Financial Services Commission of Ontario / Commission des services financiers de l’Ontario
Neutral Citation: 2018 ONFSCDRS 72
FSCO A04-002390
BETWEEN:
QUOC NGUYEN
Applicant
and
TD HOME AND AUTO INSURANCE COMPANY
Insurer
DECISION ON EXPENSES
Before: Alan Mervin
Heard: Written submissions received by Applicant - April 12, 2017 Written submissions received by Insurer - June 12, 2017 Telephone conference call - July 7, 2017.
Appearances: Peter B. Cozzi for Mr. Nguyen Daniel Siu for TD Home and Auto Insurance Company
Issues:
The Applicant, Quoc Nguyen, was injured in a motor vehicle accident on January 14, 2003. In a decision dated August 12, 2013 — April 4, 2014, I dealt with his claims for statutory accident benefits under the Schedule.1 I made the following orders:
The Applicant has not suffered a catastrophic impairment as a result of the motor vehicle accident of January 14, 2003.
The Applicant is not entitled to Income Replacement Benefits from February 4, 2004 and ongoing.
The Applicant is not entitled to housekeeping and home maintenance benefits.
The Applicant is not entitled to a special award.
The Applicant is not entitled to interest for the overdue payment of benefits awarded.
In essence, all of the Applicant’s claims were dismissed. I made no order as to expenses, and the Insurer has since requested an expense hearing be held.
The issue in this further hearing is:
- Is either party entitled to its expenses incurred in respect of this arbitration hearing?
Result:
- TD Home is entitled to its expenses in respect of this arbitration proceeding, fixed in the amount of $110,834.37, inclusive of fees, disbursements and any applicable taxes.
EVIDENCE AND ANALYSIS:
Background
This arbitration arose from an accident which took place on January 14, 2003. After a long history of motions, pre-hearings and adjournments, the hearing commenced on August 12, 2013, and continued on the following dates: August 13, 14, 15, 19, 20, 21, 22; September 11, 12, 13, 18, 19, 20, October 15, December 9, 10, 11, 12, 13, 2013, February 5, 7, and April 4, 2014 for a total of 23 days of hearing time. Following the completion of the oral hearing, extensive written submissions followed. Ultimately, all of the Applicant’s claims were dismissed. The decision was appealed to Director’s Delegate Evans, who upheld my findings and dismissed the Appeal.
The Insurer then requested an expense hearing, to determine expense awards for both the hearing and the Appeal, and telephone hearings were scheduled back to back in this matter, with the arbitration expense hearing proceeding before me on July 9, 2017 at 9:30 a.m., immediately followed by the appeal hearing at 11:00 a.m. before Director’s Delegate Evans. Written submissions were received from both parties.
The Insurer’s written expense submissions addressed both the hearing and the Appeal in one document, as did those of the Applicant, and requested over $18,000 for expenses and disbursements for the appeal. Director’s Delegate Evans released his decision on July 12, 2017, finding the amount claimed was excessive, and awarding the Insurer $4,000 for appeal expenses, inclusive of disbursements.
The Insurer also included a bill of costs for the hearing, which totalled $220,598.99 for fees and disbursements. Those expenses were not dealt with by the Director’s Delegate, as they are the subject matter of this decision.
Preliminary Jurisdictional Issue:
Mr. Nguyen raises a preliminary jurisdictional issue. He submits that expense determinations are a matter of procedure, and therefore are a separate hearing, and not part of the “lis” or suit, action, controversy or dispute between the litigants.
This argument was raised in the written submissions received by myself and Director’s Delegate Evans, and made orally before me on behalf of the Applicant.
Mr. Nguyen submits that the Licence Appeal Tribunal. (“LAT”) Rules of Practice dated May 1, 2014, provide that costs may only be awarded in cases where there is a finding of unreasonable, frivolous, or vexatious or for bad faith behaviour, and further submits that in Somers v. Fournier,2 the Court of Appeal held that an award of costs is a matter of procedural law and is not properly part of the “lis” or suit, action, controversy or dispute between the litigants. He submits that procedural regulations apply retrospectively, and, following Somers, the expense hearing is a separate hearing, and the determination should therefore now be governed by the rules of the Licence Appeal Tribunal.
Mr. Nguyen did not submit a bill of costs, relying on his submission that the LAT rules apply. Accordingly, only in cases where the threshold finding of unreasonable, frivolous, vexatious or bad faith is made against a party do costs come into play. The Applicant submits that there was no such finding in this case, and therefore no costs should be payable.
