Neutral Citation: 1995 ONICDRG 191

File No.: A-011445

ONTARIO INSURANCE COMMISSION

BETWEEN:

BHARAT KOTAK

Applicant

and

CAA INSURANCE COMPANY (ONTARIO)

Insurer

DECISION

Issues:

The Applicant, Bharat Kotak, was injured in a motor vehicle accident on June 14, 1993. He applied for and received statutory accident benefits from CAA Insurance Company (Ontario) ("CAA"), payable under Ontario Regulation 672.¹

Mr. Kotak received weekly income benefits of $260.14 from June 21, 1993 until July 26, 1994, when weekly income benefits were terminated. The parties were unable to resolve their dispute through mediation, and the Applicant applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

1. Is Mr. Kotak entitled to weekly income benefits subsequent to July 26, 1994, pursuant to section 12(1) of the Schedule?

2. What is the proper quantum of weekly income benefits to which Mr. Kotak is entitled?

3. Is Mr. Kotak entitled to payment of rehabilitation and occupational training expenses at the Devry Institute of Technology, pursuant to section 6(1)(c) of the Schedule?

4. Is Mr. Kotak entitled to interest on any overdue payments, pursuant to section 24(4) of the Schedule?

5. Is Mr. Kotak entitled to his expenses incurred in this arbitration proceeding?

Result:

1. Mr. Kotak is entitled to weekly income benefits until May 19, 1995.

2. Mr. Kotak is entitled to weekly income benefits in the amount of $361.03.

3. Mr. Kotak is not entitled to payment of rehabilitation and occupational training expenses at the Devry Institute of Technology.

4. Mr. Kotak is entitled to payment of interest on overdue payments in accordance with section 24(4) of the Schedule.

5. Mr. Kotak is entitled to his expenses incurred in respect of this arbitration proceeding.

Hearing:

The hearing was held in North York, Ontario, on August 14, 15, 16, 17, and 28, 1995, before me, Lawrence Blackman, Arbitrator.

Present at the Hearing:

Applicant:

Bharat Kotak

Applicant's

Michael Thurston

Representative:

Barrister and Solicitor

Insurer's

Guy Farrell

Representative:

Barrister and Solicitor

Witnesses:

1. Mr. Bharat Kotak, Applicant

2. Mr. Carlos Pacheco, the Applicant's former employee

3. Dr. Arthur Ameis, physiatrist

4. Mr. Jayesh Kotak, the Applicant's brother

5. Mrs. Apexa Kotak, the Applicant's wife

6. Ms. Joana Brito, the Applicant's former employee

7. Mr. Kantilal Kotak, the Applicant's father

8. Mr. John Proulx, investigator

9. Mr. Daniel Edwards, chartered accountant

Mrs. Apexa Kotak and Mr. Kantilal Kotak testified through an interpreter of the Gujarati and English languages, Ms. Bharti Ondhia.

Exhibits:

The exhibits entered at this hearing are listed in Appendix "A" to this decision.

Evidence and Findings:

Mr. Kotak was born in 1957 in what is presently Tanzania. He received his Bachelor of Science degree in India, before arriving in Canada in 1980.

Mr. Kotak subsequently engaged in a variety of small commercial enterprises. He testified that some five or six years ago, he had investigated, but had not pursued, a change in career, and considered the possibility of attending at the Devry Institute of Technology ("Devry").

In June 1992, one year prior to his accident, Mr. Kotak owned two retail stores in Toronto, under the name of Alankar Department Store ("Alankar"), selling dry goods and groceries.

In August 1992, Mr. Kotak opened another retail store in Toronto, under the name of Africana Grocers ("Africana"), also selling dry goods and groceries. In January 1993, both Alankar stores were closed.

On June 14, 1993, Mr. Kotak was involved in a motor vehicle accident ("the accident"). Mr. Kotak's family physician, Dr. A. Vozoris, saw him the day following the accident, and noted that he was complaining of headaches, dizziness, neck and shoulder stiffness, and low back pain.²Mr. Kotak received weekly income benefits from CAA from June 21, 1993 until July 26, 1994. CAA stopped payment of such benefits to Mr. Kotak, on the grounds that he no longer suffered a substantial inability to perform the essential tasks of his occupation or employment.

Mr. Kotak maintains that he continues to be entitled to weekly income benefits. He also claims that CAA has not paid him the amount of weekly income benefits to which he is entitled. In addition, Mr. Kotak submits that he is unable to return to his pre-accident employment or occupation, and seeks payment from CAA of the cost of retraining at Devry.

