(Siar) Ahmed Sadozai v. State Farm Mutual Automobile Insurance Company, 2017 ONFSCDRS 191

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 191

FSCO A13-007179

BETWEEN:

(SIAR) AHMED SADOZAI

Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Insurer

DECISION ON EXPENSES

Before:

Arbitrator Jeff Musson

Heard:

Written submissions due on April 11, April 25 and May 2, 2017

Appearances:

Mr. Arvin Gupta for Mr. (Siar) Ahmed Sadozai

Ms. Mouna Hanna for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Mr. (Siar) Ahmed Sadozai, was injured in a motor vehicle accident on August 19, 2010. There were numerous claims for accident benefits made against State Farm Mutual Automobile Insurance Company (“State Farm”), payable under the SABS.¹ The parties were unable to resolve their disputes through mediation, and Mr. Sadozai, 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.

I conducted the Hearing for the issues in dispute on August 10 and 11, 2015. I issued my written decision with reasons, dismissing all of the Applicant’s claims. On the issue of expenses, I ruled that State Farm was entitled to its expenses based on its complete success at the Arbitration, for reasons discussed further below. If the parties were unable to mutually agree on expenses, then either party would be entitled to request an Expense Hearing, which State Farm subsequently requested.

The issue in this Expense Hearing is:

1. What is the quantum that the Applicant is liable to pay with regards to the Insurer's expenses in respect of the Arbitration proceeding under section 282(11) of the Insurance Act?

Result:

1. The Applicant is liable to pay to the Insurer its expenses in respect of the Arbitration proceeding, fixed in the amount of $18,251.15 (inclusive of fees, disbursements and HST).

EVIDENCE AND ANALYSIS:

Introduction

In this Expense Hearing, the Insurer is claiming expenses in the total amount of $18,251.15, which is comprised of $16,077.89 in fees and $2,173.26 in disbursements, including HST.

Rule 79.1 of the Dispute Resolution Practice Code (“DRPC”) states that where an Arbitrator has determined all issues in dispute except expenses, and the parties cannot agree on entitlement to or the amount of expenses, either party may request, in writing, an Expense Hearing within 30 days from the date of the decision on all other issues in dispute. Both parties were prepared, absent an agreement as to expenses, to have the matter determined by me. My jurisdiction to conduct an Expense Hearing is set out in subsection 282(11) of the Insurance Act.²

In addition, an Arbitrator shall, under Rule 75.2 of the DRPC, consider only the following six (6) 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 Rule 76.

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 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.

At this Expense Hearing, both parties are focused on 4 areas: their degree of success in the outcome; the written offers to settle in accordance with Rule 76; the conduct of the parties (or party representatives) to fail to comply with undertakings; and, finally, whether any aspect of the proceeding was improper, vexatious or unnecessary.

Entitlement to Expenses

Degree of Success

In its submissions, the Insurer stated that it was 100% successful in defending all of the issues that were in dispute at the Hearing. In addition, there was no ambiguity in terms of its success in this matter. I agree with the Insurer’s conclusions and it was the successful party at the Arbitration. At the Expense Hearing, the Applicant’s counsel stated that the line by line analysis of the Insurer’s counsel’s expenses is not appropriate. These expenses should in turn be measured against a standard of reasonableness. I disagree with the Applicant’s representative’s position that the expenses of the Insurer were not reasonable. In fact, I find the opposite; its expenses were within reason based on the hours required to defend this claim at the Hearing.

Written Offers to Settle

In its submissions, the Insurer states that it made an offer, pursuant to Rule 76, to settle this claim prior to the Hearing. The Insurer made an offer of $0.00 to settle this claim in exchange for a full and final settlement on a no cost basis on July 6, 2015, prior to the Hearing.³ The Applicant agreed this offer was made; however, at the time, the Applicant felt that this offer was unreasonable, and thus declined it.

Upon receiving the offer from the Insurer to settle for $0.00 on a no cost basis, the Applicant offered to settle the file for an all-inclusive amount of $77,900.00.⁴ The Insurer submitted this amount was unreasonable. Since the positions of the parties were polarized, the Insurer prepared for the Hearing and incurred the related costs associated with preparing for the said Hearing. In hindsight, the Insurer’s $0.00 offer of July 6, 2015 was better than the ultimate result achieved by the Applicant at the Hearing.

Conduct of the Parties and/or Their Representatives to Comply with Undertakings

In its submissions, the Insurer states that there were a total of 7 requests from November 25, 2010 to July 10, 2015 for documentation prior to the Hearing, which the Applicant failed to comply with. This caused numerous letters and phone calls between Insurer’s counsel and Applicant’s counsel requesting this information, which created an unnecessary waste of time and resources. In addition, there was a lack of caregiver documentation the Insurer requested which, in my opinion, if provided, may have helped to settle this file ahead of time. Without these documents, the Insurer maintained its denial of benefits.

Whether any Aspect of the Proceeding was Improper, Vexatious or Unnecessary

The Insurer submitted that the Applicant’s dispute was unnecessary, as was the Appeal. The Insurer submitted that the evidence given by the Applicant was not credible, and the Applicant called no witnesses to support his claim.

