Kifah Abouzinni (Abouzeeni) v. Allstate Insurance Company, 2018 ONFSCDRS 62

Financial Services Commission des

Commission services financiers

of Ontario de l’Ontario

Neutral Citation: 2018 ONFSCDRS 62

FSCO A14-001528

BETWEEN:

KIFAH ABOUZINNI (ABOUZEENI)

Applicant

and

ALLSTATE INSURANCE COMPANY

Insurer

Before:

Arbitrator Anne Morris

Heard:

By written submissions completed on January 25, 2018

Appearances:

Mr. Robert A. Van Praet, legal counsel, represented the Applicant

Ms. Sharla Bandoquillo, legal counsel, represented the Insurer

Issues:

The Applicant, Mrs. Kifah Abouzinni (the “Applicant”), was injured in a motor vehicle accident on October 8, 2008 and sought accident benefits from Allstate Insurance Company (“Allstate”), payable under the Schedule.¹ The parties were unable to resolve their disputes through mediation, and the Applicant, through her representative, applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c. I.8, as amended.

A Hearing on a preliminary issue was held on July 26 and 27, 2017, and a decision rendered by Arbitrator Drory on September 14, 2017, as follows:

Allstate’s denial of caregiver benefits dated June 2, 2009 was not valid, as Mrs. Abouzinni had not elected to seek a caregiver benefit.
As a consequence of the denial not being valid, Mrs. Abouzinni is entitled to elect either a caregiver benefit, non-earner benefit, or income replacement benefit, not subject to a time limit.
If the parties are unable to mutually agree on the entitlement to and/or quantum of the expenses of this matter, either of them may request an appointment with me for determination of same in accordance with the provisions of Rules 75 to 79 of the Dispute Resolution Practice Code.

The parties were unable to agree on expenses and a request has been made for determination of the same. Arbitrator Drory is no longer available and the request for expenses has been made to me.

The issue in this Expense Hearing is:

Is either party entitled to expenses arising from this proceeding and, if so, in what amount?

Result:

The Applicant is entitled to her expenses in the amount of $19,629.68 inclusive of fees and disbursements and HST, and inclusive of the expenses for this Expense Hearing.

EVIDENCE AND ANALYSIS:

Authority to Award Expenses

Rule 75.1 of the Dispute Resolution Practice Code (“the Code”) provides that:

An adjudicator may award expenses to a party if the adjudicator is satisfied that the award is justified having regard to the criteria set out in Rule 75.2. The items and amounts which may be awarded are in Rule 78 and the Schedule to the Expense Regulation found in Section F of the Code.

Rule 75.2 of the Code, which sets out the criteria to be considered in awarding expenses, states the following:

The adjudicator will consider only the criteria referred to in the Expense Regulation found in Section F of the Code. These criteria are:

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

b. Any written offers to settle made in accordance with Rule 76;

c. Whether novel issues are raised in the proceedings;

d. The conduct of a party or party’s representative that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders;

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

f. 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; and

g. 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 – 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.

Entitlement

Success

The Applicant was successful on the preliminary issue. The Applicant was also successful on appeal to the extent that the Director’s Delegate found that an appeal on the preliminary issue was premature. The issue of appeal expenses is outside of my jurisdiction and has to be heard by a Director’s Delegate.

Offers

There does not appear, from the submissions of the parties, to have been any relevant offers to settle. Any offers referred to appear to have been made in the context of the issues as a whole, including on the merits, which have not been adjudicated upon. No particulars were provided for that reason.

Novel Issue

The decision on the preliminary issue appears to have been made on the particular facts of this case and does not appear to involve novel legal issues.

Conduct which tended to prolong

The Applicant submitted as conduct which tended to prolong the proceeding, the Insurer’s failure to properly consider the Applicant’s position prior to the Hearing but this goes to the heart of the issues in dispute in the Preliminary Issue Hearing and is properly considered under “degree of success”. Arbitrator Drory did note in his decision² however, that had the Insurer been more responsive to correspondence from counsel for the Applicant, the nature of the dispute could have been clarified sooner.

The Applicant also submitted that the Insurer’s appeal delayed the proceeding but this occurred after the Preliminary Issue Hearing and, of course, the Insurer has the right to appeal.

The Applicant also refers to the Insurer’s conduct after the decision in not responding quickly enough, in the Applicant’s view, to the Applicant’s election made after the Preliminary Issue Decision. This is not relevant to the award of expenses for the Preliminary Issue Hearing.

There are no allegations of procedural delays such as, for example, failure to comply with undertakings or failure to produce documents. Ultimately, a Preliminary Issue Hearing appears to have been the most expeditious way to litigate the weekly benefits issue at this time.

Improper, vexatious, unnecessary

The Applicant submitted that the Insurer’s conduct in appealing the decision was vexatious. Again, the Insurer is entitled to appeal and I note no finding by the Director’s Delegate that the appeal was improper, vexatious or unnecessary, and appeal expenses are in any event beyond my jurisdiction.

