Financial Services Commission of Ontario
Neutral Citation: 2016 ONFSCDRS 217 FSCO A13-003584
BETWEEN:
ZI YI KEN HUANG Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer
DECISION ON EXPENSES
Before: Arbitrator Marshall Schnapp
Heard: By written submissions completed on June 17, 2016
Appearances: Mr. Zi Yi Ken Huang participated Ms. Alyson Toms participated for Mr. Zi Yi Ken Huang Mr. Jonathan B. Schrieder participated for State Farm Mutual Automobile Insurance Company
Issues:
The Applicant, Mr. Zi Yi Ken Huang, was injured in a motor vehicle accident on October 18, 2009 and sought accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the Schedule.1 The parties were unable to resolve their disputes through mediation, and Mr. Huang, 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:
- 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:
- The Applicant is liable to pay to the Insurer its expenses in respect of the Arbitration proceeding, fixed in the amount of $12,070.91 (inclusive of all fees, disbursements, and any applicable taxes).
EVIDENCE AND ANALYSIS:
Background
Mr. Huang made numerous claims against State Farm arising from an accident that occurred on October 18, 2009. In his Application for Arbitration, he claimed the following: attendant care benefits, medical/rehabilitation benefits in the amount of $8,613.00, cost of examinations in the amount of $4,014.13, and housekeeping and home maintenance benefits.
The following benefits were withdrawn at the start of the Hearing:
- attendant care benefits - according to the Application for Arbitration, Mr. Huang received these benefits up to April 25, 2011;
- housekeeping and home maintenance benefits - according to the Application for Arbitration, Mr. Huang received these benefits up to May 20, 2011;
- medical benefits - 4 treatment plans withdrawn, totaling $3,539.62; and
- one cost of examination in the amount of $1,764.13, pursuant to an OCF-22, dated August 21, 2010, of Dr. L. Steiner (psychologist) of Pacific Assessment Centre, for a Follow Up Psychological Assessment.
The issues remaining in dispute proceeded to Arbitration and were heard by me in-person on October 6 and 7, 2015 and by written submissions completed on November 13, 2015.
My decision, dated January 25, 2016, found that Mr. Huang was not entitled to any benefits claimed in his Application for Arbitration for the reasons outlined in my decision. Pursuant to Rules 75-79 of the Dispute Resolution Practice Code (“the Code”), the parties were given 30 days to request adjudication of expenses of the Arbitration proceeding. Written submissions were received from both parties and this decision is based on those submissions.
Position of the Parties
State Farm
The Insurer submits that it is entitled to expenses in the sums outlined in its Bill of Costs. According to its Bill of Costs, which included a detailed docket, 144.8 hours were spent on this file by two lawyers, an articling student and three law clerks. According to State Farm, at the permissible Legal Aid Rates, the amount of total fees is $15,946.15, inclusive of HST.
With respect to disbursements, State Farm is claiming amounts for the following: clinical records, witness attendance fees, court reporter, copying, process server and courier, totalling $4,071.73.
Mr. Huang
According to the Applicant, the Insurer should not be awarded expenses as its actions prolonged and obstructed the proceeding by making it harder for the Applicant to know the case that he had to meet.
In the alternative, if the Insurer is awarded expenses, the Applicant seeks an appropriate amount to be ordered, as the amounts claimed by the Insurer in its Bill of Costs are excessive and impermissible under the Expenses Regulation.
The Applicant submits that all of the criteria under subsection 282(11) of the Insurance Act, and not just the first criterion, each party’s degree of success in the outcome of the proceeding, must be taken into consideration. According to Mr. Huang, while the Insurer was successful on the issues in dispute, in this matter, State Farm served notice on him in a “blanket” OCF-9 in which it refused to consider paying the treatment plans due to the treating clinic involved. State Farm never sought an independent legal opinion, it ignored the Schedule, and it questioned Mr. Huang’s honesty without any evidence to contradict him.
According to Mr. Huang, he was not provided an appropriate legal response from the Insurer on why it was denying his various claims. He had a legitimate and arguable claim and should not be penalized by a “results-based” approach to expenses or his decision to proceed to an Arbitration Hearing.
Mr. Huang also believes the fourth criterion to be considered when awarding expenses, whether the conduct of a party or a party’s representative tended to prolong, obstruct or hinder the proceeding, supports his view that either no costs should be awarded or less costs should be awarded than are being requested. Mr. Huang believes that it was only during the actual Arbitration Hearing that State Farm provided the particulars for the denials of the medical and rehabilitation benefits in dispute.
