Financial Services Commission of Ontario

Neutral Citation: 2009 ONFSCDRS 33 FSCO A07-001147

BETWEEN:

GEOFFREY PRIOR Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Eban Bayefsky Heard: Written submissions received by January 23, 2009 Appearances: Roger Gosbee for Mr. Prior Joan Takahashi for Dominion of Canada General Insurance Company

Issues:

The Applicant, Geoffrey Prior, was injured in a motor vehicle accident on July 24, 2004. In a decision dated November 6, 2008, I dealt with a preliminary issue of whether Dominion of Canada General Insurance Company (“Dominion”) was entitled to deny Mr. Prior benefits pursuant to section 30(1)(a) of the Schedule¹, on the grounds that he knew or ought reasonably to have known that he was operating a motorcycle while it was not insured under a motor vehicle liability policy. I made the following order, while reserving on the issue of expenses:

1. Dominion is not entitled to deny Mr. Prior benefits pursuant to section 30(1)(a) of the Schedule.

The issue in this further hearing is:

1. Is Mr. Prior entitled to his expenses incurred in respect of the preliminary issue hearing?

Result:

1. Dominion of Canada General Insurance Company shall pay to Mr. Prior $9,147.26 in expenses related to the preliminary issue hearing.

EVIDENCE AND ANALYSIS:

Background

I issued the decision on the preliminary issue on November 6, 2008. By letter dated December 22, 2008, received by the Commission on December 30, 2008, Mr. Gosbee requested an order of expenses on Mr. Prior’s behalf, providing brief submissions and attaching a Bill of Costs. By letter dated January 2, 2009, I responded as follows:

As indicated in my November 6, 2008 decision on the preliminary issue, if required, the parties could make submissions on the issue of expenses in accordance with the procedure set out in Rule 79 of the Dispute Resolution Practice Code. Rule 79.1 indicates, in part, that a party may request an appointment before an arbitrator on the issue of expenses “within 30 days” of the date of the initial decision. I seek the submissions of the parties on the effect of this provision in accordance with the following schedule:

• Mr. Gosbee’s submissions by January 9, 2009
• Ms. Takahashi’s response by January 16, 2009
• Mr. Gosbee’s reply, if any, by January 23, 2009

On January 7, 2009, Ms. Takahashi responded by advising that Dominion had appealed the preliminary issue decision and had sought a “stay of the award in light of the costs Order.” Ms. Takahashi, therefore, requested that the expense hearing be held in abeyance “until we [had] heard further from Delegate Evans.”

On January 8, 2009, Mr. Gosbee provided the following submissions:

The usual procedure is that [the] issue of expenses is to be dealt with within 30 days from the original Order. However, in this matter two additional issues arose. The first being an Application for leave to appeal from your decision, and the second being an Application to adjourn the substantive hearing in this matter scheduled to commence the first week of December. The issue of the adjournment was argued on November 21, 2008, and Monday November 24, 2008. As a result of this argument, the matter was adjourned. The Notice for leave of [sic] appeal was sent to the Commission, and Mr. David Evans, the Director’s Delegate issued a letter dated December 11, 2008. Attached hereto is a copy of the letter.

I would refer you to the second last paragraph of the Order, which says” [sic]

“In the mean time, the parties should seek and obtain an order as to the arbitration expenses, if desired, as set out in the arbitrator’s order.”

As the preliminary matters in regard to the appeal and the adjournment of the hearing were addressed, it was at that time that the applicant sought his expenses of this matter. It is submitted that it would not have been appropriated [sic] to do this before this time while these other two issues were outstanding.

The respondent has requested that the issue of expenses be postponed to after the issue of leave to appeal is dealt with. It is my submission that this is contrary to the direction of the Director’s Delegate[.]

On December 11, 2008, Director’s Delegate Evans had responded to the Notice of Appeal, in part, as follows:

Dominion has requested a stay of the arbitration order pending the outcome of the appeal. Mr. Gosbee is invited to address that issue as well. However, I have difficulty understanding the stay request, since the order only declares that Mr. Prior is not excluded from receiving benefits but makes no order as to those benefits.

