Subashini Yogesvaran v. State Farm Mutual Automobile Insurance Company, 2010 ONFSCDRS 85

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

Neutral Citation: 2010 ONFSCDRS 85

FSCO A08-001142

BETWEEN:

SUBASHINI YOGESVARAN Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Joyce Miller

Heard: By written and supplementary submissions received by February 22, 2010

Appearances: Alexander Voudouris for Ms. Yogesvaran Robert S. Franklin for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Subashini Yogesvaran, was injured in a motor vehicle accident on May 13, 2007. In a decision dated November 26, 2010, 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:

State Farm failed to properly terminate Ms. Yogesvaran’s income replacement benefit on January 16, 2008 and housekeeping benefits on January 2, 2008. Consequently, State Farm is required to pay an income replacement benefit from January 17, 2008 to date with interest and ongoing until the benefits are terminated in accordance with section 37 of the Schedule. In addition, State Farm shall pay housekeeping benefits with interest from January 3, 2008 to May 13, 2009.

The issue in this further hearing is:

Is Ms. Yogesvaran entitled to her expenses incurred in respect of this arbitration hearing?

Result:

Ms. Yogesvaran is entitled to her legal fees in the amount of $45,470.25 inclusive of GST and disbursements in the amount of $11,853.65 inclusive of GST incurred in respect of this arbitration hearing.

SUBMISSIONS

Ms. Yogesvaran’s Submissions

Ms. Yogesvaran submits that she has prevailed in the arbitration, and accordingly submits that she is entitled to her expenses.

Legal Fees

In her original submissions Ms. Yogesvaran claimed legal fees in the amount of docketed time of 177.05 hours at $150 an hour for a total of $26,557.50 plus GST of $1,327.88 for a total of $27,885.38.

However, in her Reply submissions, as detailed below, Ms. Yogesvaran claims the following for her legal fees: 112.1 hours at $150 an hour for the services of David Wilson for a total of $26,490 and 176.60 hours at $150 an hour for the services of Alexander Voudouris for a total of $16,815, plus a total GST of $2,165.25 on both amounts.

Ms. Yogesvaran submits that her legal fees are based on the reasonable prediction that the hearing, as detailed in the Reply submissions below, would go for longer than the four days set for the hearing.

At the request of State Farm, in her Reply submissions, Ms. Yogesvaran provided a detailed Bill of Costs to substantiate her claim for legal fees and stated she had no objection to State Farm being given an opportunity to respond to the Bill of Costs. State Farm did not ask for the opportunity to respond to the Bill of Costs.

Disbursements

Ms. Yogesvaran first claimed disbursements of $11,310.12 plus GST of $559.51 for a total of $11,869.63 In her Reply submissions, outlined below, in response to State Farm’s submissions, Ms. Yogesvaran provided more supporting documentation to her claim and presented a claim for $11,853.65 inclusive of GST.

State Farm’s Submissions

Legal Fees

State Farm submits that the legal fees claimed by Ms. Yogesvaran are excessive. While State Farm accepts the hourly rate claimed of $150 an hour, it disputes the amount of hours claimed. State Farm submits that it is “purely speculative” for Ms. Yogesvaran to submit that the hearing set for four days would expand to six or seven days.

State Farm points out that the hours claimed by its counsel for this hearing amounted to 165.8 hours. State Farm submits that the total hearing time would be 32 hours. Accordingly, at a maximum ratio of 1:4, the maximum time that could be claimed by Ms. Yogesvaran’s counsel for an estimated 32 hours of hearing time (a scheduled four-day hearing, with a maximum of 8 hours per day) would be 160 hours or $24,000 plus GST.

Disbursements

State Farm disputes the interpreting fees of $2,206.77. State Farm submits that the receipts from Lingual Solutions Inc. and Milroy Anandraj total $2,000, rather than the amount claimed. Accordingly, the difference of $206.77 should not be payable.

State Farm also disputes the following disbursements, as insufficient particulars have been provided to be able to relate the charges to the arbitration proceeding or assess the reasonableness, as required according to Gemene and RBC General Insurance Company.² These expenses include:

Parking and mileage fees in the amount of $17.33 and $21.53 respectively;
Courier charges of $131.22 ;
Faxing charges of $211.84;
Photocopies, including tabbing and binding, in the amount of $1,360.70; and
Dr. Lambotharan’s updated records in the amount of $262.50.

