Financial Services Commission of Ontario / Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 257 FSCO A05-001249

BETWEEN:

AMMAR ABULIBDEH Applicant

and

RBC GENERAL INSURANCE COMPANY Insurer

Before: Arbitrator Lawrence Blackman Heard: Written submissions were received by December 6, 2007. Hearing on December 14, 2007, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Mr. Owen Elliot for Mr. Abulibdeh Mr. Alexander J.D. Curry for RBC General Insurance Company

The Applicant, Mr. Ammar Abulibdeh, was injured in a motor vehicle accident on July 19, 2004. In my August 1, 2007 decision, I made the following orders regarding the Applicant’s claims for statutory accident benefits under the Schedule,¹ while reserving on the issue of expenses:

Mr. Abulibdeh is not entitled to payment of a weekly caregiver benefit of $300 in respect of Rawan Abulibdeh and Mirda Abulibdeh from July 20, 2004 to August 14, 2005, claimed pursuant to section 13 of the Schedule.
Mr. Abulibdeh is entitled to payment of $5,067 for services provided by East Sheppard Rehabilitation Company Ltd., together with interest on the amount set out in each treatment plan at the rate of two per cent per month, compounded monthly, from thirty days after receipt of each treatment plan to the date of payment, in accordance with section 46 of the Schedule.
Mr. Abulibdeh is not entitled to payment for housekeeping or homemaking services from July 19, 2004 to August 14, 2005, claimed pursuant to section 22 of the Schedule.

The issue in this further hearing is:

Is either party entitled to payment of its legal expenses incurred in respect of this arbitration proceeding?
If so, what is the proper quantum of those legal expenses?

Mr. Abulibdeh is entitled to his legal expenses of this arbitration proceeding, fixed in the amount of $7,266.65.

1. Entitlement to Legal Expenses

In their written submissions, Mr. Abulibdeh claimed his legal expenses of this arbitration proceeding in the amount of $9,012.65, RBC General Insurance Company (“RBC”) either $12,538.67 (at $150 an hour for senior counsel) or $8,963.73 (at $92.34 an hour for senior counsel).

In its oral submissions, RBC submitted that, in the alternative, both parties should bear their own legal expenses of this arbitration proceeding. RBC also conceded in its oral submissions that it was not entitled to claim $150 an hour for its counsel, as Rule 78.1 of the Dispute Resolution Practice Code (Fourth Edition, Updated - October 2003) (the “Code”) restricts an hourly legal rate higher than the legal aid rate to insured persons.

Subsection 12(2) of R.R.O. 1990, Regulation 664, as amended, largely echoed in Rule 75 of the Code, enumerates the criteria an arbitrator is to consider in awarding legal expenses incurred in respect of an arbitration proceeding. I will address each criterion in turn.

(a) Each party’s degree of success in the outcome of the proceeding

I awarded Mr. Abulibdeh $5,067 for medical services provided by East Sheppard Rehabilitation Company Ltd., plus interest in accordance with the Schedule. The parties agree that the interest award is $4,813.56. The total award, therefore, totaled $9,880.56. For this reason, in part, the Applicant claims his legal expenses of this proceeding.

RBC submits that it is “entitled to reimbursement of all expenses incurred on the basis that they enjoyed the substantial amount of success at the hearing.” RBC notes my August 1, 2007 comment that the Applicant’s claims for caregiver and housekeeping benefits, on which the Applicant was completely unsuccessful, totaled $22,275.

The Insurer further relies on the decision of Arbitrator Muir in Patterson and State Farm Mutual Automobile Insurance Company (FSCO A06-000068, October 15, 2007), wherein it was held that both parties should bear their own expenses of the arbitration proceeding.

Patterson is, firstly, distinguishable from this case. Most importantly, the applicant in that case was not seeking her legal expenses. Further, as set out below, the case differs in that there was no Offer to Settle to consider, nor was there any finding that a party had done anything to unnecessarily lengthen the hearing or took a position that was improper, vexatious or unnecessary.

Further, Arbitrator Muir confirmed that these are first-party claims and that this insurance scheme has been held to be consumer protection and that the “dispute resolution process was intended to provide an accessible alternative to the courts including the costs regime” in that forum. RBC submitted that one can read into the expense criteria any adverse findings of credibility. If that is so, even more so one can read into the expense criteria the principles of access to justice and fairness.

