Neutral Citation: 1992 ONICDRG 44

File No. A-000602

ONTARIO INSURANCE COMMISSION

BETWEEN:

MANUEL LOPES

Applicant

and

FEDERATION INSURANCE COMPANY OF CANADA

Insurer

DECISION

Issues:

The Applicant, Manuel Lopes, was injured in a motor vehicle accident on September 6, 1990. He was insured under an automobile owner's standard policy, issued by the Insurer. The Applicant received treatment for the injuries he received in the accident, beginning on the very day of the accident. He reported the accident promptly to the Insurer; however, it was not until more than six months after the accident that he applied for weekly income benefits under the No-fault Benefits Schedule. Every motor vehicle liability policy provides such no-fault benefits, payable under Ontario Regulation 273/90 (the No-Fault Benefits Schedule), enacted under the Insurance Act, R.S.O. 1990, c. I.8. The Insurer paid the Applicant $925.00--five weeks of benefits at $185.00 per week.

The Applicant subsequently applied for mediation on the basis that he continued to be disabled and unable to return to his former employment. The mediation was not successful in resolving the issues in dispute and the Applicant subsequently applied for arbitration. In his arbitration application, he claimed weekly income benefits to the end of February 1992.

The issues to be determined in this arbitration are:

1. Is the Applicant entitled to weekly income benefits after October 18, 1990?

2. What is the appropriate rate of weekly income benefits to be paid to the Applicant?

The Applicant also claimed his expenses of this arbitration and interest on any outstanding benefits.

Result:

1. The Applicant is entitled to weekly income benefits from October 18, 1990 to November 14, 1991.

2. The appropriate rate of weekly income benefits is $185.60.

3. The Insurer is entitled to credit in the sum of $6,260.04 for post-accident earnings of the Applicant.

4. The Applicant is entitled to interest pursuant to section 24(4) of the No-Fault Benefits Schedule.

5. The Applicant is entitled to his expenses of this arbitration.

Hearing:

An arbitration hearing was held at Simcoe, Ontario, on July 16, September 2, and September 23, 1992, before me, K. Julaine Palmer, Arbitrator.

Present at the hearing were:

Applicant:

Manuel Lopes

Applicant's

Michael Cobb

Representative:

Barrister & Solicitor

Insurer's

David Miller

Representative:

Barrister & Solicitor

Peter Johnson

Claims Supervisor

The following witnesses testified under solemn affirmation:

Manuel Lopes, Applicant

Robin Jilderda, Friend of Applicant

Sushma (Sue) Ghai, Expert in Vocational Rehabilitation

J. Gregory Johnston, Family Physician

The parties filed 20 exhibits.

Cases referred to:

Frenette v. Audet, (1988), 1988 CanLII 128 (NB CA), 89 N.B.R. (2D) 306 (N.B.C.A.)

Iannone v. Hoogenraad, (1992) 66 B.C.L.R. (2d) 107 (B.C.C.A.)

Hall v. Hebert, (1991) 1991 CanLII 5709 (BC CA), 53 B.C.L.R. (2d) 201 (B.C.C.A.)

Evidence:

Manuel Lopes, now aged 43, testified that at the time of the accident on September 6, 1990, he had recently begun working as a salesman for the Canada Group Realty Corporation, based in Toronto.

He was returning from the company office when the accident occurred. His vehicle was rear-ended on Highway 427 during the afternoon rush-hour.

The Applicant testified that he was taken by ambulance to hospital in Mississauga, examined, and released later that evening. From the time of the accident, he had headaches and his whole body was tight and tense. He testified that he had vomited after the impact and had nearly lost consciousness.

The day following the accident, he called his family doctor's office for an appointment and saw him three days later on September 10, 1990. Dr. Johnston prescribed analgesics, muscle relaxants, and anti-inflammatory medication. At that time, the Applicant was suffering from very sharp pains in the top of his head and pain on the right side of his head.

He testified that, after he began to take physiotherapy, the pain intensified. He had been put on the waiting list for physiotherapy shortly after the accident, but did not have his first appointment until late in 1990. He recalled that, after receiving electrical stimulation from the physiotherapist, he could not sleep or sit for two days because of acute pain.

The Applicant was examined by Dr. Bowler, a physical medical specialist, on two occasions. Dr. Bowler injected medication into different areas of the Applicant's back to numb the pain.

The Applicant later developed lower back pain. At the hearing, he testified he could stand for less than 30 minutes and then must sit. The Applicant still takes Tylenol No. 3 on a regular basis, although not daily. He has been taking Tylenol No. 3 for pain relief since the accident. On rising in the morning, he testified he still has a stiff neck, but this improves after a hot shower. The Applicant testified that, when he has to sit a long time, his right arm tingles and sometimes the right side of his face does the same. In the past, the Applicant has had difficulty sleeping at night, although this has improved with time.

The Applicant testified that during 1991 he received between 80 and 90 chiropractic adjustments from Dr. Kinsinger in Simcoe. The physical medicine specialist, Dr. Bowler, recommended massage therapy, and the Applicant testified that his condition improved greatly with massage treatment.

The Applicant testified that after the September 6, 1990 accident, he was involved in three subsequent motor vehicle accidents. The first of these accidents took place shortly after September 6, 1990. The Applicant had parked his vehicle and was opening his door in traffic when a passing car hit the door. He did not suffer any injury in this accident and repaired the car himself. On July 20, 1991, the Applicant was driving his motor vehicle on Queen Street in Simcoe when an oncoming car turned left in front of him and the Applicant's vehicle came into contact with the back fender of the turning vehicle. He was accompanied by his son on that occasion, but neither of them required hospital treatment. The Applicant testified that he was not injured in that accident. The third accident took place on November 18, 1991. At that time, the Applicant was a passenger in a car driven by Janet Rapley. The Applicant and Ms. Rapley were returning from Bible school when the vehicle struck a truck stopped on the highway in front of them. The Applicant testified that he suffered no injury in that accident either. He did not go to the hospital, however, he happened to have an appointment with Dr. Johnston that day, so he told his doctor about it.

