Alnoor Jadavji v. Security National Insurance Co./Monnex Insurance Mgmt. Inc., 2010 ONFSCDRS 8

Financial Services Commission of Ontario

Neutral Citation: 2010 ONFSCDRS 8

Appeal P08-00033

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ALNOOR JADAVJI Appellant

and

SECURITY NATIONAL INSURANCE CO./MONNEX INSURANCE MGMT. INC. Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Ms. Nancy Ng for the Appellant, Mr. Alnoor Jadavji Mr. Gaspare Di Salvo for the Respondent, Security National Insurance Co./Monnex Insurance Mgmt. Inc.

HEARING DATE: January 11, 2010

APPEAL EXPENSES ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. Jadavji shall pay Security National Insurance Co./Monnex Insurance Mgmt. Inc. its net appeal legal expenses fixed in the amount of $4,338.44, inclusive of GST.

January 20, 2010

Lawrence Blackman Director's Delegate

REASONS FOR DECISION

I. BACKGROUND

The Appellant, Mr. Alnoor Jadavji, was injured in a September 7, 2005 motor vehicle accident. His subsequent application for arbitration settled shortly before a scheduled January 2008 arbitration hearing, other than regarding the issue of legal expenses.

The Appellant submitted an arbitration Bill of Costs of $8,544.13 that Security National Insurance Co./ Monnex Insurance Mgmt. Inc. (the "Respondent") disputed. An arbitration expense hearing was held before Arbitrator Ashby (the "Arbitrator") whose July 15, 2008 decision awarded the Appellant $6,628.75, including 52.4 hours for hearing preparation.

The Commission received the Notice of Appeal herein on September 26, 2008. The Response to Appeal, received October 22, 2008, submitted that the appeal was out of time. The Appellant's ensuing written submissions included, as fresh evidence, an affidavit of his counsel, Mr. Alon Rooz, sworn November 24, 2008.

My February 6, 2009 decision extended to September 26, 2008 the time for requesting this appeal but did not allow Mr. Rooz' November 24, 2008 affidavit as fresh evidence. I deferred the question of the legal expenses of this interim decision to the final determination of the appeal.

My May 22, 2009 decision confirmed the Arbitrator's July 15, 2008 decision and dismissed the appeal. I referred the parties to Rule 79 of the Dispute Resolution Practice Code (Fourth Edition, Updated – October 2003) (the "Code") if they were unable to agree on appeal legal expenses.

Subsequent to my decision, the Respondent noted its intention to subpoena the Appellant to testify as to his knowledge of this appeal and whether his counsel had explained to him its cost consequences. The Respondent sought a preliminary motion to determine whether the Appellant's counsel was required to provide the Appellant's last contact information.

The Appellant then requested, by letter dated July 2, 2009, an interim motion for an order, amongst other things, that the Appellant's testimony at the expense hearing was inadmissible. Mr. Rooz, on his own behalf, requested a motion, in part, for disclosure of the Respondent's allegations regarding his personal liability for the legal expenses of this appeal.

My August 24, 2009 decision held that the Appellant's motion had become redundant, the Respondent having retracted its intention to subpoena the Appellant. I held that the Appellant was entitled to his reasonable legal expenses of his motion. I rejected Mr. Rooz' personal motion. The Respondent did not seek its legal costs of Mr. Rooz' motion and none were granted.

II. SUBMISSIONS

The Appellant's August 31, 2009 Bill of Costs seeks $2,351.75, including GST, for 14.9 hours of legal work regarding his July 2, 2009 motion. The Appellant submits that the Respondent is not entitled to its legal expenses of the balance of this appeal. The Appellant does not seek his legal expenses of the overall appeal.

The Respondent's final Updated Cost Outline seeks, on its cover page, $9,017.05 in legal expenses, including GST. The Cost Outline includes 7.4 hours prior to the commencement of the appeal, 62.8 hours for appeal hearing preparation, 9.5 hours for hearing attendance and 17.8 hours for preparation for and attendance at the appeal expense hearing. The $617.89 sought for disbursements includes a $500 filing fee. The Respondent confirmed in oral submissions that it was not seeking any legal costs personally against counsel.

The Respondent submits that this Appeal was without merit, attempted to second-guess the Arbitrator and provided little, if any, meaningful direction to future litigants. The Respondent further argues that the appeal was unnecessary, improperly brought and vexatious, and that the proceeding was prolonged, obstructed and hindered by the Appellant.

