Francis Mills v. Canadian General Insurance Company, 1995 ONICDRG 89

Ontario Insurance Commission

Neutral Citation: 1995 ONICDRG 89

File No. A-005599

BETWEEN:

FRANCIS MILLS Applicant

and

CANADIAN GENERAL INSURANCE COMPANY Insurer

DECISION

Issues:

The Applicant, Francis Mills, was injured in a motor vehicle accident on August 21, 1990. He applied for and received statutory accident benefits from Canadian General Insurance Company (Canadian General), payable under Ontario Regulation 672¹. There are two principal issues in dispute in this hearing:

1. What is the correct amount of the weekly income benefit under section 12 of the Schedule?

2. Is Mr. Mills entitled to weekly income benefits after August 21, 1993 under section 12(5)(b) of the Schedule?

3. Is Canadian General entitled to repayment of any weekly income benefits paid to Mr. Mills?

An issue regarding reimbursement of miscellaneous travel expenses ($215) and the cost of obtaining medical records ($595) was settled prior to the commencement of the hearing.

Mr. Mills also claims interest on any amounts owing, and his expenses incurred in the hearing.

Result:

1. Mr. Mills' gross weekly income is $532.81. He is therefore entitled to a weekly benefit of $426.24, less 80% of post-accident income.

2. Mr. Mills is entitled to continued weekly income benefits after August 21, 1993, in accordance with this decision.

3. Mr. Mills earned $3,387 in respect of work performed by AA#1 construction after the accident. Canadian General is entitled to deduct 80% of this amount. It is also entitled to deduct 80% of any other post-accident income earned by Mr. Mills in employment or self-employment after the accident.

4. Canadian General is entitled to offset benefits paid to Mr. Mills.

5. The parties are entitled to interest in accordance with sections 24(4) and 27(4) of the Schedule.

6. Mr. Mills is entitled to his expenses incurred in respect of the arbitration insofar as they relate to proof of disability. He is not entitled to expenses incurred in respect to proof of income.

Hearing:

The hearing was held in Belleville, Ontario on July 20, and 21, and August 12, 1994, before me, Susan Naylor, arbitrator.

Present at the Hearing:

Applicant: Francis Mills

Applicant's Representative: Shawn O'Connor, Barrister and Solicitor

Insurer's Representative: Gregory P. Heckel, Barrister and Solicitor

Witnesses:

There were five witnesses. These were: Mr. Mills; Catherine O'Rourke, rehabilitation consultant; Deborah Patricia Cameron, claims specialist; Jeffrey Smith, chartered accountant; and Roxanne Bravo, rehabilitation consultant.

There were 16 exhibits. They are listed in Appendix A.

Evidence and Findings:

The accident

Francis Mills suffered multiple injuries in a head-on collision on August 21, 1990. He fractured his right ankle in all three aspects of the joint, his jaw in three places and his ribs. He also suffered soft tissue injuries and cuts to his face. Mr. Mills had a pre-existing back condition, with left-sided sciatica, which has complicated his rehabilitation. He is unable to return to his work in the construction business because of his injuries.

Mr. Mills' employment before the accident

Mr. Mills was a 50 year old self-employed contractor, when these events happened. In terms of formal education, he completed grade 10 and later took a drafting course at a community college. He has an extensive 40 year work history, and a broad and varied range of work skills and experience. At one time or another, more than 20 years ago, he worked as a machinist operating a punchpress, a millwright, a lathe operator, and a transport driver. He then spent many years in the renovation business, doing both physical labouring and sales. In his words, he has never been out of work in his life.

In 1988, Mr. Mills set up his own renovation company, AA#1 Construction. He started the business as a sole proprietorship, and incorporated it in March of 1989.² The company operated as a general construction business, performing residential renovations and additions. At some point in 1990, Mr. Mills purchased a patio franchise and started to install patio enclosures. He estimated this work to be roughly 35% to 40% of his overall business.

Mr. Mills testified that, in the summer of 1990, the company had seven employees. Mr. Mills worked "hands-on" alongside his workers, as well as being responsible for the business end of the work - initiating the sales and negotiating the contracts. According to Mr. Mills, the company was profitable and he was looking forward to future growth; he stated that he earned a good living, drawing income from the business of approximately $1,200 to $1,500 a week.

Mr. Mills was paid weekly income benefits of $552.16 until December 21, 1992. About that time, new information came to light which caused Canadian General to question his earnings both before and after the accident.

Weekly income benefits are based on the lesser of $600 (or a higher amount if opted for) or 80% of an applicant's gross weekly income from employment or self-employment.³ Section 12(7) of the Schedule addresses gross weekly income, and gives the applicant the benefit of the most favourable of three different calculations:

1. 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.

