Financial Services Commission of Ontario Commission des services financiers de l’Ontario
Neutral Citation: 2010 ONFSCDRS 86
FSCO A07-000374
BETWEEN:
FARHAT ABBAS Applicant
and
SECURITY NATIONAL INSURANCE CO./ MONNEX INSURANCE MGMT. INC. Insurer
and
ALON ROOZ
DECISION ON EXPENSES
Before: Edward Lee
Heard: Written submissions received by May 17, 2010
Appearances: Angela Broccolini for Farhat Abbas and Alon Rooz Alexander Lempp for Security National Insurance Co./ Monnex Insurance Mgmt. Inc.
The Applicant, Farhat Abbas, was injured in a motor vehicle accident on October 15, 2005. In a decision1 dated October 1, 2008, I dealt with his claims for statutory accident benefits under the Schedule.2 I reserved on the issue of the expenses of the arbitration hearing.
In its submissions regarding expenses, Security National sought an order that Mr. Alon Rooz be made a party to the proceedings, and a further order requiring Mr. Rooz to personally pay all or part of any expenses awarded to Security National as a result of the arbitration hearing.
Mr. Rooz consented to being added as a party, and then brought a motion for summary judgement seeking to dismiss Security National’s motion in regard to his personal liability.
On October 16, 2009, I heard Mr. Rooz’ motion for summary judgement. Meanwhile, Mr. Abbas had appealed my original arbitration order before the Director’s Delegate. In an order3 dated November 10, 2009, the Director’s Delegate dismissed this appeal and confirmed my order of October 1, 2008 in its entirety.
In an order4 dated December 23, 2009, I granted Mr. Rooz’ motion for summary judgement and dismissed Security National’s motion. I then directed the parties to provide further materials and argument in regard to both the expenses of the arbitration hearing, and for the motion for summary judgement brought by Mr. Rooz.
The issues to be determined are the following:
Which party is entitled to expenses arising from the arbitration hearing?
What amount of expenses should be awarded for the arbitration hearing, if any?
Which party is entitled to expenses arising from the motion for summary judgement?
What amount of expenses should be awarded for the motion for summary judgment, if any?
If Mr. Rooz is awarded expenses for the motion for summary judgment, should Security National be permitted to set off those expenses against any expenses that might be awarded to Security National from Mr. Abbas?
Result:
Mr. Abbas shall pay $4,509.21 to Security National as expenses of the arbitration hearing.
Security National shall pay $500.00 to Mr. Rooz as expenses of the motion for summary judgement.
Security National may not set off its expenses award against the expenses it must pay to Mr. Rooz as a result of the motion for summary judgement.
ANALYSIS:
- Which party is entitled to expenses arising from the arbitration hearing?
The parties have provided me with their Bills of Costs5,as well as written submissions.
The Law:
The criteria for awarding expenses are set out in Section 12 of Ontario Regulation 664, as amended, commonly known as the Expense Regulation.
- (1) The expenses set out in the Schedule are prescribed for the purpose of subsection 282 (11) of the Act.
(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 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 to be provided by subsection 42(10) of that regulation.
(3) Upon the request of the insurer or the insured person, the arbitrator shall, for the purposes of awarding expenses, take into account all written offers to settle, if any,
(a) that were made after the conclusion of mediation and before the conclusion of the arbitration; and
(b) that were made in accordance with the rules of practice and procedure applicable to the proceeding. O. Reg. 275/03, s. 4.
(4) If the arbitrator is requested to take into account a written offer under subsection (3), the arbitrator shall have regard to the terms of the offer, the timing of the offer, the response to the offer and the result of the proceeding.
The arbitration hearing was conducted over a four day period from June 16, 2008 to June 19, 2008. Each day of hearing lasted approximately 5.5 hours. The only witness called by the applicant was Dr. Polyvos, a chiropractor. Security National called three witnesses: Dr. O’Connor, a chiropractor, Dr. Balsky, also a chiropractor, and Dr. Walters, a practitioner of family medicine.
The arguments, testimony and issues of fact and law at the arbitration hearing were straightforward. The applicant did not attend the hearing. No service provider testified in regard to the claim for housekeeping or home maintenance, and the claim for a special award was not addressed in the evidentiary portion of the hearing. Counsel have provided me with extensive argument on the issue of expenses, but most of their arguments were repetitive and had been previously addressed in my initial decision6 and in my decision on the motion for summary udgment.7
In regard to the criterion set out in the Expense Regulation, I did not find that novel issues were raised in the arbitration. I did find that Mr. Abbas’ counsel failed to fulfill an undertaking to produce certain witnesses, but I am not convinced that this failure prolonged, obstructed or hindered the proceeding. Nor did I find any aspect of the proceeding improper, vexatious or unnecessary. Further, I did not find that the sixth criterion for awarding expenses, regarding the refusal or failure to attend a section 42 examination, was a relevant consideration. I was presented with one offer to settle8 made by Security National to Mr. Abbas.
