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SHOULD YOU LITIGATE OR ARBITRATE?

Brian M. Cameron and Annette D. Jansen

 

Accident benefit disputes can be time consuming, especially when dealing with denials of relatively inexpensive benefits. Assume your client requires physiotherapy for twelve sessions and his or her insurance company denies funding. Do you issue a Statement of Claim in Superior Court for $2,000 of treatment, or do you simply arbitrate the claim? Does it make a difference if the denial is related to hundreds of thousands of dollars worth of attendant care benefits?

Regardless of the merits or size of the claim, the Insurance Act[1] requires that all accident benefit disputes be mediated. These “mediations” are informal settlement negotiations conducted over the phone. In my experience, they tend to fail. The mediator will issue a report noting which issues remain in dispute and which issues have resolved.

The important decision comes next – should you apply for arbitration or commence an action in Superior Court? There is of course no definitive answer to this question. There are however questions, considerations of which will likely point you in the right direction. You are likely going to want to consider some of the following issues:

1. How much does the process cost?

2. How long the process takes?

3. Differences in the discovery procedures.

4. Availability of punitive damages or special awards.

5. Recoverable costs in each process.

6. The Appeal Process.

7. Do you want a Jury trial?

8. Do you want to avoid a Jury trial?

There are different rules and procedures when commencing an action in Superior Court as opposed to commencing an arbitration. The Dispute Resolution Practice Code governs mediations, neutral evaluations and arbitrations. The Rules of Civil Procedure[2] govern actions brought in Superior Court. Consideration of the differences in these procedures is necessary when determining whether to commence an arbitration or commence an action in Superior Court.

You must put some thought into the route you will take prior to commencing the litigation – once you start there is almost no chance that you can switch, absent agreement from the other party.

NEUTRAL EVALUATION

Before beginning a discussion on the differences between arbitration and a Superior Court action, it is necessary to mention a “neutral evaluation”. A “neutral evaluation” is part of the dispute resolution process in the Insurance Act[3].

In its simplest terms, a neutral evaluation is where a third party assesses the issues that are in dispute and provides an opinion on the likely decision of an Arbitrator. A neutral evaluation can occur through the Financial Services Commission of Ontario (“FSCO”) or through a private evaluator. Private evaluators set their own costs for this process. There is no additional cost if you seek an evaluation through FSCO.

The parties must file a Joint Statement for Neutral Evaluation which sets out the issues in dispute.[4] After the Joint Statement for Neutral Evaluation is received by FSCO, a date will be set for the neutral evaluation. Each party must file a case summary outlining what they are seeking and what evidence they will rely upon[5]. The case summaries must be exchanged by both parties at least ten days before the neutral evaluation.

Cases that benefit most from attending a neutral evaluation are those where the facts are not in dispute or where the case requires a legal interpretation of an issue. If your case does not settle after the neutral evaluation, it is normally sent right to arbitration, without requiring a pre-hearing.

A neutral evaluation is optional and both parties must agree. The neutral evaluator will not decide disputes relating to the documents filed or make preliminary rulings. The neutral evaluator will not order any requests for interim relief. Neutral evaluation is intended to resolve the issues in dispute before an arbitration. However, the neutral evaluator’s opinion is not binding on the parties. As a result, it is doubtful that this process is useful.

ARBITRATION

Arbitrations are FSCO’s version of lawsuits. FSCO has created an entire “court” system that does nothing but adjudicate accident benefits disputes. In addition to providing the Arbitrators, FSCO provides appellate remedies within the system. It is an informal “Superior Court” and “Court of Appeal”, dedicated to accident benefits disputes, all wrapped up into one package.

