Neutral Citation: 2017 ONFSCDRS 309 FSCO A14-004894

BETWEEN:

(ANTOINE) ANDREW BONITO Applicant

and

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Insurer

DECISION ON EXPENSES

Before: Arbitrator Kimberly Parish

Heard: By written submissions completed on October 20, 2017

Appearances: Mr. (Antoine) Andrew Bonito did not participate Mr. Stefan Juzkiw, legal counsel for Mr. (Antoine) Andrew Bonito Ms. Maggie Morgan, legal counsel for State Farm Mutual Automobile Insurance Company

Issues:

The Applicant, Mr. (Antoine) Andrew Bonito ("Mr. Bonito"), was injured in a motor vehicle accident on July 26, 2011 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. Bonito, 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 for this Expense Hearing:

Is Mr. Bonito liable to pay State Farm's expenses in respect of the Arbitration proceeding under section 282(11) of the Insurance Act?

Result:

Mr. Bonito is liable to pay State Farm's expenses in respect of this Arbitration in the amount of $4851.23 (inclusive of fees, disbursements, and HST).

EVIDENCE AND ANALYSIS:

Background

An in-person Hearing was held on May 30 and 31, 2017, and written submissions completed June 1, 2017. I issued my Decision following the Hearing, dated July 10, 2017. The issues determined at the Hearing included: non-earner benefit ("NEB"), two medical benefits, a cost of examination, and interest. The Applicant was unsuccessful on all issues at the Hearing. The parties have been unable to resolve the issue of expenses. On July 25, 2017, Ms. Morgan, on behalf of the Insurer, and in accordance with Rule 79.1 of the Dispute Resolution Practice Code ("DRPC"), requested an Expense Hearing.

A telephone conference call was held on August 11, 2017 with Ms. Morgan and Mr. Bonito's legal representative, Mr. Nader Fathi ("Mr. Fathi"), who represented Mr. Bonito at the Hearing. An Expense Hearing was scheduled to proceed in writing and the timetable for written submissions was scheduled and noted within a letter dated August 11, 2017 which was issued to the parties.

On September 29, 2017, the Insurer's written submissions were received.

On October 12, 2017, Mr. Bonito sent e-mail correspondence to ADR Chambers which was reviewed by another Arbitrator, to ensure I would not be biased. The e-mails provided evidence of a breakdown in the solicitor-client relationship. Further, the correspondence noted that Mr. Bonito no longer wanted Mr. Fathi to continue representing him.

On October 16, 2017, ADR Chambers received written response submissions from Mr. Stefan Juzkiw ("Mr. Juzkiw"), who had not yet been retained as Mr. Bonito's legal counsel.

I requested a conference call with the parties. On October 17, 2017, a telephone conference call was held with Mr. Bonito and Ms. Morgan. Mr. Bonito stated he no longer wanted Mr. Fathi representing him for the Expense Hearing and he further stated he had not signed an Authorization and Direction Letter to retain Mr. Juzkiw for the Expense Hearing. I stated at the telephone conference call that ADR Chambers received written response submissions for the Expense Hearing from Mr. Juzkiw but no Authorization and Direction Letter had been received. During the conference call, I allowed Mr. Fathi to be removed from the record for this Arbitration as per Rule 9.8 of the DRPC and advised Mr. Bonito he was self-represented. I advised Mr. Bonito I would not be reviewing the written response submissions until an Authorization and Direction Letter signed by Mr. Bonito has been received confirming he has retained Mr. Juzkiw. I allowed Mr. Bonito until by 5:00 p.m. on October 19, 2017. This was also on consent of Ms. Morgan.

On October 19, 2017, an Authorization and Direction Letter was provided by Mr. Juzkiw and signed by Mr. Bonito, confirming Mr. Bonito retained Mr. Juzkiw.

The Insurer's final reply submissions were received October 20, 2017.

