Financial Services Commission of Ontario

Commission des services financiers de l'Ontario

Neutral Citation: 2013 ONFSCDRS 112

Appeal P11-00026

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ANDREW HAYWARD Appellant

and

ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA Respondent

and

Appeal P11-00028

ROYAL & SUNALLIANCE INSURANCE COMPANY OF CANADA Appellant

and

ANDREW HAYWARD Respondent

BEFORE: David Evans

REPRESENTATIVES: Kyle Smith for Mr. Hayward Sarah Langlois for Royal & SunAlliance Insurance Company of Canada

HEARING DATE: August 7, 2013, by teleconference

APPEAL EXPENSES ORDER

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

Mr. Hayward shall pay Royal & SunAlliance Insurance Company of Canada its legal expenses of this appeal in the amount of $4,000, inclusive of disbursements and HST.

August 23, 2013

David Evans Director's Delegate Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Royal & SunAlliance Insurance Company of Canada (Royal) and Mr. Andrew Hayward each appealed arbitration decisions about, respectively, licence suspensions and workplace benefits. Royal was entirely successful on appeal and now seeks its appeal expenses.

II. BACKGROUND

On January 15, 2009, Mr. Hayward was injured in a motor vehicle accident. Royal rejected his income replacement benefits (IRB) claim under the SABS–1996¹ because his driver's licence was suspended. The Workplace Safety and Insurance Board (WSIB) then accepted his claim in April 2009, but only for health care benefits.

As set out in my decision of March 6, 2013, I earlier decided two preliminary issues by acknowledging Royal's appeal of the licence decision and by refusing Mr. Hayward's fresh evidence. I then upheld Arbitrator Richards' decision that Mr. Hayward's entitlement to workers' benefits precluded his claiming any accident benefits. Finally, I reversed Arbitrator Muzzi's finding that Mr. Hayward could claim IRBs despite the suspended licence.

III. ANALYSIS

The appeal expense hearing had preliminary issues: Royal's first Bill of Costs included a $150 an hour fee for Mr. Franklin, Royal's counsel; Mr. Hayward's counsel, Mr. Smith, requested a stay of the expense hearing, as he was seeking judicial review. I replied in my letter of May 23, 2013:

I have now received Mr. Smith's request to stay the expense hearing. However, I have been advised that the Director wishes us to continue through to an expense hearing, absent any court order. The trouble is that, if the judicial review is unsuccessful, then the parties have to return here a year or more later to get the expenses ruling. But if the JR is successful, the court would likely make a ruling on both the JR and the appeal expenses: Certas Direct Insurance Company v. Gonsalves, 2011 ONSC 3986. [In that case, the Director's Delegate had made an expenses order, it is true: Gonsalves and Certas Direct Insurance Company, (FSCO P09-00036, March 31, 2011).] So it would seem more efficient to simply deal with expenses now.

That being said, it is not clear to me what exactly is being claimed for legal fees, as there is a total of $5,003.50 in one column of Part I but $5,599.61 in another column based on an "experience allowance" of $150 for Mr. Franklin.

As for the $150 hourly rate, Rule 78.1 provides that "Where an adjudicator is satisfied that a higher amount for legal fees to an insured person is justified, an hourly rate of up to $150 may be awarded." Thus, the $150 rate is not available for legal fees to an insurer.

An experience allowance is available under R.78.1(b), namely "the hourly rates established under the Legal Aid Services Act, 1998 for professional services in civil matters before the Ontario Superior Court of Justice … adjusted to include, where appropriate, the experience allowance established under the Legal Aid Services Act, 1998." I do not believe that the experience rate has yet reached $150 an hour, although I stand to be corrected.

In the relevant table of fees in Schedule 2 of the LASA regulation, I agree that item 1.1(g) provides for $89.79 for services performed on or after April 1, 2011 and before April 1, 2012. Then in Part IV under Miscellaneous, item 24 has experience allowances, and 24.2 allows an increase of 25% for a lawyer with at least 10 years of practice in litigation. Therefore, the experience allowance would be – subject to any comments by Mr. Smith – $112.25.

You should also be aware that the average appeal expenses award to insurers is $2,800: Bains and RBC General Insurance Company, (FSCO P09-00005, September 8, 2010). Bains in turn has been relied on in a number of subsequent appeal expenses cases.

Royal's revised Bill of Costs seeks $5,695.19 in legal fees for Mr. Franklin, Ms. Joanna Cox, and Ms. Sarah Langlois, and $411.25 in disbursements (including HST), totaling around $6,100.

Mr. Hayward disputes two entries. He submits that four hours for drafting the revised bill of costs is excessive, especially since it was required because the original bill sought improper hourly rates. More importantly, he notes, the bulk of the time in the amended bill is 40.9 hours spent by Ms. Joanna Cox, a fifth year lawyer, for drafting pleadings and submissions. He submits that it is not only excessive but is set out with no support or breakdown.

To remedy that last point, counsel for Royal forwarded the relevant dockets to Mr. Hayward and me shortly before the appeal expense hearing.

Mr. Hayward submits that the supporting documentation still shows too much time spent on the appeal. He notes that his counsel, Mr. Smith, who has about the same experience as Ms. Cox, took about 14 hours less than her to draft his materials.

Royal submits that there were two appeals in this case, as well as preliminary issues. It also notes that my decision was 17 pages long, so the issues were not simple. It submits that if the average expense award for an appeal is $2,800, as set out in Bains, then twice that would be $5,600, with some reduction for the fact that the appeals were dealing with the same file.

As has often been stated, a line-by-line assessment of the expenses claimed is not appropriate. Rather, the adjudicator should make a global assessment of reasonable expenses: Henri and Allstate Insurance Company of Canada, (OIC A-007954, August 8, 1997). In this case, the submissions of the parties converge somewhat, albeit not at $6,100. Mr. Hayward submits that, aside from the problem with claiming 4 hours for re-doing the Bill of Expenses, his counsel took 14 hours less to prepare the materials for the appeal. I note that adding the 4 hours to remedy the original Bill of Costs to the excess 14 hours totals 18 hours. At a rounded counsel fee of $100 an hour, this would represent a reduction of $1,800 from the $5,700 claimed in legal fees.

I find that the expenses of the two appeals should be more than – but not twice – the $2,800 average, in light of the complexity of the issues. The appeal decision involved four separate orders and was one of my longest. Therefore, I find that a reasonable global figure for these appeals is $4,000, inclusive of disbursements and HST.