Lastly, Arbitrator Muir agreed with my decision in McLellan and Aviva Canada Inc. (FSCO A06-001263, February 12, 2007) that all of the terms of the Expense Regulation must “be given meaning having regard to the overall purpose of the Statutory Accident Benefits scheme.” In McLellan, I stated that:

Meaning must be given to the words “degree of success.” Meaning must also be given to all of the other expense criteria, including offers to settle.

The purpose of the expense criteria is to encourage parties to endeavour to resolve their disputes on a fair and reasonable basis, and if the matter does proceed to a hearing, to conduct themselves in a fair and reasonable manner.

To follow the Insurer’s argument, an applicant would be entitled to full legal fees (within the limits set by the Code) only if one was entirely successful. If an applicant received half of the claim sought, both sides would simply bear their own costs. This would significantly lessen the need for an insurer to serve a meaningful binding offer to settle and greatly enhance the pressure for an insured to settle, even improvidently. This, in my view, would militate against both the fair and reasonable resolution of cases and the fair and reasonable advancement of proceedings.

To use the vernacular, I find that the Expense Regulation, in this type of situation, necessitates seeing the container as half-full, rather than half-empty. Mr. McLellan has had a significant degree of success. It would, in the absence of other persuasive reasons, be an odd result if that significant degree of success was subsequently penalized in requiring one to bear one’s entire legal costs, or being further penalized in having to pay part of the other side’s legal costs.

In the case before me, I also find that Mr. Abulibdeh has had a significant degree of success, amounting to just less than $10,000. He has obtained that success only by proceeding through an arbitration hearing. I again find that it would be an odd result if Mr. Abulibdeh, nonetheless, did not receive his legal expenses of this arbitration proceeding, especially in the light of the criteria which follow. I find that it would be even more perverse if, notwithstanding this success, he was required to essentially pay the amount awarded him to the Insurer for its legal costs.

(b) Any written offers to settle

RBC did not serve an Offer to Settle. Mr. Abulibdeh served an Offer to Settle on RBC on February 19, 2007, in the amount of $10,000 to settle the issues in arbitration, inclusive of legal costs.

I find that the Applicant did better at arbitration than his offer to settle, having been awarded $9,880.56, and the recoverable legal costs up to the date of the Offer to Settle being considerably more than the difference of $119.44, the filing fee for arbitration alone being $100.

(c) Whether novel issues were raised in the proceeding

Both parties agreed that there were no novel issues raised in this proceeding. I concur.

(d) 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

Surveillance Evidence:

If a party intends to rely on any portion of surveillance or investigative evidence, Rule 40 of the Code requires the party to provide, amongst other things, copies of all videotapes, notes and summaries taken or prepared in connection with the issues in dispute at least thirty days before the hearing.

RBC relied on surveillance evidence at the arbitration hearing. Nonetheless, more than four hours of surveillance CDs were produced only eleven days before the start of the hearing. Only on the second day of the hearing did RBC produce the investigative notes. I disagreed with RBC’s characterization of these notes as “jottings” not requiring disclosure in accordance with the Code. RBC produced further investigative notes on the third day of the hearing, at the same time disclosing that there was original 8 mm footage which it had not yet produced. This required the hearing to be adjourned to allow the Applicant’s counsel to review same.

I find that RBC’s conduct prolonged and hindered the arbitration proceeding.

Notice of Witnesses:

If a party intends to call a witness to present evidence at a hearing or requires a witness to attend for cross-examination, Rule 41 of the Code requires the party to provide the names of those witnesses at least thirty days before the first day of the arbitration hearing.

In my August 1, 2007 decision, I noted that:

By letter dated January 23, 2007, RBC wrote Mr. Abulibdeh’s counsel listing twelve medical experts upon whose evidence it intended to rely. RBC indicated that it might file the reports of those experts, rather than call them to give oral evidence. RBC further indicated “[w]e also require all your expert witnesses to be in attendance at the upcoming Arbitration for the purposes of cross-examination on their reports and materials.”

I further noted that:

. . . The Code’s overall purpose is to narrow the issues to what truly is in dispute, prevent surprise and streamline the proceeding to what is truly necessary for a just, expeditious and cost-efficient hearing. Hence, Rule 42 limits parties to two experts apiece, unless otherwise ordered by an arbitrator.