State Farm further disputes the claim of $1,800 for Dr. Wong’s report dated April 15, 2009. State Farm relies on section 5(5) of the Expense Schedule (Dispute Resolution Expenses)³, which states:

The amount of the expenses paid by or on behalf of the insured person to the insurer to an expert for the preparation of a report may be awarded, to a maximum of $1,500.

Accordingly, State Farm submits that Ms. Yogesvaran’s claim for disbursements should be reduced by $2,211.89.

Reply Submissions by Ms. Yogesvaran

Legal Fees

Ms. Yogesvaran submits that in accordance with the Hutchinson and Security National Insurance Co./Monnex Insurance Mgmt. Inc.⁴ decision which references decisions of the Ontario Divisional Court, that an attack on the quantum of costs based on excess of circumstances where the Court does not have before it the bills of all counsel is “no more than an attack in the air.” The decision further states that a reasonable inference can be drawn from the failure of counsel for one party to disclose their Bill of Costs that he or she likely spent as much time on the matter as that being claimed by the other party.

Ms. Yogesvaran submits that even if one were to accept the time allegedly spent by State Farm’s counsel (165.8 hours), at a minimum this only constitutes a starting point in terms of the analysis of the time spent by her counsel.

Ms. Yogesvaran submits that any time expended by her counsel would considerably exceed that of State Farm’s counsel. This includes the number of witnesses that had to be canvassed, including the fact that at least two witnesses had to be interviewed through an interpreter. As well, all communications with potential witnesses were conducted with the assistance of an interpreter, which, she submits, at a minimum doubles the time required for preparation.

Ms. Yogesvaran submits that an additional three days of hearing time is a reasonable prediction rather than mere speculation in the case where there are a number of issues, and the fact that the testimony of at least two witnesses had to be done through an interpreter.

Ms. Yogesvaran also submits that the time expended in preparation is reasonable, considering the projected length of the hearing and the fact that numerous factual legal issues were in dispute. In addition, she submits that the file was quite voluminous, and that extensive research was required on the section 37 issue, something State Farm’s counsel clearly did not prepare for.

Ms. Yogesvaran further submits that an error was made in her original submissions on legal fees. Ms. Yogesvaran acknowledges that there was a 13-hour overlap between May 25, 2009 and May 28, 2009 and these hours are excluded.

Ms. Yogesvaran also submits that there was an oversight by counsel, whereby extensive correspondence sent out by Mr. Wilson and received by him during the period of May 18, 2008 and May 25, 2009, together with his time spent on the file, were inadvertently overlooked and are added to the original claim.

Ms. Yogesvaran submits that a considerable amount of correspondence was generated, largely with respect to compliance with undertakings. She notes that the charging of correspondence at an average of 0.2 hours has been held reasonable in at least four arbitral decisions known to her counsel. She attached, as an example, the case of Hutchinson and Security National (supra).

Disbursements

Ms. Yogesvaran submits that two invoices dated April 12 and July 2, 2009 were inadvertently omitted and are attached to the Reply submissions. Accordingly, the total (inclusive of GST) claimed for interpreting fees amount to $2,171.77 rather than $2,206.77 as originally set out in her submissions. As well, Dr. Lambotharan’s invoice dated April 14, 2009 in the amount of $250 is also attached.

With regard to the issue of parking, mileage and courier invoices, these documents are mostly filed away off site and are costly to retrieve. However, they were in fact incurred and should be payable as being more than reasonable.

Ms. Yogesvaran submits the faxing charges, together with photocopying, tabbing and binding charges, all pertain to her FSCO claim considering the fact that her tort action is in its infancy. Attached to the Reply submissions is a computer printout of all docketed charges.

THE LAW

Subsection 282(11) of the Insurance Act provides that:

The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.

The criteria for determining entitlement to expenses of an arbitration proceeding are enumerated in section 12(2) of Ontario Regulation 664, R.R.O. 1990, as amended. The criteria are:

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 the Schedule or refused or failed to provide any material required to be provided under subsection 42(10) of the Schedule.

With these criteria in mind, I make the following findings:

Each party’s degree of success in the outcome of the proceeding.

