Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2019 ONFSCDRS 11

Appeal P17-00040

MOSES COHEN Appellant

and

AVIVA CANADA INC. Respondent

BEFORE: Maggy Murray

REPRESENTATIVES: Andrew Stein for Mr. Cohen Raymond Murray for Aviva Canada Inc.

HEARING DATE: On the record by written submissions completed December 12, 2018

APPEAL EXPENSES ORDER

Under section 283 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, R.R.O. 1990, as amended, it is ordered that:

Moses Cohen shall pay Aviva Canada Inc. its legal expenses of the appeal proceedings herein, fixed in the amount of $5,000.00, inclusive of disbursements and HST.

March 6, 2019

Maggy Murray Director’s Delegate Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

In a decision dated June 19, 2018, I dismissed the appeal of the May 31, 2017 and September 28, 2017 decisions of Arbitrator Musson wherein he dismissed Mr. Cohen's claims under the SABS-1996¹ for income replacement benefits (IRBs) and housekeeping expenses and ordered Mr. Cohen to pay Aviva $49,982.10 in legal fees, plus $2,352.09 for disbursements for a total of $52,334.19 inclusive of all fees, disbursements and HST for Aviva’s expenses of the arbitration hearing, which lasted nine days and for which the parties also made written submissions following the hearing.

Aviva now seeks its appeal costs for the following:

$35,804.54 legal fees $4,654.59 HST on legal fees (HST = 13%) $ 664.60 in disbursements $ 86.40 in HST on the disbursements costs (HST = 13%) $41,210.13 TOTAL²

II. BACKGROUND AND ANALYSIS

Rule 75.2 of the Dispute Resolution Practice Code – Fourth Edition (the Code) contains the criteria for determining entitlement to expenses which 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.

In 2010, the average appeal expenses awarded to insurers was $2,800.³ Despite this, Aviva claims legal expenses and disbursements in the amount of $41,210.13.

In Henri,⁴ Arbitrator Makepeace stated that “[t]he overriding consideration in fixing arbitration expenses is reasonableness.” A line-by-line assessment of the expenses claimed is not appropriate. Instead, a global assessment of reasonable expenses should be made. The award of costs should not be so high as to deter an Applicant from accessing the dispute resolution process at FSCO, nor should it penalize him for doing so. In addition to a costs award being reasonable, it must also be fair.⁵

Rule 78 of the Code states:

78.1 The maximum amount that may be awarded to … 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;

78.2 The maximum amount that may be awarded to an insured person or an insurer for agent’s fees is an amount calculated using the hourly rates established under the Legal Aid Services Act, 1998 for law clerks, articling students and investigators.

Success

The first criterion for an expense award pursuant to Rule 75.2 of the Code is success. The parties do not dispute that Aviva is entitled to its appeal expenses, as it was successful on appeal.⁶

The only dispute is about the amount of the expenses.

Offers to Settle

Aviva’s offers to settle⁷ expired “by October 31, 2017,” which is five months before the appeal hearing that was conducted on March 29, 2018. Although Aviva provided offers that met the criteria of Rule 76.1 of the Code, they “expired long before the start of the hearing; I accord (them) relatively little weight.”⁸ Aviva’s second offer to settle was for $51,000.00. It did not give Mr. Cohen any incentive to settle.

Novel Issues

Mr. Cohen submitted on appeal that the Arbitrator erred in law in applying a fairness test and reducing Aviva's claim for costs by 50% and instead should have applied a ratio of either 3:1 or 4:1 (three or four hours of preparation time to every one hour of hearing time). Most expense awards set out a ratio. So, that was a novel issue.

The Conduct Of A Party Or A Party's Representative That Tended To Prolong, Obstruct Or Hinder The Proceeding

Mr. Cohen’s Notice of Appeal was served on June 28, 2017. The appeal was heard on March 29, 2018, which was eight months after the Notice of Appeal was served. Although Mr. Cohen sought and obtained extensions within which to file his appeal submissions because he had to retain counsel, this was done before a hearing date was scheduled. I do not find that Mr. Cohen’s conduct prolonged, obstructed or hindered the appeal. Furthermore, Mr. Cohen’s conduct did not cause Aviva to prepare twice for the appeal.

Whether Any Aspect Of The Proceeding Was Improper, Vexatious Or Unnecessary

Aviva acknowledged in its written submissions on appeal that Mr. Cohen raised three issues of law.⁹ Therefore, the appeal was not improper, vexatious or unnecessary.

Legal Fees

The insurer retained Ottawa counsel to conduct this proceeding, which was completed in one day in about six hours, in Toronto. Aviva claimed the expenses for the following representatives:

i. Mr. Raymond Murray, who was called to the Ontario bar in 2005 (i.e., a tier 3 lawyer based on the legal aid rates) and conducted both the arbitration hearing and appeal hearing. Aviva submitted that Mr. Murray’s total time spent on this appeal was 150.7 hours;

ii. Ms. Frances Shapiro Munn, who was called to the Ontario bar in 2013 (i.e., a tier 2 lawyer based on the legal aid rates). Aviva submitted that Ms. Shapiro’s total time spent on this appeal was 30 minutes;

iii. Ms. Alessia Petricone-Westwood, who was called to the Ontario bar in 2015 (i.e., a tier 1 lawyer based on the legal aid rates). Aviva submitted that Ms. Petricone-Westwood’s total time spent on this appeal was 3.6 hours;

iv. Mr. Alexander Dezan, who was called to the Ontario Bar in 2017 (i.e., a tier 1 lawyer based on the legal aid rates). Mr. Dezan also attended the appeal hearing and Aviva’s Bill of Costs states that work including the review of Mr. Cohen’s closing submissions and attendance at the appeal hearing took 17.2 hours. Aviva submitted that Mr. Dezan’s total time spent on this appeal was 134.6 hours;

v. A law clerk was also billed for 3.3 hours.

The above is a total of 292.7 hours at a total cost of $40,459.13¹⁰ in legal fees. That is excessive and unreasonable because the appeal was not complex and did not require five different people.

Disbursements

Aviva’s disbursements are excessive and nebulous. For example:

i. Aviva claimed 2,643 photocopies. However, its Book of Authorities, Written Submissions, Compendium of Law and Compendium of Key Evidence combined were 625 pages.¹¹ Aviva only needed three copies of the aforementioned material (one for itself, one for opposing counsel and one for FSCO), which totals 1,875 pages;

ii. The two receipts from Toronto Pearson Int’l Airport, one for $33.29, the other for $174.11 are not itemized, so, it is not known what those receipts are for;

iii. The two receipts, one from Boosterjuice for $14.58 and one from Starbucks for $17.58 are for non-essential items such as smoothies and lattes;

iv. The taxi receipt for $76 states the cost of the taxi but is missing the date, where the taxi was taken from, where the taxi went, does not have the cab number or the cab driver’s signature;

v. The taxi receipt for $60 does not have the cab number or the cab driver’s signature.

Conclusion

I find that $5,000.00 inclusive of HST and disbursements, is both fair and reasonable.

Mr. Cohen shall pay to Aviva Canada Inc. its legal appeal expenses of $5,000.00 inclusive of HST and disbursements.