Velluppillai Thanikasalam v. State Farm Mutual Automobile Insurance Company, 2015 ONFSCDRS 71

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2015 ONFSCDRS 71

FSCO A12-000791

BETWEEN:

VELLUPPILLAI THANIKASALAM

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: Arbitrator John Wilson

Heard: By written submissions received on July 16, 2014.

Appearances: David Carranza for Mr. Thanikasalam

Jonathan Schrieder for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Velluppillai Thanikasalam, was injured in a motor vehicle accident on October 26, 2008. In a decision dated November 2, 2013, I dealt with his claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

Mr. Thanikasalam's claims are dismissed.
State Farm is entitled to its expenses in this matter.
State Farm shall provide both Mr. Thanikasalam and me with a brief expense outline detailing what it is claiming as reasonable expenses, within 30 days.

The issue in this further hearing is:

What is the amount of expenses payable by Mr. Thaniksalam?

Result:

Mr. Thaniksalam shall pay to State Farm $6264.50 as its fixed expenses in this matter.

EVIDENCE AND ANALYSIS:

Although this hearing was unusual in that Mr. Carranza was not permitted to withdraw as counsel of record for Mr. Thaniksalam and was ordered to proceed with the hearing notwithstanding Mr. Thaniksalam’s absence, no-one has suggested that the expenses claimed by

State Farm should be payable by anyone other than Mr. Thaniksalam, the person who brought this arbitration and later, apparently abandoned it without notice to either his counsel or the Insurer.

From the beginning of the arbitration process State Farm had advised that its claim for its expenses was an issue that would be before the arbitrator at any arbitration. Mr. Thanilsalam had every reason to expect that his failure to attend at the arbitration could result in all issues, including that of expenses being decided against him.

Mr. Carranza, Mr. Thaniksalam’s counsel of record who was present for the hearing, made no objection to the issue of expenses being dealt with at the time of the hearing. Consequentaly, after requesting submissions from counsel present, I dealt with the issue of whether and by whom any expenses would be ordered payable.

The Dispute Resolution Practice Code (the "Code") at Rule 75 sets out the criteria for the award of expenses in a dispute between and Insured and his or her Insurer.

Award of expenses 75.1 An adjudicator may award expenses to a party if the adjudicator is satisfied that the award is justified having regard to the criteria set out in Rule 75.2. The items and amounts which may be awarded are found in Rule 78 and the Schedule to the Expense Regulation found in Section F of the Code. 75.2 The adjudicator will consider only the criteria referred to in the Expense Regulation found in Section F of the Code. These criteria are:

(a) each party's degree of success in the outcome of the proceeding; (b) any written offers to settle made in accordance with Rule 76; (c) whether novel issues are raised in the proceeding; (d) 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; (e) whether any aspect of the proceeding was improper, vexatious or unnecessary. (f) 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; and (g) 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.

Relevant to my expense decision were sections 73.2 (a), (d), and (e.) of the Code. State Farm was successful on all fronts and due consideration should be given to the maxim that costs generally follow the cause (section 73.2(a)).

If Mr. Thaniksalam had second thoughts about his claim, he should have taken steps to withdraw it in a timely manner. Mr. Thaniksalam simply not turning up without notice put State Farm in the unenviable position of having to prepare for a hearing and needlessly expending resources to be ready to deal with his claim. This conduct implicates both (d) and (e) since it “tended to prolong, obstruct or hinder the proceeding" and indeed could be characterized as "vexatious”.

Section 7(1) of the Statutory Powers Procedure Act ² which governs hearings at the Commission reads as follows:

Effect of non-attendance at hearing after due notice

7.(1) Where notice of an oral hearing has been given to a party to a proceeding in accordance with this Act and the party does not attend at the hearing, the tribunal may proceed in the absence of the party and the party is not entitled to any further notice in the proceeding.

By failing to appear at the hearing, Mr. Thaniksalam waived the right to be notified of any further notice in this proceeding, including notice of any further stages in this arbitration. This expense hearing is such a “further step”.

However, notwithstanding section 7(1) I requested that State Farm serve and file its bill of costs, and gave Mr. Thaniksalam notice of his right to file submissions as to the issue of expenses. Given the curious disappearance of Mr. Thaniksalam from this process, fairness would be enhanced by giving him an opportunity to speak to the issue of the amount he would have to pay to the Insurer as compensation for its expenses incurred in defending this claim.

Although State Farm’s materials indicate that its counsel’s Bill of Costs was served personally on Mr. Thaniksalam, he still did not bother to respond to their claim for expenses.

Reisler Franklin LLP, counsel for State Farm has claimed a total of $6,705.11 as fees and disbursements including H.S.T.

While arbitrators do not generally review a Bill of Costs on a line by line basis, there are some general approaches that are accepted for awards of expenses at the Commission.

The first is that costs or expenses should be based on the prevailing legal aid tariff with appropriate adjustments for experience as provided for in the tariff.

There is, however a limited exception to this rule.

Rule 78.1 of the Code provides that; “Where an adjudicator is satisfied that a higher amount for legal fees to an insured person is justified, an hourly rate of up to$150may be awarded.”

It is of some note that the Code refers to an “insured person”. While Mr. Schrieder may well be an insured person in some other context, as counsel for State Farm, he does not meet the definition of Rule 78.1, which is a precondition to an enhanced hourly rate. Mr. Schrieder has billed his work at $150 an hour, a modest amount in a world where counsel may bill their clients in multiples of that amount.

However to claim under this exceptional rate is at best ingenuous on the part of Mr. Schrieder.

At the very least, this amount exceeds the legal aid tariff, even accounting for an experience bonus due to Mr. Schrieder’s years of experience in the personal injury bar.

Since apparently Mr. Schrieder was called to the bar in 2000, at the time of the hearing he had some thirteen years of experience. With more than ten years' experience, Mr. Schrieder would be entitled to Tier 3 rates which at the time would be $136.11 per hour. That would be a difference of some $14 per hour for time billed by Mr. Schrieder. Over a total of some 26.2 hours billed, Mr. Schrieder would have overbilled $336.00 (including HST) which should be deducted from his total claimed.

Furthermore, Mr. Schrieder has billed a further unsupported travel expense for attendance at the hearing. This disbursement is unsupported and is not particularized in any manner. Without more information and some justification I find that it is not appropriate.

The remaining fees and disbursements I find to be appropriate and even moderate for the conduct of litigation that went to the hearing stage. Therefore I find that Mr. Thaniksalam shall pay to State Farm $6,264.50 as its fixed expenses in this matter.

April 10, 2015

John Wilson, Arbitrator

Date