Director’s Delegate Evans released his decision on July 12, 2017.3 He found that the Act, regulations and Rules that were in force before the transition date of April 1, 2016, continue to apply to this proceeding, as set out in the Act and the related Regulation 664, R.R.O. 1990.
That decision contained an analysis of the submissions with respect to whether the LAT rules should apply. He disagreed with the Applicant’s submission. In his decision, Director’s Delegate Evans wrote that:
The expense determination is thus not necessarily a separate hearing. Pursuant to R. 79.1, a separate hearing for expenses is necessary only ‘Where an adjudicator has issued an order determining all issues in dispute except expenses [italics added] and the parties cannot agree about expenses, a request can be made within 30 days from the date the decision on all other issues in dispute was issued. But even there, expenses are still seen as part of all the issues in dispute. As such, their determination is not a separate process.’
Accordingly, I find that the Expense Regulation and the Code provisions regarding expenses apply to continued arbitrations and appeals, like this appeal.
While I do not intend to repeat all of his findings here, I am bound by his decision with respect to the jurisdictional issue raised by the Applicant. I find that although the Director’s Delegate dealt with Appeal Expenses, those findings also apply to hearing expenses.
I therefore find that the Expense Regulation and the Dispute Resolution Practice Code (the “Code”) provisions (rather than the LAT rules) regarding expenses apply to this case.
THE LAW
Subsection 282(11) of the Insurance Act4 provides that:
The arbitrator may award, according to criteria prescribed by the regulations, to the insured person or the insurer, all or part of such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations, to the maximum set out in the regulations.
Section 12(2) of Ontario Regulation 664, R.R.O. 1990, (“the Expense Regulation”) made under the Insurance Act, as amended, sets out the criteria for Arbitrators to consider when deciding expense claims. These criteria are also contained in Section 75.2 of the Code.
These criteria are:
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 the Schedule or refused or failed to provide any material required to be provided under subsection 42(10) of the Schedule.
Whether the insured person refused or failed to submit to an examination as required under section 44 of the Schedule or refused or failed to provide any material required to be provided under subsection 44(9) of the Schedule.
Position of the Parties
The Applicant requested that an order issue that there be no costs to either party, and did not directly address any of the considerations that an arbitrator is to consider in deciding entitlement to expenses. Instead, the submissions focussed on the preliminary jurisdictional issue, advancing the position that any award of expenses be made pursuant to the LAT rules. Under those rules, in the absence of a finding of frivolous, vexatious or fraudulent behaviour, the Applicant submitted that neither party should be entitled to expenses in this matter.
The Insurer’s Submission
The Insurer did not address in any detail the preliminary issue raised by the Applicant in its written submission, taking the position at the hearing that the current expense regulation and provisions in the Schedule continue to govern expenses.
The insurer has submitted that, of the above criteria, the following are relevant in determining expenses in this arbitration.
Each party’s degree of success,
Conduct that tended to prolong, obstruct or hinder the proceeding, including a failure to comply with undertakings and orders, and
Whether any aspect of the proceeding was improper, vexatious or unnecessary.5
With respect to these criteria, the Insurer has submitted that I should counsider the following criteria in assessing the expenses it is entitled to. The Insurer has argued the following in support of its position.
1. Degree of Success
The Insurer submitted that it was 100% successful in defending all of the issues that were in dispute at the hearing. As all claims of the Applicant were dismissed, there was no ambiguity in terms of its success in this matter. There is no dispute that TD was completely successful in its defense of the arbitration. Of the factors considered, this in my view, is by the far the most important consideration in assessing both entitlement and quantum of expenses.
4. 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: and
5. Whether any Aspect of the Proceeding was Improper, Vexatious or Unnecessary
The Insurer submits that the Applicant’s conduct prolonged the hearing, which resulted in additional costs and expenses to the Insurer.
i. October 15, 2012 adjournment
The Insurer submits that an adjournment of the hearing, which was to commence on October 15, 2012 was granted on the basis of the Applicant’s late request to add the issue of Catastrophic Impairment determination to the Arbitration, and also to allow time for the Applicant’s experts to assess the Applicant and produce responding reports. The Insurer submits that this should have been done at a much earlier time, and that, despite the adjournment being granted, the Applicant’s experts did not respond to the Insurer reports at all. The Insurer submits therefore that there was no valid reason for this adjournment.