In the case of self-employed applicants, gross weekly income is calculated net of business expenses which cease as a result of the accident.⁴ The parties agree that, as the owner and operator of the company, Mr. Mills should be considered to be self-employed rather than an employee of the company.

The Schedule allows an applicant to benefit from his or her highest average earnings for either of two periods - the four weeks or the 52 weeks before the accident. Mr. Mills wishes to base his benefits on the company's alleged income for the four weeks before the accident. To benefit from the short four week averaging period, which for most businesses is a relatively arbitrary time period, self-employed applicants must provide reasonable, credible evidence of their revenues and expenses for the actual period in question. If they cannot do so, their earnings should be averaged over the longer 52 week period. The onus is on the applicant to establish his or her income in the periods in question.

Mr. Mills' credibility is central to the issue of his income. He is not a credible witness. He admitted to falsifying details of contracts which he provided in support of his claim. He signed statements indicating that he had not returned to work after the accident, when in fact he was working.⁵ In assessing credibility, I also note that in 1991 Mr. Mills was convicted of fraud for a business related matter, although unrelated to the above conduct.⁶ For these reasons, I rely on Mr. Mills' evidence as to his income only where it is supported by reliable documentation.

There is very little such documentation. Personal and corporate income tax returns were not filed for the years 1988 to 1990. Mr. Mills' business records are not in good order and there are no proper accounting records. Financial statements were prepared for various periods, including the five months ended August 31, 1990, and the four weeks before the accident.⁷ The inadequate state of the business records does not allow for verification of the figures provided in these recent statements.

When Coopers & Lybrand, the first of three accounting firms retained to provide an opinion in regards to Mr. Mills' income, tried to verify the sales information in the five month financial statement, they discovered that he had fraudulently altered the dates of acceptance, the means of payment, and in one instance, the amount, set out in two sales contracts.⁸ They expressed serious concerns over the integrity of the material provided to them and refused to rely on the statements.

Subsequently, Mr. Mills obtained statutory declarations from ten customers, who had construction work done within the four weeks preceding the accident. It is accepted that these have established the sales revenues of the company in the period with some measure of reliability.

There does not seem to be any dispute that the company was making substantial sales in the months before the accident. However, there is no such certainty in regards to the company's gross profits and net income. The banking records do not reflect the full extent of the company's activities. It appears from the evidence that Mr. Mills freely mixed business and personal finances. Sales revenues were not necessarily deposited in the company bank account. Mr. Mills was often paid for work by cash or cheque made out to himself personally. Deposits from customers were deposited into several accounts and were not traceable.⁹ Mr. Mills took out cash for his own needs whenever he required it; he paid some expenses by cash but did not keep track of this.

Three separate accounting companies have been retained to try to make something of this incomplete financial picture. Coopers & Lybrand (Coopers) was retained by Canadian General;¹⁰ BDO Dunwoody Ward Mallette (Dunwoody) was then retained by Mr, Mills;¹¹ finally, Canadian General retained Hayes Smith & Associates Inc. (Hayes Smith).¹² Coopers and Dunwoody have arrived at a figure for Mr. Mills' average earnings in the four and the 52 weeks before the accident, although they adopted different approaches and reached different figures. Coopers relied primarily on the banking records, making certain assumptions about use of the funds; Dunwoody relied on the financial statements, making certain adjustments. Hayes Smith was unable to provide an opinion as to Mr. Mills' income because of the inadequacy of the underlying financial records. They recommended payment of benefits at the minimum.

According to banking records, the company had sales of $19,377 and expenses of $20,240 in the four weeks before the accident, for a net loss of $863. Because the bank records only covered the period from April 3, 1990 to August 21, 1990¹³, Coopers used the bank records and the financial statement for the year ended March 31, 1990 to determine Mr. Mills' income, net of ceasing expenses, for the 52 weeks before the accident, arriving at the figure, $19,401 or an average gross weekly income of $373.10. Coopers treated all expenses as ceasing expenses, on the understanding that the company had discontinued operations.

The evidence indicates that the figures from the banking records understate the business activities of the company, because a substantial amount of business was transacted in cash and did not go through the account. This figure was in the region of $34,000 in the five months ended August 31, 1990.

In their first report,¹⁴ Dunwoody based its calculations for the four week period by averaging the figures in the five month statement, and making some adjustments for errors. They had some additional working papers and material not available to Coopers. The statement for the five months ended August 31, 1990 showed a net income of $19,500. The company had reported much lower figures for the year ended March 31, 1990, compared to this and to the prior 15 months. Mr. Mills attributed the substantial drop in business in the year ending March 1990 primarily to marital difficulties.

Dunwoody did not consider the figures in the five month statement to be out of line, although they queried Mr. Mills' claim to be drawing $5,000 to $6,000 a month, as unsupportable on the profits. However, they felt that gross profit figures for the business were relatively consistent, adding plausibility to the numbers.

