Neutral Citation: 1993 ONICDRG 41

File No. A-003115

ONTARIO INSURANCE COMMISSION

BETWEEN:

PETER NAJEM

Applicant

and

AXA INSURANCE COMPANY

Insurer

File No. A-003116

AND BETWEEN:

PETER NAJEM

Applicant

and

ECONOMICAL MUTUAL INSURANCE COMPANY

Insurer

DECISION

Issues:

The Applicant, Peter Najem, was injured in a motor vehicle accident on June 14, 1992. He was a passenger in an automobile insured by Axa Insurance ("Axa"). Mr. Najem's mother has an automobile insurance policy with Economical Mutual Insurance Company ("Economical"). The Applicant applied for accident benefits from both Insurers. Such benefits are payable under Ontario Regulation 672 (R.R.O. 1990, the "No-Fault Benefits Schedule"), enacted under the Insurance Act, R.S.O. 1990, c. I.8.

Both Insurers disputed responsibility for payment of accident benefits to the Applicant.

The dispute was not resolved at mediation and the Applicant applied for arbitration under the Insurance Act.

The issue in this arbitration is whether Axa or Economical is responsible for payment of no fault benefits to the Applicant under section 268(2) of the Insurance Act.

To answer this question, I must determine whether the Applicant was "principally dependent for financial support" upon his widowed mother, pursuant to section 3(2) of the No-Fault Benefits Schedule and therefore an "insured person" under his mother's automobile policy issued by Economical.

If I find that the Applicant was not principally dependent for financial support upon his mother at the time of the accident, the parties agreed that Axa will pay no-fault benefits under the provision of section 2(a) of the Schedule and section 268(2) of the Insurance act, R.S.O. 1990, c. I.8

Result:

1. The Applicant was not "principally dependent for financial support" upon his widowed mother, within the meaning of section 3(2) of the No-Fault Benefits Schedule;

2. Axa Insurance is responsible for payment of no fault benefits to the Applicant under the provisions of section 268(2) of the Insurance Act and section 2(a) of the No-Fault Benefits Schedule.

3. The Applicant is entitled to his expenses.

Hearing:

The hearing was held in Windsor, Ontario, on June 2, 1993, before me, Janice Mackintosh, arbitrator.

Present at the Hearing:

Applicant:

Peter Najem

Applicant's

Francine Herlehy

Representative:

Barrister and Solicitor

Axa Insurance

Sharon Chisholm Clark

Representatives:

Casualty Claims Manager, and

Michael Byrne

Branch Claims Manager, Hamilton

Economical Mutual's

Jan Morgan

Representatives:

Accident Benefits Specialist, and

Chris Fearon

Claims Supervisor, Branch Mediator

Mr. Peter Najem testified. The parties presented an Agreed Statement of Facts.

Documents Before the Arbitrator:

Are listed in Schedule A to this decision.

Cases cited:

Cases referred to by the parties are listed in Schedule B to this decision.

Evidence and Findings:

The parties submitted an Agreed Statement of Facts, which forms the basis for the factual findings below. In addition, Peter Najem gave oral testimony in which he clarified some of the information contained in the Agreed Statement of Facts.

Definition of principally dependent for financial support:

The governing provisions of the No-Fault Benefits Schedule state:

Section 2

In this Schedule...

"insured person", in respect of a particular motor vehicle liability policy, means,...

(c) the named insured, his or her spouse and any dependant of either of them while the occupant of any other automobile...

Section 3

(2) For the purposes of this Schedule, a person is a dependant of another person if the person is principally dependent for financial support on the other person or other person's spouse.

Economical entered into a contract of insurance with Jean Najem, the Applicant's mother. If I find that Peter Najem was principally dependent for financial support on his mother at the time of the accident, then Economical is responsible for providing no-fault benefits to the Applicant.

The phrase "principally dependent for financial support" has been considered in four earlier arbitration cases.

