Neutral Citation: 1995 ONICDRG 33

File No. A-005291

BETWEEN:

LAWRENCE REID

Applicant

and

CO-OPERATORS GENERAL INSURANCE COMPANY

Insurer

DECISION

The Applicant, Lawrence Reid, was injured in a motor vehicle accident on June 23, 1991. He applied for and received statutory accident benefits from Co-operators General Insurance Company ("Co-operators"), payable under Ontario Regulation 672¹.

Co-operators paid weekly income benefits from June 30, 1991 to March 30, 1993, based on Mr. Reid's income from his part-time work prior to the accident.

Mr. Reid alleges that, had he not been injured in the accident, the nature of his work, the hours of his work and his income would have changed on July 1, 1991. He claims that he should have received weekly income benefits from July 1, 1991 to March 30, 1993, based on this offer of employment. Co-operators disagrees. It takes the position that Mr. Reid's weekly income benefits should be based on the income from his part-time work before the accident. Co-operators contends that Mr. Reid should receive no more than the minimum amount of $185.60 per week from June 30, 1991 to March 30, 1993.

Mr. Reid applied for mediation. Mediation was unsuccessful in resolving the dispute. Mr. Reid applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The issues in this hearing are:

Is Mr. Reid entitled to weekly income benefits from July 1, 1991 to March 30, 1993, based on an offer of employment made before the accident, under subsection 12(2) 1.iii of the Schedule?
Mr. Reid also claims interest on any amounts owing, and his expenses incurred in the hearing.

Co-operators makes no claim for repayment.

Mr. Reid is entitled to only $185.60 per week during the period July 1, 1991 to March 30, 1993.
Mr. Reid is not entitled to his expenses.

The hearing was held in North York, Ontario, on June 1 and 2, 1994, before me, Shemin Manji, arbitrator.

Present at the Hearing:

Applicant:

Lawrence Reid

Applicant's Representative:

Peter Daly Barrister and Solicitor

Insurer's Representative:

Stephen Malach Barrister and Solicitor

Court Reporter:

Carman Gillis, Holley and Strauch Court Reporters

Witnesses:

Lawrence Reid Gary Leitch

Exhibits introduced into evidence and other documents on the record are listed in Appendix A to the decision. Authorities filed by the parties are listed in Appendix B.

Reasons for Decision:

1. Factual Background and issues:

Mr. Reid was involved in a motor vehicle accident on June 23, 1991. At the time of the accident he was working, part-time, for Northern Maintenance, in Midland, Ontario. Northern Maintenance is a business that provides commercial and residential cleaning services. The business is owned by Mr. Gary Leitch.

Mr. Reid received weekly income benefits, under section 12 of the Schedule, from Co-operators based on his earnings from his part-time work. Co-operators paid Mr. Reid weekly income benefits in the amount of $240.00 from June 30, 1991 to January 19, 1992; $185.00 from January 20, 1992 to February 16, 1993; and $185.60 from February 17, 1993 to March 30, 1993. Weekly income benefits were terminated on March 30, 1993.

Mr. Reid claims that while he was employed part-time with Northern Maintenance at the time of the accident, he was set to begin full-time employment with Northern Maintenance on July 1, 1991, at a gross weekly salary of $400.00. Mr. Reid claims that this was an offer of employment under subsection 12(2) 1 .iii of the Schedule and, therefore, his weekly income benefits should have increased as of July 1, 1991.

Co-operators rejects Mr. Reid's claim. It contends that Mr. Reid's weekly income benefits should be based on the income from his part-time work before the accident and that Mr. Reid should receive no more than the minimum amount of $185.60 per week from June 30, 1991 to March 30, 1993. Co-operators takes the position that subsection 12(2) 1 .iii of the Schedule does not apply to Mr. Reid because there was no "legitimate offer of employment", and it was not evidenced in writing before the accident. Co-operators submits that, in any event, subsection 12(2) 1 .iii of the Schedule does not apply to a person like Mr. Reid who was employed part-time at the time of the accident, but who claims that his conditions at work, i.e., hours and wages, would have changed after the accident.

2. Evidence and Findings:

(a) Does Mr. Reid qualify to receive weekly income benefits under subsection 12(2)1.iii of the Schedule?

Section 12(2)1.iii of the Schedule provides as follows:

12.-(2) The following qualifications apply to an insured person who claims a weekly benefit under subsection (1):

He or she must have been at the time of the accident,

iii. entitled to start work within one year under a legitimate offer of employment made before the accident and evidenced in writing.