With respect to each party’s degree of success in the outcome of the proceeding, I find that Security National was completely successful in refuting the applicant’s claims for medical benefits, housekeeping and home maintenance benefits and for a special award.
Based on these factors, I find that Security National is entitled to part of its expenses incurred as a result of the arbitration hearing.
- What amount of expenses should be awarded for the arbitration hearing,
if any?
The total hours spent at hearing were approximately 22 hours over four days.
In its Bill of Costs9, Security National claimed $21,413.42 as legal fees for work done for the arbitration, and disbursements of $7,030.26 for a total of $28,443.68. This claim included 261.9 hours billed by lawyers, law students and law clerks at various legal aid rates. Of this total, 227 hours were billed by lawyers at the rate of $87.26 per hour.
Arbitrators have held that several general principles might be considered when fixing an expense award.
The general arbitration approach towards assessing expenses is set out in Henri and Allstate Insurance Company of Canada (OIC A-007954, August 8, 1997). Then Arbitrator Makepeace held that "[a] line-by-line assessment of the expenses claimed is not appropriate. Rather, the Arbitrator should make a global assessment of reasonable expenses." Arbitration decisions have held, subject to special circumstances, that the appropriate approach is a ratio of preparation time (and other services provided before a hearing) to attendance at an arbitration hearing of between 4:1 and 1:1.10
Another principle was cited in Malik and Economical Mutual Insurance Company:11
There must be practical and reasonable limits to the amount awarded for costs and those amounts should bear some reasonable connection to the amount that should reasonably have been contemplated.
The objective of a costs order is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful party.
In the present case, Security National has provided me with written argument on expenses as well as 73 pages of computerized dockets12 detailing the work performed on this file. Amongst the dozens of entries in the dockets, the vast majority are categorized under the cryptic heading: “Case Assessment, Development and Admin”. I heard no evidence on the nature of the work performed in these dockets. Nor do I find it necessary, as suggested in the aforementioned decision, to conduct a line-by-line assessment of these entries to attempt to determine what work was performed and by whom in each of those entries.
Instead, I find it more appropriate to apply the methods suggested in the McLellan and Malik decisions to fix a fair and reasonable amount. As noted, the arbitration was conducted over four days for an approximate total hearing time of 22 hours. Given the overall simplicity of the hearing, I am not convinced that the amount of preparation time sought was reasonable. Even if the applicant had attended, I would have found Security National hard-pressed to justify the over 260 hours claimed for preparation and hearing attendance.
Further, I noted that on most of the hearing days, Security National had two lawyers in attendance. Nothing in the proceedings convinced me that Security National required double legal representation. For instance, on June 16 and 17, 2009, both Mr. Caston and Mr. Lempp appeared before me. Mr. Caston billed 11.20 and13.80 hours respectively on those days for “trial preparation and trail”. Mr. Lempp billed 11.00 and 13.30 hours for “Case Assessment, Development, and Admin”. I find these and other amounts difficult to justify, especially since the hearing sat for no more than 5.5 hours on each of those days.
Given the relative simplicity of the case, I find a ratio of 1:1 for preparation time to hearing time is appropriate. I find it appropriate to award 44 hours of counsel time at a rate of $87.26 per hour for a total of $3,839.44.
The insurer also sought a total of $7,030.26 for disbursements. This amount was composed of the following items:
Process Server
Filing Fee
Dr. Balsky’s attendance fee:
Dr. O’Conner’s [sic] attendance fee:
NTC Reporting and Transcription Services Inc.:
Photocopying Charges:
Other Disbursements:
FSCO Arbitration Fee:
$ 602.77
305.92
1,200.00
500.00
957.00
119.77
344.80
3,000.00
Mr. Abbas raised objections to some of these items, and I agree with many of them. The process server fee and the fee for “other disbursements” were unsubstantiated, as was the filing fee of $305.92. I am not prepared to award them. The $3,000.00 arbitration fee is not recoverable as a disbursement. Nor is the reporting and transcription fee of $957.00. Finally, I was also unconvinced that Dr. Balsky merited an attendance fee of $1,200.00. His attendance at the hearing was similar to that of Dr. O’Connor (who was billed at $500.00), and should be quantified accordingly. I am thus prepared to award a disbursement of $500.00 for his attendance. I find that the total disbursements to be awarded are $1,119.77.
