Neutral Citation: 2010 ONFSCDRS 30 FSCO A08-000170

BETWEEN:

THERESE WEST Applicant

and

AVIVA CANADA INC. Insurer

DECISION ON EXPENSES

Before: Robert Bujold Heard: By written submissions from Aviva Canada Inc. received on January 13, 2010 Appearances: Cara Boddy for Aviva Canada Inc. No submissions were received for Ms. West

Issues:

The Applicant, Therese West, was injured in a motor vehicle accident on April 4, 2002. She applied for and received statutory accident benefits from Aviva Canada Inc. (“Aviva”), payable under the Schedule.¹ Aviva terminated weekly income replacement benefits. Ms. West claimed further entitlement. The parties were unable to resolve their dispute through mediation, and Ms. West applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

In a preliminary issue decision dated December 18, 2008, I found that Ms. West was precluded from proceeding to arbitration on her claim for income replacement benefits as the claim was statute barred, pursuant to section 281.1 of the Insurance Act and section 51 of the Schedule.

With respect to the issue of expenses of the preliminary issue hearing, the parties were advised that they could seek a determination of expenses pursuant to sections 75 to 79 of the Dispute Resolution Practice Code (the “Code”), if they were not able to resolve the issue between themselves.

The issues in this further hearing are:

Is Aviva entitled to its expenses of the preliminary issue hearing?
If so, what is the amount of expenses to which Aviva is entitled?

Result:

Aviva is entitled to its expenses of the preliminary issue hearing in the amount of $2,627.86.

EVIDENCE AND ANALYSIS:

Background

As noted, my decision on the preliminary issue was issued on December 18, 2008. According to Aviva, it attempted to resolve the issue of expenses with Ms. West shortly after the release of my decision. When it was unable to do so, Aviva wrote to the Commission on January 16, 2009 to request an appointment to have the issue of expenses determined by an arbitrator. I note that this request was received within 30 days of my decision, as required by Rule 79.1 of the Code.

On January 19, 2009, prior to the appointment for the expense hearing being arranged, Aviva received a Notice of Appeal on behalf of Ms. West. As a result, Aviva contacted the case administrator and advised that, in the circumstances, the issue of expenses would be “parked” pending Ms. West’s appeal of my decision. Therefore, an appointment for an expense hearing was not made at that time.

Even though Ms. West had served a Notice of Appeal on Aviva, it appears that Ms. West did not file the Notice of Appeal with the Commission. This came to Aviva’s attention as a result of inquiries it made of the Commission in April 2009. By letter dated April 22, 2009, Aviva wrote to Ms. West’s counsel and communicated its understanding that Ms. West had decided not to appeal my decision and that Ms. West’s counsel would be confirming same in writing.

Aviva did not receive a response to its letter of April 22, 2009 and, as a result, Aviva wrote to the Commission on June 3, 2009 to reinitiate its request for an expense hearing. There is no record of this correspondence in the Commission file, although Aviva subsequently provided a facsimile transmission report confirming that the letter was successfully sent to the Commission. Aviva submits that a telephone inquiry was made in September 2009 as a follow-up to its letter of June 3, 2009, but no information was provided regarding the content of any discussion that took place at that time.

In November 2009, Aviva again requested an appointment to have an arbitrator determine the issue of expenses.

Although concerned that Aviva had done little to follow-up on its request for an appointment between June and November, I accepted Aviva’s request for an expense hearing. In a letter to counsel dated December 3, 2009, I noted that Aviva had made its initial request for an appointment within 30 days of the release of my decision, as required by Rule 79.1. I also noted that had it not been for the anticipated appeal, which Ms. West apparently chose not to proceed with, the issue of expenses would already have been adjudicated. Further, I noted that the Commission had not received any objection from Ms. West to the request for an expense hearing – not when the request was reinitiated in June nor when it was requested again in November. Finally, I noted that at least part of the delay in arranging an expense hearing appeared to be attributable to the misplaced letter of June 3, 2009.

My letter of December 3, 2009 also advised the parties that the expense hearing would proceed by way of written submissions. Aviva was given until January 15, 2010 to provide its Bill of Costs and brief written submissions on how the criteria in subsection 12(2) of the Expense Regulation² should be applied in this case. Ms. West was given until February 5, 2010 to deliver brief written submissions in response. If required, Aviva would be permitted a further 5 days to provide reply submissions, including copies of supporting documentation for any expenses with which Ms. West took issue in her response.

Aviva delivered its Bill of Costs and written submissions on January 13, 2010. Ms. West has not filed any responding materials.

Entitlement to Expenses

The only criteria to be considered in determining whether a party should be awarded all or part of its expenses of an arbitration proceeding are set out in subsection 12(2) of the Expense Regulation as follows:

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 person refused or failed to submit to an examination as required under section 42 of 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 that regulation. O. Reg. 275/03, s. 4; O. Reg. 548/05, s. 1.

In its submissions, Aviva noted that only two criteria had possible relevance to this expense decision: degree of success and novelty of issues raised.

With respect to degree of success, Aviva was entirely successful in the arbitration of the preliminary issue.