All arbitrations begin with the filing of an Application for Arbitration. This is a form produced by FSCO. A copy is at Appendix “A”. This is FSCO’s version of a Statement of Claim. The Application for Arbitration must be served on the other party by either personal service; regular, registered or certified mail; courier service; facsimile; document exchange on a person who participates in an exchange serve or electronic transmission.[6] The Application for Arbitration must include the following:

a) A description of each issue to be arbitrated, provided the issues were submitted to mediation and failed;

b) An explanation of why any document identified in the Report of Mediator having been requested by the insurer, has not been provided to the insurer;

c) A list of other key documents in the applicant’s possession to which he or she intends to refer to in the arbitration;

d) A list of key documents the applicant intends to obtain from other sources, including those the applicant requests from the insurer, such as surveillance evidence;

e) Payment of the application filing fee; and

f) An indication of whether the applicant prefers an oral, electronic or written hearing.[7]

The insured party must also file a copy of the Mediator’s Report related to the issues to be arbitrated. If a private neutral evaluation has taken place, the insured party must file the Report of the Neutral Evaluator or confirmation that the parties have received a copy.[8]

The Application for Arbitration will be registered and assigned to an arbitration case administrator within five business days after receiving the Application.[9] An Application for Arbitration can be rejected by the Dispute Resolution Group if:

a) it is incomplete,

b) not filed within the time requirements,

c) exceeds the jurisdiction of dispute resolution under the Insurance Act; or is

d) frivolous, vexatious or an abuse of process.

The Dispute Resolution Group will give written notice of any jurisdictional issues or if the Application is incomplete. The Dispute Resolution Group may reject the Application if all issues raised by them in their written notice are not dealt with within twenty days.

Once the Application for Arbitration has been filed and served, the insurer has twenty days to respond.[10] It must either:

a) Serve and file a Response by Insurer together with a Statement of Service; or

b) If the insured party has requested neutral evaluation at FSCO, the insurer must file an Agreement to Neutral Evaluation.[11]

This is similar to an action commenced in the Superior Court. There, a Defendant must file a Statement of Defence twenty days after being served with the Statement of Claim.[12] However, in the Superior Court, the Plaintiff party may grant a waiver to any Defendant without seeking leave from the Court.

This is not the case with arbitration. No waivers can be granted by the insured party to extend the filing of the Response by Insurer. The adjudicator may set aside any time limit that is set out in the Dispute Resolution Code, with the agreement of all parties.

If the Response by Insurer is incomplete or exceeds the jurisdiction of the

dispute resolution process under the Insurance Act[13], the Dispute Resolution Group will:

a) Deliver written notice of the jurisdictional concerns or deficiencies in the Response to the insurer and its representative; and

b) Hold the Response in abeyance for twenty days from the delivery of the notice.[14]

If the insurer does not satisfy the jurisdictional concerns or rectify the deficiencies set out in the written notice within twenty days, an Arbitrator may reject the Response and the arbitration will proceed on an uncontested basis.

The insured party may respond to any new issues raised by the insurer by filing a Reply by the Applicant for Arbitration within ten days of being served with the Response by Insurer.

EXCHANGE OF DOCUMENTS AND DISCOVERY

Now that the initial stage of the arbitration procedure is complete the “discovery” process begins. There are different timelines in the Dispute Resolution Code and the Rules of Civil Procedure for the exchange of documents.

In an arbitration, all documents must be exchanged at least ten days before the pre-hearing discussion. If it is not possible to have all documents exchanged within that time frame, you must establish a reasonable timeframe for the exchange of any remaining documents.[15] All documents, including experts’ reports are to be served on the other party at least thirty days before the first day of the arbitration.[16]

In practice, exchanging documents ten days before the pre-hearing, despite the rule, is likely going to result in an adjourned hearing.

In contrast, the Rules of Civil Procedure requires that all expert reports be served at least ninety days before trial.[17]

Not only is the exchange of documents different in an arbitration, the oral discovery rights are different. In short, there is no right to examine a representative of the insurance company. However, there may be a right for the insurer to examine your client. Section 33 of the Statutory Accident Benefits Schedule[18] provides the insurer an opportunity to examine your client under oath. The insurer is only entitled to one examination under oath with respect to any one incident.

THE HEARINGS

The next step is a pre-hearing arbitration. A pre-hearing arbitration will be scheduled within 6-8 weeks after FSCO receives the Application for Arbitration. The pre-hearing arbitration is very similar to a pre-trial in Superior Court. The Arbitrator will help the parties in their attempt to resolve the issues in dispute. The Arbitrator who presides over the pre-hearing arbitration cannot hear the arbitration.

