Neutral Citation: 1995 ONICDRG 25
File No. A-004420
ONTARIO INSURANCE COMMISSION
BETWEEN:
CHRISTOPHER A. CHURLY
Applicant
and
JEVCO INSURANCE COMPANY
Insurer
DECISION
Issues:
The Applicant, Christopher A. Churly, was injured in a motor vehicle accident on August 30, 1992. He received weekly income benefits at the rate of $185.60 until March 1, 1993. Mr. Churly claims that his benefits should have been higher. The issue before me is:
What is the correct amount of Mr. Churly's weekly income benefit for the period from the week after the accident until March 1, 1993?
Mr. Churly also claims interest on any amounts owing, and his expenses incurred in the hearing.
Result:
Mr. Churly is entitled to include income from the sale of four cars in the calculation of his average gross weekly income from employment for the four weeks before the accident. Determination of Mr. Churly's weekly income benefit has been deferred, pending further submissions from the parties.
Mr. Churly is entitled to his expenses incurred in respect to the arbitration.
Hearing:
The hearing was held in North York, Ontario, on March 6 and March 7, 1995, before me, Susan Naylor, arbitrator. Leo Dillon represented Mr. Churly, while Jevco Insurance Company (Jevco) was represented by John McNeil, Q.C.. Mr. Churly and Ronald Mix, a chartered accountant retained on behalf of Mr. Churly, gave oral evidence at the hearing. There were ten exhibits relating to Mr. Churly's income during the period in question.
Evidence and Findings:
Mr. Churly operates a towing and scrap metal business under the name of North Peel North Towing, in equal partnership with a colleague. In addition to towing disabled vehicles to garages for repair, the business primarily involves towing unsalvageable vehicles to a scrap metal yard, stripping them of parts, and arranging for them to be pressed. The metal is sold by the ton for recycling in the automobile business.
Mr. Churly dabbles in other business, as the opportunity arises. In mid-July 1992, he bought a fleet of eight cars from the Toronto Star, for resale. He claims that he sold some of these cars in August 1992, shortly before the accident. However, he presented little in the way of documentation to show when the sales took place. The timing of the car sales is important for the calculation of his benefits.
Under section 12(7) of the Schedule1, if Mr. Churly can show that he earned more in the four weeks before the accident than his average earnings over the previous year, he is entitled to take the benefit of those higher earnings in calculating his weekly income benefits. This is so, even if, as here, the activity giving rise to the additional earnings is a relatively isolated event.
Regardless, however, Mr. Churly is deemed to have earned at least $232, even if, in fact, his actual earnings are lower than this. If I do not find that Mr. Churly sold the cars within four weeks before the accident, then his benefits will be based on this minimum figure because his earnings, averaged over the year, come to less than this.
It was Mr. Churly's contention that, in August 1992, within four weeks of the accident, he re-sold six of the cars that he had bought from the Toronto Star, at a very substantial profit. He reported the income on his 1992 income tax return.
Mr. Churly retained Ronald Mix, a chartered accountant, to calculate his weekly income benefit. According to Mr. Mix's calculations, if Mr. Churly's share of the profit from the sale of the six cars is included in his income for the four weeks before the accident, his benefits would be based on a gross weekly income of $515.
The sale of the cars to Mr. Churly is documented by bills of sale from the Toronto Star. However, Mr. Churly has no contemporary record documenting the resale of the cars. He stated that he sold the cars "as is" for cash, and although he provided the purchaser with a record of sale so that the car could be registered, he did not bother to keep a copy.
This lack of paperwork is consistent with Mr. Churly's overall evidence about how he did business. Mr. Churly is not a sophisticated businessman and apparently did not keep records of his business transactions. He testified that, for the most part, his was a cash business. If he was given an invoice or receipt by someone else, he kept the papers in a box and passed them on to his bookkeeper to deal with. His bookkeeper prepared his tax returns and the partnership's financial statements; Mr. Churly had little or nothing to do with that end of things.
