Financial Services Commission des Commission services financiers of Ontario de l’Ontario
Neutral Citation: 2014 ONFSCDRS 27 FSCO A06-002426
BETWEEN:
ALAN BROOKES Applicant
and
AVIVA CANADA INC. Insurer
DECISION ON EXPENSES
Before: Jessica Kowalski Heard: January 4, 2013 by telephone conference call Appearances: David J. Gillespie for Mr. Brookes Susan Bromley for Aviva Canada Inc.
Issues:
This is a request for expenses arising from a hearing that proceeded before Arbitrator Ashby in 2008, in which she determined Mr. Brookes’ pre-accident earning capacity, residual earning capacity, and loss of earning capacity benefit. Mr. Brookes also sought interest on any outstanding benefits and an order for a special award. Each party sought an order for expenses.
Issues:
Is Mr. Brookes entitled to an award of expenses?
Is Aviva entitled to an award of expenses?
Result:
Mr. Brookes shall pay to Aviva expenses in the amount of $6,000.00.
Background
Mr. Brookes was injured in a motor vehicle accident on July 1, 1994. Aviva paid an income replacement benefit and then a loss of earning capacity benefit based on its calculation of Mr. Brookes’ pre-accident earning capacity and two residual earning capacity DAC reports. The dispute over the proper calculation of Mr. Brookes’ pre-accident earning capacity arose more than a decade after the accident. Throughout the duration of the dispute, Aviva paid loss of earning capacity benefits to Mr. Brookes based on its calculations, adjusting wherever necessary.
A preliminary issue arose as to whether Mr. Brookes’ pre-accident earning capacity ought to have been calculated on the basis that he was an employee on layoff, or employed at some point in the 156 weeks prior to the accident. Arbitrator Killoran held that Mr. Brookes’ pre-accident earning capacity was to be calculated as if he was employed at some point during the 156 weeks prior to the accident, pursuant to subsection 7(1)(2)(ii) of the relevant Schedule.1 Costs were awarded to Mr. Brookes.
Aviva retained PricewaterhouseCoopers to calculate Mr. Brooke’s pre-accident earning capacity, and then the quantum of his loss of earning capacity benefit. Mr. Bruce Webster of PWC relied on the two residual earning capacity DACs. When Aviva received Mr. Webster’s calculation of loss of earning capacity benefits, which differed from its own, Aviva paid the difference between the new calculation and what it had been paying to Mr. Brookes and paid the LECB determined by Mr. Webster on an ongoing basis pending the outcome of the arbitration.
At the arbitration hearing, Arbitrator Ashby agreed with Mr. Webster’s calculation of pre-accident earning capacity, and she agreed with the residual earning capacity that had been attributed to Mr. Brookes by both of the residual earning capacity DACs. As a result, she agreed with Mr. Webster’s calculation of loss of earning capacity benefits and denied Mr. Brookes’ request for a special award. Mr. Brookes was entitled to interest on any overdue payments of loss of earning capacity benefits. Mr. Brookes appealed and the appeal was dismissed.
Award of Expenses
Subsection 282(11) of the Insurance Act2 provides that:
282(11) the arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.
Rule 75 of the Dispute Resolution Practice Code (the “Code”) permits an arbitrator to award expenses to one party if satisfied that the award is just.
Section 12(2) of the Expense Regulation3 sets out an exhaustive list of the criteria to be considered in determining whether or not expenses should be awarded:
12(2) each arbitrator shall, under subsection 282(11) of the Act, consider only the following criteria for the purposes of awarding all or part of the expenses incurred in respect of an arbitration proceeding:
Each party’s degree of success in the outcome of the proceeding;
Any written offers to settle made in accordance with subsection (3);
Whether novel issues are raised in the proceeding;
The conduct of a party’s representative that intended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings or orders;
Whether any aspect of the proceeding was improper, vexatious or unnecessary;
Whether an insured person refused or failed to submit to an examination as required under section 42 of Ontario Regulation 406/93, Statutory Accident Benefits Schedule – Accidents on or after November 1st, 1996, or refused or failed to provide any material required to be provided by subsection 42(10) of that Regulation; and/or
Whether the insured person refused or failed to submit to an examination as required under section 44 of Ontario Regulation 34/10, Statutory Accident Benefits Schedule – effective September 1, 2010, or refused or failed to provide any material under subsection 44(9) of that Regulation.
APPLICATION TO THIS CASE
The only relevant criterion in this case is degree of success. There were no formal offers to settle exchanged that would meet the requirements of Rule 76 of the Code. I find no evidence of inappropriate conduct or other relevant consideration under the Expense Regulation.
