Financial Services Commission of Ontario
Commission des services financiers de l’Ontario
Neutral Citation: 2012 ONFSCDRS 25
Appeal P11-00004
OFFICE OF THE DIRECTOR OF ARBITRATIONS
MOTOR VEHICLE ACCIDENT CLAIMS FUND
Appellant
and
BERTA AVDEEVA
Respondent
BEFORE:
Delegate Lawrence Blackman
REPRESENTATIVES:
Ms. Lorraine E. Takacs for the Appellant, Motor Vehicle Accident Claims Fund
Mr. George F. Pronay for the Respondent, Mrs. Berta Avdeeva
HEARING DATE:
February 22, 2012 (By telephone conference call)
APPEAL EXPENSES ORDER
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- The Appellant, the Motor Vehicle Accident Claims Fund, shall pay the Respondent, Berta Avdeeva, her legal expenses of this appeal fixed in the amount of $6,259.50, inclusive of HST.
March 5, 2012
Lawrence Blackman Director’s Delegate
Date
REASONS FOR DECISION
I. BACKGROUND
My November 10, 2011 order dismissed this appeal from the Arbitrator’s December 13, 2010 decision that on September 2, 2007, the Respondent, Berta Avdeeva, was involved in an accident, as defined in the Schedule.1 Appeal legal expenses were left to be determined.
The Respondent requested that I determine both appeal and arbitration expenses as an efficient means of resolving relatively straight forward matters. The Respondent’s initial $19,386.42 total claim was subsequently increased to $21,368.86; 74.5 hours for the six day arbitration and 40 hours for the appeal, at $150 an hour. Ultimately, 56 hours were claimed for the appeal, at varying hourly rates.
I was not persuaded to expand my November 10, 2011 order and also determine arbitration expenses. Subsection 283(1) of the Insurance Act, R.S.O. 1990, c. I.8, restricts my authority to appeals on questions of law from the order of an arbitrator. In this case, there was no expense order of an arbitrator. In any event, the hearing arbitrator was far better positioned to address arbitration expenses at first instance, especially the dispute as to the responsibility for and the possible consequences of the manner in which the arbitration proceeded.
The Respondent submits that she is entitled to her appeal expenses because (1) of her success; (2) the appeal was largely a frivolous and unnecessary endeavor to re-litigate findings of fact; and, (3) this factually and legally complex appeal was important to the Respondent and those in similar fact situations.
The Appellant, the Motor Vehicle Accident Claims Fund, states that while the majority of success on appeal was with the Respondent, her legal expenses should be significantly discounted, if not reduced, to a nominal amount, because:
(1) The Appellant has a duty to thoroughly investigate all claims involving uninsured and unidentified drivers and determine the identity and insurer of involved vehicles, “to ensure public monies are judiciously spent in the appropriate circumstances, ensuring funds to all eligible claimants.” The Respondent, rather than assisting in this endeavor, improperly and unnecessarily prolonged, obstructed and hindered the process, leaving the Appellant no option but to proceed to a hearing due to the novel facts of this case.
(2) The Respondent has not established that she has incurred the legal expenses claimed or that she is the person actually advancing the claim, as the accounts of counsel who took this appeal were submitted to the Respondent’s paralegal representative rather than directly to the Respondent.
(3) The Respondent’s failure to review the applicable expense provisions caused the Appellant to incur unnecessary expense. The Respondent has not provided supporting documentation, dockets or sufficient detail to allow the Appellant to meaningfully determine whether the hours claimed are reasonable or whether there may be an improper contingency or referral arrangement.
II. ENTITLEMENT TO APPEAL LEGAL EXPENSES
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.
Subsection 282(11) applies, with necessary modifications, to appeals, as provided under subsection 283(7). Subsection 12(2) of R.R.O. 1990, Reg. 664 (the “Expense Regulation,”) sets out the criteria in awarding legal expenses. The following criteria are argued as relevant in this case:
Each party’s degree of success in the outcome of the proceeding;
Whether novel issues are raised;
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; and,
Whether any aspect of the proceeding was improper, vexatious or unnecessary.
The Respondent was completely successful in this appeal. The expanse of this appeal was unnecessary.
The Appellant feels strongly that the Arbitrator should have weighed the evidence differently. Appeals, however, are restricted to questions of law. A question of law does include whether there is no evidence for a finding of fact. I was persuaded that there was evidence, specifically that of an independent witness, for the Arbitrator’s critical finding that the use or operation of an automobile directly caused the Respondent an impairment, meeting the definition of “accident.”
I am not persuaded that the Respondent prolonged, obstructed or hindered this appeal. Rather, the appeal itself failed to discern between legitimate questions of law and ill-considered issues such as whether bleeding from the side of one’s head constitutes an anatomical abnormality. I am not persuaded that different expense criteria apply to the Appellant. In any event, it is difficult to see how an, at times, line-by-line critique of the transcript and the arbitration decision is consistent with a judicious use of public monies, or that the Respondent should subsidize that endeavour.
Nor am I persuaded that any novel facts of this case should deprive the Respondent of her legal appeal expenses. Neither am I persuaded that there was anything improper in outside counsel being retained to defend this appeal. Accordingly, I find that the Respondent is entitled to her reasonable legal expenses of this appeal.
