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

Neutral Citation: 2018 ONFSCDRS 129

FSCO A16-004632

BETWEEN:

ABEER AL-RIFAEE

Applicant

and

AVIVA INSURANCE COMPANY LIMITED

Insurer

DECISION ON EXPENSES

Before:

Arbitrator Alan G. Smith

Heard:

By written submissions due July 16, 2018

Appearances:

Mr. Sam Elbassiouni participated for Ms. Al-Rifaee

Mr. Brian Yung participated for Aviva Insurance Company Limited

BACKGROUND:

The Applicant, Ms. Abeer Al-Rifaee, was injured in a motor vehicle accident on June 2, 2015, and sought accident benefits from Aviva Insurance Company Limited (“Aviva”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and Ms. Al-Rifaee, through her representative, applied for arbitration at the Financial Services Commission of Ontario (“FSCO”) under the Ontario Insurance Act, R.S.O. 1990, c. I.8, as amended (the “Insurance Act”)

An arbitration hearing took place in person at ADR Chambers on October 25, 26, 27, November 10 and 21, December 15, 2017, and on February 6, 2018; and by written submissions completed on March 6, 2018. Arbitrator Winer issued his written Decision with reasons on March 28, 2018. The Decision contained a provision that, if the parties could not come to an agreement on the matter of expenses, either party could request, in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code (the “Code”) an appointment before an arbitrator to determine expenses. The parties subsequently requested that a determination of expenses be made, and I requested written submissions from the parties. Written submissions were received from the Applicant and Insurer.

ISSUES:

The issues in this Expense Hearing are:

1. How much should the Applicant be reimbursed for her expenses arising from the Arbitration?

Result:

1. The Applicant is entitled to her reasonable expenses of $21,539.69, inclusive of H.S.T., disbursements and the costs of this expense hearing.

EVIDENCE AND ANALYSIS:

INTRODUCTION

The Applicant is claiming expenses in the total amount of $52,374.17, including legal fees, disbursements and H.S.T. The Insurer concedes that the Applicant is entitled to her expenses of the hearing. The Insurer does, however, take the position that the Applicant’s expense claim is “grossly exaggerated”.

Rule 79.1 of the Code provides that where an Arbitrator has determined all issues in dispute except expenses, and the parties cannot agree on entitlement or 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. My jurisdiction to conduct an Expense Hearing is set out in section 282(11) of the Insurance Act.

As noted above by the Insurer, Pursuant to Rule 75.2 of the Code, an arbitrator is to consider only the following six 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; and

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.

The Applicant submits that criteria 1, 2 and 4 apply. The Insurer says only criteria

1 and 4 are relevant.

CODE RULE 75.2 CRITERIA

Degree of Success

Arbitrator Winer ordered:

1. Ms. Al-Rifaee is entitled to receive a weekly income replacement benefit of

$400.00 from June 9, 2015 to June 2, 2017, less the sum of $1500.00;

2. Ms. Al-Rifaee is entitled to receive a medical benefit of $3885.00, less the amount paid, for a chiropractic treatment plan dated September 25, 2015, submitted by Dr. M. Sharif;

3. Ms. Al-Rifaee is not entitled to payments for the costs of examinations of $1800.00 for an attendant care assessment dated July 23, 2015 to be provided by Hal Disability Management Inc; and

4. The Insurer is liable to pay a special award in the sum of $2000.00 because it

unreasonably withheld or delayed payments to the Applicant;

5. Ms. Al-Rifaee is entitled to interest on overdue payments.

The Insurer acknowledges in its written submissions that, “the claimant’s degree of success would entitle her to her costs”.

Offer to Settle

Although the Applicant argues in her written submissions that criteria 2 is relevant, no mention is made of an offer to settle in the Applicant’s submissions.

The Insurer states in its submissions the, “no written offers to settle were exchanged prior to the conclusion of the hearing”.

I will therefore not take criteria 2 into account in awarding expenses.

Whether the conduct of a party or a party’s representative tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders

The Applicant submits that criteria 4 is relevant but provides no evidence substantiating that position.