The arbitration will usually take place 4-6 months after the pre-hearing arbitration. An arbitration can be held orally, can be a written hearing or an electronic hearing.[19] The insured party chooses the type of hearing in their Application for Arbitration. The insurer will choose their preferred method of arbitration in the Response by Insurer. At times, an Arbitrator may hold a hearing which combines one or more of these methods.

If one party to the arbitration requests a written hearing or an electronic hearing and the other party does not, the Arbitrator will decide how the hearing will be held. The party preferring the oral hearing must satisfy the Arbitrator that there is no good reason for holding a written hearing. There must be significant prejudice in holding an electronic hearing in order for the Arbitrator to rule against it.[20] The Arbitrator will advise all parties of the method of the hearing within a reasonable time.[21] “Reasonable time” is not defined in the Dispute Resolution Code.

An arbitration is like a mini-trial in front of a person who has developed a special expertise in accident benefits disputes. Each party presents his or her case and calls their witnesses to testify. No party may call more than two experts to give evidence unless ordered by the Arbitrator[22]. This is not significantly different from an action commenced in Superior Court, where no party may call more than three experts to give evidence unless the Judge orders otherwise.[23]

The arbitration will run in much the same way as a trial in Superior Court. However, it is fair to say that it is likely to be less formal. Arbitrations follow the same rules of evidence as courts do, albeit in a less formal way. The Arbitrator determines the relevance, materiality and admissibility of evidence at the hearing. The Arbitrator will not allow evidence that would not be admissible in court by reason of any prejudice under the law of evidence or is not admissible under the Insurance Act[24].

The Arbitrator will not allow evidence that was not served on the other party within the time lines set out in the Dispute Resolution Code unless extraordinary circumstances justify an exception.[25] As occurs within a trial, motions may be brought during the course of the arbitration. There are opening statements and closing argument. The proceedings are transcribed.

In short, there are few differences (in theory at least) in the conduct of an arbitration and a trial in Superior Court. There are, however, great differences in the time spent conducting the hearing. A typical oral hearing lasts three days. An arbitration order will be released within 60-85 days after an oral arbitration. A written arbitration will be complete after sixty days. Anyone with any trial experience will know that a three day Jury trial is indeed rare.

Many advocates of the arbitration system are of the opinion that arbitration is quicker, less formal and less expensive than commencing a lawsuit.

If the insurance company refuses to pay for physiotherapy or chiropractic treatment, it may be worthwhile to arbitrate. This would be an uncomplicated dispute and would not take as many hours to contest. The applicant would get an arbitration date much faster than a trial date. Counsel must examine each case as it comes to decide which route would better serve the interests of their client.

COMMENCING A LAWSUIT

Some of the procedural steps in commencing an action in Superior Court are similar to commencing an arbitration. After issuing a Statement of Claim, the Defendant has twenty days to respond by way of Statement of Defence. Once the Statement of Defence has been served on you, you have ten days to file a Reply, if necessary.[26]

Once you have served the Reply or the time limit to do so has expired and every defendant who is in default is noted in default, the pleadings are closed. An Affidavit of Documents must be served on all parties within ten days of the close of pleadings[27].

Although these rules and timelines are there, the practical reality is that they are rarely met. Defendants routinely ask for waivers. It is a rare case where an Affidavit of Documents is served in time.

Once the Affidavit of Documents has been served, you can begin the discovery process. This will add months to the litigation, as compared to the arbitration process. Simply scheduling a date for oral discovery can take months. Depending on defence counsel, the discovery could go on for days. There may be motions arising out of the discovery related to a refusal to answer questions and undertakings. In our office, we experienced four days of discovery (and three motions dates) for a simple case about income replacement benefits. We learned nothing in the course of our examination that we did not already know from a review of the records. We may have saved a lot of time if we had commenced an arbitration.

Of course, despite the fact that it takes longer and costs more, the discovery process is a very important one. An examination for discovery is very important in a bad faith case. You would want to flesh out the details of the bad faith at the examination for discovery.