The Appellant argues that he was largely successful on the preliminary issues, rebutting the Respondent's attempts to have the appeal dismissed and partially successful on the issue of fresh evidence. The Appellant submits that he was also partially successful in the main appeal hearing in that certain of the Respondent's submissions were not accepted. The Appellant further argues that the main issue in this appeal was novel, having not been properly canvassed before, was worthy of appellate consideration and was beneficial to other parties in the accident benefits system.

The Appellant argues that the hours claimed by the Respondent are grossly excessive. The Appellant submits that the Commission typically determines preparation time as a ratio of attendance at the hearing, the usual range being 1:1 to 4:1. In this case, there was no transcript to review, no viva voce evidence, the appeal was essentially fact-driven and the issues were simple and straightforward involving questions of procedure. At a maximum ratio of 4:1, with a three-hour hearing, the Respondent would be entitled to a total of 15 hours.

The Appellant, however, argued that if the Respondent is found entitled to any expenses, six hours of preparation is more reasonable, five hours of which should be allotted to the preliminary issues that should be deducted in light of the Appellant's success. The remaining one hour of preparation, as well as the three hours of hearing attendance, should be further reduced by 50% because of the novelty of the main issue. The Appellant submits that only $50 is warranted for the Respondent's disbursements.

Both parties presented their respective offers to settle. The Respondent's final offer, dated June 25, 2009, was $7,111.68, to be withdrawn 48 hours prior to the start of the expense hearing.

The Appellant's June 19, 2009 offer, open until ten minutes after the start of the expense hearing, was payment of $2,000 to the Respondent, less his expenses incurred on and after June 24, 2009. The Appellant confirmed in oral submissions that that his offer to settle was, more precisely, a net payment to him of $351.75, namely the difference between his $2,000 offer and his $2,351.75 Bill of Costs. The Appellant noted that he had also incurred significant additional legal costs in preparing for this expense hearing. These legal expenses, however, were not being claimed.

Both parties specifically confirmed in their oral submissions that there were no further issues in dispute in this proceeding or any issues to be later addressed.

III. ANALYSIS

My August 24, 2009 decision found the Appellant entitled to his reasonable legal expenses regarding his July 2, 2009 motion. I find that the Respondent is entitled to its legal expenses relating to my February 6, 2009 interim decision and the main appeal hearing.

My February 6, 2009 decision found that the time for delivering the Notice of Appeal was thirty days from the Arbitrator's July 15, 2008 decision. However, I was persuaded that there were reasonable grounds supported by considerations of fairness to exercise my discretion under subsection 283(3) of the Insurance Act, R.S.O. 1990, c. I.8, to extend the time to September 26, 2008 for initiating this appeal.

Given, however, that the Appellant's fresh evidence in Mr. Rooz' affidavit was not allowed, that the documents I allowed as part of the record were already before the Arbitrator and the indulgence provided the Appellant in extending the time for his appeal, I am persuaded that the Respondent is entitled to its legal expenses related to this interim decision.

In respect of the main appeal hearing, while I did not accept all of the Respondent's arguments I ultimately dismissed this appeal, finding that I had no basis for second-guessing the Arbitrator's decision. My May 22, 2009 decision did note the "relative novelty of bifurcated expense hearings as argued in this case." However, as stated by the Appellant himself, this appeal was "essentially fact-driven." Subsection 283(1) of the Insurance Act restricts an appeal from an arbitrator's order to questions of law. I find that the relative success in the "outcome of the proceeding" (the latter being the specific wording used in Rule 75.2(a) of the Code) is the most relevant criterion regarding the main appeal hearing. On this basis, I am persuaded that the Respondent is entitled to its legal expenses relating to the main hearing.

Regarding the appeal expense hearing, both parties disputed the other party's Bill of Costs. As set out below, in respect of the Appellant's settlement offer to pay the Respondent $2,000, I am allowing the Respondent $5,056.02 without regard to the costs claimed for this expense hearing. On the other hand, $5,056.02 is significantly below the Respondent's final offer of $7,111.68, even if one were to add to the former amount the two hours of attendance at the appeal expense hearing and reasonable preparation time. Given the partial success of both parties at this appeal expense hearing, I am persuaded that each should bear their respective costs regarding same.

The Appellant's Bill of Costs seeks an hourly rate of $150 for counsel pursuant to Rule 78 of the Code. However, the Appellant's own written submission is that the issues in this case were "simple and straightforward." Further, this appeal pertains to an appellant who offered to settle his arbitration legal expenses for $3,500, was awarded $6,628.75 and subsequently appealed an issue regarding legal expenses incurred in seeking legal expenses. In these specific circumstances, I am persuaded that the Tier 3 legal aid rate of $96.95 an hour is appropriate for senior counsel (who was called in 1999, that is, having a ten or more years experience factor). I further exercise my discretion pursuant to Rule 78 of the Code to allow the same hourly rate for the 1.6 hours sought for junior counsel.

