Neutral Citation: 2011 ONFSCDRS 108 FSCO A10-001801

BETWEEN:

BAHAREH HONARAMAND Applicant

and

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

DECISION ON EXPENSES

Before: Deborah Pressman Heard: September 13, 2011, at the offices of the Financial Services Commission of Ontario in Toronto

Appearances: Stanislav Razenberg for Ms. Honaramand Christopher Girardo for Security National Insurance Co./ Monnex Insurance Mgmt. Inc.

Overview:

The Applicant, Bahareh Honaramand, was injured in a motor vehicle accident on May 16, 2006 and received statutory accident benefits from Security National Insurance Co./Monnex Insurance Mgmt. Inc. (“Security National”), payable under the Schedule.¹ A dispute arose concerning Ms. Honaramand’s entitlement to medical benefits and cost of examinations. The parties were unable to resolve their disputes through mediation and Ms. Honaramand applied for arbitration at the Financial Services Commission of Ontario (“FSCO”) under the Insurance Act, R.S.O. 1990, c.I.8 (“Insurance Act”), as amended.

Ms. Honaramand’s hearing was scheduled to proceed on September 12, 2011. Three weeks before the hearing, on August 23, 2011, the parties settled the arbitration case.

As part of the settlement agreement, Security National agreed to pay for Ms. Honaramand’s reasonable costs and disbursements for the arbitration. The parties, however, were unable to agree on the amount of the expenses.

Ms. Honaramand submitted that she is entitled to recover her legal fees at the rate of $38.04 per hour for 34.1 hours of work by Mr. Razenberg, a licensed paralegal, and $150.00 per hour for 5.7 hours of combined work by Mr. Bergel and Mr. Finlay, barristers and solicitors, plus applicable HST.

Although Security National does not contest Ms. Honaramand’s entitlement to a reasonable amount for legal fees, it challenges the total hours and hourly rates claimed by Ms. Honaramand’s representatives.

Ms. Honaramand also claimed disbursements in the amount of $845.00, plus applicable HST. Of this amount, Security National only takes issue with one particular disbursement in the amount of $150.00, for the clinical notes and records of Dr. Pardis.

Issues:

The issue in this expense hearing is:

What is the amount of expenses to which Ms. Honaramand is entitled in respect of the arbitration?

Result:

Ms. Honaramand is entitled to expenses totalling $2,997.16, plus applicable HST.

ANALYSIS

Criteria in Assessment of Expenses:

According to the legislation, an arbitrator “may award . . . all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations . . .”² When assessing legal fees, arbitrators at FSCO determine entitlement and quantum by applying the criteria dictated by the legislation and bearing in mind the overriding principle of reasonableness.

Subsection 12(2) of the Expense Regulation³ sets out the criteria that an arbitrator shall consider in assessing expenses. In this case, Security National submitted that, because Ms. Honaramand offered to settle the arbitration for less than the amount of her claims, she met with limited success, and, as a result, I should exercise my discretion pursuant to the first criterion (“each party’s degree of success in the outcome of the proceeding”) to reduce the amount of legal fees claimed by her. I disagree for the reasons that follow.

I find the criteria listed in subsection 12(2) of the Expense Regulation to be of little assistance in determining the amount of expenses to which Ms. Honaramand is entitled.

In my view, the criterion of success at the arbitration is irrelevant in this case. The facts are clear. The parties settled the case before the arbitration hearing commenced. Security National, as part of the settlement agreement agreed to pay “reasonable” costs and disbursements of the arbitration. It is not for me to decide who was successful in an arbitration that was never adjudicated. In Stamogiannos and Allstate Insurance Company of Canada,⁴ the arbitrator stated:

…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.

Without adjudication on the merits of Ms. Honaramand’s claim, I am unable to assess which of the two parties is the “successful party”.

As no other criteria apply to this case, the only issue to be decided here is whether Ms. Honaramand’s claims for costs and disbursements are reasonable in respect of preparing for an arbitration hearing that did not proceed.

