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

Neutral Citation: 2010 ONFSCDRS 105

FSCO A08-000767

BETWEEN:

C.S.K.

Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY

Insurer

Before: Eban Bayefsky

Heard: Written submissions received by May 11, 2010 and a hearing on May 14, 2010, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Theodore P. Charney for the Applicant Daniel Strigberger for Economical Mutual Insurance Company

Issues:

The Applicant was injured in a motor vehicle accident on March 30, 2006. In a decision dated January 8, 2010, I dealt with the Applicant’s claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

Economical shall pay to C.S.K. caregiver benefits, from March 30 to June 30, 2006, September 1, 2006 to June 30, 2007, September 1 to November 15, 2007, January 17 to February 5, 2008 and June 27 to July 18, 2008, at the rate of $100 per week.
Economical shall pay to C.S.K. housekeeping benefits from September 1, 2006 to June 30, 2007 and from September 1, 2007 to March 30, 2008, at the rate of $100 per week.
Economical shall pay to C.S.K. the cost of the assessment recommended in Dr. Grushka’s December 1, 2006 OCF-22, in the amount of $1,490.
Economical shall pay to C.S.K. the cost of the treatment recommended in South City Physiotherapy’s September 27, 2007 OCF-18, in the amount of $1,413.57.
Economical shall pay to C.S.K. interest on the benefits awarded in this decision.

The issue in this further hearing is:

Is the Applicant entitled to her expenses incurred in respect of this arbitration hearing?

Result:

Economical shall pay to C.S.K. arbitration expenses of $21,268.41.

EVIDENCE AND ANALYSIS:

(i) General Entitlement to Expenses

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:

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 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.

The hearing was held over six days and included a pre-hearing conference and two pre-hearing resumptions, with two decisions being issued by the pre-hearing arbitrator. Economical does not dispute the Applicant’s general entitlement to expenses. However, Economical maintains that certain factors should temper the amount the Applicant is awarded. Economical also disputes some of the specific expenses sought by the Applicant.

Regarding the applicable criteria, the Applicant was largely successful in the arbitration. She was only fully denied one of the claims she made, namely, the neurological examination recommended by Dr. Leventhal. She succeeded on the remaining issues, although (as pointed out by Economical) denied certain periods of caregiving and housekeeping benefits. I note that the Applicant did not vigorously pursue entitlement to caregiver benefits following the two year mark.

Economical made a written offer of $10,000 for a full and final settlement of the issues in dispute in the arbitration. The parties advised that the total monetary amount of the award on the issues at arbitration (principal plus interest, and excluding expenses) was approximately $33,000. The Applicant did not make any written offers to settle the case. I do not find that Economical’s offer was sufficiently similar to the final award that the Applicant ought to have chosen not to proceed to arbitration. While it might have been preferable for the Applicant to make a written offer to settle, she was under no obligation to do so, and was ultimately successful in the arbitration.

The hearing raised some important and challenging questions of credibility, causation and impairment. However, it did not raise novel issues.

The parties generally worked well together in the efficient conduct of the arbitration. While, as pointed out by Economical, there may have been some difficulties in the manner in which the Applicant provided productions prior to the hearing, there is nothing to indicate, either from the pre-hearing arbitrator or from the hearing itself, that the conduct of the Applicant or her counsel tended to prolong, obstruct or hinder the proceeding. The Applicant was successful in the two pre-hearing issues and assisted the efficient conduct of the arbitration by preparing certain charts summarizing the dates of treatment and other information.

Economical did not maintain, and I do not find, that there was any aspect of the proceeding that was improper, vexatious or unnecessary. There was no issue of the Applicant failing to participate in an insurer examination.

In all of the circumstances, I find that the Applicant has established full entitlement to expenses, (subject to some of the specific items claimed, as discussed below).

(ii) Quantum of Legal Fees

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

The Applicant sought the following in legal fees:

Counsel (at $150 per hour)

Preparation and attendance at pre-hearing Preparation for arbitration hearing Attendance at arbitration hearing

11.4 hours 87.9 hours 31.8 hours

Law Clerk (at $45 per hour)

Preparation for arbitration

110.3 hours

The Applicant, therefore, sought legal fees of $19,665, plus GST of $983.25 for counsel, and $4,963.50 for the law clerk, for a total of $25,611.75.