Mr. Reid's claim depends on my acceptance that he had a legitimate offer of employment at the time of the accident and the offer was evidenced in writing.

Mr. Reid relied on his own testimony and the testimony of Mr. Leitch in support of his position. Mr. Reid also relied on two letters written to his solicitors, one from Mr. Leitch, dated July 26, 1993 (Exhibit 6), and the other from Mrs. Nancy Leitch (Mr. Leitch's spouse), dated November 30, 1993 (Exhibit 9).

For the reasons to follow, I am unable to conclude that Mr. Reid had a legitimate offer of employment at the time of the accident.

Mr. Reid testified that he was unemployed in the winter of 1990, but was looking for work. He testified that he was looking in particular for cleaning or janitorial work because of his past experience in this field. Mr. Reid testified that he knew Mr. Leitch, the owner of Northern Maintenance, and had discussions with him in the winter of 1990 about working for Northern Maintenance. Mr. Leitch told Mr. Reid that he was looking for a supervisor. Mr. Reid testified that Mr. Leitch said that he could only hire him on a part-time basis in April 1991. He could, however, hire him as a full-time supervisor on July 1, 1991, when there would be an increase in the volume of work (cleaning contracts) due to school closings. Mr. Reid testified that, in late March 1991, he agreed to work for Northern Maintenance on a part-time basis and on the understanding that he would be employed full-time on July 1, 1991.

Mr. Reid testified that he commenced his part-time employment with Northern Maintenance in April 1991, working approximately 15 hours per week. His duties involved general cleaning, floor scrubbing, waxing, stripping and vacuuming. Mr. Reid testified that his gross weekly income was $150.00. No deductions were taken from his gross weekly income for taxes or unemployment insurance. Mr. Reid testified that although he was responsible for paying his own taxes, he was not responsible for any expenses associated with his cleaning work. He testified that Mr. Leitch was responsible for all expenses associated with his work, including gasoline expenses for his travel.

In respect of the work which was to commence on July 1, 1991, Mr. Reid testified that his duties would involve supervising work on job sites and cleaning for his own contracts. Mr. Reid indicated that he would continue to be an employee of Northern Maintenance. He testified that his gross weekly income would be $400.00 per week. This rate would be based on 40 hours or more per week. Mr. Leitch would continue to be responsible for all expenses associated with his work.

Mr. Reid testified that Mr. Leitch's offer of full-time employment beginning on July 1, 1991 was not reduced to writing before the accident of June 23, 1991. However, he testified that Mr. Leitch confirmed the offer in writing after the accident for the purposes of his insurance claim.

In his testimony, Mr. Leitch confirmed that he offered Mr. Reid full-time work as of July 1, 1991, that the work would have involved supervision, as well as janitorial or cleaning work, and that Mr. Reid would have been paid $400.00 per week. However, Mr. Leitch testified that before the accident, Mr. Reid was not an employee of Northern Maintenance. Rather, he provided part-time janitorial or cleaning services to Northern Maintenance as an independent contractor. Mr. Leitch testified that in addition to being responsible for paying his own taxes, Mr. Reid had also been responsible for all expenses associated with his cleaning work, including expenses for gasoline. Mr. Leitch indicated in his testimony that while the nature of Mr. Reid's work, the hours that he worked and his income would have changed after July 1, 1991, his status as an independent contractor would have remained the same after July 1, 1991.

Mr. Leitch's testimony that Mr. Reid was an independent contractor and was responsible for all expenses associated with his cleaning work, including gasoline expenses, is inconsistent with statements that he made to Co-operators and Mr. Reid's solicitors prior to the hearing. In the Employer's Confirmation of Income form signed by Mr. Leitch on July 26, 1991 (Exhibit 5), and in a letter dated July 26, 1993 to Mr. Reid's solicitors (Exhibit 6), Mr. Leitch clearly indicated that Mr. Reid was an employee of Northern Maintenance prior to the accident and would have continued to be an employee of Northern Maintenance after July 1, 1991. Further, gas receipts (Exhibits 7 and 10) which were elicited from Mr. Leitch during cross-examination, indicate that Mr. Leitch was paying for Mr. Reid's gasoline expenses prior to the accident.

