Financial Services Commission of Ontario

Neutral Citation: 2011 ONFSCDRS 72

FSCO A08-002596

BETWEEN:

ASHKAN AZIMI Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Jessica Kowalski

Heard: Written submissions received by March 28, 2011

Appearances: No one appearing for Mr. Azimi¹ Nicholaus de Koning for Economical Mutual Insurance Company

Issues:

The Applicant, Ashkan Azimi, was injured in a motor vehicle accident on January 29, 2008. In a decision dated June 7, 2010 (from the hearing on January 25, 26 and 29, 2010) I dealt with the issue of whether Mr. Azimi was involved in an “accident” as defined in subsection 2(1) of the Schedule.² I made an order dismissing Mr. Azimi’s application for arbitration because he failed to prove that he was involved in an accident as defined in subsection 2(1) of the Schedule on January 29, 2008.

The issue in this further hearing is:

1. Is Economical entitled to its legal expenses and disbursements from Mr. Azimi in respect of the preliminary issue hearing?

2. If so, what is the amount of those expenses and disbursements?

Result

1. Economical is entitled to its legal expenses and disbursements in respect of the preliminary issue hearing in the amount of $9,839.20.

Award of Expenses

Subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I.8 provides that:

282(11) 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.

Rule 75 of the Dispute Resolution Practice Code (the “Code”) establishes the criteria for an award of expenses and incorporates certain provisions of Ontario Regulation 664, R.R.O. 1990 (the Expense Regulation) by reference. Rule 75.1 of the Code provides that an arbitrator may award expenses to one party if satisfied that the award is just.

Section 12(2) of the Expense Regulation sets out the following relevant criteria in making an award of expenses:

12(2) each 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:

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

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

3. Whether novel issues are raised in the proceeding;

4. The conduct of a party’s representative that intended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings or orders;

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

6. Whether an insured person refused or failed to submit to an examination as required under section 42 of Ontario Regulation 403/96, Statutory Accident Benefits Schedule – Accidents on or after November 1st, 1996, or refused or failed to provide any material required to be provided by subsection 42(10) of that Regulation; and/or

7. Whether the insured person refused or failed to submit to an examination as required under section 44 of Ontario Regulation 34/10, Statutory Accident Benefits Schedule – effective September 1, 2010, or refused or failed to provide any material under subsection 44(9) of that Regulation.

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

I found that Mr. Azimi was not involved in an accident and so Economical was the successful party in this proceeding. The hearing was a preliminary issue hearing, the result of which dismissed Mr. Azimi’s application for arbitration.

2. Offers to Settle

Although Economical submits (in its submissions regarding expenses) that the parties exchanged offers before the hearing, it has not provided copies of those offers. I have therefore not considered them because I do not have evidence that they meet the criteria set out in Rule 76.1 of the Code (and therefore subsection 12(3) of the Expense Regulation).³

3. Novel Issues

This criterion is irrelevant. There were no novel issues. The arbitral case law around what constitutes an “accident” for the purposes of statutory accident benefits and the burden of proof are well established.

4. Conduct of a Party or Party’s Representative

The evidentiary portion of the hearing was completed in the originally scheduled two days. This required cooperation between counsel in order to accommodate Mr. Azimi’s testimony, the testimony of two expert witnesses, a police officer and one lay witness.

Economical submits that some time was misused at the outset in arguments regarding which party bore the burden of proof with the result that closing arguments had to be completed by telephone conference call outside the two days scheduled for hearing. In my view, this was relatively minor and both representatives conducted themselves professionally and courteously throughout. Neither Mr. Azimi nor his representative did anything that tended to prolong, obstruct or hinder the hearing.

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

I found that Mr. Azimi failed to meet the burden of proof of the civil standard, that, on a “balance of probabilities” he did not establish that he was involved in an accident within the meaning of the Schedule. Despite Economical’s allegations, I did not find that Mr. Azimi actually staged the accident or that he intended to defraud Economical. It was sufficient for me to come to my decision that Mr. Azimi was unable to prove his claim and that there were aspects of his evidence that were troubling. From this perspective it would be difficult to characterize the proceeding as improper or vexatious. A hearing was necessary in order to adjudicate the dispute since the parties had diametrically opposed views of what the case was about.