1. Entitlement

Pursuant to section 12 of the Schedule, to be entitled to weekly income benefits, Mr. Kotak must:

(a) have sustained physical, psychological or mental injury as a result of an accident, and;

(b) during the period claimed, have suffered substantial inability to perform the essential tasks of his occupation or employment. (emphasis added)

(a) Essential Tasks

Mr. Kotak testified that immediately prior to his accident, he was working approximately 60 hours a week at the Africana store, Monday to Sunday. He stated that his essential tasks were a combination of physical and non-physical duties which included:

• managing the store

• placing orders

• selling merchandise

• stocking shelves

• loading and unloading merchandise

Mr. Wayne Cook, a senior rehabilitation consultant with the Accident Management Group ("AMG"), specified in his report of April 20, 1994, that Mr. Kotak's job duties, working seven days per week, from 9:00 a.m. to 6:00 p.m. daily, included lifting, carrying and stocking shelves, carrying items from the floor to shelves and cleaning the store. The physical demands of his job included lifting and carrying stock weighing up to fifty pounds, and constant standing, bending, and walking.³

At the time of the accident, the Applicant's wife, Mrs. Apexa Kotak, worked 20 to 25 hours a week at Africana Grocers, and a young high school student, Mr. Carlos Pacheco was employed evenings and weekends. The Applicant's father, Mr. Kantilal Kotak, testified that he had worked two or three days a week at Africana, until May 1993. The Applicant's evidence however was that his father stopped working at Africana in December 1992.

Between the summer of 1992, and the beginning of 1993, Mr. Kotak had two employees at Africana, Ms. Joana Brito and Mr. Peter Frias.

The only other person who worked at any of the Applicant's stores in the year prior to the accident was the Applicant's brother, Mr. Jayesh Kotak. Both brothers testified, that subsequent to July 15, 1992, when Mr. Jayesh Kotak opened his own store, the only significant assistance which he provided to the Applicant was during a two week period when the Alankar stores were being closed.

The Insurer argued that the Applicant's job was essentially non-physical as he could delegate his physical duties to Mr. Pacheco.

In Edgar Cowie and the Non-Marine Underwriters, Members of Lloyd's, March 9, 1993, OIC File No. A-001159, Arbitrator Mackintosh considered the meaning of the words "essential" and "task", in the context of section 13 of the Schedule. She referred to the Concise Oxford_Dictionary, Eighth Edition (1990), for the meaning of these words. According to the Concise Oxford Dictionary, "essential" means:

1. absolutely necessary; indispensable. 2. fundamental, basic. 3. of or constituting the essence of a person or thing.

"Task" was defined as meaning:

a piece of work to be done or undertaken.

I accept these definitions for the purpose of determining Mr. Kotak's entitlement to weekly income benefits.

I am satisfied, based on the evidence of the Applicant, and his two former employees, Ms. Joana Brito and Mr. Carlos Pacheco, that Mr. Kotak was involved in both the physical and non-physical aspects of operating his business. I find that managing his store, placing orders, serving customers, stocking shelves, carrying items from the floor to shelves and cleaning his store were fundamental pieces of work performed by Mr. Kotak, and therefore constituted the essential tasks of his occupation or employment.

I further find that the physical demands of these essential tasks included lifting and carrying stock, and constant standing, bending and walking.

(b) Substantial Inability

Following the accident, after several months of treatment with Dr. Vozoris, Mr. Kotak began attending at Columbia Health Care for a programme of physiotherapy and exercise.

In December 1993, Mr. Kotak left Dr. Vozoris, and started seeing Dr. David Goldstein. His treatment at Columbia Health Care was expanded to include a course of psychotherapy. Dr. Goldstein referred Mr. Kotak to AMG for medical case management services. In his letter of July 4, 1994, Dr. Goldstein states that:

Although Mr. Kotak continues to experience some lower back discomfort, I believe that Mr. Kotak is presently ready to resume many but not all of his previous occupational duties. In the past, I suspect that when he felt better, Mr. Kotak did try to do more around the store and this only exacerbated his problem I therefore like (sic) to suggest that a counsellor be involved with re-introducing him to the work place to ensure that he limits his activities to non-physical ones and learns how to delicate (sic) more demanding tasks to other staff. (Emphasis added)⁴

Witnesses called by the Applicant, including Mr. Pacheco (who was no longer employed by the Kotak family) testified that Mr. Kotak did not work at Africana after the accident, although he did sometimes drop in at the store.

Mr. Kotak testified that as of June 1994, he could not lift heavy items, he could not sit or stand very long, and he "couldn't think as a businessman."

Mr. Kotak was subsequently seen by Dr. Charles Godfrey, an orthopaedic specialist, who, in his initial examination of August 16, 1994, noted general muscle spasm and a reduced range of motion in Mr. Kotak's neck, shoulders and back. On the basis of that examination, he reported that it was uncertain when Mr. Kotak might return to work or to his normal activities. Dr. Godfrey arranged for Mr. Kotak to be seen at the Toronto Rehabilitation Centre ("TRC").⁵

Mr. Kotak was admitted to the TRC on November 14, 1994. Their initial report of December 12, 1994, indicated that Mr. Kotak's cervical and lumbar range of motion was about 50% of normal and that his tolerance to activities was low. Mr. Kotak's motivation and participation in Stage I of the programme, consisting of exercise and back education classes three half days a week, were favourably commented upon.⁶

On December 12, 1994, Mr. Kotak was seen, at the Insurer's request, by Dr. Arthur Ameis, physiatrist. Dr. Ameis opined in his December 21, 1994 report, that Mr. Kotak was "in the high risk category for chronic pain and long-term disability behaviour."⁷It was Dr. Ameis' further opinion that Mr. Kotak's alleged disability was not justified by the physical findings, but that "the most likely reason for this patient being perpetuated in his disabled state pertains to those innate vulnerabilities which cause him to develop and maintain chronic pain complaints and a disability role over the long-term." Despite Dr. Ameis' scepticism concerning the recovery from a prior accident, Dr. Ameis did not suggest that Mr. Kotak was consciously malingering following this accident. Indeed, Dr. Ameis believed that the use of a psychotherapist in this case was "certainly appropriate under the circumstances."