Mr. Leitch also testified in chief that sometime in the third week of August or in the first week of September 1991, he hired a person, Mr. Fred Hopkins, to perform the duties that Mr. Reid would have performed as of July 1, 1991. However, in cross-examination, after he was asked to review the records that he had brought with him to the hearing, Mr. Leitch changed his testimony and stated that Mr. Hopkins only worked for Northern Maintenance part-time as of September 12, 1991, not full-time; and, that Mr. Hopkins was not paid $400.00 per week.

The invoices submitted to Northern Maintenance by Mr. Hopkins, for his work, were tendered in evidence (Exhibit 11). They indicate that Mr. Hopkins only worked for Northern Maintenance from September 12, 1991 to September 15, 1991, and that during that time he only performed cleaning duties (no supervisory work).

I find the discrepancy in the testimony of Mr. Reid and Mr. Leitch about the nature of their relationship as of July 1, 1991 to be significant. This discrepancy casts doubts on whether there was a legitimate or enforceable contract for future employment between them. The discrepancy in their testimony indicates that there was ambiguity about some essential terms of the offer made by Mr. Leitch: was Mr. Reid's status that of an employee or independent contractor and, flowing from this, what should Mr. Reid be paid for his services? The evidence about what Mr. Reid and Mr. Leitch agreed to before the accident is not clear. The essence of a contract is agreement. There can be no contract without agreement.

Even if I had not found this discrepancy in the testimony of Mr. Reid and Mr. Leitch significant, I would still be unable to find that Mr. Reid had a legitimate offer of employment at the time of the accident. The only evidence about the contract was the testimony of Mr. Reid and Mr. Leitch and I found this evidence confusing and inconsistent.

Both Mr. Reid and Mr. Leitch testified that Mr. Reid's rate of pay prior to the accident, in respect of his part-time work, was $150.00. However, Mr. Reid was not paid on a regular basis; and Mr. Reid and Mr. Leitch gave confusing and contradictory testimony about the amounts that were actually paid, when these payments were made and how these payments were made to Mr. Reid, from April 15, 1991 to June 23, 1991. In addition, their testimony was inconsistent with the documentary evidence tendered at the hearing (Exhibits 1, 2, 3, 7, 8, 9 and 10), including a letter from Employment and Immigration Canada setting out the unemployment insurance benefits paid to Mr. Reid after he commenced part-time work (Exhibit 1), and Mr. Reid's 1991 Income Tax Return, as filed with Revenue Canada (Exhibit 2).

Mr. Reid gave inconsistent evidence about the number of weeks that he worked for Northern Maintenance, prior to the accident. In his examination-in-chief, he indicated that after commencing work in mid-April, he worked continuously up to the time of the accident of June 23, 1991 (ten weeks). In cross-examination, after being referred to the letter from Employment and Immigration Canada (Exhibit 1) which indicated that Mr. Reid did not work during the weeks of May 26, 1991 and June 2, 1991, he first said that he did not work during those two weeks. Later he changed his testimony again and said that he had worked during those two weeks but had not been paid for his work, because Mr. Leitch could not afford to pay him.

These discrepancies and inconsistencies persuade me that the evidence of Mr. Reid and Mr. Leitch should not be relied upon. Mr. Reid's counsel attributed the discrepancies in Mr. Reid's and Mr. Leitch's evidence to their difficulty in recollecting events that occurred three years ago. I am not satisfied with this explanation.

The discrepancies and inconsistencies in the testimony of Mr. Reid and Mr. Leitch affect the reliability of their evidence. They call into question the validity of Mr. Reid's claim that at the time of the accident, he had a legitimate offer of employment from Mr. Leitch.

Subsection 12(2) 1 .iii. of the Schedule suggests that the testimony of any witness, even if believed, is not sufficient to found a legitimate offer of employment. Supporting written evidence is required to confirm the offer. Because the words "...and evidenced in writing" in subsection 12(2) 1 .iii are not followed or qualified by the words "before the accident", it would appear that an offer evidenced in writing after the accident would also meet the requirements of the subsection. The only written evidence that supports Mr. Reid's testimony was the letter to Mr. Reid's solicitors from Mr. Leitch dated July 26, 1993 (Exhibit 6). Mr. Leitch wrote this letter specifically to support Mr. Reid's insurance claim. I find this document to be of little evidentiary weight. It is not a corroborative document made contemporaneously with the offer or in the ordinary course of business. Further, it was prepared by someone whose evidence I found to be confusing and inconsistent.