In my view, while perhaps this should have been done earlier, as it was important to the Applicant’s case to add this issue.
Further, it appeared that the Applicant’s Assessors did not respond to the Insurer’s assessors, although this could not possibly be known at the time of the adjournment request. Although the late adjournment caused some delay of the hearing, at the time it was requested, it was necessary to protect the rights of the Applicant. I do not find that the proceeding was improper, frivolous, vexatious or unnecessary.
ii. Request to add Attendant Care Issue
The Insurer further submits that the Applicant improperly requested adding the issue of Attendant Care to the arbitration, despite the fact that the issue was never mediated and no Form 1 was submitted. No explanation was given as to why this claim was not advanced properly, and at an earlier date.
The Insurer submitted that the Applicant persisted in arbitrating what the Insurer terms a “non issue”. This is due to the Applicant’s non-compliance with the legislative requirements to advance the claim, and evidence from the Applicant’s own expert, Mr. DeRyck.
Mr. DeRyck, although not an occupational therapist, prepared a document entitled “Threshold Analysis Report” to address other issues in the arbitration. At page 23 of this report, Mr. DeRyck reported that in the context of undressing and dressing, bathing, meal preparation, feeding, medication management and general supervision. “Mr. Nguyen now functions independently.”
I agree with the Insurer’s submission that this issue unnecessarily complicated the hearing and resulted in wasted hearing time, and take this into consideration as a factor when assessing the quantum of the award.
iii. Motion to Exclude Surveillance Evidence
While the Insurer submits that this motion was an attempt to take the Insurer by surprise, having been brought up mid-arbitration, it was made on the basis that the rules had not been strictly complied with, in that all of the surveillance materials, particularly the notes of the investigators in this case, had not been provided in accordance with the requirements of the Code.
Ultimately, the production and cross examination of the investigators yielded little if any relevant information.
While I found there was no prejudice to the Applicant and allowed the surveillance to be entered into evidence, the motion was necessary. It must be remembered that there was, in fact, technical non-compliance by the Insurer with the requirements of section 40 of the DRPC. That section requires a party intending to rely on surveillance, to provide all materials relating to the surveillance, at least 30 days prior to the commencement of the hearing.
In this case, the notes of some of the investigators were not produced. Had the motion been successful and the surveillance been excluded, there may well have been a very different result in this arbitration. It was therefore incumbent on the Applicant to bring this motion.
iv. The Applicant’s experts did not opine on the surveillance evidence.
Dr. Mamelak testified that he “skimmed” over some of the evidence. It appeared that from his testimony, Mr. DeRyck saw little or none of the many hours of surveillance despite being provided with the surveillance evidence. It was not the conduct of the party or the representative at issue here, but the conduct of the witnesses themselves, which may have prolonged the hearing.
Their evidence left much to be desired and did not particularly aid the Applicant’s case. However, I do not consider that the shortcomings of the Applicant’s witnesses’ testimony to be a factor in considering the expense award.
v. The Applicant’s attempt to file a supplementary brief at the hearing.
I have considered this issue and find, that, while this did somewhat marginally lengthen the hearing time, the Applicant’s argument that the documents had been already been provided to the Insurer previously, and therefore met the notice requirements to enter the brief in evidence, had some validity. Although the argument was unsuccessful, I did not find it to be frivolous and I give it little or no weight when considering the expense award.
vi. The Applicant spent time cross examining the Insurer’s experts on DAC guidelines.
The Applicant spent considerable time cross examining Dr. Gallimore, with a focus on DAC guidelines that the Insurer submitted were irrelevant, as the Insurer’s multidisciplinary catastrophic assessment was not a DAC assessment. Similarly some time was spent by the Applicant on submissions with respect to the use of the DAC guidelines, and documentary evidence with respect to DACs was also produced. As DACs were no longer the law in Ontario, I agree with the Insurer that the evidence and submissions were irrelevant, and the time spent with respect to this issue unnecessarily lengthened the proceedings, and find it a factor when assessing the expense award.
vii. The Testimony of the Applicant’s wife and daughter were given in an evasive and contradictory manner.
I gave the testimony of these witnesses little weight, as the evidence was contradictory both internally, with their own evidence, with each other, and externally with respect to the medical evidence produced. However, in my decision, I noted that it was difficult to determine whether the difficulties were due to cultural differences, interpretation difficulties, or whether the witnesses were simply evasive. While these witnesses did little to support the Applicant’s case, they were necessary witnesses and I do not consider the time spent on them as a factor that unnecessarily lengthened the hearing.
viii. No Legitimate Basis for a Special Award.
