Neutral Citation: 1994 ONICDRG 134

File No. A-003995

ONTARIO INSURANCE COMMISSION

BETWEEN:

FATHIA AHMED

Applicant

and

ALLSTATE INSURANCE COMPANY OF CANADA

Insurer

DECISION

Issues:

The Applicant, Fathia Ahmed, was the spouse of the late Faud Abdulwahab. Mr. Abdulwahab died as the result of a motor vehicle accident on December 25, 1991. At the time of the accident, Mr. Abdulwahab was living with the Applicant and their young son. The Applicant applied for and received statutory accident benefits from the Insurer, payable under Ontario Regulation 672¹. These benefits included:

• Funeral expenses pursuant to section 10 of the Schedule;

• $25,000 to Fathia Ahmed as surviving spouse under section 11(1)(a) of the Schedule;

• $10,000 to the child as a surviving dependant under section 11(1)(c) of the Schedule.

Fathia Ahmed also claimed a benefit of $10,000, under section 11(1)(c) of the Schedule, as a surviving dependant of Faud Abdulwahab at the time of the accident. The Insurer denied payment of this benefit on the basis that the Applicant was not principally dependent for financial support on Faud Abdulwahab within the meaning of section 3(2) of the Schedule, at the time of the accident, and therefore, does not qualify for a benefit under section 11(1)(c) of the Schedule.

The Insurer claims that the payment of $10,000 to the child as a surviving dependant, under section 11(1)(c) of the Schedule, was made in error. However, the Insurer confirmed that it will not seek repayment of this benefit under section 27 of the Schedule.

The parties were unable to resolve their dispute through mediation and the Applicant applied for arbitration under the Insurance Act.

The following issue was raised in this arbitration:

Was Fathia Ahmed principally dependent for financial support on Faud Abdulwahab, within the meaning of section 3(2) of the Schedule, at the time of the accident, thereby qualifying for a death benefit of $10,000 under section 11(1)(c) of the Schedule?

The Applicant also claims interest on any outstanding amounts, and her expenses incurred in the hearing.

A claim for a special award under section 282(10) of the Insurance Act was noted in the Application for Appointment of an Arbitrator, dated August 1, 1993, and the pre-hearing letter from the Commission, dated October 19, 1993. I received no evidence or submissions on this issue and make no findings in respect of this claim.

Result:

1. At the time of the accident, Fathia Ahmed was principally dependent for financial support on Faud Abdulwahab, within the meaning of section 3(2) of the Schedule, and she is therefore entitled to a death benefit in the amount of $10,000, under section 11(1)(c) of the Schedule.

2. The Applicant is entitled to payment of interest on any outstanding amounts and her expenses incurred in the arbitration.

Hearing:

The hearing was held in North York, Ontario, on January 31, 1994, before me, Janice Mackintosh, Arbitrator.

Present at the Hearing:

Applicant:

Fathia Ahmed

Applicant's Representative:

Ian Little

Barrister and Solicitor

Insurer's Representative:

James Flaherty

Barrister and Solicitor

Insurer's Officer:

Mark Potts

Senior Staff Claims Representative

Witnesses: Fathia Ahmed

Ms. Jane Givens

Supervisor of Social Assistance, Metro Toronto Social Services

The proceedings were translated from and into Italian by Ms. Marguerita Feliciano of Global Translation Services.

Exhibits:

Exhibit 1(a) Letter from Metro Toronto Social Services, Client Service and Information Unit, Community Access Team, to Mr. Mark Potts, Senior Staff Claim Representative, Allstate Insurance Company, dated January 19, 1994;

Exhibit 1(b) Attachment to Exhibit 1(a), entitled Record of General Welfare Assistance, Faud Ahmed Abdulwahab.

Other documents before the arbitrator and the case law referred to by the parties are listed in Appendix A.

Evidence and Findings:

There is little dispute concerning the facts in this case. Faud Abdulwahab, his wife, Fathia Ahmed, and their young son, immigrated to Canada in March 1991. They lived together in subsidized housing and applied for general welfare assistance as a family unit. Mr. Abdulwahab made the initial contact with the general welfare assistance office. Subsequently, both the Applicant and her husband attended at the welfare office to complete an application form. It was the Applicant's understanding that both she and her husband were required to attend at the welfare office to establish that they were a family unit.