The Insurer argues that, “The Applicant’s Representative, Mr. Elbassiouni, took exception to two difference FSCO-appointed Arabic interpreters, which resulted in losing essentially an entire hearing day (October 24, 2017)”. However, in my view, it is outside the purview of this Expense Hearing to judge whether the Applicant Representative’s objections to the interpreters were legitimate or not. As a result, I decline to consider the fourth criteria as a factor to be considered in this hearing.

THE APPLICANT’S BILL OF COSTS

The Jurisprudence

In Henri and Allstate Insurance Company of Canada², Arbitrator Makepeace provided guidance to the general principles arbitrators should consider when deciding these cases, including, but not limited to:

• the overriding consideration in fixing arbitration expenses is reasonableness.

• a line-by-line assessment of the expenses claimed is not appropriate. Rather, the Arbitrator should make a global assessment of reasonable expenses.

It has long been accepted that the Schedule is consumer-oriented legislation, designed so that access to justice is available to the public without fear of exorbitant costs or other consequences³.

The Supreme Court of Canada's decision in Smith v. Co-operators General Insurance⁴ established that consumer protection is one of the main objectives of automobile insurance law. In that decision, Justice Gonthier reasoned:

There is no dispute that one of the main objectives of insurance law is consumer protection, particularly in the field of automobile and home insurance. The Court of Appeal was unanimous on this point and the respondent does not contest it. In Insurance Law in Canada (loose-leaf ed.), Professor Craig Brown observed, that, “In one way or another, much of insurance law has as an objective the protection of customers”.

Bearing these principles in mind, a line-by-line analysis of the bill of costs is virtually impossible. The breakdown in the Applicant’s bill of costs submitted does not provide sufficiently detailed information to do so. There were no time dockets submitted by Applicant counsel and hence little detail. In the circumstances, a more “global” approach to assessing expenses certainly makes sense.

Fees

Reimbursable Hours

The Applicant claims 236 reimbursable hours for lead paralegal Elbassiouni, 100 hours for paralegal Zito and 82 hours for legal assistant Awad. The Applicant argues that, “The arbitration hearing went on for at least 60 hours, and Ms. AI-Rifaee submits she should be entitled to 160 hours of prehearing preparation and attendance, Arbitration file management, witness preparation and preparation time for the hearing”.

However, the Insurer has provided the applicable transcripts of the arbitration hearing which reveal that the total hearing time, rounded up, was 40 hours. 40 hours divided by 7 hearing days equates to (rounded up) 6 hours per day.

The Rule 75.2 criteria favouring the Applicant’s reimbursement is her substantial success at Arbitration. It is established that a 4:1 ratio of preparation time to hearing time for FSCO hearings is a reasonable ratio when assessing costs⁵. There were 7 days of hearing. At a 4:1 ratio that means 28 preparation days plus the 7 days of hearing for a total of 35 reimbursable days. At 6 hours per day, the total number of reimbursable hours is 210.

The Insurer submits that:

…Ms. Zito did not attend the hearing. She sent some communications sporadically over the life of the arbitration proceeding. The Respondent submits that Ms. Zito’s time has been severely exaggerated. The Respondent proposes that no more than 20 hours of Ms. Zito’s time be allowed.

I agree that the claim for 100 hours seems excessive. Accordingly I will discount the claim for Ms. Zito’s work by 50% to 50 hours.

The Insurer further argues that:

Ms. Awad is neither a paralegal nor a law clerk. She is a legal assistant per the Applicant’s own expense submissions. Any time she incurred was administrative and should not be considered for the calculation of hearing expenses. The Respondent submits that none of Ms. Awad’s time should be payable.

Again, I agree that the claim for 82 hours is excessive. Accordingly I will apply a 50% discount for Ms. Awad’s work. A claim for 41 hours will be allowed.

Hourly Rate

Section 78 of the Code governs the expenses of representatives. Section 78 states as follows:

78.1 The maximum amount that may be awarded to an insured person or an insurer for legal fees, is an amount calculated using:

(a) the hourly rates established under the Legal Aid Services Act, 1998 for professional services in civil matters before the Ontario Superior Court of Justice (emphasis added); OR

Where an adjudicator is satisfied that a higher amount for legal fees to an insured person is justified, an hourly rate of up to $150 may be awarded.