On cross-examination, the Applicant admitted that his doctor's notes from that visit would be accurate. The doctor's notes of November 18, 1991 say "much better until today". Dr. Johnston, in his report of July 15, 1992, recorded the following comments with respect to the incident:

He was a passenger in the front seat of a car that ran into a parked truck from the rear. He had an exacerbation of his symptoms. X-rays of his spine were taken on that date and showed no significant change from the previous films. It was felt that the incident on that date did result in some increased symptomatology.

The Applicant testified that in 1991 he earned $8,937.00 in commission income from a single transaction -- the sale of an apartment building in Simcoe. The Applicant was initially telephoned by a former client, who was interested in the property. The Applicant contacted the listing real estate broker to show the property and went to see the property as well. The Applicant travelled to Toronto with the purchaser to present an offer. The Applicant testified that, in all, his total involvement with respect to that deal was three days.

Dr. J. Gregory Johnston:

Dr. Johnston has been in full-time medical practice since 1966. The Applicant has been his patient since 1977. Dr. Johnston wrote a six-page report dated July 15, 1992, which was filed as an exhibit. Dr. Johnston outlined his treatment of the Applicant since the accident.

He first saw his patient on September 10, 1990 after the accident of September 6th. The Applicant had originally been seen at Queensway Hospital in Mississauga where x-rays were taken, which were apparently normal. He had been placed on three medications: Flurbiprofen, Orphenadrine Atrate, and Tylenol No. 3. Dr. Johnston testified that the Applicant was complaining of pain at the base of his skull and on rotation, flexion and extension of his neck. The Applicant also reported pain in the sternocleidomastoid muscles and on the top of his head, which was consistent with an acceleration/deceleration injury.

Dr. Johnston examined his patient again on September 21 and October 15, 1990, at which time he prescribed a different non-steroidal anti-inflammatory drug, Naprosyn. At that time, the Applicant's neck pain persisted, but he had been gaining some relief from intermittent use of a soft collar. The Applicant also described some periodic tingling in his arms on that occasion.

The Applicant was reassessed on November 22, 1990:

At that time the patient had neck pain which was predominently [sic] in the right paravertebral and lateral cervical region. The patient also had pain in the medial fibres of the left trapezius. There was increased pain on rotation at this point. The patient also had pain over the thoracic spine from T1 to T7 (midline). The patient had limitation of flexion and extension in the cervical vertebral column and this was predominently noted on extension. He also had pain on rotation to both the right and left. The patient was prescribed Tylenol #2, one every four hours as necessary for pain and at that point it was noted that the patient was still waiting for the initiation of physiotherapy.

On December 17, 1990, the Applicant's condition was reviewed by Dr. Johnston again, "and in fact his headache and paravertebral cervical musculature and his midline thoracic discomfort was worse. This was the case in spite of two weeks of physiotherapy."

Dr. Johnston decided to discontinue the physiotherapy, because of the worsening of the Applicant's symptoms.

He described "needles" in the dorsum of his skull and in the neck region. At that point, he was taking two Tylenol #2 each time with minimal relief. He appeared quite anxious and unsettled at this time and went on to say that "my whole body is tingling and numb". Physiotherapy had been singularly unhelpful at this point and we discontinued it. I placed him on Elavil 25 mgm at bedtime for five nights, increasing the dose to 35 mgm at night time thereafter. It was at this point that I entertained the possibility that he was entering into a chronic pain syndrome.

Dr. Johnston determined at that visit to refer the Applicant to Dr. K. Bowler, Physical Medicine Rehabilitation expert. (Dr. Bowler saw him on February 25, 1991.)

In January 1991, Dr. Johnston prescribed Xanax, an anxiolytic agent, 0.25 mg, twice daily. He also increased the Applicant's dosage of Elavil to 50 mg at bedtime.

By February 11, 1991, the Applicant was seeing Dr. Kinsinger, a local chiropractor, and his physician recorded that

he felt somewhat better since he was using a special orthopaedic support pillow prescribed by his chiropractor. The patient at this time was felt to be demonstrating some improvement and we at that point discontinued his Xanax, however, continued his Elavil.

When Dr. Johnston examined the Applicant on March 4, 1991, he was about to be begin massage therapy as Dr. Bowler had recommended. He was having some increased anxiety, with insomnia and was prescribed Mogadon, 5 mg and Elavil, 75 mg at bedtime.

On April 5, 1991, Dr. Johnston noted the Applicant had bilateral trapezii spasm. Dr. Johnston also commented:

The patient had low back spasm with paravertebral lumbar muscular discomfort. He described tingling in the dorsum of his right hand. The patient at that time felt that he had difficulty on most days in driving. He was on Myoflex cream, Elavil as noted and was receiving massage therapy from Alexis Peckford, Massage Therapist. The patient readily indicated that he felt that he was demonstrating no improvement. At that point I prescribed an analgesic, namely Idarac 200 mgm every four hours for pain as necessary. This was an attempt to reduce his codein [sic] intake which he would be getting in his Tylenol preparation.