After Mr. Mills had obtained the statutory declarations to confirm sales in the four weeks before the accident, his bookkeeper prepared a new statement of operations for this period.¹⁵ This showed the company's sales at $29,137, with gross profits of $11,965, and a net income of $8,946. Based on these revised figures, Mr. Mills' average gross weekly income for the period would be doubled: $2,236.50.

Although Dunwoody had some questions, they felt that the numbers overall were plausible and did not appear unreasonable:

The records are not in good order. However, the sales over four weeks are reliable and expenses make sense based on gross margin analysis and magnitude of operating expenses.

They noted that Mr. Mills averaged $33,000 a year over the years covered by the financial statements, which they felt was consistent with general experience in the construction industry.¹⁶

Jeffrey Smith of Hayes Smith reviewed Mr. Mills' primary financial records and concluded that, because of the incomplete state of the records:

there is absolutely no way to assess the completeness of either the revenue or expense information.¹⁷

Mr. Smith testified at the hearing. He critiqued the figures set out in the four week statement, particularly as they related to the treatment of cash payments and withdrawals. These were attributed exclusively to personal advances rather than for the payment of expenses, which Mr. Smith felt likely understated company expenses. He also felt that a total cash pay-out of $14,509 (an average of $3,627 a week) to Mr. Mills was implausible.

Mr. Smith questioned the overall profitability of the business. He cited an early-1989 letter from Mr. Mills' bookkeeper indicating that Mr. Mills had personal debts of $60,000, and unpaid invoices and letters from collection agencies that he found among the records.¹⁸ However, I am not convinced that evidence of this is strong one way or the other - it was not clear that the amount of the personal debt was of significance; the unpaid invoices had not been outstanding for any length of time and the collection letters largely related to the same debt, and were not for substantial amounts.

Notwithstanding this, I have serious reservations about the figures in the four week statement. Although the company's gross sales can be established with some measure of reliability through the statutory declarations, I am not satisfied as to the company's gross profit or net income for the same period.

Mr. Smith testified as to the inadequacy of the underlying records, which is undisputed. He was the only expert to review the original records in detail. I also accept his concern that expenses of the company were likely understated by attributing all cash withdrawals and payments to advances.

Dunwoody noted that the gross profit margin (41%) and net income claimed ($8,946) was substantially higher than for the five month total. The difference can be attributed, in part, to seasonal factors, July and August being the busiest weeks in the construction year. However, Mr. Mills was asked to provide evidence to support these figures and did not do so.

Mr. Mills reported an expected gross profit of 50% on his new line of business installing patio enclosures. He failed to provide any evidence to support this estimate in the way of promotional materials, budgets, job costings or otherwise, despite being asked to do so by Dunwoody.

Dunwoody also asked for records to verify that the company had significant start-up advertising costs in the early part of the five month period, which could explain the difference in net income for the company over the two periods. Mr. Mills did not provide these records.

Mr. Mills has not satisfied me as to the company's income in the four weeks before the accident. It is his onus to do so.

Furthermore, I am not prepared to calculate Mr. Mills' income for the four weeks before the accident by averaging the information contained in the five month statement for the period ended August 31, 1990, as was done initially by Dunwoody. If Mr. Mills cannot establish his income and expenses with some measure of certainty for the four weeks before the accident, he is not entitled to the benefit of the four week averaging period and must calculate his income on the basis of the 52 week period. I propose to do that in this case.

Despite the inadequacy of the records and Mr. Mills' lack of credibility, in my view it would be unfair to him to simply deem him to have earned the minimum $232 per week under the Schedule. I am convinced by the evidence that Mr. Mills earned more than this. The financial statements made before the accident showed that, at its lowest, his annual income was $18,000 for the year ended March 31, 1990, and this was less than in the prior 15 months.

I am prepared to accept that Mr. Mills' company was profitable in the five months before the accident. This is confirmed by the Coopers figures drawn from the banking records. Although Coopers made some assumptions about the allocation of cheque disbursements and cash withdrawals, they do not seem unreasonable.

I also accept that business in the five months before the accident was better than that reflected in the March 1990 statement. The annualized net income for the period, based on the Coopers report was over $30,000.

Coopers relied upon the banking information for the 21 week period from April 3 to August 21, 1990. I accept, based on the evidence, that this understates the company's revenues. Dunwoody annualized the combined figures reported in the March 1990 statement and the five month statement ended August 31, 1990. I am prepared to accept that this approach probably provides the fairest and most reliable assessment of Mr. Mills' earnings in the 52 weeks before the accident. I also accept their calculations in regards to ceasing expenses. These calculations give rise to an average gross weekly income, net of ceasing expenses, of $532.81, for a weekly benefit of $426.24.