After the examinations for discovery are complete, the action is ready to be set down for trial. The Trial Record will be passed and you may set a date at Trial Scheduling Court. This process can be extremely lengthy. If you and opposing counsel do not agree to a trial date, you will have to argue at Trial Scheduling Court.

Even if you do secure a trial date, there is a good chance, in some jurisdictions, that it will be adjourned. Criminal matters take priority over all civil matters and your trial may be bumped off the list on the eve of trial. In many jurisdictions, the wait for a trial date can be upwards of two years.

PUNITIVE DAMAGES AND SPECIAL AWARDS

Punitive damages are available in Superior Court. Special awards are the FSCO version of punitive damages.

Special awards are legislated under section 282(10) of the Insurance Act[28]. The purpose of section 282(10) is to punish insurers that unreasonably fail to pay accident benefits promptly and to deter the insurance companies from acting similarly in the future.

There are two criteria for special awards. First, there must be a withholding or delay of a payment by an insurer pursuant to the Statutory Accident Benefits Schedule. Second, the withholding or delay must be considered “unreasonable” by the arbitrator.

Unreasonable behaviour need not entail deliberate misconduct or bad faith on the part of the insurer, but simply actions that go beyond the limits of what is equitable or actions that are not guided by or do not listen to reason.

If the Arbitrator finds that an insurer has unreasonably withheld or delayed payments, the Arbitrator, in addition to awarding the benefits and interest to which an insured person is entitled, shall award a lump sum of up to 50% of the amount to which the person was entitled at the time of the award, together with interest on all amounts then owing to the insured (including unpaid interest) at the rate of 2 per cent per month, compounded monthly, from the time the benefits first became payable under the Schedule.[29]

Arbitrators have looked at the circumstances of each case to determine whether an insurer has acted reasonably in withholding or delaying a payment of benefits. The following factors have been considered as unreasonable:

a) where an insurer suspended the applicant’s benefits without giving him any prior notice that such a suspension was contemplated;

b) where an insurer made no attempt to update or verify its medical information;

c) where an insurer made no effort to review or re-assess its position in light of new information;

d) where there was little honest effort made on behalf of the insurer to properly investigate a matter;

e) where the insurer ignored information that tended to support a claim; or

f) where an insurer came to a hasty decision not supported by reliable evidence.

In Persofsky v. Liberty Mutual Insurance Co.[30] the court outlined a number of factors to take into consideration when determining the amount of a special award:

a) The amount of the benefits unreasonably withheld or delayed;

b) The time the benefit is withheld or delayed;

c) Failing to respect important obligations under the Statutory Accident Benefits Schedule;

d) Other factors that increase the gravity of the insurer’s conduct;

e) Mitigating factors;

f) Other penalties; and

g) Interest.

Director Draper discussed Section 282(10) of the Insurance Act and described the formula for calculating the maximum amount of the special award. The formula is as follows:

a) Determine the benefits owing to the insured person, including interest calculated under the applicable version of SABS;

b) Determine whether the insurer unreasonably withheld or delayed the payment of these benefits. If so, the insurer will be ordered to pay a lump sum amount in addition to the benefits and interest calculated in #1.

c) If the insurer did not act unreasonably in respect of all the benefits owing under #1, determine the amount of the benefits that were unreasonably withheld or delayed, and the interest payable on these benefits under the applicable version of SABS;

d) Determine the maximum special award that can be awarded under section 282(1), or at least a reasonable approximation. This is done by taking the amount in #1 or #3, whichever is applicable, and adding the additional interest component in section 282(1) - two per cent per month, compounded monthly. To be clear, this calculation includes interest on the unpaid SABS interest. The maximum special award is 50 per cent of this total. Expressed as a formula, the calculation is as follows:

e) Maximum special award = 50% x (benefits that were unreasonably withheld or delayed + interest on these benefits calculated under the SABS + compound interest calculated according to section 282(10)).

f) Consider all relevant factors to determine an appropriate lump sum special award, not a percentage that responds to the facts of the case and bears a reasonable relationship to other special awards, and does not exceed the maximum.

g) Provide reasons for concluding that the special award is payable, and for the amount of the award.

h) In the order, express the special award as a specific, lump sum amount. No interest is payable on this amount, except as part of the enforcement process.

