D. F. v. Wawanesa Mutual Insurance Company, 2006 ONFSCDRS 202

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2006 ONFSCDRS 202

FSCO A05-000779

BETWEEN:

D. F.

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

*Expense calculation error corrected on pages 2, 11 and Order on January 11, 2007, in accordance with the Dispute Resolution Practice Code and section 21.1 of the Statutory Powers Procedure Act.

Before:

Robert A. Kominar

Heard:

October 19, 2006, at the offices of the Financial Services Commission of Ontario in Toronto.

Written submissions were received on October 19, 2006.

Appearances:

Ms F represented herself, assisted by Michael Gillen as a "McKenzie Friend"¹

Ian D. Kirby for Wawanesa Mutual Insurance Company

The Applicant, D.F., was injured in a motor vehicle accident on October 13, 2002. In a decision dated August 23, 2006, I dealt with her claims for statutory accident benefits under the Schedule.² I made the following orders, while reserving on the issue of expenses.

Ms F's claims for income replacement benefits, medical-rehabilitation benefits and a special award were dismissed.
Wawanesa's claims for a repayment of an advance on income replacement benefits was dismissed. Their claim for a repayment of funds advanced to secure banking records was dismissed without prejudice to it being raised as an arbitration expense issue.

The issue in this further hearing is:

Is either party entitled to their expenses incurred in respect of this arbitration hearing, and if so in what amount?

Wawanesa is entitled to its expenses in this hearing, assessed in the amount of $15,344.05 inclusive of GST.

The parties to this arbitration were unable to resolve the question of expenses and requested a determination of entitlement to and the quantum of expenses.

The Expense Regulation, Regulation 664, R.R.O. 1990, as amended, states that an arbitrator may only consider the following criteria in making a decision regarding the awarding of expenses. I shall deal with them separately.

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

In this arbitration, Ms.F was unsuccessful on all of the claims she made. My findings were that the evidence which she presented in support of her claims did not meet the burden of proof she had upon her. Wawanesa raised an issue of repayment of funds which they advanced to Ms. F gainst future income replacement benefits and I found that they had not provided her with the required notice for claiming a repayment and so they were unsuccessful on that issue. Wawanesa also claimed a repayment of funds which they advanced to Ms F to obtain banking records. I dismissed this claim, without prejudice to their raising it again in the context of this expense hearing.

I find that Wawanesa was predominantly successful in this arbitration. The claims which Ms F asserted were, in reality, the major issues which were in dispute during the hearing. Wawanesa's claim for a repayment was a minor, derivative issue which took up a very small portion of the hearing time.

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

Both parties drew my attention to what they argued were written offers to settle. All of these documents refer to offers to resolve all accident benefit claims on a full and final basis. They do not deal in any way with the discrete issues in this arbitration. Although I understand the parties' desire to explore full and final settlement of all matters related to the accident, such offers are of no assistance to an arbitrator in coming to a decision regarding entitlement to expenses. There is simply no way of relating the offers exchanged between the parties to the outcome of the arbitration. As a result I decline to take into account the offers to settle which the parties have drawn to my attention.

3. Whether novel issues are raised in the proceeding

There were no novel issues raised in this arbitration. The dispute over income replacement benefits dealt with common concerns over whether Ms F was disabled from employment as a result of the accident, as opposed to pre-existing medical conditions and other traumas she had experienced. In addition, there was a dispute over Ms F's post-accident employment and how this impacted on quantifying an income replacement benefit. The only aspect of this issue that could conceivably be regarded as novel related to Ms F's failure to produce financial records to Wawanesa to support her claim for income replacement benefits, despite the fact that she had been advanced the funds by the Insurer to obtain these records. In my experience, it is "novel" to have to deal with such an issue without the data required to make proper calculations.

The medical-rehabilitation claims which Ms F made were for a Tempur mattress and a lightweight laptop computer. She also claimed entitlement to a neuropsychological re-assessment. I find that none of these issues were novel. The parties simply disagreed over whether they were reasonable and necessary in the circumstances.

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.

Ms F was self-represented during the arbitration. Based on my findings that the issues in dispute in this arbitration were not particularly complex, I also find that this hearing took much longer than was necessary.

There is a challenge which all adjudicators face when a party to a proceeding is unrepresented. It is fair to say that most unrepresented people are not completely familiar or comfortable with the formalities of conducting a hearing. This is the case even in arbitrations at the Commission, which are generally less formal than litigation in the courts. The arbitrator's job at the hearing is not to act as a surrogate counsel for the unrepresented applicant but to conduct a hearing which is fair to both sides of the dispute. At times this does require that the arbitrator help educate the unrepresented person as to how the process will unfold and what the expectations on him or her are at any given point in the process. It is not the arbitrator's job, however, to advise the unrepresented person as to how they ought to present their case, or what evidence to call or not to call.

