Neutral Citation: 1992 ONICDRG 31

P-000378

ONTARIO INSURANCE COMMISSION

OFFICE OF THE DIRECTOR OF ARBITRATIONS

BETWEEN:

SOLTAN DAVOUDI KAHKESH

Applicant (Appellant)

and

LLOYD'S NON MARINE UNDERWRITERS

Insurer (Respondent)

Before:

E. Sachs Director of Arbitrations

Counsel:

J. Tritt (Agent for Appellant, Applicant)

P.D. McDowell(Counsel for Respondent, Insurer)

APPEAL DECISION

I. NATURE OF PROCEEDING

By Notice of Appeal filed May 1, 1992, the insured person, Soltan Davoudi Kahkesh (the appellant) appeals from the Order of Julaine Palmer, Arbitrator, dated March 31, 1992, which found the appellant entitled to weekly income benefits of $185.00 for the period April 8, 1991 to September 12, 1991. The order required repayment by the appellant to the insurer, Lloyd's Non Marine Underwriters (the respondent) of $1,695.60 together with interest at the bank rate from March 31, 1992.

The orders sought by the appellant are:

1. A stay of the repayment provisions of the arbitral order pending final disposition of the appeal;

2. Setting aside the award of minimum weekly income benefits and substituting an award of weekly income benefits in the amount of $509.23 plus interest on any amounts found unpaid;

3. Setting aside the order for repayment to the respondent;

4. An award of expenses of this appeal.

II. PRELIMINARY ISSUES

A. Stay of Repayment Provisions

Although a stay of the repayment provisions of the arbitral order was requested in paragraph 8 of the Notice of Appeal, no submissions were made by the appellant on this issue nor reasons for such a stay cited in the Reasons for Appeal, filed as Schedule "A" to the Notice. The Notice of Appeal states the appellant should not be ordered to repay the respondent as he is entitled to greater benefits than awarded by the arbitrator. That submission goes to the possible consequences from one of the essential issues in this appeal, namely, the appropriate amount of weekly income benefits the appellant may be entitled to.

An appeal does not stay an arbitral order unless the Director orders otherwise (s. 283(6) Insurance Act, R.S.O. 1990, c. I-8). The applicant has the onus of showing a stay is appropriate. In order for the Director to exercise the discretion required, more must be shown than to allege the arbitral decision is merely wrong in providing for repayment. The criteria considered in exercising this discretion were canvassed in Canadian Home Assurance Company (Appellant) v. Vincenzo Scavuzzo (Respondent), a decision of the Director's Delegate released May 22, 1992 (OIC File No. P-000626).

In the absence of any other written or oral submissions as to why a stay should be granted, the request is denied.

B. Evidence on Appeal

The Notice of Appeal alleges certain documents, called "trip sheets" were entered into evidence at the arbitral hearing. The appellant attached copies of these documents to the Notice of Appeal. A review of the hearing transcript shows an attempt was made by the appellant to enter these documents into evidence through a witness. When an objection was made by the respondent, the attempt was abandoned. Although it appears the trip sheets were sent to the respondent after the prehearing and a copy sent to the prehearing arbitrator, they were not made exhibits at the hearing nor were they tendered as evidence by either party.

Moreover, the documents were not offered as fresh evidence on appeal, or referred to as such. In his submissions, the agent for the appellant did not mention them except to say they were offered, and rejected, at the hearing. The appellant objects to the arbitrator's statement, at page 20 of the decision, where it is stated the applicant "might have offered as evidence of his revenues documents such as trip-sheets, charge vouchers and his bank deposit book". The transcript and exhibit list indicate the documents were not submitted.

Attempting to introduce documents by way of attachment to the Notice of Appeal only is improper. No foundation was laid for their admissibility; they exist "in the air" without proof of who made them, when they were compiled, and what, if any, conclusions are to be drawn from them.