Soon after their arrival in Canada, the Applicant's husband began to receive welfare payments. Exhibit 1(b) sets out the dates and amounts of general welfare assistance cheques issued to Mr. Abdulwahab. The Applicant testified that she does not know why the cheques were made payable only to her husband. She does not recall discussing this issue with her husband or with the welfare authorities. Her understanding is that the amount of money paid by welfare was calculated on the basis of the needs of the family unit, including her husband, herself, and their child. The Applicant testified that while her husband was alive, he deposited the cheques into his bank account, paid the monthly bills, and gave her money as she needed it. Neither she nor her husband was employed nor had any other source of income or support for themselves or their child.

Shortly after her husband's death, the Applicant attempted to cash a welfare cheque issued to her husband, at her husband's bank, in order to pay living expenses. She was unable to access her husband's bank account, or cash the welfare cheque. She returned to the welfare assistance office with the cheque issued in her husband's name and was informed that they could not issue a substitute cheque in her name. She was informed that the original file which had been opened on the basis of the application as a family unit would be closed, and that her income and needs would be re-assessed. If she qualified for general welfare assistance, benefits would be calculated on the basis of her new status as a single parent. The Applicant and her son turned to friends for assistance. Some time later, the Applicant began to receive welfare cheques payable to her, with her son listed as a dependant.

Ms. Jane Givens, Supervisor of Social Assistance for Metro Toronto Social Services, testified about standard procedures in connection with applications for general welfare assistance. She stated that general welfare entitlement for a family unit is calculated on the basis of a number of factors, including the number of people in the family, the ages of the children (the rate changes for children over the age of 12), and how much rent the family is required to pay. Both spouses are required to sign the application for assistance. Either spouse can be designated head of the household. The head of the household signs the application first, and assistance cheques are made payable only to that person. The second name on the application is considered a dependant of the head of the household. The children are also considered dependants.

Ms. Givens testified that the family's full welfare allotment is paid directly to the head of the household, to be used at his or her discretion. It is assumed by the welfare authorities that the head of the household will meet his or her moral and legal obligations to support any dependants and to provide for the needs of the family, including food, clothing, and shelter. Ms. Givens noted that one of the goals of the welfare system is to recognize a family's right to self-determination and to encourage welfare recipients to exercise their own discretion in the use and allocation of welfare benefits. Payment of the family's expenses directly by the welfare office is not the norm. If the head of the household becomes incapable of administering the family's welfare entitlement, the head of the household can be changed by mutual application of the spouses to welfare. If the head of the household refuses to provide for the needs of his or her dependants, and if the family members cannot resolve this dispute, presumably the family unit will dissolve. Each spouse will then have the right to make a new application for welfare as a single person or as a single parent. Welfare payments will then be calculated in accordance with this new status.

Counsel for the Applicant submitted that the Applicant (and, by logical extension, her young son) was principally dependent upon the deceased for financial support at the time of his death. The Applicant relies upon the structure set up by the welfare authorities. In contrast, counsel for the Insurer urged me to look beyond the administrative structure set up by the welfare system and to examine the substance and reality of the Applicant's financial situation. The Insurer submitted that the Applicant (and her child), was entitled to welfare assistance by law, that her entitlement arose out of her personal need, that a portion of the family unit's welfare allotment was directly attributable to each family member, and by rights, belonged to each individual for his or her own support. The Insurer argued that the husband, Faud Abdulwahab, as the designated head of the household, merely administered each family member's specific portion of the total welfare allotment. The Insurer argued that the Applicant's real financial dependency (and by logical extension, the child's) was upon welfare, rather than upon the deceased husband and father.

Counsel for the Insurer submitted that the purpose of section 11(1)(c) is to compensate an individual who has lost financial support because of the death of his or her principal source of support, in a motor vehicle accident. Counsel submitted that the Applicant and her son were part of a family unit supported by welfare before her husband's death and continued to be supported by welfare after his death, with a brief interruption. Counsel submitted that in reality the Applicant suffered no loss of financial support as the result of the death of her husband, and urged me to interpret the facts in this case in a manner consistent with the purpose of section 11(1)(c). The relevant portions of section 11 and section 3(2) of the Schedule are contained in Appendix B.

