John Cook v. RBC General Insurance Company, 2015 ONFSCDRS 215

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2015 ONFSCDRS 215

Appeal P14-00038

OFFICE OF THE DIRECTOR OF ARBITRATIONS

JOHN COOK Appellant

and

RBC GENERAL INSURANCE COMPANY Respondent

BEFORE: Delegate Lawrence Blackman

REPRESENTATIVES: Ms. Samia M. Alam for the Appellant, Mr. John Cook Ms. Anju Sharma for the Respondent, RBC General Insurance Company

HEARING DATE: By written submissions due October 16, 2015

APPEAL EXPENSE ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The Respondent, RBC General Insurance Company, shall pay the Appellant, John Cook, his legal expenses of this appeal fixed in the amount of $7,900.42, inclusive of all fees, disbursements and HST.

October 23, 2015

Lawrence Blackman Director’s Delegate Date

REASONS FOR DECISION

I. BACKGROUND AND ANALYSIS

My May 4, 2015 decision in this matter held:

Upon an arbitrator adding catastrophic impairment as an issue in this arbitration, paragraph 1 of the Arbitrator’s September 18, 2014 order is rescinded and replaced by an order that the Respondent, RBC General Insurance Company, shall pay the Appellant, John Cook, the sum of $6,780 as interim legal expenses pursuant to subsection 282(11.1) of the Insurance Act.

If the parties could not agree on the legal expenses of the appeal, an appeal expense hearing was to be requested within sixty days of the decision date.

The Respondent filed for Judicial Review on June 30, 2015. I am advised that no date has been set for the hearing. I am further advised that at the July 10, 2015 arbitration pre-hearing resumption, over the Respondent’s objection, Arbitrator Muzzi added the issue of catastrophic impairment to the arbitration proceeding.

Counsel sought to defer the question of appeal expenses to the conclusion of the Judicial Review.

Bill 15, Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, Schedule 3, section 14, repealed sections 279 to 288 of the Insurance Act, R.S.O. 1990, c. I.8 on a day to be named by proclamation of the Lieutenant Governor. Section 283 sets out the authority of this Appeals Unit. Thus, my July 9, 2015 letter stated:

The difficulty with [the suggestion to defer the issue of appeal expenses] is that I do not presently know whether this Appeals office and/or this Dispute Resolution Group of the Commission will still be in existence following the judicial review of the appeal decision or, if they are, what their mandate may still include.

Accordingly, the Appellant filed an August 20, 2015 Bill of Costs. The Appellant claims 70.6 hours, at $116.93 an hour (for a 2009 year of call), plus HST, as well as $650.42 in disbursements, for a total of $9,978.88. The Appellant, however, notes Rule 78.1 of the Dispute Resolution Practice Code (Fourth Edition, Updated – January 2014) (the “Code”), that a higher hourly rate of up to $150 may be awarded to an insured person where the adjudicator is satisfied that is justified.

The Respondent does not seek its legal expenses of this appeal.

The Appellant submits that he is entitled to his appeal expenses, first, as he was successful in the December 18, 2014 preliminary appeal decision accepting, pursuant to the discretion allowed by Rules 50.2 and 51.2(c) of the Code, this appeal from the Arbitrator’s September 18, 2014 decision on a motion.

Second, the Appellant was successful in the May 4, 2015 decision overturning the Arbitrator’s September 18, 2014 decision, albeit $6,780 being awarded rather than the $12,960 claimed. The Appellant argues the issues on appeal were entirely novel, pertaining to interim legal expenses of catastrophic reports under the Statutory Accident Benefits Schedule — Effective September 1, 2010, Ontario Regulation 34/10, as amended.

The Respondent’s September 25, 2015 expense submissions, at paragraph 7, state that the “Respondent agrees that the Appellant is entitled to his legal expenses.” Applying the criteria in Rule 75.2 of the Code, specifically the Appellant’s degree of success and the novel issues raised in the proceeding, I concur that the Appellant is entitled to his reasonable legal expenses of this appeal.

The Appellant submits that the novelty and general importance of the issues on appeal warrant the significant hours of preparation, at a minimum, at the Tier 2 Legal Aid rates.

