Neutral Citation: 2013 ONFSCDRS 6 FSCO A09-001772 and A09-001774

BETWEEN:

Mr. Y. Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Arbitrator Fred Sampliner Heard: Written submissions Appearances: David S. Wilson for Mr. Y. Jonathan B. Schrieder for State Farm Mutual Automobile Insurance Company

Issues:

On March 30, 2012 I granted Mr. Y. income replacement benefits from July 7, 2009 to August 1, 2010 plus applicable statutory interest, but denied his other claims arising from motor vehicle accidents on March 17, 2007 and July 26, 2007. Afterwards, the parties notified me they could not agree on payment for their respective expenses of the arbitration under section 282(11) of the Insurance Act. They requested an assessment of expenses under Dispute Resolution Practice Code Rule 79.

The issue is:

Is Mr. Y. or State Farm entitled to their expenses of this arbitration?

Result:

Mr. Y. is entitled to $18,918.77 for his expenses of the arbitration.

EVIDENCE AND ANALYSIS:

Mr. Y. claims State Farm should pay him $37,291.68 for his expenses of the four day arbitration hearing and preparation¹, versus State Farm’s claim that Mr. Y. should be ordered to reimburse $20,667.25 for its total expenses.

The criteria for evaluation of a party’s entitlement to expenses are delineated in Rule 75 of the Dispute Resolution Practice Code: each party’s comparative degree of success, written offers to settle, novel issues, conduct prolonging/obstructing/hindering the process, and whether there has been improper/unnecessary/vexatious use of the process. Here, there is no evidence of written offers to settle by either party in this arbitration, as well as there are no novel legal or factual issues.

I have summarized the main facts that State Farm claims support its position that Mr. Y. prolonged, hindered or obstructed the production process leading to lengthy adjournment delays in hearing this matter. The first hearing dates were moved eight months ahead due to an inadvertent scheduling error by Mr. Y.’s representative, and the adjournment was granted with State Farm’s consent. State Farm argues that Mr. Y.’s failure to promptly obtain documents necessary to the Insurer’s full defense resulted in a second adjournment of seven months to the July 2011 dates.

State Farm’s position is contradicted by Arbitrator Ashby’s November 1, 2010 letter, where she clearly indicates many of the sought after records were in third party hands that Mr. Y. had no control to obtain. Relying on this letter, I attribute no delay or obstruction to Mr. Y. for productions.

State Farm’s second argument is that it was required to expend considerable costs before the hearing to prepare defense on numerous benefits that Mr. Y. withdrew at the commencement of the hearing. Mr. Y. counters that he should not be penalized for simplifying the process by withdrawing the housekeeping, caregiving and attendant care issues. He asserts that the value of these benefits was small and his chance of success limited, pointing out that State Farm has not identified its wasted defense effort.

While I accept that Mr. Y. simplified the hearing in withdrawing the benefits, he certainly could have ascertained this earlier than on the hearing doorstep. My comment is that strategy must be balanced with professional courtesy in maintaining an efficient and civil system of adjudication.

However, the central issue was Mr. Y.’s health and abilities following the accident, and without evidence of waste it would be speculative to determine if and how much effort State Farm expended concerning these benefits. I am unable to determine if Mr. Y.’s withdrawal of claims at the hearing outset unnecessarily contributed to any great degree in defense costs or obstructed, prolonged or hindered the arbitration process.

Mr. Y. enjoyed comparatively modest success in the end result. His claim for income replacement benefits was limited to about thirteen months, approximately $10,000, compared to ongoing benefits and the dismissal of all his other claims. I balance the dismissals and his small recovery against the lack of settlement offers in concluding that Mr. Y.’s modest success entitles him to modest recovery of his expenses.

Arbitrators do not normally assess lawyer/paralegal time on the line-by-line basis that the parties have submitted here. I apply the ratio method usually used in this forum, and find that Mr. Y. is entitled to recover for his lawyer/paralegal assistance time at a reduced ratio of 1 hour preparation for each hour of hearing.

My notes indicate that the first three hearing days averaged approximately 8 hours each and the last day 4 hours, totalling 28 hours for the hearing process. I accept that Mr. Wilson is a competent and experienced counsel who is entitled to the maximum $150 per hour rate at this Tribunal, and multiply that by 56 hours. I have reduced Mr. Y.’s claim for lawyer/legal assistant expenses from $18,690 (124.6 hours) to a finding that he is entitled to $8,400.

Although State Farm did not make submissions concerning Mr. Y.’s disbursement claims, I do not accept several amounts for the following reasons.

Mr. Y.’s lawyer submits parking and mileage expenses. Arbitrators have not accepted lawyer travel time and parking to and from hearing sites as a disbursement. Secondly, I have reduced Dr. Gozlan’s ($1,950) and Mr. Antflick’s ($2,650) reports to the $1,500 maximum. I further cannot accept Mr. Y.’s claim for $1,600 fax/photocopying without supporting documentation because the amount of productions and the number of hearing briefs do not justify this number. I allow $250 for photocopying and binding. Third, Mr. Y.’s submission of approximately $1,875 for interpretation services between Mr. Y. and his lawyer is not supported by documents. I allow $250 for interpretation.

Two reports of Mr. Balaban are listed at $1,200 each. Mr. Balaban’s opinion was not helpful to my disability analysis because he used no authoritative reference to support his opinion that Mr. Y.’s pre-accident work was heavy. I make no allowance for Mr. Balaban’s reports because his opinion contains a misleading basis that he should have known violated his expert duty to aid this Tribunal.

Dr. Lambotharan’s November 24, 2010 disability certificate did not provide a reasoned disability analysis supplementing the provision of his updated records ($200). I do not allow the $263.72 for this report.

The $11,585.17 total disbursements added to the $8,400 legal fees plus $2,598.07 HST equals $22,583.24, less $3,664.47 State Farm paid. I find that Mr. Y. is entitled to $18,918.77 for his expenses of the arbitration under section 282(11) of the Insurance Act.

January 14, 2013

Arbitrator Fred Sampliner

Date

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

State Farm shall pay Mr. Y. $18,918.77 for his expenses of the arbitration under section 282(11) of the Insurance Act.