In my decision, I found that RBC had sufficient time prior to the start of the arbitration hearing to determine whom it might reasonably call and whom it might require for cross-examination, subject to extraordinary or unforeseen circumstances. Ultimately, RBC chose not to call any of its twelve expert witnesses. The Applicant called only Dr. Alyea in addition to his own oral evidence. No further witnesses were required for cross-examination by RBC.

I find that RBC’s failure to reasonably winnow its witness list in a meaningful way did not assist the efficient preparation for nor the conduct of the arbitration hearing.

Dr. Alyea:

RBC submitted that the Applicant served the report of Dr. Alyea on January 24, 2007, and his notes on January 29, 2007. The Applicant submitted that Dr. Alyea’s report was served one day late. I am not persuaded that this technically late service prolonged, obstructed or hindered this proceeding.

Combining Proceedings:

RBC submitted that the Applicant was unsuccessful in his request that this matter proceed with that of Zaidan and RBC General Insurance Company (FSCO A05-001285). I am not persuaded that the relatively brief discussion at the beginning of the hearing in this regard prolonged, obstructed or hindered this proceeding in any meaningful manner.

(e) Whether any aspect of the proceeding was improper, vexatious or unnecessary

The Applicant submitted that no part of this proceeding was improper, vexatious or unnecessary. RBC argued that the claims for caregiver benefits and housekeeping expenses were frivolous.

RBC noted my earlier comments regarding the weaknesses in the Applicant’s evidence in respect of his claim to be the primary caregiver for his two older children and that he suffered a substantial inability to perform his alleged pre-accident caregiving and housekeeping duties. In my decision, I stated that:

I find that the Applicant’s caregiving and housekeeping claims have been grossly exaggerated. In significant measure, this is based on his lack of credibility regarding the weekly benefits in issue and, specifically, repeated lack of accurate representation of his employment.

Regarding the medical treatment plans, however, I stated that:

I am persuaded, on a balance of probabilities, that [the Applicant’s medical] improvement, consistent with Dr. Alyea’s goal of progressively increasing the Applicant’s function and returning him to his pre-accident condition, was materially due to the treatment provided by East Sheppard . . . the treatment plans identified reasonable goals (including pain reduction) which were met to more than a reasonable degree. The treatment was stopped by the clinic, but resumed on the initiative of the Applicant, I am persuaded, legitimately seeking short-term assistance. The treatment did not foster dependence nor did it interfere with any other aspect of rehabilitation, nor do I find in the circumstances, that the treatment was excessive or outside the bounds of reason.

The evidence regarding the various aspects of the Applicant’s claims were to a significant extent intertwined, medical treatment being intermeshed with function. I was persuaded by certain aspects of Mr. Abulibdeh’s claim, I was not persuaded by others. Overall, I find that the Applicant and his representative presented their evidence in an efficient manner. Further, the Applicant recognized the significant weaknesses in certain aspects of his claim by serving a meaningful Offer to Settle which, if accepted, would have negated the need for this arbitration hearing. Accordingly, I am not persuaded that, in regard to the Applicant, any aspect of this proceeding was improper, vexatious or unnecessary.

(f) Whether the Applicant person refused or failed to submit to an examination as required under section 42 of the Schedule or refused or failed to provide any material required to be provided by subsection 42 (10) of the Schedule

This provision is included in Subsection 12(2) of R.R.O. 1990, Regulation 664. It is not included in Rule 75.2 of the Code. Neither party made any submissions under this criterion.

Conclusion re Entitlement to Legal Expenses

I find the most important criterion in the particular facts of this case to be the Offer to Settle served by the Applicant. The Offer was in the amount of $10,000 for settlement of the issues in dispute, including legal costs. The Offer recognized the Applicant’s weaknesses regarding his claims for caregiver and housekeeping expenses.

As noted above, the arbitration award to the Applicant was $9,880.56. The Applicant was not able to advise his precise legal expenses to that point. However, the filing fee alone is $100. Considering that the pre-hearing discussion had been held and that productions and notices are required to be served at least thirty days before the start of the arbitration hearing, there is no doubt that the Applicant did better than his Offer to Settle.