Presumably, I was meant to rely on them as "new" evidence in determining the appropriate level of weekly income benefits. The criteria for the admission of such evidence on appeal were fully set out in the case Richard Mark Plows (Applicant) v. Jevco Insurance Company (Insurer, Appellant) a decision of the Director's Delegate released May 22, 1992 at page 22-29 (OIC File No. P-000175, P-000588). In that decision, case law relating the admissibility of fresh evidence on appeal in the court system is compared and contrasted to the statutory powers and discretion of the Director under the Insurance Act. The same factors apply here. The documents were always available, and could have been introduced at the arbitral hearing. Their admission would not be so fundamental as to now affect the outcome. This is not the kind of evidence contemplated by an application of s. 283(4) of the Insurance Act and s. 29 of the Dispute Resolution Practice Code. Absent any proper introduction and evaluation, I decline to admit the documents as fresh evidence.

C. Oral Rehearing

Schedule "A", attached to the Notice of Appeal, is referred to in s. 5 and s. 9 of the Notice, relating to Reasons for Appeal and Oral Rehearings. No oral submissions as to whether the Director should hold a rehearing were made.

I assume the allegation of bias on the part of the arbitrator set out in Schedule "A" is the ground upon which the appellant asks the Director to hold a rehearing and not determine the issues on the record alone. A rehearing would, if bias is found, be the way for justice to be done for the appellant if the record and oral argument alone could not provide sufficient basis for decision. Given the determination of the bias issue, infra, it is not necessary in this particular case to hold a rehearing.

III. FINDINGS AND ANALYSIS

Although nine separate grounds for appeal were put forward, they can be divided into two main headings:

i. bias of the arbitrator against the appellant;

ii. findings as to the sufficiency and weight of evidence related to the appellant's income and expenses.

i. Bias

Bias on the part of an adjudicator against a party is a serious allegation. It should not be made lightly, nor as a catch-all ground for appeals. The allegation here is not an apprehension of bias alone - it is that the arbitrator was biased against the appellant. Specific examples, tied to an overall picture, are required. It is noted there was no allegation of bias raised during the arbitral hearing.

An arbitrator sees the demeanour of the parties and witnesses, hears the intonations and inflections which a transcript cannot record, forms an opinion about the credibility of the overall evidence and makes rulings on the conduct of the hearing. To that, the arbitrator adds the ingredients of objective evidence - documents, records, pictures - and makes a decision which by legislation requires written reasons to support it.

The parties, too, observe the arbitrator and form opinions on the procedural fairness of the hearing and draw their own conclusions on whether a fair hearing ensued, and the attitudes of the arbitrator.

Objectively, the Director cannot measure the impact of these observations. The Director must have regard to all of the circumstances and views revealed by the written decision, the transcript if the proceeding was recorded, a review of the hearing exhibits and record, any fresh evidence admitted, and the submissions of the parties to the appeal.

Having the benefit of hindsight, the Director must determine whether the indicia of bias are present. A representative list includes: undue intervention by the arbitrator in the process and in examinations of witnesses; hostility toward a party, counsel, representatives or witnesses; financial interest in the outcome of the hearing; any relationships between a party and the arbitrator, personal or otherwise; prior involvement in the merits of the case; and comments made publicly reflecting attitudes toward persons or institutions involved in the hearing. These indicia need not all be present, nor does the existence of one or more amount to bias, for example where a party is unrepresented or unable to present the case reasonably, or the calling of additional expert evidence is suggested.

The test for bias, and the reasonable apprehension of bias, was recently reviewed by the Supreme Court of Canada in Newfoundland Telephone Company Limited v. Newfoundland (Board of Commissioners of Public Utilities), 1992 CanLII 84 (SCC), [1992] 1 S.C.R. 623. After a comprehensive review of the caselaw, the court sets out the duties of boards and tribunals and places them on a spectrum to compare the standard expected in their functions to that applicable to courts. Applying this case to this appeal, the test is whether, taking all considerations into account, the arbitrator closed her mind to being persuaded, or prejudged the issues so as to preclude the acceptance of representations to the contrary and denied a party a fair hearing. Tribunals that are adjudicative, such as the arbitration unit of the Commission, should be expected to comply fairly closely with the standard of judicial neutrality, in every case maintain procedural fairness, and require an arbitrator to conduct him or herself so there is no reasonable apprehension of bias. See generally The Committee for Justice and Liberty, et, al. v. The National Energy Board, et, al., 1976 CanLII 2 (SCC), [1978] 1 S.C.R. 369 for the test applicable to a reasonable apprehension or reasonable likelihood of bias. If these standards are not adhered to, the decision must be set aside.