In this particular arbitration I encouraged Ms F to restrict her evidence and submissions to matters relevant to the issues in dispute. I also advised her on multiple occasions that she did not need to repeat evidence or submissions. Ms F's response to my requests that she focus her case and try not to be overly repetitive was that she personally believed that she needed to communicate in this way as it is how she processes information. Although I respect that people have different learning styles and preferred modes of processing information, there are practical limitations as to how much free association and general musing can be permitted within an arbitration hearing without needlessly clouding the issues in dispute and causing unnecessary and unwarranted expense to be incurred by the other side.

An example of the problem in this arbitration was that Ms F did not want either Mr. Kirby or myself to interject questions or objections while she was talking. Her point was that this interfered with her train of thought and in general I agree that she is entitled to not be unnecessarily interrupted. I attempted, within reason, to allow Ms F to present her case in the manner she wanted to, however there were many times when her comments were either completely irrelevant to the issues in dispute or manifestly repetitive. My interventions were intentionally restricted to times when I found that Ms F was not engaged in communication which could be helpful to my making a decision on the issues in dispute. Her general reaction to an intervention was to become very emotional. The emotional reaction resulted in her losing her train of thought and so, when the evidence or submissions resumed, she generally repeated what she had previously said. The end result was that something to the effect of a procedural vicious circle resulted. When I allowed Ms F to simply say anything she chose to, the hearing was unnecessarily prolonged. When I intervened, or Mr. Kirby objected to anything she said, the hearing would be prolonged in reaction to the intervention.

I do not find that Ms F intended to unnecessarily prolong the hearing, but in fact her conduct did just that. The question this raises is whether there are any expense implications of an unrepresented person occasioning this type of prolongation of an arbitration hearing.

I am not privy to why Ms F did not have legal representation in this arbitration. I do know from the evidence at the hearing that she does have legal representation on at least two other matters which are in litigation. Ms F also claims in her request for arbitration expenses that she should be compensated by Wawanesa for 32 hours of "advice" related to this arbitration which she claims she owes to unnamed lawyers. She also had Mr. Gillen assisting her in the expense hearing, although he stated that he was not on the record but only helping Ms F out for the day. Effectively, he was acting in the capacity of a "McKenzie friend", as noted above.

I find that it is important to make a distinction between a unrepresented applicant who cannot, for whatever reason, find a lawyer or paralegal to represent her in a hearing and decides to fend for herself, and a person who acts without legal representation but clearly is getting advice from lawyers in "off the record" sorts of ways. The latter is in effect an example of "unbundling" legal services, a process that is becoming increasingly common. I find that if a person picks and chooses which legal services they will engage a representative for, then they have to accept the responsibility that goes along with that choice.

I find as a result of the above that Ms F's conduct at the arbitration hearing tended to prolong the proceedings unnecessarily. Further, I do not find that her conducting the hearing herself, especially in the light of the background legal advice she claims she was receiving, should be a factor that substantially mitigates the situation. I do believe that some reasonable latitude must be factored into determining appropriate time for an arbitration hearing when the applicant is unrepresented. However, in this case I find that the hearing was much longer than necessary.

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

Simply failing to meet the burden of proof on issues does not make a hearing improper, vexatious or unnecessary. Both parties adopted an overtly adversarial attitude from the beginning of the hearing that was at times unhelpful, however arbitration works within an adversarial legal system. I do find that Ms F's refusal from time to time to co-operate regarding locating and noting documentation she was referring to was completely unnecessary. I am referring to her inability at times to find documentation in her binder but refusing to concede that the same document was easily referenced in the insurer's filed materials.

In summary, I find that Ms F was completely unsuccessful in meeting her burden of proof for any of the claims which she asserted. Wawanesa was also unsuccessful on its claim for a repayment of advances on income replacement benefits. However, my view is that Wawanesa's claim played a very minor role in the arbitration. There were no offers to settle which either party made that were helpful in assessing entitlement to expenses. There were no novel issues raised in the proceeding. Ms F's conduct of the hearing did tend to unnecessarily prolong the process. Finally, no aspects of the hearing were improper, vexatious or significantly unnecessary.

Given that these are the only criteria which an arbitrator may consider in making a finding of entitlement to expenses, I find that Wawanesa has satisfied me that they are entitled to their reasonable expenses in the hearing based on Ms F's failure to establish any of her claims and her conduct with tended to prolong the hearing more than was reasonably necessary.

Since the amendments of 2003, expenses in arbitration are generally more "outcome oriented." I agree with the comments of the Director's Delegate in Truong and Lumbermans Mutual Casualty Company/Kemper Canada (FSCO P03-00007, March 31, 2005) where she says, at page 9, "The expense provisions are meant to discourage unmeritorious cases and ensure that meritorious cases are heard." Although Ms F argued that both parties were unsuccessful, as Wawanesa did not succeed on its claim for a repayment of income replacement benefit advances, I find that Ms F's claims occupied the overwhelming proportion of the time the hearing took. Even though I do not believe that the criteria for awarding expenses must necessarily rank in order of their importance in the Expense Regulation, my view is that when one side is overwhelmingly unsuccessful then it is a reasonable inference to draw that the other side was unnecessarily and unjustifiably compelled to incur legal expenses. It is important to provide access to justice for all those who want a binding determination of their rights to statutory accident benefits. Expenses should not be awarded in a punitive way that discourages applicants from bringing cases to arbitration. However, the dispute resolution process at the Commission strongly encourages and provides multiple opportunities within mediation and arbitration to gather information and to use it to meaningfully reflect on claims being asserted and hopefully come to a mutually acceptable and informed resolution of them. It seems to me that if a dispute goes all the way to a full hearing on the merits and the arbitrator finds that one side or the other was largely wrong about the positions on the issues which they adopted, then expenses are a reasonable response in the context.

