Neutral Citation: 1995 ONICDRG 168
ONTARIO INSURANCE COMMISSION
BETWEEN:
TERESA MAJDA
Applicant
and
SIMCOE & ERIE GENERAL INSURANCE COMPANY
Insurer
and
FARMERS' MUTUAL FIRE INSURANCE COMPANY (LINDSAY)
Insurer
DECISION
Issues:
The Applicant, Teresa Majda, was injured in a motor vehicle accident on July 17, 1993. She is receiving statutory accident benefits under Ontario Regulation 672.1
Simcoe & Erie General Insurance Company ("Simcoe & Erie") insured the vehicle in which Ms. Majda was a passenger at the time of the accident. Farmers' Mutual Fire Insurance Company (Lindsay) ("Farmers") is the insurer of a vehicle owned by Ms. Majda's sister and brother-in-law, with whom she was living at the time of the motor vehicle accident.
The issue in this case is which insurer is liable to pay Ms. Majda's benefits.
It was agreed by the parties that Farmers' is liable if Ms. Majda is a dependant of her sister and brother-in-law. Otherwise Simcoe & Erie is liable to pay.
Result:
- Ms. Majda is not a dependant of her sister and brother-in-law. Accordingly, Simcoe & Erie is the insurer liable to pay benefits in this case.
Hearing:
The hearing was held in Toronto, Ontario, on January 18, 1995, before me, Frederika Rotter, Senior Arbitrator.
Present at the Hearing:
Applicant:
Teresa Majda
Applicant's
Bernard Kott
Representative:
Barrister and Solicitor
Simcoe & Erie's
Ralph D'Angelo
Representative:
Barrister and Solicitor
Farmer's
Mr. William Scott
Representative:
Barrister and Solicitor
Witnesses:
Teresa Majda, Stanislaw Brynkus and Professor James Edward Pesando
Exhibits presented at the arbitration hearing are listed in Appendix A.
Cases referred to are listed in Appendix B.
Evidence and Findings:
The dispute in this case concerns which insurer is responsible for paying Ms. Majda's statutory accident benefits. The resolution of the dispute turns on whether Ms. Majda is considered a dependant of her sister and brother-in-law, with whom she was living at the time of the motor vehicle accident.
The law is clear, and I will summarize it briefly. Section 268(2) of the Insurance Act, R.S.O. 1990, c. I.8 as amended ("the Act"), sets out the rules determining priority to pay statutory accident benefits, among various insurers. It is not disputed that, under section 268(2), if Ms. Majda is found to have been a dependant of her sister and brother-in-law at the time of the accident, she should claim her benefits from Farmers'. Otherwise, she has recourse against Simcoe & Erie, the insurer of the vehicle in which she was an occupant at the time of the accident.2
The definition of a "dependant" is contained at section 3(2) of the Schedule which provides:
- (2) For the purposes of this Regulation, 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.
Arbitrators have found that in order for an individual to be found principally dependent for financial support on another person, the individual must "chiefly" or "for the most part" derive his or her support from that person, or the person's spouse. 3
The determination of dependence, in each case, is strictly a factual issue.
Arbitrators have dealt with the question of dependence by analysing the financial situation of the individual concerned, in as much detail as is warranted by the particular case. In general, the exercise involves comparing the financial contribution of the alleged dependent person in supporting themselves, with the contributions made by the person or persons whom, it is claimed, they are dependent on. Individuals are considered dependants only if their own contribution to their financial support is less than the contribution from other sources of support.
In assessing the extent of the financial support provided or received in every situation, arbitrators have considered not only the direct value of the dollars provided or exchanged, but also the value of the non-market goods and services provided or exchanged.4
The facts in the present case are not disputed. At the time of the July 17, 1993 accident, Ms. Majda was a young woman of 20. She was born in Poland, on January 20, 1973, and immigrated to Canada in April 1988, at the age of 15. She was sponsored by her sister and brother-in-law, Zofia and Stanislaw Brynkus, with whom she has lived ever since her arrival in this country.
