Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2014 ONFSCDRS 170

FSCO A12-003160

BETWEEN:

ISHRAT TARIQ

Applicant

and

STATE FARM MUTUAL AUTOMOBILE

INSURANCE COMPANY

Insurer

Before: James Robinson

Heard: All written submissions received by August 1, 2014

Appearances: Alexei Antonov for Mrs. Tariq

Janet S. Young for State Farm Mutual Automobile Insurance Company

Background:

The Applicant, Ishrat Tariq, was injured in a motor vehicle accident on November 10, 2010. Certain disputed issues proceeded to arbitration and in due course the Applicant issued an application for arbitration and the matter was set for a four-day hearing before me commencing April 7, 2014. At a settlement discussion conducted on April 3, 2014 the parties reached a settlement of all outstanding issues save and except the matter of the Applicant’s expenses.

Subsequently, counsel for the Applicant requested an expense hearing, which I dealt with by way of written submissions.

Issues:

The issue in this hearing is:

What is the quantum of expenses the Insurer is liable to pay to the Applicant in respect of the arbitration proceeding pursuant to subsection 282(11) of the Insurance Act?

Result:

The Insurer is liable to pay to the Applicant her expenses of the arbitration, fixed in the amount of $12,250.00.

EVIDENCE AND ANALYSIS:

Applicant’s Submissions

The Applicant is seeking expenses in the total amount of $25,228.49, comprised of $14,477.00 in fees and $10,751.49 in disbursements.

Applicant’s counsel supports his claim for expenses on the basis of Rule 75.2 of the Dispute Resolution Practice Code (the “Code”) and, more specifically, the criteria set forth clauses (a), (b) and (c) of the Rule.

First, Applicant’s counsel submits that I should look to the Applicant’s “degree of success in the outcome of the proceeding” pursuant to Rule 75.2(a).

Insofar as the Application was settled prior to hearing I am not in a position to know whether or not the Applicant would have been successful had the hearing proceeded. The Partial Release executed by the Applicant and submitted in evidence notes that the payment made to the Applicant “….does not constitute an admission of liability” on the part of the Insurer. The Partial Release does purport to exclude the issue of hearing expenses. On the other hand it does not contain any express acknowledgement that the Insurer agrees to be liable for expenses.

An argument could be made that the Applicant has no entitlement to expenses whatsoever. However, the Insurer’s counsel did not make such an argument in her submissions. They were restricted solely to the issue of quantum and from this I concluded that the Insurer has agreed to pay the Applicant’s expenses in an amount to be determined here.

Secondly, Applicant’s counsel submits that I should attend, pursuant to Rule 75.2(b), to “any written offers to settle made in accordance with Rule 76.” In that regard he entered into evidence his letter of March 27, 2014 delivered to Respondent’s counsel pursuant to Rule 76 of the Code. In that letter he offers to settle the application for the total amount of “$31,419.48 plus Costs & Disbursements to be assessed or agreed upon.”

Applicant’s counsel also entered into evidence a copy of a Settlement Disclosure Notice in this matter, acknowledged by the parties on April 4, 2014, containing the Insurer’s Offer to Settle Benefits for the sum of $31,419.48.

It must be noted that while the quantum of the offer and of the subsequent settlement are identical, the allocation of the monies comprising those totals differ significantly between the offer and the disclosure notice. The Settlement Disclosure Notice allocates nothing toward Attendant Care or Housekeeping and Home Maintenance Benefits. The Applicant’s entitlement to these was disputed by the Insurer throughout.

Thirdly, Applicant’s counsel submits that I should attend, pursuant to Rule 75.2(c), to his submission that the Application raised a novel point of law, as follows: “the non-applicability of the definition of incurred expenses under s. 3(7)(e) of the Statutory Accident Benefits Schedule (post-September 1, 2010) to a claim involving a transitional automobile insurance policy that was renewed/purchased prior to September 1, 2010, with optional Housekeeping and Home Maintenance benefits and Caregiver benefits.”

I am not altogether satisfied that the issue is novel but I need not make a specific finding on that point insofar as the submission is weak for other reasons. First, the issue was never raised or argued in the context of an actual hearing. It seems to me that it cannot be the intended result of Rule 75.2(c) that the mere whisper of novelty can offer a “leg up” to a claimant in his claim for Expenses. Something more is required. Secondly, a review of the time records filed by the Applicant does not prima facie disclose any dockets for legal research.

Moreover, the Applicant’s third submission undercuts the force of his second. If, as is submitted, the availability of Housekeeping and Home Maintenance benefits raised a novel issue of law, the fact that the matter settled on the basis that no monies were allocated for such benefits suggests that counsel’s letter of March 27, 2014 was essentially a different offer than that which was ultimately accepted. I am not persuaded by the suggestion of Applicant’s counsel that the “alternate optics of the Settlement Disclosure Notice amounts to a mere difference in semantics…”

Respondent’s Submissions

The Respondent submits that the “conduct of the Applicant’s counsel tended to prolong, obstruct or hinder the proceeding through delayed productions and information and delayed settlement discussions.”

