Neutral Citation: 2007 ONFSCDRS 204

FSCO A06-001980

BETWEEN:

LAAVANYAN SANGARALINGAM Applicant

and

NORDIC INSURANCE COMPANY OF CANADA Insurer

DECISION ON EXPENSES

*Minor error on page 6 corrected on October 30, 2007 in accordance with the Dispute Resolution Practice Code and section 21.1 of the Statutory Powers Procedure Act.

Before: Arbitrator Lawrence Blackman

Heard: By written submissions received by September 7, 2007 and oral submissions on September 12, 2007 by telephone conference call

Appearances: Mr. David S. Wilson for Mr. Sangaralingam Mr. William M. Sproull for Nordic Insurance Company of Canada

Issues:

The Applicant, Mr. Laavanyan Sangaralingam, was injured in a motor vehicle accident on March 5, 2005, and applied to Nordic Insurance Company of Canada ("Nordic") for statutory accident benefits payable under the Schedule.¹ Nordic refused payment of certain benefits. As the parties were unable to resolve their disputes through mediation, Mr. Sangaralingam applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The pre-hearing discussion in this matter was held before me on December 5, 2006. The issues in dispute were the Applicant's entitlement to $6,565.46 in various medical expenses, weekly housekeeping expenses ongoing from August 19, 2005, $3,500 for a section 24 assessment under the Schedule, a special award (which pertained, inter alia, to an additional medical expense of $8,760.07 which Nordic agreed to pay at the pre-hearing discussion), interest and legal expenses. A four-day hearing was scheduled to commence May 28, 2007.

By letter dated May 25, 2007, the Applicant advised the Commission that the dispute herein had resolved, Nordic having agreed to his legal expenses as agreed or assessed. The Applicant's Bill of Costs was forwarded to Nordic on May 31, 2007. The final account presented at the expense hearing was for 97.85 hours (including an hour preparation for and participation in the expense hearing) at $150 an hour (totalling $15,558.15, including GST) and disbursements of $2,949.61 (including an additional process serving bill of $25.75), for a total of $18,507.76.

By letter dated July 9, 2007, the Applicant's counsel advised the Commission that the issue of legal expenses had not resolved, and requested an expense hearing.

Accordingly, the issue to be determined in this hearing is:

What are Mr. Sangaralingam's assessable legal expenses in respect of this arbitration proceeding?

Result:

Mr. Sangaralingam's assessable legal expenses in respect of this arbitration proceeding are $16,464.61.

EVIDENCE AND ANALYSIS:

1. Entitlement to Legal Expenses

In its oral submissions, Nordic referred to the decision of Thevasagayam and Security National Insurance Co./Monnex Insurance Mgmt. Inc. (FSCO A05-000493, April 18, 2006), wherein Arbitrator Renahan held that both parties should bear their own expenses of the arbitration proceeding. In that case there had also been a settlement of the issues in dispute, other than legal expenses. However, unlike the case before me, in Thevasagayam the issue of legal expenses left outstanding included both entitlement to and the quantum of such expenses.

The parties herein agree that as part of the settlement of this matter, the Applicant is entitled to his reasonable legal expenses of this arbitration proceeding. Thus, the analysis in Thevasagayam determining entitlement to legal expenses when all other issues have resolved is not relevant.

On the basis of the settlement agreement entered into between the parties, I find that the Applicant is entitled to his legal expenses of this arbitration proceeding.

2. The Quantum of Legal Expenses

(a) Legal Fees

The parties agree that Mr. Wilson, counsel for the Applicant, is entitled to $150 an hour for his legal services. I accept same.

Nordic, noting that the settlement was not a full and final resolution of matters between the parties and that there were ongoing first party claims as well as tort and priority proceedings, questioned whether the 97.85 hours claimed had been totally performed by Mr. Wilson and whether all of this work related to this proceeding.

Mr. Wilson provided Nordic with computerized dockets of his hours, other than for 242 letters sent and received, billed at 0.2 hours per letter. Counsel indicated he had an administrative practice of not docketing correspondence in the belief that same was time consuming and not cost effective. Mr. Wilson stated that all legal hours billed to the Insurer were for his own services and that all hours billed pertained to this legal proceeding.