The Respondent does not dispute the claimed disbursements of $650.42. These disbursements include the $250 filing fee and $261 for photocopying. I find that these disbursements come within section 4 of the Schedule to R.R.O. 1990, Reg. 664, made under the Insurance Act, as amended, were incurred in furtherance of the appeal and are reasonable. I allow same.

The Respondent cites Henri and Allstate Insurance Company of Canada, (OIC A- 007954, August 8, 1997), that in assessing legal expenses at the Commission, a “pragmatic, broad-stroke approach rather than a line-by-line assessment is frequently favoured.” I agree.

The Respondent submits there is no reason to depart from the Henri arbitration approach using a ratio of 1:1 to 4:1 for preparation to hearing time for this appeal. I do not agree.

Delegate Evans, in Rooz and Certas Direct Insurance Company, (FSCO P07-00017, November 18, 2009), held:

I agree with the comment by Director’s Delegate Blackman in Mr. C and Kingsway General Insurance Company, (FSCO P08-00025, September 18, 2009) that ratios in appeals are of limited assistance, given that the bulk of work done in appeals goes to preparing written submissions for relatively short oral submissions and that brevity may in fact reflect a considerable amount of work.

The Respondent submits:

1. Although the singular issue in this appeal may be novel, the half-day hearing did not require voluminous material nor were there transcripts.

2. The amount in dispute was modest.

3. Bains and RBC General Insurance Company, (FSCO P09-00005, September 8, 2010), found that the average appeal expense award was $4,733.58 where expenses were awarded to insured persons (reflecting a higher allowed hourly rate) and $2,812.91 where expenses were awarded to insurers.

4. There is no reason to award an increased hourly rate of $150 to the Appellant.

5. Twenty hours, at $116.93 an hour, for legal fees, for a total award of $3,293.04 inclusive of disbursements and HST, is fair and reasonable and is in accord with Bains.

However, I am satisfied that an hourly rate of $150 for Ms. Alam, counsel for the Appellant, is entirely justified. Ms. Alam was thoroughly professional, extremely well prepared and, as set out in Principles 62 to 64 of the Advocates’ Society’s Principles of Civility for Advocates, by training and experience and with “candour, fairness and courtesy” was most competent to handle this matter and assist doing justice to the case.

Further, as the Appellant notes, in State Farm Mutual Automobile Insurance Company and Blakely, (FSCO P12-00005, September 20, 2012), I awarded the respondent in that case $3,000 where only a preliminary decision was issued that rejected the appeal. In Royal & SunAlliance Insurance Company of Canada, (FSCO P15-00009, June 2, 2015), I awarded the respondent $4,317.64, again, solely for a preliminary decision rejecting the appeal.

In this case, as the Appellant notes, he was successful not only in the preliminary appeal decision allowing this appeal from a preliminary or interim arbitration decision to proceed, but in the final appeal decision in having the Arbitrator’s order rescinded.

Third, although the amount in dispute, $6,780, is relatively modest and the legal costs on judicial review (as noted below) will likely be higher, the Respondent thought the matter important and novel enough to warrant applying for judicial review.

In Simser v. Aviva Canada et al., 2015 ONSC 2363, a judicial review of a decision from this office, the Divisional Court awarded the Respondent insurer $7,500 inclusive in costs of the application. In The Guarantee Company v. Dong Do et al., 2015 ONSC 1891, also arising from a FSCO appeal decision, the Court awarded the Respondent insured $11,000.

State Farm Mutual Automobile Insurance Company and Federico, 2014 ONSC 109 (CAN LII), awarded the Respondent insured $10,747.17. Security National Insurance Company v. Hodges, 2014 ONSC 3627, awarded the Respondent insured $12,000 all-inclusive.

I take into account the overriding consideration of reasonableness, as well as proportionality to the importance of the issue in dispute to the parties and to other first-party claims and the complexity of this novel issue. While the allowable hourly rates are more modest at the Commission, much of the preparation for judicial review at the Divisional Court will have already been completed at this stage.

I allow the Appellant his legal expenses of this appeal fixed in the amount of $7,900.42, inclusive of all fees, the $650.42 in disbursements and HST.

October 23, 2015

Lawrence Blackman Director’s Delegate Date