Terrence Broderick v. State Farm Mutual Automobile Insurance Company, 2012 ONFSCDRS 32

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

Neutral Citation: 2012 ONFSCDRS 32

FSCO A10-000901

BETWEEN:

TERRENCE BRODERICK

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: Arbitrator Jeffrey Rogers

Heard: By telephone conference call on February 10, 2012

Appearances: Mr. Broderick, self-represented

Ms. Kelly Lauzon, solicitor for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Terrence Broderick, was injured in a motor vehicle accident on September 5, 2007. In a decision dated June 20, 2011, I dismissed his claim for statutory accident benefits under the Schedule¹, while reserving on the issue of expenses:

The issue in this further hearing is:

Is State Farm entitled to its expenses incurred in respect of this arbitration hearing, and if so, in what amount?

Result:

Mr. Broderick shall pay State Farm its expenses of the arbitration in the amount of $6,435.48.

EVIDENCE AND ANALYSIS:

Entitlement to Expenses

State Farm claims its expenses on the grounds that it was successful at the arbitration and Mr. Broderick was unsuccessful. Section 12 of O. Reg. 664, and Rule 75.2 of the Dispute Resolution Practice Code restrict the discretion of an arbitrator to considering 7 criteria in deciding entitlement to expenses. 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 Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996) made under the Act or refused or failed to provide any material required to be provided by subsection 42(10) of that regulation.
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), made under the Act, or refused or failed to provide any material required to be provided under subsection 44 (9) of that regulation.

Of the listed criteria, “[E]ach party’s degree of success in the outcome of the proceeding”, is the only one relevant to this decision. State Farm was completely successful on the one issue that remained in the arbitration. Applying the criteria, I find that State Farm is entitled to its expenses of the arbitration.

Mr. Broderick currently finds himself in dire financial circumstances. He has not been employed since the accident. He recently lost the house that he owned and he advised that he is living in a garage. It is highly unlikely that he will be able to pay any amount ordered.

I empathize with Mr. Broderick. I urged State Farm to assess the utility of pursuing an award of expenses. Counsel advised that this information has no bearing on State Farm’s decision to pursue an order for payment of expenses. I find no discretion to consider Mr. Broderick’s ability to pay in deciding whether State Farm is entitled to an order for payment expenses. My discretion is limited to considering the listed criteria.

On the day of the Expense Hearing, Mr. Broderick advised of his current living conditions and reiterated that he thought it unfair for State Farm to pursue him for payment of expenses. He indicated that he may or may not have received State Farm’s Bill of Costs and did not care to comment on its content, in any event. He then said that he could not “take any more of this crap” and hung up the telephone. He did not participate further in the Expense Hearing.

Quantum of Expenses

State Farm claims expenses in the amount of $8,823.47, inclusive of HST. The hearing started at 10:00 a.m., on March 28, 2011. It finished at 2:00 p.m., on March 29, 2011.When the hearing started, Mr. Broderick was claiming entitlement to payment of a non-earner benefit, payment of $2,632.58 for psychological treatment, and payment of $713.72 for orthotic shoes. The parties were able to resolve the claims for psychological treatment and orthotic shoes during the course of the hearing.

The evidence was brief. The only witnesses were Mr. Broderick and Mr. Mike Brooks, State Farm’s adjuster. Mr. Broderick touched on the issue of entitlement to shoes in his evidence, before the matter was settled. Both witnesses gave brief evidence on the issue of entitlement to psychological treatment, before that dispute was settled. On the first day of the hearing, I recessed from 10:20 a.m. to 1:30 p.m. because counsel for State Farm advised that he anticipated that a court reporter would be present .Unfortunately, his office had not retained one. I also took a short recess on March 29, 2011, so that the parties could discuss settlement.

State Farm’s claim includes 13 hours for attendance at the hearing by counsel. The time claimed accurately reflects the time spent at the hearing, but I discount it for three reasons. First, about 3 hours were spent waiting on the arrival of the court reporter because counsel for State Farm had not retained one. Second, although brief, part of the hearing was spent hearing evidence on issues that the parties resolved. Third, the hearing was recessed briefly while the parties discussed settlement. State Farm is not entitled to recovery of expenses that relate to issues the parties settled. I find it reasonable in the circumstances to reduce the time for attendance at the hearing by a total of 4 hours. That is a reduction of $405.85 ($89.79 x 4 = 359.16 +$46.69 HST).

State Farm’s claim includes 15.3 hours for two law clerks who worked on the file. Their time is claimed at the rate of $85.51 per hour. I find the number of hours claimed to be reasonable, but I find no justification for the claimed rate. Rule 78.1 restricts the amounts that can be awarded to insurers for legal fees. The hourly rate must be the rates established under the Legal Aid Services Act, 1998 for professional services in civil matters before the Ontario Superior Court of Justice. The applicable hourly rate for law clerks at the relevant time was $25.36. The amount to which State Farm is entitled for services performed by law clerks is therefore $438.44 ($25.36 x 15.3 + $50.44 HST), and not $1,478.38 as claimed. That is a reduction of $1,039.94.

I find the other amounts State Farm claims to be reasonable and recoverable, with one exception. Counsel purportedly spent 19.5 hours on June 26, 27 and 28, 2010 reviewing the file contents and preparing a “phase 1 report.” The issues in dispute were narrow and State Farm’s file could not have been extensive. Any report should have been brief. The fact that the phase 1 conference on June 29, 2010 took only 40 minutes, reflects this reality. I reduce the amount claimed for these matters by half. That is a reduction of $942.10 ($85.51 x 9.75 + $108.38 HST).

After the reductions, State Farm is entitled to its expenses of the arbitration in the amount of $6,435.48, inclusive of HST, calculated as follows:

Amount claimed: $8,823.47

Less reduction for hearing time: 405.85

Less reduction for law clerks: 1,039.94

Less reduction for phase 1 report: 942.10

$6,435.58

March 14, 2012

Jeffrey Rogers Arbitrator

Date