and I were able to take a few minutes to delve into the intriguing case law regarding the ramifications of exclusionary orders.

whether any aspect of the proceeding was improper, vexatious or unnecessary

I did not find any part of the proceeding to be improper, vexatious or unnecessary. The Applicant raised in his correspondence issues regarding Economical's alleged improper conduct in its adjusting of its file and in its defence of this matter. In my letter of February 16, 2005, I stated that:

The Applicant alleges deceptive practices on the part of the Insurer. Part XVIII of the Insurance Act, R.S.O. 1990, c. I.8, enumerates the Superintendent's powers to examine and investigate unfair or deceptive acts or practices. Section 288 of the Insurance Act empowers the Director to recommend to the Superintendent that the latter investigate the business practices of an insurer if the Director is of the opinion that one or more arbitrations or appeals reveal unfair or deceptive business practices. My powers, as arbitrator, are set out in Part VI of the Insurance Act. They do not include the powers assigned to the Superintendent under Part XVIII or the Director under section 288.

The Applicant alleges bad faith and defamation on the part of the Insurer. Damages for bad faith and defamation are solely within the purview of the courts.

The Applicant notes a claim for a special award. The Insurance Act does give arbitrators the power to order a special award. Such a claim, however, was not included in this proceeding. My decision, disposing of all issues in dispute other than legal expenses (which was specifically left open) was issued November 10, 1999. That decision was appealed by both parties. There has also been an Application for Variation. The Appeals and the Variation Application have now been determined.

Rule 43 of the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003) states that the arbitrator may reopen a hearing at any time before making a final order disposing of the arbitration. It is now more than five years after such a final order. In my view, I am functus, other than regarding the question of legal expenses, i.e. I have discharged the duties before me and have no further authority other than determining the issue of legal expenses of the arbitration proceeding.

Subsection 282(11) of the Insurance Act restricts my authority to awarding legal expenses in respect of an arbitration proceeding in accordance with the criteria prescribed by the regulations. I am not persuaded that Regulation 664, R.R.O. 1990, either before or after the amendments set out in O. Reg. 274/03, includes as relevant criteria the Applicant's present allegations of deceptive practices, bad faith and defamation in the Insurer's general adjusting of this file specifically in the earlier years of this claim. I am not persuaded that the expense hearing should or can be expanded to serve as a forum for a claim for a special award or an investigation of an insurer's adjusting practices.

In concluding that the Applicant is entitled to his legal expenses for the aforementioned reasons, I again note the comments of the Director's Delegate's comments in Truong, that notwithstanding the amendments to the expenses regulation that have progressively tilted expenses towards the successful party, it remains the mandate of the dispute resolution scheme at FSCO to provide a more accessible alternative to the courts. In this particular case, however, it is not simply a question of access; Mr. DesRoches was, in the final analysis, the successful party.

The Amount of the Legal Fees

Mr. DesRoches submits an account from his counsel for all legal services provided from January 1995, detailing which items he argues should be attributed to these arbitration proceedings. This results in 171.8 hours for his lawyer, Mr. A. Kerr, and 72.6 hours for Ms. S. Beatty, a legal assistant. Mr. DesRoches claims $150 an hour for Mr. Kerr and $23 an hour for Ms. Beatty. In total, his claims are $27,698.63 for Mr. Kerr (although my calculator arrives at $27,573.90) and $1,786.69 for Ms. Beatty, inclusive of GST.

Economical submits that "rather than taking a line by line approach of scrutinizing each individual entry . . . it would be more appropriate to consider the amount of time that the Applicant's lawyer, Mr. Kerr, expended at the actual arbitration hearing, and then apply a ratio vis-a-vis Mr. Kerr's preparation time." I agree.

The Insurer concedes 43.8 hours of attendance at the hearing in Midland, plus submissions by telephone conference. Both parties agree that this totals 46 hours of hearing time. I accept this.

Economical submits that "FSCO arbitral jurisprudence establishes that arbitrators have found ratios of preparation time to hearing time ranging from 1:1 to 4:1 to be reasonable." I agree. The Insurer argued in its written submissions that a ratio of 1.5:1 to 2:1 would be reasonable. In its oral submissions, Economical indicated that a ratio of 2:1 would be reasonable in the circumstances of this case.

Included in the exhibit materials before me was a separate account of Mr. Kerr, dated November 30, 1999, which stated that it dealt only with legal fees and expenses regarding Mr. DesRoches' arbitration starting from August 15, 1996 and ending June 29, 1999. It sets out Mr. Kerr's hours as 143.8. I deduct from this amount 2.2 hours pertaining to mediation. I find that the remaining 141.6 hours were incurred in respect of the arbitration proceeding, as required by subsection 282(11) of the Insurance Act. Mr. Kerr also charges 62.1 hours for his law clerk at $60 an hour. The total account is in the amount of $58,719.92.

