Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 102

FSCO A15-005457

BETWEEN:

LYNDA FEDERICO

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before: David Snider

Heard: By telephone conference call on January 6, 2017.

Appearances: David S. Wilson for Ms. Federico Stacey Iordanis for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Lynda Federico, was injured in a motor vehicle accident on December 22, 2007. In a decision dated October 17, 2016, I dealt with her claims for statutory accident benefits under the Schedule.¹ I made the following orders, while reserving on the issue of expenses:

1. The medical claims were approved.
2. A special award was granted.
3. Interest was ordered to be paid by the Insurer.
4. Expenses were awarded in favour of Ms. Federico.

The issue in this further hearing is:

1. What amount of expenses is Ms. Federico entitled to in respect of this arbitration hearing?

Result:

1. Ms. Federico is entitled to her expenses in a total amount of $13,369.99, including fees, disbursements and all applicable taxes.

EVIDENCE AND ANALYSIS:

The hearing on the full merits of this matter was completed on July 20, 2016 and my final Order on the merits was issued on October 17, 2016. The result was entirely favourable to the Applicant and I left it open to the parties to apply for an expense hearing, if necessary, in a timely manner.

On October 27, 2016 the Applicant’s counsel requested an expense hearing and on November 14, 2016 he presented a Bill of Costs to the Insurer’s counsel. A teleconference to deal with the issues of expenses was arranged for January 6, 2017 and on that date I conducted the hearing with Mr. David Wilson being present for the Applicant and Ms. Stacey Iordanis appearing for the Respondent.

This matter involved a three day hearing which resulted in the Insurer’s counsel stating in his final submissions that the Insurer was no longer relying upon its assessments and effectively admited that they had been demonstrated to be of no great value. He attempted, instead, to rely upon an argument concerning double payment of the medical benefits which he had only raised on the first day of the hearing and with regard to which he delivered to me, but not to the Applicant’s counsel, a case law brief some weeks after the conclusion of the hearing. I rejected this argument because it had been raised at an impossibly late point in the proceedings and I did not consider the case law which he submitted in such an odd manner.

Turning to the applicable law pertaining to this expense hearing, I note that the criteria for determining entitlement to expenses pertaining to this type of proceeding before the Financial Services Commission of Ontario are enumerated in section 12(2) of Ontario Regulation 664, R.R.O. 1990, as amended. Since the date of loss pertaining to this Application for Arbitration is December 22, 2007, I have copied below the historical version of the said regulation as it read during the period appropriate for this matter and have set out in bold type the relevant criteria:

Historical version for the period March 1, 2006 to March 25, 2008

Last amendment: O. Reg. 548/05

12.(1) The expenses set out in the Schedule are prescribed for the purpose of subsection 282 (11) of the Act. R.R.O. 1990, Reg. 664, s. 12.

(2) An arbitrator shall, under subsection 282 (11) of the Act, consider only the following criteria for the purposes of awarding all or part of the expenses incurred in respect of an arbitration proceeding:

1. Each party’s degree of success in the outcome of the proceeding.
2. Any written offers to settle made in accordance with subsection (3).
3. Whether novel issues are raised in the proceeding.
4. 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.
5. Whether any aspect of the proceeding was improper, vexatious or unnecessary.
6. 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.

FINDINGS:

Applying these criteria to the facts of the case at hand, I make the following findings:

1. Each party’s degree of success in the outcome of the proceeding.

Ms. Federico was completely successful in this hearing and was awarded a special award.

2. Any written offers to settle made in accordance with subsection (3).

I was not made aware of any written offers exchanged between the parties.

3. Whether novel issues are raised in the proceeding.

The issues were not novel.

4. 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.

The Insurer caused the proceeding to continue into a full hearing when it knew or ought to have known that its medical assessment(s) were insufficient, thereby unnecessarily prolonging the proceedings.

5. Whether any aspect of the proceeding was improper, vexatious or unnecessary.

The Insurer’s Counsel late-submitted case law only to the Arbitrator after the hearing without delivering the materials to the Applicant’s counsel, which was highly improper.

The sixth criterion was not raised and is not applicable to this arbitration.