Dr. Johnston saw his patient next on May 4, 1991. On that visit, he noted the following:

The patient indicated that he was essentially unchanged. He had not returned to work full time at this point but indicated that "he dropped into the office once in awhile". At this point his medications were Flexeril 10 mgm tid (muscle relaxant) and Ansaid bid (NSAID). The patient was attending his chiropractor Dr. Kinsinger) three times weekly and Alexis Peckford (Massage therapist) once weekly. The patient was also using ice frequently. He complained still of headaches and some mild restriction of his cervical rotation, flexion and extension in all parameters were noted. He did indicate at this point that there was some improvement in his symptomatology. He did also indicate that he felt quite nervous and very shaky with some weight loss. Because of weight loss and some anxiety symptoms I carried out a thyroid profile at this time and it was entirely within normal limits.

After the visit of May 4, 1991, Dr. Johnston saw his patient on May 31, once in June, and then on August 13, 1991. Dr. Johnston noted in June that the Applicant was "trying to do some work", but that he was unable to work on a full-time basis. In August, the Applicant was still complaining of a burning pain in his lower back, multiple myofascial pain sites, and needles and pins in his arm and neck. He reported having less headaches. He was attending his chiropractor and intended to reduce his visits to twice weekly. The Applicant told Dr. Johnston on that visit that he wasn't taking "medication unless I have to". He also told him that he was working part-time and that "driving bothers me".

On September 11, 1991, the Applicant reported low-back discomfort to Dr. Johnston and stated "my back and neck is getting worse". He reported numbness in his forearm and that he could only lie or sit for so long. He was on no medications at that time. He reported headaches, and tingling and numbness in his legs.

At his visit to Dr. Johnston of October 16, 1991, Dr. Johnston noted his trapezii were in spasm. The Applicant was attending the chiropractor twice weekly. He reported that massage therapy had been helping. He reported that he could not sit for "long periods of time" and that he was "working part-time".

At his visit of October 23, 1991, Dr. Johnston learned that the Applicant was attending Bible school twice weekly. Earlier in October, Dr. Johnston had noted that he would talk to Sue Ghai about increasing the frequency of the Applicant's physiotherapy and, on November 8, 1991, he made a referral to Simcoe Physiotherapy.

On November 18, 1991, the Applicant was seen in Dr. Johnston's office for an appointment, which had been scheduled the month before. In Dr. Johnston's notes of that visit, he recorded "much better until today", and "recurrence of symptoms". X-rays of the Applicant's spine were taken on that day and showed no significant change from his previous x-rays. "It was felt that the incident on that date did result in some increased symptomatology."

When the Applicant was reviewed on November 25, 1991, "he had bilateral trapezii spasm with restriction once again of cervical rotation. He was once again sent to physiotherapy and was reviewed again on December 19, 1991."

The doctor noted that there was significant improvement with physiotherapy.

Dr. Johnston was asked how long the disability of the Applicant had lasted. He stated that he felt until January 30, 1992, when he stated to Sue Ghai that the Applicant was "released to work". Dr. Johnston stated that between March and June 1992, he had examined the Applicant three times for complaints of low back pain, exacerbated by long distance driving. He stated he had explained to the Applicant that "all that hurt is not harmful", and that some pain may have to be accepted after long injury. Dr. Johnston stated that he understood the Applicant's job description involved a great deal of driving, prolonged walking and stair climbing, which the Applicant also found painful. These seemed to be the major areas of stress for him.

The Applicant's physician was told by the Applicant's counsel that the eligibility test for weekly income benefits under the No-Fault Benefits Schedule required "a substantial inability to perform the essential tasks of his employment". Dr. Johnston was asked to assume that a real estate agent was required to do a significant amount of driving. It was Dr. Johnston's expert opinion that until January 1992 the Applicant was substantially unable to perform his essential tasks.

On cross-examination, Dr. Johnston reiterated that the Applicant at all times indicated that driving was a problem. The doctor testified that he understood that the Applicant's employment in real estate required him to travel between Toronto and Simcoe. With respect to the Applicant's attendance at Bible school in St. Catharines, Dr. Johnston's opinion was that travelling as a passenger would have been less of a problem than as a driver. In his view, the Applicant might have had increased low back pain with sitting in the classroom.

Dr. Johnston stated that on November 18, 1991 he noticed a minor to moderate worsening of the symptoms that had been improving until that date. The Applicant's symptoms gradually resolved until the end of January 1992 when he was fit to return to work. Dr. Johnston agreed that if the November 18, 1991 accident had not occurred "he may have been able to return to work earlier. The accident contributed to prolongation of the symptoms. I don't think there is much question of that."

Vocational Rehabilitation Expert:

Sushma Ghai gave testimony as an expert in the area of vocational rehabilitation. Ms. Ghai's qualifications include two masters degrees in psychology and counselling and guidance, and over five years' experience in the vocational rehabilitation field. Ms. Ghai was involved in the Applicant's rehabilitation from September 10, 1991.

In order to determine the type and nature of duties of a real estate salesperson's duties, Ms. Ghai extracted a job description and physical demands analysis of the position from the Canadian Classification and Dictionary of Occupations. In her expert opinion, the Applicant's occupation as a real estate salesperson accommodated his physical restriction. He had flexible working hours and should have been able to pace himself. It was not clear to Ms. Ghai how much pain affected his job performance. On cross-examination, Ms. Ghai admitted that she did not interview any real estate sales people and was not qualified to comment on the state of the real estate market in the past two years. Ms. Ghai agreed that, if the Applicant had to spend long periods of time in the car, he would have difficulty.

Ms. Ghai testified that she closed her file with respect to the Applicant at the end of January 1992, because at that time Dr. Johnston reported that he was releasing the Applicant to go back to full-time employment. It was her information that the Applicant had been working part-time up until this point.

