Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2008 ONFSCDRS 119
FSCO A05-002940
BETWEEN:
PRIYA RAGULAN
Applicant
and
SECURITY NATIONAL INSURANCE CO./
MONNEX INSURANCE MGMT. INC.
Insurer
DECISION ON EXPENSES
Before: Jeffrey Rogers
Heard: By written submissions, completed on May 5, 2008
Appearances: Mr. Steven Sieger, solicitor for Mrs. Ragulan
Mr. David Silverstone, solicitor for Security National Insurance Co./ Monnex Insurance Mgmt. Inc.
Issues:
The Applicant, Priya Ragulan, was injured in a motor vehicle accident on January 23, 2004.
She applied for and received statutory accident benefits from Security National Insurance Co./Monnex Insurance Mgmt. Inc. (“Security”), payable under the Schedule.1 Security terminated weekly income replacement benefits and housekeeping benefits. Mrs. Ragulan claimed further entitlement. The parties were unable to resolve their disputes through mediation, and Mrs. Ragulan applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended. In a decision dated January 7, 2008, I dismissed her application. I reserved my decision on entitlement to expenses of the hearing.
The issues in this further hearing are:
Is Security entitled to its expenses of the hearing?
If entitled to expenses, what is the amount of the expenses to which Security is entitled?
Result:
- Security is entitled to its expenses of the hearing in the amount of $7,616.04.
EVIDENCE AND ANALYSIS:
Time Limit for Requesting Expense Hearing
My Order of January 7, 2008, reserved the decision on the issue of expenses, to be resolved in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code.
Rule 79.1 provides as follows:
Where an adjudicator has issued an order determining all issues in dispute except expenses, and the parties cannot agree on the entitlement to or amount of the expenses of the proceeding, either party may request, in writing, an appointment before an adjudicator to determine expenses provided that the request is made within 30 days from the date the decision on all other issues in dispute was issued.
Security did not request an appointment within 30 days, as the Rule requires. Its request was made by letter dated March 24, 2008, received by the Commission on the following day. That was 77 days from the date of the decision. A Bill of Costs and written submissions accompanied the request. By letter of March 25, 2008, I asked Mrs. Ragulan to respond.
Mrs. Ragulan raised the issue of Security’s breach of the time limit in her response, arguing that the result of the breach was that I no longer had jurisdiction to make an order for payment of expenses. I asked Security to respond to this argument. Security responded by letter dated May 1, 2008. This letter also addressed other issues. I have only considered the submissions relating to the time limit issue. Further, unsolicited submissions, dated May 5, 2008 and May 9, 2008 were returned to the parties.
I do not accept Mrs. Ragulan’s submission that an Arbitrator has no jurisdiction to make an order for payment of expenses, where the request to assess expenses is made more than 30 days after the date of the decision. Rule 81.1(a) of the Code gives an Arbitrator jurisdiction to set aside any time limit set out in the Rules for doing any act, serving any notice, filing any document or holding any hearing. Exercise of that jurisdiction is guided by the provision in Rule 1.3 that a defect in form or other technical breach will not make a proceeding invalid.
Mrs. Ragulan alleged no prejudice resulting from the delay. She was aware at all times that Security intended to pursue a claim for expenses because there were ongoing discussions between the parties about resolution of her other outstanding claims for accident benefits. Security’s claim for expenses of the hearing was included in those discussions. Security sent a copy of its Bill of Costs to Mrs. Ragulan’s solicitor on February 11, 2008, asking him to seek instructions to resolve the issue of expenses. Thus, the latest date on which there could be no doubt that Security intended to pursue its claim for expenses was just over 30 days after the decision. Mrs. Ragulan’s solicitor did not reply to the letter of February 11, 2008, or to a further request dated February 27, 2008.
I am satisfied that Security’s breach of the time limit is a technical one, caused in part by its efforts to resolve the expense issue by agreement. I therefore exercise my discretion to set aside the time limit in order to allow this assessment of expenses to proceed.
Entitlement to Expenses
The criteria to be considered by an arbitrator in awarding expenses are prescribed by section 12 (2) of O. Reg. 664 (the Expense Regulation), which provides as follows:
An arbitrator shall, under subsection 282(11) of the Act, consider only the following criteria for the purposes of awarding all or part of the expenses incurred in respect of an arbitration proceeding:
Each party’s degree of success in the outcome of the proceeding.
Any written offers to settle made in accordance with subsection (3).
Whether novel issues are raised in the proceeding.
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.
Whether any aspect of the proceeding was improper, vexatious or unnecessary.
Whether the insured person refused or failed to submit to an examination as required under section 42 of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996) made under the Act or refused or failed to provide any material required to be provided by subsection 42 (10) of that regulation. O. Reg. 275/03, s. 4; O. Reg. 548/05, s. 1.
