Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2010 ONFSCDRS 5

FSCO A08-001959

BETWEEN:

MARIA STAMOGIANNOS

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

Before: Richard Feldman

Heard: November 2, 3 and 5, 2009 in Toronto, Ontario.

Appearances: Lorne Climans for the Applicant

Todd J. McCarthy for the Insurer

Issues:

The Applicant, Maria Stamogiannos, was injured in a motor vehicle accident on November 20, 2006. She applied for and received various statutory accident benefits from Allstate Insurance Company of Canada (“Allstate”), payable under the Schedule.¹ Disputes arose between the parties concerning the Applicant’s entitlement to certain benefits. The parties were unable to resolve these disputes through mediation and Ms. Stamogiannos applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing were identified by the parties as follows:

Under Part III of the Schedule, is Ms. Stamogiannos entitled to non-earner benefits from October 17, 2008 onwards?
Pursuant to section 13 of the Schedule, is Ms. Stamogiannos entitled to receive weekly caregiver benefits for the period of November 21, 2006 through January 21, 2007 in the total amount of $2,705.00?
Pursuant to section 14 of the Schedule, is Ms. Stamogiannos entitled to receive a medical benefit in the amounts of $517.64 and $1,415.88 for treatments proposed by Dr. Nejad of the Pain Management and Rehabilitation Centre?
Pursuant to section 22 of the Schedule, is Ms. Stamogiannos entitled to payments for housekeeping and home maintenance at the weekly rate of $100.00 from November 21, 2006 through September 15, 2008?
Pursuant to section 24 of the Schedule, is Ms. Stamogiannos entitled to the cost ($1,795.00) of a psychological assessment proposed by Counselling and Healing Services?²
Is the Applicant entitled to interest for the overdue payment of benefits pursuant to subsection 46(2) of the Schedule?
Is either party liable to pay the other’s expenses in respect of the arbitration under subsection 282(11) of the Insurance Act?

The hearing of this application commenced on November 2, 2009. On that date, I heard opening statements from counsel for both parties and I heard the testimony of the Applicant and of her father, Peter Stamogiannos. On the morning of November 3, 2009, I heard the testimony of Dr. Sofia Bazios, the Applicant’s family physician. At that point, the Applicant closed her case and, as the Insurer’s witnesses were not available to testify until November 5, 2009, the parties agreed to recess the hearing until the morning of November 5, 2009.

When the parties appeared before me on November 5, 2009, they advised me that on November 4, 2009 they had reached a settlement of all issues in dispute. As part of this settlement, the parties agreed that the Applicant is entitled to her expenses of this proceeding but they were unable to agree on the amount of expenses to which she is entitled. In accordance with the terms of their settlement, the parties requested that I determine the quantum of expenses to which the Applicant is entitled.

On November 5, 2009, the parties filed the terms of settlement, the written offers to settle of which they wished me to be aware and each party filed a Bill of Costs and time dockets. I heard submissions from counsel for each of the parties with respect to this sole remaining issue. Notwithstanding that the terms of the written Offer contemplated a dismissal of this application, the parties requested that I issue a “consent order” that reflected the essential terms of the settlement³ and that I include in that order my determination as to the amount of expenses to which the Applicant is entitled.

Result:

On consent of the parties, in settlement of the claims advanced in this application, Allstate shall pay to Ms. Stamogiannos $10,000.00.
On consent of the parties, Allstate shall also pay Ms. Stamogiannos interest for the overdue payment of benefits in the amount of $3,000.00.
Allstate shall also pay Ms. Stamogiannos $12,639.40 for her expenses in respect of this arbitration.

EXPENSES:

Entitlement:

The Insurer does not dispute the Applicant’s entitlement to her legal expenses of this proceeding. It is a term of the settlement that the Insurer shall pay to the Applicant her “expenses, GST and disbursements in accordance with the expense regulation”. The real issue is over the quantum.

Quantum:

(a) Fees

The Applicant has claimed $10,116.96 in fees (inclusive of GST). This is based upon about 63 hours of work by Mr. Climans, billed at $150.00 per hour (the maximum rate permitted under the Expense Regulation for an applicant’s counsel) and about 7 hours of work by law clerks (billed at $23.00 per hour). The Insurer does not challenge the hourly rates being claimed and does not dispute that the total number of hours that were devoted by the Applicant’s representatives to this proceeding is reasonable.