Independent Evaluation:

The Insurer sent the Applicant to the Hamilton Wentworth Work Injuries Rehabilitation Clinic in Stoney Creek, Ontario, for an independent evaluation by David R. Boynton, Doctor of Chiropractic. Such an examination is contemplated in section 23(2) of the No-Fault Benefits Schedule, which reads as follows:

In respect of claims under Part IV, the insurer may, on reasonable notice, require an examination of the insured person by a qualified medical practitioner, psychological advisor or chiropractor as often as it reasonably requires, and require an autopsy of a deceased insured person in accordance with the law relating to autopsies.

Dr. Boynton did not testify at the hearing, but his report was filed. Dr. Boynton graduated in 1983 from the University of Guelph with a Bachelor of Science and in 1987 from the Canadian Memorial Chiropractic College. He is an associate director of the Hamilton-Wentworth Injuries Rehabilitation Clinic.

Dr. Boynton examined the Applicant on September 11, 1991. Dr. Boynton reported that the Applicant's cervical spine range of motion was within normal limits, "except for very mild decrease in flexion". "Myofascial involvement was noted in the upper portion of the trapezius muscle bilaterally...the lumbar spine examination showed a full range of motion with mild pain at the end of extension."

It was Dr. Boynton's clinical opinion that:

...Mr. Lopes has suffered a mild to moderate hyperflexion, hyperextension injury. There is evidence for joint dysfunction in the cervicothoracic junction and to a lesser degree in the lumbosacral spine. There is also a myofascial component to the neck pain specifically the upper trapezius bilaterally. However, the hard physical findings to not correlate well with the degree of pain exhibited and reported by the patient. For this reason, I believe there is a large psychological overlay in this particular case. Mr. Lopes' score of 62% on the Neck Disability Index is an example of this. 62% on a Disability Index corresponds with a rating of being crippled and Mr. Lopes is far from being crippled.

Dr. Boynton made some recommendations for Mr. Lopes' treatment, including:

1. The psychological overlay needs to be addressed. Presently Mr. Lopes expresses little hope for recovery and an over-all depressed, or negative attitude towards his condition. Presently he is dependent upon his various practitioners and shows little in the way of self-responsibility for his own treatment and recovery. To conclude, he needs to be "managed" by a physician or psychologist who will address the psycho-social aspect of Mr. Lopes' disability.

2. Due to the poor flexibility, strength and endurance in both the cervical spine and lumbar spine, I recommend a physical rehabilitation program which would address these problems. This programme is available at any of the Chiropractic Community Clinics and is usually a 6 to 10 week course of therapy.

3. Spinal manipulation should be of some benefit when combined with a physical rehabilitation program. Frequency of once every 1 to 2 weeks would be recommended. This would be in conjunction with the rehabilitation programme.

4. Treatment by a Registered Massage Therapist to continue once or twice per month. This also would be reviewed at the end of the physical rehabilitation programme.

5. Current physical limitations are most likely due to the initial accident of September, 1990. The July, 1991 accident has mildly aggravated the pre-existing symptomatology, but has not introduced any new injuries.

6. With respect to physical limitations, Mr. Lopes' biggest barrier to a successful return to work appears to be the psychological aspect of his disability. Granted, there is a musculoskeletal component to the injury which requires rehabilitation for strength, flexibility and endurance, however, the psychological aspects must be dealt with. If this is accomplished, I see no evidence to indicate that Mr. Lopes not be able to return to his normal duties as you have described to me.

Gross Income:

The calculation of the Applicant's gross income in the 52 weeks or the four weeks prior to the accident posed great difficulties in this case. There was even an issue between the parties as to whether the Applicant was employed as a real estate salesperson at the time of the accident.

The Applicant's evidence was that, in the four weeks prior to the accident, he earned nothing. He did, however, have earnings in the 52 weeks prior to the accident. From September 6, 1989 to September 6, 1990, the Applicant worked in three areas: as a real estate salesperson, as a restaurateur, and as a promoter for National Safety Associates Ltd. The Applicant could not give precise figures of his earnings as a real estate salesperson for this period. He was then a salesperson for John Tatarka Realty Ltd.. He estimated that he had received no more than $5,000.00 from two commissions during the period. The Applicant testified that he had attempted to obtain accurate records from Mr. Tatarka, but that Mr. Tatarka was no longer in the real estate business and no longer had any records.

With respect to his income from the restaurant business, the Applicant filed income tax returns for 789018 Ontario Inc., an operation known as Manny's Pizza, for the taxation year September 1, 1988 to August 31, 1989. He presented no records for the 1989-90 year. The Applicant operated the restaurant from July 1988 to August 1990, when he sold it. He testified he never received any money from the sale, however, because the purchaser defaulted on the agreement.

The Applicant gave oral testimony, however, that while the restaurant was operating, and specifically between September 1989 and August 1990, he took between $400.00 and $500.00 per week from the restaurant cash register. Accordingly, the financial records of the business as presented for the previous year were said to be inaccurate by between $20,000.00 to $25,000.00 of gross revenue.

The Applicant was supported in this contention by the evidence of Robin Jilderda. Mr. Jilderda is a friend of the Applicant who was potentially interested in acquiring a pizza business. He often helped the Applicant at the restaurant on weekends or on his days off. Mr. Jilderda personally observed the Applicant taking money from the cash register and understood that the Applicant was living on the earnings of the restaurant. It was his view that for a start-up business the restaurant was "coming along and it was definitely growing".

The Applicant testified that he knew that he was illegally failing to report income from the business to Revenue Canada.

The Applicant also claimed to have $15,502.20 in income from National Safety Associates during the period September 1989 to September 1990. He testified that he recruited people to sell water filters produced by National Safety Associates. The Applicant testified that his earnings, paid to him in three cheques dated December 25, 1989, January 25, 1990 and February 25, 1990, were the only payments he received from that organization during the relevant time period, except for profits from the direct sale of a few filters for which he grossed $200.00 to $300.00. The Applicant further testified that his expenses to earn this income from National Safety Associates were in the range of $400.00 to $500.00 for gasoline and wear and tear on his car.