As I stated in McLellan, the “purpose of the expense criteria is to encourage parties to endeavour to resolve their disputes on a fair and reasonable basis, and if the matter does proceed to a hearing, to conduct themselves in a fair and reasonable manner.” RBC chose not to accept the Offer to Settle, or make any Offer under the Code in response. It required this hearing to proceed. It should bear the consequences of that decision by bearing the Applicant’s reasonable expenses of this arbitration proceeding.

Furthermore, even in the absence of the Offer, given the considerable success of the Applicant, I would have found him entitled to his legal expenses of this proceeding, especially considering RBC’s late production of surveillance and investigation evidence which ultimately hindered and prolonged the arbitration hearing.

2. The Quantum of Legal Expenses

(a) Legal Fees - Hours

The Applicant claims 39 hours for the attendance at the hearing of his representative, Mr. Adam Ezer. In addition, the Applicant claims 62.8 hours pre-hearing preparation and post-hearing legal work by Mr. Ezer and 4 hours of preparation by Mr. David Levy, for a total of 105.8 hours.

The Insurer claims 32.9 hours for its counsel’s attendance at the hearing and 84.8 hours for preparation, for a total of 117.7 hours. RBC’s only dispute regarding the hours claimed is that only 32.9 hours should be allowed for hearing time.

The arbitration hearing took place over the course of five days. The Applicant submits that the hearing time includes continuing preparation during the hearing days themselves.

In McLellan, I stated that:

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.

The Applicant submitted that the hearing time claimed included further preparation during the course of the hearing days. I accept this submission. Even based on the Insurer’s hearing hours, the ratio of the Applicant’s preparation time to hearing time is approximately 2.2:1. That ratio is less than that claimed by RBC (2.6:1). I am persuaded that the hours claimed by the Applicant are more than reasonable.

The Applicant did not request his legal expenses regarding preparation for and attendance at this expense hearing. Accordingly, none are granted.

(b) Legal Fees – Hourly Rate

The Applicant claims $50 an hour for the legal services of Mr. Ezer, and $75 an hour for Mr. Levy. Mr. Ezer is a student-at-law. Mr. Levy is a lawyer, who was called to the Bar in 2006.

RBC submits that under the Legal Aid Tariff, Mr. Levy is entitled to $73.87 an hour and Mr. Ezer $23 an hour. RBC does concede that although there is residual discretion to increase the hourly legal rate in certain circumstances, such discretion should not be applied in this case.

Rule 78 of the Code provides that an hourly rate of up to $150 an hour can be awarded for legal fees to an insured person, where the adjudicator is satisfied that a higher amount than the Legal Aid Tariff is justified.

As to Mr. Levy, I find RBC’s argument regarding a difference of $1.13 an hour, or a total of $4.52, unbecoming. I am satisfied that $75 an hour for Mr. Levy, a very capable young lawyer, is more than justified.

In my decision in Martikhina and RBC General Insurance Company (FSCO A05-001891, April 13, 2007), I stated that:

Mr. Ezer is a student-at-law. The legal aid tariff allows for $23 an hour for students-at-law. However, Arbitrator Makepeace, in Olszynko and Dominion of Canada General Insurance Company (FSCO A97-001495, August 27, 1999), stated she had no difficulty with a student’s time at $40 per hour. Although not explicitly stated, this was presumably on the basis of Rule 78 of the Code noted above.

Given the passage of time, I find that $50 an hour is certainly justified for a student, especially given the current partial (up to $60 an hour) and substantial (up to $90 an hour) indemnity scales for students under the Rules of Civil Procedure.

Mr. Ezer’s advocacy skills in this proceeding were far superior to what one might reasonably anticipate from an articling student, especially when facing a very experienced senior counsel. I have no hesitation in finding an hourly rate of $50 justified.

Accordingly, I find that the Applicant is entitled to 101.8 hours regarding Mr. Ezer, at $50 an hour, and 4.0 hours with regard to Mr. Levy, at $75 an hour. Including GST of 6%, the amount allowed for legal services is $5,713.40.

(c) Disbursements

The Applicant claims $3,000 for Dr. Alyea’s report, his preparation for the hearing and his attendance at the hearing. No claim is made by Dr. Alyea for GST.

An additional $282.31, plus 6% GST, is claimed for all other disbursements, consisting of the $100 filing fee, binding, courier services and photocopying.