Of the prescribed criterion, only degree of success, offers to settle and conduct prolonging the proceeding are relevant to this decision. Security was entirely successful in the arbitration. Security made two written offers to settle the arbitration on better terms than the result Mrs. Ragulan achieved. Mrs. Ragulan unnecessarily prolonged the proceeding. As noted in my decision of January 7, 2008, the hearing was adjourned once because Mrs. Ragulan had not complied with her production agreement and, when the hearing did proceed, the first morning was consumed by Security’s successful motion to exclude documents that Mrs. Ragulan sought to rely on, without proper notice. Based upon these criterion, I find that Security is entitled to its expenses of the arbitration.
Quantum of Expenses: Fees
The hearing took place over a period of 3 days. There was one adjournment because of Mrs. Ragulan’s breach of her production agreement. All of the hearing days were not full days. For this relatively short hearing with uncomplicated issues, Security’s Bill of Costs shows 137 hours and 36 minutes of counsel and law clerk time. That is about three and a half weeks of full-time work. Fees are claimed at rates in excess of the relevant Legal Aid rates. The amount claimed for disbursements is $8,424.42. The total amount claimed is $25,667.73.
Mrs. Ragulan submitted that the amount claimed is “astronomical given the relatively short length of the total Arbitration proceeding.” Without any specific reference, she submitted that there were many entries not related to the arbitration and suggested that an item by item review should therefore be conducted “as would be done in an Assessment Hearing before the Superior Court of Justice.” Many arbitral decisions have held that a line-by-line assessment of expenses is not appropriate. Rather, the arbitrator should take a pragmatic, broad-strokes approach, with a view to fixing an amount that is reasonable.2
Security has claimed for 35.18 hours of time spent by a clerk. Although that number seems high, I have allowed this item because of the lower rate payable for clerk’s time. I have taken that time into account in concluding that an additional 60 hours of counsel time is reasonable, given the length of the hearing and the nature of the issues. Rule 78 requires compensation to insurers for legal fees at Legal Aid rates. There is no discretion to award the higher rates at which Security calculated its Bill of Costs. The amount awarded for fees is therefore as follows:
Hours
Rate
Amount
Law Clerk
35.18
$23.00
$ 809.14
Counsel
60
$83.75
$5,025.00
Total
$5,834.14
Quantum of Expenses: Disbursements
Security’s claim of $8,424.42 for disbursements includes $3,000 for its filing fee and $600.64 for the services of a Court Reporter. Arbitrators have repeatedly disallowed these disbursements.3 I find no jurisdiction to award them. The Bill includes a claim for $477.64 paid to Reliance Legal Services and $11.61 to United Messengers. I presume that these amounts are for service of summonses, but Security provided no details or supporting invoices. The amount claimed appears excessive. I allow $200 for process servers. I find the amounts of $1,050 claimed for the attendance of Dr. Karen Searle and $169.23 for payment to The Printing House, to be reasonable. The amount allowed for disbursements is therefore $1,419.23.
The total amount payable for expenses of the arbitration is therefore:
Fees
$5,834.14
Disbursements
1,419.23
GST
362.67
Total
$7,616.04
Expenses of the Assessment
I find that the Bill of Costs Security submitted was not conducive to amicable resolution of the issue of expenses. The amount awarded is less than half of what was claimed because the number of hours claimed was excessive, they were claimed at a rate that could not be awarded and the claimed disbursements included significant amounts which Security clearly could not recover. A party submitting a Bill of Costs owes the opposing party a duty of candour, not evidenced in the Bill that Security submitted. Applying the criterion of the Expense Regulation, the submission of an inflated Bill was improper and it tended to prolong and hinder the assessment of expenses. Security’s claim for expenses of the assessment hearing is therefore denied.
July 16, 2008
Jeffrey Rogers
Arbitrator
Date
Financial Services Commission des
Commission services financiers
of Ontario de l’Ontario
Neutral Citation: 2008 ONFSCDRS 119
FSCO A05-002940
BETWEEN:
PRIYA RAGULAN
Applicant
and
SECURITY NATIONAL INSURANCE CO./
MONNEX INSURANCE MGMT. INC.
Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Mrs. Ragulan shall pay Security its expenses of the arbitration hearing in the amount of $7,616.04.
July 16, 2008
Jeffrey Rogers
Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- See Henri and Allstate Insurance Company of Canada (OIC A-007954, August 8, 1997)
- See Howard and State Farm Mutual Insurance Company (FSCO A02-000004, March 29, 2004) and Singh and Wawanesa Mutual Insurance Company (FSCO A02-001401, May 18, 2004)