Neutral Citation: 2016 ONFSCDRS 309 FSCO A15-003154

BETWEEN:

(ALAEI) MAJID KHANEHSHIR Applicant

and

CERTAS DIRECT INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Arbitrator Anne Morris

Heard: By written submissions completed on September 12, 2016

Appearances: Mr. Vikram Bhandari represented Mr. (Alaei) Majid Khanehshir Ms. Lisa Pool represented Certas Direct Insurance Company

Issues:

The Applicant, Mr. (Alaei) Majid Khanehshir, was injured in a motor vehicle accident on November 7, 2014 and sought accident benefits from Certas Direct Insurance Company ("Certas"), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and the Applicant, 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 Applicant was fully successful at the Hearing of this matter in that I ordered the Insurer to pay the disputed benefits for the costs of examinations. I also ordered the Insurer to pay a special award. The Insurer subsequently agreed that the Applicant was entitled to his expenses of the Hearing, but the parties were unable to agree on quantum.

The issue in this Expense Hearing is:

What is the amount of expenses to which the Applicant is entitled?

Result:

The Applicant is entitled to his expenses of the Hearing in the amount of $7,704.47, inclusive of all fees, disbursements and applicable taxes.

EVIDENCE AND ANALYSIS:

Authority to Award Expenses

Subsection 282(11) of the Insurance Act provides that:

The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.

Rule 75.1 of the Dispute Resolution Practice Code ("the Code") provides that:

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 in Rule 78 and the Schedule to the Expense Regulation found in Section F of the Code.

Rule 75.2 of the Code, which sets out the criteria to be considered in awarding expenses, states the following:

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 proceedings;

d. The conduct of a party or 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 – 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.

Expenses

I agree with the Insurer's submissions that the only criteria of significant relevance in this case are "degree of success" and "offers to settle". The Applicant was completely successful and the Applicant also made an offer to settle which was very reasonable given the outcome of the Hearing.

While the Applicant submitted that the special award issue was novel, I disagree. The special award was made based on legislation and established case law.

The Applicant also submitted that the Insurer's conduct in pushing these matters to a Hearing was improper, vexatious and unnecessary. I was of the view that the Insurer's delay in paying the benefits was unreasonable and granted a special award. Having proceeded to a Hearing, the Insurer is liable to pay the Applicant's expenses as well as its own, but beyond that, I find nothing in the manner in which the Insurer conducted the Arbitration which was improper, vexatious and unnecessary such that it prolonged the Hearing or increased the expenses normally associated with an Arbitration.

The Applicant requested expenses of $22,076.18 comprised of $7,498.17 for legal fees (including HST), taxable disbursements of $14,478.01 (including HST), plus $100.00 for the Arbitration Filing Fee. The Insurer disputes the quantum of these expenses.

Legal Fees

Rule 78 provides as follows with respect to expenses for representatives:

78.1 The maximum amount that may be awarded to an insured person or an insurer for legal fees, is an amount calculated using:

(a) the hourly rates established under the Legal Aid Services Act, 1998 for professional services in civil matters before the Ontario Superior Court of Justice; or

(b) the hourly rate referred to in Rule 78.1(a) adjusted to include, where appropriate, the experience allowance established under the Legal Aid Services Act, 1998.

Where an adjudicator is satisfied that a higher amount for legal fees to an insured person is justified, an hourly rate of up to $150 may be awarded.

78.2 The maximum amount that may be awarded to an insured person or an insurer for agent's fees is an amount calculated using the hourly rates established under the Legal Aid Services Act, 1998 for law clerks, articling students and investigators.

The Applicant's lawyer requested $150.00 per hour for 41 hours. I agree with the Insurer that the rate permissible under Rule 78 of the Code (Legal Aid Rate), based on the Applicant's lawyer's year of call is $109.14 per hour. While Rule 78 permits $150.00 per hour where justified, I do not find that hourly rate justified in these circumstances. The matter was not complex.

The Applicant's lawyer charged for 41 hours. The Insurer submitted that only 32 hours should be allowed based on 16 hours of Hearing at a 1:1 ratio. I do not, however, find 41 hours to 16 hours of Hearing time unreasonable and I allow the 41 hours at $109.14 per hour or $4,474.74 plus HST of $581.72, for a total of $5,056.46.

The Applicant's lawyer, under the heading "Legal Fees", claimed 15 hours for "administrative services rendered by my legal assistant" at $32.37 per hour. These administrative services were for "printing material, photocopying, binding Arbitration brief, other miscellaneous tasks". While Rule 78.2 allows rates for "law clerks, articling students and investigators", I do not consider that purely administrative tasks of the nature described are encompassed by this Rule. I find that there is no authority to award Legal Fees for purely administrative tasks by a legal assistant.

The total amount which I award for Legal Fees then is $5,056.46.

Disbursements

Expert Witness Fees

The Applicant claimed for three Expert Witnesses. In the view of the Insurer, none of these witnesses were qualified as experts to give an opinion on the issues at hand, and the fees for their reports and/or attendances should not be allowed.