RBC did not object to the $282.31 for the additional disbursements. GST on these amounts, other than the $100 filing fee, is $10.94. RBC, however, objected to Dr. Alyea’s account on the basis that insufficient particulars are provided.

Dr. Alyea’s account did not provide a breakdown of his expenses. All that was on the invoice were the words “Med Legal, Preparation, Arbitration.”

The Code allows specifically for an expert witness, a maximum of $1,500 for preparation of a report, $500 for preparation for a hearing at which the witness testifies, and $200 per hour of attendance up to a maximum of $1,600 per day.

Dr. Alyea testified for three hours on Thursday, March 1, 2007. I found his evidence helpful regarding the treatment plans in question.

I take judicial note that the Ontario Chiropractic Association Recommended Service Codes and Fees Schedule, January 1, 2008, provides at page 20 that for professional activity, including testifying as a witness, an hourly rate of between $180 an hour to $309 an hour is recommended. For preparation of a detailed narrative report, the practitioner should charge at his or her hourly rate, within the same guidelines.

The Superintendent’s Guideline No. 06/04, March 2004, sets a maximum hourly rate of $95 for chiropractors as a health care provider. However, firstly, the Guideline is simply that, a guideline. Secondly, the Guideline specifically sets out the services to which it applies. While it includes section 24 expenses under the Schedule, it does not include medico-legal expenses.

In the absence of a specified account, I am satisfied that $180 an hour is warranted for Dr. Alyea. While the Fee Schedule is dated subsequent to the hearing date, the rate is the minimum of the range. Accordingly, I allow $540 for Dr. Alyea’s attendance at the arbitration hearing.

The Applicant was unable to provide any particulars as to Dr. Alyea’s preparation for the arbitration hearing. His Bill of Costs notes a meeting with Dr. Alyea, but it is included in a block of 28.5 hours of preparation for the arbitration hearing, with no hours or particulars specific to Dr. Alyea provided. It was my recollection that Dr. Alyea, who is no longer with East Sheppard, may have attended the hearing from out of town, but again, no particulars are provided.

The Commission’s Notice of Assessment of Expenses herein, dated October 17, 2007, includes, amongst other things, timelines that by November 30, 2007 any party seeking its legal costs of the arbitration proceeding is to provide the other party with copies of supporting documentation in respect of the disputed items.

By letter dated November 15, 2007, the Insurer specifically challenged Dr. Alyea’s account and requested both an invoice and proof of payment. The Applicant forwarded the above-noted account, dated August 28, 2007, on November 30, 2007.

I have no evidence upon which to calculate how many hours Dr. Alyea prepared for this arbitration nor any evidence upon which to reasonably approximate such hours. I have no evidence as to what, if any, traveling or accommodation expenses Dr. Alyea may have been paid and which may be allowed in accordance with section 6 of the Expense Schedule to R.R.O 1990, Reg. 664, as amended. Accordingly, I deny Dr. Alyea his expenses, if any, for preparation for this arbitration hearing as well as for traveling, overnight accommodation and meals.

Dr. Alyea prepared a twelve-page medical report. I have no precise evidence as to Dr. Alyea’s hourly rate or how many hours Dr. Alyea required to prepare the report. RBC submitted that a reasonable disbursement fee was less than the maximum $1,500. The Applicant submitted that something should be allotted.

Part of Dr. Alyea’s report appears to simply be dictation of existing records. Part of the report contains some measure of analysis. The report itself was not based on any follow-up appointment with the Applicant, but rather a paper review. Reading the existing documentation would take some time.

In the absence of a specific account for this report, I allow $720 for the report, or four hours of preparation at $180 an hour. Accordingly, I allow a total of $1,260 with respect to Dr. Alyea (reduced from his account of $3,000) and $293.25 for the remaining disbursements (excluding GST for the arbitration filing fee), for a total of $1,553.25 for disbursements.

(d) Conclusion

I allow $5,713.40 for the hours of legal work. I further allow $1,553.25 for disbursements. This totals $7,266.65.

December 21, 2007

Lawrence Blackman Arbitrator

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

RBC General Insurance Company shall pay Mr. Abulibdeh his legal expenses of this arbitration proceeding, fixed in the amount of $7,266.65.