The Insurer's Submissions

Prior to the Hearing, the Insurer made a Rule 76 Offer to Settle ("Offer"), dated May 15, 2017 in accordance with the DRPC. The Offer stipulated that the Applicant consent to a dismissal of the Arbitration without costs and required the Applicant to execute a Settlement Disclosure Notice for a Full and Final Release. The Offer noted: "This Offer to Settle is open for acceptance until May 19, 2017 at 5:00 pm [emphasis Insurer's] or until it is withdrawn, whichever shall occur first."² The Applicant did not accept the Insurer's Offer and it was withdrawn by the Insurer. It is the Insurer's submission that if the Applicant had accepted this Offer, both time and expense would have been saved by not having to proceed to a Hearing. Mr. Fathi represented the Applicant at the Hearing. The Insurer submitted it was the successful party on all issues in dispute at the Hearing. There were no documents or a witness list for filed on behalf of the Applicant for the Hearing. The Applicant was the only witness to testify at the Hearing.

It was submitted by the Insurer that no novel issues were raised at the Hearing.

The Insurer submitted the Applicant failed to submit a Disability Certificate ("OCF-3") prior to the Hearing to support his claim for NEBs. Further, the Applicant failed to attend two scheduled Pre-Hearings and the Hearing was rescheduled on three occasions on request of the Applicant.

The Insurer submits that on May 26, 2017, Mr. Fathi e-mailed ADR Chambers and requested to withdraw the Application for Arbitration. The Insurer opposed this request. The Insurer submits Mr. Fathi then requested an adjournment of the Hearing as Mr. Fathi had a settlement conference for another file scheduled on the same date as the Hearing for this file. The Insurer opposed the adjournment request as there had already been three prior adjournments granted. The Hearing remained scheduled to commence May 30, 2017.

Within its submissions, the Insurer provided its Bill of Costs requesting a total of $11,256.85 for fees and disbursements, inclusive of HST.

The Bill of Costs provided a detailed breakdown of the fees at the appropriate Legal Aid Tariff Rates. The total amount for legal fees is as follows:

Marianne Davies (Lawyer 32 years) $136.43/hour x .8 hour = $109.14
Jessica Bacopulos (Lawyer 7 years) $122.78/hour x 11.4 hours = $1,399.69
Maggie Morgan (Lawyer 9 years) $122.78/hour x 58.9 hours = $7231.74
Frank A. Benedetto (Lawyer 18 years) $136.43/hour x 3.3 hours = $450.22
Michael McChesney (Articling Student) $64.74/hour x 2.5 hours = $161.85
Clerk $32.37/hour x 4.1 hours = $132.72

The total claimed by the Insurer for 81 hours of legal fees is: $9485.36 plus $1233.10 (HST) = $10,718.46.

The breakdown for disbursements claimed by the Insurer is:

Witness fee for Dr. Zielinsky $55.28
Process server fee $133.30
Photocopy charges $349.81

The total claimed by the Insurer for disbursements is $538.39.

The Applicant's Response

The Applicant submitted that it is not appropriate for expenses to be awarded against the Applicant as his legal counsel prior to Mr. Fathi, Mr. Jeffrey Gray ("Mr. Gray"), was removed from the record on January 13, 2016. The Applicant submits Mr. Gray failed to provide the Applicant with copies of his documentation for this Arbitration. The Applicant was incarcerated during this time and subsequently did not receive the notice that Mr. Gray was removed from the record for this Arbitration.

The Applicant noted in its submission that the Applicant was released on parole on January 16, 2017. The Applicant retained new legal representation, Mr. Fathi. A copy of the Applicant's accident benefits file was requested from the Insurer, which the Applicant submits was not received. As a result of this, an adjournment of the Hearing was requested by the Applicant. The request was denied and the Applicant proceeded to the Hearing without "any documentation or evidence." It is further submitted by the Applicant that the Insurer had the medical documentation and evidence which the Applicant required but it was not provided to the Applicant, or placed into the Arbitration brief. As a direct result of the Applicant's incarceration and his prior counsel being removed from the record, the Applicant participated at the Hearing without any medical expert opinions, or documentation to support his case.

The Applicant submits that the Insurer's Bill of Costs is excessive and unreasonable for a Hearing which ran for one and a half days.

It is the Applicant's position that the Insurer's Offer to Settle was withdrawn prior to the Hearing and it should not be considered in regard to an award of expenses.

As a result of the Applicant's incarceration, now having a criminal record and being placed on parole, this has made it difficult for the Applicant to find and sustain steady employment. This has resulted in significant financial hardship. The Applicant is not currently employed and has limited financial means. The Applicant is being supported by his spouse and his mother.