Mr. Mills' post-accident income must be deducted from his benefits under section 15 of the Schedule. Coopers calculated that Mr. Mills earned $3,387 in total under the contracts his company performed after the accident, 80% of which is deductible. These figures were not disputed by Dunwoody, and I accept them.

There is some evidence that Mr. Mills may have worked on additional projects involving AA#1 after the accident. On cross-examination, Mr. Mills testified that he tried unsuccessfully to keep the company going after the accident, but was not able to make any money and acted only in a supervisory capacity. Mr. Smith found invoices for building materials dated into December 1990, suggesting work was going on after the two altered contracts were completed.¹⁹ In addition, Mr. Mills was videotaped in December/January 1990, carrying building material. There is no evidence before me as to when the company ceased business, or its earnings in the interim period.

Mr. Mills' benefits have been calculated on the basis that his business expenses essentially ceased after the accident. While there is some element of doubt about the matter, on balance, there is insufficient evidence to persuade me that Mr. Mills earned any income from his construction business in excess of $3,387.

Mr. Mills has earned income from a number of other jobs since the accident, including his taxi business. I find below that he is entitled to weekly income benefits after August 21, 1993. Canadian General is entitled to deduct 80% of these earnings from his continued benefits. Mr. Mills must provide Canadian General promptly with such proof of his earnings, as it reasonably requires.

Entitlement

I accept, on the basis of the medical evidence before me, that Mr. Mills is unable to return to the physically demanding manual work involved in the construction business. I also accept that purely supervisory work in the construction field is not a long-term viable option; in these times, supervisors are generally expected to work alongside their workers.²⁰

Canadian General does not dispute that Mr. Mills is disabled from returning to his former occupation in construction. However it claims that he does not meet the stricter test of disability required of applicants after 156 weeks of benefits. This test is set out in section 12(5)(b) of the Schedule, which states that:

The insurer is not required to pay a weekly benefit under subsection (1)

(b) for any period in excess of 156 weeks unless it has been established that the injury continuously prevents the insured from engaging in any occupation or employment for which he or she is reasonably suited by education, training or experience. [emphasis added]

Judicial cases have considered similar wording in earlier automobile policies and disability policies.²¹These cases emphasise that the question of suitable employment in any case is a question of fact: the work must be suitable for that applicant, viewed fairly and realistically in the context of his or her educational and employment background. They have taken into account such factors as the nature and status of the work compared with what the applicant did before, the hours of work and level of remuneration, the applicant's employment experience and length of time spent in different jobs, his or her age, and his or her qualifications and technical training and know-how. The statutory requirement focuses primarily on an applicant's functional limitations, and not on the broader availability of work in the job market.

Counsel for the Insurer submitted that the words "reasonably suited by education, training or experience" were disjunctive. If an applicant satisfied one of these criteria, this is sufficient. For example, office work with a minimum grade 12 education level would be considered suitable for a 50 year old construction worker, who has spent all his or her life in manual labour. I do not read the Schedule or the cases in this restrictive manner.²² In my view, having regard to the remedial nature of the legislative scheme, one must look at the overall picture of the applicant's background and experience.

Suitable work is not limited to what the applicant was doing at the time of the accident, provided that it is not unrelated to his or her previous experience.²³ However, work is not necessarily suitable because an applicant has done a stint of it in the past.

Mr. Mills' primary restrictions relate to his right ankle, which he fractured in three places. The ankle fracture dislocation was reduced and internally fixed. His recovery was unsatisfactory and x-rays revealed progressive post-traumatic osteoarthritic degeneration in the ankle. This required a right ankle fusion, which was performed by Dr. J Birchard on May 4, 1992.

Dr. Birchard reports that certain residual limitations following such a procedure are to be expected:

Patients with ankle fusions are not able to run. The lack of ankle motion does make it somewhat difficult to compensate for uneven ground, and does place increased loads on surrounding joints which could predispose them to osteoarthritis.... He should be capable of gainful employment provided it does not require prolonged ambulation, or walking on uneven ground, squatting or kneeling.²⁴

He also felt that Mr. Mills should avoid jobs that involved prolonged sitting.²⁵

Dr. Birchard ruled out a return to construction labour but released Mr. Mills to light/sedentary work as of November 1992. He suggested a graduated return to work, given Mr. Mills' extensive time off work, but considered that Mr. Mills could try to work a full eight hour day, if graduated work impeded his employability.²⁶

Mr. Mills has continued to complain about pain and swelling in the ankle since the fusion. Dr. Birchard has been unable to find any objective basis for Mr. Mills' ongoing complaints. He reported that swelling one year following an ankle fusion is usually minimal and that a successfully fused ankle should be pain-free.

Canadian General takes the position, based on Dr. Birchard's report, that Mr. Mills is capable of light or sedentary work, without further rehabilitation or training, and that a variety of occupations, within these physical limits, are suitable for him.