Ms. Majda sustained a brain injury in the accident. For this reason, she could not clearly recollect certain details of her history, and she has no memory of the accident itself. However, her testimony about the circumstances of her life with her sister and her sister's family is clear and unequivocal, and is supported by the testimony of her brother-in-law, Stanislaw Brynkus.
Ms. Majda testified that her arrangement with her sister and brother-in-law was that she performed housework and child care in exchange for her room and board. After she first came to Canada, she enrolled in school, in September 1988. She worked for her sister and brother-in-law after school, evenings and weekends, and during the summer. She continued at school until 1992 or 1993 — she cannot remember which year it was — having completed grade 12. After leaving school, she worked in her sister's home full-time. At that time, both her sister and brother-in-law were employed full-time outside the home. They did landscaping work, which kept them very busy from April to November. Mrs. Brynkus tended to work less during the winter months.
In about 1991, when she was 18, Ms. Majda got a part-time job at a supermarket, working a few days a week (not every day) for minimum wage. She cannot remember exactly how many days a week she worked, nor what her earnings were. Her hours were not regular: the supermarket decided when she was needed, and for how long. Ms. Majda testified that she could have worked more hours than she did, and she was often asked to work for more hours than she had available. The reason she was not available to work more was because she had to work at her sister's. The evidence at the hearing was that Ms. Majda was earning approximately $115 per week from the supermarket. The exhibits tendered at the hearing show that in 1992 Ms. Majda earned $4,951, and in 1993 (the year of the accident) she earned $3,241. This figure when annualized comes to approximately $5,950 per year.5
Ms. Majda testified that her earnings were hers to keep. She used the money to pay for her personal expenses, including clothing, school supplies, and the occasional meal, such as a hamburger, outside the house. She also had significant dental bills, which she was paying at the rate of approximately $125 per month. Ms. Majda testified that her sister and brother-in-law did not give her any money for these expenses. Other than providing room and board, they gave her nothing except the odd gift on Christmas and her birthday.
Ms. Majda testified that occasionally she received some money from her parents in Poland.
Ms. Majda testified that after she finished high school, she continued working at her part-time job. She was hoping to carry on with her education, but had not yet decided what field to pursue, and needed to save money for her schooling. At the time of the accident she had $80 in savings.
Ms. Majda testified that in the period before the accident, she spent the majority of her time in the home, doing housework and child care. She was primarily responsible for looking after her two young nephews: aged two and a half and seven at the time of the accident. She would get the children up in the morning, give them their breakfast, get the seven year old ready for school, walk him to school in the mornings and home from school in the afternoons. She looked after the baby all day and minded the older boy after school. She also often looked after the children on evenings and weekends.
In addition to child care, Ms. Majda testified that she did most of the cooking and cleaning for the household. She prepared meals, vacuumed, washed dishes, made the beds and did the laundry for everyone. She also shopped for groceries, did the gardening, mowed the lawn, and in winter shovelled snow.
Ms. Majda had her own bedroom in the family home, in Brampton. She had free access to the kitchen, bathroom and family room, and could use the TV and stereo, with the children. She used the laundry facilities to do her own laundry, as well as the laundry for the rest of the family. She normally ate her meals with the family, but occasionally ate out, at work or with friends. She testified that her sister basically paid for the food, although she herself would sometimes purchase such items as milk or bread.
She does not remember ever going on a vacation or holiday trip with the family. Ms. Majda testified that her sister and brother-in-law made it clear, especially after she finished high school, that she had to do the housework if she wished to continue to live with them rent-free. Their position was that she either do what was asked of her, or move out. Ms. Majda testified that she did not wish to move out, and preferred to live with her family.
Ms. Majda indicated that she has not been able to work since the accident. She is currently receiving $185.60 in weekly income benefits, and gives her brother-in-law $30 per week for food.