a) Findings on the Submissions of the Appellant

The appellant objects to the presence of the respondent's witness, Ian Gurnell, throughout the hearing. He stated the refusal of the arbitrator to exclude Mr. Gurnell violates the rules for hearing and allowed the witness to fashion his evidence having seen and heard the appellant and his witnesses. Fairness required Mr. Gurnell to be excluded, and his evidence in total must be rejected as it is tainted as well as contradicted by the evidence of the appellant and three other witnesses, namely, Noah C. Rotman, Nasser Mordmand and Yekinni Agiri.

Mr. Gurnell's presence was dealt with at the start of the arbitral hearing. The arbitrator asked persons who would be giving evidence to leave. Counsel for the respondent requested Mr. Gurnell, the adjuster for the insurer, be entitled to remain for several reasons, notwithstanding he would be testifying. The appellant's agent was asked if he had any objection to this. The answer was "no" (page 9, line 10). When Mr. Gurnell was called as a witness later in the hearing, the appellant's agent objected. When the arbitrator referred to the fact the agent had not objected before, the response was "No, I did not speak up at that time. That is true." (page 196, line 4-5). In fact, he had spoken up indicating no objection to the presence of the witness after disclosure Mr. Gurnell would be testifying.

The appellant states it was Mr. Gurnell's evidence, and not that of his own witnesses which the arbitrator accepted and relied on. A review of the transcript shows Mr. Gurnell's evidence confirms that of Messrs. Rotman and Agiri as to what an average taxi driver might earn per shift of work and the conclusion that the reasonable range is anywhere between $100 to $300 per shift. In calculating the initial benefits paid to the appellant, Mr. Gurnell's evidence is that a median figure of $180 per shift was used. His evidence was that only after the appellant did not submit supporting documentation did the insurer reduce the weekly income benefit to $185.60.

The appellant submits that the rules do not permit witnesses remaining in the room for the hearing. There is no provision in the Insurance Act, the Dispute Resolution Practice Code, the Statutory Powers and Procedures Act, nor other legislation that so states. Arbitral hearings are public and open. Usually, a request is made by the arbitrator at the opening of a hearing that all witnesses leave until they are called to testify and if necessary, the arbitrator will entertain motions in that regard. Consequently, no objection having been taken to Mr. Gurnell's presence when the issue was put, there was no reason to exclude him later as permission for him to remain had been given, and no new reasons were advanced except to indicate he had been in the hearing room throughout.

The appellant objects to the arbitrator's reference in her decision to the fact one of the witnesses, Mr. Fadaie-Nia lied to an investigator for the insurance company. The transcript shows the witness confirms he did lie. In any event, the arbitrator chose to believe the appellant. Buttressed by Mr. Fadaie-Nia's later testimony, the lie to the investigator did not impact on her findings, but rather she believed him and the appellant who stated he had not worked for Mr. Fadaie-Nia or his company.

The appellant objects to the arbitrator's reference to the insurer having received, as stated at page 12 of the decision, "two widely different statements as to the income of the applicant". A review of the transcript and the exhibits shows there were three different statements made at various times. Exhibit 10, 11 and 13, all have different versions of what the appellant's income during the relevant periods was. There appears to be some confusion as to whether tips from customers were or were not included depending on the calculation. While I might not characterize the differences in the exhibits as being vastly disparate, they are not reconcilable. I find that the more reliable gauge of income is the appellant's 1990 personal income tax return and the evidence he gave with respect to the amount of money he earned per shift before expenses. The arbitrator's statement displays the differential she found in the exhibits and does not discredit the overall evidence as to the appellant's actual income range.