In Maninder Singh v. State Farm Mutual Automobile Insurance Company and Pilot Insurance Company, Commission File Nos. A-001525 and A-001526, Senior Arbitrator Naylor concluded that the definition of "dependant", found in the current legislation under section 3(2), is narrower than the term of "dependent relative" used under the schedule to the former Insurance Act, (R.S.O. 1980). The present definition specifies that the support must be financial and the dependence principal.

Arbitrator Naylor Arbitrator Naylor concluded that "an individual must chiefly, or for the most part, derive his or her financial support from another person in order to be principally dependent for financial support on that person". Arbitrator Naylor excluded other forms of dependence such as social dependence, except to the extent that social factors pertain to financial dependence.

In McDonald and State Farm Insurance Companies, Commission File No. A-001347 (under appeal), Arbitrator Draper concluded that the person claiming benefits through dependency must establish that they are more financially dependent upon "the other person or the other person's spouse", "or perhaps on both of them jointly", than on any other source of financial support.

I accept these interpretations of the phrase "principally dependent for financial support".

In the cases Crnkovic and Simcoe & Erie General Insurance Company, Commission File No. A-002228, and Cattrysse v. The Westminster Mutual Fire Insurance Company and Anglo Canada General Insurance Company, Commission File Nos. A-001618 and A-001789, Arbitrator Palmer referred to the case of Miller v. Safeco Insurance Co. of America, (1984) 1984 CanLII 2019 (ON HCJ), 48 O.R. (2d) 451, (H.C.J.), (1985) 1985 CanLII 2022 (ON CA), 50 O.R. (2d) 797 (Ont.C.A.) which concerned the interpretation of the words "dependent relative". Justice O'Brien considered the following factors:

In my view, however, in considering who is an "insured person", the legislative intent should be kept in mind and, in addition, matters such as the amount and duration of the financial or other dependency, the financial or other needs of the claimant, [and] the ability of the claimant to be self-supporting, and the general standard of living within the family unit should be considered.

These criteria were approved on appeal, with the exception of the general standard of living within the family unit, which was found to be an inappropriate consideration.

In argument, the representatives of the Insurers referred these cases to me. I accept that the approved criteria are also appropriate considerations for determining the question of financial dependency, in the context of the present section.

Factual background:

On June 14, 1992, the Applicant, Peter Najem, suffered multiple injuries in an automobile accident. The vehicle in which the Applicant was a passenger was insured by Axa.

At the time of the accident, Peter Najem was 21 years of age and lived with his widowed mother, Jean Najem, and three other siblings, in a house owned by his mother.

The Applicant's mother owned two vehicles which were insured with Economical. Jean Najem and her older daughter were identified as the principal operators, and Peter Najem and his brother were listed as occasional drivers of these vehicles.

In September 1990, Peter began to study engineering at the University of Windsor, in the co-op program. Each year of the four year Engineering co-op program consisted of two semesters of full-time academic study and one semester of work in a co-op placement. Each academic semester is approximately four months, including examination periods and holiday time. The Applicant paid tuition fees in the amount of $1,200 for each academic semester and a $200 co-op placement fee for each of the three co-op semesters. At the beginning of each academic semester, the Applicant purchased books in the approximate amount of $500. Over the year, the Applicant spent approximately $100 on drafting supplies.

During his first year of engineering studies, the Applicant lived in residence on campus. He paid $250 a month for shared accommodation and $250 a month for three meals a day, in residence. He used his mother's car when he returned home for weekends. He paid for the gas that he used.

During his first year co-op work placement in the summer of 1991, the Applicant lived at home on a rent-free basis, and used one of his mother's cars to travel to and from work. The Applicant earned a total of $4,847.22 during that summer.

In second year university, the Applicant returned home to live. He preferred his mother's cooking and housekeeping to residence meals and conditions. His mother also took care of his laundry and dry cleaning. He paid no room or board.

