John Florek v. State Farm Mutual Automobile Insurance Company, 2013 ONFSCDRS 23

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2013 ONFSCDRS 23

FSCO A08-001928

BETWEEN:

JOHN FLOREK

Applicant

and

STATE FARM MUTUAL AUTOMOBILE

INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: Edward Lee

Heard: Written submissions received by August 31, 2012

Appearances: Kyle Smith for Mr. Florek

Robert S. Franklin for State Farm Mutual Automobile Insurance Company

The Applicant, John Florek, was injured in a motor vehicle accident on March 24, 2006. In a decision dated January 16, 2012, I dealt with his claims for statutory accident benefits under the Schedule.¹

Overview:

This was a five-day hearing at which the applicant, three lay witnesses and two medical experts testified. The factual issues were not simple; the credibility of the applicant was challenged at every occasion. At issue were income replacement benefits, both before and after the two-year mark, as well as medical and rehabilitation benefits. At the conclusion of the oral portion of the hearing, extensive written submissions (argument, response and reply) were prepared and submitted.

Expenses of the Parties:

The applicant was entirely successful at the hearing and I awarded expenses to the applicant in my decision of January 16, 2012.

The parties were unable to agree as to the quantum of those expenses and pursuant to section 75 of the Dispute Resolution Practice Code, requested that I determine this matter. To this end, the parties have provided me with written submissions and relevant documentation.

In their argument, the parties acknowledge that a line-by-line of assessment of lawyers’ dockets and bookkeeping entries is not an appropriate arbitral exercise in the calculation of expenses. Further, it is accepted jurisprudence that the overriding consideration in fixing arbitration expenses is reasonableness.

I note that my decision in this case has already resulted in the applicant being awarded approximately $120,000.00 of IRBs. Further, a substantial sum in medical and rehabilitation benefits was settled after the third day of hearing. Finally, an offer of $42,000.00 for costs and disbursements had been made by State Farm to Strype Barristers. This offer was refused; Strype Barristers is seeking $69,047.71 for costs and disbursements.

Legal Fees:

The amount sought by counsel for the applicant in legal fees was $24,884.00 (plus GST/HST).

State Farm made the following objections in regard to this amount:

First, it is unreasonable to allow a rate of $150.00 per hour to both Kyle Smith and Jeffrey Strype, given that Jeffrey Strype had been called the Bar in 1979 and Mr. Smith in 2007.

Second, the applicant’s counsel prolonged the hearing by spending considerable time reviewing medical and rehabilitation accounts, only to have this issue settle before the end of the hearing.

Third, State Farm contested the 3.9 hours billed by both Mr. Smith and Mr. Strype for attendance at a settlement conference.

Fourth, the $1,200.00 billed by counsel as costs of travel, to and from the arbitration hearing, should be disallowed.

Fifth, the amount of $567.00 billed by Erin Neal, an associate of Strype Barristers, who attended at the arbitration, should also be disallowed. State Farm suggested that was merely double billing for counsel to attend the hearing as a learning experience.

I find the following:

Given the complexity of the facts, the issues in dispute, and the conduct of counsel during the presentation of the case, I am convinced that it is reasonable to allow the maximum rate of $150.00 per hour for counsel. Further, I see no reason why the $150.00 rate should not be applied to both Mr. Strype and Mr. Smith (who attended at and conducted the hearing).

State Farm’s argument that the hearing was prolonged by the applicant’s presentation of medical and rehabilitation evidence is completely unfounded. At the commencement of the arbitration, State Farm’s position was that medical and rehabilitation treatment received by the applicant was unreasonable and unnecessary. It was thus necessary for the applicant to engage in the presentation of evidence related to these benefits. The cross-examination of those expert witnesses by State Farm was vigorous and protracted, and these issues settled only after the cross-examinations had been conducted. I fail to see how State Farm can suggest the applicant somehow prolonged the hearing by presenting that evidence.

I accept State Farm's argument in regard to the double billing of the settlement discussion at 3.9 hours each for Mr. Smith and Mr. Strype. No argument was advanced as to why both counsel were required for the settlement discussion. I am thus reducing the account by 3.9 hours ($585.00).

I accept State Farm’s objection in regard to the travel expenses claimed for travel to and from the arbitration ($1,200.00 in total). Section 6(2) of the Schedule – Dispute Resolution Expenses², limits the amount that may be awarded for travel to and from the arbitration to the amount “incurred” by the person for his or her attendance at the hearing. Nothing in the tenor of the section suggests to me that this is to be calculated as a function of counsel’s legal fee. I have thus reduced the amount of the fees by this amount.

I reject State Farm's argument in regard to Ms. Neal’s attendance at the hearing. I did observe her assisting Mr. Smith in the presentation and the conduct of the hearing. I thus allow the $567.00 claimed for her attendance.

The amount I am awarding for legal fees is thus: $24,884.00 - $1,200.00 - $585.00 = $23,099.00 plus GST/HST.

Disbursements:

Most of State Farm’s objections (fax charges, courier charges, scanning charges, photocopying charges etc.) relate to or necessitate a line-by-line assessment of counsel’s dockets and accounting entries and are inappropriate as part of this analysis.

I find the following:

The $2,421.61 and $2,497.40 charged as travel expenses for counsel’s travel to various appointments and medical assessors is rejected for the same reasons given above.

I am also convinced that an interest charge on an overdue account ($584.10) is not recoverable under the regulations.

Further, I agree that the overnight expense permissible for the applicant’s attendance at the arbitration is limited to $150.00 per night (section 6(3) of the Regulation). As the applicant has claimed $920.80 (for four nights) for this item, the total will be reduced by the difference ($320.80).

The reasonable amount awarded for disbursements is thus: $36,918.34 - $2,497.40 - $2,421.61 - $320.80 - $584.10 = $31,094.43 plus GST/HST.

February 19, 2013

Edward Lee

Arbitrator

Date