Failure to Attend Examinations

These criteria are not relevant to this expense decision.

The Applicant is entitled to her expenses of the Hearing.

Quantum

The Insurer submitted that the award of expenses should be for the Preliminary Issue Hearing only. The Preliminary Issue Hearing seems somewhat unusual in that the decision, as Arbitrator Drory noted, effectively cancelled the FSCO Hearing on the weekly benefits issue. Neither the caregiver benefit nor the non-earner benefit can proceed because there was no valid election and therefore no valid denial. The decision, in essence, calls for an election at this time by the Applicant, which is not time-barred. Any dispute would commence after a denial, if the benefit then claimed is denied. The preliminary issue decision did not resolve the weekly benefits issue on the merits but rather cleared the way to proceed, not in this arbitration but at a later time, if necessary.

The medical and rehabilitation issues in dispute in the arbitration were settled just prior to the Hearing. The Hearing on a claim for a special award remains outstanding.

The Applicant submitted a bill of costs in the amount of $43,968.30 in legal fees for three lawyers and four law clerks, plus $12,315.55 for disbursements. The legal fees span the time spent on the file from the time of the initial application for benefits, prior to the commencement of the arbitration, up to the completion of the appeal, after the Preliminary Issue Hearing. The time also encompasses the costs of this Expense Hearing.

As noted earlier, the expenses of the appeal are outside of my jurisdiction. The expenses at issue in this Expense Hearing are the expenses of the arbitration proceeding. They do not encompass legal expenses prior to the commencement of the arbitration.

There is no breakdown of what hours were spent on what aspect of the file. It is trite law, however, that a line by line assessment of expenses is not necessary and reasonable fees based on a ratio of 1:1 through 1:4 of hearing to preparation time are often awarded in appropriate circumstances.

In this case, the preliminary issue involved hearing oral evidence from witnesses over two days. I will allow a one to four ratio, hearing time to preparation time, assuming two days of hearing at eight hours each day. The one to four ratio may be a little generous in relation to the specific preliminary issue alone, but it does allow to a reasonable extent for the Pre-Hearing litigation of the medical and rehabilitation benefits resolved just prior to the Hearing, as well as for the Pre-Hearing litigation of the weekly benefits in dispute which will no longer proceed to a Hearing in this arbitration. The weekly benefits issue was at the core of the Preliminary Issue Hearing and was affected by the preliminary issue decision.

I note that both parties had two lawyers at the Hearing which involved witness testimony. While the issue was not novel, it was not entirely straightforward. I will therefore allow two days (16 hours) of hearing time for two lawyers, Mr. Van Praet and Ms. Mitchell. I will allow four days (64 hours) of preparation time for Mr. Van Praet, the lawyer who did the bulk of the work on the file, for a total of 80 hours, preparation and hearing time. The bill of costs shows that Ms. Mitchell spent a total of 64 hours on the file and I will allow 50 hours total as reasonable for her time, inclusive of the 16 hours allowable for attendance at the Hearing. In sum, I allow 80 hours in legal fees for Mr. Van Praet and 50 hours in legal fees for Ms. Mitchell. These hours also include the time spent on this Expense Hearing.

The Applicant seeks $150.00 per hour. The allowable rate under Rule 78 of the Code is the applicable legal aid hourly rate with a maximum of $150.00 allowable for an Applicant lawyer where an adjudicator is satisfied that a higher rate than the legal aid rate is warranted. I am not satisfied that the issue was so complex that an amount outside of the legal aid tariff is warranted.

Mr. Van Praet was called to the Bar in 2005, and I will assume for legal aid rate purposes that he is a tier 3 lawyer with an hourly rate of $136.43. Ms. Mitchell was called in 2014 and I will assume she is a tier 1 lawyer with an hourly rate of $109.14.

$136.43 x 80 = $10,914.40

$109.14 x 50 = $ 5457.00

$10,914.40 + 5457= $16,371.40

HST = $ 2,128.28

Total $18,499.68

The total allowable for legal fees therefore inclusive of HST is $18,499.68.

The Applicant seeks $10,898.92 in disbursements for which no documentary support has been provided. The larger disbursements are difficult to understand. There are two claims for summons to witnesses, one for $1,369.16 and one for $1,277.67. This seems excessive in the absence of an explanation. The claim for $1,720.00 for a medical assessment seems in excess of the amount allowable under the Expense Regulation. It was not used at the Hearing but may be recoverable at a later Hearing on the merits, if any. The same applies for the “Price Waterhouse” claim in the amount of $2,765.08. The claim for $682.74 to another law firm cannot be assessed without an explanation. The claim for $2,137.75 for photocopies seems excessive.

In all of the circumstances, I find that an amount of $1,000.00 plus HST for disbursements or $1,130.00 is reasonable.

The total payable for legal fees and disbursements inclusive of HST is therefore $19,629.68 ($18,499.68 plus $1,130.00).

EXPENSES:

The time spent on this Expense Hearing is included in the expenses already awarded.

March 26, 2018

Anne Morris

Arbitrator

Date