Regarding the 14.9 hours the Appellant seeks, 1.2 hours pertain to legal work following my August 24, 2009 decision and is not recoverable. The Appellant failed to respond to the Respondent's September 1, 2009 request for supporting legal expense documentation. In this case, the Respondent provided its dockets that allowed the Appellant to critique the reasonableness of having two lawyers working on this matter for the Respondent. As a result of the Appellant's failure to provide any response to the Respondent's request (the Arbitrator also noting the Appellant's similar failure to produce supporting documentation at arbitration), I reduce the hours allowed to seven. At $96.95 an hour, plus 5% GST and disbursements of $5.00, the total allowed to the Appellant regarding his July 2, 2009 motion is $717.58.

Regarding the Respondent's Bill of Costs, in Mr. C and Kingsway General Insurance Company, (FSCO P08-00025, September 18, 2009), followed by Director's Delegate Evans in Rooz and Certas Direct Insurance Company and Zapisnoy, (FSCO P07-00017, November 18, 2009), I held that:

Given that the bulk of work done in appeals is preparing written submissions in advance of relatively short oral submissions, such a ratio is of limited assistance. Further, the sometimes relative brevity of written submissions in appeals reflects significant and considered effort in paring submissions to that which is truly helpful to the appeals adjudicator. Such specific labour should not be discouraged.

I allow the 41.3 preparation hours Mr. Caston claims as the Respondent's counsel. In this regard, I note the hours the Respondent sought for preparing for only part of one motion. I am allowing only half of the further 21.5 preparation hours claimed by Mr. Di Salvo, both counsel seeking the same hourly rate. As set out by the Appellant, the hours docketed indicate an overlap of legal work such as reviewing submissions and discussing strategy. I do not find such party and party costs reasonable in a proceeding that while prolonged, was not especially complex. I am, however, persuaded that part of Mr. Di Salvo's hours did represent a reasonable division of labour between his legal research and Mr. Caston's drafting of submissions.

I do not allow the 7.4 hours the Respondent claims for work done prior to the commencement of the appeal as same pertains to the arbitration proceeding. I allow 2.0 hours for attendance at the main appeal, not the 9.5 hours claimed, because (1) that is the number of hours I recorded at the appeal hearing, and (2) there was no reasonable need for the Respondent to be represented by two counsel at this simple and straightforward hearing.

For the reasons noted above, I am not allowing the 17.8 hours the Respondent claims subsequent to my May 22, 2009 decision. This work essentially pertains to the legal expenses of this appeal. I also find the hours claimed excessive. Hence, I am allowing the Respondent a total of 54.05 hours, at $87.26 an hour (the maximum amount allowed insurers' counsel under Tier 2), or $4,952.22 including 5% GST, for the initial motion and the main appeal hearing.

I do not allow the $500 claimed for the appeal filing fee as it is no longer recoverable under the Insurance Act, as held by amongst others, Arbitrator Muir in Argirovski and Zurich North America Canada, (FSCO A02-001448, November 19, 2003). Section 7 of the Schedule to Regulation 664, R.R.O. 1990, under the Insurance Act provides that:

7. There may be awarded to an insurer the total of all amounts in respect of a claim by an insured person that are included under section 4 of Ontario Regulation 11/01 (Assessment of Expenses and Expenditures) made under the Financial Services Commission of Ontario Act, 1997 in determining the amount of the insurer's total assessment for arbitrations under section 282 of the Act, total assessment for appeals under section 283 of the Act or total assessment for applications under section 284 of the Act, if the insured person, on or after March 1, 2006,

(a) refused or failed to submit to an examination relating to the claim under section 42 of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996) made under the Act; or

(b) refused or failed to provide any material relating to the claim that was required to be provided by subsection 42 (10) of that regulation.

Insurer medical examinations and material required to be provided in that regard are not relevant in this case. The Respondent was unable to point to any specific foundation for entitlement to payment of the $500 filing fee.

I also do not allow the $14 anticipated travel expense regarding the appeal expense hearing, expenses for the expense hearing having not been allowed. I allow the balance of the claimed disbursements of $103.80. Accordingly, I allow the Respondent its appeal legal expenses fixed at $5,056.02.

Rather than have two separate final awards regarding legal expenses, I find it appropriate in terms of simplicity and expediency, as both parties agreed, to set off the legal awards. The Respondent is thus entitled to the net amount of $4,338.44, that is, $5,056.02 less the $717.58 awarded to the Appellant.

January 20, 2010

Lawrence Blackman Director's Delegate