The Applicant is entitled to advance a claim for a special award. I have considered this submission and I do not find that the time spent in advancing this claim is relevant in assessing the expense award in this case.
Conclusion
As stated earlier, the most important factor in assessing expenses in this case is the complete success of the Insurer, as all of the Applicant’s claims were dismissed. I have also taken into account the Applicant’s conduct in prolonging the hearing, particularly with respect to the time spent on the Attendant Care claim, the arguments and cross examination with respect to the DAC guidelines and the attempt by the Applicant to introduce a supplementary brief at the hearing. However, except for the Insurer’s success, those factors, while perhaps unnecessarily prolonging the hearing somewhat, were minor factors and do not factor greatly in my assessment. The main reason why this hearing took 23 days to complete was due to the voluminous amount of surveillance evidence that the Insurer had taken over a period of several years, which was introduced and shown at the hearing. The introduction of this evidence with the explanations and commentary accompanying it, and the resultant cross examinations and submissions consumed the vast bulk of the hearing time. While this surveillance evidence proved to be a major factor with respect to the Insurer’s success, I again must look at the consumer protection aspect of the legislation.
There is no doubt that the surveillance evidence was a major factor in the successful outcome of this case for the Insurer. However, it required 2 lawyers for the Insurer in the hearing each day, and multiple hours of preparation which in fairness, the Applicant ought not, in my view, be required to entirely fund, . Thus, while I acknowledge the importance of the surveillance to the Insurer’s case, and am prepared to allow a reasonable portion of the expenses toward it, I am not prepared to require the Applicant to cover the entire cost of obtaining, preparing and showing this evidence at the hearing.
Quantum of Award
Section 3(1) of the Schedule to the Expense Regulation deals with quantum, and sets out the legal fees which may be awarded:
3(1) The legal fees payable by the insured person or the insurer for the following matters may be awarded:
For all services performed before an arbitration, appeal, variation or revocation hearing.
For the preparation for an arbitration, appeal, variation or revocation hearing.
For attendance at an arbitration, appeal, variation or revocation hearing.
For services subsequent to an arbitration, appeal, variation or revocation hearing.
3(2) The number of hours for which legal fees may be awarded shall be determined by the arbitrator, having regard to the criteria set out in subsection 12(2) of this Regulation.
3(3) The maximum amount that may be awarded for legal fees is the amount calculated using the hourly rates set out in the Dispute Resolution Practice Code published by the Ontario Insurance Commission or Financial Services Commission of Ontario, as it may be amended from time to time.
Section 78.1 Code states that 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; or
(b) the hourly rate referred to in Rule 78.1 (a) adjusted to include, where appropriate, the experience allowance established under the Legal Aid Services Act, 1998.
Note that the wording of the section states that “award of legal fees payable by the insured person or the insurer may be awarded (underline mine), suggesting that in every case, any award of expenses by the arbitrator is discretionary, as long as the arbitrator has considered the relevant criteria as set out in the Regulation.
Where an adjudicator is satisfied that a higher amount for legal fees to an insured person is justified, an hourly rate of up to $150.00 may be awarded.
However, section 78.1 (b) of the Code makes it clear that the increased rate is only available to the Insured. I have therefore reduced the hourly rate allowed for Mr. Caston to $123.74 for tier 3 counsel (those with 10 or more years of experience), in accordance with the rates set out in the Ontario Legal Aid tariff in 2013.
Other Factors
Having regard to the above, Arbitrators have a wide discretion in awarding expenses, and consider a number of general principles that have emerged from past arbitration decisions.
In Henri and Allstate Insurance Company of Canada,6 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 consequences.
The Supreme Court of Canada's decision in the leading case of Smith v. Co-operators General Insurance Co.,7 establishes that consumer protection is one of the main objectives of automobile insurance law. In that decision, Justice Gonthier reasoned as follows at paragraph 11:
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”.
I must note again, that, bearing these principles in mind, although this hearing was excessively long, a line-by-line analysis is virtually impossible. The breakdown in the Insurer’s bill of costs submitted does not provide sufficient information to do so for the several staff members who worked on this file. The “global” approach to assessing expenses under these circumstances makes more sense.