I find this account the best evidence before me as to what legal work was performed specifically for Mr. DesRoches and specifically for these arbitration proceedings.

Taking the agreed 46.0 hours for attendance at the hearing, Mr. Kerr's hours for preparation would equal 95.6, or roughly a 2.1 to 1.0 preparation to hearing ratio, which is approximately what the Insurer itself concedes is reasonable, and which I find in the circumstances of this case to be a very efficient use of time.

Ms. Beatty did not attend at the hearing. Economical does not dispute $23 an hour as being an appropriate hourly rate for a law clerk. The Insurer, however, submits that Ms. Beatty did not do any substantive legal work; it argues that it should not be responsible for paying for the clerical and administrative tasks she performed. Implicitly, the Insurer is saying that Mr. Kerr's hourly rate should encompass the work done by Ms. Beatty.

In Gresty and Howard Mutual Fire Insurance Company (FSCO A99-001152, March 18, 2002), Arbitrator Sapin stated that:

I do not accept that the fee for a law clerk is part of a lawyer's overhead. This may be true of secretarial or clerical staff, but a law clerk brings specialized legal training and expertise to a case, and does work a lawyer would otherwise be required to do at a higher hourly rate

It is unclear from the documentation provided, the precise "specialized legal training and expertise" Ms. Beatty brought to this case. From the account of Mr. Kerr, a significant part of her work seems to have consisted of passing information between Mr. Kerr and others involved in this case. However, from the account I accept that part of her work in preparing and organizing the file advanced the efficient progress of the arbitration proceeding beyond the assistance that a legal secretary might provide, and merits specific compensation. I allow twenty hours (which is less than a third of what was claimed) at the agreed hourly rate of $23, plus GST. This amounts to $492.20. I note that these further twenty hours of preparation raise the preparation to hearing ratio to 2.5 to 1.0, which I find is still very reasonable.

Economical argues that Mr. Kerr's more than ten-year call to the Bar at the time of the arbitration hearing entitles him to the $83.75 an hour legal aid rate. I note that this hourly rate is slightly greater than the $60 an hour that Ms. Beatty's work as a law clerk was billed to the client.

Both the Third Code and the Fourth Code mandate that the Rules are to be interpreted broadly so as to produce, amongst other things, the least expensive resolution of the dispute. Tariff A to the Rules of Civil Procedure allows lawyers with between ten and twenty years experience up to $300 an hour on a partial indemnity scale. Interpreting the Commission's Rules regarding counsel's hourly rate so as to result in an applicant bearing a larger portion of their costs than in the court system, is contrary to the intent of either the Third Code or the Fourth Code. It is also inconsistent with Director's Delegate's comments in Truong, noted above.

The Fourth Code, while providing specific criteria to consider in determining who is entitled to expenses, does not provide criteria to determine the appropriate hourly rate of counsel (or, indeed, the appropriate quantum of disbursements), other than Rule 78, which sets an upper limit of $150 an hour where an adjudicator is satisfied that a higher amount for legal fees to an insured person than allowed under the Legal Aid Services Act, 1998 is justified. Rule 58.06 of the Rules of Civil Procedure, however, does provide criteria, which I find helpful. These include:

– the amount involved in the proceeding: in this case, the LECB awarded was $25,421.24 per year ongoing from the date IRBs ceased, plus interest at 2% per month compounded monthly, in addition to the maintenance expenses awarded;

– the complexity of the proceeding: in this case a variety of medical, rehabilitation and accounting issues were addressed within the dizzying legislative intricacies of PECs (pre-accident earning capacity), RECs, and LECs (loss of earning capacity);

– the duration of the hearing: eight hearing days were required;

– the importance of the issues: to the parties certainly, I think the issues were extremely important. The Commission, itself, however, had seen relatively few matters proceed to a hearing concerning PECs, RECs and LECs;

– the conduct of the parties: as stated above, I found both counsel extremely professional and efficient with their time. I do note a January 8, 1999 adjournment letter decision of Arbitrator Vanderbent, which ordered, on consent, costs payable by the Applicant, fixed at $1,600, payable upon the resolution of Mr. DesRoches' application. I am advised that this order has been honoured.

Considering these factors, as well as the success of the Applicant in these proceedings, I am satisfied that Mr. Kerr is entitled to the higher maximum of $150 an hour. Such an hourly rate recognizes that it encompasses work done by a legal secretary as well as a significant part of the work performed by the law clerk, Ms. Beatty.