Dr. Ameis, in his oral evidence, agreed with Dr. Goldstein's opinion that Mr. Kotak was able to resume some, but not all, of his occupational duties. Dr. Ameis recommended in his report against abruptly ceasing the TRC programme. He felt that the programme should be continued to the end of its "logical cycle," which in his opinion would be to give Mr. Kotak a full six weeks of physical reconditioning.

Dr. Godfrey saw Mr. Kotak again on January 17, 1995. He noted general improvement, and encouraged Mr. Kotak to continue with his exercises at the TRC.

In January 1995, Mr. Kotak progressed to Stage II of the TRC programme, attending the centre five half days a week. The TRC interim report noted both physical and mental improvement. Notation was also made of Mr. Kotak's perfect attendance, and an "always enthusiastic and well-motivated" attitude. TRC increased Mr. Kotak's attendance to three full days a week in March 1995, and to five full days in April 1995.

The TRC report of June 20, 1995 indicated that Mr. Kotak was able to do three sets of ten repetitions of lifting 25 lbs. from chest to eye level, and three sets of ten repetitions of lifting 28 lbs. from hip to chest level. Mr. Kotak was also able to walk one mile in 18 to 19 minutes. Mr. Kotak's therapy had been discontinued on May 19, 1995. He was to continue with a home programme of stretches and exercises. The report again favourably comments on Mr. Kotak's motivation and attendance. His pain had decreased, his fitness, tolerance and sleep had improved, and he had resumed playing with his children. He was noted to be much improved.

This improvement is echoed in the AMG report of May 24, 1995, which states:

In terms of his current physical condition and functional capabilities, Mr. Kotak has noted significant overall improvement. Specifically, he reported improved ability to complete various household tasks, including laundry, washing dishes, cooking and general cleaning activities. He is also able to engage in more leisure activities with his children such as taking them to the park to play.⁸

In the same report, the consultant states that Mr. Kotak no longer reported difficulty with walking activities, and experienced headaches only two or three times a month. Primary continuing restrictions were noted as a limited sitting tolerance of 20 to 25 minutes and inability to lift or carry heavy items. Subjective complaints of constant left lower back and left hip area pain are noted.

The AMG rehabilitation consultants state in this report, that the treating staff at the TRC felt that "it is not feasible for Mr. Kotak to return to work in his pre-accident capacity as a grocery store owner and manager given his current physical limitations." The Applicant's counsel conceded however that such a statement does not appear in the TRC reports.

The AMG consultants related that Mr. Kotak himself, did "not consider it to be realistic to expect him to return to work in his pre-accident capacity as a grocery store owner and manager given the nature of the physical limitations imposed as a result of the injuries he sustained in the motor vehicle accident."

Mr. Kotak therefore participated in a vocational evaluation at the TRC from May 30 to July 7, 1995 to determine his ability to participate in classes at Devry. The evaluation did not consider whether the Applicant was able to return to his former employment, nor was the programme geared to simulating Mr. Kotak’s business or facilitating his return to his prior work. The TRC report of July 25, 1995, states that "physically, Mr. Kotak demonstrated good tolerance for the 5½ hour working day"⁹ (which was the course study time at Devry). The report does not comment on Mr. Kotak’s ability to put in the longer hours worked prior to the accident.

I find it significant that the summer of 1994, when weekly income benefits were terminated, Mr. Kotak’s then treating doctor, Dr. Goldstein, was of the opinion that Mr. Kotak should limit his activities to non-physical ones. As I have found that physical activities including constant walking, standing, bending as well as lifting and carrying were necessary components of Mr. Kotak’s work, I find that Mr. Kotak was still substantially unable to perform the essential duties of his occupation as of July 1994, when benefits were terminated.

To Mr. Kotaks credit, he sought out, and fully and conscientiously participated in further treatment, which according to the reports filed, led to a significant improvement in his condition. I agree with the comments of Arbitrator Naylor, that "rehabilitation is an essential feature of the accident benefits scheme."¹⁰ Such rehabilitation treatment is to be encouraged. I agree with Dr. Ameis that such a programme should be continued to its logical conclusion. I disagree with Dr. Ameis' view that six weeks of reconditioning was sufficient, especially in light of his comment that "statistically patients who have not returned to work within 1 to 2 years of an accident have virtually no likelihood of going back to work again."¹¹

A review of the TRC rehabilitation programme of progressive conditioning and increasing tolerance leads me to the conclusion that treatment reasonably and logically ended on May 19, 1995. To abruptly stop benefits at some point prior to the conclusion of a reasonable and proper form of occupational rehabilitation, based on an abstract time frame or a possible momentary improvement in one’s condition in an artificial environment, would impede, in my view, a successful return to work. I am satisfied, that until the completion of the TRC therapy programme on May 19, 1995, Mr. Kotak remained disabled, as defined by the Schedule.