The Insurer's Reply

The Insurer submits that on January 17, 2017, a copy of its Arbitration brief and the Applicant's entire accident benefits file as of that date was served upon the Applicant along with a Statement of Service.³ On January 24, 2017, the Applicant retained Mr. Fathi and the accident benefits file was couriered and received by Mr. Fathi's office on January 30, 2017.⁴ The Insurer submitted that four telephone conversations between Ms. Morgan and Mr. Fathi took place on the dates of March 10, April 4, April 28, and May 12, 2017. The Insurer submits that Mr. Fathi was advised that the Insurer was not in receipt of a Disability Certificate supporting the Applicant's entitlement to NEBs. The Insurer's brief index and witness list was filed on April 28, 2017 in accordance with the DRPC.

The Insurer relies on two cases, Gayathri and State Farm Mutual Automobile Insurance Company⁵ and Sediq and State Farm Mutual Automobile Insurance Company,⁶ in support of its position that an Arbitrator is to rely on the criteria outlined within the Expense Regulation, section F of the DRPC when considering an award of expenses, and not the party's ability to pay.

Analysis:

Section F of the Expense Regulation within the DRPC notes the following:

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 under subsection 44 (9) of that regulation.

The criteria which I find relevant for the Decision in this matter are items 1 and 2.

The Insurer was 100% successful on all issues at the Arbitration.

There was a Rule 76 Offer to Settle made by the Insurer in accordance with the DRPC. The Offer was a dismissal of the Arbitration without costs and required the Applicant to execute a Settlement Disclosure Notice and Full and Final Release. If the Applicant had accepted the Offer, the Arbitration Hearing could have been avoided along with an award for expenses claimed against the Applicant. However, I do recognize that the Applicant would have had to agree to a Full and Final Release, and not just to a withdrawal of the Application for Arbitration for the issues in dispute. There were no documents or witness lists filed by the Applicant for the Hearing. The Applicant was the only witness to provide testimony at the Hearing. These things would have made it difficult for the Applicant to prove his claim. The Applicant retained Mr. Fathi as his legal representative on January 24, 2017, and the Insurer has demonstrated through its submissions that Mr. Fathi was provided with the Applicant's accident benefits file on January 30, 2017, and on April 28, 2017, the necessary documentation to be relied upon by the Insurer at the Hearing was provided to Mr. Fathi.

The Applicant has submitted that he has limited financial means which stems from his incarceration. However, I am required to rely on the criteria listed within the Expense Regulation when determining an amount to be awarded for expenses.

I do not find that the Applicant or the Applicant's prior legal representative tended to prolong or obstruct the Hearing. The Applicant cannot be held accountable for a prior adjournment of the Hearing due to him being incarcerated. I was not provided with the circumstances surrounding the other two adjournments or why the Applicant did not attend the two Pre-Hearings.

The Hearing ran for one and a half days and there were no issues which were novel or complex.

The Applicant has submitted that the Insurer's expenses are excessive and unreasonable. I have not been provided with a copy of the Applicant's Bill of Costs to compare it with the Insurer's Bill of Costs. The Applicant was legally represented for both the Hearing and this Expense Hearing.

I am awarding the Insurer's legal fees at a ratio of 2:1. This equals 32 hours for legal fees in accordance with the Legal Aid Tariff Rates: 4 hours x $136.43 per hour = $545.72 for the time senior legal counsel spent on the file and 28 hours x $122.78 per hour = $3437.84 for the time spent by other legal counsel, which included a majority of the hours spent by Ms. Morgan. Therefore the total amount I award for the Insurer's legal fees is: $3983.56 plus $517.86 HST = $4501.42.

For the disbursements claimed by the Insurer, I will not be awarding anything for the witness fee or process server fee for Dr. Zielinsky as he did not testify as a witness at the Hearing. I will award the Insurer's photocopy disbursement costs in the amount claimed of $349.81.

Therefore the total amount I am awarding for expenses is: $4501.42 for fees (inclusive of HST) plus $349.81 for disbursements = $4851.23.

EXPENSES:

State Farm is entitled to its expenses in the amount of $4851.23 (inclusive of fees, disbursements, and HST).

November 22, 2017

Kimberly Parish Arbitrator

Financial Services Commission of Ontario