The appellant objects to the arbitrator's summation (at page 14 of the decision) of the respondent's evidence regarding demands made for personal income tax returns. After reading the transcript, I find the summary is an accurate description of the evidence given.

The appellant alleges the arbitrator is wrong and displays her bias at page 19 of the decision by setting out the evidence with respect to 1990 and 1991 income offered by the appellant. A review of the exhibits there referred to and calculations on those exhibits confirms the arbitrator accurately reflected in the decision what conclusions can be drawn from the documents.

The appellant objects to the arbitrator's comment about the appellant's agent's understanding of the burden of proof and issues in dispute at pages 19 and 20 of the decision. The arbitrator refers to "substantial confusion" in the submissions made. The arbitrator's comments are with respect to the types of documents submitted, the evidence elicited from the witnesses, and submissions made with respect to "ceasing expenses" as they are applied in s. 12(7) of the No-fault Benefits Schedule.

The arbitrator comments there are gaps in the evidence such that it is difficult, if not impossible, to establish the income of the appellant as required by the Schedule. She finds basic, objective, proof for revenues and expenses was missing. The burden of proof was on the appellant. What was offered in oral testimony and written documentation was indicative of industry (taxi driver) standards but not of the financial situation of the appellant.

I find that gross revenue of the appellant was generally proved. I find that an average 10% should be added to that for tips in this case. However, such findings do not satisfy the criteria of calculating gross income under the No-fault Benefits Schedule. There was no reliable testimony or documentation to support expenses, other than that shown in the 1990 personal income tax return and the calculation derived from a review of the 1991 GST Information returns. The only expense item proved was the plate leasing fee, but nothing more with respect to gasoline, repairs and maintenance, membership dues, meter and radio or other expenses. This submission relates not to whether the arbitrator was biased against the appellant, but whether she properly weighed the evidence presented, and then correctly applied the No-Fault Benefits Schedule.

The appellant objects to the characterization of his oral testimony as "evasive and not credible". At page 16 of the decision, the arbitrator uses these words to describe the submission of the respondent as to the appellant's evidence, not any conclusions drawn by the arbitrator from the evidence or her observation of the appellant.

At page 20 of the decision, the arbitrator gives examples of the kind of evidence which could have been produced, such as bank books. The appellant's agent stated that "it was not her business to demand bank deposits" and cited the suggestions of the arbitrator as indicative of her bias against the appellant.

He also suggested the arbitrator, in referring to the GST Information returns at page 19, was "not an expert on tax and in no position to determine whether the GST form is appropriate or not". Having himself offered the document to prove his case, the appellant cannot now complain the arbitrator had regard to it when reviewing the totality of the evidence.

b) Findings on the Submissions of the Respondent

The respondent states that the arbitrator did not display any bias toward the appellant, nor was there any reasonable apprehension of bias which could be determined from the conduct of the hearing, the transcript, or the decision itself. Rather, it is submitted that the arbitrator made several rulings in the appellant's favour, offered suggestions to the appellant's agent in the rephrasing of questions and gave him significant latitude in cross examination of the respondent's witnesses. The respondent refers to various portions of the transcript where these events occurred.

The respondent argues the arbitrator accepted the appellant's evidence and found in his favour where a witness confirmed having lied to the respondent's investigator in a previous contact, and in finding the appellant received no money from other persons driving his taxicab, all of which was contrary to the respondent's allegations as to the appellant's conduct and income.

The respondent states a significant part of the written decision is a recitation of the issues in dispute and submissions of the parties, and reflects those accurately. None of the wording used suggests anything but a neutral observer's version of the facts.

The respondent states that the final outcome of the hearing, as reflected in the decision, is not indicative of any inclination toward one party or another, but rather based on the proper weighing of the evidence and findings of credibility which are in the arbitrator's discretion. The respondent submits that on appeal, it is not for the Director to assess such credibility. The Director can only interfere if there is some specific reason or error such that the arbitrator's conclusions are put into doubt. The respondent relies on the case Vito Calogero v. The Co-operators General Insurance Company, a decision of the Director released February 13, 1992 (OIC File No. P-000251).