Nordic queried the number of letters claimed, as its counsel had only 92 letters sent and received. The Applicant responded that many of the letters were follow-up to the large number of undertakings sought by the Insurer, as well as following up with the medical practitioners regarding the claims being advanced herein.

In Kulasekarampillai and State Farm Mutual Automobile Insurance Company (FSCO A03-001063, May 11, 2005), which was also an assessment of Mr. Wilson's Bill of Costs, Arbitrator Sapin stated that:

... I do not find it unreasonable to use an average of .1 or .2 [hours] for letters. And it is not the practice of FSCO arbitrators to engage in an item by item analysis in order to determine whether work was billed at a reasonable hourly rate.

Arbitrator Nastasi, in Salva and Paramanantham and Allstate Insurance Company of Canada (FSCO A05-002958 and A06-000004, July 30, 2007), which also involved Mr. Wilson's accounts, followed Arbitrator Sapin. Arbitrator Nastasi stated that:

The overriding consideration in fixing arbitration expenses is reasonableness. Rather than a line by line review of expenses claimed, arbitrators have preferred a global assessment of expenses as being more appropriate.

Thus, as I stated in McLellan and Aviva Canada Inc. (FSCO A06-001263, February 12, 2007), which did not involve Mr. Wilson:

The general arbitration approach towards assessing expenses is set out in Henri and Allstate Insurance Company of Canada (OIC A-007954, August 8, 1997). Then Arbitrator Makepeace held that "[a] line-by-line assessment of the expenses claimed is not appropriate. Rather, the Arbitrator should make a global assessment of reasonable expenses." Arbitration decisions have held, subject to special circumstances, that the appropriate approach is a ratio of preparation time (and other services provided before a hearing) to attendance at an arbitration hearing of between 4:1 and 1:1.

In this case, the arbitration hearing was scheduled for four days. My December 5, 2006 pre-hearing letter notes Nordic's intention to call seven expert witnesses, in addition to one of its representatives. The Applicant was to testify, as well as the person said to have provided housekeeping services. There was no evidence before me as to any intention to narrow the witness list. Given the number of proposed witnesses, it is not certain that the hearing would be completed in the scheduled four days.

I also note that Nordic's Schedule "B" to its Response to the Application for Arbitration sets out eight pages of documents relevant to this matter, including four pages of listed medical documentation.

This proceeding settled very shortly before the start of the arbitration hearing, when the great bulk of preparation would have been done. Four hearing days would be approximately 28 hearing hours. The ratio of preparation time claimed to the set hearing time is approximately 3.5:1.

Given that this matter settled close to the start of the hearing, that the set hearing time may have been conservative and that there was a significant amount of documentary evidence to review, I find 85 hours of legal time in this case appropriate (including preparation for and attendance at the expense hearing itself), representing a ratio of roughly 3:1 for the scheduled hearing days. At the agreed hourly rate of $150, the amount payable is $13,515, including GST.

This reduction includes the two hours billed for preparation for and participation in a pre-hearing resumption held April 23, 2007 for which, on the basis of my comments set out in my April 24, 2007 letter, I find that it would be appropriate for both parties to bear their own expenses.

(b) Disbursements

The Applicant claims $2,949.61 for disbursements. Nordic objects to $513.04 for photocopying. Nordic's earlier concerns regarding interpretation services and certain GST were resolved.

The Applicant forwarded his Bill of Costs to the Insurer on May 31, 2007. The Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) requires the opposing party to promptly prepare a written response to the account, identifying the items in dispute and the reasons for the dispute. Nordic responded by letter dated September 5, 2007. While seeking confirmation whether the work expended related to this proceeding and asking for invoices to support the disbursements claimed, the Insurer raised no question regarding the number of photocopies or the rate charged.

I find that the Applicant has addressed the Insurer's concern regarding whether the time billed relates to this proceeding, both by the computerized dockets produced September 7, 2007 and his statement as an officer of the court. I am persuaded the disbursement claim is reasonable, and should be allowed.

3. Result

Nordic shall pay the Applicant his legal expenses of this arbitration proceeding, fixed in the amount of $2,949.61 for disbursements and $13,515 for billable time, both inclusive of GST. Accordingly, Nordic shall pay Mr. Sangaralingam $16,464.61 in respect of his legal expenses.

October 23, 2007

Lawrence Blackman Arbitrator

Date

Financial Services Commission of Ontario