In the mean time, the parties should seek and obtain an order as to the arbitration expenses, if desired, as set out in the arbitrator’s order.

By letter dated January 9, 2009, I responded to Ms. Takahashi’s letter of January 6, 2009 and Mr. Gosbee’s letter of January 7, 2009 as follows:

I do not understand Ms. Takahashi’s comments regarding a stay of the costs order, since one has not been made yet.

I look forward to Ms. Takahashi’s submissions on the issue set out in my January 2, 2009 correspondence and Mr. Gosbee’s reply, if any (in accordance with the noted schedule).

By letter dated January 13, 2009, Director’s Delegate Evans rejected Dominion’s appeal pursuant to Rule 51.2(c) of the Dispute Resolution Practice Code (the “Code”).

On January 16, 2009, Ms. Takahashi filed her submissions on the issue of expenses of the preliminary issue hearing. She addressed the substantive issue of Mr. Prior’s entitlement to expenses, but did not address the procedural issue raised in my initial letter of January 2, 2009. Mr. Gosbee filed reply submissions on January 23, 2009, responding to Ms. Takahashi’s submissions on the substantive issue of expenses.

Findings

I am satisfied that Mr. Prior had a reasonable explanation for not seeking an order of expenses within 30 days of the preliminary issue decision, as set out in Rule 79.1 of the Code. While it would have been preferable for him to have applied for expenses earlier, I accept that he was focussed on Dominion’s application for leave to appeal at the time. I see no evidence that Dominion would be prejudiced by allowing the expense hearing to proceed. I note that Dominion has not objected to the matter proceeding, despite being given an opportunity to do so, pursuant to my initial letter of January 2, 2009. I find that this would be an appropriate case in which to set aside the 30 day time limit, pursuant to Rules 1.1 and 81.1 of the Code, which allow for a flexible application of the Rules so as to “produce the most just, quickest and least expensive resolution of the dispute.”

Section 12 of Regulation 664, R.R.O. 1990, as amended, sets out the following regarding the awarding of expenses:

12(2) 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:

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

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

3. Whether novel issues are raised in the proceeding.

4. 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.

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

6. Whether the insured refused or failed to submit to an examination as required under section 42 of the 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 the Schedule.

Dominion does not dispute Mr. Prior’s general entitlement to expenses. Based in part on his success at the preliminary issue hearing, the fact that neither he nor his counsel did anything that tended to delay or hinder the proceeding, and that there was nothing in the proceeding that was improper, vexatious or unnecessary, I find that Mr. Prior is entitled to his expenses of the preliminary issue hearing.

Pursuant to section 3(1) of the Schedule to the Expense Regulation, legal fees may be awarded for “all services performed before an arbitration”, “the preparation for an arbitration”, “attendance at an arbitration” and “services subsequent to an arbitration”. Pursuant to section 3(2) of the Schedule to the Expense Regulation, the “number of hours for which legal fees may be awarded shall be determined...having regard to the criteria set out in subsection 12(2)” of the Expense Regulation.

Arbitrators have established a general guideline in determining the amount of legal work to be compensated for an arbitration proceeding, namely, a ratio of between one and four hours of preparation time for every hour of hearing time.²

Mr. Prior sought legal fees at $150 per hour, as follows:

• 12 hours of preparation for the initial day of the preliminary issue hearing (June 9, 2008)
• 2 hours of attendance on June 9, 2008
• 32 hours of preparation for the subsequent days of the preliminary issue hearing (August 18, 19 and 20, 2008)
• 18 hours of attendance on August 18, 19 and 20, 2008
• 1 hour of preparation of submissions on expenses
• Total hearing time = 20 hours; total preparation time = 44 hours; total preparation time for expense issue = 1 hour; total legal fees sought = $9,750 + GST of $487.50 = $10,237.50.