The representatives of Axa submitted that the concept of "financial support" should extend beyond money to include the reasonable value of goods and services provided to the Applicant by his mother, or available to the Applicant from his deceased father. It was argued that the receipt of such goods and services relieved the Applicant of expenses he have would otherwise incurred. Axa proposed that the value attributed to these goods and services should be added to the financial contributions of the Applicant's mother to determine whether the Applicant is more dependent upon his parents' contribution of goods and services than upon other sources of support, such as student grants.

The representatives of Economical did not object to this approach, but argued that the Applicant and his mother enjoyed a reciprocal arrangement in which the services of each benefited the other. Economical suggested that the value of the Applicant's various contributions to his mother's household must be considered when assessing the value of goods and services provided by the Applicant's mother.

I find that the term "financial support" contained in section 3(2) of the Schedule, is broad enough to extend beyond money to include the concept of "money's worth". It has often been said in arbitration decisions that the Schedule must be given a broad, liberal, and remedial interpretation in keeping with the purpose of the legislative scheme.

Food and Lodging:

Axa submitted that the monetary value of the housing provided to the Applicant by his mother should be established in accordance with Exhibit 1. Exhibit 1 sets out the weighted average rent for a one bedroom apartment in the Leamington area, where the Applicant's home is located. The rent is stated to be $488.00 per month. Exhibits 2 a and b, were introduced by Axa to establish Statistics Canada's summary of the average yearly expenditure for food of a male, one-person household. The total yearly food expenditure is stated to be $4,236. Axa submits that, if these values were used to determine the financial contribution of the Applicant's mother, the Applicant would be found to be principally dependent upon his mother.

I do not accept these values as the appropriate ones to be used in this case. The Applicant testified that during the 1990/1991 school year he obtained both food and lodging at the cost of $500 a month. In residence he shared a bedroom and bathroom. While living at home, he generally packed his own lunch rather than buy it. The figures proposed by Axa are based on a one bedroom apartment rather than shared accommodation, with more than half the total cost of food related to purchases from restaurants. I conclude that the values to be attributed to the food and lodging provided to the Applicant by his mother are more akin to the cost of student residence than the values proposed by Axa.

Housekeeping services:

The Applicant and his younger brother were very handy around their mother's house. They did everything from fixing leaky faucets and broken door handles, to making electrical and furnace repairs inside their mother's 100 year old house. They also did major household chores, maintained the grounds, and re-shingled the roof of a shed. The Applicant managed the household finances for his mother.

The representatives of Economical submitted that the value of the housekeeping, meal preparation and laundry services provided to the Applicant by his mother, should be offset by the Applicant's work around his mother's house and his bookkeeping services. I accept this submission and do not attribute an additional amount for Jean Najem's services to her son.

Transportation:

The Applicant joined a car pool to commute the 120 kilometres to and from University. The Applicant used one of his mother's cars once or twice a week whenever his turn in the car pool came up. He also used one of his mother's cars on weekends and for personal errands. He paid for his gas, license renewal fee and university parking, but his mother paid all other expenses related to the cars, including insurance. The Applicant testified that he had no reasonable alternate form of transportation.

The Applicant's younger brother is a mechanic. Together, the Applicant and his brother performed all the regular maintenance on their mother's cars, including tune-ups, oil changes, and routine mechanical repairs. Their mother paid the cost of new car parts, and garage repairs when necessary.

I have attributed no value to the Applicant's use of his mother's cars. The benefit received by the Applicant is offset by the ongoing car maintenance provided by him. I was informed that the yearly cost of automobile insurance for the Applicant would be $1,475. I have included this amount in the calculation of Jean Najem's financial contribution to the Applicant's support.

Spending Money:

The Applicant testified that his mother gave him approximately five to ten dollars a week for spending money, during the eight months of the school year that he was not working. These various small gifts of money were in the nature of pocket money and were used by the Applicant for extras rather than necessaries. I have attributed the sum of $275 to the calculation of the financial support received by the Applicant from his mother.

Benefits connected to deceased father:

Peter Najem's deceased father was a long time employee of the General Motors Corporation. Through General Motors, the Applicant receives O.H.I.P. and semi-private hospital coverage as well as dental, vision, hearing, and prescription benefits. I heard no evidence concerning the value of the medical benefits and O.H.I.P. coverage available to the Applicant through his deceased father's former employer.