Mr. Kotak testified that he could not go back to his former occupation because he did not wish to damage his body any more, he did not have the money to start a new business (Africana having been sold to his father on July 26, 1994), and he could not "take" 60 hours of work a week. No medical evidence was however provided, indicating that returning to his former occupation would cause physical harm to Mr. Kotak. Although the TRC reports of June 26 and July 25, 1995 state that Mr. Kotak was suffering from continuing pain, nowhere, as conceded by Mr. Kotak’s counsel, do the reports indicate that such pain was sufficient to cause the Applicant substantial inability to perform the essential tasks of his pre-accident employment. It is most unfortunate that financially, Mr. Kotak cannot start a new business. That is not, however, the criteria for the continuation of weekly income benefits.

Although the AMG consultant notes that as of May 19, 1995, Mr. Kotak's primary restrictions were limited sitting tolerance of 20 to 25 minutes and inability to lift or carry heavy items, the TRC report of June 28, 1995 indicates that by in or about May 1995, Mr. Kotak was able to do a significant amount of repetitive lifting. The evidence that I received indicated that the requirement for lifting heavier items was sporadic in Mr. Kotak’s store, and therefore significantly less fundamental to Mr. Kotak’s work.

I agree with Arbitrator Palmer's statement in Lily Steele and Zurich Insurance Company, December 3, 1992, OIC File No. 001024, page 32, that "it is not some inability to perform key tasks, but a sizeable inability which is compensable."

Arbitrator Makepeace comments in her decision of Eric Simpson and Royal Insurance Company of Canada, April 6, 1994, OIC File No. A-003863, at page 13:

Whereas the employer generally determines the essential tasks of an employee, and how they will be accomplished, a person who is not working has much more flexibility in deciding what his tasks are and how he will accomplish them ... In my view, it is appropriate to recognize this flexibility by considering whether the insured person's pre-accident essential tasks could be accomplished with reasonable and practical modifications. I find that, with reasonable and practical modifications, Mr. Simpson is substantially able to perform his pre-accident activities ...

I find these remarks to be equally applicable to the case of a self-employed applicant. Mr. Kotak, with reasonable and practical modifications such as getting up to walk around, and leaving the heaviest lifting to his part-time assistant, should have been able to run his store as of May 19, 1995, when he was discharged from the TRC therapy programme. I note that Mr. Kotak's 67 year old father testified that he is presently able to run a larger premises than operated by the Applicant, with only one 15 or 16 year old, full-time assistant.

The onus is on Mr. Kotak to prove, on the balance of probabilities, that he suffered a substantial inability to perform the essential tasks of his occupation or employment subsequent to the date of termination of benefits by CAA on July 26, 1994. He has not satisfied this onus beyond May 19, 1995.

2. Quantum

(a) Legislation

In deciding the correct quantum of weekly income benefits to which Mr. Kotak is entitled, two determinations must be made. Firstly, Mr. Kotak's weekly income benefit must be established, pursuant to section 12 of the Schedule, based on 80% of his gross weekly income from his occupation or employment, up to a maximum benefit of $600.00 per week.

Secondly, pursuant to section 15 of the Schedule, 80% of any income received or available from Mr. Kotak's occupation or employment subsequent to the accident may be deducted from the benefit payable.

(b) Pre-accident income from self-employment

(i) Evidence and methodology

Alankar and Africana were both sole proprietorships. Although Africana, unlike Alankar, was registered in Mr. Kotak’s wife’s name, the Insurer's accounting expert, Mr. Daniel M. Edwards, a chartered accountant with Coopers & Lybrand, assumed that as Mrs. Kotak's main responsibility was caring for her two very young children, and as she therefore spent limited time at the store prior to the accident, it was realistic to assign 100% of Africana's income or loss to Mr. Kotak, after deducting reasonable wages for the services performed by Mr. Kotak’s employees, including family members. Based on the evidence given by Mr. and Mrs. Kotak, I agree that this approach reflects the reality of Africana's ownership.

Where an insured's income is from self-employment, as in this case, section 12(7)(3) of the Schedule mandates that:

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.

A literal interpretation of the phrase "gross weekly income" implies gross revenue. However, in the case of a self-employed applicant whose business does not continue after a motor vehicle accident, it is clear that gross weekly income is an amount net of "business expenses which cease."

Unfortunately, the Schedule is completely silent as to how an insured's gross weekly income is to be calculated when an insured's business continues after the insured becomes disabled as a result of a motor vehicle accident.

