Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2012 ONFSCDRS 89

Appeal P11-00016

OFFICE OF THE DIRECTOR OF ARBITRATIONS

BAVANI THEVARANJAN

Appellant

and

PERSONAL INSURANCE COMPANY OF CANADA

Respondent

BEFORE:

David Evans

REPRESENTATIVES:

David S. Wilson for Ms. Thevaranjan Michael Chadwick for Personal Insurance Company of Canada

HEARING DATE:

On April 2, 2012, the parties agreed to proceed on the record

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal of the arbitration order, dated May 20, 2011, is hereby dismissed.
If the parties are unable to agree on the legal expenses of this appeal, an expense hearing shall be requested pursuant to the Dispute Resolution Practice Code (Fourth Edition, Updated - August 2011), but as set out below and within sixty days of the date of this decision.

June 8, 2012

David Evans Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Ms. Thevaranjan appeals Arbitrator Fred Sampliner’s order of May 20, 2011 that awarded her $18,204.83 plus applicable taxes for her expenses of Personal’s variation application.

II. BACKGROUND

Ms. Thevaranjan has been receiving income replacement benefits (IRBs) pursuant to the SABS‑1996¹ as a result of injuries she sustained in a motor vehicle accident on April 22, 2004. In an earlier order dated June 26, 2007, Arbitrator Sampliner ordered Personal to continue paying weekly IRBs of $263.51.

Personal sought a variation of that order on the basis that Ms. Thevaranjan did not meet the post‑104 week test for IRBs. Six days were scheduled for the hearing, but only two were used, as during the second day of the hearing, Personal requested permission to withdraw its application because its expert changed his opinion. The Arbitrator granted that request in his order dated May 20, 2011, in which he also dealt with Ms. Thevaranjan’s expenses of the variation application.

Ms. Thevaranjan appeals three aspects of the Arbitrator’s expenses order:

The Arbitrator disallowed travel time to the Commission for Ms. Thevaranjan’s counsel, who lives in Toronto.
Instead of allowing all the preparation time claimed by counsel, the Arbitrator applied a high multiple of 4 to the actual hearing time to determine preparation time.
The Arbitrator disallowed Dr. Rickey Miller’s (psychologist) September 2, 2008 report.

III. ANALYSIS

Subsection 12(1) of R.R.O. 1990, Reg. 664 (the “Expense Regulation”) provides that “[t]he expenses set out in the Schedule are prescribed for the purpose of subsection 282 (11) of the [Insurance] Act.” Subsection 3(1) of the Schedule in turn sets out the legal expenses that may be awarded, including “1. For all services performed before an arbitration, appeal, variation or revocation hearing.”

With respect to the claimed travel time, Arbitrator Sampliner noted that Ms. Thevaranjan’s lawyer, who resides in Toronto, included travel time of 9 hours and 4 hours in his bill for the two hearing appearances in Toronto. Accordingly, he “discount[ed] the lawyer’s hearing time to reflect that commuting to this Tribunal is not normally compensable.” In light of Director’s Delegate Blackman’s decision in Mrs. S and Economical Mutual Insurance Company, (FSCO P10-00005, February 15, 2011), where the only quantum item in dispute was travel time, the Arbitrator’s statement in his decision of May 20, 2011 was entirely correct. Delegate Blackman reviewed the case law on point and concluded it showed that either the Expense Regulation does not encompass compensation for counsel’s travel time, or that it must be reasonably justified. He found that s. 3(1) does not explicitly provide for travel time, that “the words ‘all services performed before’ a hearing in subsection 3(1) … mean reasonable professional legal services” (emphasis in the original), and that travel time by itself does not engage a litigator’s skills. He left open the possibility of paying some travel time, perhaps at a lower hourly rate, in compelling circumstances “such as access to justice where, due to location or other reasons, a party may not be otherwise able to retain proper representation.” As Arbitrator Sampliner noted, counsel for Ms. Thevaranjan lives in Toronto and attended a hearing in Toronto. Therefore, there was no reason for him to exercise any discretion and award travel time.

With respect to preparation time, the Arbitrator noted that Ms. Thevaranjan’s lawyer set out “85.10 hours at $150 per hour plus 2 hours for an unidentified person with initials ‘MK’ at $115 per hour in the costs bill,” concluding as follows:

Arbitrators do not often engage in line-by-line analysis of costs bills and I will not do so in this matter. The usual method applies a multiple to the hearing hours to arrive at a reasonable estimate for lawyer/paralegal preparation time. The combined hearing and preparation times are multiplied by the applicable hourly rate…

The variant here is that Ms. Thevaranjan’s lawyer was required to do advance preparation for a hearing that was scheduled an additional four days beyond the April 26 and July 8, 2010 attendances. The usual multiple to arrive at preparation time ranges between 1 and 4. Normally I would use a mid-range multiple, but I find it is reasonable to apply a multiple of 4 because the lawyer’s bill indicates he did some preparation for cross-examination of Personal’s experts and presentation of Ms. Thevaranjan’s witnesses before the commencement of the hearing and subsequent termination of the evidentiary process.

