Neutral Citation: 2017 ONFSCDRS 300 FSCO A15-005691 & A14-009275

BETWEEN:

YOGARASA YOGESVARAN Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: David Snider Heard: By telephone conference call on March 30, 2017 Appearances: David S. Wilson for Mr. Yogesvaran Jonathan Schrieder for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Yogarasa Yogesvaran, claimed to be injured in a motor vehicle accident on July 26, 2007. In a decision dated July 28, 2016, Arbitrator J. Rogers, as he then was, dealt with his current claims for statutory accident benefits under the Schedule¹ and denied those claims entirely while reserving on the issue of expenses.

The issue in this further hearing is:

Is the State Farm Mutual Automobile Insurance Company entitled to its expenses incurred in respect of this arbitration hearing?

Result:

State Farm Mutual Automobile Insurance Company is entitled to expenses in a total amount of $16,115.96, inclusive of disbursements and applicable taxes, in respect of this arbitration hearing.

EVIDENCE AND ANALYSIS:

State Farm was entirely successful in its defence of Mr. Yogesvaran’s Application for Arbitration and it was apparent from the analysis provided by Arbitrator Rogers in his decision dated March 30, 2016 that he found little, if any, merit in the claims advanced by the Applicant. Accordingly, this decision on expenses requires me to carefully consider State Farm’s Bill of Costs herein and to award an amount of costs to the Insurer based upon the rules applicable specifically to Insurer’s costs and disbursements, which are markedly different from the rules concerning Applicant’s expenses in certain significant ways.

Turning firstly to the hourly rate applicable to the Insurer's counsel's claims herein, I note that the amount set out in the Bill of Costs is $150 per hour. Contrary to the Insurer's submissions, this hourly rate is not permitted under section 78.1 (b) (final paragraph) of the Dispute Resolution Practice Code (DRPC). That subsection specifically allows the Insured's counsel to get up to $150.00 per hour, under appropriate circumstances, while excluding the Insurer's counsel from receiving anything more than the specified legal aid rates for counsel. The Legal Aid Tariff encompasses a sliding scale based upon the years of experience of the lawyer making the claim. There is also the complication in this case that a significant number of the hours claimed were actually provided by less experienced persons in the Insurer’s law firm and accordingly the hourly rate is lower for that work. For my purposes here, I have concluded that the approriate hourly rate applicable to Mr. Schrieder is $136.43 in consideration of the fact that he was called to the bar in the year 2000 (and is accordingly a Tier 3 lawyer pursuant to the tariff) and the fact that this arbitration was commenced in 2015. Any hours which I may allocate and allow for the junior counsel on the file will be based upon the Tier 1 rate as of April 1, 2015 of $109.14 per hour. There is also a specified hourly rate of $32.37 for law clerks (paralegals) to be considered with regard to a large number of the hours billed. The bill includes an additional 4.3 hours for an individual specified as “student”. Since I do not know what type of “student” this is, and as the number of hours is so small, I am not taking this item into account in this order. I note that the Insurer's Bill of Costs does not actually set out the hourly rates and time in an accounted-for fashion, but simply arrives at a total for billable hours of $14,022.48. I am disregarding that gross figure and will determine appropriate percentages of allocated time below.

Secondly, the Insurer has asked for reimbursement of $14,274.51 for disbursements, some of which which are not allowable under the guidelines and/or applicable case law. Clearly, I must remove these items from consideration entirely while still allowing all appropriate expenses. As well, the Insurer’s counsel has asked for photocopying costs in the amount of $1,610.61, which is sizeable and hard to properly consider but which must form some part of the final award.