Ms. Majda's evidence that she looked after the children and did housework in exchange for her room and board, and that she also worked at a part-time job to earn her spending money was corroborated by her brother-in-law, Stanislaw Brynkus.
Mr. Brynkus testified that Ms. Majda "did everything" for the children. He indicated that, in the six months before the accident, when she was no longer attending high school, she generally worked for the family more than 40 hours a week. She frequently worked evenings and weekends. While she was attending high school, she had worked approximately 30 hours a week.
Mr. Brynkus also confirmed that Ms. Majda did virtually all of the housework. He stated that "our deal was, from the beginning, that she had to work if she wanted to stay with us .... She knew what she had to do — she had to do everything." He testified that neither he nor his wife, to his knowledge, ever gave Ms. Majda any money. She bought her own clothes. He and his wife owned two cars but Ms. Majda never had the use of either vehicle.
Mr. Brynkus confirmed that Ms. Majda was perhaps planning to pursue her education. His view was that she would have to "pay back" any room and board she received, if she lived at his home without working.
Mr. Brynkus testified that Ms. Majda has not been able to work at all since her accident. She is no longer able to look after the children: instead, she now requires care herself. Mr. Brynkus testified that after the accident he and his wife were obliged to hire a babysitter to care for the children during the day. They paid the babysitter $100 weekly to look after the children, including getting the children's meals. The babysitter did no other housework or gardening.
Mr. Brynkus testified that although Ms. Majda is now living in the family home without working, she is there on "credit ", and that he and his wife eventually expect to be reimbursed for her keep. He commented that "she is living for nothing now — I don't know how long this can last."
Mr. Brynkus indicated that the family generally spent approximately $500 per month for food. The other household expenses, such as mortgage payments, taxes, utilities, cable fees, and the like came to about $2,500 per month.
Both insurers agreed, for the purposes of the hearing, that the market rate for live-in nannies or babysitters is between $11,400 and $13,200 annually. A day nanny, who does not live in the family home is paid between $15,600 and $18,200 yearly.6 However, it was agreed that these pay rates were for child care duties only, and did not include heavy housework chores.
Professor James Edward Pesando of the University of Toronto, Institute for Policy Analysis, testified on behalf of Farmers'. Professor Pesando is a professor of economics at the University of Toronto and has frequently testified as an expert in cases involving the calculation of economic loss with respect to family members, often involving dependency issues. I accepted Professor Pesando as an expert witness for the purpose of obtaining his opinion and evaluation of Ms. Majda's non-market work, prior to the accident.
Professor Pesando indicated that he based his analysis and opinions on the following facts, which I accept as having been established by the evidence before me:
(1) Ms. Majda was living with her sister and brother-in-law and received room and board for which she was not paying.
(2) Ms. Majda was employed part-time prior to the accident. Her earnings in 1993 (the year of the accident) are equivalent to approximately $6,000 per year. She earned almost $5,000 in 1992.
(3) At the time of the motor vehicle accident, Ms. Majda's sister and brother-in-law were both working full-time outside the home. Ms. Majda looked after their two children at least eight hours a day. She did the majority of the housework for the family: grocery shopping, cleaning, cooking and laundry. She received no payment for these services.
(4) Ms. Majda provided additional services of meal preparation, housework and babysitting on evenings and weekends. She received no payment or even pocket-money in return for these additional services.
(5) The total household expenses came to $3,000 per month ($2,500+$500 for food).
Professor Pesando submitted that in order to determine whether Ms. Majda was principally dependent on her sister and brother-in-law, it is necessary to recognize and assign some value to the two non-market transactions that were occurring in the household:
(1) The provision of nanny and housework services by Ms. Majda to Mr. and Mrs. Brynkus.
(2) The provision of room and board by Mr. and Mrs. Brynkus to Ms. Majda.