Mr. Prior sought the following disbursements:

• photocopying and fax - $150
• research on authorities (including tax) - $369.26
• parking - $80
• mileage - $180
• Total disbursements = $779.26 + GST of $20.50 = $799.76

Ms. Takahashi did not object to the hourly fee of $150 sought by Mr. Gosbee. However, she maintained that at least some of Mr. Gosbee’s preparation was duplicated given that the initial hearing day in June 2008 focussed not on the substantive issues as originally expected by the parties, but on the issue of whether notice of the proceeding ought to be provided to the parties in a related tort action. Ms. Takahashi also submitted that Mr. Gosbee’s preparation for the August hearing dates was excessive, given that no new issues had been raised since the first day of hearing in June and that Mr. Gosbee claimed nearly twice as much time for preparation for the August hearing than for the June hearing. Mr. Gosbee acknowledged that there had been some duplication in effort for the two stages of the hearing, but noted that the Bill of Costs already included a discount for this. Mr. Gosbee also submitted that 36 hours of preparation for a three day hearing was reasonable.

In general, I find that Mr. Gosbee’s preparation time was reasonable. It falls within the range normally applied by arbitrators, it is less than the time actually spent in preparation and, pursuant to sections 3(2) of the Schedule to the Expense Regulation and 12(2) of the Expense Regulation, is consistent with Mr. Prior’s success in the matter, the somewhat novel nature of the issues and the efficient way in which Mr. Gosbee conducted the matter. While there appears to have been some duplication in effort for the two phases of the proceeding, I accept that this has already been taken into account in Mr. Gosbee’s Bill of Costs. However, Mr. Gosbee has not directly addressed the issue of why significantly more time was required for preparation for the August hearing, given that most of the preparation would have been completed before the June hearing. I find that this is only partially addressed by Mr. Gosbee’s comment that the Bill of Costs incorporates a discount for the duplication in preparation time. In the circumstances, I am prepared to allow 20 hours of preparation for the August hearing (which represents a roughly 50% reduction in the principal amount claimed for preparation for the August hearing). I, therefore, award Mr. Prior expenses for legal fees in the amount of $8,347.50 (53 hours at $150 per hour + $397.50 in GST).

Regarding disbursements, Ms. Takahashi accepted the photocopying and research charges, but maintained that the disbursements allowed under section 3(1) of the Schedule to the Expense Regulation do not include mileage. Ms. Takahashi also noted that no receipts had been provided for the parking charges. Mr. Gosbee noted, in response, that section 6 of the Schedule to the Expense Regulation allows expenses to be recovered in respect of counsel’s travel costs. Section 6 is quite broad and I find that it covers the travel charges claimed by Mr. Gosbee in respect of his attendance at the hearing. While it would have been preferable for Mr. Gosbee to have provided receipts for the parking charges, I find that this represents a reasonable amount in respect of his attendance at the hearing. I, therefore, award Mr. Prior expenses for disbursements in the amount of $799.76 ($779.26 + $20.50 GST).

Mr. Prior is entitled to expenses for the preliminary issue hearing in the amount of $9,147.26.

March 18, 2009

Eban Bayefsky Arbitrator

ARBITRATION ORDER

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

1. Dominion of Canada General Insurance Company shall pay to Mr. Prior $9,147.26 in expenses related to the preliminary issue hearing.

March 18, 2009

Eban Bayefsky Arbitrator

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2See, for example, Carr and Lombard General Insurance Company of Canada (FSCO A00-000441, April 12, 2002), Buccellato (Estate of) and Allstate Insurance Company of Canada (FSCO A03-000609, August 27, 2004), Soobrian and Belair Insurance Company Inc. (FSCO A04-000422, February 7, 2006), Silva and York Fire & Casualty Insurance Company (FSCO A04-001771, February 28, 2006) and Crossey and Farmers’ Mutual Insurance Company (FSCO A03-001643, March 15, 2006).