Financial Services Commission of Ontario

Neutral Citation: 2016 ONFSCDRS 192

FSCO A12-006704

BETWEEN:

(JAMES) RONALD KIDDER Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Arbitrator Marshall Schnapp

Heard: By written submissions due May 24, 2016

Appearances:

Ms. Georgiana Masgras on behalf of Mr. (James) Ronald Kidder Mr. Nicholaus de Koning on behalf of Economical Mutual Insurance Company

Issues:

The Applicant, Mr. (James) Ronald Kidder, was injured in a motor vehicle accident on February 7, 2009 and sought accident benefits from Economical Mutual Insurance Company (“Economical”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Mr. Kidder, through his representative, applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

The issue in this Expense Hearing is:

1. Pursuant to section 282(11) of the Insurance Act, is either party liable to pay the opposing party’s expenses in respect of the Arbitration proceeding and, if so, in what amount?

Result:

1. The Applicant is liable to pay to the Insurer its expenses in respect of the Arbitration proceeding, fixed in the amount of $18,892.61 (inclusive of all fees, disbursements, and any applicable taxes).

EVIDENCE AND ANALYSIS:

Background

Mr. Kidder made numerous claims against Economical arising from an accident that occurred on February 7, 2009. In his Application for Arbitration, Mr. Kidder claimed the following: catastrophic impairment status, income replacement benefits, medical benefits in the amount of $5,331.62, cost of examinations in the amount of $7,105.64, attendant care benefits, housekeeping and home maintenance benefits, and a special award. Mr. Kidder withdrew his claim for income replacement benefits at the start of the Hearing on June 23, 2014.

The issues in dispute proceeded to Arbitration and were heard by me, in-person on June 23, 24, 25, 26, 27, 2014; by teleconference on September 19, 2014; and by written submissions on September 24, 2014.

It should also be noted that on July 8, 2014, Mr. Kidder attempted to bring a Motion for interim benefits after the close of viva voce evidence and before closing written submissions were received, but which I refused to hear based on Rule 1.1 of the Dispute Resolution Practice Code, in that it would not be the most just, quickest and least expensive resolution of the dispute.

My decision, dated December 19, 2014, found that Mr. Kidder was successful on three claims only. He was awarded medical benefits in the amount of $5,331.62 for psychological treatment provided by Assurance Medical Services, in respect of two Treatment Plans. As well, Mr. Kidder received $1,788.32 for a Psychological Assessment, dated November 26, 2009. All of his other claims were dismissed for the reasons outlined in my decision. Pursuant to Rules 75-79 of the Dispute Resolution Practice Code, the parties were given 30 days to request adjudication of expenses of the Arbitration proceeding.

On January 13, 2015, counsel for the Insurer requested an Expense Hearing. Before the Hearing was scheduled, the Applicant appealed my decision. Eventually, on January 28, 2016, the decision was upheld on appeal. After the appeal was concluded, the Insurer wrote again to request a determination of the issue of expenses. Written submissions were received from both parties and this decision is based on those submissions.

Position of the Parties

Economical

The Insurer takes the position that the Applicant was almost entirely unsuccessful with his claims and the only issue on which he was successful was the claim for $5,331.62 for psychological treatment. Prior to the Arbitration Hearing, the Applicant claimed to be incapacitated as evidenced by his claim for 24 hours a day and seven days a week of attendant care benefits. According to the Insurer, if the Applicant had been successful with all his claims, the past and future value of statutory accident benefits may have been worth hundreds of thousands or millions of dollars. Based on this, the Insurer takes the position that it must be considered entirely successful in this matter.

The Insurer relies on the following FSCO Arbitration Decisions, which were reviewed by me in support of their claim for expenses: Pembridge Insurance Company and Howden (FSCO Appeal P02-00031), May 17, 2004; Qureshi and State Farm Mutual Automobile Insurance Company (FSCO A08-000116), April 13, 2010; Goncharik and State Farm Mutual Automobile Insurance Company (FSCO A12-003770), March 27, 2015; and Moser and Guarantee Company of North America (FSCO A13-000812), September 26, 2014.

The Insurer is also arguing that there were numerous instances of conduct of either Mr. Kidder and/or his counsel that tended to prolong, obstruct and hinder the proceeding. Such instances included bringing three interim benefit motions that according to the Insurer were ill-conceived. Another example was the necessity for three resumptions of the Pre-Hearing due to the Applicant’s failure to produce documents and comply with orders.

The Insurer provided its counsel’s docket and disbursement list. Using the rates allowable under the Expense Regulation, the Insurer is claiming $14,339.45 in legal fees, inclusive of HST and $4,924.31 for disbursements, and another $1,000.00 in legal fees for closing submissions for a total of $22,127.89.

Mr. Kidder

In his submissions, Mr. Kidder notes that three motions for interim befits were put forth due to financial, physical and emotional hardship. Mr. Kidder takes the position that he was well within his rights to seek relief, regardless of how much time and effort resulted for the Insurer to respond.

Mr. Kidder also takes the position that the multiple resumptions were due to a number of different counsel representing him, mental health concerns, and that the two resumptions requested by the Insurer to deal with productions were not necessary as counsel was working diligently to provide them.