Further, at the outset, one must ask whether in a case where an injured Applicant who makes a claim for benefits does not succeed because of a successful challenge by the Insurer, is requiring that Applicant to pay costs of over $220,000.00 reasonable, bearing in mind that Accident Benefits legislation was designed with the intent that access to justice is available to the public without fear of exorbitant costs or other consequences?
In this case, the Insurer chose to aggressively defend its position with extensive investigative and surveillance methods, which, although ultimately successful, was costly in terms of time and resources required. This arbitration was one of the longest hearings, (if not the longest), at FSCO and when scheduled, it was not contemplated that it would require 23 days to complete.
Considering the principles of fairness, the Applicant should not be punished by having to pay the all of the legal costs of the Insurer. While it would be unfair, in my view, to penalize the Insurer because of the thorough and exhaustive evidentiary approach it chose to take, and which ultimately resulted in the Insurer’s success, I do not find that it would be fair to penalize the Applicant in the circumstances of this case, by finding that the costs of this unusually lengthy hearing be entirely borne by Applicant.
The “loser pays” system that is normally the case for the unsuccessful party in civil litigation, in my view, conflicts with the intent of the legislature to provide a consumer friendly process and can act as a barrier to access to justice for an Insured in accident benefits cases. The authors of the Schedule never intended to financially penalize those who have legitimate claims but are unable to succeed because their evidence falls short of what is necessary to prove their case on a balance of probabilities.
The subject accident occurred in 2003. The Applicant first appeared before me in September 2013, and visually presented as significantly impaired through the entire proceeding, which completed in April 2014. However the evidence to prove that the accident of 2003 was causally related to his apparent current presentation, which, at least visually, suggested that he was significantly impaired at the time of the hearing in 2013, was insufficient to find in his favour.
The whole premise behind the Commission’s dispute resolution system is to provide access to justice for claimants. Clearly, claimants do not win every case. However, the prospect of an expense award against a losing Applicant in the vicinity of a quarter of a million dollars might well act as a barrier to those with legitimate claims.
Therefore, while I have found that the insurer is entitled to its reasonable expenses for complete success, I have reduced the amounts to which I have found the Insurer to be entitled to what I consider to be a reasonable amount under the circumstances of this case, and inline with the consumer protection aspects of the legislation.
THE INSURER’S ACCOUNT
Hourly Rates:
The Insurer has submitted account fees of $143,233.28, with an additional $18,620.33 for HST, and $58,745.38 in disbursements. From the account, it appears that 14 lawyers, 2 law students and 4 law clerks have billed on this file.
At FSCO, lawyer’s fees are determined in accordance with a tariff set by Legal Aid Ontario. The tariff uses a tiered system based on the year of call to the Bar, to determine the hourly rate to which the participating lawyers are entitled. According to the tariff, lawyers called to the Bar with less than 4 years of experience are entitled to the hourly rates set out in tier 1, while senior lawyers with 10 years of experience or more are entitled to the hourly rate set out in tier 3.
Christopher Caston, senior counsel, called to the Bar in 2001, appeared daily at the hearing, and was assisted by Mr. Daniel Siu, called to the bar in 2011. Mr. Caston has requested payment at the hourly rate of $150.00 which is the increased hourly rate allowed for senior counsel in certain cases. However, the discretion to award the increased hourly fee is only available to representatives of the Insured, and is not available to Insurer’s counsel.
I have therefore reduced the hourly rate allowed for Mr. Caston to $123.74 for tier 3 counsel (those with 10 or more years of experience) , in accordance with the rates set out in the Ontario Legal Aid tariff in 2013.
In the Insurer’s account, it appears that a large portion of the work took place in 2013, including much of the preparation and appearance at the arbitration hearing.
Mr. Siu, a tier 1 lawyer, has requested payment at the hourly rate of $94.28 per hour in the account submitted. I am prepared to allow fees in that amount for Mr. Siu.
With respect to hourly rates of other staff of the Insurer who assisted with this file and appear in the Bill of Costs, I am satisfied that the hourly rates for each are in accordance with those set out in the legal aid tariff.
The Bill of Costs:
Prior to determining the amounts I will allow for fees on this file, I have reviewed the bill of costs submitted by the Insurer in detail. While the account lists the hours performed by each lawyer, it is not broken down as to the times and type of service performed. The account is broken down into main sections — Schedule A is divided into 2 sections, consisting of services rendered prior to the arbitration, excluding preparation for the hearing and for services in preparation for and attendance at the hearing. Schedule B deals with disbursements.
