Makvala Omarashvili v. Echelon General Insurance Company, 2009 ONFSCDRS 22

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 22

FSCO A07-001589

BETWEEN:

MAKVALA OMARASHVILI

Applicant

and

ECHELON GENERAL INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: Joyce Miller

Heard: Written submissions were received from Insurer on July 8, 2008 Submissions due from Applicant on August 29, 2008 were not received

Appearances: No one appeared for Mrs. Omarashvili

Jamie Pollack and Jason Goodman for Echelon General Insurance Company

Issues:

The Applicant, Makvala Omarashvili, was injured in a motor vehicle accident on December 31, 2005. In a decision dated July 4, 2008, I dealt with her claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

This arbitration is dismissed.
If needed, I may now be spoken to on the issue of expenses.

The issues further in this hearing are:

Is Mrs. Omarashvili entitled to her expenses incurred in respect of this arbitration hearing?
Is Echelon entitled to its expenses incurred in respect of this arbitration hearing?

Result:

Mrs. Omarashvili is not entitled to her expenses in respect of this arbitration.
Mrs. Omarashvili shall pay Echelon $6,063.34 plus GST for its legal fees and $5,570.01 inclusive of GST for its disbursements in this arbitration.

SUBMISSIONS

Echelon’s Submissions

On July 8, 2008, Echelon provided the following submissions for its expenses in the arbitration:

Echelon submits that it was entirely successful in the arbitration.
Echelon submits that the second day of the arbitraton hearing, which required the re-attendance of the insurer’s expert witness, was unnecessary. Echelon submits that the extra day was caused by the unduly lengthy and disorganized cross-examination of the expert witness by Mrs. Omarashvili’s representative.
Echelon submits that the entire proceeding was improper, vexatious and/or unnecessary given that the applicant was not injured in an accident as defined in section 2 of the Schedule.

Mrs. Omarashvili’s Submissions

Mrs. Omarashvili did not provide any submissions for this expense hearing.

The Commission records show that on July 31, 2008, Mrs. Omarashvili’s representative at the arbitration hearing, Mr. Vadim Malyshev, wrote to the Commission and advised that “our firm has retained Mr. Andrew Suboch, Barrister at Law for further handling Mrs. Omarashvili’s file.”

The Commission records show that after numerous attempts at trying to reach Mr. Suboch, on August 18, 2008 the case administrator spoke to Mr. Suboch who advised that he would like to reply to the claim for expenses in writing.

A Notice of Assessment of Expenses was sent to the parties advising that written submissions were due from the Applicant on August 29, 2008 and a Reply from the Insurer was due September 5, 2008.

The Notice of Assessment of Expenses states as follows:

You may personally participate in this assessment and be represented. If you or your representative do not participate, the Arbitrator may proceed with the assessment without your participation and you will not be entitled to any further notice in the proceeding.

Submissions from Mrs. Omarashvili did not arrive on August 29, 2008. Two messages were left by the Case Administrator one on September 16, 2008 to both Mr. Malyshev and Mr. Suboch and the other on September 22, 2008 to Mr. Suboch advising that the submissions were overdue.

The submissions were never forthcoming.

Based on the above information, I am satisfied that sufficient notice was given with respect to this expense hearing. Further, I find that the notice was clear in stating that if the Applicant did not participate in the expense hearing, I would proceed with the Assessment without the Applicant’s participation.

THE LAW:

Subsection 282(11) of the Insurance Act provides that:

The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.

The criteria for determining entitlement to expenses of an arbitration proceeding are enumerated in section 12(2) of Ontario Regulation 664, R.R.O. 1990, as amended. The criteria are:

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 the Ontario Regulation 403/96 (Statutory Accident Benefit Schedule — Accidents on or after November 1, 1996) or refused or failed to provide any material required to be provided under subsection 42(10) of the Schedule.

ANALYSIS AND FINDINGS:

With the above criteria in mind, I make the following findings:

Each party’s degree of success in the outcome of the proceeding.

Echelon was completely successful in the interim benefits hearing. Mrs. Omarashvili was completely unsuccessful.

