Ontario Insurance Commission
Neutral Citation: 1995 ONICDRG 58
Between:
Mustafa A. Agha Applicant
and
General Accident Assurance Company of Canada Insurer
Decision
Issues:
The Applicant, Mustafa A. Agha, was injured in a motor vehicle accident on September 10, 1993. He applied to his Insurer, the General Accident Assurance Company of Canada ("General Accident"), for statutory accident benefits, payable under Ontario Regulation 6721. General Accident paid Mr. Agha benefits, including weekly income benefits of $185.60 per week. Mr. Agha claims that he is entitled to $600 per week.
After an unsuccessful attempt at mediation, Mr. Agha 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 correct amount of Mr. Agha's weekly income benefits?
Mr. Agha also claims interest on any outstanding benefits, and his expenses related to this arbitration.
Result:
Mr. Agha's entitlement to weekly income benefits is limited to the minimum amount of $185.60.
Mr. Agha is entitled to his expenses related to this arbitration.
Hearing:
The hearing was held in North York, Ontario, on April 26, 1995, before me, David R. Draper, arbitrator.
Present at the Hearing:
Applicant: Mustafa A. Agha Applicant's Representative: Thomas Bean, Barrister and Solicitor Insurer's Representative: T.H. Rachlin, Barrister and Solicitor
Witnesses:
- Mustafa A. Agha - Applicant
- Debra Chang - Chartered Accountant
Exhibits: The exhibits are set out in the appendix.
The proceedings were recorded by Ms. Karen Charles, court reporter.
Reasons for Decision:
According to section 12 of the Schedule, Mr. Agha is entitled to the lesser of $600 a week or 80 per cent of his gross weekly income. "Gross weekly income" is defined in section 12(7), as follows:
12.--(7) The following rules apply to the calculation of gross weekly income:
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.
...
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.
Therefore, in order to calculate Mr. Agha's weekly income benefits, his gross weekly income in the four and 52 weeks preceding the date of the accident (September 10, 1993), and his "ceasing expenses", must be determined. Once the amount of his weekly income benefits is calculated, General Accident is entitled to reduce that amount by 80 per cent of any post-accident income:
- 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.
This case turns on the sufficiency of Mr. Agha's evidence about his income and expenses. He acknowledges that his records are incomplete, but claims that he is entitled to the maximum rate of $600 per week. General Accident has paid him $185.60, the minimum rate2, with no reduction for post-accident income, on the basis that he has not established that he is entitled to any greater amount.
Mr. Agha is the sole owner of Agha Promotion et Developpement du Quebec Inc., a company that he incorporated under federal legislation in August 1991. According to Mr. Agha, the corporation is involved in publishing and moving. At the time of his accident, the publishing operation was still at a preliminary stage and not generating any income. His income came from the moving business, which he operated under a number of names, but primarily as Discount Movers.
The onus is on Mr. Agha to establish his claim. In Jagdishar Singh and Kingsway General Insurance Company, January 29, 1993, OIC File No. A-000890, Senior Arbitrator Frederika M. Rotter stated:
The Applicant bears the onus of proving his gross weekly income. That onus can only be discharged through reliable and credible documentation of the Applicant's earnings and expenses.
This does not mean that Mr. Agha is expected to produce sophisticated or perfect records. I am quite prepared to accept that the moving business is a "cash business", and that movers do not always keep detailed records. However, Mr. Agha must provide some reasonable basis upon which to calculate his benefits. The difficulty is that he does not have the type of basic business records that I would expect from someone in his position. Most notably:
- he has no accounting book, record book, or other record of his revenues and expenses;
- he has never filed a corporate or personal income tax return;
- he has never remitted GST or other amounts to the government; and,
- he does not have invoices or receipts for his business expenses.
