Neutral Citation: 2015 ONFSCDRS 157 FSCO A12-007868

BETWEEN:

KHALED SALEH Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Robert Bujold Heard: Written submissions received by March 13, 2015 Appearances: Diana Colangelo for Mr. Saleh John P. Desjardins and Ms. Bita M. Rajaee for State Farm Mutual Automobile Insurance Company

Background:

The Applicant, Khaled Saleh, was injured in a motor vehicle accident on July 24, 2009. In a decision dated December 18, 2014, I dealt with Mr. Saleh’s claim for weekly caregiver benefits. For the reasons stated in my decision, I dismissed Mr. Saleh’s application for arbitration, while reserving on the issue of expenses.

The parties were unable to reach agreement on the issue of expenses, and I was requested to determine the issue.

Issue:

Is State Farm entitled to its expenses of the arbitration proceeding and, if so, in what amount?

Result:

State Farm is entitled to its expenses of the arbitration proceeding in the amount of $6,950.00 inclusive of fees, disbursements and H.S.T.

EVIDENCE AND ANALYSIS:

Entitlement to Expenses

The criteria for awarding expenses in respect of an arbitration proceeding are prescribed by subsection 12(2) of O. Reg. 664 (the Expense Regulation), which provides as follows:

An 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 or a party's representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders.

Whether any aspect of the proceeding was improper, vexatious or unnecessary.

Whether the insured person refused or failed to submit to an examination as required under section 42 of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996) made under the Act or refused or failed to provide any material required to be provided by subsection 42 (10) of that regulation.

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), made under the Act, or refused or failed to provide any material required to be provided under subsection 44 (9) of that regulation.

The only criteria relevant in this case are items 1 (degree of success) and 2 (offers to settle).

With respect to item 1, the parties agree that State Farm was entirely successful at arbitration.

With respect to item 2, State Farm made an offer to settle that it served on Mr. Saleh approximately three weeks prior to the commencement of the hearing. The offer, contained in correspondence dated June 19, 2014, provided for “payment of the all-inclusive sum of $10,000.00 in exchange for a Full and Final Release.” The offer was open for acceptance until 5:00 p.m. the following day, June 20, 2014, after which “the offer is automatically reduced to $5,000.00 all-inclusive in exchange for a Full and Final Release.” There was no mention in the letter regarding the time period during which the “secondary offer” of $5,000 would remain open for acceptance. Counsels’ submissions focus on whether the offer met the requirements of Rule 76 and, if so, what weight the offer should be given, since it sought to resolve Mr. Saleh’s entire accident benefits file and not just the arbitration proceeding.

While the parties raised some interesting issues around the interpretation of Rule 76 and the implications of making an offer to settle on a full and final basis, I am satisfied that item 1 (degree of success) alone entitles State Farm to its reasonable expenses of the arbitration. A finding that State Farm made an offer in accordance with Rule 76 would only bolster that conclusion. I therefore do not find it necessary to examine whether the offer, and in particular the “secondary offer,” meets the requirements of Rule 76; although I note that, even if it does, offers that seek to resolve matters on a full and final basis are frequently given little or no weight.¹

Quantum of Expenses

Fees

In determining the appropriate quantum of expenses, the objective is to fix an amount that is fair and reasonable given the number of issues, their complexity and the amounts in dispute.² In so doing, a pragmatic, broad-stroke approach (rather than a line-by-line assessment) is frequently favoured using a ratio in the range of 1:1 to 4:1 for pre-hearing preparation time to hearing time.³ I see no reason to depart from that approach in this case and, for the reasons that follow, I find a ratio of 2:1 is appropriate.

State Farm submitted a Bill of Costs claiming fees of $12,736.05.

State Farm maintains that the amount claimed for fees is modest, given the exposure it faced in this case. In that regard, State Farm noted that the two children for whom Mr. Saleh had claimed caregiver benefits were quite young (3 and 6 years old at the time of the accident), and State Farm’s exposure to caregiver benefits (if payable until each child turned 16 years of age) was approximately $195,000 exclusive of interest.