Mr. Mills' medical condition has been complicated by problems with his jaw and back pain.²⁷ His left temporomandibular joint pain and inability to open his mouth fully are not significant work restrictions for him. His back is another matter. Mr. Mills has a history of back problems, with left-sided sciatica, that predates the accident. He had a discotomy at L4-5, which, according to him, had resolved things. Eight or nine months after the accident, Mr. Mills reported renewed left leg and back symptoms.²⁸ He attributed his back pain to walking awkwardly as a result of the fracture to his ankle. Dr. W. John S. Marshall, the surgeon who performed the original back surgery, concluded that there was a probable relationship between the accident and the recurrence of Mr. Mills' left leg and back problems. He said²⁹:

I am certain that the distortion of his walking and his posture as a result of that [his right ankle] are increasing the problems with his left leg.

Dr. Marshall concluded that Mr. Mills' accident had produced a "recredescence of nerve root irritation" at the L-5 nerve root which would cause him trouble from time to time. He did not know whether an increase in osteophyte seen in the CT scan was caused by the accident, but thought it possible. However, he ruled out further surgery.

In my view, Dr. Marshall is in the best position to opine on a relationship between the ankle injury that Mr. Mills suffered in the accident and any exacerbation of his left leg and low back problem, and I accept that the accident has made some contribution to his pre-existing back problems.

Shortly before the accident, on August 13, 1994, Mr. Mills went to his doctor to complain about twinges of pain down his left leg and calf, apparently as a result of putting his back out digging fence poles the previous month. He was prescribed anti-inflammatory medication and back exercises.³⁰ It was not clear what the status of his back was the following week, when the accident happened, but Mr. Mills did not complain to his doctor about left leg or back problems for another eight or nine months. I draw from this that the episode of back pain immediately prior to the accident was not particularly significant.

There is some issue about the nature and degree of Mr. Mills' back pain. He testified that he experienced continuous pain. The reports of Dr. Marshall and Mr. Mills' family doctor, Dr. Gillis, suggest that Mr. Mills' back pain is intermittent rather than constant.³¹ A videotape of Mr. Mills was introduced in evidence.³² It showed Mr. Mills doing various activities. The videotape supports Mr. Mills' testimony as to his need to walk with a cane, but it also showed him in activities requiring bending over from time to time, apparently without difficulty. This reinforces my view that Mr. Mills' back pain is perhaps somewhat less restrictive than suggested.

The best indicator of Mr. Mills' overall capability is contained in the report of a comprehensive vocational assessment, including a physical demands analysis, carried out by the March of Dimes in April 1994.³³ The March of Dimes assessed Mr. Mills' lifting capacity. Although this was well below Mr. Mills' capacities before the accident, and an understandable source of frustration to Mr. Mills, the March of Dimes concluded that Mr. Mills was capable of light to medium level physical work.

The report commented that:

[Mr. Mills] was observed to demonstrate poor body mechanics during lifting activities and required repeated coaching on safe/proper lifting techniques. While [Mr. Mills] was willing to attempt higher weight limits than those stated above, he was limited by the evaluator because his pace was becoming less controlled (continuing to increase the weight limits past this point may have put the client at risk for further injury). Lifting performance suggests that [Mr. Mills] will be able to perform work which is classified as light-medium based on physical demand characteristics of work.

The March of Dimes found Mr. Mills' standing tolerance to be 20 minutes (static), and 1.5 hours (shifting). His walking tolerance was measured subjectively at 10 minutes, at which point Mr. Mills started to complain about pain. Mr. Mills demonstrated good sitting tolerance, of approximately 2 to 2.5 hours. He was not able to do significant overhead work, or work that involved squatting or kneeling. However, his pushing and pulling activities were considered above average.

The March of Dimes commented positively on Mr. Mills' motivation and effort during the assessment. They concluded that Mr. Mills was capable of light-medium level work for seven hours a day. Subsequently they qualified this somewhat, reporting:

It is difficult, however, to give an accurate estimate of his ability to sustain such a workplace tolerance over any greater period due to the limited time he participated in testing.³⁴

Mr. Mills was referred to the March of Dimes by Ms. O'Rourke, a consultant with A.C.C.E.S.S. Alternatives, a rehabilitation company, who were retained by Mr. Mills' counsel in February 1994. Ms. O'Rourke's resume is marked Exhibit 11. Since 1988, Ms. O'Rourke has been co-ordinator of the special needs program at Loyalist College in Belleville, charged with ensuring that the needs of students with disabilities at the college are met.