Shortly after the accident, General Accident retained an accounting firm to help determine the amount of Mr. Agha's weekly income benefits. Ms. Debra Chang, the accountant assigned to the case, initially met with Mr. Agha on October 15, 1993. Mr. Agha explained his business and provided some documents, including job order forms, bank statements, and a small number of returned cheques. Ms. Chang concluded, however, that there was insufficient verifiable evidence to allow her to establish his revenue and expenses before or after the accident.
Ms. Chang asked for and received some additional information, including more job order forms, from Mr. Agha and his accountant. Despite this additional information, Ms. Chang continued to be concerned about the lack of verifiable business records. She also found much of the information contradictory and implausible. In her subsequent reports, dated August 5, 1994 and March 7, 1995, Ms. Chang concluded that Mr. Agha was entitled only to the minimum amount of $185.60 per week.
In my view, Ms. Chang was not simply attempting to poke holes in Mr. Agha's claim. Rather, she attempted to make sense of his situation. The combination of the lack of business records and Mr. Agha's inconsistent explanations, however, made it impossible for her to establish his revenues or expenses with any confidence.
There may be cases in which the person's explanation is sufficient to overcome a lack of documentation. In Jodi E. Wiseman and Coachman Insurance Company, June 10, 1994, OIC File No. A-005706, I decided that the evidence of Ms. Wiseman and her witnesses was sufficiently reliable that she should be given credit for tip income, even though she kept no records of this income and could not prove the amount precisely.
I do not have the same confidence in this case. In my view, Mr. Agha failed to provide a coherent account of his financial affairs. His records are quite limited, and he provided little other evidence to clarify the situation. His testimony was confusing and inconsistent, particularly with respect to his expenses. Although I am not persuaded that his claim is fraudulent, I find no reasonable basis upon which to calculate his gross weekly income in the four or 52 weeks preceding the accident. I conclude, therefore, that his entitlement is limited to the minimum rate of $185.60 per week.
Mr. Agha acknowledged that he earned a small amount of post-accident income, although I heard no evidence about the expenses required to generate that income. In the circumstances, I conclude that Mr. Agha is entitled to $185.60 per week for any period of eligibility up to the date of the hearing, without any reduction for post-accident income3. However, if he is eligible for weekly income benefits for any period after the hearing, General Accident is entitled to reduce his benefits by 80 per cent of any post-accident income, according to section 15 of the Schedule.
Expenses
An award for expenses may be made under section 282(11) of the Insurance Act, which provides as follows:
282 (11) 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.
Arbitrators have consistently granted expenses unless the claim was fraudulent, manifestly frivolous or vexatious, or the applicant's conduct unduly prolonged the proceedings. Despite my concerns about this claim, I do not believe that it was fraudulent, manifestly frivolous or vexatious.
Given the limited productions and the relatively short hearing, Mr. Agha's expenses should be modest. In the circumstances, I conclude that I should exercise my jurisdiction to grant him his expenses, calculated according to Schedule 1 of the Dispute Resolution Practice Code and in Ontario Regulation 664, R.R.O. 1990.
The parties are encouraged to reach an agreement as to the amount of the expenses. However, if an agreement cannot be reached, I remain seized of this matter and either party may apply for an assessment of the expenses.
Order:
Mr. Agha's entitlement to weekly income benefits is limited to the minimum amount of $185.60.
Mr. Agha is entitled to his expenses related to this arbitration.
May 31, 1995
David R. Draper Arbitrator
APPENDIX
Exhibit 1 - The Insurer's brief containing photocopies of three reports from Debra Chang, C.A., dated November 15, 1993, August 5, 1994 and March 7, 1995.
Exhibit 2 - Statement of Earnings and Deductions issued to Magda Rasoul by Promotion and Development of Canada Inc. for the week ending September 10, 1993.
In addition, the following documents were before the arbitrator from the Ontario Insurance Commission file:
- Report of Mediator, dated May 19, 1994.
- Application for Appointment of an Arbitrator, dated August 23, 1994.
- Response by Insurer, dated October 20, 1994.
- A letter, dated November 29, 1994, confirming the pre-hearing discussion that was held on November 28, 1994.