Financial Services Commission of Ontario
Neutral Citation: 2013 ONFSCDRS 21 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 November 16, 2012, the parties agreed to proceed on the record
Appeal Expenses Order
Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Ms. Bavani Thevaranjan shall pay Personal Insurance Company of Canada's legal appeal expenses of $1,078.55, inclusive of HST.
February 5, 2013
David Evans Director's Delegate
Reasons for Decision
I. Nature of the Appeal
In a decision dated June 8, 2012, I upheld Arbitrator Fred Sampliner's order of May 20, 2011 that, as part of allowing Personal Insurance Company of Canada to withdraw a variation application, awarded Ms. Thevaranjan $18,204.83 plus applicable taxes in expenses.
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, Arbitrator Sampliner ordered Personal to continue paying weekly IRBs. After Personal filed a variation application of that order, it then asked Arbitrator Sampliner to be permitted to withdraw the application. He did so, and awarded Ms. Thevaranjan her expenses of the variation application, pursuant to the Expense Regulation, s. 12 of O. Reg. 664, R.R.O. 1990, as amended.
The expenses awarded to Ms. Thevaranjan were less than those she claimed. She therefore appealed the Arbitrator's disallowing a psychologist's report and travel time to the Commission for her Toronto-resident counsel, and his awarding expenses based not on the preparation time claimed but on a high ratio of preparation to hearing time.
The appeal proceeded on the record.
I agreed with the Arbitrator in disallowing the psychologist's report. I also agreed with him that, as Ms. Thevaranjan's counsel lives in Toronto and attended a hearing here, there was no reason for the Arbitrator to exercise any discretion and award his travel time as an expense.
With respect to the basis for the legal fee award, I found the Arbitrator acted within his discretion in making an award based on a high ratio of preparation time to hearing time.
III. Analysis
Subsection 12(2) of the Expense Regulation, reproduced as Rule 75.2 in Section F of the Dispute Resolution Practice Code Fourth Edition – Updated August 2011 (the "Code"), provides that an arbitrator or delegate shall consider only the criteria set out therein for "the purposes of awarding all or part of the expenses incurred in respect of an arbitration [or appeals] proceeding."
Personal submits that it was wholly successful on the appeal and as such is entitled to its expenses pursuant to criterion (a), namely "each party's degree of success in the outcome of the proceeding." It submits that none of the other criteria apply.
Ms. Thevaranjan disagrees, relying on criterion (c), namely, whether novel issues were raised in the proceeding. She states that her essential position on appeal "was that the application of a ratio was inappropriate, given that the hearing was shortened for one reason only, namely, the insurer's request to withdraw the application." Accordingly, she submits, the assessment should have been based on whether the amount claimed was reasonable or not, so the issue under consideration was the appropriateness of the application of a ratio in such circumstances.
However, as I noted in my appeal decision, arbitrators may or may not apply a ratio, depending on the circumstances, so that issue in itself was not novel. The only question was whether the Arbitrator had erred in law in exercising his discretion, and I found he had not. In that regard, I noted that in this case, the high ratio compensated Ms. Thevaranjan for the time her counsel spent in preparation for the hearing days that did not occur. I specifically did not agree with her submissions for the appeal hearing 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." Accordingly, I am not persuaded that the novelty criterion applies here.
Therefore, I find that Personal's success entitles it to its legal expenses of the appeal hearing.
Personal initially claimed legal fees of $150.00 per hour pursuant to Rule 78.1 of the Code, totaling about $1,740. However, in a letter dated September 5, 2012, I noted the Rule states:
"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." Counsel for insurers may only seek the experience allowance beyond the basic fee under the Legal Aid Services Act. Many cases at FSCO have reaffirmed that long-standing principle.
By way of background, until 1996 insurers could not even claim expenses, as only insureds were entitled to them, albeit strictly at the Legal Aid rate. As part of the trade-off in allowing insurers to claim expenses, insureds were entitled to a larger fee of $150 for their legal expenses.
Incidentally, by April 1, 2015, the legal aid rate plus experience fee will be $136.50, by my calculation. And if inflation were applied to the higher amount for legal fees to an insured person, it would be $200 now (www.bankofcanada.ca/rates/related/inflation-calculator/).
I recalculated the total fees based on the legal aid rate plus experience at $1,254.30, a total with which counsel for Personal agreed. These calculations include 6.3 hours for legal research and preparation of written submissions regarding the Response to Appeal.
Ms. Thevaranjan submits that, "Given the length of the Insurer's written submissions, preparation time of 6.3 hours appears to be considerably on the high side."
The Insurer's submissions on appeal were succinct, basically stating: The issue of arbitration expenses was a matter of the Arbitrator's discretion that he exercised appropriately.
The insurer's submissions in D.F. and Wawanesa Mutual Insurance Company, (FSCO P08-00024, April 17, 2012) were equally concise on the same point. I did award about $2,100 there because "The hearing itself lasted beyond the Commission's normal closing time and dealt almost entirely with D.F.'s submissions." There was no oral hearing in this case, so $1,250 seems somewhat high in comparison.
Nonetheless, something must be allowed for preparation of the submissions that, though being only four pages long, did cite six cases. Deducting two hours of preparation, the optimum deduction warranted, reduces the amount claimed for legal fees by approximately $250. Accordingly, I award Personal legal fees of $1,000, inclusive of HST.
There was no dispute about the disbursements and HST of $78.55.
Accordingly, I find that Ms. Thevaranjan shall pay Personal's appeal expenses of $1,078.55, inclusive of HST.
February 5, 2013
David Evans Director's Delegate
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.