This uncertainty in how "gross weekly income" is to be determined in such a case, leads me to agree with Arbitrator Makepeace's comment that "the Schedule does not necessarily mandate a single accounting approach for all cases. In each case, the arbitrator has discretion to determine which approach most fairly, reasonably and accurately reflects the applicant's financial situation before the accident, considering all the circumstances."¹²

I find in principle, that the Schedule does not contemplate the weekly income benefit to be a completely arbitrary amount. Rather, that sum is meant to bear a relationship to the insured's substantive loss following an accident, subject to a mandated benefit ceiling of $600.00 per week, and a weekly benefit floor of $185.60 (which may be reduced by collateral benefits and post-accident income).

Mr. Edwards suggested a method in this case, for arriving at a fair calculation of "gross weekly income", upon which the weekly income benefit is based. He includes as a deduction from "income from self-employment", under paragraph 12(7)(3) of the Schedule, expenses which an insured has an option to cease (as opposed to "fixed" expenses such as rent for which there is a continuing obligation) but which do not in fact cease (as the business continues). These variable "optional" expenses are deemed to cease, on the assumption that the business theoretically "ceases" upon the happening of the accident. Mr. Edwards calls these "deemed ceasing" expenses, "avoidable" expenses.

Such "avoidable expenses" are also deducted from post-accident income, in the same manner as ceasing expenses, on the principle that the method of calculation of pre-accident income must be the same as the method of calculation of post-accident income. Otherwise, the weekly income benefit received by an applicant will represent an underestimation or overestimation of his or her actual loss. Mr. Edwards submits that "this is because the arithmetic difference between the defined pre-accident income and the [differently] defined post-accident income may bear no relation whatsoever to the amount of the loss suffered by the claimant."¹³

Counsel for the Applicant did not disagree with the Insurer's methodology, but rather took issue with the raw data accepted by Mr. Edwards, and certain of his assumptions. Both counsel did agree that Mr. Kotak suffered a substantive financial loss following the accident.

In this case, I find that if pre-accident income is defined as meaning gross revenue, and post-accident income is defined as net income, Mr. Kotak would be overcompensated, as his post-accident expenses would be met twice, using both the weekly income benefit (which has been calculated without deducting for expenses, thus increasing the benefit) and post-accident revenue (from which expenses are deducted, thereby decreasing the deduction).

If the definitions are reversed, Mr. Kotak would be undercompensated, as total post-accident revenue would be deducted from pre-accident profit, resulting in Mr. Kotak not being entitled to any benefit. If both pre-accident and post-accident income are found to mean gross revenue, because post-accident income is deducted from the benefit payable (the statutory maximum being $600.00), Mr. Kotak would again not be entitled to any benefit.

If a definition of net income is used for both section 12 and section 15, no benefits would be payable to an applicant who was sustaining losses pre-accident, and who sustains even greater losses after an accident, due to the additional expenses incurred in generating post-accident income (which the Insurer submits is the case in this arbitration).

In this proceeding, I adopt Mr. Edwards' suggested approach of "avoidable expenses", which I find (using the criteria of Arbitrator Makepeace, which I accept) "in the circumstances of this case ... fairly, accurately, and reasonably reflects the Applicant's actual loss of income resulting from the accident, in accordance with the objectives underlying the Schedule."¹⁴ I find that the alternatives to this method of calculating "gross weekly income", result in a benefit which either overcompensates or undercompensates Mr. Kotak, and does not bear a relationship to his substantive loss following the accident.

(ii) Mr. Kotak's revenue from self-employment

Mr. Kotak largely relied upon unaudited income statements, prepared for the purpose of this claim by his accountant, Mr. Kirti Shah. Mr. Shah did not give evidence at the hearing. No income tax returns or other objective or contemporaneous statements such as GST statements, payroll ledgers or daily run sheets were entered as exhibits. Bank statements filed as exhibits documented only a portion of the income claimed by the Applicant.

Mr. Kotak testified that the total sales shown in his unaudited income statements, equalled his bank deposits plus cash paid to his suppliers and his landlord, only part of which could be substantiated. Mr. Edwards, whose firm reviewed Mr. Kotak's business records, was of the opinion that only somewhat over 80% of the alleged sales for Alankar and Africana could be verified.

Mr. Kotak’s unaudited statements, unlike the Cooper's and Lybrand reports, did not indicate Mr. Kotak's sales revenues for the four week period preceding the accident.

Mr. Kotak’s counsel established some errors in the Insurer’s calculations. However, in my opinion these errors were minor, relative to Mr. Kotak’s failure to present independent verification of the amounts set out in his statements. Overall, I found the Insurer's reports to be far more reliable and consistent than Mr. Kotak’s statements.

The onus is on the Applicant to prove his case, on a balance of probabilities. The Applicant has failed to satisfy me, on the balance of probabilities, of the veracity and accurary of his accounting evidence.

As I am satisfied with the overall reliability of the Insurer's numbers, I accept them as accurate, subject to my comments below concerning certain assumptions. I therefore accept the Insurer's figure of $427,197 as the Applicant's gross revenue from the Alankar and Africana stores, in the year preceding the accident. This equals an average weekly gross revenue of $8,215.33. Using the four week period preceding the accident, the average weekly gross revenue is $2,735.50.