It is the Insurer's position that the hourly rate claimed by the Applicant should not be awarded because none of the Applicant’s representatives are Lawyers. The Insurer urges me to take the same position as Arbitrator Mills in Zhang v. Pembridge Insurance Company⁶ ie., that paralegals should be reimbursed, pursuant to the Legal Aid Ontario (“LAO”) tariff, at the same rate as law clerks ($32.37/hour). The Applicant requests reimbursement for her lead representative, paralegal Elbassiouni, at $142.85/hour, for paralegal Zito at $75.00/hour, and legal assistant Awad at $32.37/hour.

The Applicant has not cited any authority whereby paralegals should be reimbursed at the same rate as lawyers. The LAO tariff does not provide a reimbursement amount for paralegals.

I agree with the Insurer that, pursuant to the LAO tariff, the $142.85/hour rate is reserved for lawyers. However, in my view it would be unfair to reimburse the lead representative at a law clerk rate. I will therefore allow Mr. Elbassiouni to be reimbursed at the LAO tariff rate for students-at-law (articling students) of $64.74/hour. Ms. Zito and Ms. Awad will be reimbursed at the law clerk rate of $32.37/hour.

Result

Accordingly, the following number of hours will be reimbursed at the rates I have established:

Paralegal Elbassiouni: 210 hours @ $64.74 = $13,595.40

Paralegal Zito 50 hours @ $32.37 = $ 1,618.50

Legal Assistant Awad 41 hours @ $32.37 = $1,327.17

Total Fees Reimbursable: = $16,541.07

Disbursements

The Applicant claims a total of $3,286.73 in disbursements. The Insurer objects to the following claims:

1. LAT Application fee of $100.00. I agree that this has no relevance to the FSCO arbitration;

2. Applicant counsel’s mileage of $350.00 over the 7 hearing days. The FSCO expense regulation allows claims for travel, however I believe the quantum of this claim to be excessive. I will allow $250.00;

3. Process servers’ fees in the total amount of $566.17. The Insurer notes correctly that no particulars were provided by the Applicant with regard to this claim. In any case, the Insurer argues, “The only witness who was summonsed by the Applicant was Mr. Ziad Jarrar who is the Applicant’s live-in boyfriend, and for whom a summons should not have been required”. I agree with the Insurer and hence will disallow this claim.

All other disbursement claims appear to be allowable under the FSCO Expense Regulation. They also all seem reasonable. In the result, calculated at the Expense Regulation rate, I will allow reimbursement of disbursements in the amount of $2,520.60.

CONCLUSION

In sum, the following expenses are reimbursable to the Applicant:

Legal Fees $16,541.07

Disbursements $2,520.60

HST @ 13% $2,478.02

In my view, these amounts respect both the principle of proportionality and reasonableness. In the result, the Insurer shall be ordered to pay the Applicant’s expenses, fixed in the amount of $21,539.69 (inclusive of fees, disbursements and taxes).

July 18, 2018

Alan G. Smith Arbitrator

Date

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

Neutral Citation: 2018 ONFSCDRS 129

FSCO A16-004632

BETWEEN:

ABEER AL-RIFAEE

Applicant

and

AVIVA INSURANCE COMPANY LIMITED

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 Insurer shall pay to the Applicant $21,539.69 inclusive of disbursements and all applicable taxes.

July 18, 2018

Alan G. Smith Arbitrator

Footnotes

1. 1Effective September 1, 2010, the Statutory Accident Benefits Schedule – Effective September 1, 2010 (the ''New Regulation'') came into force. The transition rules in the New Regulation provide that, subject to certain exceptions, benefits that would have been available pursuant to the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996 (the ''Old Regulation'') shall be paid under the New Regulation, but in amounts determined under the Old Regulation. As a result, both the Old Regulation and the New Regulation are applicable to accidents that occurred on or after November 1, 1996 and before September 1, 2010 and both should be considered.
2. 2(FSCO A-007954, August 8, 1997), See also Amoa-Williams v. Allstate ([2001] OFSCID N. 153).
3. 3Nguyen and TD Home, (FSCO A04-002390, April 9, 2018.)
4. 4[2002] 2 S.C.R., 129, 2002 SCC 30.
5. 5See for a recent example, A.B. and State Farm (FSCO A08-000007, June 22, 2018, Matheson).
6. 6(FSCO A16-000631, April 17, 2018)