The Applicant receives Orphan Benefits through the Canada Pension Plan. The benefits are paid directly to the Applicant and are included in the Applicant's income for income tax purposes. Counsel for the Applicant informed me that these benefits are payable to the Applicant until the age of 25, provided that he remains in full-time attendance at school. The benefits are not conditional upon the Applicant's continued residence with his parents.

I received no other evidence concerning the specific terms and conditions upon which the medical and Orphan Benefits continue to be extended to the Applicant.

The representatives of Axa submitted that the Orphan Benefits received by the Applicant from the Canada Pension Plan are in the nature of dependant's benefits and are payable to the Applicant as a result of his dependency upon his deceased father. Axa also suggested that a monetary value be assigned to the health care benefits received by the Applicant from General Motors. Axa submitted that both these amounts should be characterized as contributions to the Applicant's financial support through his deceased father and should be added to the value of the goods and services provided by the Applicant's mother, to establish that the Applicant is more financially dependent upon his mother "or her spouse" within the meaning of section 3(2) of the No-Fault Benefits Schedule, than on the Applicant's other sources of financial support.

I am not prepared to characterize either of these benefits in the manner proposed by Axa. The Orphan's Benefits may well be paid to the Applicant in lieu of the support he might otherwise have expected to receive from his deceased father, but neither the Orphan's Benefits nor the health care benefits from General Motors flow to the Applicant directly from his deceased father's estate. Furthermore, no argument was made to establish that a former spouse, now deceased, is included in the words "the other person or the other person's spouse" contained in the definition under section 3(2) of the Schedule. Therefore, I do not consider either the Orphan Benefits or the health care benefits to be part of the financial support the Applicant receives through his mother, or her spouse.

At the time of the accident, Peter Najem had completed his first full year of the engineering program and the first two academic semesters of his second year. He was seven weeks into his second year co-op work placement when the accident occurred.

He was employed at the Ford Motor Company as a co-op summer student. He began his employment on April 27, 1992 and expected to conclude his co-op semester in late August or early September 1992, and return to school. Peter's average gross weekly income from this employment was $610.86. His weekly income benefit of $488.69 was calculated based on this amount.

The Applicant paid his personal costs including clothing, haircuts, entertainment and recreation.

On the basis of these facts, I find the Applicant's actual expenses and financial resources to be as follows:

Academic Year Sept. 1990 to August 1991 (52 weeks)

Academic Year Sept. 1991 to June 14, 1992 (40 weeks) (10 Months)

EXPENSES:

University Tuition

$3,000 - 2 semesters plus co-op fees

$3,000

Books

$500 x 2 semesters = $1,000.00

$500 x 2 semesters = $1,000

Drafting Supplies

$100

$100

Accommodation: Winter - 2 semesters Summer - 1 semester

University Residence $250 x 8 months = $2,000 Provided by mother

Provided by mother

Food: Winter - 2 semesters Summer - 1 semester

University Residence $250 x 8 months = $2,000 Provided by mother

Provided by mother

Clothing

$1,000

$1,000

Laundry/drycleaning

Minimal

Provided by mother

Transportation:

insurance license renewal parking gas repairs

Provided by mother $69 minimal minimal - weekends only Work by Applicant - Costs paid by mother

Provided by mother $69 $104 for 2 semesters (car pool) $20/wk x 40 = $800 (car pool) Work by Applicant - Costs paid by mother

OHIP/medical benefits

Provided through father's former employer

Provided through father's former employer

Haircuts

$8/month x 12 = $96

$8/month x 10 = $80

Entertainment

$120/month x 12 = $1,440

$120/month x 10 = $1,200

Recreation

$5.25/week x 52 = $273

$5.25/week x 40 = $210

Membership dues

$35

$35

TOTAL EXPENSES

$11,913.00

$7,598.00

FINANCIAL RESOURCES:

Employment Income

$4,847.22

$4,276.36

Student Grant

$6,350 ÷ 3 semesters x 2 semesters = $4,233

$3,270 for 2 semesters

Student Loan

$2,805

$2,023

C.P.P. Orphan Benefits

$1,357.68

$1,856.40

Pocket Money

Provided by mother

Provided by mother

TOTAL FINANCIAL RESOURCES

$13,242.90

$11,425.76

The Applicant's financial resources exceed his actual expenses in each school year. My calculations support the Applicant's testimony that, by the end of the first two semesters of the school year, he was left with approximately $800 to $1,000 in the bank. Over the summer work semester, the Applicant accumulated additional funds. At the time of the accident in June 1992, the Applicant testified that he had accumulated approximately $4,000 in the bank.

I find the additional value of the financial contribution provided to the support of the Applicant by his mother to be:

Accommodation:

1990-1991

1991-1992

Winter:

residence (2 semesters)

10 months at $250/month $2,500

Summer:

4 months at $250/month

$1,000

Food:

1990-1991

1991-1992

Winter:

residence

10 months at $250/month

$2,500

Summer:

4 months at $250/month

$1,000

Transportation:

Car insurance

$1,475

$1,475

Spending money:

$275

$275

TOTAL VALUE OF MOTHER'S CONTRIBUTIONS TO APPLICANT'S SUPPORT:

$3,750

$6,750

Status of Student Loans:

Status of Student Loans:

The Applicant received government grants and loans from the Ministry of Colleges and Universities in connection with his attendance at University. The representatives of Axa submitted that the Applicant's student loan portion should be excluded from the calculation of his financial resources when determining his overall financial position. When calculated in this manner, Axa submitted that the Applicant would chiefly, or for the most part, derive his financial support from his mother. The representatives of Axa relied upon the case of Martins v. Gibraltar General Insurance Co. (1984), 1984 CanLII 5962 (ON HCJ), 6 C.C.L.I. 226 (Ont. Co. Ct.), which concerned a claim for death benefits. In that case, the claimant was 34, unemployed, and living in a house which he owned jointly with his parents, at the time of their deaths in a motor vehicle accident. The claimant maintained that he was financially dependent upon his parents. In concluding that the claimant was a dependant, Ontario County Court Judge McTurk found that the plaintiff was not required to borrow funds against his interest in the house nor to dispose of his house or automobile before he could be found to be principally dependent on his parents.

In my view, the facts of the Martins case are distinguishable from the present case. In the Martins case, the claimant had not borrowed or received funds through the ownership of the house, while in the present case the Applicant had already applied for and used his government student loans. The specific purpose of the student loans was to provide the Applicant with the financial resource to pursue his education, when other forms of financial support, including financial support from his parents, were not available. While the student loan carries with it an obligation to repay, this obligation is deferred to a date in the future when the Applicant will no longer be occupied by full-time studies. I find that the student loans should be included in the calculation of the Applicant's financial resources. However, if I am wrong on this point, it does not affect the final outcome. The total of the Applicant's other financial resources, excluding the Applicant's student loan, is $9,402.76. This figure includes the Applicant's income from employment, income from student grants, and income from C.P.P. Orphan Benefits, for the school year September 1991 to June 14, 1992. This sum is greater than the total contribution of $6,750 provided to the Applicant by his mother.

Conclusion:

I conclude that the Applicant was financially dependent upon his mother at the time of the accident. In fact, the Applicant's mother made the single greatest contribution to his support. However, the total of the Applicant's other financial resources were greater than his mother's contribution. Accordingly, the Applicant was not more financially dependent on his mother than on his other financial resources and was therefore not principally dependent for financial support upon his mother, within the meaning of section 3(2) of the Schedule. Having reached this conclusion, Axa has agreed to accept responsibility for the payment of no-fault benefits to the Applicant under provision 2(a) of the Schedule and section 268(2) 1 .ii of the Insurance Act.

