Neutral Citation: 1995 ONICDRG 48
File No. A-009213
ONTARIO INSURANCE COMMISSION
BETWEEN:
STEPHEN J. SAJKOWSKI
Applicant
and
JEVCO INSURANCE COMPANY
Insurer
DECISION
Issues:
Stephen J. Sajkowski, the Applicant in this proceeding, was injured in a motor vehicle accident on August 3, 1993. He applied for and received statutory accident benefits from the Insurer, Jevco Insurance Company, payable under Ontario Regulation 6721. Jevco has paid weekly income benefits to Mr. Sajkowski pursuant to section 12 of the Schedule, but now both parties dispute the proper amount of the benefit. The parties were unable to resolve their dispute through mediation, and Mr. Sajkowski applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended. The issue in this hearing is:
- What is the gross weekly income on which to base the weekly income benefits payable to Mr. Sajkowski pursuant to section 12 of the Schedule?
Mr. Sajkowski also claims interest on any amounts owing and his expenses incurred.
Result:
- The gross weekly income on which to base the weekly income benefits payable to Mr. Sajkowski pursuant to section 12 of the Schedule is $521.63.
Mr. Sajkowski is entitled to his expenses incurred in respect of the arbitration.
Hearing:
The hearing was held in Guelph, Ontario, on April 6, 1995, before me, David J. Evans, arbitrator.
Present at the Hearing:
Applicant:
Stephen J. Sajkowski
Mrs. Sajkowski
Applicant's
Michael B. Bean, Q.C.
Representative:
Barrister and Solicitor
Insurer's
John McNeil
Representative:
Barrister and Solicitor
Witnesses:
Mr. Sajkowski was the only witness.
Exhibits:
Exhibit 1
Statement of Facts
Exhibit 2
Exhibit Book
Evidence and Findings:
The Statement of Facts (Exhibit 1) sets out the following: Mr. Sajkowski held 50% of the shares in a company called C & S Masonry, where he worked as a bricklayer and stonemason. Mr. Sajkowski worked steadily from the beginning of 1993 until April, when he broke the heel of his right foot. He received workers' compensation for a number of weeks. He had been back at work for two and a half weeks at the time of the automobile accident on August 3, 1993. He suffered injuries in that accident that have prevented him from returning to work, and he has since sold his 50% shares in C & S Masonry.
Because of his injuries from the motor vehicle accident, Mr. Sajkowski is entitled to receive and has been receiving a weekly income benefit under section 12 of the Schedule. That weekly income benefit was based on a gross weekly income that had been calculated by Jevco at $573.16. Both Mr. Sajkowski and Jevco now dispute the amount of the gross weekly income.
Gross weekly income determines the amount of the weekly income benefit. Gross weekly income in turn is determined by average gross weekly income based on total income earned during the four and 52 weeks preceding the accident (see page 5 below). Counsel for both parties agreed that the total income earned over the four and 52 weeks preceding the accident excludes the payments Mr. Sajkowski received while he was on workers' compensation, based on recent decisions by arbitrators. Both parties agreed that, excluding the workers' compensation benefits, Mr. Sajkowski earned a total income of $21,780 over the 52 weeks preceding the accident. As for total income over the four weeks preceding the accident, Mr. Sajkowski drew a total of $1,625 in salary and received a $6,000 bonus that he and his partner (the other 50% shareholder in C & S Masonry) declared to themselves.
It should be noted that the bonus cheque dated July 29, 1993, at Tab 2 of Exhibit 2, is only for $4,500, but the accountants' letters at Tab 3 and the Payroll Records all indicate that the bonus was $6,000. In addition, the T4 slip for 1993 apparently includes the amount of $6,000 for the bonus. Therefore, I find that the bonus was $6,000.
Mr. Sajkowski and Jevco do not agree on whether the entire amount of the bonus should be included in the total income over the four weeks preceding the accident. They also do not agree on the formula for determining Mr. Sajkowski's average gross weekly income over either period.