The expenses awarded to Security National arising out of the arbitration are $3,389.44 plus $1,119.77 for a total of $4,509.21 (inclusive of legal fees, disbursements and GST).
- Which party is entitled to expenses arising from the motion for summary judgement?
I received written materials on the motion for summary judgement from both parties and heard oral argument on October 16, 2009.
Mr. Rooz argued that he should be entitled to his expenses for the motion and directed me to the decision of Seyed and Federation Insurance Company of Canada13, where an order for expenses was sought against another member of Mr. Rooz’ firm. In that case, an arbitrator held that where the conduct of a party had been unreasonable, the arbitrator could indeed order expenses to be paid to a party other than an insured or an insurer, based upon sections 17.1 and following of the Statutory Powers and Procedures Act and Rule 75 of the Code.
The facts of the present case are very similar to those in Seyed. Here, as in Seyed, the insurer presented no evidence in support of its claim to have a representative made personally liable for all or part of a party’s expenses. Indeed, much of Security National’s case was based on speculation. Given this lack of evidence, I find that Security National’s conduct was unreasonable. Therefore, given Mr. Rooz’ success in the motion for summary judgement, I am prepared to award him part of his expenses.
- What amount of expenses should be awarded for the motion for summary judgement, if any?
In his Bill of Costs, Mr. Rooz claimed a total of 37.1 hours for preparation and attendance for the motion for summary judgment, resulting in legal fees of $4,598.49. He also sought disbursements of $50.00 and GST of $229.92. The total for legal fees, disbursements and GST claimed is $4,878.41.
The same considerations used in assessing Security National’s claim for its expenses of the arbitration hearing are applicable here. I find that Mr. Rooz’ claim for legal fees is excessive. Much of the argument presented was similar to that previously made in the Seyed case. Much of Mr. Rooz’ written submissions were no more than a misguided or misdirected attempt to rehash and reargue issues that had been already determined at both the hearing and on appeal before the Director’s Delegate.
I find it unnecessary to engage in a line-by-line assessment of Mr. Rooz’ Bill of Costs. Given the nature of this case and the time reasonably spent in preparing for and pleading the motion, I am fixing Mr. Rooz’ expenses at $500.00 (inclusive of fees, disbursements and GST).
- Should Security National be permitted to set off the award made to Mr. Rooz against the expenses it has been awarded from Mr Abbas?
Security National argued that it might “...unfortunately never recover costs from Mr. Abbas. To request payment of its costs from Mr. Rooz (in light of the bizarre proceedings in this matter) was wholly reasonable also given the fact that it may prove difficult for the insurer to recover its costs of this arbitration.”14
I am not convinced that the possibility that Security National will be unable to recover its expenses from Mr. Abbas somehow justifies allowing Security National to offset the award made against it in favour of Mr. Rooz. Mr. Rooz is a distinct and different party from Mr. Abbas. Security National cited no authority to support its argument, and I am not convinced that I should allow any such set-off.
July 13, 2010
Edward Lee Arbitrator
Date
Financial Services Commission of Ontario Commission des services financiers de l’Ontario
Neutral Citation: 2010 ONFSCDRS 86
FSCO A07-000374
BETWEEN:
FARHAT ABBAS Applicant
and
SECURITY NATIONAL INSURANCE CO./ MONNEX INSURANCE MGMT. INC. Insurer
and
ALON ROOZ
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
Mr. Abbas shall pay Security National $4,509.21 as expenses of the arbitration.
Security National shall pay Mr. Rooz $500.00 as expenses of the motion for summary judgement.
Security National is not permitted to set off any part of its expense award against the expense award made to Mr. Rooz.
July 13, 2010
Edward Lee Arbitrator
Date
Footnotes
- (FSCO A07-000374, October 1, 2008)
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- (FSCO P08-00034, November 10, 2009), Appeal
- (FSCO A07-000374, December 23, 2009)
- Ex I-1, and Ex A-1
- (FSCO A07-000374, October 1, 2008)
- (FSCO A07-000374, December 23, 2009)
- Ex. I-1, Offer to Settle Schedule B
- Ex I-1, Bill of Costs, Security National
- McLellan and Aviva Canada Inc. (FSCO A06-001263, February 12, 2007) at page 9
- (FSCO A07-001978, June 26, 2009) at page 6
- Ex. I-2 and I-3
- (FSCO A07-002110, November 23, 2009)
- Ex I-1 Written submissions Security National