Neutral Citation: 2017 ONFSCDRS 87 FSCO A11-000956

BETWEEN:

AMIR SALMAN Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA Insurer

DECISION ON EXPENSES

Before: Arbitrator James Robinson Heard: Written submissions, concluding January 4th, 2017 Appearances: Mr. Salman, supported by his personal representative Zohar Salman Ian D. Kirby for Allstate Insurance Company of Canada

Issues:

The Applicant, Amir Salman, was injured in a motor vehicle accident on January 30, 2008. In a decision dated February 26, 2016, Arbitrator Bayefsky, in dealing with the applicant’s claims for statutory accident benefits under the Schedule¹, made the following orders:

Mr. Salman sustained a catastrophic impairment as a result of the accident within the meaning of section 2(1.2)(g) of the Schedule.
Allstate shall pay to Mr. Salman income replacement benefits, from December 15, 2008, onward, at a rate of $400 per week.
Allstate shall pay to Mr. Salman attendant care benefits, from October 17, 2011, onward, at a rate of $6,000 per month.
Mr. Salman is not entitled to payments for housekeeping and home maintenance services.
Allstate shall pay to Mr. Salman the cost of a treatment plan, dated May 25, 2012, prepared by Ms. L. Duffus, in the amount of $17,825.53.
Allstate shall pay to Mr. Salman the cost of an in-home assessment, by Ms. N. Vuckovic, on October 17, 20911, in the amount of $1,301.54. Mr. Salman is not entitled to benefits for the cost of catastrophic impairment assessments by Dr. Gerber and Dr. Levitt, dated September 26, 2011 and April 3, 2014, respectively.
Allstate shall pay to Mr. Salman a special award, in the amount of $5,000.
Allstate shall pay to Mr. Salman interest on the benefits ordered to be paid, subject to interest on income replacement benefits only being payable from February 4, 2011.

At the conclusion of the hearing, Arbitrator Bayefsky reserved his decision on the issue of expenses. He did not reserve his decision on any other issue.

The issues in this further hearing are:

Is Mr. Salman entitled to his expenses incurred in respect of this arbitration hearing?
On what basis shall interest be calculated upon those benefits found to be owing to Mr. Salman?

Result:

The insurer Allstate Insurance Company of Canada shall pay to the applicant, Amir Salman, his expenses of this proceeding in the amount of $139,851.68 (inclusive of fees, disbursements and all applicable taxes.)
I have no jurisdiction to re-open this hearing in order to deal with the issue of the calculation of interest upon those benefits found to be owing to Mr. Salman.

EVIDENCE AND ANALYSIS:

Background

The hearing of this matter was originally scheduled to proceed on October 28, 29, 30 & 31 and November 4, 5, 6 & 7, 2013. On October 24, 2013, pursuant to a consent order granted by Arbitrator Feldman, the Applicant’s request for an adjournment of the hearing was granted on terms. One of those terms was the following:

“that Allstate be relieved of any liability for interest on any benefits found to be overdue from October 28, 2013 [the date currently set for the commencement of the hearing] until September 15, 2014 [the date proposed by Mr. Kirby as the start date for this hearing if the matter were to be adjourned] or such later date as the hearing actually commences…”

It does not appear that any subsequent order revoked, varied or, indeed, revisited the consent order of Arbitrator Feldman. At all material times the applicant was represented by counsel. In due course the hearing proceeded before Arbitrator Bayefsky and, as earlier noted, his Reasons were issued on February 26, 2016.

At the request of the parties, and on the order of Arbitrator Bayefsky, a further hearing was subsequently ordered for the settlement of expenses and the consideration of other matters. Prior to the return date of that hearing, Arbitrator Bayefsky departed the Commission and I was assigned to hear the matter.

On September 9, 2016, a motion was brought before me by Applicant’s counsel, on an unopposed basis, for an order removing himself and his law firm from the record. That order was granted.

The applicant and his personal representative then requested an adjournment for the purpose of obtaining new counsel. After deliberating, I granted an adjournment for such purpose, but stipulated that the resumed hearing proceed no later than February 28, 2017.

On September 19, 2016, some ten days later, I received correspondence from the Applicant’s personal representative indicating that the Applicant wished to act for himself until he could obtain legal counsel. I ordered that the expense hearing proceed by written submissions, for reasons extensively outlined in that correspondence. I clearly indicated the limits of my jurisdiction with respect to the expense hearing. I then set a timeline for the delivery of written submissions by the parties.

After the timely delivery of written submissions dated December 2, 2016 from the insurer, no responding submissions were received from the Applicant by the appointed deadline of December 19, 2016. In the absence of such a response, the insurer elected to make no further submissions.