Aviva was entirely successful on all of the substantive issues in dispute in the arbitration.
Mr. Brookes did not submit any accounting evidence. He relied on the evidence of Joel Kumove, a rehabilitation counselor, who testified what Mr. Brookes’ pre-accident earning capacity would be given his personal and vocational characteristics at the time of the accident. Arbitrator Ashby did not accept Mr. Kumove’s calculations.
Mr. Brookes also argued that the amounts in dispute should be calculated by way of comparison with his brother, who is one year younger and in the same profession.
It is Mr. Brookes’ position that this constitutes a novel issue. I disagree. Arbitrator Asbhy found that Mr. Brookes’ work history was different when compared to that of his brother for the 156-week period prior to the accident. Although they were both journeymen insulators at the time of the accident, she found the comparison of the two brothers unreliable.
I disagree that any of the issues in the arbitration, the preliminary issue or the appeal were novel.
In the arbitration, the key legal issue was how Mr. Brookes’ pre-accident earning capacity ought to be calculated and what evidence was properly considered in making that determination. The law itself with respect to what information should be taken into account and how pre-accident earning capacity should be calculated was well established, and I find that the calculation of Mr. Brookes’ residual earning capacity was primarily a question of fact.
Although comparing Mr. Brookes’ work history to that of his brother might have been novel as a means of calculation, if only because the brothers were, by coincidence, in the same trade, the legal issue itself (i.e. the calculation of pre-accident earning capacity) was not novel.
The expenses related to the appeal and to a preliminary issue hearing have been dealt with separately. The expenses claimed are in accordance with the hourly legal aid rates prescribed. The arbitration was concerned primarily with a question of fact and raised no novel issue of law. The facts might have been unique in that Mr. Brookes had a brother who was a journeyman insulator too, but that fact did not mean that the legal issue was novel.
Because Aviva was entirely successful, it is therefore entitled to its expenses pursuant to the criteria set out in the Expense Regulation.
Aviva claims $11,897.10 in expenses related to the arbitration hearing. This is after expenses associated with the preliminary issue hearing and appeal are deducted from its bill of costs and is made up of the following:
$9,504.29 for lawyers’ time
$253.14 associated with preparing costs submissions
$680.76 in non-travel related disbursements which have been waived.
The claim for time is summarized as follows, using paragraphs 1 – 4 of the insurer’s bill of costs, which deal with the arbitration only (i.e. excluding the preliminary issue and appeal hearings).
34.15 hours for Susan Bromley (called 1997)
51.30 hours for Joseph Griffiths (called 2002)
13.6 hours for a student
50.9 hours for a paralegal
The hourly rates claimed are in accordance with the hourly rates established under the Legal Aid Services Act, 1998, which are the maximum allowable rates ordered by the Commission. Because this matter has been ongoing for a long time, Aviva states that the hourly rates change over time.
The general approach with respect to fees is to take a pragmatic, broad-strokes approach, with a view to fixing an amount that is reasonable.4 This includes taking into account the length of the proceeding and the complexity of the issues, and frequently involves applying a ratio of pre-hearing preparation time to hearing time in the range of 1:1 to 4:1.5 The issues in this case were not novel or complex, and the law was settled.
Because the issues in this hearing were neither complex nor novel, I felt a ratio of 2 hours preparation time to 1 hour of hearing time is appropriate. Accordingly, using criterion (1) of subsection 12(2) of the Expense Regulation, Aviva is entitled to its expenses of the arbitration totaling $6,000.00.
February 14, 2014
Jessica Kowalski Arbitrator
Date
Financial Services Commission des Commission services financiers of Ontario de l’Ontario
Neutral Citation: 2014 ONFSCDRS 27 FSCO A06-002426
BETWEEN:
ALAN BROOKES Applicant
and
AVIVA CANADA INC. Insurer
ARBITRATION ORDER
Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:
- Mr. Brookes shall pay to Aviva its expenses in the amount of $6,000.00.
February 14, 2014
Jessica Kowalski Arbitrator
Date
Footnotes
- The Statutory Accident Benefits Schedule — Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended.
- R.S.O. 1990, c.I.8
- Ontario Regulation 664, R.R.O. 1990
- Ragulan and Security National Insurance Co./Monnex Insurance Management Inc., (FSCO A05-0002940, July 16, 2008); See also Henri and Allstate Insurance Company of Canada, (OIC A-007954, August 8, 1997)
- See, for example, Soobrian and Belair Insurance Company Inc., (FSCO A04-000422, February 7, 2006)