The case law is clear that when calculating the special award, Arbitrators are to include the interest pursuant to the Statutory Accident Benefits Schedule.

William J. Teggart and Drew R. Sinclair provided a comprehensive review of the law on punitive damages available in Superior Court.[31]

THE APPEAL

The right of appeal from an arbitration differs from that of an action in Superior Court. There are two options available following an arbitration:

a) If there was an error of law you may appeal the Arbitrator’s decision. A Notice of Appeal must be filed within 30 days.[32]

b) Where your client’s situation has changed since the arbitration, new evidence has been brought to your attention or there was a clear error in the arbitration decision, you may complete an Application for Variation/Revocation. The cost of filing an Application for Variation/Revocation is $250.00.[33]

The Appellant must serve a Notice of Appeal and file it at FSCO along with a Statement of Service within thirty days of the date of the arbitration order.[34] An appeal may be rejected if:

a) it is not filed within the prescribed time limits under the Code;

b) it does not raise a question of law;

c) it is from a preliminary or interim order that does not finally dispose of the dispute;

d) the Notice of Appeal is incomplete or does not have enough information for the other party to respond;

e) or the Appellant has not paid the required filing fee.[35]

Once the Notice of Appeal, Statement of Service and the filing fee has been paid, FSCO’s Director of Arbitrations (“Director”) will acknowledge the appeal.[36]

A Response to Appeal must be served and filed along with a copy of a Statement of Service within twenty days of receiving the Director’s acknowledgment of the Notice of Appeal.

Within thirty days of the date that the Response to Appeal was due, the Appellant must serve and file written submissions and a Statement of Service. If a transcript has been ordered, the time limit for the Appellant’s written submissions is extended to thirty days from the date on which the transcript is received. Within twenty days of receiving the Appellant’s written submissions, the Respondent must serve and file their written submissions along with a Statement of Service.[37]

Appeals are heard by the Director or by someone the Director has appointed from FSCO to conduct the appeal on his/her behalf. That person will exercise the powers and perform the duties of the Director relating to the appeal.[38] The Director may decide the appeal on the record, by way of an oral or electronic hearing or in any other manner that the Director feels is appropriate. If the appeal will be heard orally or electronically, a Notice of Hearing will be delivered to the parties.

The Director may proceed with the appeal even if a party does not file documents required by the rules set out in the Dispute Resolution Code. If a Notice of Hearing was served on a party and that party does not attend the appeal, the Director may proceed with oral submissions or the hearing in the absence of the party. The party is not entitled to any further notice in the proceeding.[39]

In addition to the appeal remedy, a party may apply to the Director to vary or revoke an arbitration order or an appeal order if:

a) There has been a material change in the circumstances of the insured;

b) Evidence not available on the arbitration or appeal has become available; or

c) There is an error in the order.[40]

To vary or revoke an arbitration order or an appeal order you must complete an Application for Variation/Revocation. This Application must be served on all parties and filed with a Statement of Service. The same rules apply to an Application for Variation/Revocation as they do to filing a Notice of Appeal. The Application may be rejected by the Director if it is incomplete or if all of the issues in dispute have not been finally decided.

Once the Director has acknowledged the Application for Variation/Revocation, the responding party has twenty days to serve and file a Response to Application for Variation/Revocation.[41]

The Application for Variation/Revocation may be heard by the Director or someone appointed by the Director. The Director also has the option of appointing the same adjudicator who made the original order to decide the Application.[42]

There are many appeal decisions dealing with the criteria to establish “new evidence”. The criteria are as follows:

a) The evidence should generally not be admitted if, by due diligence, it could have been adduced at trial;

b) The evidence must be credible, in the sense that it is reasonably capable of belief;

c) The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in the trial; and

d) The evidence must be such that, if believed, it could reasonably, when taken with the other evidence adduced at trial, be expected to have affected the result.[43]

As is the case with the arbitration process, there are provisions in the Rules of Civil Procedure for reconsideration of a decision following a trial. Rule 59 of the Rules of Civil Procedure governs re-hearings and motions to vary or amend Orders. The decision whether or not to reconsider a decision or vary an order is discretionary. While the test has been expressed in a number of different ways, it essentially comes to this. The court must consider whether the evidence would probably have changed the result and whether that evidence could have been discovered by the exercise of reasonable diligence.[44]

An appeal from an action commenced in Superior Court will either go to the Divisional Court or the Court of Appeal. The choice depends on the amount of the Judgment. In either event, the process is much more expensive and takes much longer.