The Applicant's family doctor attended the Hearing in her professional capacity as a doctor. I found her evidence in explaining her clinical notes and records and her understanding of the Applicant's pre-existing condition, based on her expertise, to be very helpful to making a decision in this case. The invoice which she submitted in the amount of $1,600.00 for preparation and attendance is detailed and reasonable. She charged four hours for attendance at the Hearing which is allowed at $200.00 per hour or $800.00. She charged for four hours of preparation. $500.00 for preparation is the maximum permissible and so I allow a total of $1,300.00 for Dr. O'Mara's preparation and attendance.

I agree with the Insurer that the Functional Abilities Report, dated October 24, 2015, prepared by Dr. Justin Guy, a chiropractor, was not particularly relevant to, nor necessary to, making a decision on the issues in dispute at the Hearing. Those issues were a treatment plan for an In-Home Assessment, dated December 12, 2014 and a treatment plan for a Psychological Assessment, dated February 25, 2015. I therefore do not allow the fees claimed with respect to Dr. Guy's attendance in the amounts of $600.00 (Hearing attendance) and $500.00 (Hearing preparation). I also do not allow the fee for the Report in the amount of $1,500.00.

The Applicant also claimed $1,500.00 for a Social Emotional Assessment Report by Mr. Joshua Pugen as well as $1,100.00 for Mr. Pugen's attendance at the Hearing ($500.00 for Hearing preparation and $600.00 for Hearing attendance). While a Social Emotional Assessment on its face has some relevance to the Psychological Assessment at issue in the Hearing, there is something illogical in paying $1,500.00 for a Report which is not a Psychological Report to support the request for funding for a Psychological Report in the amount of $1,995.33. It might have been more logical to call as a witness Dr. Keeling, the psychologist who prepared the treatment plan for the Psychological Assessment which was the subject of the Hearing. The Applicant did not do so, choosing instead to call the author of a different Report. The Insurer advised that claims for payment by the Insurer for Mr. Pugen's Report and Dr. Guy's Report as benefits (rather than disbursements) are the subject of another Application for Arbitration. The expense of Mr. Pugen's Report is more reasonably dealt with at that Arbitration Hearing. His attendance at this Hearing was not necessary in my view, nor particularly helpful. He was not qualified as an expert at the Hearing. I do not allow the disbursement for Mr. Pugen's Report and attendance.

Research Agency Fee

The Applicant claimed $5,000.00 for a Research Agency Fee under Section 4 of the Schedule to the Expense Regulation² which states:

The amount of the following disbursements made by or on behalf of the insured person or the insurer may be awarded:

For long distance telephone, facsimile and other telecommunication charges.

For typing, printing and reproducing copies of documents.

For the delivery, by mail or courier, of items relating to the arbitration, appeal, variation or revocation hearing.

For other out-of-pocket expenses incurred in furtherance of the arbitration, appeal, variation or revocation hearing.

Any applicable taxes paid in respect of the expenses referred to in this section.

The invoice from the research agency indicates that this disbursement was in essence for legal research. It is difficult to see how legal research fits into this Section as an out of pocket expense, given the nature of the out of pocket expenses which are specified in this Section. Even if I considered that such a disbursement fit within this Section, I would nevertheless find it to be unreasonable and unnecessary in this particular case given that the issues in dispute in the Arbitration were not particularly complex. I do not allow this disbursement.

Other Disbursements

The Applicant claimed $108.64 in travel expenses. The Insurer disputes $10.00 of this amount for parking, submitting that only mileage is allowed. I will allow the full amount of $108.64. The modest parking amount is a reasonable out of pocket expense.

The Applicant claimed $57.52 for "meal accommodation" under Section 6 of the Schedule to the Expense Regulation. I agree with the Insurer that meal accommodation is not applicable where overnight accommodation is not required. I do not allow this expense.

The Applicant claimed $550.00 for a Third Party Binding Service/Fee. The Insurer is only prepared to reimburse $300.00 which the Insurer submits is in line with the Insurer's cost for this item. The Applicant produced an invoice of $550.00. I see no reason not to allow this disbursement in the full amount of $550.00.

The Applicant claimed $75.00 for a prescription summary. The Insurer objected on the basis it was not referred to in evidence. It was however put into evidence as part of an Exhibit without objection. I will allow this disbursement.

The parties agreed that the Applicant is entitled to $221.24 for the clinical notes and records of Toronto Medical Centre and this disbursement is allowed.

The parties agreed that the Applicant is entitled to the $100.00 Filing Fee as a disbursement.

The expenses which I allow therefore are as follows:

Legal Fees $4,474.74 HST $581.72

Taxable Disbursements: Expert Witness Fees (Dr. O'Mara) $1,300.00 Travel expenses $108.64 Third Party Binding Fee $550.00 CNRs Toronto Medical Centre $221.24 Prescription summary $ 75.00

Total Disbursement $2,254.88 HST $293.13

Arbitration Filing Fee $100.00

Total Fees and Disbursements including HST $7,704.47

EXPENSES:

My award of expenses therefore inclusive of all fees, disbursements and applicable taxes is $7,704.47.

November 18, 2016

Anne Morris 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:

The Applicant is entitled to his expenses of the Hearing in the amount of $7,704.47 inclusive of all fees, disbursements and applicable taxes.