Professor Pesando submitted that Ms. Majda could not be considered principally dependent on Mr. and Mrs. Brynkus for her economic support if the value of her services to them exceeded the value of the room and board she was obtaining from them in return for her services.
Professor Pesando observed that if Ms. Majda was working 40 hours a week at the minimum wage of $6.35 per hour, 50 weeks a year, she would be earning $12,700 yearly in respect of her babysitting services. (I note that this basic amount does not take into account the value of the additional, after-hours and weekend services Ms. Majda provided).
The monthly household expenses of approximately $3,000 comes to $36,000 yearly in respect of the five family members: Mr. and Mrs. Brynkus, the two children, and Ms. Majda. Accordingly, Ms. Majda's share of the expenses is $7,200, which is significantly less than the value of the services she was providing, based on the minimum wage rate. In addition, Ms. Majda was earning approximately $6,000 per year, making the sum of her earned income and the value of her household services approximately $18,700. This is far in excess of the economic value of the room and board she received. Therefore, Professor Pesando opined that she cannot be considered financially dependent on her sister and brother-in-law.
Professor Pesando indicated that this conclusion is also supported by comparing the annual rates for day nannies as compared with live-in nannies. The difference in the wages, as indicated above, is roughly $5,000, which is the value to the nanny of the room and board. It is clear that the value of the nanny services is well in excess of the value of room and board.
Mr. D'Angelo, on behalf of Simcoe & Erie, urged me to look at this case as a family situation, in which goods and services are freely provided, with no expectation of repayment. He submitted that Ms. Majda was living with her sister, and looking after her nephews, whom she loved. She depended on her sister and brother-in-law for the basic necessities of life, which they provided to her. No money changed hands. Mr. D'Angelo submitted that this case was similar to the situation in Raffoul7, where Senior Arbitrator Naylor found that a 22- year old woman who was living at home with her mother and paid no room and board was a dependant of the mother, despite the fact that she had some financial resources of her own, including income from part-time employment.
The mother in Raffoul was providing room and board to her daughter, without charge. She had also transferred certain funds and investments to the daughter. She bought her daughter a car, and largely paid for the expenses of its operation and upkeep. As well, the mother provided household services to the daughter, doing virtually all the laundry, the cooking, and other housework. The daughter used her earnings from her part-time work for some personal expenses (clothing, entertainment and the like), but paid no room and board to her mother. She did not contribute to the maintenance or upkeep of the home in any fashion — whether through a financial contribution or services "in kind."
Senior Arbitrator Naylor found that relatively straightforward facts of the Raffoul case did not require a detailed evaluation of the goods and services provided and exchanged. Senior Arbitrator Naylor concluded that in that situation, the mother met virtually all of the daughter's needs, the daughter made virtually no contribution, and the support overwhelmingly flowed in one direction.
However, I find that the present case can be clearly distinguished from the situation in Raffoul, on its facts.
I accept the analysis and opinion of Professor Pesando. I find that this is not a situation where members of a family, for moral or benevolent reasons, or under a legal obligation, are providing support, without any expectation of payment or contribution "in kind." On the contrary, I find that the arrangements in the Brynkus household, prior to the motor vehicle accident, were in the nature of a commercial bargain or contractual agreement, in which room and board was supplied in return for extensive babysitting, housework and other household services.
It is true that no money was exchanged in this case. However, an implicit bargain or exchange was clearly in operation between the Applicant and her sister's family. Since no money was exchanged, it is necessary to compare the "money's worth value of the goods and services exchanged in the bargain, to determine in which direction the support and services flowed.
Both Insurers agreed that the notional value of the services provided by Ms. Majda was at least $12,700, whereas she received at most $7,200 worth of room and board. In addition, her part-time earnings came to $6,000 per year.