In assessing this account, as indicated earlier, a line by line determination would not be appropriate. Rather, my assessment is based on what I consider to be a reasonable amount of time spent considering the length and complexity of this case.
Schedule A: Legal Fees
Pre-Arbitration Hearing Fees:
The Insurer has submitted an account totalling $19,148.35 for work done by 12 lawyers and 1 law clerk for services prior to the commencement of the arbitration hearing, excluding preparation for the hearing itself.
Amounts allowed for Pre- Arbitration services:
Mr. Christopher Caston:
Of the 12 lawyers named, Mr. Caston has billed for 84 hours of work, totalling $12,600.00 at $150.00 per hour, the rate he has claimed. As Mr. Caston was the lawyer with carriage of this file, and in a supervisory role, I am prepared to allow the entire 84 hours, but at the rate of $123.74 for a total of $10,394.16 for services performed by Mr. Caston up to the commencement of the hearing.
Other Staff Members:
I recognize that Mr. Caston required assistance of staff members to prepare for this arbitration. The total submitted for all persons who assisted, after allowing for Mr. Caston’s account, totals $6,548.35 accounting for approximately 70 hours of work. While I find this to be somewhat excessive, I am prepared to allow a further $2,500.00 in total for services of the other members of the Insurer’s staff who assisted in file preparation prior to the hearing.
This amount does not include the work done on the file by the law clerks. I am also allowing an additional $2,000.00 for file preparation by the law clerks.
The total therefore allowed for all services of lawyers and law clerks who worked on this file prior to the hearing, excluding preparation for the actual hearing, is $14,894.16.
Arbitration Hearing Fees:
The account submitted requests fees in the amount of $123,952.81 for arbitration preparation, attendance at the hearing, Legal Research and closing submissions. This amount represents work performed by 4 lawyers, 2 students and 4 law clerks named in the account.
Of this amount, Mr. Caston has submitted an account for 492.10 hours, totalling $73,815.00 at the billed rate of $150.00 hourly. Mr. Siu has submitted an account for 481.60 hours at the rate of $94.28 hourly, totalling $45,405.25. The law clerks have submitted 126.40 hours in total, billed at $29.36 per hour totalling $3,711.10. The other two lawyers have claimed a total of 5 hours, and the amount claimed for the 2 law students billed was for 2.3 hours.
While I appreciate that this arbitration was complicated, and took place over 23 days spanning several months, I find that almost 1000 hours of preparation for the lawyers involved is excessive and I have reduced the fees accordingly.
I acknowledge that the many hours of surveillance evidence alone required many hours to analyze, and organize in such a way that it made sense at the hearing, and in my view, could not have been presented properly by one lawyer.
Nevertheless, in my view, it was not necessary to have 2 lawyers in attendance full time for each and every day. I have therefore the reduced hours allowed for Mr. Siu, who assisted Mr. Caston throughout the hearing, to approximately one half of the time allowed for Mr. Caston.
Arbitration Services Amounts Allowed:
I am allowing 350 hours for Mr. Caston, at $123.74 per hour, for a total amount of $43,309.00.
With respect to Mr. Siu, recognizing that his assistance was required at the hearing and during preparation and presentation of the surveillance evidence, I am prepared to allow a further 175 hours at $94.28 hourly, for a total of $16,499.00.
I am also allowing an additional $2,000.00 for file preparation by the law clerks.
The total allowed for lawyers fees and law clerks, with respect to preparation for and attendance at the arbitration is $61,808.00.
Summary:
Pre-Arbitration Legal Fees Allowed $14,894.16
Arbitration Legal Fees Allowed $61,808.00
TOTAL AWARD FOR FEES $76,702.16
The total I have allowed for all fees with respect to services rendered by the Insurer for this arbitration is: $76.702.16 + HST in the amount of $9,971.28.
The total for all fees and HST is $86,673.44.
Disbursements:
Analysis:
Schedule B of the Insurer’s Bill of Costs deals with the Insurer’s claim for Disbursements.
The Expense Regulation, section 12.4 sets out the amounts eligible for payment made by or on behalf of an insured person or an insurer, for expenses incurred. Awards of disbursement are also discretionary, and should be made in accordance with the requirements of the Regulation.
