Jennifer Esterreicher v. Non-Marine Underwriters, Mbrs. Of Lloyd's, 2009 ONFSCDRS 94

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2009 ONFSCDRS 94

FSCO A04-001750

BETWEEN:

JENNIFER ESTERREICHER

Applicant

and

NON-MARINE UNDERWRITERS,

MBRS. OF LLOYD'S

Insurer

Before: Jeffrey Rogers

Heard: By written submissions completed on April 14, 2009 and a telephone conference call on June 5, 2009.

Appearances: Mr. Christopher D. J. Hacio, solicitor for Ms. Esterreicher

Ms. Amanda McBride, solicitor for Non-Marine Underwriters, Mbrs. Of Lloyd’s

Issues:

The Applicant, Jennifer Esterreicher, was injured in a motor vehicle accident on December 23, 2000. In a decision dated December 17, 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:

Lloyd’s shall pay Ms. Esterreicher $4,429.60, the total claimed for incurred treatment.
Lloyd’s shall pay Ms. Esterreicher interest on the above amount pursuant to section 46(2) of the Schedule.
Lloyd’s shall pay Ms. Esterreicher $220 for two further sessions with Tara Mueller, subject to deduction for her entitlement to collateral benefits.

The issue in this further hearing is:

What is the amount of expenses to which Ms. Esterreicher is entitled in respect of this arbitration?

Result:

Ms. Esterreicher is entitled to expenses in the amount of $16,669.05.

EVIDENCE AND ANALYSIS:

Introduction

Ms. Esterreicher claims expenses of the arbitration hearing in the amount of $17,983.58. This amount includes legal fees of $11,875, disbursements of $5,156.98 and GST of $851.60. She also claims expenses of the expense hearing in the amount of $1,307.25, including GST. She further claims interest on her expenses.

The expense hearing was conducted by way of written submissions and a brief telephone conference call. During the conference call Lloyd’s solicitor advised for the first time that Ms. Esterreicher’s entitlement to expenses of the arbitration was not disputed. She also advised that concerns she had raised about not having been provided with invoices to support the claimed disbursements had been satisfied. After Lloyd’s solicitor questioned whether certain charges related to this arbitration, Ms. Esterreicher’s solicitor agreed to delete claims for legal fees totalling $90.

Legal Fees

In the Decision on Expenses in Henri and Allstate Insurance Company of Canada², Arbitrator Makepeace outlined a number of general principles for assessing expenses, established by earlier arbitration decisions on expenses. Two of these principles are:

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

Other arbitrators have consistently followed these principles. I agree with them and will apply these principles here.

The arbitration hearing took place over 3 days. The pre-hearing proceedings included filing two Applications for Arbitration which were consolidated into one hearing, participating in the pre-hearing discussion and bringing a successful motion for an order allowing Ms. Esterreicher’s expert witnesses to testify via videoconference.

Someone unaware of the history of this dispute might wonder why a dispute over a sum of less than $5,000 took three days of hearing to resolve and consumed, by my rough estimate, at least $20,000 in gross legal fees. Lloyd’s, no doubt aware that it approached this dispute as though resolution in favour of Ms. Esterreicher would establish a damaging precedent, did not raise the issue in its submissions. In addition, the amount in dispute between the parties does not adequately reflect the complexity of the issues because Ms. Esterreicher only claimed the balance she paid after reimbursement by her collateral insurer. Given the nature of the proceedings and the length of the hearing, I find the total of 116.8 hours claimed for legal fees (117.88 billed, minus 1.8 deleted) to be eminently reasonable.

Legal fees were billed at a rate of $150 per hour for counsel who represented Ms. Esterreicher at the hearing, $40 and $50 per hour for law clerks, and $130 per hour for the services of Ruby Van Bendegem, a non-practising lawyer, employed as a legal researcher by Ms. Esterreicher’s solicitors. Lloyd’s submitted that these rates are excessive.

Rule 78.1 of the Dispute Resolution Practice Code sets the hourly rates recoverable for legal fees. It sets the maximum hourly rate recoverable by insurers at the rates established under the Legal Aid Services Act, 1998 and confers discretion to award an enhanced hourly rate of up to $150 to an insured person, where it is “justified”.

Lloyd’s concedes that Ms. Esterreicher’s counsel has “significant experience” in accident benefits litigation, but argues that his rate is excessive because the issues were neither novel nor complicated. I agree that the issues were not novel or very complicated, but I find that the rate of $150 is justified.