Therefore, I am allowing 141.6 hours in respect of Mr. Kerr, at $150 per hour, plus GST, which equals $22,726.80, in addition to the $492.20 allowed for Ms. Beatty.

The Amount of Legal Disbursements

Economical agrees to the Applicant's disbursements, with the exceptions noted below. I find the disbursements agreed by the Insurer reasonable, and allow same.

The disputed disbursements are as follows:

Mr. Joel Kumove

As noted above, Mr. Kumove is a rehabilitation counsellor. He gave evidence regarding the Applicant's PEC and REC. Economical submits that no amount should be recovered for Mr. Kumove's report nor for his preparation for or attendance at the hearing, on the basis that his evidence was not well received. As noted above, I found the evidence of both Mr. Kumove and Mr. Mix helpful in appreciating the parameters of the Applicant's case. I further found it was reasonable for these experts to be retained and to be called to give oral evidence.

Mr. Kumove's accounts for his reports and preparation for and attendance at the arbitration hearing total $5,505.85. The Applicant claims $3,832, representing the hourly and monetary maximums allowed at arbitration. Mr. Kumove, however, claims eight hours testifying on March 3, 1999. The parties agree that Mr. Kumove testified for part of that day. I allow Mr. Kumove two hours preparation (as set out in his account) and four hours for testifying, both at the $125 per hour Mr. Kumove claims, plus GST. The total recovery, as set out below, is $2,494.50, including $1,605 for Mr. Kumove’s report.

I find that this limited recovery allowed under the Code, more than adequately allows for any submitted deficiencies in Mr. Kumove's evidence.

Mr. Ronald Mix

Mr. DesRoches submitted two accounts from Mr. Mix, a chartered accountant. The first, dated April 14, 1998, is for $7,683.28. It represents work leading up to a March 25, 1998 report. The latter addressed pre-accident earning capacity on the assumption that Mr. DesRoches was also in the business of buying land and building houses for resale. The second account, dated March 9, 1999, is for $3,622.26. It was for the preparation of subsequent reports as well as preparation for and attendance at the arbitration hearing on March 3 and 4, 1999. The accounts total $11,305.54. The Applicant claims $4,698.70 as the maximum allowable under either Code.

The Insurer's submissions regarding Mr. Mix's report and attendance are addressed above.

Mr. Mix claims 9.75 hours for attending the hearing on March 3 and 4, 1999. Mr. DesRoches and Mr. Kumove, however, testified on March 3^rd. Mr. Mix testified only on March 4^th, sharing the day with Ms. Koczerginski (who gave extensive oral evidence) and a lay witness, Mr. Grozelle. I allow four hours of testimony for Mr. Mix, at the maximum $200 an hour allowed. The total allowed for Mr. Mix, as set out below, is $3,676.85. Again, the limited recovery allowed under the Code more than adequately allows for any submitted deficiencies in Mr. Mix's evidence.

Dr. Tom Davidson

Mr. DesRoches submits a $1,495 account dated January 20, 2005 in respect of Dr. Tom Davidson, a psychologist. The invoice is for counselling services provided in 1997.

Economical submits that no report of Dr. Davidson had been served, nor did Dr. Davidson testify at the arbitration hearing. The Applicant did not dispute this.

Subsection 282(11) of the Insurance Act restricts an arbitrator to awarding expenses "in respect of an arbitration proceeding." I find that this account is not in respect of this arbitration proceeding, there being no report filed into evidence nor any oral evidence received. Accordingly, the account is not recoverable.

In conclusion, the disbursements sought and allowed are as follows:

Disbursement Expense

Amount Sought (including G.S.T.)

Amount Allowed (including G.S.T.)

Ms. P. Koczerginski – January 10, 1997 report – September 17, 1997 report – preparation for / attendance at hearing

$ 1,605.00 $ 374.50 $ 649.00

$ 1,605.00 $ 374.50 $ 649.00

Dr. J.E. Trotter – April 24, 1998 report – preparation for hearing – attendance at hearing

$ 1,354.05 $ 856.00 $ 535.00

$ 1,354.05 $ 856.00 $ 535.00

Dr. J. Kumove – February 15, 1999 report – preparation for hearing – attendance at hearing – travel to hearing

$ 1,605.00 $ 535.00 $ 1,605.00 $ 87.00

$ 1,605.00 $ 267.50 $ 535.00 $ 87.00

Mr. R. Mix – April 14, 1998 report – February 18, 1999 report – preparation for hearing – attendance at hearing – travel, hotel, meals