The legal fees which may be awarded are as set out in section 3(1) of the Schedule to the Expense Regulation. I have copied below the historical version of the said schedule as it read during the period appropriate for this matter and have set out in bold type the relevant criteria, as follows:

1. The filing fees paid by the insured person when applying for arbitration may be awarded to the insured person.
2. The filing fees paid by the insured person or the insurer when appealing the order of an arbitrator or applying to vary or revoke an order may be awarded. 3.(1) The legal fees payable by the insured person or the insurer for the following matters may be awarded:
3. For all services performed before an arbitration, appeal, variation or revocation hearing.
4. For the preparation for an arbitration, appeal, variation or revocation hearing.
5. For attendance at an arbitration, appeal, variation or revocation hearing.
6. For services subsequent to an arbitration, appeal, variation or revocation hearing. (2) The number of hours for which legal fees may be awarded shall be determined by the arbitrator, having regard to the criteria set out in subsection 12 (2) of this Regulation.

In the decision of Henri and Allstate Insurance Company of Canada (OIC A-007954, August 8, 1997) Arbitrator Makepeace set out general principles which had already emerged concerning arbitration decisions pre 1997 and these have continued to be respected in arbitration expenses decisions since that time. Specifically, the approach which I take from that decision is centred around two concepts, the first being that the overriding consideration in fixing arbitration expenses is reasonableness. The second dictum is that a line-by-line assessment of the expenses claimed is not appropriate and the Arbitrator should make a global assessment of the said reasonable expenses.

Accordingly, I have considered the Bill of Costs as submitted by Mr. Wilson and the oral submissions made by both counsel in the teleconference of January 6, 2017 from the perspectives of a “global assessment” based upon “reasonableness”. I note that the Insurer’s counsel commented primarily about the amount of time claimed by Mr. Wilson in dealing with correspondence (.2 hours per item as opposed to .1 hours each for 78 items of correspondence), which had the effect of adding 7.8 hours to the account as a whole. Without descending to a “line-by-line” approach, I will say that it is clear from the evidence and submissions presented to me at the hearing that there have been, and continue to be, a multiplicity of proceedings concerning this applicant and her husband pertaining to this MVA. As a logical result of that, I would expect each piece of correspondence to take extra time to deal with just from the perspective of sorting out which file it pertains to, and accordingly I am not troubled by the extra correspondence time claimed.

In her Bill of Costs dated November 14, 2016, Ms. Federico claimed $9,534.38 for fees and $3,835.61 for disbursements for a total of $13,369.99 including HST.

Fees:

As a basic rule of thumb, Arbitrators have allowed expenses for preparation for hearing time compared to the actual hearing time on a ratio of between 1:1 and 1:4. In this case I note that Mr. Wilson recorded his hearing time (not including lunch breaks) to be a total of 20.70 hours. His total number of hours for the entire matter was 56.25 hours. Therefore his preparation time, etc., totalled 35.55 hours. This is a ratio of approximately 1.5:1. I find this to be entirely reasonable with regard to the matter at hand. Although the number of issues was small, the complex litigation history concerning this MVA complicated the fact situation and required counsel to prepare and account for a disproportionately large number of evidentiary issues relative to the specific claims being made.

Disbursements:

Ms. Federico claimed at total of $3,405.85 for disbursements, which included $1,805.60 ($1,500.00 allowed) for the Zaraska In-Home Assessment Report and $650.00 for a Rebuttal Report pertaining to it. There was an additional $310.00 for Dr. Lake's report. These three items amount to more than 79% of the disbursement total and they were all items which were appropriately submitted into evidence and, as such, are fully recoverable. I find, therefore, that the remaining miscellaneous disbursements are quite minimal and that the total for disbursements, including HST, is fully recoverable.

Accordingly, from a global and reasonableness perspective I see nothing about Ms. Federico’s Bill of Costs herein which is inappropriate or overstated. The hearing served to amply demonstrate that the Insurer’s position was untenable and their continued denial of the benefits and apparent unwillingness to settle was not reasonable. They therefore must bear the full burden of this cost award and I order them to pay Mr. Wilson’s full account herein of $13,369.99.

April 5, 2017

David Snider Arbitrator

Date

Financial Services Commission des Commission services financiers of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 102

FSCO A15-005457

BETWEEN:

LYNDA FEDERICO

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 Regulation 664, as amended, it is ordered that:

1. The State Farm Mutual Automobile Insurance Company to pay to Ms. Federico her expenses of this arbitration proceeding, fixed at $13,369.99, inclusive of fees, disbursements and any applicable taxes.

April 5, 2017

David Snider Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.