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

Neutral Citation: 2009 ONFSCDRS 172

FSCO A07-000961

BETWEEN:

SANMUGANATHAN ELAIATHAMBY

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

Before: Fred Sampliner

Heard: Written submissions received February 17, 2009, October 6, 2009, October 14, 2009 and a telephone conference call on October 23, 2009.

Appearances: David S. Wilson for Mr. Elaiathamby John P. Desjardins for State Farm Mutual Automobile Insurance Company

Issues:

On October 21, 2008 I decided that the Applicant, Sanmuganathan Elaiathamby, was involved in a motor vehicle accident on January 15, 2006. The parties’ filed an agreement concerning Mr. Elaiathamby’s entitlement to statutory accident benefits under the Schedule that is part of the Order. The Order provides that State Farm shall pay Mr. Elaiathamby’s expenses of the arbitration under subsection 282(11) of the Insurance Act, but the parties do not agree on the specific amount of Mr. Elaiathamby’s expenses.

The remaining issue is:

What is the amount of arbitration expenses Mr. Elaiathamby is entitled to receive?

Result:

Mr. Elaiathamby is entitled to $30,001.31 for his expenses of this arbitration.

EVIDENCE AND ANALYSIS:

Mr. Elaiathamby claims $30,625.88 for legal fees and $11,446.71 for disbursements in his lawyer’s bill of costs. State Farm argues that the fees portion of the $42,072.59 total should be reduced to $17,500 because the Applicant did not fully succeed.

The criteria in Rule 75 of the Dispute Resolution Practice Code (DRPC) for arbitrators to consider in deciding the amount to award for expenses are each party’s relative degree of success, written settlement offers, novel issues, obstructionist or hindering conduct, and improper or vexatious or unnecessary aspects of the process. The sole criteria argued in this case is the relative degree of success. Here, Mr. Elaiathamby recovered over $95,000 in accident benefits pursuant to the Order, but I dismissed his claim for a special award.

State Farm maintains that the dismissal of Mr. Elaiathamby’s special award claim indicates he was not successful, and his claim should be significantly reduced. While I recognize the controversial and important role that the Human Rights Code issue played in the special award claimed by Mr. Elaiathamby, it was certainly not the main focus of the evidence during the hearing. Mr. Elaiathamby, his passenger and the expert witnesses occupied centre stage. State Farm does not allege the amount of a special award would have come anywhere near the value of the sizable accident benefits Mr. Elaiathamby recovered. I reject State Farm’s argument that Mr. Elaiathamby was not successful because his special award claim was dismissed, and find he was almost entirely successful in this arbitration.

Lawyer Fees:

Although the Expense Regulation permits Applicant’s lawyers to be compensated up to $150 per hour, State Farm contends Mr. Elaiathamby’s lawyer should be reimbursed at the Legal Aid tariff rate of $96.64 an hour. I reject State Farm’s assertion because I am of the opinion that this case involved difficult and highly contentious issues where Mr. Wilson’s experience, diligence and effectiveness in both preparedness and presentation of Mr. Elaiathamby’s case directly resulted in his success. He is entitled to the maximum of $150 per hour.

State Farm argues that Mr. Elaiathamby’s lawyer’s bill listing 56.95 hours of hearing time should be reduced to 31 hours. State Farm’s position is based on its claim of actual hearing time together with reductions for travel and lunch times on Mr. Wilson’s accounting. I reject the hour-by-hour accounting method that both parties propose, and substitute a broad approach. I allow seven hours per day for the six hearing days, totalling 42 hours.

Mr. Elaiathamby’s lawyer includes .2 hours for each of the 123 pieces of correspondence (24.6 hours) in the 194.45 hours he has allocated for the entire arbitration process through the hearing stage. The problem State Farm identifies is that no dates or subject matter are identified for any individual letter, and this bulk form of billing does not lend itself to verification.

I agree with State Farm’s position for the following reasons. There is some short correspondence from Mr. Elaiathamby’s lawyer in the Financial Services Commission of Ontario’s (Commission) file that is signed by his assistant and this supports the common practice that lawyers often have their support staff prepare and sign short letters and cover correspondence. Without letter dates or subject matter identification, I am only willing to allow .1 hour for the 123 items of unidentified correspondence claimed, or 12.3 hours.