III. QUANTUM OF APPEAL LEGAL EXPENSES
In Henri and Allstate Insurance Company of Canada, (OIC A-007954, August 8, 1997),
Arbitrator Makepeace confirmed that a “line-by-line assessment of the expenses claimed is not appropriate. Rather, the Arbitrator should make a global assessment of reasonable expenses.” In Rooz and Certas Direct Insurance Company and Zapisnoy, (FSCO P07-00017, November 18, 2009), Delegate Evans, held that in appeals, as “the bulk of work done in appeals goes to preparing written submissions for relatively short oral submissions … brevity may in fact reflect a considerable amount of work.”
The Respondent claims ten hours at $150 for counsel called in 2005, 39 hours at $110 an hour for counsel called in 2007 and seven hours at $100 an hour for a paralegal. Although requested, the Respondent did not provide dockets.
In Frumusa and General Accident Assurance Co. of Canada, (OIC A96-000192, February 12, 1998), Arbitrator Alves held that “[w]hile the failure to keep dockets is not necessarily fatal, counsel place themselves at some risk that they may not be adequately compensated in relation to the efforts they expend on a file.” In this regard, she cited Orkin, in The Law of Costs, 2nd ed., Canada Law Book Inc. (Toronto: 1995), that:
The importance of keeping dockets as a reliable record of the services performed by the solicitor has been stressed, although the absence of dockets does not mean the solicitor should not be compensated. Since time is only one factor to consider in determining the reasonableness of the bill, the fee may be allowed in full even though not all time is docketed. On the other hand, fees have been reduced on assessment when dockets were skimpy or non-existent.
The Respondent claims seven hours for the more senior counsel’s attendance at the appeal hearing. There is no question this is reasonable. I am persuaded that the Respondent is the person advancing this claim for an expense order in her name and that she has incurred these expenses.
Three hours preparation time is claimed by more senior counsel, 23 hours by junior counsel and seven hours by a paralegal.
The Appellant concedes this appeal was complex. In oral submissions, the Appellant stated that it took greater issue with the hourly rate sought than the hours claimed. I am persuaded that rather than a duplication of effort by counsel, there was an efficient division of duties. I find the more junior counsel’s 26 hours preparation time reasonable. The Respondent states that the paralegal’s involvement was meeting and communicating with his principal. In the absence of dockets, I reduce the hours claimed to three.
Eight hours is claimed by more junior counsel for post-hearing written submissions on two cases referenced by the parties for the first time in oral submissions. Being unable to discern how eight hours could be warranted for these decisions that ultimately were of little import, I allow four hours.
Eight hours are claimed by junior counsel for appeal and arbitration expense submissions. Two hours may be claimed as part of the Respondent’s arbitration legal expenses. I allow the other six hours as part of the appeal legal expenses, especially as the Appellant demanded the Respondent provide supporting case law.
Under Rule 78.1 of the Dispute Resolution Practice Code (Fourth Edition, Updated August 2011) (the “Code”), a higher hourly rate for legal fees than that established for professional services under the Legal Aid Services Act, 1998, up to $150, may be awarded to an insured person, where justified. As stated by Arbitrator Rogers in Esterreicher and Non-Marine Underwriters, Mbrs. Of Lloyd’s, (FSCO A04-001750, July 9, 2009), the “discretion to award an enhanced rate for the legal fees of insured persons is founded in access to justice considerations.”
This appeal was, in significant measure, unnecessarily complex and time consuming. The ten hours claimed by more senior counsel, show economy and efficiency that should be properly acknowledged. I am persuaded the $150 hourly rate claimed is more than justified. I am not persuaded that the $150 rate, in place since April 15, 1997, is, as argued by the Appellant, an “executive” rate reserved only for the most senior and experienced counsel.
I am satisfied that the relatively modest hourly rate of $110 sought for more junior counsel is also justified under the Code.
As noted, the Code does not restrict legal fees for insured persons to the legal aid rate. “Legal fees” include accounts of paralegals who, in accordance with Rule 9.1(a) of the Code, are “licensed to provide legal services … under the by-laws of the Law Society of Upper Canada.” The paralegal has been licensed with the Law Society since 2008. I find the $70 hourly rate allowed a paralegal in Esterreicher justified in this case.
Accordingly, I allow the following hours and hourly rates:
Counsel called 2005: 10 hours @ $150 an hour =
Counsel called 2007: 33 hours @ $110 an hour =
Paralegal: 3 hours @ $ 70 an hour =
Total:
With HST:
$1,500.00
$3,630.00
$ 210.00
$5,340.00
$6,034.20
In Bains and RBC General Insurance Company, (FSCO P09-00005, September 8, 2010), I reviewed twenty expense awards. The average award was $3,389.11, $4,733.58 where expenses were awarded to insured persons (reflecting a higher allowed hourly rate), and $2,812.91 where expenses were awarded to insurers. The amount here of $6,034.20 is in the general range of expense awards to insureds, while reflecting the time-intensive aspect of this appeal that was devoted, to a significant degree, to findings of fact and procedural rulings.
The paralegal representative claims $11.30 for photocopies, faxes and postage. These disbursements are minimal and I allow same.
Counsel claims $14 for courier services, which I allow. Photocopying expenses of $399.64 are also sought. I reduce the latter to $200, inclusive of HST, on the basis of the unanswered submission that the Respondent, while delivering bound briefs to this office, served its extensive written submissions and case briefs on the Appellant by fax “in bits and pieces” over extended periods of time.
Accordingly, the Appellant shall pay the Respondent her legal expenses of this appeal fixed in the amount of $6,259.50, inclusive of HST.
March 5, 2012
Lawrence Blackman Director’s Delegate
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.