RECOVERABLE COSTS

The costs recoverable in an arbitration are significantly less than the costs you may be able to recover at trial. Of course, the converse is also true – if you are not successful, you can expect to pay much less in an arbitration that you would following a trial.

Section 282(11) of the Insurance Act[45] sets out the criteria to be followed by the Arbitrator when awarding costs. The criteria are as follows:

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

2. Any written offers to settle made in accordance with subsection (3).

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.

When it is time to assess costs before the Arbitrator, either party can request that the Arbitrator take into account all written offers:

a) That were made after the conclusion of mediation and before the conclusion of the arbitration; and

b) That were made in accordance with the rules of practice and procedure applicable to the proceeding.[46]

If a party requests that the Arbitrator take into account a written offer, the Arbitrator must be informed of the details of the written offer, including when it was made, the response of the party and the results of the proceeding. The Dispute Resolution Code is not clear what the result would be of taking into account an offer to settle. There is no provision similar to Rule 49 of the Rules of Civil Procedure in the Dispute Resolution Code.

The unsuccessful party will be responsible to pay the disbursements incurred by the successful party in accordance with the Dispute Resolution Code. Under Section F of the Dispute Resolution Code, the following disbursements are payable:

a) long distance (phone or fax charges)

b) typing, printing or otherwise reproducing documents

c) delivery by mail or courier of items related to a hearing as listed in Section 3(1)(2)

d) out-of-pocket expenses relating to a further hearing as in Section 3 (1)(2)

e) any applicable taxes

Witnesses are paid for their attendance at the arbitration. The maximum amount that may be awarded is the amount of the attendance allowance for witnesses under Rule 58.05 of the Rules of Civil Procedure as a disbursement.[47] The maximum amount that may be awarded to an expert witness is $200.00 per hour of attendance with a maximum of $1,600.00 per day. The amount of expenses paid by either party to an expert witness for preparing for a hearing is a maximum of $500.00. A maximum of $1,500.00 may be paid to the expert witness for the preparation of their report.

Anyone who has ever conducted a personal injury trial will know that expert witnesses and report expenses will far exceed these amounts. It is not unusual to spend in excess of $5,000 for an expert report, with many more thousands payable if the expert gives evidence. This alone gives the well funded insurers a distinct advantage.

Legal fees are also payable following an arbitration. The Arbitrator will award legal fees for all services performed before the arbitration as well as for all preparation time. Fees will be awarded for attending the arbitration.

The maximum amount that an Arbitrator will award for legal fees is set out in Rule 78 of the Dispute Resolution Code. This maximum amount is calculated using the hourly rates established under the Legal Aid Services Act[48]. This hourly rate will be adjusted to include the experience of counsel. The legal rates are measured in three tiers according to experience:

a) Tier 1 (less than 4 years experience) $73.87

b) Tier 2 (4-9 years experience) $83.10

c) Tier 3 (10+ years experience) $92.34

d) Articling students and clerks $23.00

If the Arbitrator is satisfied that a higher amount is justified, he or she can award up to $150.00 per hour for legal fees.

COSTS IN SUPERIOR COURT

Costs recoverable (or payable, depending in your perspective) following a trial are far more significant. Maximum hourly rates were governed by Part 1 of the Tariff made pursuant to Rule 57 of the Rules of Civil Procedure. This particular section of the Tariff was repealed, effective July 1, 2005. It was replaced as a result of a recommendation from the Costs Committee. In a release entitled "Information for the Profession" the Costs Sub-Committee of the Civil Rules Committee said:

It is anticipated that in considering rates, as one of the various relevant factors, courts will normally treat the rates set out below as maximum rates when fixing partial indemnity costs. These rates are the maximums that were available under the costs grid. It is further anticipated that the maximum rates would apply only to the more complicated matters and to the more experienced counsel within each category. The rates used in costs submissions will normally come within the range established by these maximums as appropriate to the particular matter after giving consideration to the factors set out in r. 57.01(1) which now include the amount an unsuccessful party could reasonably expect to pay and the principle of indemnity. Finally, it is the intention that these guidelines will be reviewed periodically so that their currency can be maintained, in light of accumulated experience. [emphasis added]

In addition to the hearing itself, these guidelines encompass mediation under r. 24.1, discovery of documents, drawing and settling issues on a special case, setting down for trial, pre-motion conferences, examinations, pre-trial conferences, settlement conferences, notices or offers, preparation for hearing, attendance at assignment court, orders issuing or renewing a writ of execution or notice of garnishment, seizure under writ of execution, seizure and sale under writ of execution, notices of garnishment or any other procedure authorized by the Rules of Civil Procedure.

Law Clerks		Maximum of $80.00 per hour
Student-at-law		Maximum of $60.00 per hour
Lawyer (less than 10 years)		Maximum of $225.00 per hour
Lawyer (10 or more but
Less than 20 years)		Maximum of $300.00 per hour
Lawyer (20 years and over)		Maximum of $350.00 per hour

These are partial indemnity rates. Rule 1.03 of the Rules of Civil Procedure provides that substantial indemnity costs are 1.5 times partial indemnity costs. Thus, the maximum rates for substantial indemnity costs would be as follows:

Law Clerks		Maximum of $120.00 per hour
Student-at-law		Maximum of $90.00 per hour
Lawyer (less than 10 years)		Maximum of $337.50 per hour
Lawyer (10 or more but
Less than 20 years)		Maximum of $450.00 per hour
Lawyer (20 years and over)		Maximum of $525.00 per hour

In my experience since the rate grid was repealed, Judges are following the recommendations as if they had the force of law. The hourly rates recoverable, following an action, are far more in line with the reality of a legal practise than those payable following an arbitration.

Generally speaking, one can also recover more disbursements in the Superior Court. Assessable disbursements are governed by Tariff A, Part II of the Rules of Civil Procedure.

The vast majority of disbursements in a typical accident benefits action are specifically covered by the Tariff. Expenses such as filing documents, paying court reporters, witness fees, expert reports, are generally only subject to the expense being reasonable.

There are some items such as photocopies, courier charges, Quick Law expenses and long distance charges that do not have their own category in the Tariff. However, sub-section 35 of Tariff A, Part II provides for the “payment of any other disbursement reasonably necessary for the conduct of the proceeding”.

In Banihashem-Bakhtiari et al. v. Axes Investments Inc. et al.[49] Justice Lane considered this rule in relation to courier, faxes, long distance charges and quicklaw charges. Justice Lane wrote:

There are over $200,000 in disbursements claimed. The defendants objected to several categories as falling outside the tariff. These included faxes, long distance, couriers and legal research (i.e., Quicklaw etc.). These omissions merely illustrate the degree to which the tariff of disbursements has lost touch with modern legal practice. All of these items are everyday costs in running any litigation and are case-specific, rather than mere overhead, as for example, the cost of local telephone service is. If they are not included expressly, they are certainly disbursements [page307] "reasonably necessary for the conduct of the proceeding" within Tariff item 35, and I so order.

This case was appealed to the Court of Appeal. Parts of the judgment (with respect to liability and some costs issues) were varied, but there was no comment on this disbursements issue.

The Court of Appeal considered this issue in Moon v. Sher[50]. This was an appeal from a costs order. The appellant objected to some items claims including:

net disbursements of $3,620.23 for photocopies, representing 16,207 pages @ 25 cents a page. In addition, it was submitted that the following are not recoverable as they are not contained in the disbursements found in Tariff A, Part II: Quicklaw services - $708.51; courier - $688.47; stationary supplies - $251.00; postage - $119.56. Including copies, it was submitted that $5,242.71 should be deducted from disbursements.