(iii) Avoidable Expenses

No objection was made by the Applicant as to the type of expenses which were included by the Insurer within its categories of "avoidable" and "unavoidable" expenses. No accounting evidence was given by the Applicant indicating that any items were inappropriately allocated to either category. In the absence of any submissions or accounting evidence disputing the assumptions made by Mr. Edwards in this regard, I accept Mr. Edwards divisions between "avoidable" and "unavoidable" expenses.

However, the Applicant did object to certain of the Insurer's assumptions and calculations concerning the ceasing expense of labour.

The Applicant did not keep records of the unpaid labour provided both pre-accident and post-accident by his family members. Mr. Edwards therefore calculated a value for this labour, using Ontario's minimum hourly wage rate of $635 per hour. Mr. Edwards also assumed that Mr. Kotak's brother and father worked 60 hours a week at Alankar, until the Alankar operations ceased on January 31, 1993.

Mr. Kotak firstly argued that Alankar ceased operations earlier than January 31, 1993, and therefore the estimated pre-accident labour costs should be reduced, reflecting a shorter time period. However, the Applicant presented conflicting evidence as to whether the Alankar business ended in December 1992, or at some time before the end of January 1993. Notwithstanding this, Mr. Kotak filed as Exhibit 2, an unaudited financial statement of Alankar for the eight months ending January 31, 1993. I therefore find that it reasonable to assume that labour expenses continued to the end of January, in light of Mr. Kotak's conflicting evidence, and his failure to provide contrary objective proof of the hours worked by his employees and family members.

The Applicant also argued that the Insurer had inflated the labour expense of Mr. Kotak's father, who testified that he only worked two to three days a week for the Applicant. Mr. Kotak however testified that his father was "in charge" of the Alankar store at 635 Danforth Avenue. I am unable to appreciate how Mr. Kotak could run three stores without the full-time participation of either his father, or someone in his place, for whom a labour cost must be accounted. I lastly note that Mr. Kotak testified that his father did not work for him between December 1992 and June 1993. The senior Mr. Kotak however testified that he worked for the Applicant until May 1993, whereas the Insurer only calculated his labour expense until January 1993. For all these reasons, I find that the Insurer's assessment of the labour expense attributable to Mr. Kotak’s father is reasonable.

Mr. Kotak lastly submitted that the Insurer's assumption that his brother was working sixty hours a week at Alankar was incorrect, in the face of the uncontradicted evidence that Jayesh Kotak started his own business on July 15, 1992, and did not work for his brother after that date, except for a two week period when the two Alankar stores were being closed. I found the Applicant’s evidence in this regard credible and consistent. I am not satisfied that Alankar required a worker in the place of Mr. Jayesh Kotak, taking into account the full-time pre-accident participation of the Applicant, and his father, the part-time participation of Mrs. Kotak, and the paid employees hired for the Africana store.

I have therefore reduced the Insurer's pre-accident labour expense attributed to Mr. Jayesh Kotak from $12,955.00 to $2,400.30, reflecting Mr. Jayesh Kotak's evidence about the weeks he actually worked within the 52 week period preceding the accident, using the Insurer's estimate of 60 hours a week at $6.35 an hour as consistent and reasonable figures. The difference is $10,554.70, or a weekly amount of $202.98.

The Insurer calculated Mr. Kotak's pre-accident "gross weekly income" (using the "avoidable expense" approach of deducting all avoidable expenses from gross revenue) as $248.31, based on the 52 week period preceding the accident. When the sum of $202.98 (representing avoidable weekly labour expenses which should not have been deducted from gross revenue) is added to the Insurer's calculation of $248.31, a figure of $451.29 is derived, which I find is the correct calculation of "gross weekly income" using the data from Mr. Kotak’s employment in the year before the accident.

Pursuant to section 12(7) of the Schedule:

(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.

The Insurer’s calculation of gross weekly income based on the four weeks prior to the accident is $253.75. This amount is not affected by the recalculation of the labour expense, as the Insurer accepted that Mr. Jayesh Kotak was not working at Africana in the four weeks before the accident.

In accordance with section 12(7) of the Schedule, I have deemed the Applicant's gross weekly income to be $451.29 (using the 52 week period preceding the accident), as it is the greatest of the three options provided. Pursuant to section 12(4)(b) of the Schedule, the weekly benefit is 80% of the applicable gross weekly income of $451.29, which is $361.03.

(c) Post-accident income from employment

(i) June 14, 1993 - July 26, 1994

Mr. Kotak testified that he never returned to his pre-accident employment, but that Africana continued operating after the accident, as his wife and Mr. Pacheco began working full-time. Two additional workers were also hired. In February 1994, Mr. Kotak's father began working at Africana on a full-time basis.

Section 15 of the Schedule states that "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."