Ms. Yogesvaran was completely successful in this hearing.

Any written offers to settle made in accordance with subsection (3).

Neither party made any written offer to settle.

Whether novel issues are raised in the proceeding.

The issue in this hearing was novel.

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.

Neither party prolonged, obstructed or hindered the progress of the proceeding.

Whether any aspect of the proceeding was improper, vexatious or unnecessary.

No aspect of the proceeding was improper, vexatious and unnecessary.

The sixth criterion is not applicable to this arbitration.

Based on the above criteria, pursuant to subsection 282(11) of the Insurance Act, I find that Ms. Yogesvaran, who has been completely successful on a novel issue in this arbitration, is entitled to her expenses in this arbitration hearing.

ASSESSMENT OF EXPENSES

The amount of expenses and disbursements which I may award are set out in section 3 of the Expense Schedule (supra), which states:

3(1) The legal fees payable by the insured person or the insurer for the following matters may be awarded:

For all services performed before an arbitration, appeal, variation or revocation hearing.
For the preparation for an arbitration, appeal, variation or revocation hearing.
For attendance at an arbitration, appeal, variation or revocation hearing.
For services subsequent to an arbitration, appeal, variation or revocation hearing.

(2) The number of hours for which legal fees may be awarded shall be determined by the arbitrator, having regard to the criteria set out in subsection 12(2) of this Regulation.

In the decision of Henri and Allstate Insurance Company of Canada,⁵ Arbitrator Makepeace outlined a number of general principles that have emerged from the arbitration decisions with regard to the assessment of arbitration expenses. These principles include the following:

∙ The overriding consideration in fixing arbitration expenses is reasonableness.

∙ A line-by-line assessment of the expenses claimed is not appropriate. Rather, the Arbitrator should make a global assessment of reasonable expenses.

In deciding the issues in this expense hearing, namely, what is the amount of legal fees, hourly rate and disbursements that Ms. Yogesvaran is entitled to for the services rendered by her counsel, I will adhere to the above principles of “reasonableness” and “global assessment.”

(1) Legal Fees

Pursuant to section 3 of the Expense Schedule, legal fees are payable for the preparation and attendance at an arbitration as well as for services performed before and subsequent to an arbitration hearing.

Ms. Yogesvaran claims for the following legal services: 112.1 hours at $150 an hour for the services of David Wilson for a total of $26,490 and 176.60 hours at $150 an hour for the services of Alexander Voudouris for a total of $16,815 plus GST of $2,165.25 on both amounts.

In awarding Ms. Yogesvaran her legal fees in this case, I take into consideration that she has provided a very detailed breakdown of her counsel fees and that State Farm, which was provided with the opportunity to make further submission on the Bill of Costs, did not do so.

I agree with Ms. Yogesvaran’s submission that an arbitration hearing which requires interpretation takes much longer and requires more preparation than one that does not require interpretation. I also accept her submissions that extensive research time was expended on a novel issue which became the subject of the preliminary issue hearing.

State Farm did not dispute the rate of $150 an hour. Accordingly, in the circumstances of this case, taking into consideration the experience of counsel, I agree that this is an appropriate rate.

For all of these reasons, I find that Ms. Yogesvaran is entitled to her legal fees in this arbitration in the amount of $45,470.25 inclusive of GST.

(2) Disbursements

Ms. Yogesvaran claims $11,853.65 inclusive of GST for her disbursements in this arbitration. I note that in her reply submissions Ms. Yogesvaran presented a detailed breakdown of her disbursements. Pursuant to submissions provided by State Farm she reduced the expense of Dr. Wong’s report from $1,800 to $1,500. She also provided supporting documentation for interpretation and faxing charges, together with photocopying, tabbing and binding charges. Although no receipt was provided I find the amounts of $16.50 and $20.50 plus GST to be reasonable parking expenses.

Accordingly, I find that Ms. Yogesvaran is entitled to $11,853.65 inclusive of GST for her disbursements in this arbitration.

CONCLUSION

Accordingly, pursuant to subsection 282(11) of the Insurance Act, I find that Ms. Yogesvaran is entitled to her expenses in the amount of $57,323.90 (inclusive of GST) in this arbitration hearing.

July 7, 2010

Joyce Miller Arbitrator

Date