Arbitrators have cautioned against accepting an applicant's oral testimony alone as to his or her earnings and the period they cover, without reliable supporting documentation. In this case, however, Mr. Churly was able to provide Jevco's accountants with details of the sales in a list prepared in November 1992 and marked Exhibit 6. Exhibit 6 listed a description of each car, the price Mr. Churly paid for it and any costs required to fix it up, the price he obtained for it, the month of sale and the name and telephone number of the purchaser. Exhibit 6 showed that the four cars were sold in August 1992:
| Description | Purchase Price | Sale Price |
|---|---|---|
| 1987 Ford E350 | $268 | $1,500 |
| 1986 Plym Rel Blue | $963 | $1,500 |
| 1986 Plym Rel Blue | $963 | $1,700 |
| 1987 Ford E350 | $268 | $3,000 |
The onus of establishing the amount of income claimed and the period when it was earned rests on the applicant, in whose control the information, for the most part, lies. However, in this case, Mr. Churly disclosed sufficient details of the sales to allow Jevco to properly investigate the situation. Jevco presented no evidence that called into question the information Mr. Churly provided or suggested difficulty contacting, or a lack of cooperation on the part of, the purchasers he identified. No evidence was presented to challenge the sale of the cars or the price that Mr. Churly claimed to have received for them.
Mr. Churly had very little independent recollection of his business dealings or his financial affairs. However, overall, he gave his evidence in a straightforward and credible manner. At first blush, the mark-up on the cars seems high, particularly given Mr. Churly's evidence that he sold the cars "as is", without any outlay for repair or selling costs. However, in the absence of evidence to the contrary, I accept the accuracy of the information he provided to Jevco in Exhibit 6. I find, on the weight of the evidence, that Mr. Churly sold four cars within four weeks of the accident as set out in Exhibit 6, and is entitled to include his earnings from these sales in the calculation of his benefits.
On the same basis, I accept that the cars were essentially sold "as is" and did not require any specific outlay for repairs prior to sale. In his calculations, Mr. Mix deducted the cost of the cars and pro-rated the annual operating expenses of the business over four weeks. I accept that this represents a sensible approach in this case. If anything, pro-rating the operating expenses of the business may overstate expenses in the month before the accident, as the scrap metal side of things was largely in abeyance at this time. I also accept the calculations set out in Mr. Mix's report regarding earnings from towing activities during the four week period, and Mr. Churly's post-accident income in 1992/1993.
Mr. Churly's 1992 income tax return recorded the sale of two additional cars in August 1992; two more cars than listed in Exhibit 6. Mr. Mix included the profit from the sale of these two other cars in his calculation of Mr. Churly's average gross weekly income in the four weeks before the accident.
Information as to the date of these sales was drawn from handwritten annotations made by Mr Churly in the corner of the original Toronto Star bill of sale for the cars. Exactly when and for what reason the annotations were made is unclear; Mr. Churly was unable to throw any light on them in his testimony. It seems likely that they were made after Exhibit 6 was prepared. In the circumstances, I regard Exhibit 6 as a more reliable guide to when the sales took place, and I am not prepared to include the two additional sales in Mr. Churly's income for the four weeks before the accident.
I defer determination of the amount of Mr. Churly's weekly income benefit, pending recalculation by the parties of Mr. Churly's average gross weekly income, including the effect of sales tax liabilities, in light of the above findings. The parties are required to submit any additional material in regards to the calculation by March 24, 1995, whereupon an order will be issued.
Mr. Churly is entitled to recoup his arbitration expenses, as prescribed in Regulation 664, R.R.O. 1990. I remain seized of the issue of expenses in the event that the parties cannot agree on their amount.
Order:
Mr. Churly is entitled to include income from the sale of four cars in the calculation of his average gross weekly income from employment for the four weeks before the accident. Determination of Mr. Churly's weekly income benefit has been deferred, pending further submissions from the parties.
Mr. Churly is entitled to his expenses incurred in respect to the arbitration.
March 16, 1995
Susan Naylor Arbitrator
Date