While Mr. Saleh claimed caregiver benefits on an ongoing basis in his Application for Arbitration, the claim was limited to 104 weeks at the pre-hearing.⁴ I also confirmed at the commencement of the hearing that the claim for caregiver benefits was limited to 104 weeks. Further, at no point during the hearing was it put forward that Mr. Saleh had sustained a complete inability to carry on a normal life, which is a prerequisite to claiming caregiver benefits beyond 104 weeks. Therefore, the maximum exposure to caregiver benefits in this case was $31,200 ($300/week x 104 weeks), not $195,000.

In its reply submissions, State Farm also maintains that this was not a straightforward case (even though it dealt with a single issue) because Mr. Saleh claimed that he split caregiver duties equally with his wife. This raised the question of whether a person who shares equally in childcare duties can be found to be “the primary caregiver” for the purpose of claiming caregiver benefits under the Schedule. I agree that this was an interesting question, and counsel for both parties advised me that there was no case law on point. However, apart from some allowance for legal research at the pre-hearing stage, it was not something that added any complexity or time to the hearing itself.⁵

I also note that State Farm was represented by two counsel at the hearing (Mr. Desjardins, senior counsel, and Ms. Rajaee, junior counsel), and sought its expenses for both. While there is nothing inappropriate or unusual about having two representatives, I am not satisfied, for the reasons already stated, that the concurrent involvement of two counsel was necessary in this case or something that Mr. Saleh should have to pay for.

In conclusion, I find that this was a relatively straightforward, single issue arbitration hearing. With this in mind, and given the amount in dispute, I find a ratio of 2:1 (preparation time to hearing time) is appropriate. In arriving at this ratio, I have taken into account some extra time for legal research, and I have also taken into account the fact that a small claim for housekeeping (approximately $900) was not resolved until the morning of the first day of the hearing.

The hearing itself took place over two days. I estimate about 14 hours of hearing time. At a ratio of 2:1, I award a total of 42 hours for fees. While I am not prepared to award fees for two counsel, I am prepared to apply the Tier 3 Legal Aid rate claimed for Mr. Desjardins ($117.85 per hour) to all 42 hours. The result is fees of approximately $4,950. Taking into account H.S.T., I fix fees at $5,600.00.

Disbursements

Permissible disbursements and maximum amounts are provided for in the Schedule to the Expense Regulation.

State Farm claims disbursements of $7,175.85.

Of the amount claimed for disbursements, $3,000 represents State Farm’s filing fee, and $870.10 represents its costs of having a court reporter attend at the hearing. These disbursements are not recoverable. While the filing fee may be awarded where an applicant has refused or failed to submit to an insurer’s examination, or refused or failed to provide material required for an insurer’s examination,⁶ there is no evidence that those circumstances apply here. As for reimbursement of court reporter fees, this is not provided for in the Schedule, and it is an item that has been consistently refused.⁷ I refuse it in this case as well.

State Farm’s Bill of Costs also includes $2,878.00 for “Witness Conduct Money – Dr. Oshidari.” I take “conduct money” to mean money paid to Dr. Oshidari to have him attend the hearing. Subsection 5(3) of the Schedule to the Expense Regulation provides that “the maximum amount that may be awarded for the attendance of an expert witness is $200 per hour of attendance, up to a maximum of $1,600 per day.” I allow approximately 4 hours for Dr. Oshidari’s attendance, and I fix the amount for this item at $900.00 inclusive of H.S.T.

The balance of State Farm’s disbursements are reasonable and permissible, and I fix them at $450.00 inclusive of H.S.T.

Conclusion

Having considered the applicable criteria in the Expense Regulation, as well as State Farm’s Bill of Costs in relation to the complexity of this matter, the amount at issue, and the permissible items and maximum amounts provided for in the Schedule to the Expense Regulation, I find that State Farm is entitled to its expenses of the arbitration proceeding, fixed in the amount of $5,600.00 for fees and $1,350.00 for disbursements, for a total amount of $6,950.00 inclusive of H.S.T.

July 21, 2015

Robert Bujold Arbitrator

ARBITRATION ORDER

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

Mr. Saleh shall pay State Farm its expenses of this arbitration proceeding, fixed in the amount of $6,950.00 inclusive of fees, disbursements and H.S.T.