On the basis of the exhibits produced in evidence by the Respondent it would be open to me to conclude that there had been some foot-dragging on the part of the Applicant with respect to productions. That said, Respondent’s counsel took no steps to address these issues.

Rule 75.1(d) requires me to attend to “the conduct of a party or a party’s representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders.”

The Dispute Resolution Practice Code defines a proceeding, at section 4, as follows: “…a matter requiring the exercise of a statutory power of decision.”

With respect, it is not apparent that any delay in disclosure by the Applicant did anything other than delay settlement discussions between the parties. It did not, in my view, meet the test for delay of the “proceeding” contemplated by Rule 75.1(d) insofar as it had no apparent effect upon the exercise of a statutory power of decision.

Entitlement

I find that the Applicant shall be paid her expenses of the hearing insofar as I am satisfied that it was the intention of the parties that such expenses be paid to her. I am not prepared to grant any weight to the Offer to Settle served by the Applicant because I find, on the balance of probabilities, that it is not substantially similar to the terms of the settlement ultimately agreed between the parties. I am not satisfied on the basis of the time sheets filed by the Applicant that any additional expense was incurred in this matter with reference to or by virtue of the existence of a novel point of law. I am not satisfied that any delay attributable to the Applicant was sufficient to prolong, hinder or delay a “proceeding.”

Quantum of Expenses

Fees

The hearing was scheduled for four days. This was not a complex case. I note that an interpreter had been scheduled. Had the matter proceeded to a full hearing I am not satisfied that, in the normal course, it would have required more than three days to complete.

With respect to preparatory work prior to the hearing, given the nature of the issues in dispute I find that a ratio of about 2:1 (the ratio of preparation time to hearing time) is appropriate. I find that a reasonable number of total time for legal services in this case would be about 42 hours. At the appropriate Legal Aid rates, this would be equivalent to legal fees of approximately $5,000.00 (not including HST.)

No specific submissions were made by the Applicant with respect to costs for this expense hearing. Given that it proceeded by way of written submission such costs are in any event nominal and I will fix them in accordance with my discretion in the ultimate result.

Disbursements

A party to an arbitration proceeding at FSCO is only permitted to seek compensation for expenses of a type and in an amount permitted under the Expense Regulation.

The Applicant claims HST-exempt disbursements in the total amount of $1,019.00. I am satisfied that these disbursements are recoverable insofar as they represent the Application Fee and “other out-of-pocket expenses incurred in furtherance of the arbitration.”

The Applicant further claims Non-HST-exempt disbursements as follows:

Courier Services (Envoy Express)

67.32

The Printing house (Arbitration Brief)

138.70

All Languages (March 1 and March 5, 2014)

324.00

Korbiteck/ACL

85.00

Physical paper (3,072 pages at 0.30 c/page

921.60

Primafact (4,344 pages at 0.30 c per page)

1,303.20

Med-Legal Assessment by Dr. Mula

3,500.00

Med-Legal Assessment by Dr. Zarnette

2,000.00

CPS services (process server fee)

273.00

Total

8,612.82

Korbiteck/ACL and Primafact are web-based document services engaged for the convenience of counsel. I find that they are not properly recoverable as disbursements under the Expense Regulation and I accordingly disallow those specific disbursements.

The Expense Regulation also limits the amount recoverable for expert’s reports to $1,500.00. I accordingly find that the disbursement recoverable for Dr. Mula’s report is $1,500.00 and for Dr. Zarnette’s report a further $1,500.00. I am not satisfied on the basis of the available evidence that any abatement should be made with respect to these disbursements, as requested by the Respondent in her submissions.

I am satisfied that the remainder of the non-HST-exempt disbursements claimed by the Applicant (including the All Languages disbursement for interpretation services) are recoverable and will be paid. I find the amount recoverable for non-HST-exempt disbursements to be $4,724.00 plus HST in the amount of $614.12 for a total of $5,338.12.

The total amount recoverable by the Applicant for all disbursements is accordingly $6,357.12 ($1,019.00 + $5,338.12 = $6,357.12).

Total Expenses

Having considered the degree of complexity of this matter, the time spent, the applicable Legal Aid rates, the written submissions of the parties, the supporting documentation filed and the maximum amounts permitted under the Expense Regulation, I find it appropriate to fix the Applicant’s expenses at $12,250.00, inclusive of all fees, disbursements and any applicable taxes.

Conclusion

For the reasons set out above the Insurer shall be ordered to pay to the Applicant its expenses in respect of this arbitration proceeding, fixed in the amount of $12,250.00 (inclusive of fees, disbursements and any applicable taxes.)

October 17, 2014

James Robinson

Arbitrator

Date