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

Neither party made any written offer to settle.

Whether novel issues are raised in the proceeding.

This criteria is not relevant to my findings.

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.

I agree with Echelon’s submissions that Mrs. Omarashvili’s representative unnecessarily prolonged the hearing.

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

I agree with Echelon’s submissions that the proceeding was vexatious and unnecessary. There was clear objective verifiable evidence to show that the alleged car accident Mrs. Omarashvili said she was involved in could never have occurred.

Whether the insured 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 that regulation.

This criteria is not relevant to my findings.

Accordingly, based on the above criteria and my findings, I find that Mrs. Omarashvili is not entitled to her expenses in this arbitration hearing. I find that Echelon is entitled to its expenses in this arbitration hearing.

AMOUNT OF EXPENSES

The amount of expenses and disbursements which I may award are set out in section 3 of the Schedule to the Expense Regulation to Ontario Regulation 664 which states:

3(1) The legal fees payable by the insured person or the insurer for the following matters may be awarded:

For all services performed before an arbitration, appeal, variation or revocation hearing.
For the preparation for an arbitration, appeal, variation or revocation hearing.
For attendance at an arbitration, appeal, variation or revocation hearing.
For services subsequent to an arbitration, appeal, variation or revocation hearing.

(2) The number of hours for which legal fees may be awarded shall be determined by the arbitrator, having regard to the criteria set out in subsection 12(2) of this Regulation.

In the decision of Henri and Allstate Insurance Company², Arbitrator Makepeace outlined a number of general principles that have emerged from the arbitration decisions with regard to the assessment of arbitration expenses. These principles include the following:

The overriding consideration in fixing arbitration expenses is reasonableness.
A line-by-line assessment of the expenses claimed is not appropriate. Rather, the Arbitrator should make a global assessment of reasonable expenses.

In deciding the issues in this expense hearing, namely, what is the amount of legal fees, hourly rate and disbursements that Echelon is entitled to for the services rendered by his counsel, I will adhere to the above principles of “reasonableness” and “global assessment.”

(1) Legal Fees

Pursuant to section 3 of the Schedule to the Expense Regulation, legal fees are payable for the preparation and attendance at an arbitration as well as for services performed before and subsequent to an arbitration hearing.

Echelon claims 109.4 hours for the following legal services:

Jamie Pollack, 19.3 hours at the rate of $96.95 per hour - “Preparation for and attendance at arbitration hearing (2 days).”
Jason Goodman, 65.2 hours at the rate of $87.25 per hour – “Initial review of file contents; drafting FSCO pre-hearing letter; preparation and attendance at pre-hearing discussion; preparation and attendance at arbitration hearing (2 days); drafting factum; drafting costs outline.”
Law Clerk, 24.9 hours at the rate of $23. per hour – “Organization of file, preparation of documents briefs, preparation of pleadings.”

I was not provided with any detailed dockets to support the hours claimed. However, given that this was a two day hearing on a straightforward issue, I find the number of hours claimed on behalf of Mr. Goodman to be excessive. Based on a reasonable ratio of 2:1, I find that the amount of hours attributed to Mr. Goodman for a seven-hour day, hearing over two days should be a total of 42 hours.

Accordingly, I find that Echelon is entitled to the following legal fees:

Mr. Pollack, 19.3 hours at $96.95 per hour for a total of $1,871.14;
Mr. Goodman, 42 hours at $87.25 per hour for a total of $3,664.50; and
Law Clerk, 24.9 hours at $23.00 per hour for a total of $527.70.

Accordingly, I find that Mrs. Omarashvili shall pay Echelon $6,063.34 plus GST for its legal fees in this arbitration.

(2) Disbursements

Echelon submitted disbursements in the amount of $5,570.01, which includes the expenses for the report of the expert engineer as well as his preparation and attendance for two days at the hearing. It also includes relevant GST. I have reviewed these expenses and find them to be reasonable on the facts of this case. Accordingly, I find that Mrs. Omarashvili shall pay Echelon disbursements of $5,570.01 inclusive of GST.

February 17, 2009

Joyce Miller Arbitrator

Date