The respondent's submissions as to when the Director may overturn the findings of credibility or assign a different weight to evidence are, in my view, the proper ones. However, in this case, the allegation of bias requires the Director to carefully examine the transcript, the decision, the exhibits, and the record at the hearing. It may be precisely in the exercise of her discretion that the arbitrator has demonstrated a reasonable apprehension of bias or actual bias. It is the overall context of the hearing in which the arbitrator had to make her decision - it is in the overall review of the hearing and its results that the Director must come to a conclusion on this allegation.

On appeal it is alleged the appellant might have had some language difficulties. These were dealt with at the beginning of the arbitral hearing and the appellant chose to proceed. The arbitrator's findings are not, in my view, coloured by any reaction to linguistic or comprehension abilities.

I find, given the criteria necessary to support an allegation of bias, it has not been made out. What happened here was the apparent inability of the appellant to present his case and discharge the burden of proof he had, as opposed to any procedural unfairness or preconception (or prejudging) by the arbitrator on the merits of the appellant's action.

This ground of appeal fails.

ii) Sufficiency and Weight of Evidence

The appellant's contention is the arbitrator erred in finding he had not established his income as a taxi driver in order that the proper amount of weekly income benefits could be calculated. On appeal, there still appeared to be difficulty in separating the concept of gross revenue, from gross income as used in the No-fault Benefits Schedule. It was not understood that the amount of money pocketed during a workshift had to be set off against the amount of money required to earn that income. The concept was, however, well enough understood by the appellant that his 1990 personal tax return shows exactly how a calculation is to be made.

The appellant's agent stated that the 1990 income tax return was "prepared for tax purposes only and was not intended to be used or seen by an insurance company". Who might have used or seen the return is irrelevant. It stands as an objective document showing revenue and expenses of the appellant's occupation. This evidence may be supplemented, and it was, by oral testimony relating to tips which had not been declared for tax purposes.

Much was made of the appellant's personal income tax return not including tips. The respondent argued the tip income should be disregarded on the basis that the return should reflect accurately the totality of individual's income for the year in which it is filed. Furthermore, to allow the appellant to rely on additional undeclared income would be to permit him to perpetrate a wrong, either against the insurance company or against Revenue Canada.

Recently, the Alberta Court of Queen's Bench dealt with the same allegation in a personal injury action. In the case Milton Coates v. Wolfe and Eba Engineering Consultants Ltd., (unreported June 9, 1992) Justice C.J. Virtue stated, "I do not consider it a rule of general application that failure to report income for tax purposes in all circumstances deprives a plaintiff of the right to recover loss of that income." He reviewed the caselaw applicable to the principle ex dolo malo non oritur actio (fraud does not give rise to a right of action). The plaintiff waitress was injured in a motor vehicle accident and sued the driver of the other vehicle, in tort, for her lost income which included tips not reported in her personal income tax return. The Court held the plaintiff's cause of action arose out of the defendant's negligence (admitted at trial), not her failure to properly report her income, and declined to apply the principle noted.

Here, the appellant's cause of action is founded on the no-fault insurance scheme, which gives a right of recovery against his own insurer for income benefits arising out of a motor vehicle accident in which he was injured. There is no allegation, as far as I can see, that the evidence of the appellant's gross revenue (including tips) is unworthy of belief. The issue is, did he prove gross income as required for the proper determination to be made by the arbitrator?

The appellant and his witnesses all confirm generally tip income would be in the range of 10% of gross revenue per shift. I am prepared to accept that. However, it makes no difference whether tips are included or not inasmuch as the appellant himself admits he lost money in 1990 and a recalculation of the figures he submitted, taking into account tip income, still shows an income well below the minimum obtained with reference to the No-fault Benefits Schedule.