The March of Dimes noted that Mr. Mills complained about pain after the second day of testing, and he also reported experiencing severe pain to Ms. O'Rourke. Ms. O'Rourke was concerned about his ability to work on a sustained basis and recommended an eight week work hardening program and job placement to test his capabilities. She lined up a voluntary position in sales with Beaver Lumber, but her recommendation was not implemented, in part, apparently, because Canadian General was unwilling to reinstate disability benefits for the duration of the program.

In 1992, Canadian General retained Medex Vocational Management Group (Medex) to explore new vocational directions for Mr. Mills and co-ordinate his return to work. ³⁵Through a computer generated program, Medex identified a number of alternative occupations, principally mechanical and electrical assembly positions, that were considered suitable for Mr. Mills. Medex then developed that information into a localised labour market survey in the Trenton area for light and sedentary occupations, ³⁶identifying ten positions with companies in the area that corresponded to the occupations previously identified. According to the rehabilitation report, Dr. Birchard agreed that these jobs were compatible with Mr. Mills' physical capabilities.

No vacancy was available in any of the positions surveyed, due to the depressed state of the economy. Counsel for Canadian General submitted that the jobs identified were suitable for Mr. Mills; he contended that Mr. Mills was not able to obtain work in these areas because of the poor local economic climate, not because they were beyond his capabilities.

I do not find the Medex reports particularly helpful in identifying jobs that are suitable for Mr. Mills. A closer look at the jobs showed that Mr. Mills did not have the training for the vast majority of the positions or they were not within his physical capabilities.³⁷

Counsel also suggested that Mr. Mills was a "jack of all trades" and could reasonably be expected to take on any number of jobs. In Labelle, a case he cited to me, the plaintiff was a young man of 21 years age. The court found that his work history was sporadic. He had worked at a broad range of essentially unskilled work, taking any job that became available but had built up little experience in any particular line of work. The court held that, although the plaintiff was precluded from going back to heavy labour, there were still a substantial number of jobs which he could perform.

The facts in Mr. Mills' case are clearly distinguishable: Mr. Mills is over 50 years of age. He is accomplished, with a broad range of skills and 20 years of experience in the construction industry. He has many transferable skills, garnered from his many years in business. In considering what is suitable work for him, he is entitled to draw upon the skills and experience he has worked hard to develop. However, some of his experience dates back a considerable time, and its relevance to today's jobmarket, without further training, is questionable.

There are criticisms in the Medex rehabilitation reports of Mr. Mills' motivation and commitment to look for work. While Mr. Mills might have been more proactive at the time, I am satisfied that he tried to find work. His motivation was not challenged by the March of Dimes. Mr. Mills registered with Canada Manpower and applied for jobs with a dozen companies, without success. His employment counsellor at the Employment Centre recommended further vocational testing. This was not done. Mr. Mills' file was closed after six months on the basis that his greatest barrier to obtaining work was a lack of job opportunities.

Mr. Mills subsequently found work in early spring 1993. He was hired to help lay ceramic tiles, but was let go after a short time because he could not keep up with the work.³⁸

In the summer of 1993, Mr. Mills worked as a janitor for six weeks at a local Wendy's hamburger restaurant. He was terminated, according to him, because he was too slow. He attributed his difficulty to having to stand for long periods of time, but Dr. Birchard felt that this was work within his capability, provided it did not involve squatting.³⁹ In fact, the evidence indicates that Mr. Mills was admitted to hospital for a bowel obstruction, and that this likely contributed to his departure. However, I agree with Ms. O'Rourke in her view that even if Mr. Mills was physically capable of work as a janitor, it is not suitable work for him, having regard to his skills and experience.

Subsequently, Mr. Mills drove a taxi full-time for a company for approximately three months, but gave this up after he had to go to hospital for stomach problems. He earned between $136 to $312.60 a week.⁴⁰ Mr. Mills then drove a cab for another company on a part-time basis, for three or four hours a day, until he and his girlfriend purchased their own taxi. He estimated that he now drives his own cab for four hours a day for four days a week, but cannot do so for longer because of back pain.

Although Mr. Mills has invested in and operates his own taxicab business, I do not think that this is necessarily suitable work for him, merely because he is engaged in it. Ms. O'Rourke described him as seriously underemployed in this capacity, and I agree with this assessment, because it does not adequately utilise his skills and experience.

Ms. O'Rourke felt that Mr. Mills had the transferable skills relating to construction knowledge and business acumen, to work in the construction retail field, for example, selling fireplaces, heating and air conditioning, alarm systems, windows etc. She testified that this required some on-the-job learning, but no formal training. However, Ms. O'Rourke was concerned with Mr. Mills' sustained work tolerance and suggested a work hardening program in the field first. She felt that this would also better position Mr. Mills for a job, competitively. Ms. O'Rourke also concluded that Mr. Mills needed more structured direction to his vocational rehabilitation.

Based on Ms. O'Rourke's and Mr Mills' evidence, I accept that construction retail work is suitable work for Mr. Mills: it utilises his background and experience, as well as offering him the flexibility to move around on the shop floor.

I also accept that Mr. Mills requires some form of work hardening job placement prior to full-time employment in this field. Ms. O'Rourke's suggestion in this regard strikes me as reasonable and sensible. Mr. Mills has been out of the full-time work force for a number of years. The March of Dimes report suggests that Mr. Mills demonstrated poor body mechanics and required repeated coaching on safe/proper lifting techniques; the evaluator was concerned about the potential for reinjury, if Mr. Mills was left to his own discretion. This persuades me that Mr. Mills would benefit from the recommended course of action suggested by Ms. O'Rourke, which would allow his progress to be monitored.

Based on Dr. Birchard's reports, the assessment of the March of Dimes, and my findings in regard to the intermittent nature of Mr. Mills' back problems, I expect that Mr. Mills will be capable of regular work in construction retail sales, barring unforeseen eventualities, as soon as the work placement experience is completed.

Mr. Mills is entitled to weekly income benefits if his ongoing injuries continuously prevent him from engaging in work for which he is reasonably suited by education, training and experience. I am satisfied that Mr. Mills is entitled to weekly income benefits until completion of the recommended work hardening program.

Mr. Mills remains entitled to ongoing rehabilitation assistance, including help with job search activities.

Expenses

An award of expenses in favour of an applicant may be made under section 282(11) of the Insurance Act which states:

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.

The prescribed expenses and amounts are set out in Schedule 1 of the Dispute Resolution Practice Code and in Ontario Regulation 664. Arbitrators have denied applicants their expenses, for example, where the application is devoid of merit, where the applicant has perpetrated a fraud⁴¹ or where the applicant's conduct has unreasonably prolonged the proceedings.

The applicant has been successful in regards to his claim for ongoing benefits, and I am awarding him his expenses insofar as they relate to proof of disability.

I am not prepared to award Mr. Mills any expenses relating to proof of income. Mr. Mills' fraudulent conduct in falsifying documents resulted in the need for extensive and costly accounting analysis, and largely precipitated this arbitration. I therefore exclude payment of disbursements that relate specifically to the accounting evidence. I attribute 50% of legal fees incurred in the preparation for and attendance at the hearing to proof of Mr. Mills' income, and I therefore exclude these amounts from the award of expenses.

Order

1. Mr. Mills' gross weekly income is $532.81. He is therefore entitled to a weekly income benefit of $426.24, less 80% of post-accident income.

2. Mr. Mills is entitled to continued weekly income benefits after August 21, 1993, in accordance with this decision.

3. Mr. Mills earned $3,387 in respect of work performed by AA#1 construction after the accident. Canadian General is entitled to deduct 80% of this amount. It is also entitled to deduct 80% of any other post-accident income earned by Mr. Mills in employment or self-employment after the accident.

4. Canadian General is entitled to offset benefits paid to Mr. Mills.

5. The parties are entitled to interest in accordance with sections 24(4) and 27(4) of the Schedule.

6. Mr. Mills is entitled to his expenses incurred in respect of the arbitration insofar as they relate to proof of disability. He is not entitled to expenses incurred in respect to proof of income.

July 6, 1995

Susan Naylor Senior Arbitrator

Date

Appendix A

Exhibits:

Exhibit I Document Brief

Exhibit 2 Letter dated June 1, 1994, from Nadia Stradiotto, Ontario March of Dimes

Exhibit 3 Hospital records, Belleville General Hospital

Exhibit 4 Clinical records, Dr. D. Birchard

Exhibit 5 Quantum brief

Exhibit 6 Medical brief

Exhibit 7 Articles of Incorporation, Company # 823405

Exhibit 8 Corporate file search, January 15, 1994

Exhibit 9 Bank book, the Municipal Savings & Loan Corporation

Exhibit 10 Video

Exhibit 11 Curriculum vitae, Catherine O'Rourke

Exhibit 12 Certificate of Conviction, July 26, 1990

Exhibit 13 Memorandum from Canadian General, March 7, 1991

Exhibit 14 Curriculum vitae, Jeffrey Smith

Exhibit 15 Report dated August 5, 1994, of Hayes Smith

Exhibit 16 Letter dated January 23, 1989, from Vance Bookkeeping

APPENDIX B

PRE-ACCIDENT INCOME HISTORY*

Financial Statements for AA#1 Construction

Proprietorship 12 Months December 88

3 Months March 89

Corporation 12 Months March 90

5 Months August 90

Sales Less Adjustments

$ 312,200

$ 56,800

$ 77,800

$ 140,600

Cost of Sales

(236,700)

(34,700)

(25,900)

(83,800)

Gross Profit

55,500

22,100

27,900

46,800

Total Operating Expenses

32,000

8,900

9,900

27,300

Income before taxes and available for salary

$ 23,500

$ 13,200

$ 18, 000

$ 19,500

Annualized income

$ 23,500

$ 52,800

$ 18,000

$ 39,000

• Appendix C1 Dunwoody Report, May 11, 1993 - Exhibit 5, Tab 5

APPENDIX C

Authorities referred to by the parties:

Dale v. Commercial Union Assurance Company of Canada, [1980] I.L.R. 1-1271 (Co. Ct.)

Labelle v. The Great-West Life Assurance Co. (1986), 1986 CanLII 7786 (BC SC), 17 C.C.L.I. 173 (B.C.S.C.)

Malkin v. Crown Life Insurance Company, 1989 CanLII 2898 (BC SC), [1989] I.L.R. 1-2444 (B.C.S.C.)

Newton v. The General Accident Assurance Company, 1988 CanLII 10341 (ON HCJ), [1988] I.L.R. 1-2296 (Ont. S.C.)

Roberts v. Safeco Insurance Co., [1988] O.J. No. 691 (Ont. H.C.J.), unreported decision

Manuel Lopes and Federation Insurance Company of Canada, November 9, 1992, OIC File No. A-000602

Marcel Richardson and Royal Insurance Company of Canada, November 3, 1992, OIC File No. A-001141

Footnotes

1. 1Prior 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.
2. 2Certificate of articles of incorporation, March 1, 1989, Exhibit 8
3. 3Schedule, section 12(4)
4. 4Schedule, section 12(7) 3.
5. 5Exhibit 6, Tab 2
6. 6Certificate of conviction, May 30, 1994, Exhibit 12
7. 7Appendix B
8. 8Exhibit 5, Tab 17; report dated November 20, 1992, Exhibit 5, Tab 2.
9. 9Dunwoody report.
10. 10Letter dated November 20, 1992, Exhibit 5, Tab 2, and Report dated December 1, 1992, Exhibit 5, Tab 3.
11. 11Report dated May 11, 1993, Exhibit 5, Tab 5; report dated February 1, 1994, Exhibit 5, Tab 7; and letter dated March 10, 1994, Exhibit 5, Tab 9.
12. 12Report dated September 20, 1993, Exhibit 5, Tab 6; report dated July 8, 1994, Exhibit 5, Tab 8; Report dated August 5, 1994; testimony of Mr. Jeffrey C. Smith, chartered accountant.
13. 13Exhibit 5, Tab 3.
14. 14Report dated May 11, 1993, Exhibit 5, Tab 5
15. 15Dunwoody report dated February 1, 1994, Exhibit 5, Tab 7.
16. 16Report dated February 1, 1994, Exhibit 5, Tab 7.
17. 17Report dated August 5, 1994.
18. 18Letter dated January 23, 1989, Exhibit 16.
19. 19Report dated August 5, 1994.
20. 20Report of Sandra Guest, rehabilitation consultant, A.C.C.E.S.S. Alternatives, undated 1994, Exhibit 6, Tab 33.
21. 21See Appendix C.
22. 22see, for example, Labelle v. The Great-West Life Assurance Co. (1986), 17 C.C.L.I. 174 (B.C.S.C.), Brief of Authorities, Tab 4.
23. 23Dale v. Commercial Union Assurance Company of Canada,[1980] I.L.R. 1-1271 (Co. Ct.).
24. 24Report dated August 12, 1993, Exhibit 6, Tab 28.
25. 25Medex report dated October 22, 1992, Exhibit 6, Tab 18.
26. 26Report dated November 16, 1992, Exhibit 6, Tab 26.
27. 27Report dated July 9, 1991, Dr. D.J. McPhee, Exhibit 6, Tab 9.
28. 28Clinical notes of Dr. F.G. Gillis, Exhibit 6, Tab 34.
29. 29Report dated January 9, 1992, Exhibit 6, Tab 13.
30. 30Exhibit 6, Tab 34, August 13, 1990.
31. 31Report dated February 17, 1993, Exhibit 6, Tab 43.
32. 32Exhibit 10.
33. 33Report dated April 21, 1994, Exhibit 6, Tab 32.
34. 34Letter dated June 1, 1994, exhibit 6, Tab 32.
35. 35Report dated July 16, 1992, Exhibit 6, Tab 17.
36. 36Report dated August 11, 1992, Exhibit 6, Tab 24 and report dated October 22, 1992, Exhibit 6, Tab 18.
37. 37Report dated October 27, 1992, Exhibit 6, Tab 19.
38. 38Exhibit 1, Tab 3D.
39. 39Report dated August 30, 1993, Exhibit 6, Tab 29.
40. 40Exhibit 1, Tab 3B.
41. 41Marcel Richardson and Royal Insurance Company of Canada, November 3, 1992, OIC File No. A-001141