$ 1,605.00 $ 433.35 $ 535.00 $ 1,877.85 $ 247.50

$ 1,605.00 $ 433.35 $ 535.00 $ 856.00 $ 247.50

Dr. M. Veall – preparation for / attendance at hearing – August 26, 1996 – August 28, 1996 – August 11, 1997 photocopies – April 12, 1999 records

$ 1,250.00 $ 15.00 $ 50.00 $ 8.50 $ 12.50

$ 1,250.00 $ 15.00 $ 50.00 $ 8.50 $ 12.50

Dr. T. Davidson – 1997 psychological counselling

$ 1,495.00

$ 0.00

Barrie Physiotherapy Associates Inc., May 20, 1997

$ 60.00

$ 60.00

Huronia Physiotherapy & Sports Injury Clinic, July 24, 1997 photocopying

$ 75.00

$ 75.00

Huronia District Hospital, September 12, 1997

$ 138.00

$ 138.00

Simcoe Court Report (Barrie) Inc. transcripts re March 1, 2 and 3, 1999

$ 275.95

$ 275.95

Best Western Conference Room, March 1, 2, 3 and 4, 1999

$ 260.33

$ 260.33

Midland Buildall, photocopying of house plan

$ 115.92

$ 115.92

Arbitration Filing Fee

$ 100.00

$ 100.00

Photocopies

$ 658.28

$ 658.28

Long Distance

$ 370.22

$370.22

FAX Charges

$ 108.43

$108.43

Courier Charges

$ 79.52

$79.52

Postage

$ 43.24

$43.24

Research

$ 24.65

$24.65

Total

$19, 044.79

$15, 190.44

Interest

In response to comments by the Applicant regarding interest on legal expenses, my January 10, 2005 letter to the parties requested that Mr. DesRoches confirm whether he was indeed seeking interest on his legal expenses, and if so, that he provide submissions as to the jurisdiction an arbitrator has to make such an award. In his letter of January 19, 2005, Mr. DesRoches stated that he was not seeking interest on his legal expenses up to the date of that submission. However, his letter provided no guidance as to my jurisdiction to award interest on legal expenses.

In his further letter dated February 22, 2005, Mr. DesRoches indicated that he was not seeking interest. At the oral expense hearing on May 6, 2005, however, the Applicant indicated that he was seeking interest on his legal expenses.

Arbitrator Alves concluded in Blake and Jevco Insurance Company (FSCO A98-000102, April 12, 2001), that an arbitrator has no authority to award interest on legal expenses. Mr. DesRoches provided no case law or statutory authority to the contrary. Accordingly, I am not awarding interest on the legal expenses which have been allowed. As noted in Blake, a certified copy of an expense order may be filed in the Superior Court of Justice, and upon filing, money owing under the order bears interest at the post judgment interest rate, calculated from the date of the order.

Conclusion

I find that Mr. DesRoches is entitled to payment of $22,726.80 for Mr. Kerr's legal work in respect of these arbitration proceedings, $492.20 for Ms. Beatty and $15,190.44 for legal disbursements. This totals $38,409.44.

I was provided a copy of an Order of the Honourable Mr. Justice Howden, dated July 15, 2002, that, amongst other things, orders Economical to pay into court the net proceeds of the arbitration award, pending resolution of a dispute between Mr. DesRoches and his former lawyer. Reference is made in the Order to legal expenses awarded and accrued interest up to the date of the Order.

I have no jurisdiction to amend any such order that is presently in effect and which may encompass this award of expenses, nor do I have authority to determine its application. I am issuing my order in the usual manner, leaving it to the parties to work out matters with Mr. Kerr and with the Ontario Superior Court of Justice.

I wish to thank both parties for their courtesy in this expense proceeding. I commend Mr. Robson for his professionalism and expertise throughout and acknowledge Mrs. DesRoches, who is not a lawyer, for her extensive research and preparation for the ultimate May 6, 2005 oral hearing.

June 3, 2005

Lawrence Blackman Arbitrator

Date

Neutral Citation: 2005 ONFSCDRS 78

FSCO A97-000312

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

RICHARD DESROCHES

Applicant

and

ECONOMICAL MUTUAL 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. Economical Mutual Insurance Company shall pay Mr. Richard DesRoches the sum of $38,409.44, inclusive of G.S.T., in respect of his legal expenses of these arbitration proceedings.

June 3, 2005

Lawrence Blackman Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98. O.R. 776/93 was extensively modified by O.R. 781/94; accordingly, where necessary, "1994 Schedule "refers to the original O.R. 776/93, and “1995 Schedule” refers to O.R. 776/93 as amended.