Expenses:

During mediation of this dispute, the Insurers agreed as follows:

...whichever Insurer is determined to be responsible for payment of Mr. Najem's no-fault benefits, that insurer will pay Mr. Najem's reasonable solicitor and client costs as agreed or assessed with respect to preparation for mediation, and mediation. This insurer will also be responsible for payment of Mr. Najem's solicitor and client costs incurred with respect to arbitration of this issue for a period of up to six months.

This agreement is recorded in the Report of Mediator dated February 11, 1993.

In addition, the Applicant has claimed the expenses he has incurred in respect of 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 664 (R.R.O. 1990), Dispute Resolution Expenses.

This is an appropriate case in which to award the Applicant his expenses incurred in respect of this arbitration. The application for appointment of an arbitrator was neither frivolous nor vexatious, nor did the Applicant's conduct unreasonably prolong the proceedings. On the contrary, all the parties worked together to produce an agreed statement of facts in an effort to reduce the time and costs of the arbitration hearing. In addition, the Insurers agreed to forego the use of legal counsel for the presentation of their respective positions. While it is true that all matters referred to arbitration cannot be dealt with in this manner, such co-operation is commendable.

Order:

1. The Applicant was not "principally dependent for financial support" upon his widowed mother, within the meaning of section 3(2) of the No-Fault Benefits Schedule;

2. Axa Insurance is responsible for payment of no fault benefits to the Applicant under the provisions of section 268(2) of the Insurance Act and section 2(a) of the No-Fault Benefits Schedule.

3. The Applicant is entitled to his expenses incurred in connection with this hearing.

July 27, 1993

Janice Mackintosh Arbitrator

Date

SCHEDULE A

Documents introduced into Evidence:

Exhibit 1

Appendix - October 1992 and Historical Survey Results for Southwestern Ontario Non-CMA's Apartment Weighted Average Rents;

Exhibit 2a

Explanatory covering letter from Advisory Services of Statistics Canada, dated May 27, 1993;

2b

Family Expenditure in Canada, Catalogue Number: 62-555, Table 16, Summary and Selective Detailed Household Expenditure by Age and Sex of One-Person Household, 17 Metropolitan Areas, Canada, 1990.

Other documents that formed part of the record:

Two Reports of Mediator for File Nos. A-003115, and A-003116 respectively, dated February 11, 1993;

Two Applications for Appointment of an Arbitrator, each dated December 23, 1992; Response by Insurer in respect of File No. A-003115, dated March 8, 1993;

Response by Insurer in respect of File No. A-003116, dated March 15, 1993;

Letter of pre-hearing arbitrator David Draper, dated May 6, 1993.

Agreed Statement of Facts, dated May 28, 1993.

SCHEDULE B

Barnard et al. v. Safeco Insurance Co. of America [1986] I.L.R. & 1-2146, (1986) 1986 CanLII 2522 (ON HCJ), 57 O.R. (2d) 558 (H.C.J.)

Martins v. Gibraltar General Insurance Co. (1984) 1984 CanLII 5962 (ON HCJ), 6 C.C.L.I. 226 (Ont. Co. Ct.), I.L.R. & 1-779

Miller v. Safeco Insurance Co. of America (1984) 48 O.R.(2d )451 (H.C.J.), (1985) 1985 CanLII 2022 (ON CA), 50 O.R.(2d) 797 (Ont. C.A.), [1984] I.L.R. 1-1848 (S.C.O.), [1985] I.L.R. 1-1949 (Ont.C.A.)

Pagliarella et al. v. Di Biase Brothers Inc. et al. (1989) 1989 CanLII 4388 (ON HCJ), 71 O.R.(2d) 193 (H.C.J.)

Revega v. Western Union Insurance Company [1975] I.L.R. & 1-665 (S.C.O.)

Simeonoff v. Pafco Insurance Co. [1992] O.J. No. 2662 (Gen.Div.)

Taylor v. Ontario (Motor Vehicle Accident Fund) et al. (1989), 1989 CanLII 10431 (ON HCJ), 44 C.C.L.I. 116 (Ont. Dist. Ct.)