In 1991, apart from the $8,937.00 commission discussed above, the Applicant had no other source of income. He sold a house which he owned in February 1991. In July 1991, the Applicant began to receive social assistance payments.

The Applicant testified that he did not file income tax returns for 1988, 1989, 1990 and 1991 until very recently. He explained that on his 1989 and 1990 returns, he did not show any income from National Safety Associates, because he had not taken all his personal papers with him when he moved from his residence at 235 Talbot Street. He testified that, since he had come across this information, he had reported it to Revenue Canada and was awaiting receipt of the proper forms to amend his returns.

The Applicant admitted on cross-examination that he knew it was illegal for him to take money directly from the pizza business, but suggested "everybody in the restaurant business does it that way". The company was paying its bills and he was doing it to "make a living out of it". The Applicant admitted that he had not disclosed to Revenue Canada the $20,000.00 to $25,000.00 which he had taken from the pizza business.

The Applicant explained with respect to the mileage claimed on his income tax returns from 1988 to 1991 that he had given his accountant the total mileage he had travelled during those years, and she had averaged it out to the same mileage every year. However, his evidence was that in the year following the accident, he had not driven nearly as far as previously.

Submissions:

Applicant's Submissions:

The Applicant's solicitor submitted that the Applicant meets the test of section 12 of the No-Fault Benefits Schedule, having suffered a moderate soft tissue injury. He submitted that the notes of the employer on Exhibit 15 "requires lots of driving" corroborates the Applicant's evidence of the amount of driving required in his occupation as a real estate agent. The Applicant's counsel noted the case of Donna Flemming v. Wawanesa Mutual Insurance, a decision of Susan Naylor, Arbitrator, O.I.C. File No. A-000406, dated April 28, 1992, and the striking parallels between that case, which involved a real estate agent, and this case. At page 15 of the decision, Arbitrator Naylor stated that the ability of the Applicant to "...perform some functions of her occupation on a part-time basis does not address the standard of disability set out in the regulations."

...The regulations contemplate inability to perform the duties of remunerative work. The performance of the essential tasks must incorporate the ability to perform such tasks in a manner, at a speed or for a time that renders such performance capable of being remunerative.

The Applicant's counsel submitted that until mid June 1992 the Applicant was substantially disabled.

With respect to the accident of November 18, 1991, at best that accident could shorten the disability time frame, because of the increased symptomatology noted by Dr. Johnston.

With respect to the amount of gross weekly income prior to the accident, the Applicant's counsel submitted that the evidence had shown that the Applicant was earning approximately $450.00 per week prior to the accident. He also earned $15,502.20 from National Safety Associates in the 52 weeks prior to the accident, which averages to $288.46 per week. Taken together, these sums total $738.46 in average gross weekly income. Under the No-Fault Benefits Schedule, eighty per cent of that figure results in $590.77 per week being available to the Applicant for weekly income benefits.

The Applicant's counsel submitted that until mid June 1992 the Applicant was entitled to the sum of $53,718.64 in weekly income benefits, from which must be deducted the $925.00, which he was already paid and eighty per cent of the commission he earned from the Canada Realty Group. The gross commission was $8,937.50. Eighty per cent of this commission is $7,149.60, leaving a total net claim of $45,644.04, to which should be added interest.

The Applicant's counsel also asked for a special award under the provisions of sections 282(10) of the Insurance Act because of the actions of the Insurer in totally dealing with this claim by telephone and without engaging an independent insurance adjuster to assist the Applicant.

Insurer's Submissions:

The Insurer's counsel submitted that there are three important issues in this arbitration:

1. Whether the Applicant was employed at the time of the accident;

2. Whether he was medically eligible for weekly income benefits; and

3. The quantum of those benefits.

All of these issues require that the credibility of the Applicant be assessed. The Insurer's counsel submitted that the Applicant was not credible: he had falsified income tax returns; misrepresented the failure of a deal with Standard Trust to close; stolen money from 789018 Ontario Inc.; and lied about being injured in the November 18, 1991 accident.

On the second issue of employment, the Insurer's counsel submitted that on the day of the accident, the Applicant was self-employed at National Safety Associates. He was not employed at Canada Realty Group and he had shut down Manny's Pizza. If one reviews the test of section 12(3) of the No-Fault Benefits Schedule as to where the Applicant spent his most time in the previous year, that is at Manny's Pizza, and there is no evidence that he was disabled from performing any tasks at Manny's Pizza. If I find that he was employed at National Safety Associates, under section 12(2) (ii), there is no evidence that he couldn't handle that employment. The Applicant was not employed or self-employed at real estate until later in September, which is evidenced by Exhibit 5. The Insurer submitted, then, that the Applicant is not entitled to any weekly income benefits at all.

In the alternative, if real estate is the employment of the Applicant, then the Insurer's counsel submitted the Applicant has not met the onus of proof of his claim. On the totality of the evidence, the Applicant was not required to drive long distances. He had three car accidents after this accident. He drove to and from Toronto to enable the Standard Trust deal of November 8, 1990 to be signed, and in the fall of 1991, he drove twice weekly to Bible school and sat for four hours of classes. These actions were inconsistent with what he was telling Dr. Johnston.

The income tax returns showing 42,000 kilometres per year indicate a tremendous amount of driving, more than 807 kilometres per week. If one accepts the evidence of Mr. Lopes that in 1990/91 he did very little driving, then this increases the number of kilometres driven every week. The Insurer's counsel submitted that this evidence offends common sense.

With respect to the medical evidence, there is no evidence to conclude that the Applicant is disabled. Dr. Johnston's words following the November 18, 1991 accident are that he might have been released to work around that time. That is the cut-off point.