I accordingly proceeded to hearing the matter on the basis of the material before me, as follows:

Insurer’s Document Brief (Concerning Proper Calculation of Interest on Arbitral Award) dated May 13, 2016;
Applicant’s Submissions on Expenses Brief dated September 2, 2016;
Written Submission on Behalf of Allstate Insurance Company of Canada dated December 5, 2016.

Is Mr. Salman entitled to his expenses incurred in respect of this arbitration hearing?

In its written submission on expenses dated December 2, 2016 the insurer acknowledges that the Applicant was “primarily successful on his Application for Arbitration, such that the Applicant is entitled to his arbitration expenses. However, such expenses are to be awarded in accordance with the provisions of the Dispute Resolution Practice Code.”

This acknowledgement is both reasonable and helpful. I am satisfied that I have jurisdiction under rule 75.2(1) of the Dispute Resolution Practice Code to make an award of expenses to the Applicant on the basis of his degree of success in this proceeding. I therefore turn to the issue of the quantum of those expenses.

In that connection, there are two preliminary issues, bearing upon the outcome, which it would be best to address at this point.

First, in assessing the Applicant’s expenses, insurer’s counsel submits that I should give strong weight to the comments of Arbitrator Feldman in his adjournment letter dated October 24, 2013. The insurer’s submission is as follows:

“…Arbitrator Feldman has awarded the Insurer expenses of $2,500.00 in relation to “costs thrown away” by virtue of the Applicant’s request for adjournment. Accordingly, any time spent by Mr. Bennett and/or his law clerk and student at law in relation to preparation for the original hearing in October 2013 ought to be deducted.”

This is an argument by analogy. It is to suggest that the Applicant’s expenses should be deemed to be no greater than the expenses granted to the Insurer for the period up to and including October 24, 2013. Arbitrator Feldman’s remark (made in the context of his grant of expenses in an interlocutory proceeding) cannot be taken to have created a firewall by virtue of which no expenses prior to October 24, 2013 would be recoverable by either party. That could not have been his intention and I do not think it was within the purview of any party that this should be the result. I reject this submission.

Secondly, insurer’s counsel submits that the insurer should receive a set-off in my order with respect to the $2,500.00 expense award of Arbitrator Feldman. While I do not for a moment doubt that the award has not been paid, it would be an error of law for me to “renew” the order or to apply an offset of those monies in the context of my own order. Arbitrator Feldman’s order must stand on its own.

Applicant’s Disbursements

With respect to the assessment of disbursements I am bound by the provisions of the Expense Regulation, issued pursuant to subsection 282(11) of the Insurance Act, R.S.O. 1990, c. I-8, as amended, which regulation is scheduled to R.R.O. 1990, Reg. 664.

In his written submissions on Expenses, insurer’s counsel correctly states the law as follows:

“…the Dispute Resolution Practice Code allows a maximum of $1,500.00 for an expert’s report, except in the case of an accountant, who my charge a maximum of $2,500.00. Moreover, in terms of preparation for and attendance at an Arbitration Hearing, an expert is allowed a maximum of $500.00 for preparation and $200.00 per hour or $1,600.00 per day for actual attendance.”

In the light of the foregoing, I accept the following submissions of insurer’s counsel with reference to the following disbursement claims made by the application:

(a) Fees incurred for the accounting report of Collins Barrow shall be capped and recoverable in the amount of $2,500.00 (resulting in a reduction of $1,270.00);

(b) Fees incurred for the medical report of Dr. Scherer shall be capped and recoverable in the amount of $1,500.00 (resulting in a reduction of $1,900.00);

(c) Fees for the medical report of Dr. Patmanidis shall be capped and recoverable in the amount of $1,500.00 (resulting in a reduction of $1,900.00);

(d) Fees for the medical report of Trupath Occupational Therapy shall be capped and recoverable in the amount of $1,500.00 (resulting in a reduction of $390.01);

(e) Fees for the medical report of Dr. Gerber shall be capped and recoverable in the amount of $1,500.00 (resulting in a reduction of $6,000.00);

(f) Fees for the report of MDAC shall be capped and recoverable in the amount of $1,500.00 (resulting in a reduction of $4,350.00).

Upon a review of the Reasons of Arbitrator Bayefsky, I am satisfied that the insurer is correct in submitting that the arbitrator, at page 39 of those reasons, specifically denied the following costs of examination:

(a) Report of Drs. Kaplan/Levitt re: catastrophic impairment assessment in the amount of $18,600.00;

(b) Catastrophic impairment assessment report of Dr. Gerber in the amount of $7,800.00.

Insofar as these amounts were specifically disallowed by the hearing arbitrator, the issue has been conclusively determined and may not now be revisited in the context of an expense hearing. I find that they are not recoverable as disbursements and I specifically disallow them. They must accordingly be deducted from the total amount of disbursements otherwise claimed by the applicant.