Several different calculations of the appellant's income were proffered. The Notice of Appeal has one based on gross income of $36,000 per annum without tips. The only expense alleged to have ceased was gasoline of $115.38 weekly, resulting a gross earning per week of approximately $576.92 plus tips of $70 per week. On appeal, it was suggested the figure to be used was a gross annual income of $36,000 plus tips of $3,600 less a gasoline expense of $6,500 annually, leaving a weekly amount of $636.54 of which 80% would be $509.23. A gross income of $10,500 was alleged for the first three months of 1991, using the GST information returns (uncertified) and calculating from the claim of input credits. Using the same figure as on the GST return, a gross income is not obtained - rather a net loss for the period January 1 to March 31, 1991 is shown.

The appellant's 1990 tax return shows gross income from his occupation of $36,000 for the year (without tips). The return also discloses a loss from his occupation of $2,500. On appeal, the appellant submitted there was an extraordinary item in the 1990 tax return under the heading Repairs and Maintenance ($7,800) which was not ongoing but a one time expense only. Nowhere in the evidence is there any reference to this item as being "extraordinary" and it is not an amount that relates to the purchase of the taxi cab itself.

With respect to ceasing expenses as calculated under s. 12(7)(3) of the No-fault Benefits Schedule, the appellant submits that gasoline is the only item to be deducted. He does not include membership dues, insurance, plate leasing charges, meter and radio, repairs and maintenance or other expenses. The appellant seems unable to apply the concept of ceasing expenses to his particular occupation. Consequently, he also would not, or could not, provide evidence as to his expenses in this hearing, although he did so for the purpose of preparing his tax return.

Even if tips are taken into account at the suggested rate, the resulting income is $1,100 for the 1990 tax year, which would not produce any weekly income benefit in excess of the minimum amount. For 1991, calculations based on the GST information returns do not show a positive net income. Using the appellant's figures, a net loss is shown in both the first quarter of 1991 (just before the accident occurred) and the second quarter of 1991. Documentary evidence, taken at face value, shows a continual loss of business income. On cross-examination, for the 1990 period, the appellant acknowledged he lost money and was supported financially by family and friends.

The basic problem for the appellant is the manner in which he chose to prove his case. Although his tax returns and income calculations were prepared by an accountant, this individual was not called as a witness. No documents other than these returns were submitted to establish income and no documents at all regarding expenses. The only expense which anyone could agree on was the plate leasing charge. There was not enough there, coupled with the admissions by the appellant on cross-examination, to permit the arbitrator to make findings other than she did with respect to gross income. The appellant showed, overall, he had no income for the relevant periods which would have entitled him to more than the statutory minimum weekly income benefits. It was his own evidence which led to the arbitrator's conclusions.

IV. Expenses

The appellant claims his expenses of this appeal.

Of the nine reasons for appeal advanced, two were abandoned during the course of submissions, two dealt with the objection to Mr. Gurnell's evidence and some contained statements which were clearly wrong, for example, that the arbitrator had demanded the appellant produce a 1991 tax return.

The appellant was not satisfied with the result of the hearing, brought about by his own action (or inaction in the case of tendering appropriate evidence), sought to have the arbitrator's decision reversed by alleging bias on her part and insisting his interpretation of gross weekly income was the only acceptable one. The appellant did not, or could not, present the case and subsequent appeal in another fashion. The choice of how these actions proceeded was that of the appellant, and not of the respondent.

I do not believe it appropriate that the respondent, who has been successful in the arbitral hearing and in this appeal, pay the expenses of both. While generally an appellant should receive his expenses regardless of the ultimate outcome of the action, I find the seriousness of the allegations made, and the unfounded grounds for appeal are such that this is not a case where the appellant should be granted his expenses. The order of the arbitrator awarding the appellant of his expenses of the main action remains. The respondent is not entitled by legislation to its expenses of this appeal.

V. ORDER

1. The appeal from the decision of Julaine Palmer, Arbitrator, is dismissed.

2. The stay of the arbitral order in respect of repayment by the appellant to the insurer of $1,695.60 is denied and the appellant must repay accordingly.

3. The appellant is not entitled to expenses of this appeal.

August 19, 1992

Elisabeth Sachs

Director of Arbitrations

Date