With respect to novelty of issues raised, Aviva submitted that, while Ms. West may have raised novel arguments at the hearing, she had not raised a novel issue.³ I agree. The question of whether an insured person may reapply for weekly benefits after the expiration of an intervening limitation period flowing from a proper denial is not new. Although decided in the context of a previous statutory accident benefits regime,⁴ the issue had been settled by decisions of the Ontario Court of Appeal⁵ and the Divisional Court.⁶ Notwithstanding the creative and somewhat complex arguments raised by Ms. West (that required a comparative analysis of the current Schedule with the two prior regimes), I was not persuaded that the current Schedule should be interpreted as implicitly providing a right to reapply for weekly benefits nor do I now find that the creativity of those arguments should warrant Aviva being denied all or part of its expenses.

I also agree with Aviva’s submission that the criteria in the Expense Regulation are to be applied similarly to insurers and insured persons without preferential interpretation in favour of insured persons on account of the consumer protection goals of the Insurance Act.⁷

Based on the criteria in the Expense Regulation, I find that Aviva is entitled to its expenses of the preliminary issue hearing.

Quantum of Expenses

Fees

The preliminary issue hearing proceeded on the basis of an Agreed Statement of Facts and took a little over two hours to be heard.

Aviva’s Bill of Costs claims fees of $2,615.00 based on a total of 26.5 hours for Ms. Cara Boddy (4 years’ experience) at an hourly rate of $80.00, and a further 4.3 hours for Ms. Kimberley Tye (6 years’ experience) at an hourly rate of $110.00. There is no separate claim or line item in the Bill of Costs for G.S.T. and I have proceeded on the basis that all amounts are inclusive of G.S.T.

The general approach with respect to fees is to take a “pragmatic, broad-strokes approach, with a view to fixing an amount that is reasonable.”⁸ This means taking into account the length of the proceeding and the complexity of the issues, and frequently involves applying a ratio of pre-hearing preparation time to hearing time in the range of 1:1 to 4:1.⁹ While this approach is often both efficient and sufficient, applying a ratio is not always appropriate. As Arbitrator Palmer observed in Argirovski and Allstate Insurance Company of Canada,¹⁰ “[using a ratio] is a crude measure that does not take account of the fact that, in many cases, additional time spent in preparation is reflected in decreased time spent in a formal arbitration hearing. Efficient use of the Commission’s time for hearings should be encouraged, not discouraged by setting inflexible ratios for preparation to hearing time.”

In this case, Aviva is claiming approximately 26 hours, excluding travel time, for professional fees. This represents a ratio of approximately 10:1 in terms of preparation time to hearing time.

I note that a substantial portion of the time billed (approximately 17 hours or the equivalent of two workdays) is for the preparation of an Agreed Statement of Facts including communications between counsel and the preparation of written submissions and related case brief. Although the time spent seems rather high, the Agreed Statement of Facts and written materials were well-prepared and contributed significantly to an efficient and effective hearing. As a result, I do not find it necessary or appropriate to reduce the number of hours claimed for preparation prior to hearing.

With respect to the hourly rates claimed, Rule 78.1 of the Code limits the hourly rate that may be claimed for professional services to the rates established under the Legal Aid Services Act, 1998, adjusted for the appropriate experience allowance. Both Ms. Boddy and Ms. Tye would fall under Tier 2 which provides for an hourly rate of $87.26. As Ms. Boddy’s services are claimed at $80.00 per hour, I accept that rate for her services. The rate for Ms. Tye’s services is reduced to $87.26 per hour.

Although the preliminary issue was heard in Toronto, the applicant and both counsel reside outside Toronto. The substantive hearing would have proceeded in Kitchener had I not found Ms. West’s claim statute barred. In other words, the insurer’s choice of counsel from outside Toronto is not the reason that travel time was incurred. I am prepared, therefore, to compensate Aviva for Ms. Boddy’s travel time to attend the preliminary issue hearing (approximately 5 hours for the return trip), but not at the hourly rate of $80.00. The Tier 2 rate for travel time is $48.38 per hour. The claim for Ms. Boddy’s travel time is adjusted accordingly.

Having regard to all of the above considerations, I fix the amount awarded for Aviva’s fees at $2,300.00.

Disbursements

Aviva seeks to recover its disbursements in the amount of $712.01. Again, the Bill of Costs makes no reference to G.S.T. and I have proceeded on the basis that any G.S.T. is included in the amounts claimed.

Aviva’s claim for disbursements includes $287.00 for a court reporter. Such claims have been repeatedly denied by arbitrators. Retaining a court reporter is a discretionary expense unrelated to the effective conduct of a hearing¹¹ and, in any event, there is no provision in the Schedule to the Expense Regulation for reimbursement of amounts paid to a court reporter.¹² Aviva’s claim for its expenses to retain a court reporter for the preliminary issue hearing is accordingly denied.

Aviva’s claim for disbursements also includes $297.15 for photocopies. I find that amount to be excessive given the volume of materials filed for the hearing. I allow $200.00 for photocopies.

The balance of Aviva’s disbursements for long distance ($18.31), courier charges ($41.35) and mileage ($68.20) appear reasonable and permitted by the Expense Regulation.

Aviva is therefore awarded its disbursements in the amount of $327.86.

Conclusion

Aviva is entitled to its expenses of the preliminary issue hearing in the amount of $2,627.86.

March 15, 2010

Robert Bujold Arbitrator

Financial Services Commission of Ontario