Subject only to the foregoing, deductions I am satisfied that the disbursements claimed by the Applicant are properly claimed and fully recoverable under the Expense Regulation. H.S.T. is exigible upon all but the amount of $394.00 of the disbursements claimed.

I therefore find that the Applicant shall be paid the sum of $63,807.88 for disbursements and the further sum of $8,243.80 for H.S.T. upon disbursements.

Applicant’s Legal Fees

The insurer acknowledges that the work performed by the applicant’s counsel (Ms. Sokoloff first and latterly Mr. Bennett) should be charged at the rate of $150.00 per hour. Given the specialization and seniority of each of the named counsel, that acknowledgement is both welcome and appropriate and I will apply that rate for counsel in my deliberations. Insurer’s Counsel also correctly notes that the Legal Aid Tariff rate for law clerks and students-at-law, to which I am remitted by the Expense Regulation, was $23.00 per hour prior to April 1, 2014 and $30.82 from and after that date. I accept the suggestion of insurer’s counsel that, as a rule of thumb and purely for the purposes of my deliberations, it will be useful to consider an average rate of $27.00 an hour for the services of clerks and students.

In his written submissions insurer’s counsel made the following statement with respect to the assessment of expenses before the Commission:

“The case law from the Financial Services Commission of Ontario in dealing with assessments of arbitration expense allows a ratio of anywhere from 1:1 to 4:1 in preparation time versus hours of the hearing. The Insurer accepts that this was a difficult case and as such, the maximum preparation time to hearing time ratio of 4:1 is appropriate.”

In my opinion, this is a correct summary statement of the law and practice of the Commission with respect to the assessment of legal fees and I will be guided by these principles in the conduct of this assessment.

I accept the uncontradicted submission of insurer’s counsel that the actual hearing time was 94 hours. Applying a 4:1 ratio, the total amount of time expended by applicant’s counsel would be 470 hours. On a common-sense basis there would have to have been some duplication of effort. Clearly, some of the effort expended in preparing for the hearing adjourned in 2013 would inevitably have been renewed during the run-up to the hearing that proceeded before Arbitrator Bayefsky. Moreover, the passing involvement of numbers of clerks and students-at-law with the file must give rise to a reasonable apprehension that there was some duplication of their efforts as well. Some reduction is therefore warranted.

On the other hand, it has been acknowledged that this was a matter of great complexity. Moreover, it is evident that the efforts of applicant’s counsel were undertaken on behalf of a client who, because of the very nature of his injuries, was unusually demanding and ultimately lacking in trust. It was a very difficult brief.

I am satisfied that an award of $60,000.00 on account of legal fees, plus H.S.T. in the amount of $7,800.00, would be appropriate upon the facts and circumstances of this case and I so find.

Interest upon the Award

The decision of Arbitrator Bayefsky in this matter was released on February 26, 2016. In the ordinary course, I would have no jurisdiction in the context of an Expense Hearing to consider submissions with respect to the calculation of interest. However, by letter dated March 22, 2016 addressed to counsel, Arbitrator Bayefsky wrote:

“The hearing in this matter resumed on March 18, 2016, at 10:00 a.m., by teleconference, to address the parties’ request for clarification of the amounts owing pursuant to my decision of February 26, 2016, and for direction on to whom any amounts owing ought to be paid (whether to Mr. Salaman directly or to Mr. Bennett’s firm, Thomson Rogers, in trust).”

Arbitrator Bayefsky gave the direction therein referred to and then ordered as follows:

“Upon hearing the parties’ submissions, and on consent, I scheduled the hearing to resume…to address the issue of the quantum of interest owing pursuant to Clause 9 of my Order of February 26, 2016, as well as the arbitration expenses owing in this matter.”

Thereafter, as I have earlier noted, Arbitrator Bayefsky left the Financial Services Commission of Ontario and the matter was assigned to me.

The preliminary question for consideration is the vexed question of jurisdiction.

After much consideration, I regret that I am not satisfied that Arbitrator Bayefsky was correct in ordering a re-opening of the hearing to consider the calculation of interest upon his arbitral award, for the following reasons.

Section 21.2 of the Statutory Powers Procedure Act² deals specifically with the issue of re-opening, in the following terms:

21.2(1)A tribunal may, if it considers it advisable and if its rules made under section 25.1 deal with the matter, review all or part of its own decision or order, and may confirm, vary, suspend or cancel the decision or order. 1997, c. 23, s. 13 (20).