On the issue of quantum, the evidence with respect to the amount of money being made at Manny's Pizza is so indefinite it provides insufficient foundation to deduce an income for Manuel Lopes.

The income from National Safety Associates is $15,000.00, but we don't even know what this is for. In the previous year, Exhibit 10 shows from a gross income from National Safety Associates of almost $7,000.00, a net income of $4,683.53 is reported. That means the ratio of expenses to gross earnings is a little over one third. If one assumes that ratio in proportion to the $15,000.00 income, then the income is reduced to $10,000.00, which is less than $200.00 per week.

The Insurer's counsel submitted that one must take 80% of the minimum gross weekly income of $232, deduct 80% of the commission of $7,150.00, and deduct the $925.00 paid by Federation Insurance, to deduce the amount which will be owing to the Applicant.

A special award ought not to be made here, but only where an insurer unreasonably refuses to pay, he submitted. This insurer has paid all the physiotherapy and chiropractic expenses plus five weeks of weekly income benefits at a time when the Applicant had already received between $8,000.00 and $9,000.00 of real estate commission income.

Findings:

In this arbitration, it was the task of the Applicant to prove, on a balance of probabilities, that after October 26, 1990 he suffered a "substantial inability to perform the essential tasks of his or her occupation or employment". That is the test for eligibility for weekly income benefits set out in section 12 of the No-Fault Benefits Schedule.

Employment at Date of Accident:

The Insurer disputed that the Applicant was employed or self-employed at the date of the accident, September 6, 1990, based on the evidence, provided by the Applicant in Exhibit 5. Exhibit 5 is a letter dated July 31, 1991 signed by Manuel Alves, Broker, Canada Group Realty Corporation. The letter states as follows:

TO WHOM IT MAY CONCERN:

This letter shall confirm that Mr. Manuel Lopes was employed by Canada Group Realty Corporation from about September 7, 1990 to about October 25, 1990, and from March 14., 1991 to about June 12th., 1991.

Mr. Manuel Lopes earnings during such periods were eight thousand nine hundred and thirty seven dollars and fifty cents ($8,937.50) gross.

The dates in the letter from Manuel Alves are imprecise. He qualifies three of the four dates mentioned with the word "about". Sushma Ghai, the rehabilitation expert employed by the insurer, met with Manuel Alves on October 3, 1991. Her report of this meeting was filed by the Insurer as part of Exhibit 19. In her report, Ms. Ghai states the following:

Mr. Alwis [sic] reported Mr. Lopes had registered himself as a licensed salesperson on July 13, 1990, and at that time, he started working for him. Subsequently, he registered again in the beginning of 1991. He renewed his registration on March 14, 1991.

Mr. Lopes, himself, testified that at the time of the accident he was returning from the Canada Group office on College Street, in Toronto. He testified that he had begun working for the group just prior to the accident. He had no written contract with the corporation.

I accept the evidence of Manuel Lopes and the report of Sushma Ghai that the Applicant was working as a commissioned real estate salesperson for the Canada Realty Group Corporation at the date of the accident, September 6, 1990.

Essential Tasks of a Real Estate Salesperson:

The Canadian Classification and Dictionary of Occupations (C.C.D.O.) is a useful tool for ascertaining the duties of the Applicant. The C.C.D.O. sets out the following duties:

a) Selling and leasing land, house, apartments, commercial buildings and other real estate for clients on a commission basis.

b) Studying property listings to become familiar with the properties for sale.

c) Reviewing trade journals to keep informed of marketing conditions and property values.

d) Interviewing prospective sellers to solicit listings.

e) Advertising properties for sale or lease.

f) Accompanying prospective purchasers to property sites, pointing out saleable features of property, quoting asking price and discussing conditions of sale or terms of lease.

g) Drawing up sales or rental agreements for approval by purchaser and seller.

h) Assisting and advising clients in arranging mortgages, computing legal fees and other costs, and related matters.

The Applicant agreed that this description accurately sets out the main duties of a real estate salesperson and agreed that he could perform most of these tasks after October 26, 1990. However, he qualified this by stating that he would have to travel to Toronto to obtain the Toronto MLS listing and would have to go to Toronto to look at these properties. He also could not perform the duties as listed in subparagraph (f) as he had previously, because he could not do the travelling. With respect to subparagraph (h), he commented that it is "not just that simple-- I have to go to them." He stated that his inability to do a lot of driving was the principal reason he could not perform all his duties as a real estate agent after October 26, 1990.

I have set out at length the evidence of Gregory Johnston, M.D., and Daniel Boynton, D.C., with respect to the Applicant's medical condition in the late summer and early autumn of 1991.

I accept the evidence of these practitioners as to their findings on their various examinations of the Applicant. Dr. Johnston stated on cross-examination that, if the November 18, 1991 accident had not occurred, "he may have been able to return to work earlier. The accident contributed to the prolongation of the symptoms. I don't think there's much question of that."

Dr. Johnston "cleared" the Applicant for return to full-time employment as a real estate salesperson as of January 31, 1992. However, he was aware from the spring of 1991 that the Applicant was going into the office from time to time and attempting to work part-time. He was aware in October 1991 that the Applicant was attending Bible school. Dr. Johnston stated he understood the Applicant's job involved a great deal of driving, prolonged walking and stair climbing. These activities appeared to be the major areas of stress for the Applicant. By the spring of 1992, Dr. Johnston was urging his patient to accept that "all that hurts is not harmful" and that some pain might have to be accepted after long injury.

Dr. Boynton expressed the view after his September 1991 examination of the Applicant that he could return to his previous employment with some additional physiotherapy and attention to his psychological difficulties.