Where the parties disagree is over their interpretation of the Offer to Settle that Mr. McCarthy sent to Mr. Climans by fax on October 30, 2009. The full text of the Offer is as follows:

This correspondence constitutes an offer to settle arbitration proceeding A08-001959 scheduled to commence Monday, November 2, 2009 at FSCO. Allstate Insurance Company of Canada will pay $10,000.00 for all benefits plus applicable interest under the Statutory Accident Benefits Schedule, plus expenses, GST and disbursements in accordance with the expense regulation in exchange for your client’s agreement to a dismissal of the arbitration proceeding without costs. If your client elects to accept this Offer and we cannot agree on the amount payable for interest, expenses, GST and disbursements, then this Offer herein stipulates that the amounts of those items shall be determined by an Arbitrator.

This Offer to Settle shall remain open for your client to accept until the conclusion of the arbitration hearing or until withdrawn whichever shall first occur.

This Offer was accepted by the Applicant in writing on November 4, 2009.

The Applicant takes the position that the terms of this Offer require the Insurer to pay the Applicant’s reasonable expenses of this proceeding up to and including November 4, 2009 and that the only issues that the Insurer can raise with respect to fees are with respect to the number of hours claimed or the hourly rates charged. Given that the Insurer is conceding that the number of hours claimed is reasonable and that the rates claimed are both reasonable and do not exceed the maximum amounts permitted under the Expense Regulation, the Applicant submits that the fees should be allowed as submitted.

On behalf of the Insurer, Mr. McCarthy submits that the Offer contemplates that if the parties cannot agree on the issue of expenses that issue would have to be adjudicated. In such circumstances, an arbitrator must consider all of the criteria set out in the Expense Regulation. He submits that if one considers the Applicant’s degree of success, the written offers that were made by both parties prior to the commencement of the hearing and the fact that, had the Applicant accepted the Insurer’s Offer on October 30, 2009, both parties could have avoided the cost of preparing for and attending the hearing that proceeded for part of the following week, there ought to be some reduction of the fees awarded to the Applicant to reflect the wasted time spent from October 31, 2009 through November 4, 2009. In fact, the Insurer urges that the Applicant not be awarded any fees after October 30, 2009 (the date the Applicant received the Insurer’s Offer to Settle).

The Applicant takes the position that the criteria set out in the Expense Regulation have no application to this case and that the Applicant ought to receive all of her expenses since, according to the Applicant’s interpretation of the settlement, this is what Allstate agreed to pay. The Applicant points out that the Insurer’s Offer was specifically kept open for acceptance, even after the commencement of the hearing, until withdrawn by the Insurer (or the conclusion of the hearing, whichever occurred first). Mr. Climans points out that if the Insurer wished to impose some cost penalty (i.e., some set-off for the Insurer’s expenses or other reduction to the Applicant’s expenses) based upon the costs of the proceeding should the offer not be accepted prior to the commencement of the hearing, such a provision could have been explicitly included in the Offer. No such terms were contained in the Offer and, to the extent that the terms of the Offer are ambiguous, they ought to be construed against the party that drafted those terms (Allstate). Furthermore, had Allstate included such an explicit term, the Applicant might have either accepted this Offer earlier or rejected it outright. The Applicant relied upon the plain wording of the Offer as presented and she would be prejudiced if that Offer were to be interpreted in the manner now being urged by counsel for the Insurer. Therefore, according to the Applicant, there should be no reduction to the expenses awarded to her as a result of the relatively short delay on her part in accepting the Insurer’s Offer.

I reject the Applicant’s position that the criteria set out in the Expense Regulation are entirely irrelevant. The Insurer’s Offer (which was accepted by the Applicant) specifically stated that if the Offer was accepted, the Insurer agreed to pay the Applicant’s “expenses, GST and disbursements in accordance with the expense regulation” (emphasis added). Furthermore, the Expense Regulation itself states that, for the purposes of awarding all or part of the expenses incurred in respect of an arbitration proceeding, an arbitrator shall under subsection 282(11) of the Insurance Act, consider only the criteria set out in the Expense Regulation.

To determine the reasonable expenses, it is necessary to apply the Expense Regulation and Rule 76 of the Dispute Resolution Practice Code to the facts of this case. Allstate submits that of the six criteria set out in the Expense Regulation, the only ones that apply in this case are:

The written offers to settle;
Each party’s degree of success in the outcome of the proceeding; and
The conduct of a party or a party’s representative that tended to prolong, obstruct or hinder the proceeding.

I will consider each of these in turn.

Written Offers to Settle

There were two written offers that I have been asked to consider. Both offers were made on the afternoon of October 30, 2009 (i.e., the Friday afternoon immediately preceding the commencement of the hearing).

The Applicant offered to accept $60,000.00 in settlement of this application and left the offer open for acceptance until two minutes after commencement of the arbitration hearing. The Insurer’s offer to pay $10,000.00 (plus interest and expenses) has been set out in full earlier in these reasons. This latter offer was accepted by the Applicant on November 4, 2009, after two days of hearing.