Reasonableness of the Number of Hours claimed:

Ms. Honaramand sought 39.8 hours of preparation time for this arbitration. Security National submitted that I should award Ms. Honaramand, a total of 14 hours of preparation time for this arbitration.

In Henri and Allstate Insurance Company of Canada, the arbitrator 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.”⁵ This view, with which I agree, has been followed in numerous arbitration expense decisions.⁶

Arbitration decisions have held that, subject to special circumstances, the appropriate approach in assessing allowable hours is a ratio of preparation time (and other services provided before a hearing) to attendance at an arbitration hearing of a range between 4:1 and 1:1.⁷

Ms. Honaramand submitted that her dockets amount to a ratio of 1.89:1 on the basis that the case was originally scheduled for three days.

Security National submitted that given the issues in dispute were reduced from the original four issues on the Application for Arbitration to one medical treatment plan and minor outstanding, a shorter hearing would likely have been required and two days would have been sufficient.

Security National suggested that a ratio of 1:1 (preparation time to attendance at a two-day hearing) would be more appropriate in this case to reflect the modest settlement and the non-complexity of the only issue left in dispute prior to settlement.

Ms. Honaramand responded that her reasonable dockets are already on the low end of the permissible ratio and that the medical issue in dispute prior to settlement involved a complex claim of chronic pain. Security National’s position regarding a two-day hearing was optimistic.

I find that 39.8 hours of preparation time for this arbitration is not excessive. I do not find it unreasonable to estimate that this case would likely have taken 3 days of hearing time to accommodate several medical experts.

I disagree with Security National’s submissions that 14 hours of preparation time, based on a two-day hearing, and a 1:1 ratio are reasonable in this case. Considering Security National’s own dockets total 28.5 hours, I give little weight to their submissions that Ms. Honaramand should be entitled to half of Security National’s preparation time.

I also note that Security National’s dockets are not significantly different from Ms. Honaramand’s dockets. The difference between the dockets is 11.3 hours. This modest difference suggests to me that the number of hours being claimed by Ms. Honaramand is not unreasonable.

Accordingly, I conclude that the preparation time of 39.8 hours sought by Ms. Honaramand is reasonable.

Reasonableness of Hourly Rate:

Rule 78 of the Dispute Resolution Practice Code (the “Code”)⁸ speaks to the hourly rates that I may award to the insured person or an insurer. These amounts are calculated using the rates established in the Legal Services Act,⁹ and where appropriate, they allow for an adjustment to include an experience allowance.

In addition, Rule 78 of the Code allows an arbitrator to award an hourly rate of up to $150.00 per hour for legal fees “Where an adjudicator is satisfied that a higher amount for legal fees to an insured person is justified.”

Mr. Razenberg’s claims $38.04 per hour for his services, and $150.00 per hour for the work of Mr. Bergel and Mr. Finlay.

Security National submitted that, given the lack of complexity in this matter and the fact that it settled early and did not actually proceed to a hearing, $75.00 per hour for counsel time and $23.00 per hour for Mr. Razenberg’s time are more reasonable amounts to award.

In assessing the appropriate hourly rate for Mr. Razenberg’s services, I note that his contribution to this matter is significant. A review of past FSCO decisions indicates that arbitrators have considered and recognized circumstances where a law clerk’s contribution to the file is significant enough to warrant a higher rate than the $23 per hour rate prescribed by the Legal Aid Services Act. I agree with these decisions.¹⁰

In Ms. G. and Pilot Insurance Company,¹¹ Arbitrator Blackman noted that Rule 78 of the Code is not restricted to counsel fees and awarded $50 per hour to a law clerk whom he found to be very capable and professional and whose services justified a higher award. In Amoa-Williams,¹² Arbitrator Sapin awarded $45 per hour to a law clerk that she found worked independently with minimal supervision, whose work was organised, thorough and detailed. In Oppedisano and Zurich Insurance Company,¹³ Arbitrator Killoran awarded a law clerk $45 an hour, as she found he made an important contribution to the preparation of his case.