Conclusion

For all these reasons, I have determined that the Insurer is entitled to its expenses from this Arbitration proceeding up to and including preparing for this Expense Hearing.

Assessment of Expenses

This was not an overly complex case but at the same time, it was not a simple case either due to lack of documentation and witness testimony. The Insurer had to defend against a claim not knowing who would testify and what evidence would be produced. In terms of testimony, this case ultimately relied heavily upon the credibility of the Applicant and the presence or lack of corroborating evidence. In the end, the onus was on the Applicant to prove his entitlement to benefits and he failed to do so.

The Insurer submitted the following fee breakdown for the individuals working on the case for the Hearing.

Expenses for the Arbitration Hearing:

TASK

LAWYER, LAW CLERK OR STUDENT

HOURSxRATE

FULL

INDEMNITY AMOUNT

Correspondence to and from applicant's counsel, various non-parties, and with client

Robert Franklin (Lawyer, 1980)

0.3 X $136.14/hr

$40.84

Mouna Hanna (Lawyer, 2012)

3.0 X $109.14/hr

$327.42

Lisa Moore

1.8 X $32.37/hr

$58.27

(Law Clerk)

David Whidden

0.2 X $32.37 /hr

$6.47

(Law Clerk)

Review and analysis of file contents, briefing file contents, productions, and

Robert Franklin (Lawyer, 1980)

1.0 X $136.14/hr

$136.14

responding materials, drafting of summaries, drafting client reports, and drafting appeal submissions

Mouna Hanna (Lawyer, 2012)

15.0 X $109.14/hr

$1,637.10

Alexander Swabuk

8.5. X $64.74/hr

$550.29

(Student-at-Law)

Carina D'Souza

10.5 X $32.37

$339.89

(Law Clerk)

Christopher Rawoteea

2.5 X $32.37 /hr

$80.93

(Law Clerk)

Lisa Moore (Law Clerk)

8.1 X $32.37/hr

$262.20

Pleadings (drafting, reviewing, and filing of response and schedules)

Mouna Hanna (Lawyer, 2011)

0.7 X $109.14/hr

$76.40

Pre-Hearing

(correspondence to arbitrator and counsel, analysis of production issues, preparation for and attendance at)

Mouna Hanna (Lawyer, 2012)

5.3 X $109.14/hr

$578.44

Resumption of Pre-Hearing (correspondence to arbitrator and counsel, analysis of production issues, preparation for and attendance at)

Mouna Hanna (lawyer, 2012)

Jessica Kuredjian (Student-at-Law)

0.4 X $109.14/hr

15.7 X $64.74/hr

$43.66

$1,016.42

Arbitration

Robert Franklin (Lawyer, 1980)

29.7 X $136.14/hr

$4,043.36

(preparation for and attendance at

Arbitration, meeting with experts, correspondence to witnesses)

Mouna Hanna (Lawyer, 2012)

28.8 x $109.14/hour

$3,143.23

Fernanda Perez (Law Clerk)

3.9 X 32.37/hr

$126.24

David Whidden (Law Clerk)

7.2 X $32.37 /hr

$233.06

Lisa Moore

16.3 X $32.37 /hr

$527.63

(Law Clerk)

Lindsay Schoures

30.9 X $32.37 /hr

$1,000.23

(Law Clerk)

TOTAL HOURS: 189.80

TOTAL BILLED: $16,077.89 ($14,228.22 plus HST)

With respect to the preparatory work leading up to the Hearing and the relative nature of the issues in dispute, I find the Insurer’s ratio of prep time to Hearing time is reasonable for this case. The Applicant was questioning the reasonableness of the total hours spent by the Insurer. The Insurer spent 119.90 hours as part of the Hearing for a total of $16,077.89. I disagree with the Applicant and find this amount to be reasonable.

Disbursements for the Arbitration Hearing:

DISBURSEMENTS

Accident Benefits File (previous MVA)

$300.00

Courier

$1,572.44

Copying

$50.80

Subtotal

$1,923.24

HST

$250.02

TOTAL

$2,173.26

I am accepting the disbursement list as presented by the Insurer’s counsel for the Hearing. All of the amounts claimed by the Insurer for the Hearing are within the maximum limits permitted under Section 4 of the Expense Regulation.

EXPENSES:

After considering the complexity of this Arbitration Hearing, the applicable Legal Aid fee structure, written submissions of the parties, the supporting documentation filed, and using the maximum amounts permitted under the Expense Regulation as guidance, I find it appropriate to fix the Insurer's expenses at $18,251.15, inclusive of all fees, disbursements and HST.

July 10, 2017

Jeff Musson

Arbitrator

Date

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2017 ONFSCDRS 191

FSCO A13-007179

BETWEEN:

(SIAR) AHMED SADOZAI

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:

1. The Applicant is liable to pay to the Insurer its expenses in respect of the Arbitration proceeding, fixed in the amount of $18,251.15 (inclusive of fees, disbursements and HST).

July 10, 2017

Jeff Musson

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Insurance Act, R.S.O. 1990, c. I.8.
3. 3Insurer’s Expense Submission, Pg. 5.
4. 4Ibid.