I conclude that Ms. Majda's income in combination with the economic value of the services she was providing was significantly in excess of the value of the room and board she was receiving from Mr. and Mrs. Brynkus. This is so, even if I assign a minimum value of $100 per week for babysitting services provided, i.e., $5000 per year (less two weeks vacation) — the rate paid by Mr. and Mrs. Brynkus after the motor vehicle accident. Accordingly, I find Ms. Majda was not principally dependent on either Mr. or Mrs. Brynkus for her support.
Expenses:
None of the parties involved in this matter specifically addressed me regarding expenses. I have the discretion to award to Ms. Majda her expenses for participating in the arbitration hearing, under subsection 282(11) of the Act.
This hearing concerned the issue of liability between two insurers, and did not involve a question of Ms. Majda's entitlement to statutory accident benefits. In the circumstances, I find the Applicant is entitled to her expenses for participating in the arbitration hearing.
Order:
Simcoe & Erie is responsible for paying statutory accident benefits to Ms. Majda.
Ms. Majda is entitled to her expenses incurred in respect of the arbitration proceeding.
November 21, 1995
Frederika Rotter
Senior Arbitrator
Date
APPENDIX A
Exhibits:
Exhibit 1
Revised Canadian Notice of Assessment dated July 13, 1993 for the taxation year 1992.
Exhibit 2
T4 - 1993 from Guido's Grocers Limited.
Exhibit 3
Printout of Ms. Majda's bank book.
Exhibit 4
Curriculum Vitae of Professor James Edward Pesando, dated July 1994.
Exhibit 5
Report of Professor James Edward Pesando, dated December 28, 1994.
APPENDIX B
Cases Referred to:
Daniel Cattrysse and Westminster Mutual Fire Insurance Company and Anglo Canada General Insurance Company, June 21, 1993, OIC File Nos.: A-001618 and A-001789.
Adolf and Maria Crnkovic and Simcoe & Erie General Insurance Company, April 8, 1993, OIC File No. A-002228.
Bruce and Eleanor McDonald and State Farm Mutual Automobile Insurance Company, March 11, 1993, OIC File No. A-001347.
Miller and Safeco Insurance Company of America, (1994) 1984 CanLII 2019 (ON HCJ), 9 C.C.L.I. 1, O.R. (2d) 451, I.L.R. 1-1848 (Ont.H.C.) appealed 13 C.C.L.I.
Peter Najem and Axa Insurance Company and Economical Insurance Company, July 27, 1993, OIC File Nos.: A-003115 and A-003116.
Dianne Raffoul and State Farm Mutual Automobile Insurance Company, September 21, 1994, OIC File No. A-004476.
Maninder Singh and State Farm Mutual Automobile Insurance Company and Pilot Insurance Company, June 4, 1993, OIC File Nos.: A-001525 and A-001526.
Dani Tripone and Guardian Insurance Company and Liberty Mutual Fire Insurance Company, May 16, 1994, OIC File No. A-004757.
1 Prior 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.
2 The relevant subsections of section 268(2) provide as follows:
(2) The following rules apply for determining who is liable to pay no-fault benefits:
- In respect of an occupant of an automobile,
i. the occupant has recourse against the insurer of an automobile in respect of which the occupant is an insured,
ii. if recovery is unavailable under subparagraph i, the occupant has recourse against the insurer of the automobile in which he or she was an occupant.
3 Maninder Singh and State Farm Mutual Automobile Insurance Company and Pilot Insurance Company, June 4, 1993, OIC File Nos.: A-001525 and A-001526 and Bruce and Eleanor McDonald and State Farm Mutual Automobile Insurance Company, March 11, 1993, OIC File No. A-001347.
4 Peter Najem and Axa Insurance Company and Economical Insurance Company, July 27, 1993, OIC File Nos.: A-003115 and A-003116.
5 Exhibits 1, 2, 5
6 Exhibit 5, page 4. These figures are based on information provided by Execu-Nannies, in Toronto.
7 Dianne Raffoul and State Farm Mutual Automobile Insurance Company, September 21, 1994, OIC File No. A-004476.