6. and 7. Whether the insured person refused or failed submit to examinations

These two criteria are not relevant.

Quantum of Expenses

The main relevant criterion was Economical’s degree of success in the proceeding. That criterion is decisive and Economical is entitled to recover its legal expenses calculated using the hourly rates as set out in the Code, which incorporates by reference the relevant Legal Aid tariff. The application for arbitration was filed in September 2008, and the hearing took place in January 2010. The applicable Legal Aid rates according to the tariff are the rates for Legal Aid certificates issued after April 1, 2007 but before February 1, 2010.

Total Claimed:

The request for expenses is unopposed: although given the opportunity to do so, Mr. Azimi made no submissions regarding expenses.

Ecomonical claims a total of $9,839.20 supported by six accounts attached to its submissions. The claim for expenses is broken down as follows:

i. $5,027.47 in legal fees including 5% GST of $251.37 totaling $5,278.84;

ii. $1,760.35 in disbursements set out in the six accounts attached to its submissions; and,

iii. $2,800, being the maximum allowable for Mr. Sam Kodsi’s expert witness attendance, report and preparation.

Legal Fees:

The legal fees claim counsel time for two full days of hearing (beginning at 10:00 a.m. until after 5:00 p.m. each day with short breaks), plus a resumption by telephone conference for approximately two hours of closing submissions.

If the total hearing time was approximately 16 hours, Mr. de Koning claims roughly two hours of additional time for each one hour of hearing, plus some minimal time of students and one other lawyer in his office (.20 hours by Helen Friedman). Economical was not billed for and is not claiming expenses associated with a student’s attendance and assistance to counsel during the hearing. I find the legal fees claimed reasonable.

Disbursements:

Like expenses, the claim for disbursements is unopposed. I find the disbursements reasonable.

Expert Witness Fee:

Mr. Kodsi, who gave expert evidence at the hearing, submitted an invoice to Economical of $12,262.69, which did not give a specific breakdown between attendance time and preparation time. Mr. Kodsi’s invoice exceeds the maximum allowable amounts for expert witness preparation and attendance. The maximum is in accordance with section 5 of the Expense Regulation, which provides that the maximum for attendance of an expert witness is $200 per hour of attendance, up to maximum of $1,600 per day. The amount of expense that may be recovered for preparation time is $500, and the maximum recoverable for preparation of a report is $1,500. Mr. Kodsi was present for approximately one half of the second day of hearing. Economical requests $500 for his preparation, $800 for his attendance, and $1,500 for preparation of his report, totaling $2,800.

I preferred Mr. Kodsi’s evidence to that of Mr. Zygmunt Gorski, the expert who testified on Mr. Azimi’s behalf. Mr. Kodsi inspected both cars closer to the date of the alleged incident. Mr. Gorski did not see Mr. Azimi’s vehicle until some 18 months later, and never inspected the car Mr. Azimi allegedly struck. I am satisfied that Economical should recover the maximum allowable for Mr. Kodsi’s preparation and attendance.

Conclusion

Economical is entitled to the total amount claimed of $9,839.20: $5,278.84 for legal fees including GST, $1,760.35 for disbursements, and $2,800 for Mr. Kodsi’s expert witness attendance, report and preparation.

August 31, 2011

Jessica Kowalski Arbitrator

Date

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. Azimi shall pay to Economical its legal expenses and disbursements in respect of the preliminary issue hearing in the amount of $9,839.20.

August 31, 2011

Jessica Kowalski Arbitrator

Date

12(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. 

According to subparagraph (4) of the Expense Regulation, if an 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. 

Under Rule 76.1 of the Code, an adjudicator is to consider an Offer to Settle in connection with an award of expenses provided that: 

(a) it was made in writing, was served on the other parties and contains: 

(i) the full terms of the Offer to Settle; 

(ii) the date when the Offer was served and the time period during which it remained open for acceptance.

Footnotes

1. 1By order dated January 7, 2011, I granted the request of Mr. Azimi’s former solicitors, the Law Offices of Meleni David, to be removed from the record. Mr. Azimi was acting in person for the expenses hearing. Although notified, Mr. Azimi did not participate in this expenses hearing.
2. 2The Statutory Accident Benefits Schedule - Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
3. 3Subsection 12(3) of the Expense Regulation provides that: