Neutral Citation: 1995 ONICDRG 6
File No. A-007144
ONTARIO INSURANCE COMMISSION
BETWEEN:
THERESA GAUDREAULT
Applicant
and
PILOT INSURANCE COMPANY
Insurer
DECISION
Issues:
The Applicant, Theresa Gaudreault, was injured in a motor vehicle accident on June 17, 1991. She applied for and received statutory accident benefits from the Insurer, Pilot Insurance Company ("Pilot"), payable under Ontario Regulation 6721. Mrs. Gaudreault's entitlement to weekly income benefits under section 12 of the Schedule is not at issue; however, the parties did not agree on the correct amount of her weekly benefits.
Mrs. Gaudreault received weekly income benefits of $600.00 between June 24, 1991 and June 24, 1993. The Insurer contends that the correct amount of Mrs. Gaudreault's weekly income benefit is $317.84. It stopped paying weekly income benefits on June 24, 1993, claiming that Mrs. Gaudreault had been overpaid. Mrs. Gaudreault claims that the correct amount of her weekly income benefit is $600.00.
The parties were unable to resolve their disputes through mediation and Mrs. Gaudreault applied for arbitration under the Insurance Act, R.S.O. 1990, c.I.8, as amended.
The issues in this hearing are:
What is the correct amount of weekly income benefit that Mrs. Gaudreault is entitled to under section 12 of the Schedule?
Is the Insurer entitled to a repayment of any benefits paid to Mrs. Gaudreault, under section 27(1) of the Schedule?
The Applicant also claims interest on any amounts outstanding, and her expenses incurred in the hearing.
Result:
The correct amount of Mrs. Gaudreault's weekly income benefits is $600.00.
Pilot is not entitled to repayment.
Mrs. Gaudreault is entitled to her expenses incurred in respect of this arbitration, and to interest on any overdue amounts in accordance with section 24(4) of the Schedule.
Hearing:
The hearing was held in North Bay, Ontario, on July 25, 1994, before me, Asfaw Seife, arbitrator. Written submissions were exchanged and filed with the Commission on August 3 and 9, 1994.
Present at the Hearing:
Applicant:
Theresa Gaudreault
Applicant's Representative:
Paul U. Rivard Barrister and Solicitor
Insurer's Representative:
Rudy Lobl Barrister and Solicitor
Witnesses:
Theresa Gaudreault, Applicant; Daniel Edwards, accountant; Gina De Joseph, regional benefits officer
Exhibits:
Listed in Appendix "A"
Evidence and Findings:
Background:
At the time of the accident, Mrs. Gaudreault had been working since March 1, 1991, as a real estate agent with Homelife/C. Carlyle Real Estate ("Homelife"), located in North Bay, Ontario. Prior to this, from July 2, 1990 to February 20, 1991, she was employed by a non-profit organization. The parties agree that Mrs. Gaudreault was employed or self-employed during the full 52 weeks prior to the accident, and that she has not returned to her work as a real estate agent since June 17, 1991, the date of the accident.
Calculation of Weekly Income Benefits:
Weekly income benefits are based on 80 per cent of an applicant's gross weekly income from employment or occupation, up to the limits set out under section 12(4) of the Schedule. The gross weekly income is determined in accordance with the rules set out in section 12(7).
Section 12(7) provides that an applicant's gross weekly income from his or her occupation or employment is deemed to be the greatest of:
his or her average gross weekly income for the four weeks preceding the accident; or
his or her average gross weekly income for the 52 weeks preceding the accident; or
$232.00.
In calculating the gross income of applicants who were self-employed at the time of the accident, section 12(7)(3) provides that business expenses which cease as a result of the accident shall be deducted from the person's income from self-employment before calculating the gross weekly income.
In addition, section 15 of the Schedule provides that the Insurer may deduct from weekly benefits 80 per cent of any income received by or available to the Applicant from any occupation or employment subsequent to the accident.
Mrs. Gaudreault has chosen to base the calculation of her weekly income benefits on the average of her gross weekly income for the four weeks preceding the accident.
Mrs. Gaudreault testified that in the four weeks preceding the accident, she sold two properties in North Bay: 119 View Street, with a commission of $1,725.25, and 524 Cartier Street, with a commission of $2,340.00. She received her commissions on both properties after the accident, when the transactions were completed. She claims that these commissions, totalling $4,065.25, constitute her income for the four weeks preceding the accident.
Mrs. Gaudreault introduced in evidence Trade Record Sheets (Exhibit 1) for both properties. The Trade Record Sheet for 119 View Street shows that the property was sold on June 12, 1991, and the transaction closed on August 16, 1991. It shows that Mrs. Gaudreault was the "selling salesman", and her commission of $1,725.25 was paid to her on August 19, 1991, after income tax and other deductions were made.
The Trade Record Sheet for 524 Cartier Street shows that the property was sold on June 24, 1991, and the transaction was completed on August 30, 1991. Mrs. Gaudreault was the "selling salesman", and her commission of $2,340.00 was paid to her on September 11, 1991, after certain deductions were made.
Mrs. Gaudreault testified that she did all the required work on the sale of the properties prior to the accident on June 17, 1991; she testified that she did "no work at all" with respect to these sales after the accident. With regard to the discrepancy between her statement that 524 Cartier was sold prior to the accident and the entry in the Trade Record Sheet which shows a date subsequent to the accident, Mrs. Gaudreault explained that she did in fact secure the Agreement of Purchase and Sale for the property in question on June 17, 1991, shortly before the accident. She testified that the sale was not processed by the office the same day. She stated: "sometimes it takes a few days before the offers are processed in the office."
Mrs. Gaudreault testified that no further work or services were required by her on the sale of this property subsequent to June 17. I accept Mrs. Gaudreault's evidence, and I am satisfied that she indeed performed all the work required for the sale of this property prior to the accident.
In his submissions, counsel for Pilot argued that in the absence of the Offers of Purchase and Sale, which were not entered in evidence, the Trade Record Sheets alone are not reliable evidence of when and whether commission was payable to the Applicant. Pilot had not questioned the authenticity of the Trade Record Sheets when they were filed as exhibits, nor has it produced any evidence to challenge the dates or other information contained in them. These records were created by Homelife in the normal course of conducting its business. They are signed by the Homelife broker certifying that the information contained in them is correct. In the absence of any contrary evidence, I accept the Trade Record Sheets as reliable proof of their contents.
Mrs. Gaudreault also submitted in evidence her income tax returns, T4 slips and Employer's Confirmation of Income completed by Homelife. Having carefully examined the contents of these documents, and after considering the uncontradicted testimony of Mrs. Gaudreault, I accept this evidence as reliable and credible proof of Mrs. Gaudreault's commission income. As for her ceasing expenses, I accept the amount of $210.00 per week for car and office expenses. This amount was considered reasonable by the Insurer's accountant, given the nature and arrangement of a real estate agent's business.
Counsel for the Insurer took the position that the commissions which Mrs. Gaudreault received after the accident should not be considered income from pre-accident employment. He argued that these commissions should properly be considered deductible from weekly benefits under section 15 of the Schedule as income from post-accident employment, even though Mrs. Gaudreault did not work after the accident.
Mr. Daniel Edwards, a chartered accountant with expertise in the area of earnings loss analysis, testified at the hearing on behalf of the Insurer. He was retained by Pilot in June of 1993 to assist in determining the weekly income benefit payable to Mrs. Gaudreault. Mr. Edwards issued two reports, dated June 8, 1993 and August 31, 1993, which were filed in evidence at this hearing.
In his first report Mr. Edwards stated as follows:
TIMING OF REAL ESTATE COMMISSION EARNINGS
The exact date on which income is earned is, of course, critical to the calculation of weekly income benefits under OMPP.
Although real estate commissions are not paid until after the transaction has closed, we believe that the real estate commissions are earned by the real estate agents on the date an unconditional offer to purchase is accepted by the vendor, or on the date a conditional sale becomes unconditional. At this date, assuming that all the parties to the contract fulfil their contractual obligations, the real estate agents involved know that the commissions will indeed be paid after closing, without significant additional duties required.
Conversely, until an unconditional purchase/ sale agreement is in place, neither a listing agent nor a selling agent can be certain of receiving any remuneration for work performed. For example, a house listed for sale may fail to sell within the listing period , or potential purchasers may fail to purchase any of the houses shown by a selling agent. For this reason, we believe that no income has been earned by a real estate agent for work performed before an unconditional purchase/sale agreement is in place.
In his second report, Mr. Edwards revised the above approach as follows:
In our view, there are two possible dates in which real estate commissions could be considered to have been earned for OMPP purposes:
i) On the date an unconditional purchase /sales agreement is in place (ie. signed); ("the Agreement Date"); or alteratively
ii) On the date the transaction is closed ("the Closing Date").
Mr. Edwards testified that using the "Agreement Date" approach, (which was the approach recommended in his first report), he excluded the commission from 524 Cartier from the calculation of Mrs. Gaudreault's pre-accident income, and determined the amount of her weekly benefits to be $336.97, based on her average gross weekly income for the 52 weeks before the accident. Mr. Edwards agreed that if the unconditional sale of 524 Cartier Street is found to have been secured prior to the accident, under this approach, Mrs. Gaudreault's weekly income benefits would be at the maximum $600.00, based on her average gross weekly income for the four weeks preceding the accident. If this is the case, Mr. Edwards conceded that the Insurer's claimed overpayment does not exist.
Using the "Closing Date" approach, since Mrs. Gaudreault had no sales that "closed" during the four weeks preceding the accident, Mr. Edwards calculated her weekly income benefits to be $317.84, based on her average gross weekly income for the 52 weeks preceding the accident. Mr. Edwards testified that he recommended to the Insurer that it adopt the "Closing Date" approach. His reason for this change of approach is contained in his second report, which states, in part:
We point out that an OIC Arbitration decision between M.P. and The Dominion of Canada General Insurance Company (File No: A001478) determined that real estate commissions are earned on the date of closing for OMPP purposes, notwithstanding that this could lead to "arbitrary results". In light of the fact that this Arbitration decision was clearly intended to set a precedent on this interpretation matter, we have followed this approach in calculating the weekly income benefit entitlement.
The Insurer's counsel submitted that the Insurer accepted the "Closing Date" approach recommended by Mr. Edwards because it is consistent with the M.P. decision.
In the M.P. case (M.P. and Dominion of Canada General Insurance Company, May 21, 1993, OIC File No. A-001478, under appeal), the issues were entitlement to weekly benefits and the amount of the entitlement. Senior Arbitrator Susan Naylor decided that the applicant, a real estate agent, was not entitled to weekly income benefits since the accident did not cause him to be substantially disabled from performing the essential tasks of his employment. Having made this decision, she was not required to deal with the issue of the amount of benefits; however, she went on to consider whether the applicant's income in the four weeks before the accident included two sales that closed within that period, although the Agreements of Purchase and Sale had been executed earlier. She stated that the applicant's commissions were earned on the date of closing, and should be included in his income for the four weeks preceding the accident.
No special rule governs the calculation of income from commission sales under section 12(7)(1) of the Schedule. Neither is the treatment of sporadic income, such as that earned by a real estate agent, addressed in the Schedule. While the section states that the calculation of weekly income benefits is based on the insured person's gross weekly income from his or her occupation or employment, for the designated periods preceding the accident, it does not stipulate that the income must actually be received by the insured person during the time period in question, or indeed prior to the accident.
It has been stated in many arbitration decisions that weekly income benefits are intended to compensate insured persons who, as a result of a motor vehicle accident, suffer from a substantial inability to perform the essential tasks of their pre-accident employment or occupation. While using the "Closing Date" approach to determine the timing of a real estate agent's income may be a convenient method that is based on certainty of income, in my view, the automatic application of this approach in every case can lead to results that are contrary to the intent of the legislation, and conclusions that are manifestly absurd, such as those demonstrated by this case.
In the circumstances of this case, it is agreed that Mrs. Gaudreault did not return to her employment as a real estate agent after the accident. She did not perform any work relative to the sale of the properties in question subsequent to the accident; and, with the benefit of hindsight, we know that the closing on both properties did take place and she was paid her commissions. This leads to the inescapable conclusion that the commissions paid to Mrs. Gaudreault after the accident can only be from her employment preceding the accident. In my view, to recognize this income as her earnings before the accident is consistent with common sense and the legislative intent underlying section 12 of the Schedule.
Accordingly, I find Mrs. Gaudreault is entitled to include the commission income of $4,065.25, received from the sale of 119 View Street and 524 Cartier Street, in the calculation of her income for the four weeks preceding the accident. Based on ceasing expenses of $210.00 per week, I find the correct amount of Mrs. Gaudreault's weekly income benefit under section 12(7)(1) is $600.00.
I note that after the hearing on this matter was concluded, Arbitrator Nancy Makepeace issued a decision in a case involving similar facts (Antonio Ferrari and Royal Insurance Company, September 8, 1994, OIC File No. A-007313, under appeal). In that case, Arbitrator Makepeace found that the applicant's pre-accident income from a real estate lease included a commission paid to him on the closing date after the accident, because the applicant had completed all or substantially all of his work on the lease prior to the accident, when the offer was accepted.
The Ferrari decision was not available at the time of this hearing and I have not relied on Arbitrator Makepeace's decision in making my findings in this case; however, I take comfort in the fact that my conclusions are supported by my colleague's views on this issue.
Order:
The correct amount of Mrs. Gaudreault's weekly income benefits is $600.00 per week.
Pilot is not entitled to repayment.
Mrs. Gaudreault is entitled to her expenses incurred in respect of this arbitration, and to interest on any overdue amounts in accordance with section 24(4) of the Schedule.
January 24, 1995
Asfaw Seife Arbitrator
Date
APPENDIX A
Exhibits:
Exhibit 1 Ontario Real Estate Association Trade Record Sheets
Exhibit 2 Medical or Psychological Reports, dated July 23, 1991 and October 2, 1991; Application for Accident Benefits, dated July 4, 1991
Exhibit 3 Employer's Confirmation of Income, dated July 4, 1991
Exhibit 4 Revenue Canada Income Tax Return Form for 1991
Exhibit 5 Revenue Canada Income Tax Return Form for 1990 with T4 slips
Exhibit 6 Letter to Applicant from Pilot Insurance Company, dated October 20, 1992
Exhibit 7 Letter to Pilot Insurance Company from Paul Rivard, dated August 10, 1993
Exhibit 8 Listing of cheques from 1991 to 1993
Exhibit 9 Report of Daniel M. Edwards, Coopers & Lybrand, dated June 8, 1993
Exhibit 10 Report of Daniel M. Edwards, Coopers & Lybrand, dated August 31, 1993
Exhibit 11 Letter to Applicant from Pilot Insurance Company, dated June 25, 1993
Exhibit 12 Letter to Coopers & Lybrand from Pilot Insurance Company, dated April 14, 1993
Exhibit 13 Letter to Homelife Realty from Pilot Insurance Company, dated April 27, 1992
Exhibit 14 Letter to Homelife Realty from Pilot Insurance Company, dated June 30, 1992
Exhibit 15 Adding machine calculations 1991
Exhibit 16 Applicant's Income Certification, dated November 20, 1992
Other documents before the arbitrator:
Report of Mediator, dated December 15, 1993
Application for Appointment of an Arbitrator, dated December 22, 1993
Response by Insurer, dated February 7, 1994
Reply by Insured Person, dated February 20, 1994
Pre-hearing letter, dated March 10, 1994