Mr. Huang submits that had State Farm provided particulars in its Response to the Application for Arbitration, in an OCF-9, at the Pre-Hearing, during settlement discussions, or in any correspondence, that it was refusing to pay because it alleged that the confirmation was inaccurate, or that it had not received certain documents, Mr. Huang would have adduced evidence to address these concerns. This may have ultimately reduced the amount of time required to complete the Hearing or the need for a Hearing altogether.
With respect to State Farm’s Bill of Costs, Mr. Huang submits that the hourly rate being claimed of $150.00 per hour for senior counsel on the file is more than permissible under Rule 78 of the Code. As well, from Mr. Huang’s review of State Farm’s docket entries, he noted multiple times where the amount of hours being spent are excessive from his perspective.
Entitlement to Expenses
Keeping in mind the criteria outlined in Rule 75 of the Code, I find each party’s degree of success the most important factor in this case. However, I do agree with Mr. Huang that all of the criteria should be considered and have considered them all in coming to my decision.
All of Mr. Huang’s claims for benefits were either withdrawn at the start of the Hearing or denied by me. State Farm was entirely successful in this proceeding, and the expense award should reflect the result of the Hearing.
Mr. Huang submits that State Farm’s conduct resulted in behaviour that prolonged, obstructed or hindered the proceeding. While I can appreciate the argument Mr. Huang is attempting to make – namely that he was not provided with the opportunity to know what case he had to meet as State Farm did not provide particulars of why his medical and rehabilitation benefits were being denied – I am not persuaded by it. During the Hearing before me, State Farm made some basic arguments that for a number of reasons, Mr. Huang was not able to prove what goods and services he received and when he received them. These were not novel arguments and should not have taken Mr. Huang by surprise. In my view, it was necessary for Mr. Huang to feel confident that he could prove on a balance of probabilities what goods and services he received and when he received them prior to proceeding to the Arbitration Hearing.
I do agree with Mr. Huang’s submissions that State Farm’s Bill of Costs is excessive and utilizes an hourly rate for senior counsel that is higher than allowable under Rule 78 of the Code.
Quantum
The in-person Hearing ran over two days of Hearing time. State Farm is seeking 144.8 hours for its legal fees which total $15,946.15. Given the nature of this case, the claims being advanced, and the lack of complexity, I find the amount of hours being claimed is excessive as well as the hourly rate for senior 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.
I believe this is the appropriate approach in this case. Given my findings, the relevant criteria, and the straightforward nature of this case, I find the ratio of 3:1 is appropriate based on two days of actual in-person Hearing time.
Thus based on the ratio of 3 to 1, for a two day Hearing, the Insurer is entitled to 64 hours (one day is 8 hours of hearing time, 2 x 8 = 16 hours of actual Hearing time plus an additional 48 hours of preparation time = 64 hours) at the allowable rate for counsel of $136.43, and thus State Farm is entitled to receive $8,731.52, plus HST, for a total of $9,866.62 in legal fees.
With respect to disbursements, I note State Farm provided a breakdown of those being claimed and Mr. Huang did not make any submissions on the disbursements claimed. From my review of the list, I note $1,142.44 is being sought for Court Reporter fees. I am not allowing reimbursement of Court Reporter fees as this is not provided for in the Schedule. I also note that $1,474.72 is being sought for copying fees which I find excessive and am reducing that to $750.00. Thus I find that a total of $2,204.29 in disbursements is proper.
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 State Farm’s expenses at $12,070.91 (inclusive of all fees, disbursements, and any applicable taxes) and to order Mr. Huang to pay this amount to State Farm.
August 18, 2016
Marshall Schnapp Arbitrator
Date
Financial Services Commission of Ontario
Neutral Citation: 2016 ONFSCDRS 217 FSCO A13-003584
BETWEEN:
ZI YI KEN HUANG Applicant
and
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer
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:
- Mr. Huang shall pay State Farm its expenses in respect of the Arbitration proceeding, fixed in the amount of $12,070.91 (inclusive of all fees, disbursements, and any applicable taxes).
August 18, 2016
Marshall Schnapp Arbitrator
Date
Footnotes
- Effective September 1, 2010, the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the “new SABS”) came into force. The transition rules in the new SABS provide that, subject to certain exceptions, benefits that would have been available pursuant to the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996 (the “old SABS”) shall be paid under the new SABS, but in amounts determined under the old SABS.