Mr. Kidder’s submissions did not comment on the amounts being claimed by Economical, or the three decisions being relied upon by Economical and did not provide any decisions for my consideration.

Entitlement to Expenses

Keeping in mind the criteria outlined in Rule 75 of the Dispute Resolution Practice Code that I am to consider in awarding expenses, the only two that I find relevant are (1) each party’s degree of success and (4) conduct of a party or party’s representative resulting in behaviour that prolonged, obstructed or hindered the proceeding, including failure to comply with undertakings and orders.

Dealing with the conduct matter first, I find that overall the conduct of Mr. Kidder through his counsel did prolong and hinder the proceedings. And while I agree with Mr. Kidder’s submissions that he is entitled to instruct his counsel to do whatever he feels necessary, he also has to be prepared to deal with the cost consequences if the relief sought is not awarded and if the steps taken result in prolonging and hindering the proceedings. I find that the multiple interim benefit motions and the multiple resumptions due to the lack of productions provided by the Applicant prolonged and hindered the proceedings.

I now turn now to the most important factor in determining the entitlement to expenses in this case – each party’s degree of success. Mr. Kidder’s claims in his Application for Arbitration were potentially worth in the millions of dollars. At the end of the Hearing, my decision awarded $5,331.62 in medical benefits and $1,788.32 for a cost of examination for a total of $7,119.94 plus interest. Given the above, it is clear that Economical was predominantly successful in the current Arbitration proceeding and thus entitled to its reasonable expenses related to this proceeding. However, I do recognize that Mr. Kidder was awarded some benefits and will take that into account when exercising my discretion in determining the appropriate amount of expenses.

I note in the Qureshi and State Farm² decision provided by Economical, Arbitrator Lee awarded approximately 50% of the legal fees and allowable disbursements to the Insurer. However in Qureshi, there were less issues in dispute and the total amount of the potential value of the claims was significantly less than the claims being advanced by Mr. Kidder.

Quantum

The actual in-person Hearing ran over 5 days from June 23 to June 27, 2016. According to Economical’s submissions, there was 29.70 hours of Hearing time. I believe this is accurate. Seven witnesses provided testimony: Mr. Kidder, Mrs. Kidder, Dr. Rosenblat, Ilicia Simmons (a Child and Family Therapist and Psychometrist), Barbara Anschuetz (a Psychotherapist), Dr. Stokl, and Dr. Luczak. The outcome of this case revolved largely on my findings that both Mr. and Mrs. Kidder were not credible witnesses.

Economical is seeking 104.30 hours for its legal counsel’s time and 25.30 hours for a legal clerk’s time at the allowable rates, that is, $14,339.45 plus HST for a total of $16,203.58. As well, Economical is requesting an additional $1,000.00 for time related to the preparation of the written closing submissions.

I note that the Applicant did not provide me with a docket or Bill of Costs for his counsel, so I am unable to compare the amount of hours spent by the respective counsel.

It is established case law that 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. A broad-stroke approach rather than a line-by-line assessment is frequently chosen by adjudicators using a ratio in the range of 1:1 to 4:1 for Pre-Hearing preparation time to Hearing time.³

I believe this is the appropriate approach in this case. Given my findings, the relevant criteria, and due to Mr. Kidder being awarded some medical and rehabilitation benefits, I find the ratio of 3:1 is appropriate.

Thus the Insurer is entitled to 118.80 hours (104.30 hours will be at the allowable rate for counsel of $129.93 and the remaining 14.5 hours will be at the allowable rate for a clerk of $30.82 as per breakdown of the legal fees in the docket). Thus Economical will receive $13,998.59 plus HST for a total of $15,818.41.

With respect to disbursements, I note Economical provided a breakdown of those being claimed. Mr. Kidder did not make any submissions on the disbursements being claimed. From my review of the list, I believe $2,750.55 is excessive for photocopies and will reduce that to $1,000.00. I also note that mileage is being claimed, which is permissible, but $99.56 is also being claimed for toll expenses for using Highway 407. I do not think that disbursement is reasonable. Therefore I will allow $3,074.20 for disbursements.

EXPENSES:

Having considered the degree of success of each party, the duration of the proceeding, the reasonable amount of legal services that can be claimed, the applicable Legal Aid Rates, the written submissions of the parties, the supporting documentation filed and the maximum amounts permitted under the Expense Regulation, for the reasons set out above, I find it appropriate to fix Economical’s expenses at $18,892.61 (inclusive of all fees, disbursements, and any applicable taxes) and to order Mr. Kidder to pay this amount to Economical.

July 18, 2016

Marshall Schnapp Arbitrator

Date

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c. I.8, as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Ontario Regulation 664, as amended, it is ordered that:

1. Mr. Kidder shall pay Economical Mutual Insurance Company its expenses in respect of the Arbitration proceeding, fixed in the amount of $18,892.61 (inclusive of all fees, disbursements, and any applicable taxes).

July 18, 2016

Marshall Schnapp Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule – Accidents on or after November1, 1996, Ontario Regulation 403/96, as amended.
2. 2Qureshi and State Farm Mutual Automobile Insurance Company (FSCO File A08- 000116, April 13, 2010), at p. 6.
3. 3Khaled Saleh and State Farm Mutual Automobile Insurance Company (FSCO A12-007868, July 21, 2015), at p. 4.