Economical maintained that the number of hours claimed for legal fees was excessive and that, given the modest complexity of the issues raised in the proceeding, Economical’s reasonable defences to the claims and the factors outlined above concerning the Applicant’s general entitlement to expenses, a ratio of at most 2:1 for preparation time to hearing time should be awarded. Economical also submitted that the Applicant’s counsel should not automatically be awarded legal fees at $150 per hour and that a law clerk’s time can only be compensated at a maximum of $23 per hour.

I see no reason to depart from the $150 per hour for experienced counsel awarded to the Applicant’s lawyer in the case of Amoa-Williams and Allstate Insurance Company of Canada (FSCO A97-001864, October 24, 2001), particularly since several years have passed since that decision was issued. I agree with the decisions of Ms. G. and Pilot Insurance Company (FSCO A04-000446, June 21, 2006) and Amato and Wawanesa Mutual Insurance Company (FSCO A02-000161, August 17, 2006) which held that law clerks can be compensated at a rate higher than $23 per hour. I also accept Applicant’s counsel’s submission that his law clerk was instrumental in preparing the file for arbitration and that this was a cost-effective way of doing work on the case. I note as well that the law clerk has twenty years of experience working on personal injury matters. I am, therefore, prepared to allow the law clerk’s time on the file at the requested $45 per hour (which, I note, was the amount allowed in the Amoa-Williams case).

The Applicant submitted two judicial decisions (Risorto v. State Farm Mutual Automobile Insurance Company, 2003 CanLII 43566 (ON SC), [2003] 64 O.R. (3d) 135 (Ont. Sup. Ct.) and Diagnostic Imaging International Corp. v. Quinte Magnetic Resonance Imaging, Inc., [2010] O.J. No. 1536 (Ont. Sup. Ct.)) to the effect that a party ought not necessarily to be allowed to question the number of hours spent on a case by opposing counsel where it has not submitted its own dockets for consideration. While this is of some relevance to the analysis, I must nevertheless consider the claim for legal fees in light of the statutory conditions laid down in the Expense Regulation. The Applicant was largely successful and the proceeding was well conducted; however, the arbitration did not raise novel issues and was not particularly complex. A ratio of 2:1 is reasonable in the circumstances. While the fees of a lawyer and law clerk should not necessarily be considered separately in the application of the ratio, in this particular case, I find that having the law clerk do most of the pre-hearing preparation was an efficient use of resources. I am, therefore, prepared to apply the 2:1 ratio to both counsel’s fees and the law clerk’s fees (resulting in a total of 95.4 hours for counsel and 63.6 hours for the law clerk). Given the somewhat involved pre-hearing process, I am also prepared to award a modest amount for counsel’s attendance at that stage of the proceeding (namely, 3 hours).

I, therefore, award the Applicant legal fees in the amount of $14,760 plus GST of $738 for counsel and $2,862 for the law clerk, for a total of $18,360.

(iii) Disbursements

Economical disputed the Applicant’s entitlement to expenses for Dr. Grushka ($1,100) and counsel’s travel to the arbitration ($40). The Applicant concedes that it is not entitled to these items. Economical disputed the Applicant’s claim for $134 for records from Toronto Western Hospital on the basis that these were only requested in early December 2008 (roughly a month prior to the hearing) and provided to Economical a week before the hearing. I do not see this as a basis for denying entitlement to a disbursement that was otherwise relevant and admissible.

I, therefore, award the Applicant disbursements in the amount of $2,593.41 ($1,500 for Dr. Kozac and Dr. Hoffman, and $1,093.41 ($1,041.34 plus $52.07 GST) for miscellaneous disbursements).

(iv) Expenses of Expense Hearing

Both parties sought their expenses of the expense hearing. Essentially on the basis of the Applicant’s success in the expense hearing, as well as the general reasonableness of the Applicant’s claim for expenses in this regard, I find that the Applicant is entitled to its expenses of the expense hearing. The Applicant sought expenses for the preparation of its Bill of Costs and submissions in the amount of $1,380 (9.2 hours at $150 per hour) plus GST of $69, for a total of $1,449. The expense hearing took approximately an hour to complete. While the Applicant was successful in the expense hearing, given its relative simplicity, I find that an appropriate ratio of preparation time to hearing time is 1:1, resulting in a total of two hours of legal fees for the expense hearing.

I, therefore, award the Applicant legal fees of $315 ($300 plus GST of $15) for the expense hearing.

August 23, 2010

Eban Bayefsky Arbitrator

Date