The Bonus
Counsel for Jevco initially took the position that the bonus was not income, but he eventually conceded that, as the bonus was included on the T4 slip as salary and was treated as wages, it should be included as income.
I find that the bonus was income and should be treated as such. However, I do not find that it is particularly referable to the four weeks preceding the accident.
Although Mr. Sajkowski suggested that the entire bonus should be included in the total income of the four weeks preceding the accident, paragraph 4 of the Statement of Facts states:
This bonus was declared because the [Applicant] and his partner felt they could use the money. It was a joint decision by both shareholders, who were treated identically. The bonus was not referable to any specific time period, was not a dividend payment and was included in the [Applicant's] T4 as wages by the limited company.
In cross-examination, Mr. Sajkowski also stated that he worked the same hours as usual prior to declaring the bonus. He and his partner felt they had some "extra money" to pay themselves more, which is why they declared the bonus.
I find that the bonus flowed from the success of the business over the previous year. As it happens, the bonus was declared at the financial year end of the corporation: July 31, 1993. Accordingly, the bonus should be allocated by dividing it by 52 and applying it to each week of the preceding year. Therefore, the gross weekly income preceding the accident includes $6,000 - 52, or $115.38.
Average Gross Weekly Income
Paragraph 12(7)1. of the Schedule sets out that average gross weekly income determines the gross weekly income of the insured person:
- 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.
Mr. Sajkowski had not worked every week during the four and 52 weeks preceding the accident. He had worked 22 of the 52 weeks and two and a half of the four weeks preceding the accident. He submitted that his average gross weekly income should be determined by dividing the total income from those periods by the weeks actually worked. This procedure would naturally result in a greater average gross weekly income than simply dividing by the number of weeks in the period — 236% greater in the case of the 52 week period, for example. Jevco opposed this method of calculation. I heard a great number of submissions on this issue and references to a number of decisions by arbitrators and by the Director's Delegate.
As I have found that Mr. Sajkowski received income from his occupation or employment during the entire four and 52 week periods preceding the accident, in that I have found that the bonus was income from his occupation or employment and should be apportioned over the year preceding the accident, it is unnecessary for me to decide which method of calculating the average is applicable.
Mr. Sajkowski's gross average weekly income based on the 52 week income is $418.85 (total income of $21,780 + 52). The gross average weekly income based on the four-week income, which includes four weeks of the bonus plus the amounts earned after his return to work, is $521.63, based on the following calculation:
Income earned from return to work to date of accident
$1,625.00
Bonus (4 x $115.38)
$461.52
Total
$2,086.52
Average (Total ÷ 4)
$521.63
Paragraph 12(7)1. of the Schedule deems the higher of the four week and 52 week averages to be the gross weekly income. Therefore, Mr. Sajkowski's gross weekly income is deemed to be $521.63.
Before the weekly income benefit is calculated, payments for loss of income are deducted from the gross weekly income, and then the weekly income benefit is calculated as 80% of the remainder: paragraph 12(4)(b) of the Schedule. Mr. Sajkowski has been receiving such payments for loss of income since December 1993. Both parties advised me that they would be calculating the appropriate deduction between themselves, and accordingly I make a finding as to the amount of the gross weekly income only.
Counsel for Jevco advised me that Jevco is not seeking repayment of the difference between the benefit that has been paid based on a gross weekly income of $573.16 and the benefit based on the gross weekly income as determined above.
Expenses
Mr. Sajkowski may be awarded the expenses he has incurred in this arbitration pursuant to section 282(11) of the Insurance Act. The issue of determining the average gross weekly income is a difficult and unsettled one. I award Mr. Sajkowski his expenses in the proceeding. In the event that the parties cannot agree as to the total amount of expenses, a party may apply to the Ontario Insurance Commission for assessment of the expenses.
Order:
The gross weekly income on which to base the weekly income benefits payable to Mr. Sajkowski pursuant to section 12 of the Schedule is $521.63.
Mr. Sajkowski is entitled to his expenses incurred in respect of the arbitration.
May 8, 1995
David J. Evans Arbitrator
Date