The Arbitrator is correct that in many cases a ratio has been applied to hearing time to arrive at a figure for preparation time. Certainly, as was noted in Singh and Allstate Insurance Company of Canada and Wellington Insurance Company, (FSCO A97-000710, May 18, 2001), arbitrators have allowed preparation time based on dockets showing the actual time spent, especially where additional preparation time resulted in a more cost-effective hearing, but there has to be a basis for such a finding. It was also noted that use of a ratio precludes the need to conduct a time-consuming examination of detailed dockets.

The Arbitrator is also correct that the range is from 1 to 4. In Singh, a ratio of 1.5:1 was allowed, in the absence of any documentation as to preparation time. In C.S.K. and Economical Mutual Insurance Company, (FSCO A08-000767, August 23, 2010), a ratio of 2:1 was applied in an arbitration that did not raise novel issues and was not particularly complex but where having a law clerk do most of the pre-hearing preparation was an efficient use of resources. In Carr and TD General Insurance Company, (FSCO A09-003154, March 10, 2011), a ratio of 3:1 was found most appropriate, considering the case in terms of complexity and amount of time required for a 4‑day hearing, reducing the hours claimed by 9. Finally, in Soobrian and Belair Insurance Company Inc., (FSCO A04-000422, February 7, 2006), the maximum ratio of 4:1 was found to be appropriate, given that the successful insurer presented its case in an extremely efficient manner due to thorough preparation, and “[a] party should not be penalized where the preparation time was well spent in facilitating an efficient and shortened hearing.”

By way of contrast, Ms. Thevaranjan submits that the Arbitrator should have determined “the number of hours of actual hearing time that would have been expended had the matter proceeded to its conclusion as scheduled” and then determined “the appropriate multiple based upon the anticipated hearing time.” Unsurprisingly, Ms. Thevaranjan provides no case law for awarding expenses based upon conjecture. Furthermore, there is no evidence that the additional preparation time resulted in a more cost-effective hearing. Rather, Personal sought to withdraw its application based on the assertion that its medical expert had changed his opinion days before the resumption of the hearing, as set out in the Arbitrator’s decision of April 19, 2011. The foreshortening of the hearing thus had nothing to do with the additional preparation time.

Wasted preparation time was an element for the high ratio in Soobrian, where the hearing had to be adjourned due to the applicant’s failure to attend the hearing, so the insurer duplicated part of its preparation. Similarly, in this case, the high ratio compensated Ms. Thevaranjan for the time her counsel wasted in preparation for the hearing days that did not occur. The Arbitrator thus acted well within his discretion in awarding the highest multiple instead of awarding the actual hours claimed. I see nothing approaching an error in the Arbitrator’s conclusion.

Finally, Ms. Thevaranjan submits that the Arbitrator improperly disallowed the September 2, 2008 report of Dr. Miller. The Arbitrator wrote:

Personal contends Dr. Rickey Miller’s (psychologist) September 2, 2008 report is not helpful and should be disallowed. Dr. Miller’s report is a brief update respecting the short period between March 2008 and late April 2008, but it is generated nearly a year before the filing of this Application. I deny Dr. Miller’s $225.00 bill for reason that I find it was not generated for this Application.

Ms. Thevaranjan submits that reports pre-dating a dispute can be reimbursed as expenses under the general disbursement section, s. 4, and in particular s. 4.4. Section 4 deals with disbursements like long distance telephone charges (4.1), reproducing copies of documents (4.2), the delivery, by mail or courier, of items relating to the arbitration, appeal, variation or revocation hearing (4.3), any applicable taxes paid in respect of these expenses (4.5), and the “basket” clause, other out-of-pocket expenses incurred in furtherance of the arbitration, appeal, variation or revocation hearing (4.4). Ms. Thevaranjan relies on cases such as C.C. and Economical Mutual Insurance Company, (FSCO A09-000114, September 23, 2011), which held that s. 4.4 is broad enough to include medical reports pre-dating termination of benefits (which was the issue in that case).

Personal submits that the applicable section is rather s. 5(1)3, which specifically deals with medical reports, providing for recovery of “a report prepared by an expert, provided to the other parties to the arbitration or hearing and necessary for the conduct of the arbitration or hearing…” It is more appropriate to consider expert reports under the section dealing with expert reports rather than under some catch-all basket clause that deals with items like telephone, photocopying and courier charges. Furthermore, just as with s. 4.4, s. 5(1)3 could allow for recovery of reports pre-dating a dispute, assuming they were necessary for the conduct of the hearing.

In any event, as noted in C.C., expenses for expert reports were found to be payable where they were necessary and useful, or helpful to the arbitrator. Thus, the Singh case (referred to above) applied s. 5(1)3 to deny the expenses of a buried report that was not introduced into evidence in the hearing and was not produced to the insurers until shortly before the expenses assessment hearing.

Reading that passage of the Arbitrator’s decision cited above, I find that, read as a whole, it shows that the Arbitrator did not find the report helpful. Thus, he found that the report neither furthered the arbitration hearing nor was necessary for its conduct. I see no error of law in his conclusion.

Accordingly, the appeal is dismissed and the decision is confirmed.

IV. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, an expense hearing shall be requested within sixty days of this decision. The request shall be accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs, as well as written submissions regarding entitlement to or the quantum of these expenses, or both, as are in dispute.