For the reasons that follow, I am not persuaded by the submissions of counsel for the Insurer. In my view, the combination of section 3(2) and section 11(1)(c) appear to do more than compensate a surviving claimant for the loss of financial support as suggested by counsel for the Insurer. In their totality, sections 3(2), 11 and specifically subsection 11(1)(c), recognize the complexity of family units and the connection, both financial and otherwise, among spouses and their dependants. For example, section 11(1)(a) makes no reference to financial dependency. The death benefit is payable on the occurrence of death as the result of a motor vehicle accident, irrespective of the financial arrangements between the spouses. Sections 11(1)(b), (c), and (d) introduce the concept of dependency and incorporate the reference to financial dependency contained in section 3(2) of the Schedule. Yet under these sections it is quite possible for claimants to be eligible for a death benefit, even though the person who died in the car accident made no contribution to their financial support. Under the combined operation of sections 3(2) and 11(1)(c) of the Schedule, a child is entitled to a benefit of $10,000 when the non-income earning parent or guardian dies in a car accident, provided that the child is principally dependent for financial support on the spouse of the deceased at the time of the accident.

If I accept the Insurer's view that members of a family unit in receipt of welfare are each principally dependent for their financial support directly upon welfare, rather than upon the designated head of the household, the result is that minor children of married welfare recipients cannot qualify for any death benefit under section 11 of the Schedule, in the event of the death of either or both parents in a car accident.

On the other hand, if I accept the Applicant's view that the head of the household is directly dependent upon welfare, while the other family members are dependent upon the head of the household, the result is that minor children of married welfare recipients are entitled to death benefits under section 11 in the same manner and to the same extent as the minor children of spouses who are not receiving welfare. However, spouses on welfare would each receive different treatment under section 11(1)(c), even though the ultimate source of the family's funding flowed from welfare. For example, the head of the household would not be entitled to a death benefit under section 11(1)(c) if their spouse died in a car accident, whereas the dependant spouse would be entitled to payment.

The representative from Social Assistance testified that either spouse may be named the head of the household for the purpose of receiving the family's welfare payments. I heard no evidence to suggest that the head of the household was determined by any factors other than the simple choice of the spouses. Yet, this decision of the spouses significantly alters their entitlement under section 11(1)(c). While I am troubled by this anomaly, it is a less disturbing outcome than the exclusion of a whole class of individuals, (i.e. the children of welfare recipients) from receiving any death benefits under section 11, in the manner proposed by the Insurer.

Counsel for the Insurer referred to several cases in support of its position. Some of the cases establish that an individual can be financially dependent upon several sources of income, but principally dependent for financial support upon only one of those sources. Counsel also referred to cases which establish that an individual can be "principally dependent for financial support" upon publicly funded agencies such as welfare. Were I to accept these principles, I would conclude that the deceased, Faud Abdulwahab, was principally dependent for financial support upon welfare at the time of his death. However, these principles do not answer the question of whether the Applicant herself was principally dependent for financial support upon welfare, rather than upon her late husband.

Counsel for the Insurer referred to the case of Chevrier et al. v. Zurich Insurance Company, [1985] I.L.R. 7389. In that case, a District Court Judge considered a claim for death benefits under an auto insurance policy. The claim was brought on behalf of a mental incompetent (not so found), over the age of 18 years, who was residing with her mother at the time her mother was killed in a motor vehicle accident. The judge considered the following paragraph under Schedule C of the Insurance Act, then in force:

Subsection 2, Part 1, B(3)(b)(ii):

18 years of age or over who, because of mental or physical infirmity, is principally dependent upon the head of the household or the spouse of the head of the household for financial support.

The trial judge concluded that both mother and daughter received welfare, each in the same amount. The mother managed her daughter's welfare entitlement because of the daughter's mental infirmity. The judge was prepared to find that the mother was the head of the household within the meaning of the above section, however, he concluded that the adult daughter was principally dependent for financial support upon welfare rather than her mother as follows:

...on the statement of facts we have two people who are both receiving welfare and the same amount of welfare, so the financial support is not from the mother.

Having decided the issue before him, the judge in the Chevrier decision went on to agree with counsel for the insurer's submission concerning the intention of the legislation. The judge states at page 7390 of the case:

...this legislation is designed to provide money to someone who has lost financial support because of the death due to the accident under this Insurance Act.

The judge concluded that the adult daughter did not lose her financial support from welfare when she lost her mother in the car accident.

The decision in Chevrier is clearly distinguishable from the present case, on its facts. In Chevrier the judge was dealing with two people who each received their own welfare entitlement in a specific amount. In this case, I find that the Applicant did not have an individual entitlement to welfare assistance at the time of the motor vehicle accident. Welfare assistance was not granted to each member of the family unit, but rather, was granted to the designated head of the household to be used, at his discretion, for the needs of his whole family.