An offer to settle is usually a relevant factor in assessing expenses when a case has been adjudicated (i.e., where it has not settled). It is perhaps a unique feature of this case that I am being asked to consider what impact, if any, the Applicant’s offer ought to have on her entitlement to expenses where the case did in fact settle but on other terms.

Without adjudication on the merits of the various claims being advanced by the Applicant, I cannot ascertain whether her offer of October 30, 2009 was a reasonable one. The fact that she eventually agreed to accept much less is not evidence that her proposal was unreasonable. I therefore find the Applicant’s Offer to be a neutral factor.

The Insurer’s Offer was in fact accepted and it is the terms of that settlement that needs to be the focus of this analysis.

I am sympathetic to the Insurer’s argument that, had its Offer been accepted a few days earlier, unnecessary expense could have been avoided. If, however, that was a concern of the Insurer, as was pointed out by counsel for the Applicant, the Insurer could have explicitly provided for such a contingency within the terms of the Offer itself. Greater care in drafting the Offer to Settle could have avoided this current dispute by spelling out exactly what would happen if the Applicant delayed in accepting the Offer until some time after the commencement of the hearing. Instead, Allstate’s Offer simply stated that Allstate would pay the Applicant’s “expenses, GST and disbursements in accordance with the expense regulation”. The Offer explicitly remained open for acceptance until the conclusion of the arbitration hearing or until it was withdrawn, whichever first occurred.

I agree with the Applicant’s position that the only reasonable way to interpret this is that Allstate agreed to pay the Applicant’s reasonable fees, disbursements and GST (not to exceed the maximum amounts provided for in the Expense Regulation) up to the date the Offer was accepted.

In the face of such an agreement, it is really unnecessary to consider the other criteria to which the Insurer has directed my attention. Nevertheless, I will briefly deal with each of those other two criteria.

Degree of Success

I find this criterion to be of little assistance in this case for several reasons.

First, as I have already pointed out, Allstate agreed to pay the Applicant’s expenses of this proceeding as part of the settlement. It therefore seems unfair for Allstate to try to then avoid paying such expenses on the basis that the Applicant was unsuccessful on this application because she accepted less than was potentially at stake.

Second, as is true in most cases that settle, there may be many reasons why a settlement is achieved prior to the conclusion of a hearing. Those reasons may relate to personal circumstances, health issues, financial or other considerations that may have little, if anything, to do with the actual merits of the case. A party need not disclose to the other party or to the Commission the rationale for making or for accepting an offer to settle. The settlement may involve issues that were not part of the application for arbitration (although that is not the case here). Thus, where a case has settled, “success” can rarely be determined by simply comparing the total amount claimed by an applicant to the total amount they ultimately agreed to accept in settlement of their application. In fact, where parties to an arbitration proceeding have agreed upon a compromise, it is difficult to think of either side as having been “successful” as that term is usually thought of in the context of litigation.

Third, even if I were inclined to attempt to assess the Applicant’s degree of success by comparing the amount she ultimately agreed to accept against the present value of the amounts in dispute, there is insufficient evidence before me to permit a meaningful analysis in this case. The Insurer’s Offer was made in the form of a lump sum. The parties did not agree within the written terms of settlement on any allocation of that lump sum (i.e., how much of that that total sum related to each of the particular claims that were being advanced by the Applicant).

For all of the foregoing reasons, I find this criterion (“degree of success”) to be of little assistance in determining the expenses to which the Applicant is entitled in this case.

Furthermore, while it does not form the basis of my decision, I note in passing that penalizing a party in expenses for accepting an offer to settle for an amount that is less than they originally claimed might have the undesirable effect of discouraging settlements.

Conduct of the Parties

For this criterion to apply, it must be proven that the conduct of the Applicant or her counsel tended to prolong, obstruct or hinder the proceeding. I cannot see how accepting the Insurer’s Offer (within five days of its receipt) and truncating the hearing can be said to have prolonged, obstructed or hindered the proceeding.

What Allstate is really urging me to do is to deny the Applicant all or part of her expenses incurred after October 30, 2009 because, as a result of her delay in accepting Allstate’s Offer, Allstate was put to the expense of preparing for and attending the hearing on November 2 and 3, 2009. I have already considered and rejected this argument on the basis that such a consequence is neither an express nor implied term of Allstate’s Offer to Settle.

Conclusion – Fees

Having considered all of the above, I allow the fees that have been claimed by the Applicant in the amount of $10,116.96 (inclusive of GST).

(b) Disbursements

On November 5, 2009, the Applicant claimed $3,197.44 in disbursements (inclusive of GST). The Insurer’s only challenge to the disbursements claimed is with respect to:

the Transaction Levy of $50.00;
the amount being claimed for the preparation and attendance at the hearing of Dr. Bazios; and
the attendance money of $53.00 paid to Dr. Bazios.