The Insurer concedes that prior to February 23, 1994, Africana's avoidable expenses exceeded its gross revenues, and that therefore there should be no deduction for post-accident income. However, after that date, the Insurer submits that the business gross revenues exceeded avoidable expenses by $161.57 a week. This submission was however based on the unsubstantiated assumption that the Applicant was working 30 hours a week at Africana from February to July, 1994, thereby reducing the Insurer's calculation of post-accident avoidable labour expenses. The evidence of all witnesses, including Mr. Pacheco, whom I found to be independent and impartial, was that Mr. Kotak did not work at the store following the accident. The Insurer conducted surveillance on Mr. Kotak only after the sale of Africana on July 26, 1994. The surveillance evidence about Mr. Kotak's role in running the store, was at best inconclusive.

I further find that the Insurer underestimated the post-accident labour expense, by failing to attribute any hours of work subsequent to January 1, 1994, to either the Applicants father or to Carlos Pacheco, contrary to their uncontradicted evidence.

I therefore find that the Insurer’s calculations must be readjusted to reflect the increased additional avoidable labour expense of Mr. Kantilal Kotak and Mr. Carlos Pacheco, which results in avoidable expenses continuing to exceed post-accident income until July 26, 1994.

Therefore, from the date of the accident until July 26, 1994, I find that no income was received by or available to Mr. Kotak from his occupation or employment, and therefore his weekly income benefit for this period is $361.03.

(ii) Subsequent to July 26, 1994

On July 26, 1994, Mr. Kotak sold Africana to his father. Mr. Kotak gave evidence that because of continuing losses following his accident and his absence from work, he had no choice but to sell his business.

I received no evidence of any income, that was received by or available to Mr. Kotak, following the sale of Africana to his father.

The Insurer submitted that as the business ceased on July 26, 1994, pursuant to section 12(7)(3) of the Schedule, all pre-accident business expenses should now be reduced from gross revenue, and the Applicant's gross weekly income should be recalculated as of the date of sale.

I find no authority in the Schedule for recalculating an applicant's gross weekly income, once it has been determined in accordance with section 12. Collateral benefits to be deducted may vary. Post-accident income to be subtracted may fluctuate. Gross weekly income however, once calculated, is a constant. It does not vary, depending on later events. It matters not whether an applicant's job is subsequently eliminated. It is irrelevant whether one’s business would have closed, or indeed does close, after gross weekly income has been calculated. Once determined, gross weekly income is a fixed amount.

Therefore, as there is no evidence of post-accident income, the Applicant's weekly income benefit remains at $361.03 for the period of entitlement.

Rehabilitation:

The AMG rehabilitation report of October 13, 1994 indicates that Mr. Kotak was not interested in returning to his former business "due to the extensive pressure associated with such a job, in addition to the excessive physical demands."¹⁵

It was further noted that Mr. Kotak had independently investigated obtaining a Certificate in Electronics and Technology from Devry. However, before beginning this course, he wished to complete a physical tolerance and conditioning programme at the TRC, to ensure that he could finish the course, as he was unable to sit for extended periods.

Mr. Kotak began his studies at Devry on July 10, 1995, attending classes from 8:00 a.m. to 1:00 p.m. Very few details about this course, including its cost, were provided.

Mr. Kotak submits that he is entitled to payment of the cost of his occupational retraining at Devry, and refers to his caseworkers at AMG and treating staff at TRC who supported his enrollment in the Electronics Engineering Technology Program at Devry. The Insurer submits that it is really the Applicant who referred himself to this retraining, in accordance with his plans preceding this accident. I note that the AMG consultant's recommendation for the Devry course was made at a July 11, 1995 case conference with TRC staff, a day after Mr. Kotak began classes¹⁶.

The Insurer submits that this expense is not reasonable, as the Applicant can return to his pre-accident occupation.

The provisions for eligibility for occupational training are set out in section 6 of the Schedule:

6.-(1) The insurer will pay with respect to each insured person who sustains physical, psychological or mental injury as a result of an accident all reasonable expenses resulting from the accident within the benefit period set out in subsection (3) for,

(c) rehabilitation, life-skills training and occupational counselling and training;

(4) Subject to subsections (5) and (6), the insurer, before making a payment for an expense under subsection (1), may require the insured person to submit a statement signed by the insured person's qualified medical practitioner or psychological advisor stating that the expense is necessary for the insured person's treatment or rehabilitation.

Senior Arbitrator Rotter, at page 46 in the decision of Richard Mark Plows and Jevco Insurance Company, January 16, 1992, OIC File Nos. A-000175, A-000588, set out the following criteria which must be met before an insurer is to be found liable to pay for a section 6(1)(f) item, which I find to be applicable to the expense sought in this case:

(1) it must be a reasonable expense resulting from the accident

(2) it must be required because of the accident

(3) a medical practitioner must provide a signed statement that the expense is necessary for the insured's treatment or rehabilitation, if the Insurer so requires

I agree with the comments of Arbitrator Draper at page 15 of his decision of Pedro Correal and Jevco Insurance Company, May 6, 1993, OIC File No. A-001994, that "retraining for a new occupation is reasonable only if it is unreasonable to expect the insured person to return to his or her pre-accident occupation."