The Rules of Procedure of the Financial Services Commission of Ontario are contained in the Dispute Resolution Practice Code which, at Sub-rule 43.1 under the rubric “Reopening of Hearing,” provides as follows:

“The arbitrator may reopen a hearing at any time before he or she makes a final order disposing of the arbitration.”

Arbitrator Bayefsky issued a final order in this matter on February 26, 2016. Therefore, in the present case, a final order had been made before the issue of interest upon the award was revisited by the parties and by the Arbitrator. I must conclude, on the basis of the foregoing, that Arbitrator Bayefsky was functus officio on March 22, 2016 when he purported to agree to re-open the hearing, to accept evidence and hear submissions upon the calculation of interest.

Sub-rule 65.6 of the Dispute Resolution Practice Code provides as follows:

“An adjudicator may at any time clarify a decision or order that contains a misstatement, ambiguity or other similar error.”

Arbitrator Bayefsky did not purport to clarify his decision or order. It was not a “misstatement, ambiguity or similar error” that led him to purport to re-open the hearing. Instead, his intention was to resume a hearing that had already ended.

This appears to be a novel issue at the Commission. I can find no other arbitral decision on point.

In the Supreme Court of Canada decision in Chandler v. Alberta Association of Architects³ Justice Sopinka (as he then was), writing for the majority, summarized the law (at page 860) as follows:

The general rule that a final decision of a court cannot be reopened derives from the decision of the English Court of Appeal in In re St. Nazaire Co. (1879), 12 Ch. D. 88…The rule applied only after the formal judgment had been drawn up, issued and entered, and was subject to two exceptions:

where there had been a slip in drawing it up, and,
where there was an error in expressing the manifest intention of the court. See Paper Machinery Ltd. V. J.O. Ross Engineering Corp., 1934 CanLII 1 (SCC), [1934] S.C.R. 186.

He continues:

…Apart from the English practice which is based on a reluctance to amend or reopen formal judgments, there is a sound policy reason for recognizing the finality of proceedings before administrative tribunals. As a general rule, once such a tribunal has reached a final decision in respect to the matter that is before it in accordance with its enabling statute, that decision cannot be revisited because the tribunal has changed its mind, made an error within jurisdiction or because there has been a chance of circumstances…

Turning to the present case, the following is the material term of Arbitrator Bayefsky’s original order:

“9. Allstate shall pay to Mr. Salman interest on the benefits ordered to be paid, subject to interest on income replacement benefits only being payable from February 4, 2011.”

It is evident that this was not a boilerplate term of the order. Arbitrator Bayefsky clearly adverted to the matter of interest on the application and made a specific ruling with respect to the payment of interest on one, but only one, element of the Applicant’s claim. I am unable to conclude that there was a “slip” here. I am also unable to conclude that there was any error in expressing the arbitrator’s “manifest intention.” Quite the contrary, the term itself is an unambiguous expression of the arbitrator’s manifest intention. And the arbitrator did not purport to reserve on the issue, as he did on the issue of expenses.

In the Chandler decision supra Sopinka, J. was concerned about the potential consequences of a narrow application of functus officio in the context of any administrative tribunal where the right of appeal was limited to questions of law. He urged a more expansive view of the doctrine in such cases:

Accordingly, the principle should not be strictly applied where there are indications in this enabling statute that a decision can be reopened in order to enable the tribunal to discharge the function committed to it by enabling legislation…

I am not satisfied that the enabling legislation of this Commission offers any such indications.

Sopinka, J. then suggests the following:

Furthermore, if the tribunal has failed to dispose of an issue which is fairly raised by the proceedings and of which the tribunal is empowered by its enabling statute to dispose, it ought to be allowed to complete its statutory task…

I would understand this to mean that if the arbitrator had made a jurisdictional error or if he had overlooked an issue, he would have fallen within the grounds of the exception and that a reopening of the hearing would be available.

I am not satisfied that such was the case here. The facts are consistent with remorse on the part of the insurer upon receipt of the forensic accounting reports commissioned with respect to the calculation of interest. These reports, dated March 9, 2016 and March 17, 2016, immediately predate the purported resumption of hearing referred to in Arbitrator Bayefsky’s letter of March 22, 2016. In my opinion this represents an attempt to revisit litigation which was properly and finally concluded with the issuance of Arbitrator Bayefsky’s original decision. I do not believe I can bootstrap myself into jurisdiction on these admittedly difficult facts.

March 23, 2017

James Robinson Arbitrator

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:

The insurer, Allstate Insurance Company of Canada, shall pay to the applicant Amir Salman his expenses of this proceeding in the amount of $139,851.68 (inclusive of fees, disbursements and all applicable taxes.)
There exists no jurisdiction to re-open this hearing in order to deal with the issue of the calculation of interest upon those benefits found to be owing to Mr. Salman.