The Transaction Levy is not one of the listed types of disbursements specifically permitted under the Expense Regulation. I find, however, that the amount and nature of this expense falls within clause 4 of section 4, “disbursements made by or on behalf of the insured person … [f]or other out-of-pocket expenses incurred in furtherance of the arbitration…” The Transaction Levy shall, therefore, be allowed.

With respect to the amount being claimed for the preparation and attendance at the hearing of Dr. Bazios, I was informed on November 5, 2009 by Mr. Climans that Dr. Bazios had not yet delivered her bill but that, based on a conversation they had had, she would be billing $1,500.00. The Insurer objected to this amount on the grounds that it exceeds the maximum amount permitted under the Expense Regulation. Mr. McCarthy suggested that the Applicant can only claim $500.00 for the preparation of Dr. Bazios and $200.00 per hour for each hour of her attendance at the hearing. Mr. McCarthy estimated that Dr. Bazios was on the witness stand for about two hours and, therefore, this disbursement should not exceed $900.00. Mr. Climans suggested that Dr. Bazios also attended early to prepare to testify and that, therefore, $1,100.00 would be more appropriate. Mr. McCarthy responded that preparation time was already included in the $500.00. On this last point, I agree with Mr. McCarthy. My notes indicate, however, that Dr. Bazios testified for about 2.25 hours. She was the only witness that day and did not have to wait for her turn to testify. I shall permit $500.00 for preparation and $450.00 for attendance at the hearing, for a total of $950.00.

On December 14, 2009, Mr. Climans wrote to counsel for the Insurer and to me to inform us that he had received the bill from Dr. Bazios and that it was in the total amount of $1,050.00 ($500.00 for attendance, $500.00 for preparation and $50.00 for travel expenses). Dr. Bazios did not claim GST. I would not normally consider an unsolicited post-hearing submission but, in this case, I see no harm in accepting the actual bill from Dr. Bazios. As I have already indicated, I am allowing $500.00 for her preparation time (as claimed) and $450.00 for her attendance at the hearing. With respect to her claim for $50.00 as a “travel expense”, there is no explanation provided for this claim and the Expense Regulation itself does not provide compensation for travel time of witnesses.

Also with respect to Dr. Bazios, the Applicant claimed a disbursement of $53.00 for the attendance money that was paid to Dr. Bazios along with a Summons to Witness. The Insurer has taken the position that this is duplicative of the amounts allowed under section 5 of the Expense Regulation and that, if both amounts were to be allowed, the total amount paid to Dr. Bazios to attend the hearing would exceed the maximum permitted under section 5 of the Expense Regulation. Neither party could direct me to any decisions on this point.

Tariff A to the Rules of Civil Procedure makes clear the purpose of the $53.00 payment. $50.00 is the “[a]ttendance allowance for each day of necessary attendance” and $3.00 is a “[t]ravel allowance” for each day of necessary attendance where the hearing is held in the city in which the witness resides.

Practice Note 8 of the Dispute Resolution Practice Code is also of some assistance with respect to this matter. Under the heading, “Calculating Payment To The Witness”, it reads as follows:

The standard witness fee is $50 a day for each day of the hearing the witness attends. But an expert witness, like a doctor or an accountant, often charges more. You should speak directly to your doctor or other expert witness to determine any additional fees they may charge in connection with their attendance at the hearing.

It appears to me that $50.00 of the $53.00 paid to Dr. Bazios represents compensation for her attendance at the hearing and ought not to be allowed over and above the maximum of $200.00 per hour mandated by the Expense Regulation. The remaining $3.00 is a travel allowance which is not duplicative of either her preparation time or her time in attendance at the hearing itself. I shall therefore allow only $3.00 for this disbursement.

I therefore calculate the allowable disbursements to be as follows:

Total disbursements originally claimed (inclusive of GST)

$3,197.44

Subtract

Amount originally claimed for preparation and attendance of Dr. Bazios (plus GST)
Amount claimed for “conduct money”

1,575.00 53.00

Subtotal

1,569.44

Add

Amount permitted for preparation and attendance of Dr. Bazios (of $1,050.00 now being claimed)

950.00

Amount permitted for “conduct money”

3.00

TOTAL

$2,522.44

I shall therefore order the Insurer to pay the Applicant’s legal disbursements in the amount of $2,522.44 (inclusive of GST).

Conclusion:

Pursuant to subsection 282(11) of the Insurance Act, I find that the Applicant is entitled to her expenses with respect to this proceeding in the total amount of $12,639.40 (inclusive of GST).⁴ I shall issue an order in accordance with this determination and in accordance with the other terms of the settlement reached by the parties.

January 14, 2010

Richard Feldman Arbitrator

Date