I have found that the Applicant no longer suffers substantial inability to perform the essential tasks of his occupation. I therefore find that the retraining expense submitted by the Applicant is not reasonable, nor is it required because of the accident. Accordingly, the Insurer is not liable to pay the cost of such retraining.

Interest:

The provisions of section 24(4) of the Schedule are mandatory that "the insurer will pay interest on overdue payments from the date they become overdue at the rate of 2 per cent per month." I find that payments are overdue in that between June 21, 1993 and July 26, 1994, there was a shortfall of $100.89 per week, in the amount of benefits paid to the Insured. Benefits of $361.03 per week from July 27, 1994 to May 19, 1995 are also overdue.

Expenses:

The Applicant has requested his expenses incurred in respect of this arbitration proceeding. Pursuant to section 282(11) of the Insurance Act, R.S.O. 1990, Chap. I. 8, as amended, I may award the Applicant such expenses.

Arbitrators have consistently followed the decision of Arbitrator Naylor in the case of Ralph McCormi'ck and Economical Mutual Insurance Company, October 2, 1991, OIC File No. A-000139, that it is appropriate to award an applicant his or her expenses unless the application for appointment of an arbitrator "was manifestly frivolous or vexatious, or the applicant's conduct unreasonably prolonged the proceedings."

In this case, I am satisfied that Mr. Kotak is entitled to his expenses, calculated in accordance with Section F of the Dispute Resolution Practice Code, effective August 1, 1995 and Ontario Regulation 664, R.R.O. 1990. If the parties are unable to agree on the expenses payable, I remain seized of this matter, and either party may apply to me for an assessment of expenses.

Order:

1. CAA Insurance Company (Ontario) shall pay Mr. Kotak weekly income benefits until May 19. 1995.

2. The quantum of weekly income benefits to which Mr. Kotak is entitled is $361.03.

3. Mr. Kotak is not entitled to payment of rehabilitation and occupational training at the Devry Institute of Technology.

4. CAA Insurance Company (Ontario) shall pay Mr. Kotak interest on overdue payments in accordance with section 24(4) of the Schedule.

5. CAA Insurance Company (Ontario) shall pay Mr. Kotak his expenses incurred in respect of this arbitration proceeding.

December 20, 1995

Lawrence Blackman Arbitrator

Date

APPENDIX A

Exhibit 1

Alankar Dept Store - Unaudited Income Statement for the 12 months ending May 31, 1992;

Exhibit 2

Alankar Dept Store - Unaudited Income Statement for the 8 months ending January 31, 1993;

Exhibit 3

Africana Grocers - Unaudited Income Statement for the 5 months ending December 31, 1992;

Exhibit 4

Africana Grocers - Unaudited Income Statement for the 12 months ending December 31, 1993;

Exhibit 5

Medical Brief;

Exhibit 6

Copy of House and Store Lease between Ilona Ohayon and Kotak Kantilal, dated October 1, 1994 (sic);

Exhibit 7

Copy of Employer's Confirmation of Income form dated July 13, 1993, and Application for Benefits form dated July 10, 1993;

Exhibit 8

Copy of Medical Report of Dr. A.Vozoris dated July 8, 1993;

Exhibit 9

Original documents re: Purchases of Africana Grocers, June 1, 1993 to December 31, 1993;

Exhibit 10

Copies of Bank Statements for Alankar Department Store with the Bank of Nova Scotia, May 29, 1992 to January 29, 1993;

Exhibit 11

Copies of Bank Statements for Africana Grocers with the Bank of Nova Scotia, July 31, 1992 to July 29, 1994;

Exhibit 12

Original deposit book of Africana Grocers, March 14, 1994 to July 5, 1994;

Exhibit 13

Copies of 2 reports of Signum Corporate Services Inc., dated January 12, 1995 and May 31, 1995;

Exhibit 14

two videotapes dated January 2, 1995 and May 26 - 27, 1995;

Exhibit 15

Copy of report of Mr. Daniel Edwards, Coopers & Lybrand, dated August 26, 1994;

Exhibit 16

Copy of report of Mr. Daniel Edwards, Coopers & Lybrand, dated August 8, 1995.

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.
2. 2Exhibit 5, Tab 4
3. 3Exhibit 5, Tab 8
4. 4Exhibit 5, Tab 7
5. 5Exhibit 5, Tab 10
6. 6Exhibit 5, Tab 11
7. 7Exhibit 5, Tab 5
8. 8Exhibit 5, Tab 8
9. 9Exhibit 5, Tab 11
10. 10Francois Philippe and Royal Insurance Company of Canada, January 24, 1994, OIC File No. A-001736
11. 11Exhibit 5, Tab 5
12. 12Gene Meandro and Pilot Insurance Company, June 7, 1994, OIC File No. A-004433, pp.10-11
13. 13Exhibit 16, page 11
14. 14Meandro, page 16
15. 15Exhibit 5, Tab 8
16. 16Exhibit 5, Tab 8, July 14, 1995 report