The discretion to award an enhanced rate for the legal fees of insured persons is founded in access to justice considerations. Arbitrator Palmer pointed this out in Tustin and Canadian General Insurance Group³, finding that the maximum rate can be awarded “where an experienced advocate has attended on a hearing, leaving a sizeable gap between his or her fees per hour and the hourly rates accorded under the Legal Aid Act” in order to facilitate access to justice. This approach was adopted in Clipperton and Zurich North America Canada⁴ and in Ms. G and Pilot Insurance Company.⁵

In addition, counsel for Ms. Esterreicher brought his experience to bear in two areas, resulting in a reduction of the overall claim for expenses. First, his imaginative use of videoconferencing for expert testimony greatly reduced the recoverable cost of introducing that evidence. Second the length of the hearing was kept to a minimum by a generally efficient and expeditious presentation of his client’s case at the hearing.

There are conflicting arbitration decisions on whether there is jurisdiction to award an enhanced hourly rate for the services of law clerks. For example, in Carr and Lombard General Insurance Co. of Canada Arbitrator Sapin wrote:

“The Legal Aid rate for law clerks as referenced in Rule 76 [sic]…is $23 per hour. Where the amounts claimed are disputed, I find I have no authority to award more than the amount provided for in the regulation.”⁶

In Ms. G and Pilot Insurance Company Arbitrator Blackman reached the opposite conclusion.

He wrote:

“It is correct that subsection 2(2) of the Schedule to Regulation 664 once restricted expenses to the amount allowed under the Legal Aid Services Act, 1998. However, O. Reg. 464/96 revoked subsection 2(2), and substituted in lieu the following under subsection 3(3):

The maximum amount that may be awarded for legal fees is the amount calculated using the hourly rates set out in the Dispute Resolution Practice Code published by the Ontario Insurance Commission or Financial Services Commission of Ontario, as it may be amended from time to time.”⁷

Arbitrator Miller followed this approach in Amato and Wawanesa Mutual Insurance Company.⁸

I prefer the latter approach. Rule 78.1(b) provides as follows:

“Where an adjudicator is satisfied that a higher amount for legal fees to an insured person is justified, an hourly rate of up to $150 may be awarded.” [with emphasis]

Where an insured person is represented by a lawyer, I see nothing in Rule 78 that restricts the discretion to award an enhanced rate to those legal fees that are charged for the services of a lawyer.

However, for the discretion to be exercised, the enhanced rate must be justified. Ms. Esterreicher presented no evidence to justify an enhanced rate for the law clerks in her lawyer’s office. I therefore restrict the rate awarded for their services to the Legal Aid rate of $23 per hour.

Ms. Esterreicher’s solicitor submits that an increased rate is justified for the legal research services provided by Ruby Van Bendegem, because “[We] think she is the best in the business. We would have had to do the research she did (at a higher rate) if she did not do it.” I do not accept the submission that a higher rate is justified because a lawyer would otherwise have done the same work. The submission must fail because the same could be said for all of the work done by law students and law clerks. However, I am satisfied that an enhanced rate is justified by the particular expertise that Ms. Van Bendegem brings to the work performed. Since she is not a lawyer, the reference point for her services is the hourly rate of $23 allowed for law clerks. In the circumstances, I find an enhanced rate of $70 per hour to be justified.

Disbursements

Having been provided with the supporting invoices, the only challenge that Lloyd’s raised about disbursements was with regard to Ms. Esterreicher’s claim of $101.65 for a Quicklaw search. Lloyd’s argued that this expense was not reasonable because Commission decisions are available online, free of charge. I find the expense to be reasonable because, although Commission decisions are available free of charge, a prudent researcher would also want to be aware of Court decisions and relevant decisions of other jurisdictions. I find all the other claimed disbursements to be reasonable.

Expenses of the Expense Hearing

Lloyd’s submitted that an arbitrator does not have jurisdiction to award expenses of an expense hearing, but retreated from that position when I pointed out that section 3(1)4 of the Expense Regulation provides for recovery of legal fees for “services subsequent to an arbitration…”

I find that Ms. Esterreicher is entitled to her expenses of the expense hearing, based on her success and the fact that she has recovered in excess of her offer of $13,000 to settle her claim. The submitted Bill of $1,245 includes charges for a law clerk at an enhanced rate and for her lawyer at an enhanced rate. I find the amount claimed to be a bit excessive. I fix the expenses of this hearing at $800, inclusive of GST.

Interest on Expenses

Ms. Esterreicher claimed interest on her expenses but could not point to any legislation or jurisprudence to support my authority to make such an award. I find no jurisdiction to do so.

Conclusion

Based on the above analysis, Ms. Esterreicher is entitled to expenses as follows:

Christopher Hacio, lawyer

55.08 hours

$150 per hour

$8,262.00

Law Clerks

54.8 hours

$ 23 per hour

$1,260.40

Ruby Van Bendegem

6.2 hours

$ 70 per hour

$ 434.00

Disbursements

$ 5,156.98

GST

$ 755.67

Expense Hearing

$__800.00

Total

$16,669.05

July 9, 2009

Jeffrey Rogers

Arbitrator

Date