Having determined that Wawanesa is entitled to its expenses, I allow the following amounts as submitted in Mr. Kirby's bill of costs.

The hearing took seven days to complete. Mr. Kirby claims 29.4 hours of preparation prior to the hearing. He further claims 66.7 hours of attendance time at the hearing plus continued preparation. I am prepared to allow 7 hours of daily attendance time at the arbitration. This would mean that Mr. Kirby claims 17.7 hours of ongoing preparation time after the hearing started. His total hourly claim is 96.1 hours. I find that there is a close to one to one ratio of attendance and preparation time for this arbitration for Mr. Kirby and I find that to be both well within the normal range and also reflective of my view that this case was not in reality particularly complex.

Ms Falkeisen claims 16.6 hours of preparation and attendance times up to the pre-hearing which I find to be reasonable. She also claims 4.2 hours of preparation after the pre-hearing. Based on the evidence at the hearing, it is my understanding that Ms Falkeisen was originally intending to conduct the arbitration until she and Ms F had a falling out, after which time Mr. Kirby took carriage of the file. In the circumstances, since I do not know all of the details related to Ms Falkeisen's stepping aside, I exercise my discretion not to allow the claim for the extra 4.2 hours of preparation.

There is a claim for 23.4 hours of preparation time for the services of a law clerk. Given the amount of documentation and correspondence in this matter I find that it is reasonable to allow these hours.

I am satisfied that both Mr. Kirby and Ms Falkeisen are entitled to bill at Tier 3 of the Legal Aid Tariff and thus their hourly rate is $92.34. The law clerk's time is allowed at the hourly rate of $23.00 in accordance with the Legal Aid Tariff.

Therefore I allow the following legal fees:

Mr. Kirby

(96.1 hours @ $92.00 per hour)

= $ 8,873.87

Ms Falkeisen

(16.6 hours @ $92.00)

= 1,527.20

Law clerk

(23.4 hours @ $23.00)

= 538.20

Total Legal Fees

= $10,939.27

GST

= 765.75

TOTAL

= $11,705.02

For Claimed Disbursements I allow:

Attendance of Dr. Barry Little $321.00

Attendance of Dr. Todd Levy $400.00

Wawanesa claims $1,408.75 for Dr. Levy's attendance. According to the Expense Regulation, the maximum which can be allowed is $200.00 per hour. I am prepared to allow for 2 hours of Dr. Levy's attendance.

Wawanesa claims $2,288.33 for court reporter services. I decline to allow this expense as it is my view that court reporters are discretionary expenses which a party, usually an insurer, voluntarily assumes. I do not believe that Ms F should bear the burden of Wawanesa's choice to have a reporter present.

I allow postage in the claimed amount of $42.50

I allow photocopying in the claimed amount of $425.00

I allow process server's fees for serving summonses to witnesses in the claimed amount $311.80.

I allow conduct money for Dr. Kaminska and Mr. Bruce Reilly in the amount of $53.00 for each.

Wawanesa claims conduct money in the amount of $70.30 for Dr. Rennie. There was some evidence at the expense hearing that Dr. Rennie may not have cashed this cheque and consequently I am not satisfied that Wawanesa actually incurred this expense and so I disallow it.

Wawanesa claims $2,000.00 paid to Ms F to obtain bank records which were to be used to calculate entitlement to and amount of income replacement benefits. This was the claim which I dismissed as a substantive claim within the arbitration without prejudice to Wawanesa's raising it as an arbitration expense.

Based on the evidence at the hearing, I am satisfied that Wawanesa did advance these funds to Ms F explicitly for the purpose of paying the fees her bank requested to search for and provide records of her transactions at that institution. I am further completely satisfied that Ms F never did provide these records to Wawanesa and that she used the money for other purposes. I find that these funds are "out-of-pocket expenses incurred in furtherance of the arbitration" and that Wawanesa is entitled to the return of the money since it did not receive the documents. Given the challenges in determining how to quantify any income replacement benefit that Ms F may have been entitled to, I find that the request for these documents by Wawanesa was completely reasonable. Had they been produced it is likely that the hearing could have been significantly shortened. They are not, in my view, simply the costs of adjusting the file, as suggested by Ms F in her submissions. I allow $2,000.00 for the cost of obtaining banking records.

Total of allowed disbursements

$3,606.30

GST on postage and photocopies

32.73

TOTAL DISBURSEMENTS AND TAX

$3,639.03

TOTAL FEES, DISBURSEMENTS AND GST

$15,344.05

December 22, 2006

Robert A. Kominar Arbitrator

Date