In conclusion, I find that Mr. Reid has not proven that he meets the requirements of subsection 12(2) 1 .iii of the Schedule or that he qualifies for weekly income benefits under that subsection from July 1, 1991 to March 30, 1993. Accordingly, he is entitled to only the minimum amount of $185.60 per week during this period.

Having found that Mr. Reid does not qualify for weekly income benefits under subsection 12(2)1.iii of the Schedule for the reasons set out above, it is not necessary for me to address, in this decision, Co-operators' submission that this subsection does not apply to a person like Mr. Reid, who was employed part-time and who claims that his conditions at work, i.e., hours and wages, would have changed after the accident.

(b) Is Mr. Reid entitled to his expenses relating to the arbitration?

Mr. Reid seeks an award of the expenses he has incurred in this arbitration. An award for expenses may be made under section 282(11) of the Insurance Act, which provides as follows:

The arbitrator may award to the insured person such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations to the maximum set out in the regulations.

In Ralph McCormick and Economical Mutual Insurance Company, October 2, 1991, OIC File No. A-000139, Senior Arbitrator Susan Naylor discussed appropriate criteria guiding the exercise of an arbitrator's discretion to award an applicant his or her expenses. In that decision, she stated, at page 24:

The discretion to award expenses should be exercised, having regard to the intent and purpose of the legislative scheme. The arbitration process has been established under the Insurance Act, as amended, in order to facilitate applicants' access to relatively inexpensive, speedy and informal adjudication of disputes regarding no-fault benefits. The discretion to award expenses should be exercised in accordance with this objective, having regard to the individual circumstances of each case.

Accordingly, it is appropriate to award an applicant his or her expenses, unless, in the circumstances of the particular case, it is determined that the application for appointment of an arbitrator was manifestly frivolous or vexatious, or that the applicant's conduct unreasonably prolonged the proceedings.

The Director of Arbitrations approved these criteria in the appeal decision in Vito Luigi Calogero and The Co-Operators General Insurance Company, February 13, 1992, OIC File No. P-000251.

Having regard to the criteria set out in McCormick, I decline, in this case, to exercise my discretion to award expenses to Mr. Reid. Based on the contradictory and confusing evidence tendered at the hearing, I agree with Co-operators' submission that this case should never have proceeded to arbitration.

Order:

Mr. Reid is entitled to only $185.60 per week during the period July 1, 1991 to March 30, 1993.
Mr. Reid is not entitled to his expenses.

April 11, 1995

Shemin Manji Arbitrator

Date

APPENDIX A - THE RECORD

The following documents were introduced into evidence:

Exhibits:

Exhibit 1

Letter to Malach & Fidler from Employment and Immigration Canada dated November 25, 1993

Exhibit 2

T1 Short 1991 of Mr. Lawrence Reid dated April 30, 1992

Exhibit 3

Cheques issued by Northern Maintenance/Gary Leitch to Mr. Reid

Exhibit 4

Authorization for Employment Information by Mr. Reid dated July 29, 1994 & Direction to the Unemployment Commission by Mr. Reid dated October 21, 1993

Exhibit 5

Employer's (Northern Maintenance) Confirmation of Income dated July 26, 1991

Exhibit 6

Letter dated July 26, 1993 to Lofranco & Sabetti from Northern Maintenance

Exhibit 7

Gas receipt from Petro-Canada signed by Richard Reid dated June 28, 1991

Exhibit 8

Notes of Northern Maintenance - Re: Richard Reid

Exhibit 9

Letter dated November 30, 1993 to Lofranco & Sabetti from Northern Maintenance

Exhibit 10

Gas receipts from Petro-Canada signed by Richard Reid (17) during the period May 21, 1991 to July 6, 1991

Exhibit 11

Invoices Fred Hopkins - September 12 - September 15, 1991

APPENDIX B - AUTHORITIES

Elizabeth Ann Arsenault and Guardian Insurance Company of Canada, November 17, 1993, OIC File No. A-003173
Peter . Tolin and . Tevco Insurance Company, October 27, 1993, OIC File No. A-002187
Toseph Marry and Sun Alliance Insurance Company, March 12, 1993, OIC File No. A-002329
Dalvir S. Niijar and Co-operators General Insurance Company, April 14, 1994, OIC File No. A-004436
Canadian Home Assurance Company and Vincenzo Scavuzzo (decision on appeal), June 19, 1992, OIC File No. P-000626

Footnotes

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.

Lawrence Reid v. Co-operators General Insurance Company, 1995 ONICDRG 33

Case Summary