Mr. Razenberg submitted that he had complete carriage of Ms. Honaramand’s file. His handling of her file included preparation and representation at mediation and the pre-hearing discussion, unsupervised by counsel. He also attended to productions, undertakings, document exchange, the preparation of briefs, and summoning of witnesses in this arbitration.

Counsel for Security National did not disagree that Mr. Razenberg had complete carriage of this file. Ms. Honaramand’s Document Brief attests to the fact that Mr. Razenberg has been the sole legal contact from his firm handling this arbitration.

I accept that Mr. Razenberg was instrumental in preparing this file for arbitration. I also accept that his efforts contributed to the settlement of this matter and that this was a cost-effective way of doing work on this case.

The general approach at FSCO with respect to assessment of fees, has been to take a “pragmatic, broad-strokes approach, with a view to fixing an amount that is reasonable.”¹⁴ In looking at the total number of hours spent on this file, the fact that most of the pre-hearing and hearing preparation was done by a licensed paralegal (at a lower rate than counsel), is an efficient and reasonable use of resources.

Based on the particular facts of this case, I am prepared to allow Mr. Razenberg’s time on the file at the requested rate of $38.04 per hour to reflect his contribution and handling of this matter. I am also prepared to award a rate of $150.00 per hour for counsel’s involvement in this case (namely, 5.7 hours). Mr. Bergel, a 2002 call and Mr. Finlay, a 1998 call, are experienced counsel practicing exclusively in personal injury. I note that their hourly rate is being claimed for a modest 5.7 hours.

For these reasons, I find that Ms. Honaramand is entitled to her legal fees for Mr. Razenberg, a licensed paralegal, for a total of 34.1 hours at the rate of $38.04 and 5.7 hours at the rate of $150.00 for Mr. Bergel and Mr. Finlay. The total of which is $2,152.16, plus applicable HST.

Disbursements:

Disbursements at FSCO arbitrations are mandated by the Schedule to the Expense Regulation.¹⁵ Pursuant to section 4.4, a party may be awarded “out-of-pocket expenses incurred in furtherance of the arbitration, appeal, variation or revocation hearing.”

Ms. Honaramand claimed disbursements in the amount of $845.00, plus applicable HST. Of this amount, Security National only objected to one particular disbursement in the amount of $150.00, for Dr. Pardis’ updated clinical notes and records, requested in July 2011.

Security National did not contest the nature of the disbursement. Rather, it objected to this particular disbursement on the basis that it was unnecessary and unreasonable of Ms. Honaramand to incur the cost of updating Dr. Pardis’ records for the third time. I disagree for the reasons that follow.

Rule 32.2 of the Code places an ongoing obligation on the parties to “ensure the prompt and complete exchange of documents that are reasonably necessary to determine the issues being arbitrated, including updates to the information previously exchanged and any additional documents obtained.”

In addition, Practice Note 4 of the Code speaks to the disclosure of supporting documents in FSCO’s dispute resolution process and specifically requires that the party asking for a document be responsible for paying the cost of getting it.

Security National made several production requests for Dr. Pardis’ clinical notes and records for the period of 3 years pre-accident to present date.¹⁶ By incurring the cost of the update in July 2011, Ms. Honaramand was complying with Security National’s production request and FSCO’s dispute resolution rules. Therefore, requesting the updated medical information for the third time was not unreasonable.

I find that Ms. Honoramand is entitled to all of her disbursements, totalling $845.00, plus applicable HST.

CONCLUSION

Ms. Honaramand is entitled to her expenses in the total amount of $2,997.16, representing fees of $2,152.16, and disbursements of $845.00, plus applicable HST.

November 28, 2011

Deborah Pressman Arbitrator

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