In the present case, the Applicant did, in fact, lose her financial support when her husband died. She had no independent access to the family's welfare entitlement. She could not cash the welfare cheque issued in her husband's name, and the welfare authorities could not transfer the cheque over to her name. It was necessary for the Applicant to apply for welfare in her own right and seek the assistance of friends in the meantime. After the welfare authorities had reviewed the Applicant's finances and satisfied themselves as to her eligibility, the Applicant received welfare in her own right, as a single parent with a dependant child. The amount of welfare benefit was calculated on the basis of her new status. It is assumed by the welfare authorities that the Applicant will administer these funds in accordance with her moral and legal obligation to provide for her dependant child.

While it is true that the ultimate source of the Applicant's income was General Welfare Assistance, the payments were structured in such a manner as to create financial dependency by the Applicant upon her late husband.

For these reasons, I conclude that at the time of the accident, the Applicant was principally dependent for financial support upon her late husband, Faud Abdulwahab, within the meaning of section 3(2) of the Schedule, and she is therefore entitled to a benefit under section 11(1)(c) of the Schedule.

Expenses:

The Applicant claims the expenses that she has incurred in this arbitration. An award for expenses may be made under section 282(11) of the Insurance Act, R.S.O. 1990, c.I.8, which provides as follows:

282(11) 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 R.R.O. 1990, Reg. 664.

In view of the novel legal point, as well as the success of the Applicant, I conclude that this is an appropriate case in which to award the Applicant her expenses of the arbitration. If the parties are unable to agree on the amount of the expenses, I remain seized of this matter and either party may apply for an assessment of the expenses.

Order:

1. At the time of the accident, Fathia Ahmed was principally dependent for financial support on Faud Abdulwahab within the meaning of section 3(2) of the Schedule, and she is therefore entitled to a benefit in the amount of $10,000 under section 11(1)(c) of the Schedule.

2. The Applicant is entitled to payment of interest on any outstanding amounts owing by the Insurer.

3. The Applicant is entitled to her expenses incurred in respect to the arbitration.

Janice Mackintosh

Arbitrator

Date

APPENDIX A

INDEX OF AUTHORITIES ON BEHALF OF THE INSURANCE COMPANY

1. Barnard Estate v. Safeco Ins. Co. of America (1986) 1986 CanLII 2522 (ON HCJ), 23 C.C.L.I. 279 (S.C.).

2. Chevrier et al v. Zurich Insurance Company [1985] I.L.R. 1-1919 (D.C.O.); [1985] I.L.R. 1-1920 (Ont. C.A.).

3. Ireland v. Royal Insurance Canada et al [1992] I.L.R. 1-2837 (Ont. Ct. (Gen. Div.)).

4. Bruce and Eleanor McDonald and State Farm Insurance Companies, March 11, 1993, OIC File No. A-001347.

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

Other Documents Before the Arbitrator:

1. Report of Mediator, dated April 15, 1993.

2. Application for Appointment of an Arbitrator, dated August 1, 1993.

3. Response by Insurer, dated August 13, 1993.

4. Pre-hearing letter, dated October 19, 1993.

APPENDIX B

11. (1) If, as a result of an accident, an insured person dies within the benefit period set out in subsection (3), the insurer will pay with respect to the insured person, if Optional Benefit 1 has not been purchased,

(a) $25,000 to his or her spouse, if the deceased is survived by a spouse who was his or her spouse at the time of the accident;

(b) $25,000 to his or her dependants, if the deceased is survived by any dependant who was a dependant at the time of the accident and is not survived by a spouse who is entitled to a benefit under this section;

(c) $10,000 to each of his or her surviving dependants who was a dependant at the time of the accident; and

(d) if, at the time of the accident, the deceased was a dependant, $10,000,

(i) to the person upon whom the deceased was dependent or, if that person is dead, to the surviving spouse of that person if the surviving spouse was the deceased's primary caregiver, or

(ii) to the other surviving dependants of the person upon whom the deceased was dependent if that person and his or her spouse are dead.

(4) If at the time of the accident the deceased person had more than one person entitled to claim as his or her spouse, the $25,000 payment under clause (1)(a) or $50,000 under clause (2)(a) will be divided equally between or among such persons who survive the deceased and who at the time of the death were still spouses of the deceased.

(5) Payments under clauses (1)(b) and (d) and clauses (2)(b) and (d) will be paid in equal shares to the surviving dependants.

The word "dependant" is interpreted in section 3(2) of the Schedule, as follows:

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 the other person's spouse.

Footnotes

1. 1Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994. In this decision, the term "Schedule" will be used to refer to Regulation 672.