Quantum:
The Insurer has requested $58,745.38 for disbursements in its bill of costs, which formed part of the Insurer’s written submissions. There are almost 100 items claimed in that bill, and I do not intend to go through them line by line. However, there are no details in the bill regarding when the work was done, and, other than naming the type of expense and the vendor.
Also, there are no details of what work was done. While there is no doubt that the Insurer is entitled to reimbursement for expenses, despite the fact that this was a long and complicated hearing, I find that the amount of $58,745.38 is excessive, especially in circumstances such as these where there are substantial expenses claimed without explanation or detail. While the reason for some of the expenses can be ascertained with some certainty, (for example, witness fees, the application fee, fees paid to the investigators) most of the other expenses submitted are general in nature. I will therefore outline below the factors which I have considered in assessing the quantum of disbursements.
Disallowed Expenses:
i. Court Reporters
There is no provision in the Schedule for allowing court reporter fees. Section 4.4 of the Expense Regulation allows an award for other out of pocket expenses incurred “in furtherance of the arbitration, appeal, variation or revocation hearing”. In my view, court reporter attendance fees are not covered by this section. The Bill of Costs claims 19 items in the amount of $517.64, and an additional amount of $221.78 claimed, paid to the vendor, Professional Court Reporters.
These were described as “Arbitration”, or “Official Examiner”. Without dates or explanation of services, I assume these amounts were for attendance of the Court Reporter at the request of the Insurer. The total for these items is $10,547.74. This amount is disallowed.
ii. Mediation:
There is an expense of $5,423.25 listed for “mediation”, without any explanation as to whether this was an attendance fee, a fee for the mediator or some other expense related to a mediation. There is no provision in the Schedule for mediation fees, and without further explanation, this item is disallowed.
iii. Filing Fee
The Insurer has also billed for re-imbursement of the $3,000.00 filing fee.
Section 7 of the Schedule to the Expense Regulation, sets out conditions in which the Insurer may be entitled to an award of the filing fee. It states as follows:
There may be awarded to an insurer the total of all amounts in respect of a claim by an insured person that are included under section 4 of Ontario Regulation 11/01 (Assessment of Expenses and Expenditures) made under the Financial Services Commission of Ontario Act, 1997 in determining the amount of the insurer’s total assessment for arbitrations under section 282 of the Act, total assessment for appeals under section 283 of the Act or total assessment for applications under section 284 of the Act, if the insured person, on or after March 1, 2006,
(a) refused or failed to submit to an examination relating to the claim under section 42 of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996) made under the Act or under section 44 of Ontario Regulation 34/10 (Statutory Accident Benefits Schedule — Effective September 1, 2010) made under the Act; or
(b) refused or failed to provide any material relating to the claim that was required to be provided by subsection 42 (10) of Ontario Regulation 403/96 (Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996), made under the Act, or by subsection 44 (9) of Ontario Regulation 34/10 (Statutory Accident Benefits Schedule — Effective September 1, 2010), made under the Act.
None of these conditions apply to this case.
Further, should I be wrong in the application of the above section to this case and this amount is within the sole discretion of the arbitrator, I am not prepared to exercise my discretion in this case. The $3,000.00 filing fee claimed is disallowed.
Allowable Expenses:
Other Out of Pocket Expenses
i. Parking, mileage, car rental:
There is over $400.00 claimed by Mr. Siu for mileage, parking and car rental. Again there is no explanation given as to when, where and for what reason these expenses were incurred. However, the amounts claimed in my view, are reasonable and fall within the schedule of allowable expenses.
I allow $400.00 for these expenses.
ii. Photocopy Expenses:
With respect to photocopying expenses, there are 13 separate entries totalling $3,438.39 by 5 vendors, but with no detail as to amount per page, number of pages, dates or purpose. Without explanation, I find this amount to be excessive, and I am reducing this amount to $1,500.00.
iii. Process Serving:
There are 8 expense items claimed for process serving totalling $2,045.33. There is no detail given other than the name of the vendor. Process serving is a necessary part of the arbitration process, but in the absence of detail as to what documents were served, and for what purpose, I am allowing $1,000.00 for process serving.
iv. Investigative Expenses:
With respect to investigative expenses, I assume that these were incurred for the surveillance evidence. The account claims $5,962.00 which, in the absence of a breakdown, I assume includes investigative services, CD copying, and presumably the time spent in gathering the evidence by the investigators, consulting with the Insurer, preparation of their reports, and perhaps, for attendance at the hearing. However, the surveillance was a necessary expense in preparing for this arbitration, and I am therefore prepared to award $5,962.00 for investigative expenses.
v. Witness Fees:
There are also 4 claims for re-imbursement of witness fees paid to the Minister of Finance totalling $293.20. This amount is reasonable, and I allow this amount.