Finally, there is the factor that the Insurer’s counsel has claimed preparation times, for the lawyers only, which greatly exceed the total time for the actual attendance time involved in the hearing. The parties disagreed on the total hours which should be allowed for time spent in the hearing itself, with one stating 18 hours and the other suggesting that 16 would be appropriate after making allowances for time spent within the hearing period on matters not directly relating to the hearing on the merits. I do not wish to belabour the points being made and counter-pointed on these issues. As I was not in attendance at the hearing I can do no better than to simply split the differencce between them and arrive at a figure of 17 hours of expended hearing time. I do consider it relevant that this is the second time these particular parties went through a full hearing at FSCO and that accordingly it was necessary for the Insurer to review the transcripts of the prior hearing, which would require considerable time. This may account for the 21 hours claimed for a junior lawyer to write a “draft phase 1 opinion”, and there is no doubt that there was a large volume of submissions provided by the Insured's counsel. I note that the total number of hours claimed for work by the lawyers themselves is 102.5 hours. When I deduct 17 hours of hearing time from this figure I arrive at 85.5 hours of preparation time leading to 17 hours of hearing time. This calculates to a ratio of slightly over 5:1. This is clearly well beyond the customary ratio which my fellow Arbitrators have been granting for expenses over the years. The customary ratio is more in the range of 2:1, not 5:1.

Having stated these general principles and recognizing that the established precedent is for Arbitrators to make an award of expenses which is reasonable under the circumstances based upon a pragmatic, broad-strokes approach, I turn now to my calculations which, pursuant to the requirements of the Expense Regulation, take into account a number of factors.

The expenses set out in the Schedule are prescribed for the purpose of subsection 282 (11) of the Insurance Act in Ontario Regulation 664, R.R.O. 1990. Further explanations of the allowable expenses are set out in Rule 75 and Section F of the Dispute Resolution Practice Code.

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:

Each party’s degree of success in the outcome of the proceeding.
Any written offers to settle made in accordance with subsection (3).
Whether novel issues are raised in the proceeding.
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.
Whether any aspect of the proceeding was improper, vexatious or unnecessary.
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.
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 by subsection 44 (9) of that regulation.

FINDINGS:

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

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

State Farm was completely successful in this hearing.

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

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

Whether novel issues are raised in the proceeding.

The issues were not novel. They were quite simple, although the file history is quite complex.

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 alleges that the Insured’s counsel unduly complicated the issues and raised an excessive number of procedural/production issues. The insured alleges that the Insurer’s counsel copied and produced excessive quantities of documents and incurred witness expenses which were not of use in the hearing itself. On balance, I have concluded that the entire proceeding was over-long and unduly complex when the simplicity of the issues are taken into account. I attribute this to the joint actions of both counsel, however, so this will not be a significant factor in my calculations.

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

As I was not in attendance at the hearing I can only reference the fact that Arbitrator Rogers found that the Applicant obscured his medical history and enhanced his description of the events surrounding the MVA. That being said, the Applicant was not believed by the arbitrator and accordingly these behaviours did not result in any type of gain to the Applicant and do not appear to have unduly affected the proceedings. Accordingly, this criterion will not be a significant factor in my calculations.

The sixth and seventh criteria were not raised and are not applicable to this arbitration.

FEES ALLOWED:

Turning now to the calculation of an appropriate amount for fees herein, I find that I must apply a number of different factors to the allowances made. Firstly, I note that the Bill of Costs has not set out any factor for HST regarding any of the amounts claimed and hence I must conclude that this was already accounted for in their overall fee and disbursement amounts. I will therefore calculate and allow HST on the hourly rates I allow for the lawyer’s time but not on any other items.

I have concluded that the appropriate overall ratio of lawyer preparation time to hearing time should be allowed at 3:1 in this particular case due to the long history involving two MVAs and two hearings concerning this individual applicant even though the issues in this hearing were quite simple. Accordingly as I have found that there were 17 hours of hearing time, I can allow a total of 51 hours of lawyer preparation time. The situation is complicated by the fact that the insurer has indicated that the law clerk contributed 100.7 hours of hearing preparation time. At $32.37 per hour, this would total $3,259.66, which is excessive. I will reduce this figure to a simple $1,000.00 as reasonable compensation but I will add it on top of the hearing expenses (for Mr. Schrieder only) and to the preparation time for Mr. Schrieder and the two junior lawyers which I will set out below.