State Farm maintains the 194.45 hours billed by Mr. Elaiathamby’s lawyer in this arbitration is excessive for the limited single issue at the hearing. Within that amount, his lawyer lists 106 hours for preparing to present evidence respecting Mr. Elaiathamby’s entitlement to four different benefit categories that were contested up until the parties resolved those issues at the doorstep of the hearing.

On this point, I agree with Mr. Elaiathamby that his lawyer was required to expend considerable time preparing to present the case on multiple issues until shortly before commencement of the arbitration hearing. The breadth of issues set out in the pre-hearing letter, the complexity of the evidence concerning the accident itself and the additional time Mr. Wilson needed to be able to communicate through an interpreter with Mr. Elaiathamby convince me that the hearing preparation was more complicated than State Farm admits.

Arbitrators often take a broad approach to the number of hearing preparation hours by assigning a multiple to the hearing time, rather than a line-by-line analysis. I choose to allow two preparation hours for every hearing hour, which grants Mr. Wilson 84 hours for hearing preparation.

Mr. Elaiathamby’s lawyer enumerates extensive hours for post-hearing legal research and drafting final written submissions or responses to State Farm’s submissions. I am not convinced that 30 hours were necessary. I am prepared to allow 7 hours for research and preparation of the final submissions or responses, together with 2 hours for his lawyer’s preparation of the final costs bill and oral/written submissions on the arbitration expenses.

The addition of the 42 hours for the hearing, 3.25 hours for the pre-hearing, 12.3 hours for correspondence, 84 hours for hearing preparation, 7 hours for post-hearing/research/final submissions and 2 hours for dealing with the matter of the arbitration expenses total 150.55 hours. Thus, I find that Mr. Elaiathamby is entitled to $22,582.50 for his counsel’s time in this arbitration, plus $1,129.13 (5% ) GST.

Disbursements:

Mr. Elaiathamby’s concession that the his engineering report is limited to the maximum $1,500 which the DRPC allows for experts makes it unnecessary for me to formally rule on State Farm’s objection on the amount. State Farm’s objection to reimbursement of Atila Balaban’s functional abilities report is based on the claim that it is irrelevant to the single hearing issue concerning Mr. Elaiathamby’s involvement in an accident. Even if relevant, State Farm still contends that the Balaban report and all Mr. Elaiathamby’s other expert health care reports should be reimbursed fifty percent to account for their use in his ongoing tort proceeding respecting this accident.

State Farm’s first objection does not stand up to scrutiny on the admitted fact that the parties only resolved Mr. Elaiathamby’s entitlement to the amount of his accident benefits immediately before the hearing commenced. Consequently, Mr. Elaiathamby had to prepare and file his health care evidence respecting those matters with this Commission thirty days in advance of the hearing in order to comply with the DRPC rules. I cannot agree with State Farm that Mr. Balaban’s report or any other experts listed in the final bill of costs are irrelevant to the issues in this arbitration process.

In response to State Farm’s second objection to full reimbursement, Mr. Elaiathamby defends his claim for arbitration expenses on the basis that reimbursement for any portion of these reports through his ongoing tort claim is not assured. However, his admission that all the reports are being used in that process persuades me to agree with State Farm’s position that it should only have to bear half of the cost.

I allow $1,575 for the Walters engineering report, $630 each for the Balaban functional abilities report and Dr. Wong’s initial report, $569.75 for Mr. Antflick’s vocational report, $105 for Dr. Wong’s addendum/reponse, $262.50 for Dr. Chan’s report, inclusive of GST. The allowed disbursements for expert reports total $3,772.25.

State Farm does not make specific objections to Mr. Elaiathamby’s remaining disbursements, except to request I review them. I have reviewed the receipts presented and allow Mr. Elaiathamby’s disbursements as follows: $100 arbitration fee, $460 for Lingual Solutions interpretation, $146.48 parking, $40 OHIP summary, $78.75 prescription summary, $370 for Milroy Anandraj interpretation, $109.40 for courier, $83.33 fax/long distance, $1,064.39 copying and $65.08 Canadian Paralegal Services.

I find Mr. Elaiathamby is entitled to $2,517.43 for the above disbursements, $3,772.25 for his experts’ reports, totalling $6,289.68. I add the $6,289.68 disbursements to the $23,711.63 for legal fees, and find that Mr. Elaiathamby is entitled to $30,001.31 for his total arbitration expenses in this matter.

December 11, 2009

Fred Sampliner Arbitrator

Date