It is my view, after considering all the medical evidence, and the Applicant's own testimony, that as of November 14, 1991, he was fit to perform the essential tasks of his employment as a real estate salesperson.

The motor vehicle accident of November 18, 1991 had a considerable impact on the Applicant's recovery. I accept Dr. Johnston's evidence, outlined above, with respect to the effect of that accident. However, it is my view that by the time that accident occurred, the Applicant had already recovered to a sufficient degree to enable him to perform his essential employment tasks. I express no views on whether that accident, itself, impaired his ability to the extent that he, once again, was unable to perform his essential tasks. I have no evidence before me to indicate who might be the insurer responsible for the no-fault benefits for the injuries received in that accident. It is my understanding that there has never been an application for accident benefits arising out of that accident.

Amount of Weekly Benefit

Once I have found that the Applicant qualifies as being employed or self-employed at the date of the accident, I must apply the rules of section 12(7) of the No-Fault Benefits Schedule to calculate the Applicant's gross weekly income. Section 12(7) provides as follows:

(7) The following rules apply to the calculation of gross weekly income:

1. A person's gross weekly income shall be deemed to be the greatest of,

i. his or her average gross weekly income from his or her occupation or employment for the four weeks preceding the accident,

ii. his or her average gross weekly income from his or her occupation or employment for the fifty-two weeks preceding the accident,

iii. $232.

3. Business expenses which cease as a result of the accident shall be deducted from a person's income from self-employment before calculating his or her gross weekly income.

The Applicant has testified that in 1991 his only income from employment or self-employment was $8,937.00 in commission earnings from a single real estate transaction. To earn that income, the Applicant represented to Revenue Canada that he had $1,111.95 in employment expenses of which $813.42 were "allowable automobile expenses". In his 1991 income tax return, the Applicant represented that he drove 6,000 kilometres that year to earn income out of 42,000 total kilometres driven in 1991. Based on the evidence given by the Applicant at the hearing, I find he drove far less than 42,000 kilometres in 1991. I will, however, accept $813.42 as allowable automobile expenses for the purposes of this hearing. In so doing, I note that, proportionately, the Applicant would be entitled to greater allowable automobile expenses if the ratio of personal kilometres to business kilometres was greater than 6,000: 42,000.

I find that the Applicant's total gross revenue from employment after the accident in the sum of $8,937.00 should be reduced by $1,111.95 in allowable expenses to give $7,825.05 in post-accident income. The Insurer is entitled to credit for 80% of that figure, or $6,260.04, pursuant to the provisions of section 15 of the No-Fault Benefits Schedule, which states as follows:

The insurer may deduct from any benefit payable under this Part 80 per cent of any income received or available from any occupation or employment subsequent to the accident.

In the four weeks preceding the accident, the Applicant earned nothing. Thus, according to the provisions of section 12(7)1.(ii), quoted above, I must determine the Applicant's earnings in the 52 weeks preceding the accident. The accident occurred September 6, 1990. Thus, I may look to the Applicant's 1989 and 1990 income tax returns, which were exhibits at the hearing, for assistance as well as his oral testimony.

In 1989, the Applicant reported $1,562.00 in employment income. He claimed $685.12 in employment expenses, of which $631.52 were allowable automobile expenses. The Applicant represented that he drove 42,000 kilometres in 1989, of which 6,000 kilometres were to earn income. The Applicant claimed no gasoline and oil expenses in 1989. This return was prepared for filing in March 1992. There is no indication of the source of the employment income in the working copy of the Applicant's T1 General return which was filed at the hearing.

In 1990, the Applicant reported $6,977.00 in employment income. He claimed $2,293.47 in employment expenses, of which $746.31 were allowable automobile expenses. The Applicant represented he drove 42,000 kilometres in 1990, of which 6,000 kilometres were to earn income. The Applicant claimed $848.32 in gasoline and oil expenses in 1990. In 1990, the Applicant is represented in his income tax return as being a "salesman" whose employer is "National Safety Associates". He also represented in that tax return that he lost $1,547.16 from the business of selling water filters, plus $746.31 in automobile expenses, for a net business loss before business use of home expenses in the sum of ($2,293.47). This return was prepared for filing in March 1992.

The Applicant testified at the hearing that he received three payments from National Safety Associates in 1989-90:

December 25, 1989

$ 6,275.00

January 25, 1990

$ 2,497.60

February 25, 1990

$ 6,729.60

TOTAL

$ 15,502.20

He explained that, when he moved from 235 Talbot Street, Simcoe, he did not take all his personal papers. He explained that he was in the process of reporting this additional income to Revenue Canada.

The Applicant testified that he operated 789018 Ontario Inc., a pizza restaurant, from August 1988 until August 1990, when the business was sold. He filed as Exhibit 12 a corporation tax return for its taxation year September 1, 1988 to August 31, 1989. This return showed gross sales of $59,125.60; total cost of sales $30,164.09; total expenses $42,097.76 including $10,023.00 depreciation, for a loss of $13,136.25. Net income for federal tax purposes was shown as ($3,113.00). The balance sheet showed total assets of $40,500.00, including $2,500.00 for goodwill and total liabilities and shareholder's advances of $40,400.00 and capital stock $100.00. These records were prepared May 3, 1990 by a certified management accountant and were not audited. Manuel Lopes was listed as the sole shareholder of the corporation.

The Applicant testified at the hearing that he took between $400.00 and $500.00 each week from the restaurant cash register while he was operating the business, without noting that revenue in the company records. He testified he paid a mortgage of $750.00 per month on his residence at 235 Talbot Street South during this period and paid for the utilities and telephone there. The woman with whom he lived contributed to some of the groceries, but not to these other expenses, the Applicant testified. He estimated he had approximately $2,000.00 in expenses per month, which he financed from these monies taken from the cash register at the restaurant business.