The Court of Appeal rejected this argument, deciding that:

Moon challenged the GLOI's disbursements for Quicklaw services, courier services, stationary supplies and postage, as not recoverable on the ground that they are not in the list of disbursements in Tariff A, Part II. While it is correct that these items are not specifically listed in the tariff, in the appropriate circumstances resort can be had to Tariff item 35:

Where ordered by the presiding judge or officer, for any other disbursement reasonably necessary for the conduct of the proceeding, a reasonable amount in the discretion of the assessment officer.

In addition, Moon challenged the amount for making copies as being an excessive number of copies. Under Tariff item 31, a "reasonable amount" may be awarded for copies of the documents or authorities for the use of the court and supplied to the opposite party.

In commenting on somewhat similar disbursements in Banihashem-Bakhtiari v. Axes Investments Inc. (2003), 66 O.R. (3d) 284 (S.C.J.), at para. 52 Lane J. stated:

There are over $200,000 in disbursements claimed. The defendants objected to several categories as falling outside the tariff. These included faxes, long distance, couriers and legal research (i.e., Quicklaw etc.). These omissions merely illustrate the degree to which the tariff of disbursements has lost touch with modern legal practice. All of these items are everyday costs in running any litigation and are case-specific, rather than mere overhead, as for example, the cost of local telephone service is. If they are not included expressly, they are certainly disbursements "reasonably necessary for the conduct of the proceeding" within Tariff item 35, and I so order.

An appeal to this court from Lane J.'s costs order was dismissed without comment on disbursements: [2004] O.J. No. 1090 (C.A.).

In 3664902 Canada Inc. v. Hudson's Bay Co., [2002] O.J. No. 2096 (S.C.J.), at para. 25, Lang J. stated:

The Plaintiffs is entitled to compensation for reasonable costs for facsimile, telephone, and courier, provided such costs do not fall within standard office overhead, that they are charged at a reasonable rate and they are not unusually high.

On appeal to this court, her order respecting disbursements was not considered: [2003] O.J. No. 950 (C.A.).

It would seem, therefore, that amounts disbursed for Quicklaw services, courier services, stationary and postage may be recoverable under Tariff item 35 if the service or expense is "reasonably necessary for the conduct of the proceeding", the amount is reasonable and has been charged to the client, and the disbursement does not fall within standard office overhead. Indeed, as Quicklaw and similar search vehicles have become convenient aids to research, although not found in the Tariff, their costs should be recoverable as disbursements provided they are not excessive and have been charged to the client. It is for the party seeking recovery of the disbursements to satisfy these criteria.

As a result, although there is little doubt that a Superior Court action will cost more in terms of time and money, the successful party will be able to recover far more of his or her costs in Superior Court.

A Jury Trial?

This may be the most significant substantive difference between an arbitration and a trial – the right to a Jury.

When choosing commence an action in Superior Court, rather than arbitrate, you receive the benefit of filing a Jury Notice. The right to a Jury trial is a substantive right. Section 108(1) of the Courts of Justice Act[51], allows every action that is not a Small Claims Court action to be tried by a jury, subject to some specific exceptions. There has been some dispute with respect to accident benefit actions. Many accident benefit actions purport to seek declaratory relief and as such, some believe that accident benefit actions cannot be tried with a jury. This is not true.

Totic v. State Farm Insurance Co.[52] was an accident benefit action in which declarations were claimed. The court refused to strike out the Jury Notice on the basis of the claim for declarations as the “pith and substance” of the claim was for breach of contract and consequential damages and not a claim for declaratory relief.

An arbitration does not have a jury. There may be instances where a jury would not be in your client’s best interest. If your client lacks credibility or has some damaging pre-morbid history, an arbitration may be the better option for you. If your client presents as a likeable witness with solid injuries, you may want the case tried before a jury of their peers.

CONCLUSION

It is quite impossible to come to any definitive answer with respect to the better process. Both have advantages and disadvantages. In complicated and expensive actions, Superior Court may be preferable simply because there is more opportunity to recover costs if you are successful. If the case is weak, or there is a real chance a Jury will not like your client, an arbitration may be preferable.

Regardless of the method you choose, be sure you are aware of all of the benefits and costs of each procedure before you start.