Experts:
a) Dr. Joel Eisen:
The Insurer has submitted 3 claims for reimbursement for Dr. Joel Eisen, psychiatrist, in the amounts of $988.75, $791.00 and $200.00 respectively. The Expense Regulation sets out the hourly rates for attendance at the arbitration, preparation, and for writing reports. None of this information is contained in the account. Under the circumstances, Dr. Eisen was an important witness for the Insurer, and although I do not have the details as to what the amounts billed were for, the amounts claimed appear to be reasonable. Dr. Eisen testified, wrote reports and I assume he prepared for the hearing. I therefore am allowing his accounts in full, for a total of $1,979.75.
b) Dr. Gallimore:
The Insurer has submitted an account for $8,475.00, with only the type of expense listed as Arbitration. While I do not know the breakdown of the services billed for, and therefore cannot determine if some of the amounts in this account exceed the amounts allowed by the Regulation, Dr. Gallimore testified at the hearing, which required preparation and wrote a report. The Regulation allows for $200.00 per hour for testimony at the hearing, $500.00 for hearing preparation, and up to $1,500.00 for an expert report. I am awarding 3 hours or $600.00 for attendance at the hearing, $500.00 for preparation and $1,500.00 for the report, for a total of $2,300.00.
vi. Medical Records:
The Insurer has submitted claims for reimbursement for obtaining medical records in the total amount of $511.05. Again, while no details are provided, under the circumstances, this amount is reasonable in my view, and I am prepared to award payment of this amount.
vii. Transcripts of Proceedings:
Because of the length of this case over an extended time period, transcripts were ordered by the Insurer, copies of which were provided to the Applicant and the Arbitrator.
The Insurer has submitted a claim for transcripts, in the amount of $9,654.95. I consider this to be an out of pocket expense, in furtherance of the arbitration and in accordance with the Schedule to the Expense Regulation, I allow this amount in full.
viii. Other claimed disbursements:
The Insurer has included several sundry amounts in its bill of costs, such as interpreter fees. None of these items have any detail or explanation as to why they were incurred.
Although I have allowed several items at the amounts claimed, such as witness fees, and medical records, these were easily discernible as necessary costs, and I found the amounts claimed reasonable. However, with respect to items other than the disbursements above which I have found to be allowable, I am not prepared to allow any further disbursements in the absence of explanation or detail.
ix. Total Disbursements Allowed:
The total amount awarded for disbursements is $23,900.95.
SUMMARY:
Pre-Arbitration Legal Fees Allowed $14,894.16
Arbitration Legal Fees Allowed $61,808.00
Total Legal Fees allowed $76,702.16
HST @ 13% $9,971.28
Disbursements Allowed $23,900.95
TOTAL AWARD FOR ALL FEES, DISBURSEMENTS AND HST $110,834.37
The total for all fees and HST is $86,673.44.
For the reasons set out above, the Applicant shall be ordered to pay to the Insurer its expenses in respect of this arbitration proceeding, fixed in the amount of $110,834.37 (inclusive of fees, disbursements and any applicable taxes).
April 9, 2018
Alan Mervin Arbitrator
Financial Services Commission of Ontario / Commission des services financiers de l’Ontario
Neutral Citation: 2018 ONFSCDRS 72
FSCO A04-002390
BETWEEN:
QUOC NGUYEN
Applicant
and
TD HOME AND AUTO INSURANCE COMPANY
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 Regulation 664, as amended, it is ordered that:
- The Applicant shall pay to the Insurer its expenses in respect of this arbitration proceeding, fixed in the amount of $110,834.37 (inclusive of fees, disbursements and any applicable taxes).
April 9, 2018
Alan Mervin Arbitrator
Footnotes
- The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
- 2002 CanLII 45001 (ON CA)
- Nguyen and TD Home and Auto Insurance Company (FSCO P16-00007, July 12, 2017)
- Insurance Act, R.S.O. 1990, c.I.8, as amended
- Insurer’s Written Submission, dated June 16, 2017
- (FSCO A-007954, August 8, 1997)
- 2002 SCC 30, [2002] 2 S.C.R., 129, 2002 SCC30