The Applicant's solicitor has asked me to accept the Applicant's oral testimony and find that he had an income of approximately $450.00 per week from the restaurant business. He has asked me to deduce that he had further income of $288.46 per week from National Safety Associates, by taking expenses of $502.20 from the total of the three cheques ($15.502.20) and dividing by 52. His alternative submission is that I use the provisions of section 12(7) 1 .iii and find a gross weekly income of $232., the statutory minimum.

The Insurer's solicitor, on the other hand, points out the inaccuracies, estimations, and outright fraudulent aspects of the Applicant's reported income.

In my view, the Applicant has not met the onus of proof, on a balance of probabilities, of an income between $400.00 and $500.00 per week from the pizza business during the period September 1989 to September 1990. I accept that, in order to meet his living expenses, the Applicant must have earned some income during that period. However, he has produced insufficient evidence of his exact income. On the contrary, he filed as exhibits his income tax returns showing total income of $1,562.00 in 1989 and net income of $5,683.53 in 1990. I am unable to accept his bald assertion that he extracted $400.00 to $500.00 per week from the cash register of 789018 Ontario Inc. as sufficient, reliable proof of this greater level of income. Similarly, I am unable to deduce a net income figure from the work for National Safety Associates. The Applicant adduced no corroborating financial records such as bank records to show his payments of his residential mortgage during that period, nor any utility payment records, nor any other banking records, nor did he produce any other witness who could credibly substantiate his income, other than brief testimony from one friend, Mr. Jilderda, whose testimony was vague.

It is my responsibility to accept proof from an applicant, which is worthy of belief, substantiating his claims with respect to pre-accident income. It is difficult for applicants to come before me as an adjudicator and admit that they have lied in other circumstances where a truthful response was required. It becomes even more difficult to unweave a web of deceitful behaviour, once it has been initiated.

I say this, because, in my view, had the Applicant brought forward sufficient, compelling evidence of greater income, I would have found in his favour, regardless of the false income tax returns. Although I do not condone such behaviour as the Applicant has exhibited, that issue is beyond the scope of this arbitration.

It might be said that as a matter of public policy, however, that an applicant who has never formally acknowledged and reported income in his tax return should not be allowed to use a proceeding before an administrative tribunal to recover income lost as a result of an accident. The New Brunswick Court of Appeal in a case heard in 1988, Frenette v. Audet,(1988), 1988 CanLII 128 (NB CA), 89 N.B.R. (2D) 306, held this to be the law. The principle of law which the court cited is the maxim ex turpi causa non oritur actio (out of an immoral consideration, an action cannot arise). However, in my view, the view of the British Columbia Court of Appeal in Iannone v. Hoogenrraad (1992) 66 B.C.L.R. (2d) 107 is to be preferred. In that case, the court reiterated its definition of the scope of the principle in its decision in Hall v. Hebert (1991) 1991 CanLII 5709 (BC CA), 53 B.C.L.R. (2d) 201. Justice Gibbs, in the Iannone case, concluded that the contention that the plaintiff's recovery should be barred on public policy grounds

confuses the concepts of a right to recover on a cause of action and the burden of proof upon a plaintiff whose right of recovery is not barred by a principle like ex turpi causa.

This plaintiff, like others in similar circumstances, had the burden of leading evidence of post-accident wages losses. That will be a difficult burden to discharge where there is no corroborating evidence such as income tax returns, but it is not an impossible burden to discharge.

In order for the ex turpiprinciple to apply, the cause of action must arise out of the commission of that act. Here, the cause of action arises out of a contract of insurance and a motor vehicle accident, not the false reporting of income.

I find, then, that the Applicant has failed to discharge his burden of proof with respect to a level of gross income greater than $232.00 per week. Accordingly, his gross weekly income will be deemed to be $232.00, by the operation of section 12(7) 1.iii of the No-Fault Benefits Schedule.

Expenses:

The Applicant seeks an award of the expenses he has incurred in this arbitration. An award for expenses may be made under section 282(11) of the Insurance Act, which provides as follows:

The arbitrator may award to the insured person such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations to the maximum set out in the regulations.

The prescribed expenses and amounts are set out in Schedule 1 of the Dispute Resolution Practice Code and in Ontario Regulation 275/90 "Schedule".

In the McCormick v. Economical Mutual Insurance Company case (O.I.C. No. A-000139), Arbitrator Susan Naylor made the following comments about expenses, with which I agree:

The discretion to award expenses should be exercised, having regard to the intent and purpose of the legislative scheme. The arbitration process has been established under the Insurance Act, as amended, in order to facilitate applicants' access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits. The discretion to award expenses should be exercised in accordance with this objective, having regard to the individual circumstances of each case.

Accordingly, it is appropriate to award an applicant his or her expenses, unless, in the circumstances of the particular case, it is determined that the application for appointment of an arbitrator was manifestly frivolous or vexatious, or that the applicant's conduct unreasonably prolonged the proceedings.

The Applicant is entitled to his expenses as set out in Schedule 1 of the Dispute Resolution Practice Code. In the event that the parties cannot agree as to the total amount of expenses, I remain seized of this matter and a party may apply for assessment of the expenses before me.

Order:

1. The Applicant is entitled to weekly income benefits from October 18, 1990 to November 14, 1991.

2. The appropriate rate of weekly income benefits is $185.60.

3. The Insurer is entitled to credit in the sum of $6,260.04 for post-accident earnings of the Applicant.

4. The Applicant is entitled to interest pursuant to section 24(4) of the No-Fault Benefits Schedule.

5. The Applicant is entitled to his expenses of this arbitration.

November 9, 1992

K. Julaine Palmer Arbitrator

Date