The Bill of Costs sets out a total of exactly 61 hours for Mr. Schrieder. I will allow the full 17 hours of hearing time, plus 17 more hours for preparation time at his hourly rate ($136.43). This amounts to 34 hours and totals $4,638.62, plus HST at 13%, which raises it to $5,241.64.

This leaves exactly 17 hours to be billed at the hourly rate of $109.14 for the two more junior lawyers combined fees. This totals $1,855.38, plus HST at 13%, which raises it to $2,096.58.

Accordingly, the amount to be allowed for fees can be totalled as follows:

Jonathan Schrieder $5,241.64

Two junior lawyers 2,096.58

Law clerk 1,000.00

TOTAL $8,338.22 (all inclusive for fees)

DISBURSEMENTS ALLOWED:

The Bill of Costs sets out 13 separate items and, as stated above, does not separate out any amount(s) for HST. Accordingly, I am assuming that the HST is included in each item as and when it is applicable. I am prepared to allow 10 of these items (totalling $7,277.74) as they are claimed, including the total amount for witness fees as although I know that Dr. Zakzanis did not attend I have no doubt that witness fees totalling $235.48 were paid as a necessary part of the hearing process and were not likely to have been recoverable. I have determined the “allowed in full” items to be as follows:

Dr. Frank’s records $ 33.90

OHIP, Dr. Lambothran & Dr. Majl records 316.46

GTA Rehab records 179.29

MVA Report 78.88

Rothbard and Markham Stouffville Records 188.99

Updated OHIP Summary 138.52

Witness attendance fee(s) 235.48

NTC (prior) Arbitration transcripts 5,303.99

Process Server 775.23

Courier 27.00

There are three more items claimed which require further consideration. They are all of significant size considering the nature of this hearing and amount to slightly less than half of the total set out for disbursements in the Bill of Costs.

Firstly, there is the $3,672.50 specified for “Dr. Zakzanis fee for arbitration”. It is not disputed that Dr. Zakzanis did not attend at the hearing and was not called as a witness. The Insurer asserts that a significant amount of time was spent in preparing this witness but his attendance turned out not to be needed and they ask for at least the $500.00 set out in section 5(4) of the Schedule to the Expense Regulation of the Dispute Resolution Practice Code. However, I went through the Bill of Costs in detail and found that only the law clerk corresponded with Dr. Zakzanis and for a fairly minimal amount of time. Most importantly, there is absolutely no lawyer time specified for hearing preparation with Dr. Zakzanis. Accordingly, I am disallowing this amount entirely.

Secondly, there is an amount of $1,713.66 for “court reporter” with no details being given. This does not appear to be an expense incurred in furtherance of the arbitration and pursuant to the precedent(s) set out in numerous previous FSCO expense orders. I disallow this expense entirely.

Finally, there is the question of photocopying claimed in the amount of $1,610.61. Again, there is no detail provided although the number suggests that photocopying in the amount of $1,425.00 was billed to the account and that 13% HST was added to this figure. I again looked through the Bill of Costs and could not find any reference to time billed for photocopying, although to reach such a significant figure there must have been quite a bit of time spent on photocopying. This leaves me with a problem because although I recognise that a good deal of photocopying did take place in this matter, I have no way of actually identifying how many copies were made or how much is being billed for each copy. This leaves me no choice but to assign an arbitrary amount for photocopying and, in all of the circumstances I find that $500.00 should be sufficient for this line item of disbursements.

This brings me to a final figure, inclusive of HST, of $7,777.74 ($7,277.74 + $500.00) for disbursements in this matter.

TOTAL EXPENSE ORDER:

I find that Yogarasa Yogesvaran is required to pay a total of $16,115.96 to the State Farm Automobile Insurance Company for its expenses in this hearing.

November 16, 2017

David Snider Arbitrator

Date

Financial Services Commission of Ontario

Neutral Citation: 2017 ONFSCDRS 300 FSCO A15-005691